Property Management 101 Part 2: Defense J.E. “Skip” Adolph, CPPM CF.

Property Management 101Part 2: Defense

J.E. “Skip” Adolph, CPPM CF

Property Management 101: Defense

• The “Property” Clause• 52.245-1 “Government Property (Apr

2012)– Addresses the following

• (a) Definitions• (b) Property Management• (c) Use of Government Property• (d) Government-furnished Property• (e) Title to Government Property• (f) Contractor Plans and Systems


• The “Property” Clause (cont)

• 52.245-1 “Government Property (Apr 2012)– Addresses the following

• (g) System Analysis• (h) Contractor Liability for Government

Property• (i) Equitable Adjustment• (j) Contractor Inventory Disposal


• The “Property” Clause (cont)

• 52.245-1 “Government Property (Apr 2012)– Addresses the following

• (k) Abandonment of Government Property• (l) Communications• (m) Contracts Outside The United States

End of Clause


• The “Contract”• What is a Contract?

– “An agreement between two or more parties, creating obligations to do or not to do something, that are enforceable or otherwise recognizable by law…”

Black’s Law…


• How to read a contract: From The First Word To The Last Word!– Read The Clause In It’s Entirety– Any other clause referenced…

– 52.245-1 -- Government Property.• As prescribed in (45.107 a), insert the

following clause:• “Real property.” See Federal

Management Regulation 102-71.20 (41 CFR 102-71.20).


• Property “Management” or Property “Control”?

• ASTM Definition (ASTM E 2135)– “Property Control System”:

• An entity’s internal management program for protecting, preserving, accounting for, and controlling property from acquisition through disposition, including both application and compliance


• 52.245-1(b)– The Contractor shall have a system of

internal controls to manage (control, use, preserve, protect, repair and maintain) Government property in its possession.


Property Management is the Management of Data The effectiveness of that

management is a direct reflection on the adequacy of the system

The efficiency of that management is a direct reflection of the level of contribution to the system


• 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:


• 52.245-1(f) Contractor plans & systems– (1) Contractors shall establish and

implement property management plans, systems, procedures at the contract, program, site or entity level to enable the following outcomes:


• Contractor plans & systems– Enabled process outcomes:

Acquisition

Receipt

Records

Physical Inventory

Subcontractor control

Reports

Relief of Stewardship

Utilization

Maintenance

Property closeout


• Contractor plans & systems– How many process outcomes?

• Acquisition: 2 each• Receipt: 2 each• Records: 2 each• Subcontractor control: 2 each• Relief of stewardship: 2 each• Utilization: 2 each


• 52.245-1(f)(1)(i)– Establish and implement property

management plans, systems, and procedures to enable the following outcome:

• Acquisition: Contractor shall document that all property was acquired consistent with its engineering, production planning, and property control operations


• Acquisition “Source” Documents– Based on “Method”:

FURNISHED LOANEDPURCHASED

FABRICATED

LEASE

RENTED

REUTILIZED

TRANSFERRED


• Sources of Asset Data:

Description; Part #

Location

Contract #

Unit of Measure

Acquisition Cost

Date Placed in Service

Quantity Received

Purchasing

Receiving / Inspection

Warehouse / Using Org

P.O. / Receiver

Asset

Facilities

Contracts


• Starts with a “Plan”– A written strategic description of how

best to manage the government’s property holdings in your possession (“I am the Steward”) while providing the “Best Value”

– Establishes performance “outcomes” from acquisition to close out

– Using selected VCS and/or ILPs


• Your procedures describe how those performance outcomes shall be achieved– A “best practice” is to be simple yet

detailed (therein lies a challenge)• Purpose (Why)• Process (How)• Responsibility (Who)


• “The Big Three”– The 3 most important Outcomes:

• Receiving– Establishes the foundation of the asset

history

• Records– The “Ledger” of what the Government’s

property in you possession

• Physical Inventory– A physical accounting of all assets reported

in the “Ledger”


• It’s About RISK !– Perform your own assessment– PMSA:

• LDDT Ratio for past 3 years?• Inventory Loss Ration for past 3 years?• Last PMSA evaluation for past 3 years?• Current “Property Management Plan”?• Self-assessment Program In Place?


• All You Have To Do Is…

Basic Property Federal

Rick Price, CPPM

Government Policies & Regs.

• Sources Of Procurement Law• Statutes• Executive Orders• Decisions• Decision Process Governed By

Regulations• FAR• Supplements• Office Of Federal Procurement Policy

(OFPP)

Federal Acquisition Regulation (FAR)

Public Law 93-400Office of Federal Procurement Policy (OFPP) Act of 1974Amended by Public Law 96-83 and OFPP Letter dated August 19, 1985

Our roots are found in LAW!!!Our roots are found in LAW!!!

• More about roots! The basis or roots for all property control systems should be C.P.P.M.

• Not NPMA’s CPPM, but…..

CPPM

Control

Protect

Preserve

Maintain

Cornerstones of a PM

• The System Integrator• The magnet that draws all functional

areas together• Security, Purchasing, Subcontracts,

Quality, Training, Information Services, Accounting, Production, Planning, and the list goes on

The Property Mgmt. System

Where it all BeginsFPMR Subpart 101-1.101 -- “The FPMR…shall be used by General Services Administration…except procurement and contract matters contained in the FAR.”

FAR Section 1.101 -- stipulates that all Executive Agencies will use the FAR contracting system policies and procedures when acquiring supplies and/or services

Both allow for supplements to be generated by agencies. FPMR 101-8.108 and FAR 1.103

Who uses What?

“Drivers”

Every organization, regardless of size or type, has critical business processes that are an integral part of the success of their organizational mission and objectives.

NPMA Standard Property Book, July 1999

• Fiduciary Responsibility• Business Management • Enable work efficiencies

How is this applied in your organization?….How is this applied in your organization?….

Drivers, cont….

External Auditors, DCMA, DCAA, ONR and other Sponsors

Contractual Compliance

Financial Accounting Compliance

CAS

Property’s “Multiple Hats”

“Hats”ComplianceBusiness Mgmt/Asset ManagementStewardshipPotential conflicting prioritiesBalance and consistency most important

Core Team for Property Management

Property Management ProcessesProperty Management Processes

PropertyManagementOffice

PropertyManagementOffice Program

ManagementProgramManagement

IT StaffIT StaffCustodiansandUser

CustodiansandUser

??????????

SponsorsSponsors

A Winning Combination!

Where it all Begins

Unless otherwise stated...

Property means: Real property, equipment, intangible property and debt instruments.

Property Management Definition

Stewardship

The conducting, supervising, or managing of something

The careful and responsible management of something entrusted to one’s care

Stewardship Responsibilities

Maintain Approved Property System in today’s world and Acceptable in tomorrow’s world FinancialAccountabilityLiability

Property Management

Now that we have it, what do we have to do and how?

Track itFinancial ImplicationsMaintenanceReportingSubcontractingAuditsLD&D and other liability You said it

was where?

Definitions

Government Furnished Property (GFP) “means property in the

possession of or directly acquired by the government and

subsequently made available to the contractor.

Contractor Acquired Property (CAP) “means property acquired

or otherwise provided by the contractor for performing a contract

and to which the government has title.

Government Property (GP) “means all

property owned by or leased to the government or acquired

by the government under the terms of the contract.”

FAR45.101

Property ManagementThe Overseer -- Very Important

Ensures procedures are written, updated and adhered toProvides trainingOversees self auditsLeads in LDD problems

Receiving

The process of physically accepting propertyItem(s) screened against procurement documentationItem(s) identified and tagged Discrepancies noted and acted uponSecuring of the propertyTimely completion of documentation

Details often overlooked…

Basis for correct records!

Critical for damage claims

Details often overlooked…

Basis for correct records!

Critical for damage claims

Receiving, cont.

Where and by whom?You develop the processWhat do you check for and document?Confirmation of orderConditionDemographic data of assetWhat if a problem?It depends…let’s discuss

Identification

PurposeIdentify ownershipControl number designationTagging optionsWho does this?Suggested placement and related benefitsReplacement of lost tags

Where’sthetag?

Records: The Great Communicator

Your Property Control System’s Soul

Have a record system that will display basic information for each item.Some items have more data, some less.

Utilization and Storage

Business process needed to protect the company’s and its Sponsor’s property from loss, damage, and destruction while it is not in use and to ensure its availability whenever it is needed in the future Let’s talk about

commingling...

Physical Inventory Regulatory & Contractual

Requirements Good Business Practice

Of special importance during acquisitions/mergers of organizations

Financial Considerations Measure Health of Property

System Utilization Excess Property Indicators “Other Factors”

Inventory --Assessing System “Health”

Unlocated property may be indicator of:TheftPoor security Inadequate documentation of receipts & issues

Location discrepancies may indicate:Undocumented movementUntrained property custodiansPoor record keeping Improper disposition

Unrecorded equipment may indicate:Problems is areas of

Procurement Receiving Identification

Maintenance

What does this mean?Who does it?When?How documented?Decision factor for replacement planning

Movement

Movement vs. shippingTemporary vs. long-term movesUsed as authorizedDocumentedSecured and protected while in transitUpdate recorded location when move is completeFAR 52.245-1 Records needs location

Reports

Records

Maintenance

Use

Storage

Movement

Like records, reports touches all

facets of our Property Control

System, for example...

Like records, reports touches all

facets of our Property Control

System, for example...

Subcontracts Consumption Identification

Inventory Receiving

Disposal of Property

Process by which one disposes of excess propertyHave approved proceduresMust screen in-houseReport excessMaintain while in storageDispose of as instructedAdjust records

Reutilization

Normally ends up in a transfer of asset to another organization outside of your company or to another contract within your company

Property Management 101Universities - Agreements

• Research Grants• Instrumentation

Grants• Contracts• Coop. Agreements• Donations/Gifts• Loans

• RPAs• Fellowships• Bailments• Clinical Trials• “Evaluation”


• Grants – Predominant Type• Contracts – More Complex to Manage• Coop Agree. – Similar to Grants• Instrumentation – Large Asset

Acquisition, shared funding• Donations – Gifts, Potential Tax Benefits


• Donations – Gifts, Potential Tax Benefits• RPAs – Use of Facility by external users• Fellowships – Internal/External;

awarded to student• Clinical Trials – May involve Human

Subjects• Evaluation – Prototype testing

Property Management 101Universities - Grants

• Title to contractor-acquired equipment usually vests with University at time of acquisition

• May have “exempt” property; no further obligation after title granted to university

• GFP treated same as GFP on a contract

Property Management 101Universities

Shared Instrumentation Grants

• Provides a cost-effective mechanism for groups of NIH-supported investigators to obtain commercially-available equipment that costs more than $100,000.

• Instruments in this price range are typically too expensive to be obtained through a research project grant. The maximum SIG award is $600,000.

Property Management 101Universities

Shared Instrumentation Grants

• These grants cover the direct costs of the instruments; the grantee institution must meet costs for maintenance, service contracts, and technical support.

• Awards are for one year only and are not renewable.

Property Management 101Universities - Contracts

• Less frequent; challenging to manage• For procurement of goods or services

that directly benefit the USG• Property managed IAW the FAR clauses

– Will affect key issues such as title, use and reporting of property

Property Management 101Universities – Coop. Agreements

• Similar to grants, managed per OMB Circulars• Substantial technical involvement is

anticipated between the awarding agency and the recipient during the period of performance

• Title to equipment usually vests with university at time of acquisition; however this is negotiable within each agreement

Property Management 101Universities - RPAs

• A form of sponsored project • Personnel, academic facilities, and/or

laboratory equipment are employed on behalf of parties not otherwise affiliated with the University as faculty, staff, or students.

• Faculty involvement vary• Project requirements may be established in

detail by the sponsor.

Property Management 101Universities - RPAs

• A RPA is different in that a significant portion of the responsibility for the intellectual direction, interpretation, and/or outcome of the work rests with the outside user.

Property Management 101Universities - Title

• Eligible or Qualified Recipients• CAP title may vest in University at

time of acquisition-- With or without further obligation

• Title dependent on type of agreement and source of funding

Property Management 101Universities - Utilization

• Broader ability to use• Priority to acquiring agreement• “Stepdown” for priotizing• Tracking dependent on

organization• Idle should be excessed

Property Management 101Universities – Inventory

• Biennial per OMB• More often per agreement or policy• May vary depending on type of award

Property Management 101Universities - Disposition

• Have method to identify idle status• Preferably single-stream• GP per Contracting Officer approval• May require remuneration for value of

remaining useful life

Property Management 101

Contact Information

Skip Adolph, CPPM [email protected]

Ivonne Bachar, CPPM [email protected]

Rick Price, [email protected]

mailto:[email protected]



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