1 1

Breakout Session # B04 Andrew C. Obermeyer, Director, DCMA Business Operations Center Henry Pielaet, Supervisor, DCMA Business Operations Center, Property Group

Property Management System Analysis

December 14, 2015 2:15 pm – 3:30 pm

2 2

Functions: • Evaluate contractor’s purchasing systems and provide expert

recommendations whether to approve or withhold/withdraw approval of the system.

• Arrange timely and cost effective reutilization, sale, and disposal of excess government property in the possession of contractors.

• Settle contracts terminated for the convenience of the Government. • Evaluate the adequacy of contractor’s property management system

(PMS) to ensure Government Property in the hands of contractors is appropriately managed.

Specialized Business Capabilities

Plant Clearance Group

Terminations Group

Property Group CPSR Group

Business Operations Center

3

The Property Group ensures that Government Property in the possession of contractors is

effectively and efficiently managed as required by FAR

52.245-1– Government Property.

What is Our Property Mission?

4

By performing Property Management System Analyses (PMSAs)

A PMSA is a systematic, objective review and evaluation of a contractor's PMS including the procedures and the implementation of applicable property management processes to determine whether the contractor is complying with contractual terms and conditions relating to property management.

How Do We Perform the Mission?

5

• Standard PMSAs require entrance and exit conferences, involve plant visits, formal examinations with detailed workpapers generated and formalized conclusions drawn as to the condition of the contractor's system. The depth and detail of review and analysis are far greater for a standard system analysis than for a limited system analysis.

• Limited PMSAs or “desk audits” permit less formal testing methods and techniques including contractor responses to a series of questions covering each applicable element of a contractor’s PMS, and interviews of contractor personnel among other methods as appropriate, depending on the risk level, amount and value of property, etc.

Two Types of PMSAs

6

• New contractors: • Identified during contract receipt and review

• Initial PMSA scheduled within one year • Within six months if there is sensitive property

• Established contractors: • Type and frequency of PMSAs determined IAW

risk level of contractor’s PMS • When sensitive property is involved, PAs

perform annual on-site reviews of records, storage, utilization, and physical inventories processes, regardless of the contractor’s risk rating

How Does Property Schedule PMSAs?

7

• Performed immediately after each PMSA and validated annually

• Based on PMSA results and other sources of reliance, PAs: • Identify unfavorable future events • Assess the likelihood or probability

of unfavorable future events • Estimate the consequence or

impact of those events

Risk Assessments

8

• PAs assign each PMS a risk rating of high, moderate or low. • High Risk – Requires a Standard PMSA at

least annually • Moderate Risk - A Standard or Limited

PMSA as frequently as conditions warrant, but at least once every 2 years

• Low Risk - Standard or Limited PMSA as frequently as conditions warrant, but at least once every 3 years

• PMSA schedules are maintained in the Contract Property Administration System (CPAS) eTool.

Risk Assessments

9 9

PMSA Performance • PAs review all applicable elements and processes of the

contractor’s PMS as identified at FAR 52.245-1(f)(1) (i through x) including:

Written procedures Reports Contractor self-assessment Relief of stewardship Acquisition Utilization Receiving Declaration of excess Discrepancies incident to shipment Consumption Identification Movement Records Storage Receipt and issue system Storage – commingling Physical inventory Maintenance Subcontractor awards and flowdown Disposal Subcontractor reviews Closeout

10

• Subject to the judgment and determination of the PA, sampling is used as an efficient and economical method for analyzing a system.

• One of three different types of sampling may be used: • Statistical - A number of items are selected from the

population for analysis so that the sample is representative of the entire population from which it was selected. The sampling plan used will discover defects of 10% or more, if they exist, 90% of the time.

• Judgment – A number of items are selected from the population for analysis without meeting the random selection and sample size criteria of statistical sampling.

• Purposeful - Known, suspected, or reported conditions of a critical or substantial nature are used to select items, for review to determine the possible adverse systemic impact.

PMSA Performance

11 11

After the PMSA • Findings are reported to the Contracting Officer (CO)

who either approves or disapproves the PMS in accordance with DCMA-INST 131. – The CO records the status of the PMS in the Contract

Business Analysis Repository (CBAR) eTool. – The CO may implement a payment withhold on an

individual contract if the contract contains DFARS 252.242-7005, Contractor Business Systems and DFARS 252.245-7003 Contractor Property Management System Administration.

• If there are any deficiencies, PA indicates whether they materially affect the ability of DoD officials to rely upon information produced by the system.

• PA issues Level II CARs for deficiencies determined by the CO to be non-significant.

• PA evaluates the adequacy of all corrective action plans, monitors the performance of corrective actions and determines if corrective actions have been implemented and adequately address the deficiency.

12 12

Standard PMSA Timeline • P-30 Notify contractor in writing of PMSA • P-30 Request data and documentation from

contractor • P-30 PMSA Planning • PMSA – Entrance Brief, Daily Out brief, Exit

Conference • Exit Conference+30 Management review, Report to

CO • Exit Conference+40 CO approval if no deficiencies,

or initial determination • Exit Conference+70 Ktr response to initial

determination • Ktr Response+30 Final determination • Ktr Response+45 Corrective Action Plan if

requested, due to CO

13 13

Subcontractor PMSAs – Prime contractor is responsible for performing periodic

reviews to determine the adequacy of the subcontractor's property management system.

– DCMA may perform a PMSA for a subcontractor only when the exceptions listed at FAR 42.202(e)(2) apply • The Government otherwise would incur undue cost; • Successful completion of the prime contract is

threatened; or • If a contracting officer for a major system acquisition

designates certain high risk or critical subsystems or components for special surveillance in addition to requesting supporting contract administration.

– The prime contractor must also consent to accept the findings.

– Prime contractor consent is not required for DCMA to perform a PMSA at an alternate site of the prime contractor.

14 14

Who Performs the Property Mission?

DCMA-AQBY Director – Teresa Lardaro

(Ft. Lee, VA) Deputy – David Ryan

(Philadelphia, PA)

Michael Karolak Performance Improvement Manager

(St. Petersburg, FL)

Kitty Olson Management Assistant (Arlington Heights, IL)

DCMA-AQBYC Team Lead – Jack Pocorobba

(Philadelphia, PA)

DCMA-AQBYA Team Lead – Nancy Olbrych

(Hartford, CT)

DCMA-AQBYB Team Lead - Jack Kesler

(Boston, MA)

DCMA-AQBYD Team Lead – Gerard Rothhaar

(Pittsburgh, PA)

DCMA-AQBYE Team Lead – Henry Pielaet, Jr.

(Chantilly, VA)

DCMA-AQBYF Team Lead – Cindy Bradbury

(Orlando, FL)

DCMA-AQBYG Team Lead – Duke Montgomery

(Arlington Heights, IL)

DCMA-AQBYH Team Lead – Randy Scott

(Crestview, FL)

DCMA-AQBYI Team Lead – Carmen Strange

(Dallas, TX)

DCMA-AQBYJ Team Lead – Philip Heisler

(San Antonio, TX)

DCMA-AQBYM Team Lead – Leonardo Salazar

(Carson, CA)

DCMA-AQBYK Team Lead – Deena Day

(Lakewood, CO)

DCMA-AQBYL Team Lead – Derek Urban

(Phoenix, AZ)

Vacant Management Analyst

(Ft. Lee, VA)

Susan Scott Management Assistant

(Boston, MA)

DCMA-AQBYN Team Lead – Bridgette Harris

(Los Angeles, CA)

DCMA-AQBYO Team Lead – Edwin Hoenig

(Ft. Lee, VA)

DCMA-AQBYP Team Lead – Steve Abramowitz

(Orlando, FL)

DCMA-AQB Andrew C. Obermeyer

Director Business Operations Center

Ft. Lee, VA

14

15 15

Property Workload Trend Indicator

FY 2010 2011 2012 2013 2014 2015 # of Government Property

(GP) Systems 3,492 2,882 1,850 2,130 2,131 2,415 GP Value $ 167.3 B $ 147.3 B $ 147.7 B $ 139.8 B $ 129.7 B $128.9 B

GP Line Items 30.5 M 30.5 M 41.0 M 43.7 M 65.6 M 78.9 M Onboard/Authorized 208 205 183/185 182/197 174/201 172/230

Audits Performed 1075 1094 917 1026 1090 1025 Audit Target 1113 1179 984 1121 1145 1066 Complete % 97% 93% 93% 92% 95% 96%

15

16 16

Property Systems by Status

Total Systems Approved

Approved w/Def Disapproved Pending CO Not Evaluated

New Contractor

Totals: 2415 1628 81 18 126 135 427

Percentage: 100% 67.4% 3.4% 0.7% 5.2% 5.6% 17.7%

16

17 17

Property Loss Administration Workload

17

FY Number of Loss Cases

Acquisition Value

10 2,429 $429,811,107 11 2,722 $2,259,898,741 12 3,479 $1,698,645,547 13 5,935 $688,848,155 14 4,640 $7,245,306,357 15 3,775 $1,809,881,019

18 18

Administration of Government Property Loss

18

• Government typically self-insures against loss • Exceptions:

• The risk is covered by insurance or the contractor is otherwise reimbursed.

• The loss is the result of willful misconduct or lack of good faith on the part of the contractor's managerial personnel.

• The CO has revoked the Government's assumption of risk for loss of Government property due to a determination that the contractor's property management practices are inadequate, and/or present an undue risk to the Government, and the contractor failed to take timely corrective action.

19 19

PA’s Role in Property Loss Administration

19

Within 90 days of receipt of a loss report from contractor in the Property Loss eTool, PA shall: • Ensure FAR/DFARS definitions for

loss of Government property are met • Determine whether contract imposes

risk of loss on Government or contractor

• Evaluate facts and circumstances • Determine if loss was caused by

deficiencies in contractor’s PMS

20 20

PA’s Role in Property Loss Administration Based on the findings and conclusions resulting from the actions described on the previous slide, the PA shall either • Relieve the contractor of responsibility and

liability where the Government bears the risk of loss under the contract, or

• Recommend the Contracting Officer – Hold the contractor responsible and liable

for the item’s acquisition cost (in full or in part)

– Authorize the contractor to repair or replace the property or

– Determine a form on consideration appropriate for the circumstances.

20

21 21

• Audit Quality – Use of appropriate auditing techniques – Improved audit reports

• Data Integrity – Accuracy of CPAS has improved but requires

constant attention – Contract Receipt and Review

• Ensure assignment is taken of all contracts with GP

• Ensure contracts contain required property related clauses

– Aging Workforce – Disruption of mission performance due to

• CRF positions • OCONUS obligated positions

Property Management Challenges

22 22

PMSAs

Questions?

23 23

Contact Information

• Andrew C. Obermeyer, Director, DCMA Business Operations Center

804-734-0494 andrew.obermeyer@dcma.mil

• Henry Pielaet, Supervisor DCMA Business Operations Center,

Property Group 571-521-1838 henry.pielaet@dcma.mil