Business System Requirements - Government Property

The Department of Defense has propsed regulations that will allow it to withhold payments from contractors who have inadequate business systems; purchasing, accounting, estimating, MMAS, EVMS, and Government Property. Over the past few days, we have been discussing the characteristics of adequate systems. Today we discuss the sixth and final business system covered undet this regulation; Government Property.

Government property in the possession of contractors consists of property provided or leased to the contractor by the Government and property acquired by the contractor fromother sources where upon acquisition title passes to the Government under the terms of the contract. It includes property such as:

• plant equipment
• real property
• special test equipment
• special tooling
• facilities
• Government production and research property
• material
• nonseverable property
• agency-peculiar property
• industrial plan equipment

FAR 45.5 prescribes the minimum requirements contractors must meet in establishing and maintaining control over Government property. This business system is essentially a record keeping requirement at a very detailed level. Historically, many contractors have had extreme difficulty in meeting these standards although software solutions, bar coding, and RFID technology is making it easier to administer. The basic requirements for an adequate Government Property system include:

•  Receipts for Government property.
• Records of discrepancies incident to shipment
• Records and reports of Government property. The contractor shall establish and maintain adequate control records for all Government property, including property provided to and in the possession or control of a subcontractor.
• The name, description, and National Stock Number (if furnished by the Government or available in the property control system).
• Quantity received (or fabricated), issued, and on hand.
• Unit price (and unit of measure).
• Contract number or equivalent code designation.
• Location.
• Disposition.
• Posting reference and date of transaction.
• Records of pricing information.
• Records of material.
• Records of plant equipment.
• Special reports of plant equipment.
• Records of real property.
• Records of scrap or salvage.
• Records of related data and information.
• Records of completed products.
• Records of transportation and installation costs of plant equipment.
• Records of misdirected shipments.
• Records of property returned for rework.
• Reports of Government property - provide annually the total acquisition cost of Government property for which the contractor is accountable under each contract with each agency, including Government property at subcontractor plants and alternate locations.
• Segregation of Government property.
• Physical inventories.
• Care, maintenance, and use.
• Contractor’s maintenance program (including preventative maintenance).
• Use of Government property.
• Property in possession of subcontractors.