Source: https://www.dau.mil/aap/Pages/qlist.aspx?cgiSubjectAreaID=5&cgiStart=0&RefreshField=20
Timestamp: 2018-12-17 16:31:32
Document Index: 276721381

Matched Legal Cases: ['art 7', 'art 2', 'art 7', 'art 7', 'art 45', 'art 45', 'art 45']

Home > Industrial and Contract Property Management (853 Q&A)
Timing Aspect of Items Requiring Disposition Schedules Posted:11/6/2018
Timing Aspect of Items Requiring Disposition Schedules
Posted: 11/6/2018 2:47:00 PM
Scenario: This inquiry relates to timing of contractor inventory decisions relative to retaining property in support of future customer contract/pursuit requirements versus appropriateness of an inventory disposal schedule. The submission criteria 52.245-1(j)(3) after contract performance and deliveries is relatively explicit, but the activity (pre-disposal) 52.245-1(j)(1) and the timing associated to decide re-use for future business versus determining if a disposal schedule is appropriate for property is not explicitly clear.
Question: Can DAU professor provide an opinion or direction relative to the timing aspect of an item requiring disposition schedules; can it ultimately extend to the time standard for contract closeout in FAR4.804, e.g. 36 months for cost-reimbursement and time and material contracts?
The following response is based solely on the question and background information provided. As we do not have the entire facts particular to your contract, program, and situation, we suggest you discuss with your contracting team, program manager, legal department, and/or Government partners, as appropriate.
First, the timelines in the Government property clause are not tied to FAR 4.804*, but rather are embedded within the Government property clause, FAR 52.245-1. These timeframes with respect to disposition are:
FAR 52.245-1(j)(3)(i) The Contractor shall submit inventory disposal schedules to the Plant Clearance Officer no later than.
FAR 52.245-1(j)(6)(i) The Contractor shall store the property identified on an inventory disposal schedule pending receipt of disposal instructions. The Government’s failure to furnish disposal instructions within 120 days following acceptance of an inventory disposal schedule may entitle the Contractor to an equitable adjustment for costs incurred to store such property on or after the 121st day.
The next place to go is your Property Management System procedures that are “necessary for effective and efficient” control of Government property (FAR 52.245-1(b)(1)). No one else knows your products, customers, and acquisition strategies and timelines better than you. How and when you construct your utilization reviews to determine when items will become excess to current contract performance (FAR 52.245-1(f)(1)(viii)(A)) and when you conduct predisposal analysis to determine if items have the potential to fulfill requirements under other contracts (FAR 52.245-1(j)(1)(i)) is heavily under your control, subject to evaluation by the Property Administrator that it meets contractual requirements and effectively mitigates Risk to the USG. The earlier you determine if or when to engage with the Government on smart business arrangements to ensure win-win outcomes that otherwise comply with contractual requirements, specifically disposition timelines, the more likely for success. These business arrangements range the gamut from transfer to another current effort with a valid need, storage contracts, return to customer, or input into PCARSS. These engagements do NOT change your contractual requirement to submit inventory disposal schedules within the required timeframes.
It is in the Government’s and Industry’s best interest to take advantage of Acquisition Planning (FAR Part 7 - USG) and excess identification and predisposal (FAR 52.245-1 - contractor) requirements early to ensure these contractual timelines do not impact less optimal business arrangements or untimely close-out.
*Timely contract closeout is a significant DoD issue (e.g., GAO-17-738) and we should endeavor not to add to the problem through failure of timely planning and execution of Government property disposition.
Subcontractor Control Term clearly identify Posted:10/31/2018
Subcontractor Control Term clearly identify
Posted: 10/31/2018 8:32:00 AM
Scenario: 52.245-1 (f)(1)(V)(A) (v) Subcontractor control. (A) The Contractor shall award subcontracts that clearly identify items to be provided and the extent of any restrictions or limitations on their use. The Contractor shall ensure appropriate flow down of contract terms and conditions (e.g., extent of liability for loss of Government property. Our company flows purchase contracts (PC) to subcontractors and identifies tooling on these PCs by their unique part number. Our property administrator wants to give us a CAR because he does not believe identifying tooling solely by its part number meets the requirement in 52.245-1 (f)(1)(V)(A) to clearly identify the tools. The PA would like us to flow down the part number, serial number, and nomenclature. However, I cannot find anywhere in the FAR or DFARS which provides a definition of clearly identify. I noted that in DODI 5000.64, section 7, the Government discusses part number, NSN, serial number, UII or UID are acceptable as a unique identifier. And notice there is an or not an and connecting the identifiers and we read this to mean any one of those would be acceptable.
Question: What is the Governments definition of the term clearly identify and does part number alone qualify? Is there anywhere that states exactly what fields need to be flowed to Subcontractors to identify tools?
The following response is based solely on the question and background information provided. As we do not have the entire facts particular to your contract, program, and situation, we suggest you discuss with your contracting team, program manager and/or legal department and Government oversight partners as appropriate.
I will answer your question generally; specifically; and then some great generalizable points you raise.
First to the general question of where are terms and processes operationalized within a contractor’s Property Management System. Looking at FAR 52.245-1, Government Property (b) and (f) (GPC) state:
(b) Property management. (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…
(f) Contractor plans and systems. (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:…
SO, your PMS procedures must define to your organization and the Government how you will meet your contractual requirements with regards to Government property, which includes the requirements of the GPC.
NOW, a quick 3-part test:
1. What do you procedures state?; 2. Are you following them?; and 3. Do they enable you to comply with contractual requirements?
If everybody (contractor and Government) agrees that the last two answers are 'YES', then in most cases you should be contractually compliant. If not, corrective actions are most likely warranted.
Okay, now to your specific question of what to do when a term isn’t defined as described in FAR 52.202-1, Definitions? FAR 1.108 (consistent with contract law) states:
FAR 1.108 (a) Words and terms. Definitions in Part 2 apply to the entire regulation unless specifically defined in another part, subpart, section, provision, or clause. Words or terms defined in a specific part, subpart, section, provision, or clause have that meaning when used in that part, subpart, section, provision, or clause. Undefined words retain their common dictionary meaning.
Even if we settle on which of the 22 definitions of “clear” at www.dictionary.com, “7. free from doubt or confusion” that still leaves room for reasonable people to disagree (OK, I’ll say it ... “IT DEPENDS!”)
“Free from doubt or confusion”. In many cases PN identifies what (e.g., 100 Mw power generator) whereas the inclusion of the additional descriptors (SN or IUID) tell which one. Does part number always provide that to the level required or is additional information required? If there is a serial number, is it required for traceability for tracking or maintenance? …
Due to the many variables, I cannot answer your specific questions other than refer you to the discussion above.
Another great topic you bring up is, where can I go when there is no specific guidance in the contract?
FAR 52.245-1 (b) provide some additional assistance:
… 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 the performance of this contract (except where inconsistent with law or regulation).
Although DoDI 5000.64 generally is not incorporated as specific T&Cs of a contract, you MAY consider it to be an ILP/BP. As such using it to establish your internal processes and procedures to enable contractual requirements could be appropriate.
I would caution in applying where the “OR” belongs in the list as there is an “AND” at the end of the list. Reading subparagraphs 4.7 with 4.6 helps provide context that the “OR” could only mean between “UII or DoD recognized IUID equivalent if available and necessary for unique identification”.
Equipment Authorizations Posted:10/29/2018
Posted: 10/29/2018 7:49:00 AM
Scenario: Reference Line item # T73645. This item is listed in CTA 50-909. A property book person is stating that this item has to be picked up to the TDA of an IMCOM organization. Item is authorized under CTA can it be added to the TDA also?
Question: 1. Can equipment be authorized by to a non tactical organization(IMCOM Garrison) by both CTA and TDA?
Per AR 750-1, dated 3 Aug 2017 equipment may only be listed on the CTA, or an MTOE, or a TOE. They may not be listed on multiple authorization documents.
Additional information can be found in AR 15-1 and in a previous Ask A Professor question located at the link below.
https://www.dau.mil/aap/pages/qdetails.aspx?cgiSubjectAreaID=45&cgiQuestionID=119031
Maintenance of Special Tooling Posted:10/29/2018
Maintenance of Special Tooling
Posted: 10/29/2018 7:42:00 AM
Scenario: I am being directed by a DCMA PA that all Government owned Special tooling is to be documented regardless of the type of inspection being performed. For ST where PSI and Calibration intervals are required, these type of inspections are documented. However, for visual type inspections, which are not documented as it is visual only. However, if during a visual inspection a user identifies a defect, the tool is then moved to a restricted status and assigned to a work order which is documented.
Question: Does all Government owned Special Tooling other than tools having PSI or calibration requirements need to have some form of documentation kept on file for inspections that are performed visually by a machine operator prior to using tool?
What does the FAR tell us? FAR 52.245-1 (1)(f) “(ix) Maintenance. The Contractor shall properly maintain Government property. The Contractor's maintenance program shall enable the identification, disclosure, and performance of normal and routine preventative maintenance and repair.”
“(iii) Records of Government property. The Contractor shall create and maintain records of all Government property accountable to the contract, including Government-furnished and Contractor-acquired 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…”
Now, if your “visual inspection” is a process you perform that is “outside” your documented normal routine preventative maintenance program then you would not necessarily consider documenting this practice a requirement. Simply because your normal preventative maintenance documented within your procedures ensures that Government property, in your possession, is being controlled, used, preserved, protected, repaired and maintained in accordance with contract requirements. The Property Administrator has the authority to determine if your procedures adequately address these risks. However, if this “visual inspection” process is documented within your procedures and/or is part of your normal routine preventative maintenance program, then yes, you have a requirement to document the process when it is performed. Otherwise, how do you or your customer know it ever happened or that it is regularly being performed? It is easy to see the logic within your perspective that if there is a problem then it will be documented when it is addressed eliminating some administrative burden; however, there must be some type of evidence in order for a contract required process to be auditable. Many undocumented processes increase risk because this gives the impression of non-importance and these practices will tend to be low priority especially when schedules are tight or resources are low. One of the Property Administrator’s primary jobs is to ensure risk is being mitigated on behalf of the Government and it sounds as if this is the perspective in which their concern is based.
Is This Contract Property? Posted:10/24/2018
Is This Contract Property?
Posted: 10/24/2018 9:25:00 AM
Scenario: During the sustainment portion of our contracts property is DD250'd and becomes Government inventory. The assets are now at the military units for their use at a base. Periodically, something breaks and needs repair. They are shipped to the OEM for evaluation and repair. When the OEM cannot repair the unit it is placed in BER condition code. This contractor is also the Item Manager for the program. The property that goes back to the vendor is not placed on a list in a contract.
Question: 1. Is this property eligible to be put in the PCARRS system or should it be shipped back to the units for local disposal? 2. Because it is not listed on a contract after it is DD250'd and accepted by the Government, is it contract property and does FAR requirements apply to it? 3. Because the contractor is the Item Manager, do they have a stewardship responsibility for this Government Inventory property when they have not established a record for it in their PMS?
Answer to question #1: In order for Government property to be processed through the PCARSS system it must have an accountable contract.
Answer to question #2: If a contract modification was not performed to make the item accountable to the contract it is not considered property accountable to the contract and FAR clause requirements do not apply. It is simply an item of Government Property in the possession of the Contractor. In accordance with 45.402(a) “…If a deliverable item is to be retained by the contractor for use after inspection and acceptance by the Government, it shall be made accountable to the contract through a contract modification listing the item as Government-furnished property.”
Answer to question #3: In order for the Contractor to be the item manager of any Government furnished property, there must be a contract specifically documenting this requirement and this contract must have a listing of Government furnished property in which the contractor has this requirement as the “Item Manager”.
Answer #4 (the more applicable answer) What you are describing in your background are items of Government furnished property in need of evaluation and repair not Government furnished property that would normally be accountable as contract property used for the performance of a contract.
Government furnished property issued to a contract as an item in need of repair is already accountable to the contract when identified on a CLIN and associated to a performance work statement (PWS)/statement of work (SOW) requirement. Essentially the CLIN makes the Government furnished property accountable and any work performance such as beyond economical repair (BER) thresholds or disposition requirements will be identified specifically for the subject items in the PWS/SOW. If the PWS/SOW states to use their established disposition procedures, then yes, the items should be processed through PCARSS when applicable. If the evaluation and repair effort is not identified on a contract as part of a CLIN and statement of work, then the items are not accountable to the contract and should be shipped back to the unit (owning agency).
Exception: This does not apply to items that would be covered under warranty or considered a manufacturing defect. These items would need to be handled through the applicable process such as, Product Quality Deficiency Reporting, Report of Discrepancy, etc.
Implied FAR 52.245-1 Posted:10/15/2018
Implied FAR 52.245-1
Posted: 10/15/2018 3:15:00 PM
Scenario: Contract did not have FAR 52-245.1 property clause inserted, this is not a DCMA Administered contract, no GFP or CAP present at contract award.
Question: If FAR 52-245.1 was not included in contract, and GFP/CAP came into the picture at a later time, is it "implied" that FAR 52-245.1 would be adhered to in the management of the property? Or, would a contract modification be required to insert the property clauses?
When the Government property clause at FAR 52.245-1 shall be inserted into a contract in accordance with FAR 45.107 and it is omitted, a contract modification should be issued to correct the deficiency. By “implied” you may be thinking in terms of the Government property clause being incorporated into a contract by operation of law when it has been physically omitted from the contract. Many in Contracting and Industrial Contract Property Management are familiar with the Christian doctrine, G. L. Christian and Associates v. the United States, (312 F.2d 418 (Ct. Cl. 1963) U.S. Court of Claims (1855-1982) - 312 F.2d 418 (Ct. Cl. 1963)), which determined that the standard termination clause, when omitted, should be read into the contract by operation of law. The rationale for the Court’s decision was that the clause was mandatory under statutory authority and the profit limitation and recovery of anticipated but unearned profits within the clause were determined to be “a deeply ingrained strand of public procurement policy.” Relative to the Government property clause is the Appeals of Hart's Food Service, Inc., d/b/a Delta Food Service (ASBCA No. 30756 1989 WL 47610 (A.S.B.C.A.), ASBCA No. 30,756, 89-2 BCA 21,789). In this appeal the Armed Services Board of Contract Appeals applied the Christian doctrine to the mandatory Government property clause. There have been other decisions from the ASBCA and other courts that have decided for and against the Christian doctrine’s applicability to the Government property clause. It is best to issue a contract modification to insert FAR 52.245-1 in the contract in accordance with FAR 45.107 rather than to rely solely upon it being read into the contract by operation of law. Currently there is a Department of Defense effort to ensure FAR 52.245-1 is inserted in all cost-reimbursable contracts.
Are certain Cost Type service contracts exempt from PGI 245.103-70? Posted:9/28/2018
Are certain Cost Type service contracts exempt from PGI 245.103-70?
Posted: 9/28/2018 2:33:00 PM
Scenario: We have a requirement for a BOS service contract. Contract type is CPAF. Anything the contractor purchases to perform this service, the contractor gets reimbursed for and the title/ownership transfers to the Government. The determination to be made during the acquisition planning phase would NOT be whether to provide GFP or not. Rather, a determination whether to provide "scheduled" or "requisitioned' GFP has to be made, in my opinion.
Question: Does the contracting file for CPAF BOS Service Contract require documentation that addresses each of the requirements of FAR 45.102.
Nothing specifically exempts cost-reimbursable contracts from PGI 245.103-70. This PGI provides the framework for ensuring the all requirements for furnishing GFP are considered and documented and the Government cost and risk are not increased. Without reference to contract type, FAR 45.102(d) and PGI 245.103-70(1) only exempts property provided under contracts for repair, maintenance, overhaul, or modification from FAR 45.102(b) requirement to clearly demonstrate the provision of property—
· To be in the Government’s best interest;
· That the overall benefit to the acquisition significantly outweighs the increased cost of administration, including ultimate property disposal;
· That providing the property does not substantially increase the Government’s assumption of risk; AND
· That Government requirements cannot otherwise be met.
The PGI 245.103-70 requirement for any decision to provide Government property be documented by the requiring activity and for the contracting officer to ensure that each of the requirements of FAR 45.102 are addressed, applies only to Government-furnished property (GFP). This requirement is tied to FAR Part 7 -- Acquisition Planning. FAR Part 7.105(b)(15) requires the acquisition planner to indicate any Government-furnished property to be provided to contractors and discuss any associated considerations, such as the required criteria identified in provided in FAR 45.102, in the written acquisition plan. As indicated in FAR 7.105(b)(15) and PGI 245.103-70(1) acquisition planning IS the decision point as to whether or not to furnish property to contractors. Whether GFP will be scheduled or requisitioned should be included in the considerations discussed in the written acquisition plan. The Navy also has to comply with SECNAVINST 5200.43 Government Furnished Property Accountability and Management (13 July 2018). The instruction states that it is SECNAV policy to require written justification by the requiring activity whenever a determination is made to provide GFP, whether pre-award/solicitation or post contract award via modification.
There is always the potential for CAP whenever a cost type contract is selected. See FAR 52.245-1(e) for information pertaining to title of CAP. PGI 245.402-71 provides instructions relative to the delivery and acceptance of CAP, and providing the delivered property as GFP under other contracts. The AAP answer at https://www.dau.mil/aap/pages/qdetails.aspx?cgiSubjectAreaID=5&cgiQuestionID=103340 might also be helpful.
Double Sampling Plan Confidence Charts Posted:9/20/2018
Double Sampling Plan Confidence Charts
Posted: 9/20/2018 7:59:00 AM
Scenario: DODI 5000.64 requires a minimum of 98% accuracy rate on physical inventory for non-sensitive or classified property. The DOD Contract Property Handbook as well as other publications only have tables that go up to 97% confidence rate. Where can I find charts or how do I figure the lot size for a 98% confidence for a double sampling plan?
Question: Where can I find charts or how do I figure the sample size for a 98% confidence for a double sampling plan for a lot of 330 items?
First, a point of clarification. Physical inventory accuracy rate and confidence level have different meanings. The physical inventory accuracy rate required by DoDI 5000.64 is the mandatory measure of how closely the inventory records and actual physical inventory counts must match. GAO-02-447G Best Practices in Inventory Counts provides the formula below forcalculating the inventory record accuracy rate.
Number of accurate items or records x 100% = record accuracy rate
Number of items or records counted
The confidence level is directly related to sampling. It is the probability that the sample is characteristically representative of the population (lot) from which it was selected. Use of 90%, 95%, or 97% confidence levels are both acceptable and prevalent in the performance of property management system analyses as well as other various forms of testing and inspecting. We are unaware of an existing 98% confidence double sampling plan table. If based on your objective you believe it is necessary to use a 98% confidence double sampling plan, it appears that you would have to design it. The hyperlinks below include sample size calculators (that allow you to enter any confidence level that you choose) and information that might assist you in designing a sampling plan.
https://www.calculator.net/sample-size-calculator.html?type=1&cl=90&ci=5&pp=60&ps=90&x=49&y=21
https://www.itl.nist.gov/div898/handbook/pmc/section2/pmc24.htm
https://www.itl.nist.gov/div898/handbook/pmc/section2/pmc231.htm
https://www.omicsonline.org/open-access/determination-of-lot-size-in-theconstruction-of-six-sigma-based-doublesampling-plans-.php?aid=16355
PCSA contractor selection Posted:8/16/2018
PCSA contractor selection
Posted: 8/16/2018 10:29:00 AM
Scenario: We have only done desk audits to to funding. My supervisor wants us to now do local site visits to our local contractors to conduct PCSA's. He is targeting local only because we have no travel money. From all my training i say we can not do this. It is unfair to all the other contractors. I attest that the audit evidence will not hold up. I can't find it in writing in GAAS or GAGAS on how to select this pool of contractors. It is my understanding the only fair way is a completely random sample of the main pool of contractors.
Question: Can we target local contractors this way? Is there a place that outlines, in writing, how to select the sample of contractors to be audited? We have no high or medium risk contractors. they are all low risk.
There are no Federal regulations or policies that prohibitan agency from directing that a property management system analysis (PMSA) beperformed on-site, (i.e., standard PMSA), for each local contractor only. FAR 45.105 -- Contractors’ property management system compliance, states that ananalysis of a contractor property management system is to be performed as frequentlyas conditions warrant, in accordance with agency procedures. It doesn’t appearthat your supervisor is “targeting” local contractors. The decision may bebased on resources or the lack thereof since emphasis has been placed on travelfunds. It could also be due to the need or desire to perform more in depthPMSAs when it is cost efficient. Of course, the possible reasons given are purelyspeculative. You should speak with your supervisor if you need clarityregarding the rationale behind the decision to perform standard PMSAs for localcontractors only.
Randomly selecting a sample from a pool of contractors todetermine which contractor property management systems to audit may be thepolicy of your agency, but it is extremely rare. That is not the practice ofthe Department of Defense (DoD). Property administrators within DoD and otherFederal agencies apply random sample selection when using probability(statistical) sampling to test the contractor’s procedures and processes forcompliance with FAR 52.245-1 – Government property. Determination ofwhich contractor systems to audit and which method to use (e.g., standard orlimited/desk audit) is based on the risk that the contractor’s property managementsystem poses to the Government and other criteria established at the agency andorganization level. Within DoD, either a standard or limited PMSAcan be performed when a contractor’s property management system is designatedas low risk. Some organizations within DoD choose to perform solely limitedPMSAs for low risk systems. However, limited PMSAs can be upgraded to standardPMSAs when the conditions warrant it, (e.g., discovery of sensitive property). Itreally depends on your particular agency and the procedures that you have tocomply with. The decision to designate standard PMSAs for only localcontractors should have no impact on your audit evidence. It is the methodologiesthat you use to perform PMSA and your documentation that factor into whetheryour audit evidence will hold up.
FMS Accountablity Posted:6/20/2018
FMS Accountablity
Posted: 6/20/2018 3:50:00 PM
Scenario: FMS Scenario- A Foreign Army has a new regulation that requires cell phones used on their bases have Foreign Army software installed that disables the camera and provides monitoring of all voice and data communications. US Contractors that are instructing the Foreign Army will be utilizing these on-duty phones while they are working on Foreign Army bases. These cell phones will be turned-in at the end of the duty day. The Contracting Officer wants to purchase phones on the ODC Reimbursable CLIN for the US Contractors performing services.No GFP on current contract. (Update) This is a fixed-price contract that does not include the Government Property clause. The Foreign Army has purchased the cell phones. ODC funds would have been U.S. Government funds. There is no reference to providing property in the Letter of Offer and Acceptance.
Question: 1. Will these cellphones become CAP( Contractor Acquired Property) to the US Contractor performing services? 2. Why is the USG purchasing these phones and not the Foreign Army as they are the ones mandating the new requirement?
Under the fixed-price contract, if the Contractor is directed to acquire the cell phones and deliver them under a cost-reimbursable contract line item (CLIN) funded by the U.S. Government, the property would be contractor-acquired property (see FAR 45.402 - Title to contractor-acquired property.) The contract would need to be modified to insert the Government Property clause of FAR 52.245-1. This might also require a modification to the Letter of Offer and Acceptance (i.e., government-to-government agreement) if acquisition of property and title are not currently addressed. Also, keep in mind that the Contracting Officer has to comply with the policy of FAR 45.102 and DFARS Procedures, Guidance and Information 245.103-70.
Since the need for the cell phones is driven by the new Foreign Army regulation consider FAR 45.302 - Contracts with foreign governments or international organizations. It states “Requests by, or for the benefit of, foreign Governments or international organizations to use Government property shall be processed in accordance with agency procedures.” This leads us to DFARS 245.302 - Contracts with foreign governments or international organizations. It authorizes the contracting officer to grant approval for the Contractor to use Government property for work undertaken as a DoD foreign military sale. You should check your local Component or Agency for detailed procedures.
Your second question would require speculation to answer. However, you bring up a valid point. As an alternative to the U.S. Government providing the property, the cell phones can be purchased by the Foreign Army. This is likely the best scenario since the Foreign Army will maintain control of the cell phones and the Contractor will be required to return the cell phones to the Foreign Army at the end of each duty day. In this scenario FAR 52.245-1 does not apply. It only applies to U.S. Government property (reference paragraph (m) of the clause). The Foreign Army would be treating the cell phones as equivalent to what is described in FAR Part 45 as property incidental to the place of performance.
What can be done when the Contractor loses an excessive amount of GP? Posted:6/12/2018
What can be done when the Contractor loses an excessive amount of GP?
Posted: 6/12/2018 10:39:00 AM
Scenario: During ship construction the contractor issues both CAP and GFP (material) to trades personnel for installation on Navy ships. The contractor has reported 1,800 cases of lost or damaged material within a short period of time. A corrective action request (CAR) has been issued to the Contractor for failure to comply with FAR 52.245-1(f)(1)(vii).
Question: What actions should the Contracting Officer take to mitigate the losses? What action should the Property Administrator take to mitigate the losses?
Ensuring that the Government Property clause FAR 52.245-1 is in the contract is one way that the Contracting Officer has already mitigated the risk of loss of Government property. The Government property clause requires the Contractor to establish a system of internal controls to manage Government property. The contractor is required to establish and maintain the system. Ensuring that the Contractor’s system of internal controls is both effective and efficient and corrective action is taken when processes are inadequate is how the Contracting Officer and the Property Administrator mitigate loss of Government property. The Property Administrator accomplishes this by thoroughly evaluating the Contractor’s written property management procedures as well as the Contractor’s implementation through the performance of a property management system analysis. Processes for establishing and maintaining records, receiving, storage, and movement often contribute to loss of Government property.
With regard to loss of Government property, the Contracting Officer and the Property Administrator should place emphasis on the Contractor’s corrective action plan. Since the Government self-insures and contractors are generally not held liable for loss of Government property, often the Government’s only available option is to try to ensure that the Contractor develops and implements an effective corrective action plan that does not merely address the symptoms associated with the loss (e.g., contractor employee error), but corrects the problem that caused the symptoms. The corrective action request should include direction to the Contractor to perform a root cause analysis that will reveal the actual problem that can be directly tied to loss of property (e.g., inadequate controls or lack of implementation of procedures). Prior to accepting the Contractor’s corrective action plan the Contracting Officer and/or the Property Administrator should perform a thorough review for effectiveness and the potential to prevent recurrence. Keep in mind that at times the root cause may exist within a segment of the Contractor’s organization outside of property management. That is for the Contractor to figure out. Lastly, if the conditions of Contractor’s (or subcontractor’s) property management practices are inadequate or not acceptable for the effective management and control of Government property under the contract, or present an undue risk to the Government, and the Contractor fails to take timely corrective action, the Contracting Officer can, in writing, revoke the Government’s assumption of risk (see FAR 52.245-1(h)(1)(iii) and 52.245-1(g)(3)). See DFARS 242.7000 for direction concerning Contractor business system “significant deficiencies” and DFARS 252.245-7003 for information specific to Contractor property management systems “significant deficiencies” and corrective actions.
FAR 45.104 Responsibility and liability for Government property
Changing Contract Accountability Posted:6/5/2018
Changing Contract Accountability
Posted: 6/5/2018 3:38:00 PM
Scenario: A piece of Government owned tooling was requested to be transferred from our prime contract (DoD) to one of our subcontractors prime contracts (DoD). We have received the losing modification from our PCO but the other contractor has not received a gaining modification.
Question: At what point do we update and close our record showing that the Government property is no longer accountable to us? We do not have privity for the gaining contract but FAR 45.106 requires both the losing and gaining modification prior to changing contract accountability.
If your contract is administered by the Defense Contract Management Agency, the contract modification may include the following language; “The purpose of this modification is to transfer accountability of the contract property items listed on the attachment -- from this contract to contract XXXXXXXXXXXXX.” Presuming the contracting officer (CO) for the losing contract secured concurrence from the CO for the gaining contract to transfer the property, your organization needs to comply with the contract modification that was received. Your organization would not see the gaining contract modification since it is not the prime contractor and as you stated, does not have privity of contract.
As the prime contractor, your organization has stewardship responsibility of the Government owned tooling until all necessary actions are complete (e.g., shipping, updating the Invoice, Receiving, and Property Transfer (IRAPT) module within Wide Area Workflow (WAWF)). (Note: Property transfer entries will be processed using the Government Furnished Property Module within WAWF approximately mid-July 2018 per Defense Procurement Acquisition Policy. See https://dodprocurementtoolbox.com/site-pages/gfp-module-transition for details.) The record should be closed out in your property management system after all actions are complete and documented in the appropriate systems. Your organization should have a process established to accomplish this within its written property management procedures. It is suggested that someone in your organization seek clarification from the Contracting Officer and the assigned Property Administrator if needed.
Items requiring installation, are they GFP? Posted:6/4/2018
Items requiring installation, are they GFP?
Posted: 6/4/2018 8:00:00 AM
Scenario: I am going to solicit a Task Order on our MACC and in this project a small part of it is an Air Compressor that was purchased via GPC many years ago that requires installation. No titles will be transferred and this item will never leave the facility in which it is currently stored.
Question: Is this item considered GFP to be furnished to the contractor, and do the normal rules apply? I have asked several other CO's and some say all the rules apply and some say it is overkill. In this case isn't it more of an installation service, such as if we had cubicles that required assembly? Although we are in a sense supplying items that will necessitate contract completion, we never lose control of it and never leaves government inventory.
DoD Instruction 5000.64 “Accountability and Management of DoD Equipment and Other Accountable Property” defines “administrative property” and “incidental to place of performance” as follows.
“administrative property. A subcategory of personal property, used for grouping property that is operationally distinct from weapon systems and other equipment. Administrative property is typically less than mission critical. Examples include: desktop computers and peripherals, furniture, and office equipment.”
“incidental to place of performance. A property designation defined at FAR Part 45.000(b)(5). Property incidental to place of performance requires the contractor to be at a government place of performance and the property to remain accountable to the government.”
FAR Part 45.000(b)(5) includes examples of items that may be considered incidental to the place of performance. It is not an exhaustive list. Since the task order (service) under the construction contract is being performed on a Government installation and the Government will maintain control and accountability of the air compressor (even after installation) you can to list it in the solicitation/contract as property incidental to the place of performance in lieu of providing it as GFP. If this route is taken, the air compressor will not be covered by the Government Property clause at FAR 52.245-1.
Clarification of property ownership - cost type prime contract Posted:5/17/2018
Clarification of property ownership - cost type prime contract
Posted: 5/17/2018 8:19:00 AM
Scenario: Contractor has a cost-type contract with USG.
Question: Does DCMA need to provide disposition instructions on all rejected material once issued to production line (WIP) and would any scrap material be required to be processed through PCARSS for disposition?
With regard to clarification of property ownership, FAR 52.245-1(e) – Government Property –Title to Government property states that the Government retains title to Government-furnished property. FAR 52.245-1(e) further states “Title vests in the Government for all property acquired or fabricated by the Contractor in accordance with the financing provisions or other specific requirements for passage of title in the contract.” Under cost type contracts, when the Contractor purchases property and is entitled to be reimbursed as a direct item of cost under the contract, title vests in the Government upon vendor delivery of the property. When the Contractor acquires property by means other than purchasing, e.g., fabrication, and is entitled to reimbursement, title vests in the Government upon whichever of the following actions occurs first:
· Issuance of the property for use in contract performance;
· Commencement of processing of the property for use in contract performance; or
· Reimbursement of the cost of the property by the Government.
If the rejected material falls within any of the scenarios described above (which it most likely does since it is a cost type contract) and it is serviceable or useable it needs to be removed from work-in- process and returned to stock. If it is no longer needed for contract performance, except as otherwise provided for in the contract, the Contractor is not dispose of the property (i.e., “contractor inventory” as defined in paragraph (a) of the Government property clause) until authorized to do so by the Plant Clearance Officer (PLCO) or authorizing official. FAR 52.245-1(j) includes pre-disposal requirements. If the pre-disposal requirements cannot be executed, then the material must be reported on an inventory disposal schedule and submitted to the PLCO for disposition instructions. The Contractor is also required to identify the rejected material on an inventory disposal schedule and submit it to the PLCO for disposition instructions if it is “scrap” as defined by FAR 2.101. Scrap should be reported by “lot” along with metal content, estimated weight and estimated value. If the contract includes DFARS 252.245-7004 Reporting, Reutilization, and Disposal the Contractor is required to submit the inventory disposal schedule using the Plant Clearance Automated Screening System (PCARSS). DFARS 252.245-7004 also includes a definition of “scrap” and specifically requires the Contractor to include a process for the accountability and management of Government-owned scrap within its property management procedure.
There is a similar question relative to a firm-fixed-priced contract that addresses production scrap at https://www.dau.mil/aap/Pages/qdetails.aspx?cgiSubjectAreaID=15&cgiQuestionID=130393.
Clarifying property ownership Posted:5/15/2018
Posted: 5/15/2018 7:15:00 PM
Scenario: Contractor has a FFP prime contract with USG to teardown/overhaul/reset vehicles, and the USG provides the seed vehicles to the Contractor as government property under the FFP contract.
Question: Is all material removed from the vehicle considered government property? Any material removed from the vehicle that requires overhaul/reset, should it be treated as government property and would it DCMA be required to provide disposition instructions? If the material cannot be overhauled or reset, would it need to be processed through PCARSS for disposition (unless of course there is language in the contract that would state otherwise)?
Yes, all material removed from the vehicle is considered Government property. FAR 52.245-1(e) – Government Property –Title to Government property informs us that the Government retains title to Government-furnished property (GFP). Just because the material is no longer installed does not mean the Government automatically abandons the property. We will revisit abandonment later.
Whether the DCMA Plant Clearance Officer (PLCO) is required to provide disposition instructions for the material removed from the vehicle is dependent upon the condition of the material and whether the Contractor’s property management system includes scrap procedures as required. It comes down to whether the material removed from the vehicles meets the definition of “serviceable or useable property” as defined by DFARS 252.245-7004 or “production scrap” as defined in FAR 52.245-1.
“Serviceable or usable property” means property with potential for reutilization or sale “as is” or with minor repairs or alterations.
If the material is serviceable or usable then the Contractor must identify the items on an inventory disposal schedule and submit it to the PLCO for disposition instructions. If the material is production scrap and the Contractor has a scrap procedure in place, unless the PLCO says otherwise, there is no requirement to report the material to submit an inventory disposal schedule. The Contractor may process the material in accordance with your organization’s internal scrap procedure as stated in FAR 52.245-1(j)(3)(ii). Paragraph (k) of the Government property clause states the Government may abandon parts removed and replaced from property as a result of normal maintenance actions, or removed from property as a result of the repair, maintenance, overhaul, or modification process unless the terms and conditions of the contract state otherwise. If the material is sensitive, Contractor written consent is needed to do so. If the material is nonsensitive, the Government can abandon it in place. Remember, FAR 52.245-1(l) requires all communication under the Government property clause to be in writing. Lastly, keep in mind that there are items of material that may require demilitarization that must be witnessed by a Government representative.
PCO BER scrap instruction by email sufficiency for action Posted:5/10/2018
PCO BER scrap instruction by email sufficiency for action
Posted: 5/10/2018 9:00:00 AM
Scenario: I received the following email from a NAVSUP PCO to scrap some BER assets, the company is authorized to dispose of any assets under Basic Ordering Agreement designated as Beyond Economical Repair IAW Section III. CAV REPORTER'S RESPONSIBILITIES, Para 7(d) 'H' condition material as scrap in place at their facility. If there is any additional questions/concerns, please feel free to contact me.
Question: Is a PCO email with instructions to scrap BER assets sufficient for a contractor to proceed with the action?
The following response is based solely on the question and background information provided. As we do not have the entire facts particular to your contract, program, and situation, we suggest you discuss with your contracting team, program manager and/or legal department as appropriate.
First to the general question if an email is sufficient for action. Looking at FAR 52.245-1, Government Property (the FAR clause that covers disposition of Government property) in par. (l) states:
FAR 2.101 defines that as:
This seems to validate the PCO email to authorize an action… BUT WAIT, we must look at the rest of the 52.245-1; related clause at DFARS 252.245-7004, Reporting, Reutilization, and Disposal; and more of the SOW.
So, you may proceed … to the next line in the SOW under par 7(d): “Any disposal action ordered by the PCO shall be performed by the CAV Reporter in accordance with applicable regulations and DCMA disposal procedures and requirements.“
BLUF: In general, report the items to the Plant Clearance Officer (PLCO) in PCARSS. Your PLCO will consider and provide any special disposal instructions such as demilitarization or trade security control requirements. In certain circumstances, the contract may authorize the initiation of the scrap process, if special disposal instructions are not required.
The Order should incorporate the following relevant clauses to disposition:
FAR 52.245-1, Government Property and DFARS 252.245-7004, Reporting, Reutilization, and Disposal.
Germane portions on the clauses are below:
(j)(3)(ii) … The processing and disposal of other types of Government-owned scrap [other than production scrap] will be conducted in accordance with the terms and conditions of the contract or Plant Clearance Officer direction, as appropriate.
DFARS 252.245-7004
1) “Demilitarization” means the act of eliminating the functional capabilities and inherent military design features from DoD personal property…
(4) “Scrap” means property that has no value except for its basic material content. For purposes of demilitarization, scrap is defined as recyclable waste and discarded materials derived from items that have been rendered useless beyond repair, rehabilitation, or restoration such that the item’s original identity, utility, form, fit, and function have been destroyed…Intact or recognizable components and parts are not “scrap.”
(b) Inventory disposal schedules. Unless disposition instructions are otherwise included in this contract, the Contractor shall complete SF 1428, Inventory Schedule B, within the Plant Clearance Automated Reutilization Screening System (PCARSS). Information on PCARSS can be obtained from the plant clearance officer and at http://www.dcma.mil/WBT/PCARSS/.
(d) Demilitarization, mutilation, and destruction. If demilitarization, mutilation, or destruction of contractor inventory is required, the Contractor shall demilitarize, mutilate, or destroy contractor inventory, in accordance with the terms and conditions of the contract and consistent with Defense Demilitarization Manual, DoDM 4160.28-M, edition in effect as of the date of this contract...
If you use PCARSS, the requirement to update the IUID Registry as directed at DFARS 252.211-7007 is exempted at (g)(2)(i):
(i) Plant Clearance Automated Reutilization and Screening System (PCARSS);
So unless otherwise directed in the contract, or agreed to by the PLCO, follow DFARS 252.245-7004 (b) and submit Inventory Schedule(s) within PCARSS. If unsure, you may check with your assigned PLCO (DCMA-delegated contract) who can be found here: https://pubmini.dcma.mil/CMT_View/CMT_View_Search.cfm
Subcontract Return of GFE Posted:4/24/2018
Subcontract Return of GFE
Posted: 4/24/2018 5:02:00 PM
Scenario: I am a Subcontractor on a contract. The contract ended five (5) years ago and we no longer need, want or should have the GFE. I have notified the Prime in writing, as well as left a message, asking what they want us to do with the GFE; they have yet to respond. So, essentially we are being used in the capacity of a "storage facility".
Question: As the Subcontractor, what do I do with this GFE??
The Government property in the possession of your organization is clearly no longer needed for contract performance. Therefore, it needs to be reported on an Inventory Disposal Schedule. If you have access to the Plant Clearance Automated Reutilization Screening System (PCARRS) you can use it to create an Inventory Disposal Schedule for the Prime Contractor by using its Commercial and Government Entity Code (CAGE code). The CAGE code will become a part of the Inventory Schedule number, which would result in the schedule appearing on the Prime Contractor’s Inventory Schedule Workload Screen. That should make the Prime aware that your organization still has Government property. The Prime would then submit the schedule to its Plant Clearance Officer for disposition instructions. If you do not have access to PCARSS, you can apply through DCMA’s External Web Access Management (EWAM) at http://www.dcma.mil/Customers/.
Contractor use of DD1149 Posted:4/24/2018
Contractor use of DD1149
Posted: 4/24/2018 9:59:00 AM
Scenario: Contractors working in Logistics department are unsure whether or not they are legally allowed to sign 1149's to transfer custody of DoD property between DoD commands.
Question: Can a contractor sign an 1149 on behalf of the government to document custody transfer of government assets between government entities?
The DD Form 1149 is a multi-purpose form used to document various transactions. Since there are no official instructions for this form, DoD Components have established their own uses and instructions (formal and informal) for the form. Whatever the case, the DD Form 1149 only documents transactions. It does not authorize transactions. One instance where it may be acceptable for the Contractor to sign the DD Form 1149 is if the Contractor is performing under a contractor logistics support contract that requires the Contractor to perform shipping and other logistics related responsibilities on behalf of the Government. Contractor logistics responsibilities should be documented within the Performance Work Statement (PWS). Perhaps the Contractor personnel are concerned that by signing the form it would appear that they are authorizing the transfer of custody between DoD commands. If that is the case it is strongly suggested that Block 9 – Authority or Purpose be used to document the source that authorizes shipping and custody transfer. The DD Form 1149 would be supporting documentation of the transaction and could be used by the Accountable Property Officer to update the Accountable Property Systems of Record. Keep in mind that DoD Instruction 5000.64 Section 4.8 states that transfers of custody and accountability should be accomplished electronically when practicable. It also identifies acceptable methods. Since the Contractor questions the legality of signing the DD Form 1149 it is recommended that you speak with your legal counsel for direction if you cannot find the answer within the PWS.
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