AIA’s Property Management Industry Leading Practices
Kathy McFarland, JD CPPM CF
Aerospace Government Property Compliance Sr. Manager
Honeywell International Inc.
AIA PMC ILP Subcommittee Chair
Background
The Aerospace Industries Association (AIA), founded in 1919, (only a few years after the birth of flight!), is
the premier trade association representing the nation’s major aerospace and defense manufacturers.
Today, more than 300 major companies and their suppliers are members.
The Association concentrates on issues covering civil aviation, space, national security, international, and
procurement & finance. In addition, the Association has offices for Communications, Legislative Affairs,
the Supplier Management Council, and the Aerospace Research Center. Acquisition Policy is the focal
point for many initiatives associated with Federal Government acquisition reform activities. AIA
establishes industry goals and strategies, achieving consensus among its members and national and
global stakeholders, and implementing solutions to industry-wide issues. AIA commits to seeking
consensus positions on all issues of importance to our entire membership while maintaining free and
open discussion and ensuring all views are heard. They are committed to developing and implementing
Industry Leading Practices throughout their Association membership.
Objective
In 2008, AIA’s Property Management Committee (PMC), under the auspices of the Procurement and
Finance Council, set out to document leading practices and subsequent best practices within our industry.
Why?
Other than “just a good idea”, the revised Government Property clause of June 2007, stated Government
contractors “…shall initiate and maintain the processes, systems, procedures, records, and
methodologies necessary for effective control of Government property, consistent with voluntary
consensus standards and/or industry-leading practices and standards for Government property
management except where inconsistent with law or regulation.” FAR § 52.245-1 (b) (1). In addition, we
could not locate a documented study on property management industry leading practices (ILPs). We
also were aware that each company had practices which would lead to exceptional performance and
desired outcomes. Finally, there are certain established and time tested practices that most, if not all of
our companies recognize as best practices and currently utilize. This was a unique opportunity to adopt
and document industry leading practices.
ILP Subcommittee
We formed the ILP subcommittee consisting of Kathy McFarland, Honeywell International. as the chair,
Pat Jacklets - Northrop Grumman Corp., Richard Culbertson - Lockheed Martin Corp., Jim Prusaczyk Sikorsky Helicopter - UTC, Robert McFarland – ITT A/CD, Bonnie Schlag - Honeywell Intl., and Cathy
Boehm – Sikorsky. Cathy was our technical representative and she and Bonnie orchestrated the format,
collection of data, and organized the data for full PMC review.
What is an ILP?
While there are many definitions provided by multiple entities, AIA established the following:
•
Industry Leading Practices and Best Practices are methods, processes, or practices about which
one or more of the following pertain:
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–
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It produces desired results;
It leads to exceptional performance;
It is recognized by an industry expert or group of industry experts;
It is deemed so by an organization's customers; and/or
It is clearly a new or innovative use of personnel, resources, or technology.
These points were considered in the adoption of our AIA Industry Leading Practices.
Phase I
We conducted a five part survey within AIA member companies to establish what processes were being
utilized. We began our surveys by obtaining some general information about the companies themselves
such as type of business, type of contracts, customers, Government v. commercial, functional reporting
chain, direct v. indirect, capital assets, etc.
Surveys 2 through 5 included questions covering the 10 performance based outcomes along with self
assessments. In all there were 479 questions in the following areas: Contract Closeout, Solicitation,
Acquisition, Receiving and Identification, Records, Physical Inventory, Reports, Relief of Stewardship,
Subcontractor Control, Utilization (movement, storage), Maintenance and Self Assessments. The
development of the questions together with the actual data solicitation was conducted over an 11 month
time period.
Process
Once we concluded the surveys, the next step was the data analysis. This was accomplished by weekly
telecons over three months involving the full Property Management Committee. We reviewed all 479
questions, prioritized the major practices, and analyzed the responses. Through committee review and
consensus, 42 ILPs constituted Phase I. We then documented and shared the results with the rest of our
industry via our NES ’09 presentation and on the AIA public website, encouraging additional input and
continuous improvement.
Phase II
We began Phase II in 2010, with the objective of reviewing the remaining initial data, and following the
Phase I scenario, continued to identify potential ILPs. Phase II was completed in May 2011 resulting in a
consensus of 8 ILPs. They have been included in the listing on the AIA website and are being presented
at this NES ‘11.
The New Ones!
(Please read the following in conjunction with the PowerPoint presentation)
Outcome
ILP #
Title
Records
3-05
Found Property on Active Contract
3-06
Found Property on Closed Contract
Note that this designates that no accountable record was established. This differentiates from
finding property where there had been a record and the item was reported as a loss and the
contract has been closed. In the latter, there was no overwhelming leading process indicated by
our survey and our committee was unable to reach a consensus on guidance for records and
reporting at this time.
3-07
Items issued to WIP
This clarifies that items being received and stocked for future use are considered “material” and is
not a “tagged asset” until such time as meets the requirements and installed into a higher level
item. They are not considered individual assets until fully incorporated into the end product (i.e. an
oscilloscope or power supply designated as a component of a test station). Once issued, the item
becomes work in process and would not be entered into the property record as test equipment until
the final product is complete.
Physical Inventory
4-07
Material Inventories – Use of Cycle Counts
This, of course, includes the opportunity for utilizing both wall to wall AND cycle counting.
A general concern is that the most talked about method of cycle counting is the “ABC or Pareto”
method – selecting part numbers based on cost, risk etc. This would leave a potential gap in not
identifying a part within a bin that may not be on record.
Another way to conduct a cycle count is performing a “geographical” count of the inventory. This
requires that certain portions of the warehouse (e.g. bins or drawers) are completely counted at
regular intervals throughout the designated inventory period. Even if some of the items are moved
to different locations, these discrepancies will generally balance out over the course of periodic
checks. The accuracy of the geographic method depends on the accuracy of the specific area
counts. Jon Schreibfeder. Cycle Counting Can Eliminate Your Annual Physical Inventory!,
Effective Inventory Management, Inc. http://www.effectiveinventory.com/article9.html).
(Mr. Schreibfeder has been awarded the title "Subject Matter Expert" in inventory management by
the American Productivity and Quality Center. He is an advisor and guest lecturer in the Industrial
Distribution Program at Purdue University.)
“Improve accuracy and reliability and reduce costs to perform physical inventories through the use
of inventory-by-exception, cycle counting in addition to wall-to-wall inventories, establishing
accountability, and written policies and procedures”. Ronald E. Regalado, CPPM, Industry Leading
Practices - A Comparative Analysis....,The Journal of Property and Asset Management, Vol. 1, No.
1, (NPMA May 2010),. http://www.npma.org/uploads/NPMA%202010%20Journal%20%20Property%20and%20Asset%20Mgt.pdf
Subcontractor Control
5-05
Primary Site Designation w/ Alternate Site’s
This was a toughie since there was no overwhelming consensus process of managing alternate
sites. Some companies manage their alternate/secondary/performing sites similar to how they
manage their subcontractors/suppliers. Others do not.
Some have their primary site manage everything at the alternate site, treating them as a separate
“building” and maintaining a single record system. Others have variations on the two methods.
Relief of Stewardship
7-04
Sanitization/Disposition of Data Storage Devices
7-05
Qualification of 3rd Party for Sanitization or Disposal
This is basically common sense. You wouldn’t take your car to be fixed to someone who wasn’t an
expert in that field. The qualification and certificate themselves, document that your company has
exercised reasonable caution and due diligence if any information should be compromised
Utilization (Movement)
8-05
Use of DD Form 1149
It is very important to note that the authorization for transfer or shipment should be in the form of a
contract line item, contract modification or some other approval (letter, signed statement, etc.) by
the Contracting Officer or Customer representative who is contractually authorized to provide this
approval. (Not an engineer or program technical personnel!).
The DD1149 should reference the approval in block 9 and a copy of the authorization attached.
Industry likes this method! It standardizes our documentation and normally is controlled by
property management personnel. In addition, as we all are aware, it takes a lot less time to obtain
authorization via letter or electronic document than to receive a contract modification! That is not to
say, however, that a contract mod shouldn’t be executed by the Contracting Officer. It should!
However, program delay or stoppage should not occur due to administrative timing of a
modification.
ILP Implementation
Now that 50 Industry Leading Practices have been documented, you should be implementing them within
your companies! This is accomplished by referencing them within your Property Management System
such as in your Property Management Plan, Policies and Procedures (specify the ILP# or stating
verbatim), incorporating into your processes, and managing the property in accordance with the ILPs.
We started off by surveying our sites to see which ILPs were already being performed and at which sites.
We targeted the sites that weren’t already performing the most common ILPs that the other sites had
already implemented. Then, we began introducing the “rest of them” to the all sites. Yes, we took the
easiest and least costly ones first! It broke the ice. Then we initiated probably the most costly,
considering the labor involved, Automated Identification Technology (AIT). We phased this in over a two
year period to the sites that did not currently have this capability.
Because existing ILPs may be improved, additional ones documented or created, and to assure that the
ILPs are current, a listing of AIA Industry Leading Practices can be viewed on an ongoing basis by
accessing the following website:
http://www.aia-aerospace.org/industry_information/resources/property_management_etools/
In closing, we extend an opportunity to everyone to assist us in improving our documented ILPs.
Suggestions may be sent to Ric Sylvester, AIA VP Acquisition Policy, richard.sylvester@aiaaerospace.org, Attention: Property Management Committee/ILP.
Our Power Point presentation follows.