National Capitol Area Conference November 14 2011 NPMA

National Capitol Area Conference November 14, 2011 NPMA Conference Series III National Capital Area Conference Leaders in Asset Management

10: 15 AM Le. Antha Sumpter Legislative and Regulatory Changes 2011 NPMA Conference Series III National Capital Area Conference

Department of Defense Government Property Defense Procurement and Acquisition Policy November 14, 2011

Government Furnished Property

The Problem with Government Furnished Property We aren’t sure of what we have We aren’t sure where it is We aren’t sure what its worth We don’t think its where we need it

Audits related to GFP General Accountability Office (GAO) GAO-04 -779, Navy Needs to Improve the Management Over Government-Furnished Material Shipped to Its Repair Contractors, July 23, 2004 US Army Audit Agency (USAAA) Report No. A-2005 -0126 -FFE, Management of Government Furnished Property, U. S. Army Garrison, Fort Hood, Texas, dated, Mar 4, 2005. GAO Report No. GAO-08 -316 R. Subject: Defense Logistics: The Army Needs to Implement an Effective Management and Oversight Plan for the Equipment Maintenance Contract in Kuwait, dated January 22, 2008 Do. D Inspector General (Do. D IG) Report No. 2009 -089, Internal Controls Over Government Property in the Possession of Contractors at Two Army Locations, dated June 18, 2009. USAAA Report No. A-2009 -0183 -ALL, Applying Agreed-Upon Procedures to Determine if There Was a Potential for Theft of Property and Loss of Funds to the Government Due to the Actions of a Government Property Administrator, dated August 14, 2009. USAAA Report No. A-2010 -0018 -ALL, Audit of Management and Visibility of Government Property Provided to the Contractor Performing Bulk Fuel Operations in Kuwait, dated December 17, 2009. AFAA Report No. F 2010 -0005 -FB 3000, Government Furnished Equipment Financial Statement Reporting, dated January 11, 2010. USAAA Report No. A-2010 -0133 -FFE, Time Sensitive Report - Accountability of Contractor Acquired Property, Audit of Planning for Disposal of Chemical Demilitarization and Storage Facilities, dated July 13, 2010. Do. D IG Report No. D-2010 -088, Accountability and Disposition of Government Furnished Property in Conjunction with the Iraq Drawdown – Logistics Civil Augmentation Program, dated September 30, 2010.

Government Furnished Property Business Rules* • Electronic transactions will be used to transfer government property to a contractor and/or return property to Do. D. Contractors and Do. D components shall confirm receipt by contract number for property received electronically. • All transactions used to transfer property to contractor custody or return property to Do. D custody shall cite contract number under which the property is or was accountable for stewardship • For contractor requisitions of GFP, the Do. D components shall capture or link to the contract number under which requisition authority to contractors is granted, and shall reject any contractor requisitions that are not authorized. *January 11, 2010 DPAP Memo

Government Furnished Property Business Rules* (Con’t) • Consistent with FAR 45. 201, GFP requirements shall be fully described and listed in an Attachment in any solicitation or contract to notify the contractor of those items of GFP that are due-in from Do. D or that are authorized for requisition from a Do. D Component supply source. • GFP transfer transactions and receipts for non-UII’d property shall be routed to a GFP Hub co-located with the Do. D IUID Registry as a prototype effort until Defense FAR Supplement guidance is final. *January 11, 2010 DPAP Memo

Synchronizing the Policy Material/ Logistics Equipment/ Accountability Acquisition/ GFP Do. DM 4140 Do. DI 5000. 64 Do. DI 4161. 02 Re-write in progress Signed May 2011 In coordination Do. DM 4140 Ensuring consistency of policy and terminology across organizations and functions

The Vision to Accompany the Policy Using automation, data standards and standard electronic transactions (together with business rules) to: – Standardize – Simplify – Provide accountability – Provide visibility – Provide efficiency – Eliminate multiple redundant requests for data – Communicate with humans in a consistent fashion

Today’s Regulatory Baseline • Two property clauses published in the last five (5) years – 52. 245 -1 (June 2007) – 52. 245 -1 (August 2010) • A third FAR revision is now completed – Will be published in 2011 – Focus: property disposition and plant clearance • New PGI 245 – Government Property • Six new DFARS clauses now in place: – – – 252. 211 -7007 Reporting GFE to the UID registry 252. 245 -7001 Tagging, Labeling and Marking of GFP 252. 245 -7002 Reporting Loss of Government Property 252. 245 -7003 Contractor Property Management System Administration 252. 245 -7004 Reporting, Reutilization, and Disposal 252. 242 -7005 Contractor Business Systems • Revision to 252. 211 -7007 in process

252. 211 -7007 Revision DFARS Case 2009 -D 043: Reporting GFP to the Do. D Registry/Hub • Revises current DFARS clause 252. 211 -7007 – Removes some reporting exception – Removes dollar threshold on reporting • Status: – Proposed Rule published Dec. 22, 2010 (canceled) – Public Meeting conducted March 18, 2011 – Case rewritten based on comments and public meeting – Published in the Federal Register October 14, 2011 under new case number 2010 -D 001 – Public Meeting scheduled for November 17, 2011 12

WAWF is part of the solution Property Mgmt Systems WAWF Roles Vendor EDI TP r F o nd WAWF DAASC EDA at ata t Data ct ra nt Co act D D Contrac CCR a GEX or nd es) e (V od Es ss C G CA dre Ad Contr View Unique Identifier eb • Process Invoice/RR • Create and Process Property Transfer and Misc Pay PBUSE Ve -Contracting Officer -Payment Clerks W or View Only Users Vendor EDI nd -Inspectors -Acceptors -Auditors -Certifiers -Receivers IUID Registry GEX DPAS Ve Government Workflow Users Create • Invoice • Receiving Report • Property Transfer • View status Do. D Add AACs ( ress Gov Cod t es) Vendors AFEMS Contract Writing Systems (7) Entitlement Systems • MOCAS - DCMA • SAMMS - DLA • EBS* - DLA • One Pay - Navy • CAPS - Army/ODAs • IAPS – AF • Navy ERP* • DAI* Accounting Systems • ACMS - JS • EBIZ - DFAS • SABRS – USMC • Navy ERP • STARS • DAI* Logistics Systems

GFP Process Flow – Govt to Contractor Contract w/GFP WAWF Property Transfer Items received Items being sent Items received Contractor Receiver Cu sto dy up da te d LTDD Cu sto dy up dat ed Material Control Activity Items being sent Property Accountability UID Registry PCARSS Organization input can be manual web input or system electronic formatted message

GFP Module in the IUID Registry Supply Systems Property Systems Bulk Load XML 527 R XML MILS X 12 DAASC DLMS Transactions IUID Registry GEX Bulk Load XML WAWF, Property Systems GEX GFP Module Non-UII’d DCMA e. Tools 15

GFP Pilot Participants Pilots will run through 2 nd quarter FY 12 Participants will pilot portions of the functionality with and without a Government trading partner Government Air Force Navy Marines Vendors Bell Boeing Lockheed Northrop Raytheon Additional participants being accepted

Events • WAWF and Registry capability for UID’d items • WAWF Capability for non-UIIs • Registry capability for non-UII’d property • Bulk upload of non-UII property • Pilot/Test GFP Capabilities* • Complete remaining property cases • GFP Module user interface Now Now Dec 2011 July 2011 - January 2012 CY 2012 February 2012

Warranty Traceability IUID Items Only Phase I

Warranty Data – An Evolving Plan 246. 710 -70 Warranty attachment. This is the prescribed attachment and format required and referenced in the provision at 252. 246 -7005, Notice of Warranty Tracking of Serialized Items, and the clause at 252. 246 -7006, Warranty Tracking of Serialized Items. The contracting officer shall number the attachment upon issuance of the solicitation and include the solicitation or contract number. Warranty Planning Process Establish requirement Contract Writing Identify warranty requirements Forward demand to contracting office Do. D Warranty Guide Receipt & Acceptance Send warranty data to be centrally retrieved Contractors deliver goods via WAWF Create & deliver warranty data (not available in contract) Incorporate government warranty requirements into solicitation Proposal submitted FAR/DFAR Award contract w/ warranty provisions Evaluate proposed warranty provisions & cost Use Phase Forward warranty data from contract & acceptance so it can be retrieved Government/Industry records a warranty issue Past Performance & Quality Assurance Sandbox

Preventing Counterfeit Parts

Anti-Counterfeiting • Strengthen policies requiring traceability of procurement and quality assurance procedures at all tiers of supply chain • Develop procedures and standards for quality assurance of commercial items • Strengthen reporting requirements • Strengthen remediation procedures

Framework for Mitigation of High Risk Vendors, Parts, Programs, and Systems Vendor Identification PM level or Do. D Level? How to identify R suppliers who are not Do. D prime contractors How to identify commercial parts systematically How to identify high risk parts (manual vs. automated) High risk traceable parts How to determine links between parts and programs Three way match • Part Number • Vendor • System or Program High risk programs and systems R*Rulemaking required (FAR or DFARS Case)

BACKUP

GFP Business Rules • • Do. DI 8320. 04 The Do. D IUID Registry shall be the master data source for the identification of GFP in the hands of contractors. • • Do. DI 4161. 02 All government property with a UII assigned shall be reported to the Do. D IUID Registry as being reciepted. • All government furnished property without a UII assigned shall be reported to the IUID Registry as being in a GFP state. • Electronic transactions shall be used to transfer government property to a contractor and/or return property to Do. D. • Transactions transferring property from the government to contractor custody shall cite a contract number under which the property is accountable for stewardship, if known at the time of shipment. • All contractor requisitions of Government property shall include the contract number under which requisition authority is granted. • Accountability of contractor acquired property shall be established, not by maintaining accountable property records at the Component level, but by ensuring the contractor maintains an adequate property system in accordance with the requirements of FAR 52. 245(b)(1). • To the extent that visibility of CAP is required by the government, informational sub line items shall be established to identify each item requiring such visibility in accordance with the criteria of DFARS Subpart 204. 7104 -1(a). • Accountable property records for CAP shall only be established upon delivery to the Government on a contract line item number (CLIN). • GFE and serially managed GFM shall be identified and tracked through the use of unique item identifiers (UII), and nonserially managed GFM shall be identified by national stock numbers (NSN) in transaction-derived data from electronic business transactions • • PGI 245 GFP requirements shall be fully described and listed in an Attachment in the solicitation and contract to notify the contractor of those items of GFP that are due-in from the government.

GFP Business Rules…continued • • DFARS 245 GFP shall remain on a contractor’s stewardship records until government receipt or acceptance (as required) of the returned GFP asset is complete • When contractors receipt GFP shipped direct from another contractor or the government, the gaining stewardship contract shall be indicated on the receipt. If the stewardship contract cannot be determined at the time of receipt it must be annotated in the IUID registry within 30 days of receipt. • • Do. DI 5000. 64 and Do. DM 4140 The Do. D accountable property system of record shall be the authoritative source to establish the existence on a GFP item. • An item of GFP shall only be recorded once in a Do. D accountable property system of record. • An item of GFP will remain recorded in a Do. D accountable property system of record while in the custody of a contractor. • Contractor systems and Government in-transit systems used to record receipt, custody or stewardship of GFP shall not qualify as authoritative Do. D accountable property systems of record. • • Do. DM 4140 Authorization of contractor access to the Do. D supply system shall be managed using a single Do. DAAC for each contractor location recorded in the Central Contractor Registry, consistent with the provisions of FAR Subparts 51. 102(c)(2) and 51. 103(b)(1). • • Do. DI 5000. 64 When an item marked with a UII is embedded in an end item, it shall be assumed to remain in parent UII until a record indicates detachment.

Le. Antha Sumpter Legislative and Regulatory Changes 2011 NPMA Conference Series III National Capital Area Conference