**BONNEVILLE PURCHASING INSTRUCTIONS**

APPENDIX 19-A

PROPERTY MANAGEMENT PROCEDURES\
FOR CONTRACTORS

# TABLE Of CONTENTS

1.1 GENERAL. [2](#general.)

1.2 DEFINITIONS. [2](#definitions.)

1.3 PROPERTY CLAUSES. [3](#property-clauses.)

1.4 FIRM FIXED PRICE /COST REIMBURSEMENT CONTRACTS.
[3](#firm-fixed-price-cost-reimbursement-contracts.)

1.5 PROVIDING MATERIALS. [4](#providing-materials.)

1.6 RESPONSIBILITIES AND LIABILITIES FOR BPA PROPERTY.
[4](#responsibilities-and-liabilities-for-bpa-property.)

1.7 PROPERTY IN POSSESSION OF SUBCONTRACTORS.
[5](#property-in-possession-of-subcontractors.)

1.8 RECORDS. [5](#records.)

1.9 RECEIPT OF BPA-FURNISHED AND CONTRACTOR-ACQUIRED PROPERTY.
[7](#receipt-of-bpa-furnished-and-contractor-acquired-property.)

1.10 IDENTIFICATION. [7](#identification.)

1.11 UTILIZATION. [8](#utilization.)

1.12 PHYSICAL SECURITY, CARE AND MAINTENANCE.
[8](#physical-security-care-and-maintenance.)

1.13 PHYSICAL INVENTORIES. [9](#physical-inventories.)

1.14 DISPOSITION. [9](#disposition.)

### 1.1 GENERAL.

This supplement prescribes procedures to contractors for managing
BPA-furnished and contractor acquired personal property.

### 1.2 DEFINITIONS.

\"BPA-furnished property\" means property in the possession of or
directly acquired by BPA and subsequently made available to the
contractor.

\"BPA property\" means all property and materials owned by, leased to,
or acquired by BPA under the terms of the contract. It includes both
BPA-furnished property and contractor-acquired property as defined in
this section.

\"Capitalized equipment\" means personal property items having a unit
acquisition cost of \$10,000 or more with a useful service life of one
year or more, and generally has a property tracking number assigned and
is carried on the financial ledger as an asset (i.e., not expendable due
to use).

\"Contract Inventory\" means:

\(a\) Any property acquired by and in the possession of a contractor or
subcontractor under a contract for which title is vested in BPA.

\(b\) Any property to which BPA is obligated or has the option to take
title to under any type of contract as a result either of any changes in
the specifications or plans or of the termination of the contract (or
subcontract thereunder), prior to completion of the work; and

\(c\) BPA-furnished property that exceeds the amounts needed to complete
full performance under the entire contract.

\"Contractor-acquired property\" means property acquired or otherwise
provided by the contractor for performance of a contract, to which BPA
has title or the right to take title under the contract terms.

\"Cost-reimbursement contract\" means the contractor is reimbursed for
its costs.

\"Custodial records\" means any document such as requisitions, property
receipts, issue documents, tool checks, stock record books, etc.

\"Excess\" means any property that is no longer used, needed, or
required by BPA.

"Expendable property" means property and material, which when put to
use, are consumed, lose their identity, or become an integral part of
other property.

\"Fixed-price contract\" means that the contractor receives a stated
amount regardless of the costs the contractor incurs.

\"Material\" means property which may be incorporated into or attached
to a deliverable end item or which may be consumed or expended in the
performance of a contract. It includes assemblies, components, parts,
raw and processed materials, and small tools and supplies that may be
consumed in normal use in the performance of a contract.

\"Non-Expendable Equipment\" means property which has continuing
usefulness as a self contained unit, is not consumed in use, and does
not lose its identity when put to use or does not ordinarily become a
component of other equipment or plant. It may or may not be capitalized.

\"Personal Property\" is defined as non-expendable property, complete in
itself, durable, with an expected service life of more than one year,
and which does not loose its identity or become a component part of
another article when put to use.

\"Physical inventory\" means the actual observation and count of the
property to be reconciled with custodial records.

\"Property Administrator\" or Organizational Property Management Office,
provides advice/guidance on BPA\'s property management and control
requirements.

\"Salvage\" means property that, because of its worn, damaged,
deteriorated, incomplete condition or specialized nature, has no
reasonable prospect of use as serviceable property without major
repairs, but which has some value in excess of its scrap value.

\"Sensitive Property\" means personal property, regardless of value,
that is susceptible to being appropriated for personal use or can be
readily converted to cash.

\"Scrap\" means property that has no reasonable value except for the
recovery value of its basic material content.

\"Surplus\" means inventory excess to the contract that is not required
by other Federal agencies.

\"Termination inventory\" means any property purchased, supplied,
manufactured, furnished, or otherwise acquired for the performance of a
contract subsequently terminated and properly allocable to the
terminated portion of the contract.

### 1.3 PROPERTY CLAUSES.

See BPA Property Clauses in the contract.

### 1.4 FIRM FIXED PRICE /COST REIMBURSEMENT CONTRACTS.

Under a fixed price contract BPA shall retain title to all BPA-furnished
property until such times as BPA decides to relinquish or transfer title
through a disposal action such as donation, sale, or abandonment. Under
a cost reimbursement contract, the BPA has title to all property that is
BPA-furnished or contractor acquired as a direct cost of performance
under that contract.

### 1.5 PROVIDING MATERIALS.

Contractors shall ordinarily furnish all material for the performance of
BPA contracts. However, BPA shall provide material to a contractor when
necessary to achieve significant economy, standardization, expedited
production, or when it is otherwise in BPA\'s best interest. Material to
be furnished by BPA under the contract must be set forth in the
solicitation and the contract.

### 1.6 RESPONSIBILITIES AND LIABILITIES FOR BPA PROPERTY.

\(a\) Responsibilities.

\(1\) The contractor is directly responsible and accountable for all BPA
property in its possession or control in accordance with the
requirements of the contract. This includes BPA property in the
possession or control of a subcontractor. The contractor shall establish
and maintain a property system in accordance with the contract to
control, protect, preserve, and maintain all BPA property. This property
control system shall be in writing unless the CO determines such a
document to be unnecessary. The system shall be approved in writing by
the CO.

\(2\) The contractor\'s property control system is subject to review by
BPA as often as circumstances warrant during the contractor\'s
performance, at contract completion or termination, or at any time
thereafter while the contractor is required to retain the contract
records. The contractor shall take necessary action to correct
deficiencies found during any review.

\(3\) The contractor shall designate one individual in writing, who is
not the user of the property, as the primary property contact for the
contract.

\(4\) The contractor shall maintain and make available accurate property
records and shall account for all BPA property until relieved of that
responsibility by the CO.

\(5\) The contractor shall require subcontractors who are provided BPA
property under the prime contract to comply with the provisions of this
paragraph. Procedures for assuring subcontractor compliance shall be
included in the contractor\'s property control system.(6) The contractor
shall promptly report all BPA property in excess of the amounts needed
to complete full performance under the contracts providing it or
authorizing its use.

\(7\) When unrecorded BPA property is found, both the cause of the
discrepancy and actions taken by the contractor to prevent recurrence
shall be determined and reported to the CO.

\(b\) Liabilities.

\(1\) Subject to the terms of the contract and the circumstances
surrounding the particular case, the contractor may be liable for
shortages, loss, damages, or destruction of BPA property. The contractor
may also be liable when the use or consumption of BPA property
unreasonably exceeds the allowances provided for by the contract, the
bill of material, or other appropriate criteria.

\(2\) The contractor shall promptly report to the COTR any shortage,
loss, damage, or destruction of BPA property in its possession or
control, or in the possession or control of any subcontractor, together
with all the facts and circumstances of the case as soon as the facts
become known, or when they are requested by the CO. The liability for
loss, damage, or improper use of BPA property will depend upon all the
circumstances surrounding the particular case and will be determined by
the CO in accordance with the provisions of the contract. The contractor
will furnish all data necessary to substantiate any request for
discharge from responsibility. The contractor shall immediately report
loss that may be due to theft to local police and/or Federal Bureau of
Investigation (FBI) and the COTR.

\(c\) Relief from responsibility. Unless the contract or CO provides
otherwise, the contractor shall be relieved of the responsibility for
BPA property consumed in the performance of the contract.

### 1.7 PROPERTY IN POSSESSION OF SUBCONTRACTORS.

The contractor shall require any of its subcontractors possessing or
controlling BPA property to adequately care for and maintain that
property and ensure that it is utilized only as authorized by the
contract. The contractor\'s approved property control system shall
include procedures to ensure this responsibility. The contractor shall
also hold its subcontractors possessing or controlling BPA property
accountable under the contract to investigate and report all instances
of loss, damage, or destruction of such property.

### 1.8 RECORDS.

\(a\) BPA Property. Property records are the means by which location and
status of property is recorded from acquisition through utilization and
disposal. Separate property records for each contract are desirable, but
a consolidated property record may be maintained if it provides the
required basic information (see paragraph 1.8(a)(6)).

\(1\) The contractor shall establish and maintain adequate property
control records, manual or automated consistent with the requirements of
this section for all BPA property provided under a contract, including
property provided under such contract in the possession or control of a
subcontractor. The records specified in this section are the minimum
required by BPA unless directed otherwise by the CO, when a
subcontractor has an approved property control system for BPA property
provided under its own separate prime contract, the contractor shall
utilize the records created and maintained under that system.

\(2\) Contractor records of BPA property established and maintained
under the terms of the contract are the official property records.
Duplicate official records shall not be furnished to or maintained by
BPA personnel, except when the contract provides for the CO to maintain
BPA\'s official property records when BPA property is furnished to a
contractor.

\(3\) Official property records must identify all BPA property and
provide a complete, current, auditable record of all transactions. The
contractor\'s system of record maintenance shall be sufficient to
adequately monitor BPA property. The contractor\'s system of records
maintenance, as a minimum, shall be equivalent to and maintained in the
same manner as the contractor\'s system for maintaining records of
contractor-owned property, but need not exceed the requirements of this
paragraph. The records shall be safeguarded from tampering or
destruction. Records shall be accessible to authorized BPA personnel at
all reasonable times. All these records, including related
correspondence, shall be made available to BPA or other Government
auditors upon request.

\(4\) The contractor\'s property control system shall be adequate to
locate any item of BPA property within a reasonable period of time.

\(5\) A multi-contract costs and material control system may be
authorized if \--

\(i\) The contractor demonstrates that adoption of the system will
result in savings or improved operations, or that it will otherwise be
in the interest of BPA;

\(ii\) The system is applied to existing BPA contracts only and excludes
materials acquired or costs incurred for non-BPA work or in anticipation
of future BPA work; and

\(iii\) The contractor\'s accounting system is adequate to provide on a
complete and timely basis a clear \"audit trail\" from costs of
materials acquired for each contract to materials used or disposed of on
each contract.

\(6\) Basic information. The contractor\'s property control records
shall provide the following basic information for every item of BPA
property in the contractor\'s possession:

Contract number

Nomenclature or description of item

Quantity received

Quantity issued

Balance on hand

Posting reference and date of transaction

Unit price/acquisition cost

Location

Disposition

\(7\) Custodial Records. Custodial records should be maintained for tool
crib, security equipment, protective clothing and other items issued for
the use of the contractor in the performance of the contract.

\(b\) Capitalized Equipment.

\(1\) The contractor shall maintain individual item records for each
item of equipment having a unit cost of \$10,000 or more. Summary
records may be maintained for equipment costing less than \$10,000 per
unit, except where individual item records are necessary for effective
control, calibration, or maintenance.

\(2\) In addition to the information required in 1.8(a)(6) above for
each item of BPA-owned equipment having a unit cost of \$10,000 or more,
the following information is required:

\(i\) The manufacturer\'s name; model or part number;

\(ii\) Serial number and year built;

\(iii\) Identification number; and

\(iv\) Acquisition and disposition document references and dates.

\(3\) The CO may determine that the information in (2) (ii) and (iii)
above should be recorded in the property records for equipment costing
less than \$10,000, e.g., sensitive and safety equipment.

\(4\) Accessory and auxiliary items that are attached to, part of, or
acquired for use with a specific item of capital equipment shall be
recorded on the record of the associated item of capital equipment. When
accessory and auxiliary items are permanently removed from the basic
equipment, the cost of the basic item shall be appropriately reduced.

\(c\) Materials

\(1\) General. All BPA material furnished to the contractor, as well as
other material to which title has passed to BPA by reason of allocation
from contractor-owned stores or purchase by the contractor for direct
charge to a BPA contract or otherwise, shall be recorded in accordance
with the contractor\'s property control system and the requirements of
this section.

\(2\) Consolidated stock record. When a contractor is provided BPA
material under more than one contract, the CO may authorize a
consolidated record for materials, if the total quantity of any item is
allocated to each contract-by-contract number and each requisition of
material from contractor-owned stores is charged to the contract on
which the material is to be used.

\(3\) Use of receipt and issue documents. The CO may authorize the
contractor to maintain, in lieu of stock records, a file of
appropriately cross-referenced documents evidencing receipt, issue, and
use of BPA-provided material that is issued for immediate consumption
and, as a matter of sound business practice, is not entered in the
inventory records.

\(4\) A multi-contract costs and material control system may be
authorized for the physical identification of BPA material, if the
contractor demonstrates that adoption of the system will result in
savings or improved operations or is otherwise be in the interest of
BPA.

### 1.9 RECEIPT OF BPA-FURNISHED AND CONTRACTOR-ACQUIRED PROPERTY.

\(a\) Receipts. The contractor shall furnish the COTR with written
receipts for all or specified classes of BPA property prior to
reimbursement. If evidence of receipt is required for
contractor-acquired property, the contractor shall provide it before
submitting a request for payment of the property. For BPA-furnished
property, the contractor shall provide the required receipt immediately
upon receipt of the property.

\(1\) Inspection, transfer. All BPA-furnished property shall be
inspected and tested/operated by the contractor at the time of receipt.
Any visible or other external evidence of damage or error in quantity
should be noted on the property transfer document with the signature of
the carrier\'s agent. As soon as possible, the contractor shall furnish
the CO a full report of the damage or quantity error, including extent,
apparent cause, and the estimated costs of repairs. Only that quantity
of property actually received will be recorded on the official records.

\(2\) Inspection, acquisition. The contractor shall inspect at the time
of receipt, all property that is acquired for the performance of the
contract, and take necessary action with the vendor and/or carrier to
correct or adjust for any damage or error in quantity.

\(3\) Warranty documentation. Procedures shall be established by the
contractor to protect applicable warranty rights that accrue to BPA with
the acquisition of BPA property.

\(b\) Contractor-acquired property. The contractor shall take all
actions necessary to adjust overages, shortages, or damages in shipment
of contractor-acquired property from a vendor or supplier. However, when
the shipment has been moved by Government bill of lading and carrier
liability is indicated, the contractor shall report the discrepancy in
accordance with Paragraph (a) above.

\(c\) Segregation. BPA property shall be segregated from
contractor-owned property when feasible.

### 1.10 IDENTIFICATION.

The contractor shall identify, mark, and record all capital and
sensitive items of equipment promptly upon receipt, with the exception
of leased or rented equipment. The contractor shall permanently mark the
property in a legible, conspicuous, and tamper-proof method to identify
it as BPA-owned. The identification markings shall consist of a serial
number and an indication of BPA ownership. This identification shall be
maintained as long as such property remains in the custody, possession,
or control of the contractor. Property identification numbers for
BPA-furnished property will be provided to the contractor by the COTR.
The contractor shall record applicable number(s) on receiving, shipping,
and disposal documents, and any other documents pertaining to the
property control system. The contractor shall remove or obliterate
markings when BPA property is sold, scrapped, abandoned, or donated.

### 1.11 UTILIZATION.

It is BPA\'s policy that all BPA property furnished under a contract
shall be fully utilized. The contractor\'s property and supply
management practices shall assure that the maximum and best possible use
is made of the property. Materials and equipment shall be limited to
those items essential for effective execution of work performed under
the contract. The use of BPA property for non-contract purposes is
prohibited without the prior written consent of the CO.

### 1.12 PHYSICAL SECURITY, CARE AND MAINTENANCE.

\(a\) General. Controls such as property pass systems, memorandum
records, marking of tools, regular or intermittent gate checks and
perimeter fencing shall be implemented, (commensurate with the value of
the property) to prevent loss, theft, or unauthorized movement of BPA
property from the premises.

\(1\) The contractor shall ensure that effective procedures and
practices are established for administrative and physical control of
tagged and tracked property items before and after such items are
issued. The CO shall contact Shared Services Personal Property group
prior to providing the Contractor with instructions for tagging and
tracking BPA property under the Capitalization threshold.

\(2\) At a minimum, controls on sensitive property shall include
property records, memorandum receipts, bin or tool check systems, or
combinations thereof. Procedures shall provide for physical inventories
at least once each year, and methods for adjustment of inventory levels
due to losses, thefts, and damages. More frequent inventories may be
necessary when the value of the property, degree of security achieved,
or loss experience indicates that more stringent controls are required
to protect BPA\'s interest. Such procedures and practices shall be
subject to the CO/COTR review and approval.

\(b\) Weather. The contractor shall ensure the protection of any BPA
property that is susceptible to weather damage.

\(c\) Care and Maintenance. The contractor shall be responsible for the
proper care and maintenance of BPA property in its possession or control
from the time of receipt until relief of responsibility, in accordance
with sound economic industrial practice, the manufacturer\'s
recommendation, and the terms of the contract. The removal of BPA
property to storage, or its contemplated transfer, does not relieve the
contractor of these responsibilities.

\(d\) Major repairs or rehabilitation. The contractor\'s maintenance
program shall provide for disclosure to the COTR of the need for major
repairs, replacement, and other rehabilitation work on BPA property in
its possession or control.

\(e\) Records of maintenance. The contractor shall keep records listing
the type of maintenance and repair performed and the associated cost.
Upon completion of the contract the contractor shall provide the COTR
with copies of the maintenance records. Deficiencies discovered as a
result of inspections on BPA-furnished property shall be reported to
COTR as soon as practical.

### 1.13 PHYSICAL INVENTORIES.

\(a\) General. The contractor shall conduct periodic physical
inventories of all BPA property and shall cause subcontractors to do
likewise. The contractor, with the approval of the CO, shall establish
the type of inventory and procedures. The type of inventory should be
based on the contractor\'s established practices, the type and use of
BPA property involved, or the amount of BPA property involved and its
monetary value, and the reliability of the contractor\'s property
system. Procedures that are limited solely to a check-off of a listing
of recorded property do not meet the requirements of a physical
inventory. Personnel who perform the physical inventory shall not be the
same individuals who maintain the property records or have custody of
the property. The inventory shall be conducted in accordance with the
following frequencies:

\(1\) Permanently affixed plant (such as fencing, buildings, utilities,
and systems - every 10 years;

\(2\) Moveable capital equipment -- Bi-annually;

\(3\) Non-Capital equipment - annually; and

(4) Stores inventories - annually.

\(b\) Reporting results of inventories. Results of the inventory must be
recorded on the property records. The report shall include a signed
statement that the inventory was completed on a certain date, the
inventory method used, and that the physical inventory was found to be
in agreement with the official property records, except for the
discrepancies reported. The report shall contain all discrepancies
disclosed by the physical inventory. As a minimum, the discrepancy
listing shall contain the property number, nomenclature, and unit cost.
The report and signed statement shall be furnished to the COTR no later
than 30 days after completion of the physical inventory.

\(c\) Immediately upon termination or completion of a contract, the
contractor shall perform and cause each subcontractor to perform a
physical inventory and an assessment of condition (see Exhibit 1,
Condition Code listing), adequate for disposal purposes, of all BPA
property applicable to the contract. This inventory shall also include
all BPA property in a subcontractor\'s possession or control, which
applied to the completed or terminated contact. This inventory report
shall be submitted to the CO for verification and disposal instructions.

### 1.14 DISPOSITION.

\(a\) General. Property shall not be disposed of without prior approval
of the CO. The contractor is responsible for disposing of all BPA
property as provided in the contract or as directed by the CO. The
contractor shall promptly advise the CO of any BPA property that becomes
excess to the requirements for contract performance and shall take
disposition action as directed.

\(b\) Disposal methods for supplies and materials. BPA may exercise its
rights to require delivery of any contract supplies and materials
inventory. If BPA does not exercise these rights, the contract inventory
shall be disposed of by one of the following methods in the priority
indicated:

\(1\) Return of contractor-acquired property to suppliers. The CO shall
encourage contractors to return allocable quantities of
contractor-acquired supplies and materials to suppliers for full credit
less either the supplier\'s normal restocking charge or 25 percent of
the cost, whichever is less.

\(2\) Purchase or retention at cost by prime contractor or subcontractor
of contractor-acquired supplies and materials. The CO shall encourage
contractors to purchase or retain contractor-acquired supplies and
materials at cost. However, the contractor shall not include any part of
the cost of supplies and materials purchased or retained in any claim
for reimbursement against BPA. If a contractor purchases or retains
contractor supplies and materials inventory for use on a continuing BPA
contract that is subsequently terminated, the supplies and materials
shall be allocated to the continuing contract, even though its purchase
would otherwise constitute undue anticipation of production schedules.

\(3\) Sale at the fair market value of excess supplies and materials

\(c\) Disposal methods for property other than supplies and materials.
BPA may exercise its rights to require delivery of any contract property
other than supplies and materials inventory. If BPA does not exercise
these rights, the contract inventory shall be disposed of by one of the
following methods in the priority indicated:

(1) Deliver the property inventory to BPA for either reutilization or
    disposal by BPA.

(2) Purchase or retention at cost by prime contractor or subcontractor
    of contractor-acquired property other than supplies and materials.

The CO shall encourage contractors to purchase or retain
contractor-acquired property other than supplies and materials at cost.
However, the contractor shall not include any part of the cost of the
property purchased or retained in any claim for reimbursement against
BPA. If a contractor purchases or retains contractor property other than
supplies and materials inventory for use on a continuing BPA contract
that is subsequently terminated, the property shall be allocated to the
continuing contract, even though its purchase would otherwise constitute
undue anticipation of performance schedules.

(3) BPA will transfer title to the property to the contractor if BPA
    declares the property excess to BPA's needs.

(4) Destruction or abandonment. If determined that the property has no
    commercial value or no value to BPA, the estimated cost of care and
    handling exceeds any potential sale price, or does not constitute a
    danger to public health, safety, or welfare, the property may be
    abandoned or destroyed on the contractor's premises with written
    consent.

(5) Donation. If determination has been made by BPA, the property may be
    donated to public bodies or educational institutions in lieu of
    abandonment or destruction. All costs incident to the donation shall
    be borne by the donee.

\(d\) Retirement. The contractor shall notify the COTR when capital
equipment is worn out or damaged beyond economical repair. The CO shall
provide to the contractor instructions as to the disposition of worn out
or damaged property.

**EXHIBIT 1**

**CONDITION CODES**

**CODE BRIEF**

**[CONDITION DEFINITION EXPANDED DEFINITION]{.underline}**

1 Unused-good Property in new condition or unused condition and can be
used immediately without modifications or repairs.

4 Used-good Property that shows some wear but can be used without
significant repair.

7 Repairs required-good Property that cannot be used in its current
condition.

X Salvage Property that has value in excess of its basic material
content but repair or rehabilitation is not practical and/or not
economical.

S Scrap Material that has no value except for its basic material
content.