Contractor Property Management Procedures IND 105 LESSON 6
Contractor Property Management Procedures TLO 6- Given the requirement to review a Contractors written property management procedure, analyze procedures to determine acceptability based on the required outcomes and processes identified in FAR 52.245-1(f)(1). 1. Recognize the purpose of contractor written property management procedures. 2. Recognize the essential elements that should be addressed in the contractor’s written procedures for each outcome and process. 3. Identify outcomes and processes contractors are required to establish under FAR 52.245-1(f)(1). 2
PMS Procedures ELO 1 What is a Policy? • Guiding principles used to set direction within an organization. • Usually associated with the overall mission of an organization. • Used as mini-mission statement(s) to provide direction/purpose/scope for the procedure content. Contains: • The target user, • A stated purpose, and • Some type of effectiveness measure to communicate how users know the procedure is working. 3
PMS Procedures ELO 1 What is a Procedure? • A document identifying a specific way of accomplishing something. • Designed as a series of steps to be followed • Consistent and repetitive approach to accomplish an end result. • A plan of action used to guide desired outcomes • A fundamental instruction to help make consistent decisions. 4
PMS Procedures ELO 1 What are desk instructions (a.k.a. desk procedure)? • An instruction that provides detailed directions on how to perform a task. Are they auditable? • Yes, any published process provided to or created by an employee and approved by management to perform a requirement is auditable. 5
PMS Procedures ELO 1 What is a System? • Refers to the set of procedures, documents, software programs, forms, etc., interconnected and organized to accomplish a higher-level objective. 6
PMS Procedures ELO 1 What are internal controls? • The methodologies implemented for measuring the effectiveness and efficiency of an organization’s processes for compliance with laws, regulations and policies. • Internal controls are important for improving operational effectiveness by identifying weaknesses in the systems allowing for proactive process improvement. 7
PMS Procedures ELO 1 Why does the Government require procedures? • Lessens the risk of Loss • Increases the reliability of process execution • Enables the effective and efficient performance of contract performance • Empowers contractor employees to successfully control, use, preservation, protection, repair and maintain Government property • Provides a means to proactively identify system risks • Reduces Cost and Costly Mistakes 8
PMS Procedures TLO 1 What series of objectives do effective procedures accomplish for organizations? Aligns Expectations & Objectives Reduces Consistency Cost Reliability Lowers Risk 9
PMS Procedures ELO 1 What purposes do well written procedures serve? • Procedures align Government expectations and objectives with contractor performance to provide consistent and reliable processes to achieve outcomes successfully • Provides employees with clear direction for meeting contract requirements • Enables better decisions for exceptions in process • Defines individual/team responsibilities saving time and resources 10
PMS Procedures ELO 1 What purposes do well written procedures serve (cont.)? • Allows for managing processes by exception rather than trial and error • Means to measure and control success and prevent risk • Allows employees to perform at their full potential 11
PMS Procedures ELO 1 What are the risks of not having adequate procedures? • Opens performance to individual interpretation • Lessons the importance of process requirements. • Inhibits continual process improvement. • Hinders the ability to identify the root cause of a deficiency. • Prevents the efficiency and effectiveness of successful outcomes. • Increases overall contract costs due to inefficiencies, disconnected resources, redundancy, outdated systems, incomplete process execution, etc. 12
PMS Procedures ELO 1 What is the expectation for establishing procedures? • Contractors are expected to establish procedures prior to acquiring Government property. • Contractor written procedures should provide a clear, transparent, “how-to” processes for all applicable outcomes. Property Plans submitted to the Contracting Officer during pre-award are not the same as a property procedure. 13
PMS Procedures ELO 1 What is the expectation for the contractor to maintain procedures? • Review and maintain processes as conditions warrant. • Examples of common events that generate maintenance actions on procedures are; – established periodic reviews, – results of an audit, – regulatory changes, – change in scope of work, – changes in management, etc. 14
PMS Procedures ELO 1 What does it mean to be efficient? What does it mean to be effective? 15
Essential Elements of a PMS ELO2 Content structure of a procedure (example) • Purpose/Objectives • Timelines • Scope (roles/business area • Instruction Details affected) • Responsibilities • Effective Date • Required Forms • Revision Date • References (e.g., VCSs, • Policy other supplementary • Definitions instruction, etc.) 16
Essential Elements of a PMS ELO2 How do VCSs, ILPs, and CCPs affect a PMS? • Provides a standardized practice that can provide an increased level of benefit to a process • Cannot be used as written, must be tailored to contractors unique performance requirements Application of VCSs, ILPs, and CCPs • May be used in whole or in part • Document reference alone within a procedure is not okay • Needs to provide a measureable benefit 17
Evaluating Contractor’s Procedures ELO 2 What initiates a procedure review? • New contractor • Contractor acquiring Government property for the first time • Contractor procedure updates • Property Management System Audit • Occurrence or identification of a Non-Compliance • Property Loss Investigation • New performance requirements 18
Evaluating Contractor’s Procedures ELO 2 You are handed a set of contractor procedures. Where do you start? What do you know what to look for? How do you know they are adequate? First we start with the FAR, DFARS, and Contract Requirements. What applies to the contractor? Now… what do you look for? 19
Evaluating Contractor’s Procedures ELO 2 It isn’t enough for contractors procedure so simply identify a requirement. Who are procedures written for? In order for processes to be executed effectively and efficiently; procedures must be clear, understandable and enable consistent performance. As auditors, how can you tell? 20
Property Management System ELO 3 Contractor plans and systems Contractors shall establish and implement property management plans, systems and procedures at the contract, program, site or entity level to FAR 52.245-1 enable the following outcomes: (f)(1) 21
FAR PMS REQUIREMENTS ELO 3 PROPERTY MANAGEMENT OUTCOMES Acquisition of Property 1. FAR 2. Receipt of GP (including Identification) 52.245-1 3. Records of GP (f)(1) Property 4. Physical Inventory Life Cycle 5. Subcontract Control 6. Reports 7. Relief of Stewardship Responsibility and Liability 8. Utilizing GP (including Consumption, Movement, Storage, Identification of excess) 9. Maintenance 10. Property Closeout (Disposition of Property) 22
Acquisition ELO3 GP = GFP + CAP FAR Pushed Acquired 52.245-1 GP (f)(1) (from Vendor/Sub) GFP CAP Pulled Transferred (credit/debit ) Transferred to In-House (via contract mod) Fabrication Issued USG Leased (from Stock/Storeroom) 23
Acquisition ELO 3 Key Things to Remember • The Government specifies when it has title to CAP via the contract and the GP Clause FAR • Pushed - Government activities may 52.245-1 (f)(1) DIRECT SHIP GFP to contractors with NO ACTIONS on the part of the Contractor • Pulled - Contractor requisitions from GFP Government supply sources when required for contract performance • All acquisitions must be supported by a valid need or requirement 24
Acquisition ELO3 Examples of Procedure Content • Different types of ordering practices • How will they identify Special Contract Requirements • Identifies what is considered authorization to acquire • Statement of Work • Contract Mods (Transfers) • MILSTRIP process 25
Receipt ELO3 (ii) Receipt of GP (including Identification) The Contractor shall: FAR 52.245-1 1. Receive Government property (f)(1) 2. Document the receipt of Government property 3. Record the information necessary to meet the record requirements of paragraph 52.245-1 (f)(1)(iii)(A)(1) through (5) 4. Manage any discrepancies incident to shipment 26
Receipt ELO 3 ( ii) Receipt of GP (including Identification cont.) The Contractor shall: FAR 52.245-1 5. Identify as Government owned in a manner (f)(1) appropriate to the type of property 6. Notify the Property Administrator of any discrepancies incident to shipment for GFP in accordance with 52.245-1 (f)(1)(ii)(A) (Includes vendors and suppliers) 27
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