intermediate government furnished property for contracting ... › cms › sites › ... ·...
TRANSCRIPT
Defense Procurement and Acquisition Policy (DPAP)
Presented by:
Intermediate Government Furnished
Property for Contracting
Professionals
17 JAN 2016
Carol Vigna, OSD AT&L DPAP
David Guinasso, supporting OSD AT&L DPAP
www.dodprocurementtoolbox.com
Topics
The areas covered in this training are
recurring areas of concern for audit,
accountability and ensuring that contracts
protect the governments assets and
public’s interests.
-Contractor Acquired Property
-Bailment
-Exchange or Sale
-Performance Based Logistics
2
Definitions
Government Furnished Property (GFP) – is defined as property in
the possession of or acquired by the Government and subsequently
furnished to the Contractor for performance of a contract.
It includes items like spares and property furnished for repair,
maintenance, overhaul, or modification. It can be items taken or
requisitioned from Government inventory or purchased by the
Government specifically to be provided on a contract.
GFP also includes contractor-acquired property if the contractor-
acquired property is a deliverable under a cost contract that has been
accepted by the Government for continued use under that contract or
a future contract.
Contractor Acquired Property (CAP) - is property purchased or
fabricated by a contractor for use on a contract to which the
Government has title.
3
Not considered GFP
Government property that is incidental to the place of performance, when the contract requires contractor personnel to be located on a Government site or installation, and when the property used by the contractor within the location remains accountable to the Government.
Located on a Government site or installation
Used within the location
Remains accountable to the Government
4
Contractor Acquired Property
5
Cost Contract Title Provision in GP Clause
Title under Cost-Reimbursement or Time-and-Material Contracts or Cost-
Reimbursable contract line items under Fixed-Price contracts.
(i) Title to all property purchased by the Contractor for which the
Contractor is entitled to be reimbursed as a direct item of cost under
this contract shall pass to and vest in the Government upon the
vendor's delivery of such property.
(ii) Title to all other property, the cost of which is reimbursable to the
Contractor, shall pass to and vest in the Government upon—
(A) Issuance of the property for use in contract performance;
(B) Commencement of processing of the property for use in
contract performance; or
(C) Reimbursement of the cost of the property by the
Government, whichever occurs first.
FAR 52.245-1 Government Property
52.245-1 Must be in all Cost Reimbursable and T&M contracts
6
An Illustration
DeliverableCAP
7
Important Things to Remember
Title is not changed by incorporation of Government
property into property owned by the contractor.
Title to cost reimbursable line items on Fixed Price
contracts is the same as title under a cost contract.
CAP can not be used on a different contract unless it
is:» Delivered and accepted and provided as GFP
» Repurchased or credited by the contractor*
*Subject to the requirements of the Materials Management and Accounting
System (MMAS)
8
What Happens to CAP
May be consumed in production of the deliverable
May be delivered
May be credited to the contract and charged to a different contract
if needed on the succeeding contract
» (Reasonable, Allocable, and Allowable test)
May be repurchased by the contractor
- At full cost; or,
- Returned to suppliers less reasonable restock costs
If not consumed, repurchased or delivered, must be reported to the
Government for plant clearance whenever no longer required for
performance
» Either during or at the completion of the contract
May be provided to succeeding contracts as GFP after inspection
and acceptance and delivery
9
How CAP is Delivered
PGI 245.402-71 Delivery of contractor-acquired property.
» (1)(i) When delivery of contractor-acquired property is required, the
contracting officer shall direct that the delivery be accomplished by
contract line item, except as described in paragraph (1)(ii) of this
section.
» (2) Each contract line item of contractor-acquired property shall
include the following information:
Contractor-Acquired Property Delivery Contract Line Item
*Contractor-acquired property items shall be marked as required by DFARS clause
252.245-7001.
CLIN
Item Description/
Nomenclature
Type
Designation NSN PIN Quantity
Unit of
Measure
Serial
Number
(UII)*
Original Unit
Acquisition Cost
Date Placed in
Service by the
Contractor
x x As required x x x x If known x x
10
Delivery of CAP
Once Contract Line Items are created, CAP will
be delivered as any other deliverable line item,
using WAWF iRAPT in accordance with: » DFARS 252.232-7003 (b) Except as provided in paragraph (c) of this clause, the
Contractor shall submit payment requests and receiving reports using WAWF, in one of the
following electronic formats that WAWF accepts: Electronic Data Interchange, Secure File
Transfer Protocol, or World Wide Web input. Information regarding WAWF is available on the
Internet at https://wawf.eb.mil/.
» DFARS 252.246-7000 "(b) Contractor submission of the material inspection and
receiving information required by Appendix F of the Defense FAR Supplement by using the Wide
Area WorkFlow (WAWF) electronic form (see paragraph (b) of the clause at 252.232-
7003 <http://www.acq.osd.mil/dpap/dars/dfars/html/current/252232.htm> ) fulfills the requirement
for a material inspection and receiving report (DD Form 250).“
» DFARS Appendix F (b) The use of the DD Form 250 is on an exception basis (see
DFARS 232.7003 <http://www.acq.osd.mil/dpap/dars/dfars/html/current/232_70.htm> (a))
because use of the WAWF RR is now required by most DoD contracts
11
Bailment
12
Bailment
What is a “Bailment”? DFARS PGI 217_75 defines bailment as:
» “The process whereby a part is loaned to a recipient with the agreement that the part
will be returned at an appointed time. The government retains legal title to such
material even though the borrowing agency has possession during the stated period.”
» Items remain accountable to the DoD activity that loans them (Loaning Activity) and
will be recorded in accountable property system of record as required by DoDI 5000.64
When do you use it? Under PGI 217_75
» used to loan parts to a contractor that DoD believes qualified to become a “second
source” for items which are only available sole source (Spare Parts Breakout Program)
To provide military unique items for contractors to use in IR&D and B&P
Should Not be used to provide property for use in performing a contract» If there is a contract, the property should be provided as GFP
» Bailment agreements and loans are not governed by FAR Part 45 and associated DFARS
clauses
13
Bailment Agreements
Loaning Activity must work with counsel to prepare a
bailment or loan agreement
Bailment/Loan agreement should: Specify the allowed use for the item (and disallow any other use)
Set the term of the loan (beginning and ending dates)
Specify transportation arrangements and costs
Reserve the right for the government to inspect the item at reasonable times
Require regular confirmation of the existence of the item (physical inventory)
Allow for government to require return of the property at any time, without
compensation to the contractor
Discuss responsibility for liability associated with the use or loss of the property
Require reporting of any loss of government property
Specify any export restrictions or intellectual property considerations
14
Exchange or Sale
15
Exchange or Sale
Exchange – most commonly
thought of as a “trade in”
Sell – disposal sales as part of the
federal disposal process- Plant Clearance under FAR and Federal
Management Regulations (FMR) 102-38
- FMR Disposal Process under FMR 102-38
16
§ 503. Exchange or sale of similar items
(a) Authority of Executive Agencies. – In acquiring personal property, an executive agency may exchange or sell similar items and may apply the exchange allowance or proceeds of sale in whole or in part payment for the property acquired.
(b) APPLICABLE REGULATION AND LAW –
(1) REGULATIONS PRESCRIBED BY ADMINISTRATOR OF GENERAL SERVICES. – A transaction under subsection (a) must be carried out in accordance with regulations the Administrator of General Services prescribes, subject to regulations prescribed by the Administrator for Federal Procurement Policy under division B (except sections 1704 and 2303) of subtitle I of title 41.
(2) IN WRITING – A transaction under subsection (a) must be evidenced in writing.
(3) SECTION 6101(b) to (d) OF TITLE 41 – Section 6101(b) to (d) of title 41 applies to a sale of property under subsection (a), except that fixed price sales may be conducted in the same manner and subject to the same conditions as are applicable to the sale of property under section 545(d) of this title.
Exchange or Sale Legal Authority - 40 USC
17
Personal Property [Exchange or
Sale]
FMR 102-36.40
“Personal property” means any property, except real property. For
purposes of this part, the term excludes records of the Federal
Government, and naval vessels of the following categories:
battleships, cruisers, aircraft carriers, destroyers, and submarines.
FAR 2.101
“Personal property” means property of any kind or interest in it
except real property, records of the Federal Government, and naval
vessels of the following categories:
(1) Battleships;
(2) Cruisers;
(3) Aircraft carriers;
(4) Destroyers; and
(5) Submarines.
18
Similar Items [Exchange or Sale]
• Defined in FMR 102-39.20“Similar” means the acquired item(s) and replaced item(s):
(1) Are identical; or
(2) Fall within a single Federal Supply Classification (FSC) Group of property (includes any and all forms of property within a single FSC Group); or
(3) Are parts or containers for similar end items; or
(4) Are designed or constructed for the same purpose (includes any and all forms of property regardless of the FSC Group to which they are assigned).
19
When You Can Do An Exchange
Replacement of property that is still
required, but is no longer functional due
to wear or obsolescence
May be accomplished as part of the
acquisition of new property
May be used to acquire property under a
service contract provided the property is
similar to that being exchanged or sold
20
Prohibitions on Exchange or Sale
• Prohibited Federal Supply Groups• 10 – Weapons (DoD exception for all except FSC 1005 Guns)
• 11 – Nuclear ordnance
• 42 – Firefighting, rescue, and safety equipment
• 44 – Nuclear reactors (FSC Class 4470 only )
• 51 – Hand tools
• 54 – Prefabricated structure and scaffolding • FSC 5410 Prefabricated and Portable Buildings
• FSC 5411 Rigid Wall Structures
• FSC 5419 Collective Modular Support System only
• 68 – Chemicals and chemical products, except medicinal chemicals
• 84 – Clothing, individual equipment, and insignia
21
More Prohibitions on Exchange
or Sale • Materials in the National Defense Stockpile
• NRC Controlled materials (except for §101-42.1102-4)
• Controlled substances (except for §101-42.1102-3)
• Scrap condition property except• Property that had utility when exchange/sale authority was
determined• Property that was determined in scrap condition due to
damage after exchange/sale determination• Scrap gold for fine gold
• Other agency excess, forfeited property or property not obtained from an acquisition, unless it has been in use for no less than 1 year since obtaining
22
Still More Prohibitions on
Exchange or Sale
Dangerous property not rendered innocuous
Combat material without demil or other DoD authorization
Flight Safety Critical Aircraft Parts and Critical Safety Items
» Unless meeting the provisions of 102-33.370
For acquisition of unauthorized replacement property
Acquisition of replacement property that violates any
» Restriction on procurement of a commodity or commodities
» Replacement policy of standard prescribed by the President,
Congress or the Administrator of GSA
» Contractual Obligation
Vessels subject to 40USC548
Aircraft and aircraft parts, unless there is full compliance with all
exchange/sale provisions in Part 102-33 of the FMR
23
Conducting an Exchange
Procurements may carry a line
item which identifies the value of
items to be traded in
In order to comply with 40 USC
and FMR annual reporting
requirements transactions must
be documented
24
Aircraft Parts in Exchange or Sale
§102-33.115—Special requirements for acquiring military Flight Safety Critical Aircraft Parts (FSCAP)
When you acquire Flight Safety Critical Aircraft Parts (FSCAP), you must—
(a) Accept a FSCAP only when it is documented or traceable to its original equipment manufacturer (a FSCAP’s DOD FSCAP Criticality Code should be marked or tagged on the part or appear on its invoice/transfer document; see 102-33.375 for further explanation of the FSCAP Criticality Codes); and
(b) Not install undocumented, but traceable FSCAP until you have the parts inspected and recertified by the original equipment manufacturer or FAA-approved production approval holder (see 102-33.370 on FSCAP).
§102-33.120—Special requirements for acquiring life-limited parts
When you acquire new or used life-limited parts, you must—
(a) Identify and inspect the parts, ensuring that they have civil or military-certified documentation (i.e., complete life histories); and
(b) Mutilate and dispose of any expired life-limited parts (see 102-33.370 on handling life-limited parts).
25
Exchange or Sale Summary
• Agencies are encouraged to utilize the proceeds from sale or trade-in of existing property when purchasing replacement property.
• Under contracts, even service contracts, property must be acquired.
• Property must be similar, but need not be equivalent in quantity, as long as the function remains the same, e.g. several small trucks could be sold or exchanged for one large truck that can haul the same or better volume
• Agencies must report exchange/sale transactions in list form to GSA annually
• List form implies that individual transactions are recorded AND reported
26
Performance-Based
Logistics (PBL)
27
PBL & CLS
The use of Performance Based
Logistics (PBL) and Contractor
Logistics Support (CLS) contracts is
increasing
Audits have uncovered reoccurring
issues relating to property
» Failure to identify or recognize GFP
» Acceptance and transfer of title
» Excess inventory
28
Failure to Recognize GFP in PBL
Two areas have been repeatedly
identified as points of failure on
PBL contracts:
Initial lay in of long lead material
becomes GFP once accepted
Material requisitioned by the
contractor and paid for by the
Government is GFP.
29
Acceptance and Transfer of Title
PGI 245.402-71(1)(ii) In some circumstances, such as contractor-performed
logistics support or performance-based logistics support contracts, contract
deliverables consist of non-hardware items, such as operational readiness rate
goals or mean-time-between failures of a system. In order to meet these
deliverables, contractors are required to provide certain property items to the
Government. In such cases, the contract does not include specific delivery line
items requiring formal delivery of the property. By extension, the Government will
not have title to the property at the time contractor provides the property. Rather, in
such cases, title to the property passes to the Government—upon Government
acceptance (as defined in FAR 46.101) of the items at the destination stated in the
contract. Contracting officers shall ensure that the contract—
(A) Clearly defines how and when acceptance will be performed; and
(B) Includes applicable requirements for quality assurance, part marking,
anti-counterfeiting, or other requirement for the delivery of the property.
30
Excess Inventory
There have been multiple audit findings where
contractors were meeting performance goals by
maintaining inventory levels far in excess of
need.
This resulted in significant loss to the
Government through obsolescence or continually
buying un-needed inventory.
Accessing and monitoring demand and inventory
levels need to be part of PBL arrangements.
Regulatory coverage in process
31
PBL: Other Items to Remember
Contractors cannot perform acceptance
Certificate of Conformance cannot be used
in lieu of acceptance
If it is GFP, it must be on a Government
property book
If it is delivered, it is not CAP
If transferred to another contract, it is not
CAP
32
PBL Summary
There are many situations involving
contractors and property
All offer benefits to the Government,
but come with their own controls
Consider the benefits, know the
controls and think through the
implications when constructing
contracts
33
For more information
http://www.acq.osd.mil/dpap/pdi/gfp/index.html www.dodprocurementtoolbox.com
GFP Policy Training, Procedures,
Tools
34
Training Certificates
Please send your request to Niki Sollinger:
Please include the date of the webinar and if
you want to be on the GFP Training email
distribution list.
35
Any Questions?
36