2012 NPMA Fall ConferenceValue Through Professional Asset Management

Property 101 TrackContracts and Records

Presented by:

Robert Giacomi, CPPM CFLockheed Martin Space Systems Company

2012 NPMA Fall ConferenceValue Through Professional Asset Management

Introduction

Contract, as used in this presentation, means all types of agreements or other legally binding document between two parties unless specially stated otherwise

Property professionals should understand the basic terms and conditions of the contract.

Regardless of how the contract was funded, property provisions can be found in the contract

Property professionals should understand their agreed upon requirements for Records and how the data is communicated.

Do you have current and accurate data in your records?This is a two-way conversation.

Participation is welcomed!

2012 NPMA Fall ConferenceValue Through Professional Asset Management

CONTRACTSNow, let’s start with your authority to do something ….

2012 NPMA Fall ConferenceValue Through Professional Asset Management

Contract Types

Type of contract selected by the amount of risk (financial risk) each party is willing to accept.

Each party to a contract evaluates the risk and then

comes to an agreement as to the type of contract they will enter into.• Do you participate in this process?

Are there any “issues/concerns” that need addressing?• Why is it important for you to get this information?

2012 NPMA Fall ConferenceValue Through Professional Asset Management

Contract Types (Cont.)

FAR Part 16 – Types of Contracts Primarily two types of contracts:

• Fixed Price Places the greatest financial risk on the “Seller”.

• Cost-Reimbursement Places the greatest financial risk on the “Buyer”.

2012 NPMA Fall ConferenceValue Through Professional Asset Management

Fixed Price Contracts

Two common characteristics of all fixed-price contracts are:• The Seller is contractually bound to complete the

contracted work per the terms and conditions.• The Buyer is obligated to pay a price equal to the fixed

price specified in the contract.

2012 NPMA Fall ConferenceValue Through Professional Asset Management

Fixed Price Contracts (Cont.)

Advantages:• Minimum administrative burden on both parties.• Maximum incentive for Seller to control costs.• A known monetary obligation.

Disadvantages:• To the Buyer: If there is no competition, the Seller could

inflate costs of contingencies.• To the Seller: There is a risk of loss dealing with

performance of cost difficulties not foreseen in the proposal process.

2012 NPMA Fall ConferenceValue Through Professional Asset Management

Cost Reimbursement Contracts

Suitable for use when uncertainties prevent costs to be estimated with sufficient accuracy• Think Research & Development or similar.

Provides for payment of allowable costs• Seller not borne by all expenses until final

delivery. Results in low risk for both parties

• Your dealing with a mostly known process (history).

2012 NPMA Fall ConferenceValue Through Professional Asset Management

Cost Reimbursement Contracts

Used only when:• Seller has adequate accounting system to determine

costs.• Appropriate oversight is conducted by Buyer and is

acceptable.• A determination and finding has been executed that

shows (a) this type of contract is likely to be less costly; or (b) it is impractical to obtain supplies or services

without this type of contract.

2012 NPMA Fall ConferenceValue Through Professional Asset Management

Comparison - Contract Types

Fixed Price• Firm-Fixed Price (FFP)• Fixed-Price with Economic Price

Adjustment (FPEPA)• Fixed-Price with Prospective Price

Redetermination (FP3R)• Fixed-Price with Retroactive Price

Redetermination (FPRPR)• Firm-Fixed Price Level of Effort (Term)

(FFPLOET)• Fixed-Price Incentive (Firm Target)

(FPIFT)• Fixed-Price Incentive (Successive

Targets) (FP{ST})

Cost Reimbursement• Cost Sharing (CS)• Cost Plus Incentive Fee (CPIF)• Cost Plus Award Fee (CPAF)• Cost Plus Fixed Fee (CPFF)

Others• Indefinite Delivery, Indefinite Quantity• Basic Ordering Agreements • Time-and-Materials• Labor-Hour• Letter Contracts

*** Be aware that you could have a HYBRID contract ***

A combination of contract types under one main document.

2012 NPMA Fall ConferenceValue Through Professional Asset Management

RECORDS

Now, let’s switch directions from your authority to do something to your requirement to document something ….

2012 NPMA Fall ConferenceValue Through Professional Asset Management

Records - Notes

Let’s keep this simple:• Do you know what you have ….?• Do you know where it is ….?• Do you still need it ….?

Your records should be able to answer the questions above. How you get there, is all up to you.

Records in this context does not necessarily mean one system, module or hard-card. It is an all inclusive statement.

Requirement (extremes of scope)• As simple as a 5x7 Filedex Card; hand written; different colored ink.• As complex as a (you name the company) software package• Whatever works for you and your situation!

Do you have some contractual requirements?• Is your customer requiring you to do something you don’t normally do?• Are you being asked to work in a system as an integrator?• Do you have the right person(s) in place to handle this?

2012 NPMA Fall ConferenceValue Through Professional Asset Management

Records - References

Federal Acquisition Regulations (FAR)• Supplements (Government Agencies way of adding their “stuff” to FAR)• DFAR, NFS, DEAR and so on.• http://www.fedaccess.com/agency-supplements.htm

American Society for Testing and Materials, International (ASTM)• E53 Committee

E53.01 E2499 Classification of Equipment Physical Location Information E53.01 E2672 Identification and Categorization of Tooling E53.02 E2604 Data Characteristics of Equipment Records E53.02 E2812 Uniform Data Management in Asset Management Records

Contract / Agreement Company Command Media Internal Work Instructions

2012 NPMA Fall ConferenceValue Through Professional Asset Management

What Needs a Record?

Everything that you are responsible to report!(What does the contract say?)• Material• Equipment• Repairs• Facility• Other?

Key Elements• Back-up “documentation”• Acquired vs Furnished• Sensitive Property• Classified Property• Others?

Can you follow the property life cycle with your records? Are you able to support any type of audit?

2012 NPMA Fall ConferenceValue Through Professional Asset Management

Records – ASTM Standard Perspective

• Essential data elements that shall be used in equipment record(s). They are: Identification number

(unique or equivalent), Description, Receipt date, Unit acquisition cost, Location.

• Optional data elements that shall be used in equipment record(s). They are: Model number, Manufacturer, Disposal information, Physical inventory date, Owner, Unit of measure, Maintenance, Manufacture date, Part number, Serial number, User, Additional identification

E53.02 E2604-09 Data Characteristics of Equipment Records

2012 NPMA Fall ConferenceValue Through Professional Asset Management

Records – DOD Perspective

FAR 52.245-1(f)(1)(iii), Records of Government Property• (A) Property records shall enable a complete, current, auditable record of all

transactions and shall, unless otherwise approved by the Property Administrator, contain the following:

(1) The name, part number and description, National Stock Number, and other data elements as necessary and required in accordance with the terms and conditions of the contract.

(2) Quantity received (or fabricated), issued, and balance-on-hand. (3) Unit acquisition cost. (4) Unique-item identifier or equivalent. (5) Unit of measure. (6) Accountable contract number or equivalent code designation. (7) Location. (8) Disposition. (9) Posting reference and date of transaction. (10) Date placed in service.

2012 NPMA Fall ConferenceValue Through Professional Asset Management

Records – OMB Perspective

OMB Circular A-110, SUBPART C, Property Standards• (f)(1) Equipment records shall be maintained accurately and shall include the

following information (i) A description of the equipment. (ii) Manufacturer's serial number, model number, Federal stock number,

national stock number, or other identification number. (iii) Source of the equipment, including the award number. (iv) Whether title vests in the recipient or the Federal Government. (v) Acquisition date (or date received, if the equipment was furnished by

the Federal Government) and cost. (vi) Information from which one can calculate the percentage of Federal

participation in the cost of the equipment. (vii) Location and condition of the equipment and the date the information

was reported. (viii) Unit acquisition cost. (ix) Ultimate disposition data, including date of disposal and sales price or

the method used to determine current fair market value where a recipient compensates the Federal awarding agency for its share.

2012 NPMA Fall ConferenceValue Through Professional Asset Management

Let’s Review

For Contracts:• What a contract/agreement is.• What type of contract/agreement you have.• The difference between FP & CR

For Records:• What is a record• What are the requirements

And finally ……

2012 NPMA Fall ConferenceValue Through Professional Asset Management

A Thought …..

Take care of your THOUGHTSbecause they become WORDS.

Take care of your Wordsbecause they will become ACTIONS.

Take care of your Actionsbecause they will become HABITS.

Take care of your Habitsbecause they will form your CHARACTER.

Take care of your Characterbecause it will form your DESTINY,and your Destiny will be your LIFE.

Words of wisdom by Dalai Lama

2012 NPMA Fall ConferenceValue Through Professional Asset Management

Thank You!!Any questions?