Acquisition Population :

ITEMS:

All purchase orders, material requisitions,

contract transfer documents,

petty cash documents for property to which the Government has title – TIMEFRAME:

Since last PMSA or back one year, whichever is less.

The same population may be used for the first four process segments:

• Acquisition Authority,

• Classification of Property,

• Requirements Computation, and

• Ordering Practices.

[NOTE -- The population for the process segment of MILSTRIP requisitions is different from the population used for the first four process segments.]

Process Segment: Acquisition Authority

This process segment focuses on the buying or fabricating or making or transferring Government property.

QUESTIONS?

• Are purchasing, material control, and engineering aware of contractual requirements for Government property acquired by the contractor?

• When material is moved between contracts as a cost transfer, e.g. MMAS or credit/debit system, is there adequate documentation?

• Is there documentation of CO consent where required, e.g., special terms and conditions in the contract, purchases over the dollar threshold in Subcontract Clause, FAR 52.244-2, or where there is no approved purchasing system, etc.

• Where VCSes or ILPS are applied for this process are the criteria set forth in the VCS/ILP applied through the contractor’s PMS?

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Process Segment: Categorization/Classification of Property

Population: Use same population AND SAMPLE for this process segment as for the process segment of ACQUISITION AUTHORITY.

QUESTIONS:

• Is property properly classified, e.g. Material, Special Tooling, Special Test Equipment, and Real Property, for purposes of acquisition to preclude property being acquired without the proper authorizations, e.g., misclassifying an item as STE instead of Equipment to allow direct charging of the item.

Process Segment: Requirements Computations

Population: Use same population AND SAMPLE for this process segment as for the process segment of ACQUISITION AUTHORITY.

QUESTIONS:

• Why is the entity/activity buying the item of property?

• Is there a need for the property supported by the proper documentation, e.g. Bill of Material, Material Requirement Lists, Tech drawings, etc?

• Where VCSes or ILPS are applied for this process are the criteria set forth in the VCS/ILP applied through the contractor’s PMS?

Process Segment: Ordering Practices

Population: Use same population AND SAMPLE for this process segment as for the process segment of ACQUISITION AUTHORITY.

QUESTIONS:

• On the acquisition document is there the required data: Item name, description, price, quantity, contract #, etc?

• Items and quantities acquired are reasonable and needed?

• Is there a balance on hand already?

• Is there over acquisition (Buying more than is needed)?

• Time frames for ordering are reasonable (What do the PMS procedures say?)

• Are modifications to orders controlled so as to not buy stuff the G doesn't need?

• How are Purchase Orders controlled and distributed?

• Is it adequate?

• Is it in accordance with the PMS?

• Where VCSes or ILPS are applied for this process are the criteria set forth in the VCS/ILP applied through the contractor’s PMS?

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Process Segment: MILSTRIP Requisitions

Population: ALL MILSTRIP REQUISITIONS for the past year or since last PMSA whichever is less.

QUESTIONS:

• How are requisition documents maintained?

• Are the documents properly prepared? (Same data as for other property + MORE!)

• Is the contractor using the correct Fund codes, Priority Designator, Force Activity Designator as specified in the contract? (See FAR 52.251 and the MILSTRIP MANUAL http://www.dla.mil/j-6/dlmso/eLibrary/Manuals/MILSTRIP/Default.asp.)

• Are emergency priorities used and if so is the use proper, i.e., authorized in the contract?

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Process 2: Receiving

Purpose:

Receiving Process: The Auditor’s responsibilities, as part of the PMSA or Internal Audit program, include a review of the contractor's receiving system to ensure that the system specifies:

• Physical inspection of the shipping containers for evidence of obvious damage, comparison of incoming receipts with due-in records to determine if the correct item and/or quantity was received, and immediate notification to shipper (driver) of obvious damage disclosed during the initial receiving of Government property.

• Special handling instructions regarding the acceptance inspection and/or test requirements, sensitive property; i.e., precious metals, explosives, corrosive chemicals, etc., and special storage requirements.

Documentation supporting receipt. The Auditor must ensure that procedures require the receiving documents be maintained, distributed, and contain the entries necessary for the protection of the Government's interest. The Auditor should examine receiving reports and the supporting documents such as Government shipping documents (DD Form 1149, "Requisition and Invoice/Shipping Document"; DD Form 250, "Material Inspection and Receiving Report"; DD Form 1348-1, "DoD Single Line Item

Release/Receipt Document"; and MCA reports). The population may be obtained from the contractor’s receiving log, MCA reports for GFM, and even fabrication records if the property IF the property is entered into the contractor’s PMS through receiving, where applicable.

Process Segments:

• Receiving Process

• Discrepancies Incident to Shipment

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Process Segment: Receiving Process

Population: All receiving reports generated for one year or since the last PMSA,

whichever is less. (NOTE: Care should be taken as to how property fabricated in-house is input/received into the contractor's PMS.)

QUESTIONS:

• Is the property promptly examined upon arrival to verify quantity received against shipping document, condition upon receipt against shipping document and other transit-related discrepancies?

• Timeframes for "Prompt" action as specified in PMS. [Judgment] Carrier's signature obtained, where applicable?

• Is the receiving report (RR) promptly prepared (TIMEFRAME IN PMS)?

• Does the receiving report have the required data?

• Reconciliation (How is the RR compared against the requisition, PO, etc?

• Are RR distributed as specified in PMS?

• Are items protected during the receiving process?

• Are there any reusable containers involved?

• Are the reusable containers properly controlled?

• Where VCSes or ILPS are applied for this process are the criteria set forth in the VCS/ILP applied through the contractor’s PMS?

Process Segment: Discrepancies Incident to Shipment

Population: All contractor records indicating discrepancies incident to shipment. In addition, Government prepared documentation such as an SF 361 "Transportation Discrepancy report" or an SF 364 "Report of Discrepancy" may be other sources to use as part of the population.

REAL WORLD WARNING AND RISK!!!

The contractor is not responsible for preparing the SF 361/364. Rather the contractor is only required to REPORT the discrepancy to the Government. The PA or other government employee (Transportation or quality Assurance) may be responsible for preparing the SFs. Therefore, using these documents may not provide a good “fit” for

the population.

QUESTIONS:

• How does the contractor handle misdirected shipments?

• Are misdirected shipments adequately segregated?

• What caused the discrepancy?

• Was it investigated and documented?

• Did the contractor report the discrepancy to the PA in the time period set forth in the PMS?

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Process 3: Identification

Purpose:

The Auditor is responsible for ensuring that the contractor has established proper procedures for the identification, marking, and recording of Government property upon receipt or fabrication. The basic objective is to determine the effectiveness of the contractor's system in identifying Government property. A thorough analysis would validate that the assigned numbers are recorded on all applicable documents, as well as marked on the particular pieces of property. Testing of this process may be

accomplished during the testing of other process segments.

Process Segment:

• Identification Process