1. SUBCONTRACT MANAGEMENT Pamela McFarland

2. 2 AGENDA Statement of Work (SOW) Terms and Conditions Risk Assessment Site Visits Liability Records Disposition

3. 3 STATEMENT OF WORK Incorporate requirements into SOW as deliverable line items Physical Inventory Requirements Financial Reporting Requirements Gov’t Property System “Adequate” Letters Property Plans/Procedure Requirements Disposal Requirements

4. 4 STATEMENT OF WORK Requires Close working relationship with: Procurement Contracts Engineering Cost Accounting Managers Quality (to incorporate possible property audits with quality audits ……cost effective!)

5. 5 TERMS and CONDITIONS Flow all property requirements (FAR 52.245, and NASA or DoD Supplements) into the Terms and Conditions of Every Contract May seem redundant, but acquisition or furnishing GP/CP may not be known at time of SOW. Be careful on flowing Limited Risk of Loss.

6. 6 RISK ASSESSMENT Once the subcontract is in place and property is accountable. Assessments should consider the following: Total Dollar Value of property Is there a Property Plan? Does the sub have an “adequate” system? Have they had LDD’s? Do they have lower tier subs? Have they implemented UID? (DoD) Do they have procedures? Does the sub use Metrics?

7. 7 RISK ASSESSMENT Assessments should be completed annually: To ascertain surveillance requirements (i.e., “on-site” versus desk surveillance) Review for support property administration delegation DCMA is NOT going to approve 99% of the requests for SPA delegation. Oversight is a requirement of the Prime.

8. 8 RISK ASSESSMENT PURPOSE To provide an objective and disciplined risk assessment analysis of subcontractors METHODOLOGY Identify areas of vulnerability Focus on optimal levels of risk Efficient commitment of resources KEY ATTRIBUTES The risk categories and the corresponding measurements have been identified in the following charts

9. 9 RISK ASSESSMENT DoD

10. 10 RISK ASSESSMENT NASA

11. 11 SITE VISITS If the risk assessment determines a site visit is required, prior preparation is essential. Limit the scope to 5 functional elements or less Request property listings a week prior for random sample selection and preparation Complete audit spreadsheets and entrance briefings prior to start of visit (See Handout)

12. 12 LIABILITY Limited Risk of Loss If the Prime has limited risk, the potential exists to flowdown these requirements.

13. 13 Determining Risk Provision COST REIMBURSEMENT SUBCONTRACTOR Being awarded a subcontract Exceeding $650,000 AND Containing 52.215-12* AND Providing Government Property + GP Requirements FIXED PRICE SUBCONTRACTOR Being awarded a subcontract (Competitive or Negotiated) Exceeding $650,000 AND Containing 52.215-12* AND Providing Government Property + GP Requirements COST REIMBURSEMENT or FIXED PRICE (NEGOTIATED) PRIME CONTRACT/CONTRACTOR EXCEEDING $650,000 (Requiring a Cert of Current Cost and Pricing Data) and FAR 52.215-12* and WITH GOVERNMENT PROPERTY CLAUSE of FAR 52.245-1 LIMITED RISK OF LOSS FIRST SIMPLE APPLICATION Automatically Flow Down The Limited Risk of Loss GP Provision *NOTE: There are Exceptions at 15.403-1 where this clause is NOT required.

14. 14 Determining Risk Provision FIXED PRICE (COMPETITIVE) PRIME CONTRACT/CONTRACTOR WITH NO Requirement for a Cert of Current Cost and Pricing Data WITH GOVERNMENT PROPERTY CLAUSE Of FAR 52.245-1 (Alternate I) FULL RISK OF LOSS REGARDLESS OF THE PRICING ARRANGEMENT OF THE SUBCONTRACT, PRIME WOULD AUTOMATICALLY FLOW DOWN THE FULL RISK OF LOSS TO ITS SUBCONTRACTORS AND VENDORS WHEN GP IS PROVIDED TO SUB + GP REQUIREMENTS SECOND SIMPLE APPLICATION

15. 15 Determining Risk Provision COST REIMBURSEMENT or FIXED PRICE (NEGOTIATED) PRIME CONTRACT/CONTRACTOR EXCEEDING $650,000 (Requiring a Cert of Current Cost and Pricing Data) AND FAR 52.215-12* AND WITH GOVERNMENT PROPERTY CLAUSE Of FAR 52.245-1 LIMITED RISK OF LOSS FIXED PRICE NEGOTIATED SUBCONTRACT Being Awarded to a Subcontractor UNDER $650,000 AND NOT Containing 52.215-12 AND Providing Government Property + GP REQUIREMENTS REQUIRES SOME THOUGHT FIXED PRICE COMPETITIVE SUBCONTRACT/ SUBCONTRACTOR AND Providing Government Property + GP Requirements PRIME FLOWS DOWN FULL RISK PRIME MAY FLOW DOWN LIMITED RISK OF LOSS IF….PRIME REQUIRES SUB TO EXCLUDE INSURANCE FOR GP. IF UNABLE/UNWILLING TO EXCLUDE INSURANCE – FLOW DOWN FULL! *NOTE: There are exceptions at 15.403-1 where this clause is NOT required.

16. 16 LIABILITY Remember…………….. If the subcontractor does NOT have the limited risk clause, then YOU, as the prime, are responsible for obtaining payment.

17. 17 RECORDS Subcontractor Records Two methods exist pertaining to records –The subcontractor maintains the record, or …… –YOU, the prime, maintain the record Pros and Cons for both methods You must rely on the subcontractor for everything, when the sub keeps the records. If you keep the records, are they “up to date”? How do you get notified when the property moves, gets issued, or ships?

18. 18 DISPOSITION Program Screening MUST be completed first. Several Methods of Disposal PCARSS (Plant Clearance Reutilization Screening System) Ship back to Prime for retention/reutilization Ship back to Prime for disposal (Yikes!)

19. 19 MANAGING SUBCONTRACTORS REMEMBER …………We must reflect the value that property management adds to the company “bottom line”. We must be resourceful and flexible, and we can NOT do it alone. Creating and maintaining a good working rapport with your subcontractor is ……. ESSENTIAL !!

20. 20 QUESTIONS QUESTIONS ? CONCERNS ? COMMENTS ? Thank You Pamela McFarland, Raytheon Technical Services Co., LLC Work: 260-486-5237 Cell: 260-446-7190