PROCESSES OUTSIDE OF THE CONTRACTOR PLANS AND SYSTEMS PARAGRAPH OF THE GP CLAUSE – 52.245-1(f)

The first process we need to address is that of disposition. Disposition has an entire paragraph devoted to it under the GP Clause of 52.245-1. Paragraph J, entitled Contractor inventory disposal, and it has a PROCESS feel and flavor to it – with numerous SUB-PROCESSES embedded within it. Yet, from a strict constructionist

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standpoint – it is not a process. Why? Because it is not addressed in the plans and systems paragraph where we see the process and outcomes requirement.

Does that mean we should NOT audit or assess that process? ABSOLUTELY NOT!!!

In point of fact the PROCESS of DISPOSITION is a CRITICAL PROCESS for you to audit – as it, versus many of the other processes that are called out, is driven by LAW!

Not just regulation, i.e., the FAR, but by LAW/STATUTE – the Federal Property and Administrative Act of 1949, as revised.

So, we have another process to review OUTSIDE the GP clause’s process paragraph.

How about the “old” process of Property Management? No longer is it called out as a

“process” requirement. Yet we see Paragraph (b) of the GP Clause entitled

“PROPERTY MANAGEMENT” imposing a requirement with a very clear OUTCOME – in point of fact an outcome or outcomes that overarch and permeate every OTHER process.

Should we then ignore this process and outcome requirement because it is not called out in the plans and systems paragraph?

ABSOLUTELY NOT!

If one were to review the ASTM International Voluntary Consensus Standards relating to Property management we would find numerous references to plans and procedures and even the overarching concerns of property MANAGEMENT – not just property control. The Equipment Management Process Maturity Model (EMPM), ASTM E2452-05 is one methodology for determining the level of maturity found within an entity’s property management system.

COMMENTARY

In my opinion, It is critical when using the EMPM that the GPA or internal auditor obtain the CRITERIA used to determine the subjective rating determined by the contractor Many of the criteria echo the original concerns set forth in Appendix A of the “OLD” DoD Property Manual. Without audit evidence, supporting the criteria embedded within the EMPM, there may be no reliability or validity to the determined EMPM level.

So, if we were to list ALL of the PROCESSES described in the GP CLAUSE of 52.245-1 – NOT JUST THOSE LISTED IN PARAGRAPH (f) we find that there are SIXTEEN (16) PROCESSES. These are:

Property Management (1) -- Not in Process Paragraph Acquisition of Property (2)

Receiving of Government property (3)

Identification of property (Embedded) (4)

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Records of Government property (5) Physical Inventory (6)

Subcontractor Control (7) Reports (8)

Utilization of Government property Utilize (9)

Consume (Embedded) (10) Move (Embedded) (11) Store (Embedded) (12) Maintenance (13)

Property Closeout (14)

Relief of Responsibility (15) – Let’s rename this LIABILITY as the real description set forth under relief of responsibility does impose this as a process and outcomes issue but rather a description of WHEN the contractor is no longer “responsible” for

Government property. TECHNICAL CORRECTION - As an academic note, it would probably be simpler and more easily understood to rename this LIABILITY for L, D, D and T of GP – with the accompanying REQUIREMENT to have a PROCESS to promptly disclose and report any instances of L, D, D and T of GP including the outcome of the report set forth in (vi) (a) of the GP clause.

And lastly…

Disposition (16).

Now, you will notice that I “broke out” the EMBEDDED processes that were/are

subsumed under the top level process – UTILIZE Government property is a good one to start with. Under this top level process there are really FOUR embedded processes – Utilize, Consume, Store and Move Government property. You may wonder why I SEGREGATE them into their own processes. Simple! They all have DIFFERENT POPULATIONS as a process.

Let me try and explain that a little more and you will see this later on in this chapter.

Let’s compare utilizing property with consuming property.

What type of property is utilized?

Equipment, Special Tooling and Special Test equipment (And yes we could even throw in Real Property (RP) if RP is accountable to your contractor.

What type of property is consumed?

Material.

The records that you would be reviewing under utilization may NOT be (And probably aren’t) the same records that you review for consumption. Therefore the

POPULATIONS need to be properly stratified which leads to the breaking out of the processes.

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Let’s look at storage and movement.

Again, the POPULATIONS are different for these processes. Where for storage you are going to review the actual, physical storage LOCATIONS, for movement you are going to review the MOVEMENT of property and the documents that affect that movement.

If we were to lump these processes together for audit purposes it is highly probable that our findings would be specious – simply put, they would be wrong, and the contractor would have every right to debate and dispute the ‘rating” we assigned this process.

It is NOT my intent to create MORE work for the Government Property Administrator or the internal auditor. I am only trying to accomplish two things:

1. To ensure that the Auditor performs a thorough and complete AUDIT of the contractor’s PMS when tasked to do so and

2. To provide CLARITY in defining and APPLYING POPULATIONS for each of the process and outcome requirements. And this is critical!!! If you define a population incorrectly – your results will be incorrect. They will be specious! So, if you were to define a population for Utilizing Government property under the GP clause, FAR 52.245-1, Paragraph (f)(1)(viii) – and attempt to test the four embedded processes with that ONE

POPULATION your results will most definitely have no statistical reliability or validity and quite possibly (In fact probably) you will find the contractor inadequate due to the specious population.

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