Government Furnished Property Record Establishment in the DoD Presented by: Ms. Amber Barber June 25,2012

Property Accountability Fun Fact Identify the entity highlighted in yellow: 2011 General Property, Plant & Equipment (Net, in millions) Exxon Mobile Wal-Mart Chevron ConocoPhillips General Motors General Electric DoD Wal-Mart General Electric Dept. of Defense Exxon Mobile

DoD and Audit Challenges DoD is the last federal agency which hasn’t received a “clean audit” opinion. DoD is comprised of: 3 Military Departments 17 Defense Agencies (DARPA,DLA,MDA) 10 Field Agencies (TRICARE,WHS,DTIC) 8 Other Organizations (DAU,DoDIG,Joint Staff) 9 Combatant Commands Based on FY 2011 Financial Statements for US Government, DoD represents 71.7% of reported GPP&E

Property Accountability Fun Fact What percent of the United States General Property, Plant and Equipment (GPP&E), does DoD represent? 29% 72% 47% 63%

Breakdown of DoD General Property, Plant & Equipment Line Item DoD GPP&E, Net value is Approx. $608 Billion

How Assets are Aligned Financial Assets PP&E Inventory/OM&S Real Property Personal Property Repairables Consumables Internal Use Software Land Distilled into four (4) types under the Federal Acquisition Regulation Facilities Equipment Military Equipment Buildings Structures General Purpose Equipment Linear

Cost of an Airplane The Airframe is the price on the contract CAP transferred from Developmental Contract The engines provided as GFP from a different contractor GFP parts requisitioned from DLA

Property Accountability Fun Fact Audit Report stated the Air Force could not account for $22 Billion of GFE. Solve for “X”. “X” equals $22 B Air Force DoD $X $596 Billion $1.2 Trillion $608 Billion No Idea

GFP Record Problem Baseline information needed Lack of data in DoD accountable systems No standard method of collecting/establishing records Communications Breakdowns Logistics community “out of the loop” APSR not updated DoD does not know: What it has; where it is; and what its worth Why? Contracts (especially legacy contracts) do not always contain GFP listings; listings are often ad-hoc and inaccurate DoD Component past practice was to “zero out” equipment (GFP) records (“surely DCMA keeps those records”) Little rigor in evaluating contractor need for GFP (“contractor asked for the property”)

The “Solution” Everyone wants: This just in: Property lists. Why? Lists make us happy Any information (even bad) will quell our fear A 100% wall-to-wall physical inventory. Why? Helps us sleep at night Auditors love them Lets us “catch up” This just in: Property lists are a poor proxy for good records Physical inventories are usually not necessary and a waste of time if not done effectively (ALSO $$$) I got my list! My life will be perfect

GFP – Establishing Baseline OSD memorandum issued on January 7, 2012 Goals Promote the current clause requirements Demonstrate the relationship between the clauses, the DoD policy, and the system capabilities (IUID Registry) Get a starting point for equipment already used by contractors Increase visibility and awareness of the “mystery” surrounding GFP Requires Detailed Plans for implementing to be incorporated into FIPS by 4/6/2012

The Memo Explained Based on existing policy NO NEW POLICY is in this memo Requires HQ Level coordination Each DoD Component will take a unified approach Leverages Property Management System Analysis Each contractor will have their risk assessment based from this work performed as part of the regular duties of a property admin. Standardizes DoD practices Reduces ad-hoc data calls to contractors Promotes a common enterprise approach Use of IUID Registry as master data source for GFE Single face to industry Consistent with DoD Instruction 8320.4

OSD Methodology Highlights Create Integrated Project Team Program Managers Acquisition Offices Logistics Utilize IUID Registry Interface with Contractors Leverage DCMA Property Management System Analysis Adequate & Low = accept contractor data Inadequate & High = contractor perform wall to wall & data validated independent Inadequate & Moderate = evaluate CAP and use sampling techniques to validate data Modify Contract to list GFE Bring contract into FAR, DFARS compliance Amended Contract serves as Supporting Documentation For government’s rights and obligations to GFE

Expectations Contracting Officers (Buying Commands) Program Offices Use the opportunity to update property clauses (FAR and DFARS) and other terms and conditions Modify contracts with appropriate property info per PGI 245 Program Offices Work with Accountable Property Officers to establish needed property records based on risk assessments of contractors Contractors Report property per contract terms; utilize the IUID Registry as appropriate

Step by Step Immediate (1) Stop the bleeding. (2) No GFP should be furnished without PCO first meeting PGI 245.103-70 Short Term (1) Identify contracts ending within one year (2) Plan for property disposal; contractors use PCARSS for excess property Intermediate (1) Identify contracts going beyond one year (2) Ensure GFE reported to IUID registry (3) Use fillable PDFs for GFE listing (4) Modify contracts as needed to add GFE listing Long Term (1) Update local policy and procedures; sustainment & compliance

Implementation of Memo Guidance Components to develop detailed project plans showing activities and dates for validating their GFE Baseline and incorporate into their FIP Current Results Not all Components have adequately satisfied this requirement Financial Improvement Plans (FIP) have not been updated to reflect GFE plans Difficult for DoD Senior Leadership to support GFE baseline efforts or monitor progress. DoD Senior Leadership unable to determine whether corrective plans will be met by specified dates Suggested GFE metrics provided to Components must be delayed due to lack of response Actions Components must develop a project plan that is specific to their approach for validating a GFE baseline and incorporate into FIP as appropriate Components must be prepared to report progress against project plan and explain how they’re assessing progress using the scorecards provided previously Components to report project status via scorecards at next GFP Working Group

DOD Actions to Improve GFP Accountability Enhancing the IUID Registry Adding property transfer capability to WAWF Existence and Completeness testing Gap Analysis of process flows Pilot Program with the USMC for electronic property transfer actions Increased accountable property records Air Force: +64,000; $1,226,000,000 Missile Defense Agency: +64,500; $4,685,000,000 (Total: 128,000 new records for property worth $5.9 Billion)

Accountability for GFE Key Control Points Government APSR Must have a Property Record for all GFE While in possession of Contractor, property record shows location, condition of asset and authorizing contract Asset uniquely identified and tagged/marked clearly distinguishing as government property Upon return or disposal of asset, APSR updated appropriately Contract Prior to furnishing government property, cost/benefit analysis must be performed justifying GFE Specific assets furnished to Contractor must be listed in the Contract in accordance with PGI 245.201-71 Contract is the authorizing document allowing proper use of Government Property by a contractor, not a hand receipt, DD1149, or other miscellaneous form Contractor Must maintain control and stewardship for GFE in their possession Must only use GFE for authorized purposes Responsible for notifying Government of Loss, Theft, Damaged or Destroyed GFE by using the LTTD eTool Responsible for notifying Government of excess or surplus assets via PCARSS eTool Implement timely and effective corrective action plans to address control deficiencies Contracting Officer/Property Administrator Periodically review contractor property management system for controls Review adequacy of corrective action plans to address any Property Management system deficiencies Does NOT maintain accountable property records Is appropriate personnel for contractor relief of liability or accountability

GFP Process Flow – Govt to Contractor Contract w/GFP Items being sent Items being sent Contractor Receiver WAWF Property Transfer Material Control Activity Items received Items received Custody updated Custody updated Property Accountability UID Registry Organization data can be manual web or system electronic formatted message

USMC/DPAS Enhancements – GFP & WAWF Issue Resolution Conditions If asset is in DPAS but transfer to Contractor has NOT been designated in DPAS, WAWF transfer transaction is ignored/discarded by DPAS Add DPAS functionality to process WAWF Transfer Transaction according to the following conditions If Contractor and contract number established in DPAS, execute property record update If contractor and contract not in DPAS, add asset to DUE-IN Process and require DPAS user intervention If asset is not in DPAS but transfer is received via WAWF, WAWF transfer transaction is ignored/discarded by DPAS Modify DPAS to process the WAWF Transfer Transaction. Asset placed in “Due-In” process DPAS user intervention required to execute Asset Receiving Process Process streamlined when Catalog, USMC NSNs, Contractor and Contract reside in DPAS USMC Catalog in DPAS does not contain all standard USMC NSNs Update DPAS with all USMC standard NSNs from FLIS USMC to identify NSNs that are USMC controlled. DPAS to create an update file for loading into USMC catalog When transaction received DPAS will search & find NSN and enable processing of transfer transaction DPAS does not search FLIS database of NSNs using Part Number. When assets are first introduced to USMC, they do not have NSNs but are identified by Part Number DPAS to subscribe to DLIS’s MFG Part Number subscription or request GEX to subscribe to service to obtain Part Number DPAS will add Part Number to Master FLIS “MFG Part NBR” table DPAS would compare DPAS user catalog to MFG Part NBR table and populate Part Numbers for NSNs that match. When a new stock number added, DPAS will auto-populate the MFG Part NBR table with all MFG Part Numbers associated with the Stock Number Not Applicable, no conditional processing required

Working to Solving The GFE “Mystery” Evaluate Existing Environment Identify Accountability Gaps Modify Policy & Instruction Process Improvement APSR Up To Date with GFP Status Warfighter has more resources to accomplish mission!

Property Accountability Fun Fact What key action item was due within 90 days from issuance of GFE memorandum dated January 7, 2012? Create Plan to address GFE Adhere to PGI 245.103-70 DCMA is key Stakeholder Wall to Wall is first action

For general questions and information, visit our website: Questions? Comments? Contact us at: Amber.Barber@osd.mill For general questions and information, visit our website: http://www.acq.osd.mil/pepolicy/ Thank You! 23