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Most companies maintain a separate system to meet government property requirements as specified in the FAR, Part 45.  However, with the implementation of SAP, I have come to believe that the basic infrastructure from which to design and develop a fully accountable property system can be achieved using the SAP system.

In September 1998, the Government Property Special Interest Group submitted a “System Requirements Document” to SAP.  This document identified the requirements needed for an ERP Property Management Solution.  This solution covered all types of property in a contractor’s possession including Company, Government, and Customer owned property.  The focus of Property Management is to maintain an approved system of controls for all non-company owned property for which a contractor is to be held accountable.

Government property encompasses a multitude of business processes that are required when managing Government Property.  I have found that the best approach is to look at the processes from a lifecycle standpoint.  As property moves through the financial and logistical process, the data necessary for managing, tracking and reporting on government property can be captured. 

The property management lifecycle includes the following 14 major processes:

Acquisition
Receiving
Identification
Records Management
Movement
Storage
Inventory
Consumption
Maintenance
Utilization
Reporting
Subcontractor Control
Disposition
Contract Close-Out

The sub-processes associated with the above 14 major processes are dependent on the type of property that is being managed.  There are 9 major classes of property includes, but is not limited to:

Land
Other Real Property
Plant Equipment
Industrial Plant Equipment
Special Test Equipment
Special Tooling
Agency-Peculiar
Government-Furnished Material
Contractor-Acquired Material

To complicate the matter, the DoD and NASA have different reporting requirements.  Both requirements must be integrated in order to provide an overall SAP-based government property solution.

In the normal course of business, Government-furnished and contractor-acquired material can deviate from other property because it is most likely to be consumed on a contract and does not maintain it’s presence at a contractor’s site over the life of the contract.  Material can be seen as “consumable” items associated with the contract and is treated similar to company owned material inventory from a logistical viewpoint.

Plant equipment, STE, Special Tooling, and STE, on the other hand, continues to maintain their presence at the contractor’s site and are considered “non-consumable” property associated with a contract and is treated similar to company owned assets from a logistical viewpoint.

Typical government contract types which use government property include, but is not limited to, fixed price, cost reimbursement, and time and material contracts.

Fixed price contracts are typically associated with, but not limited to, property that includes equipment, tooling, and agency-peculiar types of property.  The property is usually associated with equipment used in the building the end item product that is to be delivered as part of the contract.

Cost-reimbursable contracts are those for which the costs incurred on the contract are used as the basis for billing the customer.  These types of contracts typically have a cost risk factor where the actual cost associated with the development is relatively unknown.   These types of contracts include all types of government property.

Time and Material Contracts are those where a specific service is to be performed.  For example, an end-item repairable ha to be tracked as agency peculiar property and if the government furnishes parts that are to be used for the repair, then these parts need to be tracked and reported as well.

Each of the above contract types require different back-end logistical process flows and these flows are the basis from which the appropriate information associated with the property must be captured.

The follow-on parts of this series will address each process within the life-cycle of the property as stated above.  Stay tuned for the next part which will address the acquisition process.

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  1. Nitesh Nagpal
    A precise document..sub part of Cost-Reimbursable contracts will include: Service contracts, notifications and Sales Orders for replaced material & services performed..resource related billing will be used as actual cost is not known.

    Regards,
    Nitesh

    (0) 

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