Back to Basics for Property Management and Acquisition Presenter By: Beth Green, CPPM, CF Consultant Tara S. Miller, PMP, CPPM, CF

Property Management

FAR (b) Property Management (April 2012) (1) The Contractor shall have a system of internal controls to manage (control, use, preserve, protect, repair and maintain) Government property in its possession. The system shall be adequate to satisfy the requirements of this clause. In doing so, the Contractor shall initiate and maintain the processes, systems, procedures, records, and methodologies necessary for effective and efficient control of Government property. Property Management

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

Outcomes Acquisition Receipt (Identification) Records Physical Inventory Subcontract Control Reports Relief of Stewardship Utilizing (Use, Consume, Move, and Store) Maintenance Property Closeout

Besides the 10 outcomes we just talked about there are requirements addressed in FAR Clause  Source documents  Procedures  Self-assessment  Reference documents Property Management Plan

Benefits that can be gained from an Effective Property Management System  Provides an effective management tool  Maximizes return on investment  Ensures effective stewardship  Facilitates compliance  Increases reutilization  Increased cooperation  and collaboration

What is a Property Management Plan?  A calculated look at how best to manage the government’s property based on the best value for the:  Program  Site (Location)  Entity (Group) level What Should the plan provide?  Performance outcomes (Acquisition thru Contract Closeout)  Using primarily VCS and/or ILPs Property Management Plan

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

Developing the Property Plan  Preparing your procedures (different than a plan)  Assess the 10 Outcomes and how the standards may assist  Tackling the added requirements outlined in the property clause E Establishing the Guiding Principles of Property Management E Terminology for Property and Asset Management Property Management Plan

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

Compliance with  Regulations  Requirements of the Contract  Policies (Government and Company)  Procedures (Property)  Operational guidelines (Safety and Environmental) Property Management Plan

FAR (b) Property Management (April 2012) (1) (continued) The Contractor shall disclose any significant changes to its property management system to the Property Administrator prior to implementation of the changes.

FAR (b) Property Management (April 2012) (1) (continued) The Contractor May employ customary commercial practices, voluntary consensus standards, or industry-leading practices and standards that provide effective and efficient Government property management that are necessary and appropriate for performance of this contract (except where inconsistent with law or regulation).

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

ASTM International E53 Committee  Summary of Active Standards ASTM International

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

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

Ownership, Accountability, and Responsibility  “Ownership” is having legal or rightful title to property.  “Accountability” (that is, to be accountable) means to possess and have use of the property of another with delegated duties and responsibilities, subject to penalty in case of default.  “Responsibility” (that is, to be responsible) means to be answerable for a trust or obligation. Property Management

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

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

Acquisition of Property

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

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

Acquisition of Government Property  Shall be documented  In accordance with contract requirements  Approval process E Standard Practice for Prioritizing Asset Resources for Acquisition, Utilization, and Disposition Acquisition

Acquisition of Property (Outcome #1) Acquiring (to get or to gain) Acquisition begins when needs have been defined. Reutilization  Acquiring excess, surplus or on-hand assets that are idle  The preferred method of acquisition and supply for any organization and is considered by the federal government to always be the first source of supply Acquisition

Acquisition of Property (Outcome #1) (continued)  Purchase (new or used)  The acquiring of property or services by contract with appropriated funds through purchase or lease, whether the property or services are already in existence or must be created, developed, demonstrated, and evaluated  The approval process begins with obtaining approval to spend budgeted organization funds Acquisition

Acquisition of Property (Outcome #1) (continued)  Lease/Rent  Fabricate (to make or build in-house)  The most important considerations for in- house fabrication are the capacity and expertise of organization staff and the facilities and tools required  Loans  Attempt to establish formal loan agreements  Transfer  From another contractor approved by the Government Acquisition

FAR Definitions (June 2007) “Material” means property that may be consumed or expended during the performance of a contract, component parts of a higher assembly, or items that lose their individual identity through incorporation into an end-item. Material does not include equipment, special tooling, and special test equipment or real property. Acquisition

FAR (a) Definitions (August 2010) Equipment – Means a tangible item that is functionally complete for its intended purpose, durable, nonexpendable, and needed for the performance of a contract. Equipment is not intended for sale, and does not ordinarily lose its identity or become a component part of another article when put into use. Equipment does not include material, real property, special test equipment or special tooling. Acquisition

ASTM Standard E-2135 Provides a Definition (higher level) Equipment is non-expendable, tangible moveable property needed for the performance of a task or useful in effecting an obligation Acquisition

FAR Definitions Agency Peculiar Property: Means Government-owned personal property that is peculiar to the mission of one agency (e.g., military or space property). It excludes Government material, special test equipment, special tooling, and facilities. FAR (b) Providing agency-peculiar property Direction to the Government New FAR – does not discuss APP Acquisition

FAR Definitions (June 2007) Special Test Equipment Either single or multipurpose integrated test units engineered, designed, fabricated, or modified to accomplish special purpose testing in performing a contract. It consists of items or assemblies of equipment including foundations and similar improvements necessary for installing special test equipment, and standard or general purpose items Acquisition

FAR Definitions (June 2007) Special Test Equipment (continued) or components that are interconnected and interdependent so as to become a new functional entity for special testing purposes. Special test equipment does not include material, special tooling, real property, and equipment items used for general testing purposes or property that with relatively minor expense can be made suitable for general purpose use. Acquisition

FAR Definitions (August 2010) Special Tooling means jigs, dies, fixtures, molds, patterns, taps, gauges, and all components of these items including foundations and similar improvements necessary for installing special tooling equipment, and which are of such a specialized nature that without substantial modification or alteration their use is limited to the development or production of particular supplies or parts thereof or to the performance of particular services. Special tooling does not include material, special test equipment, real property, equipment, machine tools, or similar capital items. Acquisition

Our goal was to provide a basic understanding of Government Property Management and the requirements for establishing a Property Management System and Plan. We also presented one of the first steps in having Government Property – Acquisition. We reviewed the different types of Acquisition and what is necessary to pass the Acquisition Outcome in an audit. Rosanne “Beth” Green, CPPM, CF Tara S. Miller, PMP, CPPM, CF Conclusion