Contract Property Closeout Standardization Cinda Brockman CPPM CF

Contract Property Closeout Standardization Cinda Brockman, CPPM CF, SAIC Pam Mc. Farland, CPPM CF, Raytheon Technical Services Co. , LLC National Property Management Association

Agenda l l l Audience Questions Requirements Industry Leading Practices Ø Ø l l 10 -01 10 -02 10 -03 10 -04 Standardization Metrics National Property Management Association

Audience Questions 1) How many of you in the room have a role in the property closeouts process for your company? A. Yes B. No 2) How many of you know the difference between closing Firm Fixed Price Contracts versus Cost Plus or Time & Material Contracts for property? A. Yes B. No C. Clueless! National Property Management Association

Audience Questions 3) How many are informed by contracts, or have a way to find out, when a contract’s period of performance is ending in: A. B. C. D. 30 Days 60 Days 90 Days Not Informed National Property Management Association

Audience Questions 4) How many process property closeouts within: A. 30 -90 days B. 90 -120 days C. 1 or more years 5) How many of you perform periodic or annual inventories on property actively being used on a contract where the period of performance has ended: A. 30 – 90 days B. 90 – 120 days C. One or more years National Property Management Association

Audience Questions 6) How many of you have closed all of the property issues on a contract; received a final property notification from the customer, and found out later that there is still active property in your property system accountable to this contract? A. Yes B. No National Property Management Association

Audience Questions 7) How many of you have had findings or outcomes rated “inadequate” on a Property Management System Analysis (PMSA) because of using active property on a contract where the period of performance had ended? A. Yes B. No National Property Management Association

“The Good” 1) A. Yes 2) A. Yes 3) A. 30 Days 4) A. 30 – 90 Days after POP ended 5) A. 30 – 90 Days after POP ended 6) B. No 7) B. No National Property Management Association

“The Bad” 1) A. Yes 2) B. No 3) D. Not Informed 4) B. 90 – 120 days after POP ended 5) B. 90 – 120 days after POP ended 6) A. Yes 7) B. No National Property Management Association

“The Ugly” 1) A. Yes 2) A. Yes 3) D. Not Informed 4) C. One or More Years After POP Ended 5) C. One or More Years After POP Ended 6) A. Yes 7) A. Yes National Property Management Association

Requirements Federal Acquisition Regulation (FAR) 52. 245 -1 (f) (1) (x) Closeout of Property Contractor promptly performs and reports to the Government Property Administrator (GPA) contract property closeout, to include reporting, investigating and securing of all Loss Cases, physically inventorying all property upon termination or completion of the contract and disposing of items at the time they are determined to be excess to contractual needs. National Property Management Association

Requirements Although there is NO timeframe requirement, most Property Administrators take this to mean within 30 – 90 days, with the understanding that closeout may exceed 90 days depending on the circumstances: 1) Contract Type 2) Delivery Orders, Task Orders, etc. 3) Numerous Subcontracts 4) Awaiting Disposition Instructions 5) Etc. National Property Management Association

Industry Leading Practices (ILP) Aerospace Industries Association’s (AIA) ILP 10 -01 - Establish a contract closeout team consisting of several functional entities: A. Property Management B. Contracts C. Material Personnel D. Subcontracts E. Program Management F. Etc. Team arrangements helps streamline the process and provide quicker responses and actions National Property Management Association

Standardization 1) Read the Contract a) Type of Contract (i) Fixed Price (ii) Cost Type (iii) Mixed Line Items 1 b) Special Disposition Instructions (i) (ii) 1 Shipping Instructions Transfer Instructions DCMA treats contracts with mixed line items as cost- reimbursement type contracts per DCMA Portal, Contract Closeout, Revised June 2010, 1. 1. National Property Management Association

Standardization 2) Obtain property listings per category: a) Material b) Equipment c) Special Test Equipment (STE) d) Special Tooling (ST) National Property Management Association

Standardization 3) Perform Final Inventory. a) Group property per category b) FAR 52. 245 -1(f)(1)(iv) Physical Inventory, “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). ” National Property Management Association

Industry Leading Practices (ILP) ILP 10 -02 Upon completion or termination of a contract, perform a physical inventory, adequate for disposal purposes, of all property applicable to the contract. A physical inventory at the completion of a contract is not required – Ø When the property is authorized for use on a follow -on contract; and Ø Experience has established the adequacy of property controls and an acceptable degree of inventory discrepancies; and National Property Management Association

Industry Leading Practices (ILP) ILP 10 -02 (Cont. ) Ø The contractor provides a statement indicating that record balances have been transferred in lieu of preparing a formal inventory list and that the contractor accepts responsibility and accountability for those balances under the terms of the follow-on contract. National Property Management Association

Standardization 4) Research expenditures for acquired property associated with subcontractors and reconcile tangible Government property and material. a) All property owned or leased by the Government property includes both Government-furnished and contractoracquired property. (52. 245 -1 Definitions) b) The contractor is responsible and accountable for all Government property under the provisions of the contract including property located with subcontractors. National Property Management Association

Standardization 5) Investigate, report and resolve loss cases a) If the contract is Do. D DCMA administered, the contractor would need to report the Loss report to the GPA via DCMA e. Tools and fill out the information listed in FAR 52. 245 -1 (vi) Reports. b) For non-Do. D DCMA administered contracts the contractor would need to submit a letter and form to the Contracting Officer requesting relief of accountability for item(s) lost National Property Management Association

Standardization Recommendation Create a standardized Loss Report National Property Management Association

Standardization 6) Perform Relief of Stewardship Actions a) Property is disposed in accordance with contractual or contracting officer instructions (non. DCMA administered contracts) b) Consumed or expended during contract performance c) Processed through an inventory adjustment d) Property is delivered or shipped from the Contractor’s plant, under Government instructions; except when shipment is to a subcontractor or other location of the contractor; National Property Management Association

Standardization 6) Perform Relief of Stewardship Actions (Cont. ) e) Relieved of Liability (ROL) through a Loss Report. Some contractors use AIA ILP 7 -02 Electronic reporting for Loss Items. f) Processed as production scrap or testing scrap g) Abandoned in accordance with contract terms. National Property Management Association

Standardization 7) Report Excess/Residual Property a) Plant Clearance Automated Reutilization Screening System (PCARSS) 8) Comply with disposition instructions. 9) Submit Property Closeout Certification a) Upon completion or termination of a subcontract, the subcontractor will be directed by prime contractor to initiate closeout actions for property in their possession. National Property Management Association

Standardization 10) Prepare an internal Property Checklist a) Ensure all actions have been completed b) Create a standardized “Property Closeout Checklist” 11) Prepare and submit a final property closeout letter to the appropriate Government agency National Property Management Association

Metrics Utilize Metrics to track your Closeout Process Contract Closeout As of: _______ % of On-Time Closeouts – 85. 71% 90. 00% 80. 00% % of Contracts w/Property found After Closeout – 42. 86% Percentage 70. 00% 60. 00% 50. 00% 40. 00% 30. 00% 20. 00% 10. 00% % of On-Time Closeouts % of Contracts w/ Property Found after Closeout Requirements National Property Management Association

Metrics 30 Notifications Received 25 Days 20 15 10 5 0 Jan Feb Notification Rec'd May Open Jun Property Issues Mar Apr Jul Open Gov't Issues Oct Aug Sep National Property Management Association Nov Dec

Conclusion q Adopt Industry Leading Practices q Form a Contract Closeout Team of Professionals q Read the Contract q Obtain Listings of Property q Perform Inventories q Notify Subcontractors q Investigate and Report Losses q Perform Relief of Stewardship Actions q Report Excess/Residual property National Property Management Association

Conclusion q q Comply with Disposition Instruction Submit Closeout Certification Measure the health of the process through metrics AND VALIDATE, VALIDATE !!!! National Property Management Association

And most importantly Standardize! National Property Management Association

Questions ? National Property Management Association

Thank You for Your Time and Participation. Cinda Brockman, CPPM CF, SAIC Pam Mc. Farland, CPPM CF, RTSC National Property Management Association