Attachment 0003 Property Management System Analysis.docx

Property Management System Analysis (PMSA) What You Need to Know A. During the pre-award solicitation phase, the contractor is required to submit a Property Management Plan (PMP) with its proposal. The intent of the PMP is for the contractor to provide a high level strategic overview of “how” the contractor intends to manage Government Property, both Government Furnished Property (GFP) and Contractor Acquired Property (CAP), in its possession in accordance with FAR 52.245-1 requirements. The plan should also include any customary commercial practices, voluntary consensus standards, or industry leading practices the contractor plans to use in managing Government Property.

B. After award, the contractor is required to submit the intricate details of the inner workings of the contractor’s Property Management System and how it will meet the ten (10) established outcomes (i.e. Acquisition, Receipt (includes Identification), Records, Physical Inventory, Subcontractor Control, Reports, Relief of Stewardship Responsibility/Liability, Utilization (includes Consumption, Movement, and Storage), Maintenance and Property Close-Out (includes Disposition). This written document is known as the contractor’s Property Management System procedures. These procedures are used by the contractor’s operational personnel as their daily standard operating procedure (SOP) for the management of Government Property. The contractor’s Property Management System procedures are working document(s) that may require updates as processes change; however, a contractor cannot change its procedures unilaterally. Any proposed changes to the contractor’s processes shall be submitted to the Property Administrator for review/concurrence prior to the implementation of the changes.

Reference: FAR 52.245-1(b)(1) C. The primary objective of a PMSA is providing the Contracting Officer with the sufficient and appropriate evidence required to make a reasonable determination as to the acceptability of a contractor’s Property Management System based on contractual and regulatory requirements.

D. A contractor’s Property Management System is made up of two parts:

a. Procedures (tangible)

b. Application, Implementation, and Compliance of Procedures (intangible) E. The contractor is responsible for managing Government Property in its possession in accordance with contractual terms and conditions, voluntary consensus standards, industry leading practices, and FAR/DFARS requirements. When establishing its Property Management System procedures, the contractor should have taken all of these requirements into consideration; thus, creating a document that adheres to all contractual and regulatory requirements.

F. The Property Administrator shall review the contractor’s Property Management System procedures to ensure that they adequately describe the day-to-day processes that address the ten (10) Government Property outcomes and to ensure they do not conflict with FAR/DFARS requirements and contractual terms and conditions. Any voluntary consensus standards or industry leading practices used by the contractor must be explained in ample detail to allow for the Property Administrator to test for compliance. FAR/DFARS requirements and contractual terms and conditions take precedence over all voluntary consensus standards or industry leading practices. A contractor cannot use a voluntary consensus standard or industry leading practice to ease or invalidate a contractual requirement unless authorized by law, such as the use of a receipt and issue system for Government Material.

Reference: FAR 52.245-1(f)(1) and FAR 52.245-1(f)(1)(iii)(B)

a. Ten (10) Government Property Outcomes:

i. Acquisition

1. Contractors are required to have a process for the acquisition of Government Property (i.e. CAP). In accordance with FAR 52.245-1(a), property acquired, fabricated, or otherwise provided by the contractor for performance on a contract, and to which the Government has title is defined as “contractor acquired property” or CAP. An example of “or otherwise provided by the contractor” would be the transfer of a piece of Material from contractor-owned inventory to Government-owned inventory because it is needed on a contract.

Reference: 52.245-1(f)(1)(i)

2. The objectives of evaluating the acquisition of Government Property are ensuring that the:

a. contractor had contractual authority to acquire, fabricate, or otherwise provide the items,

b. items and quantities acquired, fabricated, or otherwise provided by the contractor can be supported by requirements documents, such as bills of material, material requirement lists, or similar technical planning documents, and

c. items were properly classified (i.e. EQP, MAT, STE, ST) prior to acquisition.

ii. Receipt (includes Identification)

1. Contractors are required to have a process for the receipt of Government Property. This process shall also cover the requirement to properly identify Government owned property (i.e. GFP and CAP) in a manner appropriate to the type of property (e.g. stamp, tag, mark, or other identification).

Reference: 52.245-1(f)(1)(ii)

2. The objectives of evaluating the receipt of Government Property are ensuring that the contractor:

a. documented (i.e. receiving and/or inspection report) the receipt verifying that the item and quantity received is the same as the item and quantity ordered/fabricated (i.e. CAP) or furnished by the Government (i.e. GFP),

b. recorded the information necessary to meet the requirements of FAR 52.245-1(f)(1)(iii)(A) in its Property Management System,

c. identified the property received as Government owned, and

d. managed any discrepancies that occurred during shipment (i.e. overages, shortages, damages, or other discrepancies).

iii. Records

1. Contractors are required to have a process for establishing and maintaining records of Government Property.

Reference: 52.245-1(f)(1)(iii)

2. The objective of evaluating the records of Government Property is ensuring that the contractor’s Property Management System adequately accounts for each item of Government Property in accordance with the terms and conditions of the contract. Records should be current and organized in a manner that allows the Property Administrator to sufficiently assess the efficiency and effectiveness of a contractor’s recordkeeping processes.

iv. Physical Inventory

1. Contractors are required to have a process for the physical inventory of Government Property.

Reference: 52.245-1(f)(1)(iv)

2. The objectives of evaluating the physical inventory of Government Property are ensuring that the contractor has scheduled and conducted physical inventories of Government Property in accordance with the contractor’s Property Management System procedures and to determine the effectiveness of contractor’s physical inventory process.

v. Subcontractor Control

1. Contractors are required to have a process for the subcontractor control of Government Property. Subcontractors are normally external businesses that a prime contractor “hires” to perform a portion of the overall contract scope. For the review of the Subcontractor Control outcome, internal businesses or “alternate locations” of the prime contractor should also be included. Large contractors often let internal “subcontracts” to their “alternate locations” to perform part or all of a contract scope. It is the prime contractor’s responsibility to ensure that both “external” and “internal” subcontractors have adequate procedures and controls in place to properly administer Government Property in their possession.

Reference: 52.245-1(f)(1)(v)

2. The objectives of evaluating the subcontractor control of Government Property are ensuring that the prime contractor has adequate control over its “external” and “internal” subcontractors. These subcontractors were provided Government Property in performance of the prime contractor’s contract with the Government. Property Administrator’s should verify that the prime contractor has flowed down the appropriate contract terms and conditions (e.g. Government Property clause(s), extent of liability for loss of Government Property).

vi. Reports

1. Contractors are required to have a process for the reports of Government Property.

Reference: 52.245-1(f)(1)(vi)

2. The objective of evaluating the reports of Government Property is ensuring that the contractor is submitting adequate property related reports in accordance with the terms and conditions of the contract.

vii. Relief of Stewardship Responsibility and Liability

1. Contractors are required to have a process for the relief of stewardship responsibility and liability of Government Property.

Reference: 52.245-1(f)(1)(vii)

2. The objectives of evaluating the relief of stewardship responsibility and liability of Government Property are ensuring that the:

3. Below is a listing of the various type(s) of Property Management System procedures that applies to the relief of stewardship responsibility and liability of Government Property:

a. Loss of Government Property

b. Movement

c. Receiving

d. Records

viii. Utilization (includes Consumption, Movement, and Storage)

1. Contractors are required to have a process for the utilization, consumption, storage, and movement of Government Property.

Reference: 52.245-1(f)(1)(viii)

2. The objectives of evaluating the utilization of Government Property are:

a. ensuring that the contractor is utilizing Government Property only as authorized by the terms and conditions of the contract,

b. ensuring that the contractor is reasonably and properly consuming or expending Government Property only as required by the terms and conditions of the contract,

c. ensuring that the contractor is providing adequate storage, security and protection to all types and sensitivity levels of Government Property in its possession,

d. ensuring that the contractor is not commingling Government Material with Material not owned by the Government (exception MMAS),

e. ensuring that the contractor is properly identifying and reporting excess Government Property that is no longer needed in performance of the contract, and

f. ensuring that the contractor is moving Government Property under proper authority, supported by approved documentation, and adequate protection is provided during movement.

ix. Maintenance

1. Contractors are required to have a process for the maintenance of Government Property.

Reference: 52.245-1(f)(1)(ix)

2. The objectives of evaluating the maintenance of Government Property are ensuring that the contractor has properly established a maintenance program for both routine, preventative maintenance and unscheduled maintenance and a process for requesting Contracting Officer approval for all Capital Type Rehabilitation requirements.

x. Property Close-out (includes Disposition)

1. Contractors are required to have a process for the disposition and close-out of Government Property.

Reference: FAR 52.245-1(f)(1)(x), FAR 52.245-1(j)

2. The objectives of evaluating the close-out of Government Property are:

a. Ensuring that the contractor has a process for identifying Government Property that can be reutilized on the contractor’s other Government contracts,

b. Ensuring that the contractor has a process for reporting Government Property that has been deemed as excess,

c. Ensuring that the contractor has a process for properly dispositioning Government Property, and

d. Ensuring that the contractor has a process for the timely completion of property close-out actions.

G. Once the Property Administrator determines that a contractor’s Property Management System procedures are in compliance with contractual terms and conditions and regulatory requirements (e.g. FAR, DFARS), the focus then turns to determining whether or not the contractor is following those procedures. During the PMSA, the Property Administrator is essentially evaluating whether or not the contractor is actually accomplishing its Government Property processes as described/detailed in its Property Management System procedures.

H. In accordance with FAR 52.245-1(g)(1), the “Government shall have access to the contractor’s premises and all Government Property, at reasonable times, for the purposes of reviewing, inspecting, and evaluating the contractor’s property management plan(s), systems, procedures, records, and supporting documentation that pertains to Government Property.” The Property Administrator should have unrestricted access to any location/facility where Government Property is located.