Urban Legends, Half-Truths,
Distortions and Flat-Out Lies in
Contract Property Management
A Myth-Busting Panel Discussion
Dr. Douglas Goetz, CPPM CF, GP Consultants
Mary Gonzalez, CPPM Southwest Research Institute
Brandon Kriner, CPPM CF, Harris Corporation
RECORDS
Contractors need not keep records
of Government property when the
items original acquisition cost is less
than either:
•$5000 or
•Their own Capitalization
Threshold, as they would for their
own property….
RECORDS
ANSWER – No, the Contractor is required to keep records of ALL
Government property REGARDLESS of Acquisition Cost.
(f) Contractor plans and systems.
(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:
(iii) Records of Government property. The Contractor
shall create and maintain records of
all
Government property accountable to the contract,
including Government-furnished and Contractoracquired property.
PHYSICAL INVENTORY
ALL Government Property
must be inventoried
ANNUALLY….
PHYSICAL INVENTORY
ANSWER – MAJOR MISCONCEPTION
FAR 52.245-1(f)(1)(iv) Physical inventory.
PERIODICALLY
The Contractor shall
perform,
record, and disclose physical inventory results.
A final physical inventory shall be performed upon contract
completion or termination.
The Property Administrator may waive this final inventory
requirement, depending on the circumstances (e.g., overall
reliability of the Contractor's system or the property is to be
transferred to a follow-on contract).
USE OF GOVERNMENT PROPERTY
If contractors are in possession of GFP under a US Government
contract, and they are bidding on ANOTHER US Government
contract – they should NOT disclose the GFP in their possession
such that, after award, they can request Rent Free Noninterference use on the new contract…
USE OF GOVERNMENT PROPERTY
FAR 45.201
(c) The solicitation shall describe the evaluation procedures to be
followed, including rental charges or equivalents and other costs or
savings to be evaluated, and shall require all offerors to submit
the following information with their offers—
(1) A list or description of all Government property that the offeror
or its subcontractors propose to use on a rent-free basis. The list
shall identify the accountable contract under which the property is
held and the authorization for its use (from the contracting officer
having cognizance of the property);
(2) The dates during which the property will be available for use
(including the first, last, and all intervening months) and, for any
property that will be used concurrently in performing two or more
contracts, the amounts of the respective uses in sufficient detail to
support prorating the rent;
(3) The amount of rent that would otherwise be charged in
accordance with FAR 52.245-9, Use and Charges; ….
NOTE – IT IS A GOVERNMENT RESPONSIBILITY TO PUT THIS INTO THE RFP!!!
USE OF GOVERNMENT PROPERTY
Where Government Property, accountable under a Prime’s US
Government contract is to be used by a Subcontractor -- Does the
Prime have to ask the Government’s permission?
USE OF GOVERNMENT PROPERTY
IT DEPENDS! 
There is an interesting technical issue/error in the FAR. FAR 52.245-9 REQUIRES:
(b) Use of Government property. The Contractor may use the Government
property without charge in the performance of—
(1) Contracts with the Government that
specifically authorize such use without charge;
(2) Subcontracts of any tier under Government prime contracts if the
Contracting Officer having cognizance of the prime contract—
(i) Approves a subcontract specifically authorizing such use; or
(ii) Otherwise authorizes such use in writing; and
(3) Other work, if the Contracting Officer specifically authorizes in writing
use without charge for such work.
Contractors – ask yourself – in your procedures do you ask the Government
every time you want to allow a Sub to use GP?
RISK OF LOSS
Contractors are to flow down to their subcontractors the SAME
Risk of loss Provision for Government property as is contained in
their contract….
RISK OF LOSS
No!
FAR 52.245-1(f)(1)
(v) Subcontractor control.
(A) The Contractor shall award
subcontracts that clearly identify items to be
provided and the extent of any restrictions or
limitations on their use. The Contractor shall
ensure appropriate flow down of contract terms
and conditions (e.g., extent of liability for loss of
Government property).
DISPOSITION
If the Government fails to respond within 120 after
acceptance of Inventory Disposal Schedules
(Submitted on Paper or through PCARSS) the
Government Property is considered to be abandoned
through the concept of “Constructive Abandonment.”
DISPOSITION
Nope!
FAR 52.245-1(j) Contractor inventory disposal. Provides
Guidance…
(6) Storage.
(i) The Contractor shall store the property identified on
an inventory disposal schedule pending receipt of
disposal instructions. The Government's failure to
furnish disposal instructions within 120 days
following acceptance of an inventory disposal
schedule may entitle the Contractor to an equitable
adjustment for costs incurred to store such
property on or after the 121st day.
TRANSFER OF ACCOUNTABILITY
Contractors can request transfer of property accountability
from one contract to another if there is a potential need for the
property under the gaining contract.
TRANSFER OF ACCOUNTABILITY
The statement is incorrect.
In accordance with FAR 45.106, Transferring Accountability, if
firm requirements exist under the gaining contract…..
TRANSFER OF ACCOUNTABILITY
Once the losing and gaining contracting officers agree with the
transfer, the only documentation needed is a letter signed by
both parties to effect the transfer.
TRANSFER OF ACCOUNTABILITY
The statement is incorrect. In accordance with FAR 45.106,
Transferring Accountability, states that when a firm
requirement exists on another contract, modifications are
issued to the losing contract and to the gaining contract to
effect the transfer of accountability.
TRANSFER OF ACCOUNTABILITY
When contractor-acquired property is transferred to another
Government contract, the classification remains the same
until final disposition occurs at the end of the gaining contract.
TRANSFER OF ACCOUNTABILITY
The statement is incorrect. In accordance with FAR 45.106,
once transferred, all property shall be considered
Government-furnished property to the contract
TRANSFER OF ACCOUNTABILITY
Under Firm-Fixed Price “Vanilla” Contracts, GFP belongs to
the contractor so property would not need to be reviewed for
the purpose of reutilization under another Government
Contract
TRANSFER OF ACCOUNTABILITY
The statement is incorrect. Title to Government-Furnished
Property remains vested with Government under all types of
contracts which includes “Vanilla” Firm-Fixed Price
“Chocolate” and “Strawberry” Firm-Fixed Price contracts are a whole ‘nother story…
IUID REGISTRY (DFARS 252.211-7007)
All Government-Furnished Property, Contractor-Acquired
Property, and Real Property with an acquisition cost of
$5000.00 or more require entry into the IUID Registry under
DFARS 252.211-7007
IUID REGISTRY (DFARS 252.211-7007)
The statement is incorrect. In accordance with DFARS
252.211-7007(c), Reporting of Government-Furnished
Property, the following are the exceptions:
1) Contractor-Acquired Property
2) Real Property
3) Property under any statutory leasing authority
4) Property to which the Government has acquired a lien or
title solely because of partial, advance, progress, or
performance-based payments
5) Intellectual property or software
6) Property released for work in process
IUID REGISTRY (DFARS 252.211-7007)
The statement is incorrect. In accordance with DFARS
252.211-7007(c), Reporting of Government-Furnished
Property, the following are the exceptions:
1) Contractor-Acquired Property
2) Real Property
3) Property under any statutory leasing authority
4) Property to which the Government has acquired a lien or
title solely because of partial, advance, progress, or
performance-based payments
5) Intellectual property or software
6) Property released for work in process
PROPERTY ADMINISTRATION
FAR 52.245-1(b)(4) obligates contractors to perform periodic
internal reviews, surveillances, self assessments or audits and
disclose significant findings or results to the GPA. This means
that the Government does not need to do its own audit.
PROPERTY ADMINISTRATION
This statement is incorrect. The Government’s interest and
obligation in performing its own PMSA is separate from the
contractor’s requirement to self-assess. (See FAR 45.105(a))
Sorry….
PROPERTY ADMINISTRATION
Under the “Business Systems Rule” (DFARS 252.245-7003),
the Government Property Administrator is responsible for
approving the contractor’s property management system and
issuing a letter to the contractor
PROPERTY ADMINISTRATION
This statement is incorrect. The Contracting Officer (usually,
the Division Administrative Contracting Officer, or DACO) is
responsible for notifying the contractor in writing of the status
of the contractor’s property management system. The CO
does rely on input from the GPA as the technical expert on
property management.
PROPERTY ADMINISTRATION
Under the “Business Systems Rule” (DFARS 252.245-7003),
any deficiency identified by the GPA during the course of an
audit will be considered “significant” and result in disapproval
of the system and withholding of payments.
PROPERTY ADMINISTRATION
This statement is incorrect. Significant deficiencies are
specifically defined in the clause as: “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.”
All “findings” are not significant in this context- this definition sets a high
bar. It is important that contractors, GPAs and COs understand these
terms. This concept extends beyond just the world of DoD and the
Business Systems rule to audits between Primes and Subs, and audits
with other Government agencies. All issues must be appropriately
addressed by all parties within the context of their significance, materiality
and impact on contract performance.
PLANT CLEARANCE
Ms. Alma Casias, DCMA Plant Clearance Officer is present
and willing to answer questions regarding the Plant Clearance
process under DoD Contracts