Federal Property
SIG
NPMA NES
Orlando, 2013
Agenda
• Business Meeting
• Case Study: Gary Aircraft Corporation
Business Meeting
• Call to order
• Old business
– Review National direction for SIGs
• New business
– Election of officers
• Adjourn
Volunteers/Nominees
• Chair
– Luis Mora, South Florida Chapter, SharePoint
Manager at US Southern Command
• Vice Chair
– Dave Gedlinske, Saguaro Chapter, Property
Management Officer at Western Area Power
Administration
• Secretary
– Collin McKinstrie, Federal Center Chapter, Senior
Consultant at Sunflower Systems
• Working Group Coordinator
– ?
Case Study: Gary Aircraft Corp.
• November, 1989, an appeals case was
heard in which the government was
seeking restitution from Gary Aircraft
Corporation (“Gary”) for government
furnished property presumed to be lost.
• Value of said property estimated to be
$1.8M
• Date of initial complaint against the
contracting officer: 1977
The Details
• Gary won a competitive contract to repair airplane
engines.
• Engines were provided as GFP
• It is the Government's policy to rely upon contractor
property control records and to designate and use such
records as the official contract records unless an
exception has been authorized.
• The contractor shall establish and maintain adequate
control records, either manual or mechanized, for all
Government property provided under a contract,
including property provided under such contract as may
be in the possession or control of a subcontractor.
Details, cont.
• The Air Force in general maintains no record which allows a
determination of the quantity of Government furnished
property (GFP) given to overhaul contractors for performance
of their overhaul contracts. Accordingly, Government records
cannot be used to determine the amount of GFP delivered to
Gary.
• Air Force overhaul contractors have complete requisitioning
authority for GFP used in the prosecution of the contract
work with little or no surveillance by the Air Force. The Air
Force places near total reliance for the maintenance of GFP
records on overhaul contractors and has no way to assure
itself of their accuracy other than some occasional
surveillance at the contractors' plants by Government
property administrators.
Details, cont.
• The Government claim for allegedly lost unserviceable GFP is
based on 85 inventory adjustment vouchers which input
inventory decrease adjustments to the mechanized records
for unserviceable GFP. All of the exhibits on which the
Government's GFP claim is based are either Gary inventory
adjustment vouchers or Government-performed
reconciliations of inventory adjustments reported to the
Government in inventory adjustment vouchers.
• After completion of development and application of a
mechanized inventory management system for serviceable
Government property, the logical next step was to develop a
"test system" for unserviceable Government property. One
location would be the "guinea pig" for Gary's ultimate goal of
company-wide mechanization of unserviceable GFP.
Details, cont.
•
Because of the other duties assigned to the data processing manager, Gary
"stopped all further development work on the computerization of the
unserviceables." Thus, Gary's mechanized system for unserviceable GFP
never progressed even to the parallel processing phase and in fact never
reached anything other than a "test system basis" or the "experimental"
state in 1973.
•
In a parallel processing phase, both manual and computerized records would
be kept simultaneously to see that the systems produced the same results.
The "official“ system used by appellant for accounting for unserviceable
Government property at Victoria (test location) never changed from the
manual stock record cards throughout the life of the contract although from
time to time appellant provided the Government with the computer data.
•
The receipt and issue documents for unserviceable GFP were not submitted
to the mechanized system on a regular basis; thus, the mechanized system
for unserviceable Government property was never properly maintained as
even a test data base.
The Government Claim
•
•
On 22 May 1974, the company submitted to the Government a computer print-out which
contained all of the inventory adjustments made in Gary's mechanized system at Victoria
from July 1972 through 22 May 1974. This print-out included all increase and decrease
adjustments to the serviceable and unserviceable Government property inventories as
reflected in the mechanized system. Shortly after the print-out was submitted to the
Government, Gary reminded DCAS property personnel that the unserviceable entries did not
constitute the official records for unserviceable GFP.
On 27 February 1975, Mr. Marino, the Government property administrator, wrote a letter to
the then contracting officer which concerned the "Determination of Contractor Liability
Inventory Discrepancies, Gary Aircraft Corporation, GAC, Victoria, Texas." This letter noted
two categories of unserviceable Government property for which Gary allegedly owed money.
The first of these was based on Inventory Adjustment Voucher Number 4260 8051 and was in
the amount of $13,984.30. The second was based on the mechanized print-out of 22 May
1974, and included alleged inventory shortages of $2,279,846.32. The letter then stated:
–
•
This latter reconciliation of unserviceable inventory adjustments consists of a group of 66 individual
line items comprising 84 transactions for which auditability and traceability could not be established.
In response to both written and verbal requests from the property administrator the contractor was
unable to provide satisfactory explanations for these adjustments. The contractor stated in his letter
of 14 October 1974, that these adjustments were simply bookkeeping adjustments to bring both his
mechanical and manual records into adjustment. Notwithstanding this contention inspection of each
of the 84 transactions fails to provide any explanation as to the reason for the adjustment.
Basically, the Government's position is that since the mechanized records and the manual
records do not agree, the difference must be due to losses of property for which Gary is
responsible.
Group Questions
• What impact does the change in the
government property clause (no longer
having the official records be those of
the contractors) have in a situation such
as this?
• Is the current guidance an improvement
to management of property records? If
not, how should the guidance be
improved?
The Court’s Decision
• It is the Government which bears the burden of
"showing that the goods were delivered to the bailee in
good condition and that they were returned in a
damaged condition or not returned at all." Meeks
Transfer Co., Inc., ASBCA No. 11819, 67 2 P 6567 at
30,472.
• Herein lies the fatal defect in the Government's claim.
The Government is unable to produce evidence which
establishes any loss, let alone in what particular
amount.
• The Government maintained no records of what
property was sent to appellant over the years. Thus,
the Government has no proof from its own records of
the first element in the (Appendix B) equation.