1. ASTM E2936 Standard Guide for Contractor Self Assessment for U. S
ASTM E2936 Standard Guide for Contractor Self Assessment for U.S. Government Property Management Systems
Brandon Kriner, CPPM CF
Harris Corporation

2. Background
FAR requires contractors to self-assess, but no specific guidance is provided in the clause
There is much confusion and debate on Contractor Self Assessment (CSA)
What constitutes an “acceptable” CSA?
What should be the role of CSA in a Government audit or PMSA?
The guide is intended to compile best practices from both a contractor and Government point of view- not a step-by-step manual- every environment is different
(Hence a standard “guide” and not a “practice”)

3. Task Group Brandon Kriner, Harris Corporation (Lead)
Alex Barenblitt, BSL Company
Cinda Brockman, A2B Tracking
Eric Fassett, Northrop Grumman Corporation
Bill Franklin, Noblis, Inc.
Doug Goetz, GP Consultants
Mike Showers, NASA
Rick Shultz, JHU Applied Physics Laboratory
Tamra Zahn, The Boeing Company

4. Scope
The standard is intentionally narrow in focus- specifically addresses the requirements of FAR
Many of the concepts could be applied to other types of asset management self-assessments, audits, surveillances, reviews, etc.
The FAR Government Property focus is intended to directly address the widespread challenges associated with CSA implementation and acceptance since 2007

5. Significance and Use
The guide provides a foundation for minimum effective internal assessment of a contractor’s Government property management system
Your CSA may go farther/deeper- probably already aligned with the standard!
The guide is a menu, not a recipe
A contractor may use all or parts of the guide in accordance with its procedures and operating environment
Self assessment should be used to identify and correct potential deficiencies or areas of risk independent of a Government audit
Also provides insight into continuous improvement opportunities

6. Significance and Use
Self assessments are not a replacement for PMSAs or other external audits- they are distinct requirements
A contractor is required to self-assess in order to proactively address issues
The Government has a fiduciary responsibility to ensure that its property is adequately managed by contractors
The results of CSAs should be made available to Government auditors for potential inclusion in their audits or reports
Self disclosure of potential issues (and evidence of corrective action) may preempt CARs (C. Williams Letter 9/13)
Self disclosure of areas of strength may minimize the time spent on a PMSA
In a September 5, 2013 letter to AIA VP Acquisition Policy William Greenwalt, Charlie Williams, DCMA Director, stated “We recognize that if contractors self-identify non-compliances and take timely and appropriate action to correct the non-compliances, DCMA CARs are normally not needed. In our view, that should be the ultimate goal.”

7. Independence and Objectivity
To the extent possible, a CSA should provide a level of objectivity similar to that of a PMSA
Individuals performing CSA should be independent when possible
The contractor’s procedures should address independence
People should not be assessing their own work
Example: calibration lab performs calibration; Property Management assessing % of on-schedule calibration of assets

8. Procedures
Contractors should clearly describe their CSA in their procedures
The following concepts should be addressed:
Methodology used (examples):
Government PMSA criteria
ASTM E2452 EMPM
ILPs/Customary Commercial Practices
Balanced Scorecard/CMMI
In general, the closer you are to the Government’s methodology, the greater the chance of your CSA results being incorporated

9. Procedures The processes/outcomes to be reviewed
These may be the “10 outcomes/15 functions” or other processes/contractual requirements
The organizational scope of the CSA
Business units, sites, other sub-divisions to which the assessment applies

10. Procedures A “defect” should be defined
The differences between minor, major and critical defects should be defined in the context of the business environment
Corrective action requirements for defects should be established

11. Defects- E2936 Definitions
Defect, n – a condition in which a functional segment, a sample item or sample item element of a property control system contains one or more deficiencies (E 2315).
Definitions are loosely aligned with DFARS Contractor Business System Deficiencies (aka the BSR)

12. Defects- E2936 Definitions
Minor defect – a defect that is administrative in nature, non-systemic and would have no material outcome for the control of Government property.
Major defect – a significant, but not systemic defect that may affect the control of government property, possibly increasing the risk to the Government.
Critical defect – a significant and systemic defect that would have a material effect on contract performance or cause concern for the reliability of the information provided by the property management system.
Materiality- magnitude of an omission or misstatement of accounting data

13. Defects- Examples
Minor defect – Characters transposed in a model number; asset location one room off (no material impact on contract performance or management information)
Major defect – A $500,000 test set has been improperly stored, leading to damage (significant; not systemic)
Critical defect – The contractor automatically disposes of all Government property as scrap at its discretion without gaining Government approval or reporting to the Government (significant and systemic)

14. Risk Assessment
Contractors should perform a risk assessment in planning a CSA
The frequency of a CSA or parts of a CSA should be based upon the risk assessment
Direct resources to areas that present risk; don’t overdo low-risk areas

15. Process Tests
Contractors should establish process tests that provide sufficient evidence to credibly evaluate the effectiveness and risk level of the property system
Process tests may be quantitative (metrics, statistical sampling) or qualitative
Support documentation is critical
The standard suggests processes to test

16. Population Selection
Sample data are observed in order to estimate attributes of the entire population
Transaction-based population
Driven by actions over a set period of time, e.g. all receipts of GP over the past year
Attribute-based population
Based on common characteristics, e.g. condition of storage areas

17. Population Selection Processes may have more than one population
Acquisition of GFP vs. CAP
Sensitive property
ABC or Low Risk Property (ASTM E2811)

18. Population Selection
Some populations may be used to test multiple processes
Records and Utilization
Acquisition and Receiving

19. Sampling
Statistical Sampling: use of random statistical tests to estimate the characteristics of a complete population
Judgment Sampling: non-random, non-probability; auditor selects items based on knowledge and experience
Purposive Sampling: selecting specific items based on knowledge of a situation

20. Sampling
Contractors must identify the statistical sampling plan to be used
DCMA 90%,95%,97% Double Sampling Plans
ASTM E2234 AQL 6.5 Single or Double Sampling Plans
Others
The statistical sampling plan used should be determined by risk and other factors

21. Sampling
Statistical sampling populations should be randomly generated using automated tools
Excel’s sampling tool under the Data Analysis add-in
The standard contains several statistical sampling tables in the appendix

22. Evaluation of Samples
Defects should be analyzed from both a quantitative and qualitative perspective
Quantitative- based on the acceptance rates in the statistical sampling program
Qualitative- the relative significance and materiality of the defects
Even quantitative “failures” may be immaterial!
$2.48 cents out of a population of $500,000

23. Significance
Defined in GAGAS as the relative importance of a matter within the context in which it is being considered
Magnitude in relation to overall system
Nature and effect of the defect
Relevance and impact on overall contract performance
GAGAS = Generally Accepted Government Auditing Standards

24. Significance Business Systems Rule Definition:
DFARS : “Significant deficiency” means a shortcoming in the system that materially affects the ability of officials of the Department of Defense to rely upon information produced by the system that is needed for management purposes.
This is a high bar that should not be hastily applied.
GAGAS = Generally Accepted Government Auditing Standards

25. Corrective Actions and Plans
Contractors should take corrective action to resolve issues and mitigate risk as they become known during the CSA.
The cost and burden of corrective actions should be commensurate with the significance and risk presented to the Government

26. Corrective Actions and Plans
Significant risks (critical or major defects) should be addressed through a formal written CAP
Identify steps taken to identify and analyze the root cause, mitigate the risk, the resources required, and the specific timeline for implementation
Minor defects should be corrected at the lowest effective responsible level of contractor personnel
CAP = Corrective Action Plan

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