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Leaders in Asset Management
How to Conduct a Supplier Risk Assessment
Pat Jacklets, CPPM CF
Pam McFarland, CPPM CF
“Risky Business”
Leaders in Asset Management
Objectives
• Share ILP for Supplier Risk Assessments
• Develop the risk assessment questions
• Place values on the risk assessment questions
• Complete the risk assessment tool
• Identify limited and full surveys
• Prepare Schedule
Leaders in Asset Management
What Do You Know?Who your suppliers are?
Where they are located?Are they common to other sites/entities in your company?
The number of line items and the dollar value of that property?
What contracts are involved?
What agencies? DoD? NASA? DHS? DOT?
Any delegations?
History of Supplier:Responsiveness? Losses? Inventory Results?
Leaders in Asset Management
What is the Requirement?
FAR 52.245(f)(i)(v) Subcontractor control. (A) The Contractor shall award subcontracts that clearly identify assets to be provided and shall ensure appropriate flow down of contract terms and conditions (e.g., extent of liability for loss, damage, destruction or theft of Government property). (B) The Contractor shall assure its subcontracts are properly administered and reviews are periodically performed to determine the adequacy of the subcontractor’s property management system.
What Risks Do You Want to Address?
Leaders in Asset Management
Develop the Risk Assessment Questions•Does the subcontractor have documented evidence of an adequate Government Property System? If so, has the system received an adequate rating within the last 2 years?
•Is the supplier responsive to requests for reports, and are the reports deemed accurate?
•Is the value of government property reported on the previous years report in excess of $500,000 and 50 items?
•Has the subcontractor subcontracted with a lower tier supplier and provided assigned government-owned property? If so, is the subcontractor ensuring the lower tier subcontractor is complying with contractual requirements?
•During the previous year, has the subcontractor reported ANY Losses?
•Did the subcontractor respond to a request for a limited desk survey?
•Is the supplier reporting excess property in a timely manner? Are the disposition instructions completed in a timely manner?
Leaders in Asset Management
How Do I Assign Values?
Determine which questions are the riskiest!
For instance: If supplier does not have an adequate Property Management System or if they have never had a Government contract, they would represent a high risk. Assign the highest points to that situation
Leaders in Asset Management
Assign Points to Risk Assessment Questions
•Does the subcontractor have documented evidence of an adequate Government Property System? If so, has the system received an adequate rating within the last 2 years?
(1) Yes (2)Yes/CA (3) No
•Is the supplier responsive to requests for reports, and are the reports deemed accurate?(1) Yes (2)Yes/CA (3) No
•Is the value of government property reported on the previous years report in excess of $500,000 and 50 items?
(2) Yes (0) No
•Has the subcontractor subcontracted with a lower tier supplier and provided assigned government-owned property? If so, is the subcontractor ensuring the lower tier subk is complying with contractual requirements?
(1) Yes/Yes (3)Yes/No (0) No (2) unknown
Leaders in Asset Management
Assign Points to Risk Assessment Questions
•During the previous year, has the subcontractor reported ANY losses?Assign 0, or 1 point (non significant); 3 points fairly significant; 5 points alarming problem
•Did the subcontractor respond to a request for a limited desk survey?(0) Yes (1) Yes with "Go Backs" (3) No
•Is the supplier reporting excess property in a timely manner? Are the disposition instructions completed in a timely manner?
(0) Yes/Yes (1)Yes/No (3) No/No
Leaders in Asset Management
EXAMPLE of DoD Risk Assessment QuestionsWeight Risk Criterion Definition
Positive Response
Negative Response
6 Adequate Gov't Property Sys.
Does the subcontractor have documented evidence of an adequate Government Property System? If so, has the system received an adequate rating within the last 2 years?
0 6
5 UID Compliant Is the subcontractor UID compliant, if applicable? 0 5
4 Value of Government Property
Is the value of government property reported on the previous years financial report in excess of $1,000,000?
4 0
3 Lower Tier Subcontractors
Has the subcontractor subcontracted with a lower tier subcontractor and provided assigned government-owned property? If so, is the subcontractor ensuring the lower tier subk is complying with contractual requirements?
1 3
2 Loss, Damage, Destroyed or Theft Reports
During the previous year, has the subk reported ANY LDDT? (Assign 1 point per report for possible total of 5)
0 1-5
1 Desk Surveillance Assessment Responses
Did the subcontractor respond to a request for a limited desk survey? 0 1
Leaders in Asset Management
Weight Risk Criterion DefinitionPositive
ResponseNegative Response
Understanding the Columns
Weight: The factor applied to a risk criterion – the higher the number, the more important the risk
Risk Criterion/Definition: The risks you have identified and what it means
Positive Response: Points assigned for a positive response
Negative Response: Points assigned for a negative response
Leaders in Asset Management
EXAMPLE of NASA Risk Assessment QuestionsWeight Risk Criterion Definition
Positive Response
Negative Response
6 Adequate Gov't Property Sys.Does the subcontractor have documented evidence of an adequate Government Property System? If so, has the system received an adequate rating within the last 2 years?
0 6
5 NFS 1845.7101-3 Compliance
Is the subcontractor reflecting unit acquisition costs to include all costs incurred to bring the property to a form and location suitable for its intended use? Adding fee?
0 5
4 Value of Government PropertyIs the value of government property reported on the previous years financial report in excess of $1,000,000?
4 0
3 Lower Tier Subcontractors
Has the subcontractor subcontracted with a lower tier subcontractor and provided assigned government-owned property? If so, is the subcontractor ensuring the lower tier subk is complying with contractual requirements?
1 3
2 Loss, Damage, Destroyed or Theft Reports
During the previous year, has the subk reported ANY LDDT? (Assign 1 point per report for possible total of 5)
0 1-5
1 Desk Surveillance Assessment Responses
Did the subcontractor respond to a request for a limited desk survey? 0 1
Leaders in Asset Management
Prepare Subcontractor List
Owning Div
Proposed Auditors
Del PAPO/ POSupplier
CodeSupplier Name Address City State Zip Total L/I TOTAL $
Division A 2734382 459448Company A PO Box 123 Any City KY 40066 2 $12,015
Division B 869942Company B PO Box 124 Any City NY 11757 21 $11,930
Division B 7600002798 90008074Company C PO Box 125 Any City NY 11552 651 $330,739
Division A 726552 90011295Company E PO Box 126 Any City CA 95838-1701 55 $1,197,445
Division A 477035 90011316Company F PO Box 127 Any City FL 33777 79 $681,418
Division A D 74243 90024430Company G PO Box 128 Any City NC 27896 83 $512,818
Division A 90056619Company H PO Box 129 Any City CA 91016 6 $24,989
Division B 74190, 288077 90021975Company I PO Box 130 Any City CA 90245-3507 1622 $94,617,665
Division C 7600003819 90022028Company J PO Box 131 Any City CA 90278 14 $147,794
Division A D7600003315, 7600003118 90013817Company K PO Box 132 Any City CO 80301 1886 $40,080,279
Division C 2699674 90024605Company L PO Box 133 Any City NY 11716 744 $257,545
Division A D 74199 90027816Company M PO Box 134 Any City CO 80127-1762 95 $3,318,052
Division C D7600003129, 7600003306 90027944Company N PO Box 135 Any City CA 90245 1443 $25,700,088
Division C D7600002744, 7600004432 90027944Company O PO Box 136 Any City CO 80011 1536 $37,787,527
Leaders in Asset Management
Supplier Risk Assessment
Sample Supplier Risk Assessment
Leaders in Asset Management
Metrics
Subcontract Management Metrics
Leaders in Asset Management
ILPs for Subcontract Property Control
Leaders in Asset Management
How Do I Access the AIA Website?
http://www.aia-aerospace.org/resource_center/resources/property_management_etools/
Leaders in Asset Management
QUESTIONS?