Back to Basics for Property Management and Acquisition

Presenter By:Beth Green, CPPM, CFConsultant

Tara S. Miller, PMP, CPPM, CF

Property Management

FAR 52-245-1 (b) Property Management (April 2012)

(1) The Contractor shall have a system of internal controls to manage (control, use, preserve, protect, repair and maintain) Government property in its possession. The system shall be adequate to satisfy the requirements of this clause. In doing so, the Contractor shall initiate and maintain the processes, systems, procedures, records, and methodologies necessary for effective and efficient control of Government property.

Property Management

FAR 52-245-1 (f) Contractor plans and systems (June 2007) (1) Contractors shall establish and implement property management plans, systems and procedures at the contract, program, site or entity level to enable the following outcomes:

• OutcomesAcquisition

Receipt (Identification)Records

Physical Inventory Subcontract Control

ReportsRelief of Stewardship

Utilizing (Use, Consume, Move, and Store)Maintenance

Property Closeout

• Besides the 10 outcomes we just talked about there are requirements addressed in FAR Clause 52.245-1Source documentsProceduresSelf-assessmentReference documents

Property Management Plan

• Benefits that can be gained from an Effective Property Management System Provides an effective management

tool Maximizes return on investment Ensures effective stewardship Facilitates compliance Increases reutilization Increased cooperation and collaboration

•What is a Property Management Plan? A calculated look at how best to

manage the government’s property based on the best value for the: Program Site (Location) Entity (Group) level

•What Should the plan provide? Performance outcomes (Acquisition

thru Contract Closeout) Using primarily VCS and/or ILPs

Property Management Plan

•The property plan should address four major topics besides the outcomes should be rather simple in nature (don’t complicate things): An Introduction The Scope The Purpose and Process Ownership

Property Management Plan

•Developing the Property Plan Preparing your procedures (different

than a plan) Assess the 10 Outcomes and how the

standards may assist Tackling the added requirements

outlined in the property clause 52.245-1 •E2279-03 Establishing the Guiding Principles

of Property Management•E2135-01 Terminology for Property and Asset

Management

Property Management Plan

•Yes procedures are part of the plan•They should address policies on how you are going to manage the Government property in your possession. (not necessarily desk top guides)•When developing your procedures The FAR guiding principles The meaning of accountability, and Applying the word stewardship

Procedures

•Compliance with Regulations Requirements of the Contract Policies (Government and

Company) Procedures (Property) Operational guidelines

(Safety and Environmental)

Property Management Plan

FAR 52-245-1 (b) Property Management (April 2012)

(1) (continued) The Contractor shall disclose any significant changes to its property management system to the Property Administrator prior to implementation of the changes.

FAR 52-245-1 (b) Property Management (April 2012)

(1) (continued) The Contractor May employ customary commercial practices, voluntary consensus standards, or industry-leading practices and standards that provide effective and efficient Government property management that are necessary and appropriate for performance of this contract (except where inconsistent with law or regulation).

•National Technology Transfer and Advancement Act of 1995 Gives the meaning of VCS.•Means common and repeated use of rules, conditions, guidelines or characteristics for products, or related processes and production methods and related management systems.•VCS is developed or adopted by domestic and international voluntary consensus standard making bodies

Voluntary Consensus Standards (VCS)

• ASTM International• E53 Committee Summary of Active

Standards

ASTM International

•Based on empirical (repeatable) research, evidence and literature pertaining to that business practice. In order for the process to become an ILP, it should be widely used.•Generally, there should be supporting historical data from an accepted source, e.g., trade publications, literature, etc. to support the process as being repeatable, efficient, measurable, and verifiable.

Industry Leading Practices (ILP)

FAR 52-245-1 (b) Property Management (April 2012)(2) The Contractor’s responsibility extends from the initial acquisition and receipt of property, through stewardship, custody, and use until formally relieved of responsibility by authorized means, including delivery, consumption, expending, sale (as surplus property) or other disposition, or via a completed investigation, evaluation, and final determination for lost property.

Property Management

•Ownership, Accountability, and Responsibility “Ownership” is having legal or rightful

title to property. “Accountability” (that is, to be

accountable) means to possess and have use of the property of another with delegated duties and responsibilities, subject to penalty in case of default.

“Responsibility” (that is, to be responsible) means to be answerable for a trust or obligation.

Property Management

FAR 52.245-1 (b) Property Management (April 2012)(3) The contractor shall include the requirements of this clause in all subcontracts under which Government property is acquired or furnished for subcontract performance.

Property Management

FAR 52.245-1 (b) Property Management (April 2012)(4) The Contractor shall establish and maintain procedures necessary to assess its property management system effectiveness and shall perform periodic internal reviews and surveillances, self assessments, or audits. Significant findings and/or results of such reviews and audits pertaining to Government property shall be made available to the Property Administrator.

Property Management

Acquisition of

Property

FAR 52.245-1 (a) Definitions (June 2007)As used in this clause— “Unit acquisition cost” means—(1) For Government-furnished property, the dollar value assigned by the Government and identified in the contract; and(2) For contractor-acquired property, the cost derived from the contractor’s records that reflect consistently applied generally accepted accounting principles.

Acquisition

FAR 52-245-1 (f) (1) Contractor Plans and Systems (August 2010) (i) Acquisition of property. The Contractor shall document that all property was acquired consistent with its engineering, production planning, and property control operations.

Acquisition

• Acquisition of Government Property Shall be documented In accordance with contract

requirements Approval process

E2495-13 Standard Practice for Prioritizing Asset Resources for Acquisition, Utilization, and Disposition

Acquisition

•Acquisition of Property (Outcome #1)•Acquiring (to get or to gain)•Acquisition begins when needs have

been defined.•Reutilization

Acquiring excess, surplus or on-hand assets that are idle

The preferred method of acquisition and supply for any organization and is considered by the federal government to always be the first source of supply

Acquisition

•Acquisition of Property (Outcome #1) (continued)

Purchase (new or used) The acquiring of property or services

by contract with appropriated funds through purchase or lease, whether the property or services are already in existence or must be created, developed, demonstrated, and evaluated

The approval process begins with obtaining approval to spend budgeted organization funds

Acquisition

•Acquisition of Property (Outcome #1) (continued) Lease/Rent Fabricate (to make or build in-house)

The most important considerations for in-house fabrication are the capacity and expertise of organization staff and the facilities and tools required

Loans Attempt to establish formal loan

agreements Transfer

From another contractor approved by the Government

Acquisition

FAR 45.101 Definitions (June 2007)• “Material” means property that

may be consumed or expended during the performance of a contract, component parts of a higher assembly, or items that lose their individual identity through incorporation into an end-item. Material does not include equipment, special tooling, and special test equipment or real property.

Acquisition

FAR 52.245-1 (a) Definitions (August 2010)• Equipment – Means a tangible item that

is functionally complete for its intended purpose, durable, nonexpendable, and needed for the performance of a contract. Equipment is not intended for sale, and does not ordinarily lose its identity or become a component part of another article when put into use. Equipment does not include material, real property, special test equipment or special tooling.

Acquisition

ASTM Standard E-2135Provides a Definition (higher level)

Equipment is non-expendable, tangible moveable property needed for the performance of a task or useful in effectingan obligation

Acquisition

FAR 45.301 DefinitionsAgency Peculiar Property:• Means Government-owned personal

property that is peculiar to the mission of one agency (e.g., military or space property). It excludes Government material, special test equipment, special tooling, and facilities.

FAR 45.310 (b) Providing agency-peculiar property • Direction to the Government

New FAR – does not discuss APP

Acquisition

FAR 2.101 Definitions (June 2007)Special Test Equipment•Either single or multipurpose integrated

test units engineered, designed, fabricated, or modified to accomplish special purpose testing in performing a contract. It consists of items or assemblies of equipment including foundations and similar improvements necessary for installing special test equipment, and standard or general purpose items

Acquisition

FAR 2.101 Definitions (June 2007)Special Test Equipment (continued)•or components that are interconnected

and interdependent so as to become a new functional entity for special testing purposes. Special test equipment does not include material, special tooling, real property, and equipment items used for general testing purposes or property that with relatively minor expense can be made suitable for general purpose use.

Acquisition

FAR 2.101 Definitions (August 2010) Special Tooling •means jigs, dies, fixtures, molds, patterns, taps,

gauges, and all components of these items including foundations and similar improvements necessary for installing special tooling equipment, and which are of such a specialized nature that without substantial modification or alteration their use is limited to the development or production of particular supplies or parts thereof or to the performance of particular services. Special tooling does not include material, special test equipment, real property, equipment, machine tools, or similar capital items.

Acquisition

• Our goal was to provide a basic understanding of Government Property Management and the requirements for establishing a Property Management System and Plan.

• We also presented one of the first steps in having Government Property – Acquisition. We reviewed the different types of Acquisition and what is necessary to pass the Acquisition Outcome in an audit.

Rosanne “Beth” Green, CPPM, CFbethivangreen@cfl.rr.com

Tara S. Miller, PMP, CPPM, CF tara.s.miller@nasa.gov

Conclusion