IND 105 LESSON 6 Contractor Property Management Procedures TLO 6- - - PowerPoint PPT Presentation

Contractor Property Management Procedures

IND 105 LESSON 6

Contractor Property Management Procedures

TLO 6- Given the requirement to review a Contractors written property management procedure, analyze procedures to determine acceptability based on the required outcomes and processes identified in FAR 52.245-1(f)(1).

• 1. Recognize the purpose of contractor written property management

procedures.

• 2. Recognize the essential elements that should be addressed in the

contractor’s written procedures for each outcome and process.

• 3. Identify outcomes and processes contractors are required to establish

under FAR 52.245-1(f)(1).

2

PMS Procedures

ELO 1

What is a Policy?

• Guiding principles used to set direction within an organization.
• Usually associated with the overall mission of an organization.
• Used as mini-mission statement(s) to provide

direction/purpose/scope for the procedure content. Contains:

• The target user,
• A stated purpose, and
• Some type of effectiveness measure to communicate how

users know the procedure is working.

3

PMS Procedures

ELO 1

What is a Procedure?

• A document identifying a specific way of accomplishing

something.

• Designed as a series of steps to be followed
• Consistent and repetitive approach to accomplish an end

result.

• A plan of action used to guide desired outcomes
• A fundamental instruction to help make consistent decisions.

4

PMS Procedures

ELO 1

What are desk instructions (a.k.a. desk procedure)?

• An instruction that provides detailed directions on how to

perform a task.

Are they auditable?

• Yes, any published process provided to or created by an

employee and approved by management to perform a requirement is auditable.

5

PMS Procedures

ELO 1

What is a System?

• Refers to the set of procedures, documents, software

programs, forms, etc., interconnected and organized to accomplish a higher-level objective.

6

PMS Procedures

ELO 1

What are internal controls?

• The methodologies implemented for measuring the

effectiveness and efficiency of an organization’s processes for compliance with laws, regulations and policies.

• Internal controls are important for improving operational

effectiveness by identifying weaknesses in the systems allowing for proactive process improvement.

7

PMS Procedures

ELO 1

Why does the Government require procedures?

• Lessens the risk of Loss
• Increases the reliability of process execution
• Enables the effective and efficient performance of contract

performance

• Empowers contractor employees to successfully control, use,

preservation, protection, repair and maintain Government property

• Provides a means to proactively identify system risks
• Reduces Cost and Costly Mistakes

8

PMS Procedures

TLO 1

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Aligns Expectations & Objectives Consistency Reliability Lowers Risk Reduces Cost

What series of objectives do effective procedures accomplish for organizations?

PMS Procedures

ELO 1

What purposes do well written procedures serve?

• Procedures align Government expectations and objectives

with contractor performance to provide consistent and reliable processes to achieve outcomes successfully

• Provides employees with clear direction for meeting contract

requirements

• Enables better decisions for exceptions in process
• Defines individual/team responsibilities saving time and

resources

10

PMS Procedures

ELO 1

What purposes do well written procedures serve (cont.)?

• Allows for managing processes by exception rather than trial

and error

• Means to measure and control success and prevent risk
• Allows employees to perform at their full potential

11

PMS Procedures

ELO 1

What are the risks of not having adequate procedures?

• Opens performance to individual interpretation
• Lessons the importance of process requirements.
• Inhibits continual process improvement.
• Hinders the ability to identify the root cause of a deficiency.
• Prevents the efficiency and effectiveness of successful
• utcomes.
• Increases overall contract costs due to inefficiencies,

disconnected resources, redundancy, outdated systems, incomplete process execution, etc.

12

PMS Procedures

ELO 1

What is the expectation for establishing procedures?

• Contractors are expected to establish procedures prior to

acquiring Government property.

• Contractor written procedures should provide a clear,

transparent, “how-to” processes for all applicable outcomes.

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Property Plans submitted to the Contracting Officer during pre-award are not the same as a property procedure.

PMS Procedures

ELO 1

What is the expectation for the contractor to maintain procedures?

• Review and maintain processes as conditions warrant.
• Examples of common events that generate maintenance

actions on procedures are;

– established periodic reviews, – results of an audit, – regulatory changes, – change in scope of work, – changes in management, etc.

14

PMS Procedures

ELO 1

What does it mean to be efficient? What does it mean to be effective?

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Essential Elements of a PMS ELO2

Content structure of a procedure (example)

• Purpose/Objectives
• Scope (roles/business area

affected)

• Effective Date
• Revision Date
• Policy
• Definitions
• Timelines
• Instruction Details
• Responsibilities
• Required Forms
• References (e.g., VCSs,
• ther supplementary

instruction, etc.)

16

Essential Elements of a PMS ELO2

How do VCSs, ILPs, and CCPs affect a PMS?

• Provides a standardized practice that can provide an

increased level of benefit to a process

• Cannot be used as written, must be tailored to contractors

unique performance requirements

Application of VCSs, ILPs, and CCPs

• May be used in whole or in part
• Document reference alone within a procedure is not okay
• Needs to provide a measureable benefit

17

Evaluating Contractor’s Procedures ELO 2 What initiates a procedure review?

• New contractor
• Contractor acquiring Government property for the first time
• Contractor procedure updates
• Property Management System Audit
• Occurrence or identification of a Non-Compliance
• Property Loss Investigation
• New performance requirements

18

Evaluating Contractor’s Procedures ELO 2

You are handed a set of contractor procedures. Where do you start? What do you know what to look for? How do you know they are adequate? First we start with the FAR, DFARS, and Contract

• Requirements. What applies to the contractor?

Now… what do you look for?

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Evaluating Contractor’s Procedures ELO 2

It isn’t enough for contractors procedure so simply identify a requirement. Who are procedures written for? In order for processes to be executed effectively and efficiently; procedures must be clear, understandable and enable consistent performance. As auditors, how can you tell?

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Property Management System ELO 3

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

21

FAR 52.245-1 (f)(1)

PROPERTY MANAGEMENT OUTCOMES

1.

Acquisition of Property 2. Receipt of GP (including Identification) 3. Records of GP 4. Physical Inventory 5. Subcontract Control 6. Reports 7. Relief of Stewardship Responsibility and Liability 8. Utilizing GP (including Consumption, Movement, Storage, Identification of excess) 9. Maintenance 10. Property Closeout (Disposition of Property)

22

Property Life Cycle

FAR PMS REQUIREMENTS ELO 3

FAR 52.245-1 (f)(1)

Acquisition

ELO3

GP = GFP + CAP GP

Transferred

(credit/debit)

In-House Fabrication Acquired

(from Vendor/Sub)

GFP CAP

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Issued

(from Stock/Storeroom)

Pushed Pulled Transferred to

(via contract mod)

USG Leased

FAR 52.245-1 (f)(1)

Acquisition ELO 3

Key Things to Remember

• The Government specifies when it has title

to CAP via the contract and the GP Clause

• Pushed - Government activities may

DIRECT SHIP GFP to contractors with NO ACTIONS on the part of the Contractor

• Pulled - Contractor requisitions from GFP

Government supply sources when required for contract performance

• All acquisitions must be supported by a

valid need or requirement

24

FAR 52.245-1 (f)(1)

Examples of Procedure Content

• Different types of ordering practices
• How will they identify Special Contract Requirements
• Identifies what is considered authorization to acquire
• Statement of Work
• Contract Mods (Transfers)
• MILSTRIP process

25

Acquisition

ELO3

(ii) Receipt of GP (including Identification) The Contractor shall:

• 1. Receive Government property
• 2. Document the receipt of Government property
• 3. Record the information necessary to meet the

record requirements of paragraph 52.245-1 (f)(1)(iii)(A)(1) through (5)

• 4. Manage any discrepancies incident to shipment

26

Receipt

ELO3

FAR 52.245-1 (f)(1)

Receipt ELO 3

(ii) Receipt of GP (including Identification cont.)

The Contractor shall:

• 5. Identify as Government owned in a manner

appropriate to the type of property

• 6. Notify the Property Administrator of any

discrepancies incident to shipment for GFP in accordance with 52.245-1 (f)(1)(ii)(A) (Includes vendors and suppliers)

27

FAR 52.245-1 (f)(1)

Examples of Procedure Content

• Process for Receiving
• Timelines
• Reconciliation of Packaging Slips
• Government Identification Tags
• IUID Markings
• Process for Discrepancies/Incorrect Shipments
• Process for Damaged Shipments
• Process for Staging items and Storage

28

Receipt ELO 3

Records

ELO 3

(iii) Records of Government Property The Contractor Shall:

• 1. The Contractor shall create records of all Government property

accountable to the contract including Government-Furnished and Contractor-Acquired property.

• 2. The Contractor shall maintain records of all Government

property accountable to the contract including Government- furnished and Contractor-acquired property.

• 3. Property records shall enable a complete record of all

transactions.

• 4. Property records shall enable a current record of all

transactions.

29

FAR 52.245-1 (f)(1)

(iii) Records of Government Property

The Contractor Shall:

• 5. Property records shall enable an auditable record of all

transactions

• 6. Unless otherwise approved by the Property Administrator,

Government property records shall contain the following: (Data requirements 1-12)

• 7. Maintains the use of a Receipt and Issue system that is

approved by the Property Administrator (Government Material)

*Two additional requirements under section (g) 52.245-1 (g)(2) Records of Government property shall be readily available to authorized Government personnel. Records of Government property shall be appropriately safeguarded.

30

Records

ELO 3

FAR 52.245-1 (f)(1)

Examples of Procedure Content

• Official Records System(s)
• Asset Data Base
• Material Management System Records
• Purchasing System
• Subcontractor/Supply Chain
• Receiving System

31

Records

ELO 3

Physical Inventory ELO 3

(iv) Physical Inventory The Contractor shall:

• 1. Periodically perform physical inventory
• 2. Record physical inventory results
• 3. Disclose physical inventory results and
• 4. A final physical inventory shall be performed upon contract

completion or termination (May only be waived by Property Administrator)

32

FAR 52.245-1 (f)(1)

Examples of Procedure Content

• Process for Inventory
• Timelines
• How personnel are selected to perform Inventory
• Different types of inventory (material, basic,

closeout)

• Documents used to conduct inventory
• Reporting of inventory results

33

Physical Inventory ELO 3

(v) Subcontract Control

The Contractor shall:

1. Award subcontracts that clearly identify items to be provided 2. Award subcontracts that clearly identify the extent of any restrictions

• r limitations on their use

3. Ensure appropriate flow down of contract terms and conditions (e.g., extent of liability for loss of Government property)

For example: The Prime Contractor must flow down the full risk of loss to the subcontractor when FAR 52.245-1 (Alt I) is in the contract.

4. Assure its subcontracts are properly administered 5. Assure reviews are periodically performed to determine the adequacy

• f the subcontractor's property management system

34

*One additional requirement under section (j) Require its Subcontractors to submit inventory disposal schedules to the Contractor in accordance with the requirements of paragraph (j)(3) of this clause. (j)(9)

Subcontract Control ELO 3

FAR 52.245-1 (f)(1)

Examples of Procedure Content

• Process for issuing GP to Subcontractors
• Process for Flowdown of Terms and Conditions
• PMS Reviews
• Types and frequency of PMSA’s performed by the Prime
• Process for Inventory
• Management of listings of GP at Subcontractor
• Process(s) for authorizing Subs to acquire GP
• Process for follow-up on property issues with Sub

35

Subcontract Control

ELO 3

(vi) Reports The Contractor shall have a process to create and provide:

• 1. Reports of discrepancies
• 2. Reports of loss of Government property
• 3. Reports of physical inventory results
• 4. Reports of audits
• 5. Corrective actions
• 6. Property related reports as directed by the Contracting Officer

36

Reports ELO 3

FAR 52.245-1 (f)(1)

Examples of Procedure Content

• Records process for

– Physical Inventory – Life cycle processes – Audits – Corrective Actions – Loss, etc.

• H Clause Requirements
• CDRLs (Contract Data Requirements List)
• SOW (Statement of Work)

37

Reports ELO 3

(vii) Relief of Stewardship Responsibility and Liability (8 Total)

The Contractor shall have a process to:

• 1. Enable the prompt recognition of loss of Government property

including losses that occur at subcontractor or alternate site locations

• 2. Promptly investigate loss of Government property
• 3. Enable the prompt disclosure of loss of Government property

including losses that occur at subcontractor or alternate site locations

• 4. Enable the prompt reporting of loss of Government property including

losses that occur at subcontractor or alternate site locations

38

Relief of Stewardship Responsibility and Liability ELO 3

FAR 52.245-1 (f)(1)

(vii) Relief of Stewardship Responsibility and Liability

• 5. Process shall include the corrective actions necessary to

prevent recurrence

• 6. Shall investigate and report to the Government all incidents
• f property loss as soon as the facts are known
• 7. Report shall, at a minimum, contain the following: (data

elements 1-12)

• 8. (c) Shall establish and maintain Government accounting

source data, as may be required by this contract, particularly in the area of loss of Government property. FAR 52.245- 1(f)(2)

39

Relief of Stewardship Responsibility and Liability ELO 3

FAR 52.245-1 (f)(1)

Examples of Procedure Content

• Dates/process timelines are defined for each

requirement

• Process for loss investigations
• Incident reports
• Process for subcontractor loss
• Plant clearance notification (when applicable)

40

Relief of Stewardship Responsibility and Liability ELO 3

(viii) Utilizing GP (including Consumption, Movement, & Storage) The Contractor shall:

1. Utilize Government Property only as authorized under this contract 2. Consume Government Property only as authorized under this contract 3. Move, Government Property only as authorized under this contract 4. Store Government Property only as authorized under this contract 5. Promptly disclose and report Government property in its possession that is excess to contract performance 6. Not commingle Government material with material not owned by the Government (Unless otherwise authorized in this contract or by the Property Administrator)

41

Utilization ELO 3

FAR 52.245-1 (f)(1)

Examples of Utilization Procedure Content

• Process for determining contractual authority (do they

have authority to use?)

• How do their people know if they have authorization to

use?

42

Utilization ELO 3

Examples of Consumption Procedure Content

• Contract requirements
• Receipt and issue documents
• Bills of material
• Work/job orders
• Inventory listings
• Return to stock

43

Consumption ELO 3

Examples of Movement Procedure Content

• Movement documents (within location)
• Location change documents (external location)
• Custodial transfer documents
• Types of authorized moment

44

Movement ELO 3

Examples of Storage Procedure Content

• Types of storage
• Physical security and protection
• Access authorizations
• Authorization requests to commingle
• Housekeeping logs

45

Storage ELO 3

(ix) Maintenance

The Contractor

• 1. Shall properly maintain Government property
• 2. Maintenance program shall enable the identification of normal and routine

preventative maintenance and repair

• 3. Maintenance program shall enable the disclosure of normal and routine

preventative maintenance and repair

• 4. Maintenance program shall enable the performance of normal and routine

preventative maintenance and repair

• 5. Shall disclose and report to the Property Administrator the need for

replacement and/or capital rehabilitation

46

Maintenance ELO 3

FAR 52.245-1 (f)(1)

Examples of Procedure Content

• Maintenance records

– Preventive, corrective, capital type

• Maintenance schedules
• Requests for new/replacement tooling
• Technical manuals
• Calibration records
• Process for vendor maintenance service

47

Maintenance ELO 3

(x) Property Closeout (Disposition)

The Contractor shall:

• 1. Promptly perform contract property closeout
• 2. Promptly report to the Property Administrator contract property closeout
• 3. Promptly perform investigations and secure closure of all loss of

Government property cases

• 4. Promptly perform and report physical inventories on all property upon

termination or completion of this contract

• 5. Promptly perform the disposition of items at the time they are determined

to be excess to contractual needs

• 6. Establish and maintain Government accounting source data, as may be

required by this contract, particularly in the areas of disposition of material and equipment (f)(2)

48

Property Closeout ELO 3

FAR 52.245-1 (f)(1)

Examples of Procedure Content

• Notifications of property closeout
• Subcontractor GP closeout
• Final Inventories
• Material closeout
• Forms required for property closeout
• Scrap
• Prescreening process
• SF 1423, SF 1428, PCARRS

49

Property Closeout ELO 3

Class Discussion ELO 3

What comes after the review?

– Were there deficiencies? – How do you proceed? – When do you write a Corrective Action Request? – Do you proceed with an audit?

50

Contractor Property Management Procedures

TLO 6- Given the requirement to review a Contractors written property management procedure, analyze procedures to determine acceptability based on the required outcomes and processes identified in FAR 52.245-1(f)(1).

• 1. Recognize the purpose of contractor written property management

procedures.

• 2. Recognize the essential elements that should be addressed in the

contractor’s written procedures for each outcome and process.

• 3. Identify outcomes and processes contractors are required to establish

under FAR 52.245-1(f)(1).

51