Understanding
Property Contractual
Terms and
Conditions
Judy Hively, CPPM
Northrop Grumman
and
Rick Shultz, CPPM, CF
Johns Hopkins APL
AGENDA
•
•
•
•
•
•
•
•
•
•
Introductions
Why Review Contract?
Key Stakeholders
Sections of a Contract (A thru K)
Reviewing the Contract
– General Clauses
– Section I, Contract Clauses
Checklist for Government Property Oversight
Challenges
Glossary, References, Additional Links
Closing
Questions?
WHY REVIEW CONTRACT?
• Address Property Concerns Upfront
• Understand Terms and Conditions
• Look Out for the Best Interest of Your Organization
• Possible Consequences of Non-Compliance
•
Increased Liability/Withholding Fee
•
•
•
DFARS 252.242-7005, Contractor Business Systems (Feb 2012)
Applies to 6 systems (Accounting, EVMS, Estimating, MMAS, Property and Purchasing)
Withhold Fee can be up to 10% if multiple business systems deemed inadequate
•
Reduced Award Fee
•
Inadequate Customer Property Audits
•
Contract Termination by Default
•
Negative Performance Rating for Future Proposals
PROGRAM
MANAGER
CONTRACTS
FINANCE
Identify
Key
Stakeholders
Your Organization
Must
COMMUNICATE
PROPERTY
ADMINISTRATOR
SUBCONTRACTS
SECURITY
PURCHASING
GOVERNMENT CONTRACTING
SECTION A – SOLICITATION/CONTRACT FORM
Standard Form 26 and Standard Form 33
• Name, Address, and Location of Issuing Activity, Including Room and Building
• Contract Number/Modification or Revision Number
• Date
• Request for Proposal (RFP) Number
• Number of pages
• Requisition or Other Purchase Author
• Brief Description of Item or Service
• Requirement for the offeror to provide its name and complete address,
including street, city, county, state, and zip code, and electronic address
(including facsimile address), if appropriate
• Other Agency-unique data such as priority ratings, security classification and
similar data
• Signature blocks for the Government and the Contractor at contract
GOVERNMENT CONTRACTING
SECTION B – SUPPLIES OR SERVICES AND PRICES/COSTS
This section is critical for billing purposes. It details negotiated products and services
(contract line item number - CLIN) including the agreed upon prices. Contractors
must ensure they reference contract line item information when invoicing the
government.
SECTION C – DESCRIPTION/SPECIFICATIONS/STATEMENT OF WORK
This section outlines the work to be performed and is technically considered to be
the most critical section. The statement of work also describes the requirements
(product performance) for the end item.
SECTION D – PACKING AND MARKING
This section identifies the terms for all contract deliverables which includes:
packaging requirements and identification specifications.
GOVERNMENT CONTRACTING
SECTION E – INSPECTION AND ACCEPTANCE
This section outlines the inspection process and quality assurance requirements.
This includes: criteria the government will use for an acceptable product, the
methodology they will use to inspect the product and the place of delivery.
SECTION F – DELIVERIES OR PERFORMANCE
This section identifies the excepted schedule of delivery. It includes: time, place and
method of delivery by contract line item.
SECTION G – CONTRACT ADMINISTRATION DATE
This section presents contracting administration data that includes: required
accounting and appropriation data, contract administrations information and/or
instructions other than those on the contract form.
GOVERNMENT CONTRACTING
SECTION H – SPECIAL CONTRACT REQUIREMENTS
This section identifies special contract requirements that are specific to this contract
and are not included elsewhere in the contract. Examples include: property related
requirements, special security requirements and limited access to facilities.
SECTION I – CONTRACT CLAUSES
This section outlines the required contract clauses. Clauses include: Federal
Acquisition Requirements (FAR), Agency specific FAR Supplements and/or specific
Agency’s Clauses.
GOVERNMENT CONTRACTING
SECTION J – LIST OF DOCUMENTS, EXHIBITS AND OTHER ATTACHMENTS
This section lists all attachments that have been appended to the contract. These
documents may clarify or further define contract requirements. Attachments could
include: Contract Data Requirement Lists or lists of government furnished property.
SECTION K – REPRESENTATIONS, CERTIFICATIONS AND OTHER STATEMENTS
This section identifies any Certifications (Certs) or Representations (Reps) a
contractor has to present. These signed documents establish compliance with
conflict of interest and the identity of the contractor by specifying information
unique to the company.
REVIEWING THE CONTRACT
• General Clauses
• Search for General Words
• Property
• Equipment
• Furnished
• Look for Certain Terms
• Deliverable
• Build
• Maintain
• Section I, Contract Clauses
EQUIPMENT ACQUISITON AND TITLE
(a) In accordance with 31 USC 6306 and FAR 35.014 (b), the Contracting Officer hereby grants approval
to [enter name of contractor] to retain title to any non-deliverable equipment, procured for the
approved task order and funded solely with RDT&E 6.1, 6.2 and/or 6.3 funds or equivalent categories
of non-DoD funding. Such equipment shall be subject to the constraints of FAR 45.3 and will be
subject to annual review by the ACO. The contractor shall comply with the provisions in FAR
35.014(d)(1). A list of subject equipment is required to be submitted to the Contracting Officer, with
a copy to the COR, on an annual basis.
(b) If the Contractor fails to maintain an approved Purchasing system it will then be required to obtain
prior approval from the ACO to acquire any items not specifically included in an approved task order,
and which exceed the capitalization level established by [enter name of contractor] for financial
statements of $5,000. Title to all such items of equipment, purchased with RDT&E 6.1, 6.2 and/or 6.3
funds or equivalent categories of non-DoD funding, will be determined by the ACO at the time of the
approval subject to FAR 35.014(b)(3).
(c) If title to equipment is vested in the contractor, depreciation, amortization, or use charges are not
allowable with respect to that equipment under any existing or future Government contract or
subcontract.
(d) Undeliverable property acquired and/or accountable under Contract [enter old contract number ] is
hereby transferred to Contract [enter new contract number ].
USE OF GOVERNMENT FURNISHED PROPERTY
FOR UARC CONTRACTS
•
In accordance with FAR 45.301, this clause sets forth the use and accountability of property either
furnished or acquired under prime contracts with [enter name of contractor] for performance of
current and future U.S. Government contracts and other work performed in accordance with this
clause.
•
[enter name of contractor] may use the property accountable under this contract in the
performance of other U.S. Government contracts and performance of its Independent Research and
Development (IR&D) programs in accordance with the requirements of FAR 45.301 and FAR 45.303.
For purposes of 52.245-9, the parties agree that such use is on a rent-free basis.
•
Costs incurred for acquisition, maintenance, repair, replacement, disposition, or other purposes in
connection with the property accountable hereunder will be subject to the reimbursement
provisions of the related contracts and FAR Subpart 31.2. Security requirements, if any, shall be
governed by the terms and conditions of the related contracts.
Contract Section G.7, USE OF GOVERNMENT PRODUCTION AND
RESEARCH PROPERTY ON A NO-CHARGE BASIS (1852.245-80) (MAR
1989) is hereby replaced in its entirety with the following:
“G.7 1852.245-80 (MAR 1989) USE OF GOVERNMENT PRODUCTION AND RESEARCH
PROPERTY ON A NO-CHARGE BASIS
In performing this contract, the Contractor is authorized to use on a no-charge,
noninterference basis the Government-owned production and research property provided to
the Contractor under the contract(s) specified below and identified in the cognizant
Contracting Officer’s letter approving use of the property. Use is authorized on the basis that
it will not interfere with performance of the Government contract(s) under which the
property was originally furnished. Use shall be in accordance with the cognizant Contracting
officer’s approval letter.
Contract No(s):
NAS#:?????, NAS#-?????, and NAS#-????? (NASA Contracts)
H.4 Government Property
a. Government-Furnished Equipment. Government-furnished equipment, data, or services shall
be identified in individual TOs.
b. Contractor Acquired Property. In the event the contractor is required to purchase property in
the performance of this contract, compliance with the procedures of FAR Part 45.402,
Government Property is required.
c. Disposition of Government Property. Thirty (30) days prior to the end of the Task Order period
of performance, or upon termination of the Task Order, the contractor shall furnish to the COR
a complete inventory of all Government Property in his possession under the Task Order that
has not been tested to destruction, completely expended in performance, or incorporation
and made a part of a deliverable end item. The COR will furnish disposition instructions on all
listed property which was furnished or purchased under the Task Order.
d. Risk of Loss. The contractor assumes full responsibility for and shall indemnify the Government
for any and all loss or damage of whatsoever kind and nature to any and all Government
property, including any equipment, supplies, accessories, or parts furnished, while in his
custody and care for storage, repairs, or services to be performed under the terms of this
contract, resulting in whole or in part from the negligent acts or omissions of the contractor,
subcontract, or any employee, agent, or representative of the contractor or subcontractor.
H.4 Government Property (con’t)
e. Leasing of Real and Personal Property. The Government contemplates that leases may be part
of a solution offered by a Contractor, but the Government, where the Offeror’s solution
includes leasing, will not be the Lessee. Under no circumstances on any Order issued under
this Basic Contract shall (a) the Government be deemed to have privity-of-contract with the
owner/lessor of the leased items; or (b) The Government be held liable for early
termination/cancellation damages if the Government decides not to exercise an Option period
under an Order unless the Contractor has specifically disclosed the amount of such damages
(or the formula by which such damages would be calculated) as part of its Proposal and the
Contracting Officer has specifically approved/allow such damgaes as part of the Award. The
Basic Contractor strictly prohibits the use of lease-like payment arrangements, which purport
to permit the Government to receive delivery of items and then pay for the full cost of the
items over time, even if such arrangements are not technically a lease transaction because the
is Government is not the lessee.
SECTION I – CONTRACT CLAUSES
•
FAR Regulations –
•
•
•
FAR Part 45.101 – Government Property
FAR Part 52.245-1 (April 2012)– Government Property Clause
Agency Supplements –
•
•
•
•
•
•
•
•
•
•
•
DFARS 252.211-7003 - Item Identification and Valuation
DFARS 252.211-7006 - Radio Frequency Identification
DFARS 252.211-7007 - Reporting of GFE in the DoD IUID Registry
DFARS 252.242-7004(f) - MMAS (Material Management Accounting System)
DFARS 252.242-7005 - Contractor Business Systems
DFARS 252.245-7001 - Tagging, Labeling and Marking of GFP
DFARS 252.245-7002 - Reporting Loss of Government Property
DFARS 252.245-7003 - Contractor Property Management System Administration
DFARS 252.245-7004 - Reporting, Reutilization and Disposal of Government Property
DFARS 252.228-7001 – Ground and Flight Risk
FAA 3.10.3-2 – Government Property Basic Clause
SECTION I – CONTRACT CLAUSES (CON’T)
•
NASA FAR SUPPLEMENTAL CLAUSES
–
–
–
–
–
–
–
–
–
–
–
–
–
1852.245–70 Contractor Requests for Government-Provided Equipment.
1852.245–72 Liability for Government Property Furnished for Repair or Other Services.
1852.245–73 Financial Reporting of NASA Property in the Custody of Contractors.
1852.245–74 Identification and Marking of Government Equipment.
1852.245–75 Property Management Changes.
1852.245–76 List of Government Property Furnished Pursuant to FAR 52.245–1.
1852.245–77 List of Government Property Furnished Pursuant to FAR 52.245–2.
1852.245–78 Physical Inventory of Capital Personal Property.
1852.245–79 Records and Disposition Reports for Government Property with Potential Historic or Significant
Real Value.
1852.245–80 Government Property Management Information.
18.52.245–81 List of Available Government Property.
1852.245–82 Occupancy Management Requirements.
1852.245–83 Real Property Management Requirements.
CHECKLIST FOR GOVERNMENT PROPERTY OVERSIGHT
Contract Review
•
•
•
Contract Number / Delivery Order Number / PO Number
• Contract Description
• Contract Period of Performance
Contract Point of Contacts
• Contracts Rep
• Program Manager
• Program Focal Point of Contact for Property
Additional Contract Information
• Contract Type – FP, T&M, CP
• Government Property Clauses (i.e. 52.245-1, April 2012)
• Use of Customer Property
• Government Furnished Property
• Material Acquisitions
• Subcontractors
• UID Clause
• Residual Material Ownership
CHECKLIST FOR GOVERNMENT PROPERTY OVERSIGHT (CON’T)
•
Consider the Ten Lifecycle Outcomes When Reviewing the Contract
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Acquisition
Identification/Receiving
Records
Physical Inventory
Subcontractor Control
Reporting
Relief of Stewardship (Disposition)
Utilization
Maintenance
Closeout
CHALLENGES
•
•
•
•
•
•
•
•
•
•
•
Lack of Communication between GP, Contracts, Program and Supply Chain functions
Updating Contract/Accounting System as Contract Reps and/or PM’s rotate
Involve GP in Solicitation, RFP, Program Inception and/or PMR’s
Identify Program POC for Property Interface
Use of GFE on other contracts must have written authorization from customer
Subcontracts/PO’s that contain GFE
Jointly Determine Whether to Barcode Items
Complete/Reconcile Inventories
Customer Audits when or if necessary
Disposition/Transfer of Residual Material/GP
Contract Closeout of GP for Final Invoice
GLOSSARY / REFERENCES / ADDITIONAL LINKS
Federal Acquisition Regulation - http://www.acquisition.gov/far/
DFARS 252 - http://farsite.hill.af.mil/VFDFARA.HTM
FAA - https://conwrite.faa.gov/CWClauseList.cfm?Show=Num,Title,Text,Pers,UCF,IBR&CatNum=3.10.3
NASA - http://www.hq.nasa.gov/office/procurement/regs/1845.htm#45_106
Agriculture (AGAR) - http://www.dm.usda.gov/procurement/policy/agar.html
Air Force (AFFARS) - http://farsite.hill.af.mil/vfaffar1.htm
Army (AFARS) - http://farsite.hill.af.mil/VFAFAR1.HTM
Army (AFARS) Acquisition Procedures - http://www.army.mil/usapa/epubs/pdf/p70_3.pdf
Army Corps of Engineers (EFARS) - http://www.usace.army.mil/Portals/2/docs/EFARS.pdf
Defense (DFARS) - http://www.acq.osd.mil/dpap/dars/dfars/index.htm
Education (EDAR) - http://www.ed.gov/policy/fund/reg/clibrary/edar.html
Energy (DEAR) - http://farsite.hill.af.mil/vfdoe1.htm
Housing (HUDAR) - http://www.hud.gov/offices/cpo/hudar.cfm
Interior (DIAR) - http://www.ecfr.gov/cgi-bin/text-idx?c=ecfr&tpl=/ecfrbrowse/Title48/48cfrv5_02.tpl
Justice (JAR) - http://www.justice.gov/jmd/pe/index.htm
Labor (DOLAR) - http://www.dol.gov/oasam/regs/cfr/48cfr/toc_Part2900-2999/Part2900-2999_toc.htm
NASA (NFS) - http://www.hq.nasa.gov/office/procurement/regs/nfstoc.htm
Nuclear Regulatory Commission (NRCAR) - http://www.nrc.gov/about-nrc/contracting/48cfr-ch20.html
Prisons (BPAP) - http://www.bop.gov/business/acquisition.jsp
State (DOSAR) - http://www.statebuy.state.gov/dosar/dosartoc.htm
Transportation (TAR) - http://www.dot.gov/ost/m60/tamtar/tar.htm
Treasury (DTAR) - http://www.treasury.gov/about/organizational-structure/offices/Mgt/Pages/ProcurementPolicy-Regulations.aspx
Veterans Affairs (VAAR) - http://www1.va.gov/oamm/elibrary/policy.htm
QUESTIONS?
COMMENTS?
Thank You
Judy Hively
and
Rick Shultz