Auditing and Assessing the PMS –
Government and Contractor
Requirements
Presented by:
Dr. Douglas Goetz, CPPM, CF
NPMA Rocky Mountain Chapter
19 May 2010
TASKING
• Over the past six months design develop and
write a DOD Property Guide….
• What Professor Chuck Waszczak referred to as
“The Property Book of Wisdom.”
• Its foundation – the DOD Property Manual
Rewrite team:
– Team Members were from the Air Force, Army,
DCMA, Navy, and NASA
• The original rewrite died an ignominious death….
TASKING
• OSD tasked DAU to create six guides:
– Property Administrators
– Plant Clearance Officers
– Program Managers
– Procuring Contracting Officers
– Administrative Contracting Officers
– CORs/COTRs/TRCOs
Thinking!?!?!
• One Chapter of the PA Guide got me thinking!
– In the words of Lyle Hestermann, it caused me to go,
“Hmmmmm?”
– What were the FOUNDATIONAL ELEMENTS of an
ASSESSMENT?
– What were the FOUNDATION ELEMENTS of an
AUDIT?
– And were/are we RIGOROUSLY applying those
ELEMENTS?
FAR REQUIREMENTS
• GP CLAUSE
– Requirement for a “SYSTEM”
• 52.245-1(b) Property management.
– (1) The Contractor shall have a system to manage (control, use, preserve,
protect, repair and maintain) Government property in its possession.
– Requirement for “ASSESSMENT”
• 52.245-1 (f) Contractor Plans and Systems
– (3) The Contractor shall establish and maintain procedures necessary to
ASSESS its property management system effectiveness, and shall perform
periodic internal REVIEWS and AUDITS.
– Allowance to “AUDIT”
• 52.245-1(g) SYSTEM ANALYSIS
– (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, systems, procedures, records
Contractor Requirement
• ASSESSMENT of their PMS
– What methods can the contractor use…
what exists out there today?
Property
Management
E-Tools
E 2452-05
Standard Practice for
Equipment Management
Process Maturity Model
Contractor Requirement
• There is no specific contractual requirement as to
HOW the contractor is to “ASSESS,” “REVIEW” or
“AUDIT” their PMS.
– So long as they “assess” the outcomes/processes set
forth in the GP Clause or other requirements.
• Contractors should determine the APPROPRIATE
methodology(ies) for their “environment.”
• Ensure reliability, validity, and the ability to
replicate the findings.
Government System “?????”
What… Is it a survey or analysis or ???
• As our profession has matured the underlying
concepts – and their accompanying semantics
become more critical.
• The current perspective from DC (That 20 square miles
of land surrounded by reality) is that our work, i.e., our
reviews need more rigor and consistency.
• Just listen to the Congressional Hearings on
DCAA!
• What does this mean? Next Slide!!!
Government System “?”
FOR DOD
Current Guidance
Ye’ Really Olden Days!
Ye’ Recent Olden Days!
For DCMAers
DCMA
GUIDEBOOK
Proposed Guidance
For All of DOD
DoD
GUIDE
For the
Performance
Of Contract
Property
Administration
Property Control
SYSTEM SURVEY
Property Control
SYSTEM ANALYSIS
Property Management Property Management
SYSTEM ANALYSIS
SYSTEM AUDIT
AUDIT REQUIREMENTS
• If Property, within the Government, is going to
use the term AUDIT – they open themselves
to the requirements of the AUDIT
PROFESSION!
• AICPA
• IIA
• GAGAS - (Generally Accepted Government Auditing Standards)
AUDIT PROTOCOLS
• PROCESS
– Since the FAR has moved to a PROCESS orientation
it would be wise to view “Auditing” as a PROCESS.
– And, since I am trying to move NPMA to a more
RESEARCH based body… Thought it would be
good to support my contentions based upon
RESEARCH and not opinion.
– So, think for a minute, looking at every reference I
cited in earlier slides, are they not all based upon
AUDIT PRINCIPLES and PRACTICES?
AUDIT PROTOCOLS
• The answer is yes!
• So, what does that mean to every contractor
and every Government Employee involved
with either ASSESSING their PMS or
ANALYZING a PMS?
• The Answer…
– We had best be well versed in AUDIT PROTOCOLS,
METHODOLOGIES, and… WAIT FOR IT….
STANDARDS!!!
AUDIT PROTOCOLS
(Regardless of which methodology you use)
AUDIT PROCESS – what are the steps?
• Audit Objectives
• Define the attributes or
transactions or
characteristics
• Define the Population
• Specify the acceptance
rejection rate
• Sampling Methodology
•
•
•
•
•
Select Sample
Perform the Audit
Analyze Sample
Determine Status
Issue report
Source:
National Property Management Association,
Intermediate Studies Manual, Clearwater, FL.
2007. Pg. 7-2.
Please note that there are TONS of Texts
On the Auditing Process – encompassing
VOLUMES!
So, how do I apply this?
Let’s see – Some Examples!
• ASTM E 2452, 2005
Paragraph 8. Equipment
Life-Cycle Phases
• 8.1.6 Receiving
• DoD Property Manual
4161.2-M (1991) App. A
Function 3 – Receiving
– 8.1.6.1 Identify and resolve
shipping discrepancies
– 8.1.6.2 Record and post
receipts
– Discrepancies
• 2. Causes of discrepancies
are investigated and
documented. II
• 3. Contractor initiates
appropriate discrepancy
reports….
– Receiving Process
Note: Neither of these documents
Tell you the specific data elements
Within each PROCESS. That is where
Your PROCESS REQUIREMENTS and
PROCEDURES are critical!
• 3. Receiving reports are
promptly prepared that
document items and
quantities received, etc.,
etc., etc.
Both of these items may apply steps
within the AUDIT PROCESS.
• For example:
– What is your population?
– What is your sample size?
– What specific DATA ELEMENTS will you evaluate/test
under this process:
• Timeliness
• Accuracy of data
• Etc.
– How will you EVALUATE the “maturity” or “adequacy”
of the sample/population?
• The EMPM uses maturity levels (1-5)
• The DoD Property Manual uses Confidence rates, i.e.,
acceptance and rejection rates.
Both take into consideration issues of Materiality & Significance.
THE ISSUE
• We in the property community, at least under
DOD, have grown “comfortable” in doing our
work ONE WAY, i.e., using the DoD Property
Manual.
• In today’s environment we need:
– The ability to adapt and change!
– The ability to think and analyze – creatively!
– Most importantly – the ability to LEARN!
We need to be well versed in
A WIDE VARIETY of
AUDIT and ASSESSMENT
PROTOCOLS!
An Interesting Quote
• “There are known knowns. There are things we
know that we know.
There are known unknowns. That is to say,
there are things that we know we don't know.
But there are also unknown unknowns. There
are things we don't know we don't know.”
• Donald Rumsfeld
• So, the concern is, what is the depth of your
knowledge to properly apply an assessment or
audit program/process?
Are you as comfortable with the
Language of Auditing and Assessment
as you are with Property?
“Well, wait a minute Doug – this is all
new, it’s different – and it ain’t easy!”
• What to do?
Now, if I were “King of the Forest” and was
to design a curriculum for the Field…
• Foundations in Statistics
• Statistical Process Control (SPC)
– Including Metrics
• Auditing
– With ALL of its embedded requirements
• Just take a look at the AICPA SAS or the DCAA Manuals
• Property Related Tools
• Maturity Model Construct
• AIA’s E-tools and Metrics
• Auditing and Assessment -- Relationship(s) to VCSes
A few Tiny Questions - Why is it that DOD has just one two week on-line Property Audit
Course yet DCAA and QA have extensive training & education requirements in auditing?
And other Government agencies with Property responsibilities have NO training requirements….
And contractors, you’re not innocent either. What does YOUR company require/support?
What’s the old adage?
• “Jack of all trades and master of none.”
– Anonymous
• YES!!! We must have BREADTH to our
knowledge and experience
• But… we must also have DEPTH to our
knowledge!
Our Challenge here…
• Again, go out and learn – all that you can, such
that you acquire and develop the knowledge,
skills, and abilities to perform exceptional
work in the area of PROPERTY Audits and
Assessments.
THANK YOU!
Dr. Douglas N. Goetz, CPPM, CF
OLD DAU PROFESSOR
Recently Retired – now Rehired.
President of the newly incorporated GP Associates.
Hopefully a Good NPMA Instructor.
Chief cook and bottle washer at Home, responsible for all “honeydue”
requirements – though my wife has told me to stay out of HER house!
233 N. Maple Ave
Fairborn, OH 45324
GPASSOCIATES@ATT.NET
1- 888-576-0200