NASA Procedural Requirements

NPR 4500.1A Effective Date: April 10, 2024 Expiration Date: April 10, 2029

Subject: Administration of Property in the Custody of Award Recipients

Responsible Office: Office of Strategic Infrastructure

Chapter 5. Property Management System Analysis (PMSA)

5.1 Purposes of a PMSA

5.1.1 Establishing the Adequacy of Award Recipient Performance

Through the PMSA, the GPA evaluates the award recipient’s management (control, use, preservation, protection, repair, and maintenance) of GP in its possession. The recipient’s performance needs to meet the GPA’s evaluation criteria, which will be consistent with the award requirements as well as with VCS, ILPS, and CCPs for property management that have been determined to be adequate for the performance of the applicable contracts. Determination of adequacy of VCS, ILPS, and CCPs may occur either as part of the award process or in response to a recipient’s reported changes. Subjective evaluations may include outlining the scope of the system analysis performed, summarizing the processes and process segments or outcomes audited, and examining any deficiencies identified for possible negative trends.

5.1.2 Ensuring Adequate Management Control

The award recipient’s use, stewardship, and management of government assets in no way negates NASA’s responsibility to provide reasonable management controls to protect the assets, preserve them, ensure their proper use, and, when no longer required, dispose of them appropriately. While the recipient retains the principal stewardship responsibility and their property standards, practices, and procedures serve as the principal management control, the PMSA provides the management control and oversight audit needed to ensure the public that NASA is appropriately managing the resources assigned to administer the award.

5.1.3 Ensuring Appropriate Accounting for Property

Tests of the award recipient’s records, physical inventory, loss identification and reporting, and the various transactions within the recipient’s PMSA should establish the accuracy of those records and transactions. A primary function of any property records system is to ensure there are appropriate records for all property and that the property on record exists. As such, tests within the PMSA should establish reasonable assurance of existence of property and completeness of records for accountability and accounting purposes. Documentation is audited to ensure that records are properly supported. Transactions are reviewed to ensure that processes are documented appropriately for audit-readiness in the Agency.

5.1.4 Ameliorating Risk to the Government

While providing property to an award recipient increases risk to the Government, the PMSA should reduce risk by identifying areas of award noncompliance or inadequate processes or actions, as well as any incidence of fraud, waste, or abuse. The process of auditing, identification and correction of deficiencies provides a method for continuous improvement of process and standards.

5.2 Risk Assessment

5.2.1 The GPA shall review the award recipient’s PMS at the inception or within 30 days after award. This includes review of the property plan, policies, number of personnel, property management training, and systems being utilized. This information and review will be documented as a memorandum for the record indicating the initial review of the recipient’s system and documenting any deficiencies and resolutions by the recipient.

5.2.1.1 The availability of personnel and travel resources will be effectively managed by the award recipient and applied to those situations posing the greatest risk to NASA, its mission, and the public resources entrusted to the Agency.

5.2.1.2 Risks will be identified and incorporated into decisions regarding the resources to be assigned to the PMSA.

a. Award recipients that have not changed principal property, personnel, or systems and have maintained a minimum adequate PMSA rating for two consecutive cycles may be conducted as full or limited outcomes of PMSA (i.e., NF 1019, etc.).

b. When only limited PMSA has been performed, the GPA shall evaluate the award to determine if a full outcome area is warranted according to the Risk Assessment Matrix. (See Table 5-1 for more information.)

5.2.2 Method of Risk Assessment

IPOs shall collect information on the award recipient and ensure the recipient is sufficiently able to perform an evaluation of risk. Risk should be based on the entirety of the recipient’s activities at a place of performance rather than activities for a single award. IPOs should refer to existing recipient records within NESS to determine if there are other NASA awards performed at a recipient’s place of performance including all cage codes associated with that place of performance and including property from the other Centers within their risk determinations.

5.2.3 Criticality of Risks

Table 5-1, Risk Assessment Matrix, provides a matrix that relates different evaluation factors to levels of risk. IPOs/GPAs should use this table to evaluate the risk associated with an award recipient and particular place of performance. IPOs/GPAs should assign the highest level of risk related to any of the evaluation factors identified for a recipient and place of performance. For example, if there is a change to a recipient’s management personnel, a high risk should be assigned regardless of whether any of the other situational aspects falls within the high-risk category.

5.2.4 Exceptions

IPOs/GPAs may increase risk levels or sampling confidence levels when their knowledge of problems with award recipient processes or activities provides sufficient justification.

Table 5-1 Risk Assessment Matrix

5.2.5 Application of Risk to the PMSA Schedule and Sampling Populations

5.2.5.1 Table 5-1, Risk Assessment Matrix, provides an audit frequency associated with risk level. IPOs/GPAs should use the risk frequency to determine how often an audit will be scheduled at the award recipient’s place of performance.

5.2.5.2 Double sampling confidence levels may be based on the risk assessment. For aid in determining the appropriate use of double sampling confidence levels, the GPA may use the following table for weighting the risk to sample size and error rates. The individual items will be weighted in order of precedence, with one being the highest priority and three being the lowest priority. An assessment may be made for the overall PMSA or by the segment/outcome. (See Section 5.6.2.3 c(4) for more information.)

5.2.5.3 IPOs shall ensure all GPA documents on awards according to the risk level for all awards with GP in NESS PMSA’s section under all tabs. (See Section 1.3.8.3(j) for more information.)

5.2.6 Full and Limited PMSA

5.2.6.1 The GPA shall conduct a full or limited PMSA based on the performed and documented Risk Assessment Matrix.

a. The full PMSA shall have a formal entrance and exit conference. The limited PMSA permits less formal testing methods and techniques. The limited PMSA methodology uses responses to the PMSA questionnaire covering each segment or element of the award recipient’s PMS.

b. Performance of a limited PMSA.

(1) PAs shall ensure that the level of review is sufficient to determine the adequacy of the award recipient’s property management system. The GPA will conduct interviews, review submitted information, and conduct sample testing of selected processes if necessary.

(2) If a limited PMSA reveals deficiencies, the GPA may visit the award recipient to resolve issues or expand the scope to a full PMSA.

(3) The GPA oversight at inception includes reviewing award recipient’s PMS, written procedures, and property plan.

(4) For high-risk or new awards, the assessment will begin within 12 months of the award recipient’s receiving or acquiring property.

5.2.6.2 Conducting a Limited PMSA.

5.2.6.2.1 For a limited PMSA, the GPA shall at a minimum:

a. Review the award recipient’s property plan, policies, systems, and past PMSA results prior to interviews and evaluation of current submitted information.

b. Check for any changes to the award recipient property plan in accordance with 48 CFR § 52.245-1, and 48 CFR § 1852.245-75.

c. Using NF 1019, cover each applicable element of the recipient’s PMS requesting additional information as needed.

d. Review requested information that includes:

(1) Current records listing all GP for all categories of furnished or provided property (equipment, STE, ST, and materiel).

(2) Additions, deletions, and reported losses of both GP furnished or acquired property.

e. Ascertain that authorization was obtained for acquisitions in accordance with 2 CFR pt. 200, subpt. E, 48 CFR § 1852.245-70, and for deletions from records.

f. Verify that the property listing contains the required Equipment section, 48 CFR § 52.245-1, property record data elements and that the recipient maintains source documentation and audit traceability for transactions.

g. Verify completeness and timelines of submitted reports to include property submissions in accordance with 48 CFR § 1852.245-73, self-assessment, loss, discrepancy, and physical inventory results (for capital property according to 48 CFR § 1852.245-78).

h. Verify physical inventories are conducted per the approved plans and procedures.

i. Evaluate utilization elements to include authorized use, screening for continued use/need or timely disposal.

j. Verify processes for materiel consumption, receipt, and issue.

k. Ascertain if the award recipient has property that requires scheduled preventative maintenance (PM) or calibration, and records validating the performance of maintenance activities.

l. Verify the recipient retains complete, authorized records for relief of stewardship for any dispositioned property.

m. Verify the award recipient has plans and procedures for award closeout activities, or the performance activities if awards have closed during the review period.

n. Prepare a determination letter for the CO/GO to sign that includes at a minimum:

(1) Findings and conclusions,

(2) A statement addressing the adequacy of the overall system, and

(3) Document resolution of any corrective actions and deficiencies.

5.3 Establishing the Annual PMSA Schedule

5.3.1 Award recipients with GFP or who acquire it will receive a PMSA according to Table 5-1, Risk Assessment Matrix.

5.3.2 The Center IPO and FIP shall establish the annual schedule of PMSAs stating what type is being performed during the fiscal year.

a. The IPO and FIP schedules need to allow for the performance of PMSAs in accordance with the frequencies cited in Table 5-1.

b. The schedule being conducted by FIP and NASA for off-Center awards will be forwarded to the NASA HQ-CPPM by IPO and FIP no later than November 30 of each fiscal year.

5.4 Pre-Audit Communications with the Award Recipient

5.4.1 Under 48 CFR § 52.245-1, the Government has access, at reasonable times, to the award recipients’ and any of their subcontractors’ premises and records for the purpose of establishing the effectiveness of the contractor’s plans, systems, practices, and procedures. All full PMSAs require an entrance conference and if the GPA determines that a limited PMSA is appropriate (based on risk), there is no formal entrance briefing required.

5.4.2 The GPA shall notify the recipient, CO/GO, and IPO of their intent to conduct a PMSA.

a. The notification will provide the times and dates of the proposed audit, and alternate times and dates to the extent they may be available within the GPA’s schedule.

b. The notification should request any necessary data in a form that would be useful to the GPA to identify appropriate populations, generate appropriate samples, and otherwise provide information in support of the audit.

c. The notification should also request any information on the recipient’s self-assessment practices and the result of any external independent audits involving the recipient’s property systems and practices.

d. The GPA should prepare (select) all samples prior to the audit. However, to preserve the integrity of the audit sample, samples will not be provided to the recipient in advance except as needed for recipients to obtain their information such as access to files, personnel, and or secure areas.

5.4.3 Within the PMSA, the GPA may request and audit support documentation including but not limited to:

a. The award recipient’s internal audit work papers and reports.

b. VCS, ILPS, and the recipient’s procedures as part of its PMS.

c. Awards and associated modifications.

d. Correspondence and other official records relating to GP.

e. Past PMSAs to identify systemic deficiencies and associated corrective action plans.

f. Reports of loss of GP, any report register, and loss case files.

g. Findings from other Government or third-party audits involving GP.

h. Property records required to be maintained according to this NPR.

5.4.4 After establishing the firm dates for the audit and after receipt of the requested materials, the GPA shall prepare an entrance conference presentation. The presentation should include:

a. Award information for the GPA and any supporting personnel.

b. Dates and times of the audit.

c. Tentative dates for:

(1) Discussion of interim findings and recommendations.

(2) A draft report, if required.

(3) The final report.

d. A tentative schedule for receipt of recipient response and a corrective action plan, if needed.

e. A description of the audit, including a list of the outcomes of the property system to be audited.

f. A summary of the techniques and methods that will be used to test the outcomes.

5.4.5 The GPA may, at their own discretion, provide a copy of the entrance conference presentation to the recipient prior to the date of the conference. The GPA shall include the CO/GO and IPO in the entrance conference.

5.5 Award Recipient Self-Assessments

5.5.1 Participation in Award Recipient’s Self-Assessments

5.5.1.1 The GPA may participate as part of or serve as a control point in the recipient’s self-assessment program. Grant and cooperative agreements are not required to conduct self-assessments or maintain a self-assessment program.

5.5.1.2 The GPA may build upon or incorporate the results of the recipient’s assessment process in conjunction with, but not in lieu of, the performance of the PMSA nor for a particular property test or segment.

5.5.1.3 The GPA shall test recipient performance and compliance in accordance with the procedures in this chapter and GAGAS to provide an independent verification of the recipient’s findings and to provide reasonable assurance of the adequacy of the recipient’s property management practices and systems.

5.5.2 Review of Proposed Standards and Practices

5.5.2.1 The GPA shall review the recipient’s standards submitted at the time of proposal to determine whether those standards will serve as indicators of the adequacy of recipient performance.

5.5.2.2 The GPA shall review the recipient’s proposed practices to determine whether the actual operations of the recipient comply with those practices.

5.5.2.3 The GPA shall not use the recipient’s self-assessment in lieu of the Government’s PMSA.

a. The GPA may use portions of the recipient’s self-assessment in lieu of performing a separate government review. This may only be done if the recipient’s self-assessment methodologies and techniques provide the same reliability, validity, accuracy, completeness, and confidence level produced by the Government surveillance.

b. If the results of the recipient’s self-assessments are to be integrated into the PMSA, the GPA shall validate the recipient’s internal audit practices through either visual observation conducted during the recipient’s internal audit and/or judgement sampling of the recipient’s work papers, verifying the reliability, validity, accuracy, and completeness of the data.

5.6 Testing Award Recipient Performance

5.6.1 Evaluation and Identification of Applicable System Segments

5.6.1.1 The GPA shall review past PMSAs and the award recipient’s PMSs, plans, processes, procedures, practices, and standards to determine the segments of the property system that will be subject to audit.

5.6.1.2 If the recipient meets the qualifications for a “high-risk recipient” as determined by the Center Deputy Chief Financial Officer with OP’s PPMD, the GPA shall, at minimum, audit the records, physical inventory, and reporting segments of the property system annually without regard for past performance.

5.6.1.3 The GPA shall document the rationale for evaluation or non-evaluation of segments of the property system.

5.6.2 Test Methods

5.6.2.1 Population Selection

Within each segment of the property system, the GPA shall select an appropriate population for audit referenced in Section 5.2.5.2 for double sampling confidence level.

a. Definition of the population is to be carefully performed. Improper population selection may render the results obtained from sampling techniques unsupportable. Also, improper population selection may cause a random sample to be invalid as it may not represent the entire population and it may not be possible to generalize the results of sample tests to the full population.

b. The use of sampling techniques ensures recipient records show property within the recipient’s custody. Particular attention should be given to ensure the recipient obtained NASA’s CO/GO approval to transfer award accountability of GP in accordance with this NPR and FAR and NFS requirements.

c. The GPA shall determine the purpose of the test and ensure that the population is fully inclusive of all situations, documents, records, or items associated with the test area.

d. The GPA shall not include items in the population that are dissimilar or unrelated to the process being tested. For example, all receiving reports could be considered a population if the test involves validation of documentation supporting the receiving process and the recipient’s processes call for the creation of receiving reports to document the transaction. Conversely, a purchase document may provide proof of acquisition but not necessarily provide proof of receipt. As such, it should not be included in the population.

5.6.2.2 Full Population Testing

GPAs should evaluate the need for testing an entire population as opposed to sampling. GPAs shall employ full population testing when the nature of the test is critical to safety or health; when inventory is critical to the execution of the award; or when items to be tested are of a specialized nature (i.e., national security items) and, therefore, necessitate absolute control. Full population testing should also be used when populations are small and the cost to determine and generate random samples exceeds the cost to evaluate the entire population.

5.6.2.3 Sample Types

a. Judgment Samples

(1) Judgment samples may be used to evaluate process segments that do not lend themselves to any other methods of sampling.

(2) Prior to using judgment samples, the GPA shall evaluate whether it is possible to use random samples.

(3) If the GPA determines that random, statistical sampling is not applicable or cannot be used, the GPA shall document the file with the rationale.

b. Purposeful Samples

(1) Purposeful samples are used when a specific sample is selected to test for the possible systemic impact of a critical or substantial condition or situation and there is suspicion or reports of significant noncompliance.

(2) The GPA should limit the use of purposeful sampling to situations in which the GPA believes the severity of the situation is likely to result in a systemic deficiency.

(3) Purposeful samples may also be used in root cause analysis and related efforts after establishing the inadequacy of a property segment through random statistical sampling.

c. Random Statistical Samples

(1) The GPA shall select a sample size sufficient to support generalization to the entire population.

(2) To support the adequacy of the statistical sample, the GPA shall, at minimum, use a double sampling plan where the government’s risk may not exceed 10 percent (and a 90 percent confidence level) except for slight variations due to changes in population sizes.

(3) Use of automated systems to determine sample size and to generate the random sample is encouraged. Automated systems help control cost and increase the efficacy of the sample. When applicable, a statistical double sampling plan is the technique utilized to select samples from the recipient’s total universe using a Web-based number generator (https://www.calculator.net/random-number-generator.html).

(4) GPAs who intend to use automated systems should request electronic versions of the recipient’s records, sufficient to generate the sample, as part of the initial PMSA data collection effort. Various tools exist to determine an appropriate sample size. The DCMA Property Administration Procedural Guidance at: https://www.dcma.mil/Portals/31/Documents/Contract%20Property%20Guidebook/Contract_
Guidebook_Aug2022.pdf provides a double sampling table for this purpose and https://www.dau.edu/tools Determination of Anomalous Errors.

5.6.2.4 Anomalous Errors

Anomalous errors are those that are either within the sample’s expected error rate or are not repeated in succeeding samples when double sampling techniques are used. While anomalous errors are not normally indicative of systemic deficiencies, GPAs shall note anomalous errors and, if sufficiently serious as to warrant further action, determine the cause of the error and require its correction.

5.6.3 Determination of Systemic Deficiencies

5.6.3.1 GPAs shall retest to determine whether errors found within an initial sample are repeated. If the errors are repeated, it should be assumed that segment of the award recipient’s system is deficient in that it has not produced the outcome required by the property clause or the standards and practices within the recipient’s property management plan.

5.6.3.2 A deficiency or deficiencies should be considered systemic when, in the professional determination of the GPA, the deficiency or deficiencies are deemed sufficiently significant to risk loss of GP, cause delays to mission schedule, affect the safety of personnel or the public, or significantly increase award cost.

5.6.3.3 The GPA shall require the recipient to perform a root cause analysis to determine the scope and source of the deficiency and require the recipient to provide a corrective action plan.

5.6.4 Correction of Deficiencies and Errors Identified During Evaluation

5.6.4.1 Systemic deficiencies will be reported to the recipient’s management personnel upon discovery. Correction of systemic deficiencies should be acted on immediately and not postponed until the completion of the report.

5.6.4.2 The GPA shall note systemic deficiencies in the report along with the corrective action taken when that action is completed during the conduct of the PMSA.

5.6.4.3 The GPA may document anomalous errors corrected during the PMSA with summary notations to the report.

5.6.5 Outcome of Segment Testing

5.6.5.1 Evaluation of Acquisition

a. Acquisition is tested to ensure that it is limited to those quantities authorized by the award. Acquisition includes any property acquired, constructed, fabricated, or furnished by the Government or via other methods. Random sampling techniques should be utilized unless acquisition activity is so limited as to warrant a full population audit.

b. The population for this process may consist of all acquisition and fabrication transactions as evidenced by the documents of those transactions for the past year or since the last PMSA, whichever is more recent. The GPA shall audit the procurement, requisitions, purchase orders, subcontracts, fabrication, or transfer documents. These documents may serve as the appropriate population for testing acquisition.

c. The GPA may also audit the acquisition cost vouchers submitted to the CO for payment to determine whether the dollar value of direct charges for property against the awards are appropriate for the circumstances of the award. Grant and cooperative agreement recipients are not required to submit cost vouchers to GOs when the recipient procures equipment that remains vested in the Federal Government.

d. The GPA should also audit bills of materials or material requirements lists to determine if the quantities of acquired material are appropriate or excessive. GPAs should consider minimum buys, bulk purchases, shelf life, and similar conditions that warrant acquisition of quantities that differ from specific award requirements. Further, the GPA should evaluate the recipient’s performance considering the recipient’s proposed practices, procedures, and standards.

e. The GPA shall treat Federal Standard Requisitioning and Issuing Procedures (FEDSTRIP) and Military Standard Requisitioning and Issuing Procedures (MILSTRIP) acquisition audits as separate populations under the process of acquisition due to the unique requirements of the MILSTRIP process, i.e., form and format, authority needed to use the MILSTRIP system including priority codes. The population consists of all FEDSTRIP/MILSTRIP requisitions made by the recipient for the appropriate timeframe. (See the GSA FEDSTRIP Operating Guide (2006) at https://www.gsaadvantage.gov/images/muffin/fedstrip_guide_2006.pdf and/or

DOD 4000.25-1-M, Military Standard Requisitioning and Issuing Procedure.)

f. The GPA shall review documentation of equipment acquisitions to ensure recipient compliance with the requirements of 48 CFR § 1852.245-70, and the section Equipment and Other Capital Expenditures, 2 CFR § 200.439.

(1) Award recipients should have written CO/GO approval to acquire or begin fabrication items of equipment that were not approved as part of the initial award.

(2) The GPA shall review recipient requests to ascertain that they were submitted to CO/GO for approval no later than 30 days prior to the acquisition date.

(3) When recipients are authorized to self-screen for available NASA inventory or the excess of other agencies, the GPA shall review documentation to determine if that screening has taken place and that the results of that screening are supportable.

g. The GPA shall review all transportation asset records to ensure that they were requested and approved in accordance with the requirements of 48 CFR subpt. 1851.2, and NPR 6200.1, NASA Transportation and General Traffic Management.

(1) In addition, award recipients shall obtain the approval of the NASA CTO prior to the acquisition of additional transportation assets.

(2) The GPA shall test transportation asset acquisition approval documents to ensure the approval was received prior to acquisition.

5.6.5.2 Evaluation of Receiving

a. The award recipient shall have documentation of receipts, either in manual or electronic form. These documents constitute the population for evaluation of receiving practices.

b. The recipient shall have documentation of identified discrepancies and their resolution. Receiving records constitute the initial entries into the property record or provide evidence that the property was issued directly to work in progress.

c. At a minimum, the GPA shall audit receiving documentation and practices to ascertain the following:

(1) Whether the receiving activity ensured that quantities ordered were received and whether the condition of acquired item(s) meets the acquisition specifications.

(2) Whether receiving documentation provides evidence of corrective actions in the case of discrepancies.

(3) Whether receiving documentation provides evidence of prompt processing activity as delays in the receiving process can affect overall production.

(4) Whether receiving documentation provides evidence that items were promptly entered in property records or issued to work in progress.

5.6.5.3 Evaluation of Identification

a. The GPA shall test to ensure the award recipient has established a process for the identification of GP upon receipt or fabrication in accordance with 48 CFR § 52.245-1(f)(1)(ii), and 48 CFR § 1852.245-74. The basic objective is to determine the effectiveness of the recipient’s system of physically identifying GP.

b. A thorough analysis would validate that the assigned numbers are recorded on all applicable documents; marked on the components or parts of GP; and marks are readable using appropriate equipment and are, when required, human readable.

c. The GPA may use the same population to test the process of identification as used in testing the process of “records” of GP. The testing of this process may be accomplished during the testing of other process segments (i.e., when testing “Records of all Government Property” by establishing two column headings on the GPA’s worksheets reflecting “identification number on record” and “identification number on asset.”)

d. To ensure that records accurately reflect items on the floor, the GPA shall also perform a “property to records” audit using a separate population as discussed in evaluation of records, Section 5.6.5.4.

e. The GPA may also use a separate population for testing the process of identification. This would entail using the population used in testing receiving and then ensuring that the items received have been identified. The GPA may consider alternating these two methodologies to ensure broad coverage of this process requirement.

5.6.5.4 Evaluation of Records

a. The GPA shall audit the award recipient’s records systems to ensure that the records are established and maintained according to their proposed property plan, system, practice, and/or standards.

b. In addition, Equipment, 2 CFR § 200.313, and 48 CFR § 52.245-1, require recipients to retain records sufficient to support audits and set forth minimum requirements for data elements. The GPA shall ensure that the recipient’s property records contain the appropriate data elements.

c. The GPA shall:

(1) Ensure the recipient’s records of GP contain the data elements of 48 CFR § 52.245-1 (f)(1)(iii) (A), and the same property value as the supporting documentation provision.

(2) Ensure the unit acquisition cost of CAP is supported by and derived from data in the recipient’s cost accounting records or processes (e.g., obtain a copy of the purchase order to validate equipment cost).

(3) Request that the recipient provide information on the results of any Government review of their cost accounting processes.

(4) If any of the above conditions have not been met, include in the PMSA the following statement, “The review of the recipient records is qualified because there is insufficient information for the GPA to validate unit prices of Government property.”

d. While some data elements required within the FAR clause Government Property (i.e., description) are applicable to all classifications of property, some data elements may not be. For example, quantity received or fabricated and quantity on hand are applicable to material items. However, equipment items (especially serially numbered equipment items) are tracked as individual units; therefore, the quantity will always be one. Conversely, a unique item identifier or equivalent and date placed in service are applicable to serially numbered equipment items but not to material. Disposition, posting reference, and transaction information are only applicable when those activities take place.

e. Care needs to be taken in the selection of populations for testing. The GPA may determine it appropriate to test the property using stratified statistical samples in which different values or types of property are tested separately from other types. Differentiation may be based on property value such as capital valued property as opposed to lower valued property. Differentiation may be based on the physical makeup or use of the property. For example, weapons or other property may be subject to a higher level of control because they pose a hazard to persons or property, or property that is critical to mission performance may be subject to a higher level of control. Such property should be tested using a stratification based on these factors.

f. Records should be tested to determine whether transactions are posted. Timeliness of transaction posting should be defined in the recipient’s system plan, standards, and/or practices. GPAs should test to determine if transactions are posted accordingly.

g. The GPA shall test the accuracy of quantity and location to evaluate:

(1) The existence of property on record.

(2) Whether items on record are in correct locations and quantity (record-to-floor checks).

(3) The completeness of records, testing whether items on the floor have corresponding and appropriate records (floor-to-record checks).

h. The GPA shall conduct tests using appropriately sized random statistical samples or full population testing for the record-to-floor checks.

i. The GPA shall use an untested Government-owned item adjacent to an item tested during the record-to-floor checks to perform the floor-to-record check. The GPA should be careful to consistently check for a floor-to-record check item in the same position in relation to the randomly selected record-to-floor check item. For example, the GPA could establish that they will always check the Government-owned item closest to the right-hand side of the randomly selected record-to-floor check.

j. When a recipient is authorized to use a “receipt and issue” record-keeping system, the GPA shall review receipt and issue records to determine whether received items have been issued directly to the floor for consumption, whether items are consumed and whether unconsumed items or items that will not be consumed for a period exceeding the recipient’s plan are placed on record in a perpetual inventory system.

k. In accordance with 48 CFR § 1852.223-76, Federal automotive recipients who are authorized to use Government-provided transportation assets are required to report into the Federal Automotive Statistical Tool (FAST) annually. The GPA shall consult with the CTO to ensure that FAST records are up to date and complete.

5.6.5.5 Evaluation of Physical Inventory

a. Section 2 CFR § 200.313 and 48 CFR § 52.245-1(f)(1)(iv) require recipients to perform, record, and report the results of physical inventories. Physical inventories are essential in the validation of records, transactions, and practices. Physical inventories provide insight into the overall effectiveness of management controls employed by the recipient over GP. As such, they are an equally essential part of the Government’s oversight and review processes. Further, GCAM and 48 CFR § 1852.245-78 require recipients to validate the existence of items valued $500,000 or above on an annual basis.

b. The GPA shall evaluate the recipient’s physical inventory execution to determine whether the inventory is being scheduled, performed, recorded, and reported in accordance with the recipient’s property management practices, standards, plans, or systems. The basic objective is to determine the effectiveness of the physical inventory process, physically locate and count GP, compare the results to the records, post the findings, reconcile the inventory, make physical inventory adjustments, report the adjustments and losses to the GPA, and perform a physical inventory at award completion, termination, or when otherwise required.

c. The GPA has the option of performing audits of the recipient’s physical inventories either during the performance of the inventory or after its completion. In either case, the tests need to evidence performance of the physical inventory at the time(s) stated in the recipient’s PMS, physical counts of selected items, verification of the entries on count slips, comparisons with records, preparation of documents necessary for any adjustments required, internal recipient approval of adjustments, and the referral of lists of all recorded adjustments to the GPA. Populations and their respective samples may be drawn from physical inventory documentation such as count slips, inventory tickets, computer printouts of automated inventories, or similar items.

d. To ensure that the recipient’s inventory practices encompass all property under contract, the GPA shall select an appropriate sample of items from the recipient’s work areas (i.e., storage, manufacturing, and fabrication) to determine if items within those areas have been verified during the inventory process.

e. The GPA shall review an appropriate stratified sample or stratified population of the recipient’s records to determine whether items valued $500,000 or above have been verified on an annual basis in accordance with the requirements of the NFS clause Physical Inventory of Capital Personal Property, 48 CFR § 1852.245-78. Special attention should be given to any instance where an item was not found to determine whether the discrepancy was reported according to the requirements of 48 CFR § 52.245-1, and whether the associated records were updated.

f. The GPA shall ensure the award recipient has updated/descriptive property listing in NESS in Contract screen under Documents tab or in PMSA screen under Documents tab as supporting documentation. If any GP experienced any adjustment, acquired, transfer, disposal, loss, etc., an updated/descriptive property listing is warranted for upload in NESS. Accurate property listing ensures NASA and PLCO knows what is needed for final disposition and timely closure of the award.

5.6.5.6 Evaluation of Subcontractor Control

a. Though it is not a widespread practice for commercial companies to provide their assets to their vendors, it is occasionally in the Government’s best interest to provide property to contractors performing government awards. When a subcontractor requires property to perform duties associated with the prime award, prime award recipients may provide that GP to subcontractors. As the Government does not have “privity” into the relationships between the prime recipient and subcontractors, the prime award recipient is responsible for the management of GP in the possession of its subcontractors in accordance with 48 CFR § 52.245-1(f)(1)(v).

b. The GPA shall ensure the prime award recipient has established a process to manage its subcontractors who have been provided GP. The basic objective in testing subcontractor control is to ensure that the contractor has a process for properly applying the GP clauses requirements in its subcontracting processes and providing the required information in the subcontracting process, and then to ensure sufficiency of the subcontractor’s PMS to protect the Government’s interests in the GP.

c. The GPA should be aware of all subcontracts, purchase orders, interdivisional work authorizations (IDWAs), inter-organization transfers (IOTs), and other documents that furnish GP or authorize the acquisition and fabrication of items that become GP. Applicable documents to review as part of this process may include purchase orders/subcontracts with GP, and awards, as well as associated modifications and correspondence relating to GP provided to subcontractors, flow down of risk of loss and control of GP, and supporting correspondence and reports. The populations for this process and their respective samples can be taken from these documents.

d. When subcontractor acquisitions of property will result in Government-titled property in accordance with the title provisions of 48 CFR § 52.245-1, the GPA shall test to ensure that:

(1) The prime award recipient requested approval of the CO/GO for the acquisition in accordance with 48 CFR § 1852.245-70.

(2) The appropriate title provisions of the FAR clause Government Property are included in subcontracts.

e. The GPA should be aware that there are numerous different award relationships between a prime award recipient and a subcontractor as well as differing relationships between and recipient and the recipient’s alternate locations. A determination should be made concerning the type of award relationship, i.e., whether the business relationship is that of a prime award recipient with a subcontractor or is that of an alternate location as a physical extension/location of the recipient. Where the GPA is unable to ascertain the type of relationship, the GPA shall request clarification of the relationship from the recipient. The recipient is in the best position to provide this information to the GPA.

f. When the prime award recipient has retained property management responsibilities for its subcontractors, the GPA shall ensure that adequate processes have been established in the award recipient’s PMS. Areas within the subcontract process that are of critical concern are:

(1) The flow down requirements (i.e., 48 CFR § 52.245-1(b)(3)).

(2) The adequacy of the recipient’s system of surveillance incorporated in its PMS and applied throughout the life of the subcontract.

(3) The adequacy of the recipient’s surveillance documentation of the subcontractor’s PMSA, to include but not limited to types, quantities, and dollar value of property; methods of performing the analysis; subcontractor performance and reporting of physical inventories; evaluation criteria; and conclusions including disclosure, follow up, and final resolution of deficiencies.

g. Property administration may have been delegated through a support property administration delegation requested by the NASA Center IPO. Where the prime award recipient has retained the oversight process, the GPA shall, as part of the PMSA, perform an analysis of the recipient’s oversight of their subcontractors in accordance with its PMS.

h. Where the prime award recipient and the prime’s GPA have agreed in writing to a support property administration delegation, the cognizant GPA for the subcontractor shall perform a PMSA on that subcontractor, including the GP accountable under the subcontract delegated for property administration, and provide their findings to the prime’s GPA promptly upon completion of the PMSA.

5.6.5.7 Evaluation of Utilization

a. 48 CFR § 52.245-1(f)(1)(viii) combines five distinct processes under the outcome of utilization. These include use, consumption, movement, storage, and reporting of property no longer required for performance. GPAs need to be aware that, though these distinct processes are combined into a single FAR clause outcome, the processes have different populations and different criteria that are subject to review. Within this NPR, distinct evaluation requirements are identified for each of these processes.

b. During evaluation of utilization, the GPA should be particularly concerned with any unauthorized use, use more than allowable time on non-government work, improper recording of actual use, and failure to maintain any required utilization records. There needs to be an award requirement or justification for retention for each item in the possession of the award recipient. GPAs should be aware that the utilization levels of property may be affected by the purpose of the award (i.e., operations and maintenance (O&M), production, research, and development (R&D)); the type of testing the item was used for; continuous versus final acceptance; and the reason the property was provided (i.e., as a model or for configuration standards).

c. Recipients are required by 48 CFR § 52.245-1 to restrict use of GP exclusively for the performance of the award under which the property was provided. Use on other Government awards may be allowed after receipt of noninterference use approval from the CO/GO for the providing award. Approval should also be garnered from the CO/GO responsible for the use award. GPAs shall check to ensure that any identified use on other awards has been appropriately authorized.

d. Conversion of public property to private use without authority is a criminal act under Public Money, Property or Records, 18 U.S.C. § 641. GPAs shall review recipient use records and operations to determine whether property is being used exclusively for authorized purposes. When the GPA suspects that property is being used for unauthorized purposes, the GPA should immediately report such conditions in writing via e-mail with prime award number within two business days to the CO/GO, HQ-CPPM and NASA Inspector General for further investigation and should request advice from the Inspector General on whether and to what extent the PMSA should continue.

e. Recipients who identify a commercial or private use for GP shall obtain the approval of the providing CO under 48 CFR § 52.245-9 and comply with the CO’s direction.

f. GPAs shall review recipient records to ensure recipients have obtained the CO’s advanced approval of commercial use and that the recipient’s plans, practices, procedures, or systems provide accurate means to collect use data; for example, hours used for performance of commercial work versus hours used for performance of Government work.

g. Recipients shall have processes and standards to determine when property is no longer required for performance of the providing contract and to report that property for disposition in accordance with 48 CFR § 52.245-1 and 48 CFR subpt. 45.6. Disposition is completed throughout the award period of performance.

h. The GPA shall evaluate recipient records of use and observe the use of property to determine whether property that is no longer required for contract performance has been reported for disposition in accordance with the recipient’s processes and standards. This portion of the utilization evaluation applies only to non-consumable types of GP (i.e., equipment, STE, durable ST, and real property).

i. The GPA shall review the activity level of the items sampled to identify idle or underutilized GP.

(1) Where the GP does not reflect current or recent use, the GPA shall request the recipient to provide justification that the GP is required for planned or “in process” continuing award efforts.

(2) If not justified for retention, inactive GP should be declared excess.

j. The population for utilization evaluation should be selected from all utilization records, either manual or automated, and should be stratified by property type with common utilization characteristics. The GPA shall use sound judgment in determining the populations selected for testing the utilization process. If the recipient uses the same process for tracking the utilization of equipment, STE, and ST, it would be appropriate to use the records of all equipment, ST, and STE as the population of utilization. If a different process is used to track the utilization of the various classes of GP, then separate populations should be used for this test rather than combining all equipment, ST, and STE.

k. GPAs shall conduct specific reviews of transportation assets and other material handling equipment, as part of the PMSA based on special award provisions. Such reviews should be made to ensure Government-owned transportation assets are:

(1) Approved and justified in accordance with award requirements. Specific approval requirements exist for transportation assets in 48 CFR subpt. 1851.2, and NPR 6200.1.

(2) Subject to controls in the recipient’s procedures to prevent unauthorized home-to-work or work-to-home use of transportation assets.

(3) Utilized in accordance with NPR 6200.1 and the NASA Official Fleet Management Handbook. If underutilization is identified, the GPA should further report that underutilization to the CTO. If the justification for acquisition is insufficient to determine level of use, the GPA shall recommend that the CO require a more detailed justification of the projected use of the transportation assets.

l. The GPA should review the recipient’s processes for responding to award completions, terminations, modifications, and engineering changes to identify property no longer required for award performance.

m. When GP will be retained beyond the original period of performance or termination, the GPA shall ask the CO/GO to provide documentation of award extension or award of a new storage award.

n. When property is to be transferred between a complete award and an executed follow-on award, the CO/GO will give authorization in writing in the complete award. The complete award cannot be closed for property or award administration until the GP is either transferred to the follow-on award or disposition is directed by a PLCO or the NASA PDO and completed by the recipient.

5.6.5.8 Evaluation of Storage

a. Award recipients are required to properly store property under their stewardship. The GPA shall ensure that the recipient has established a proper method of storage for all GP in accordance with 48 CFR § 52.245-1(f)(1)(viii). The basic objective in testing storage is to determine the recipient’s effectiveness in controlling, protecting, and preserving GP while in storage. Assessing the effectiveness of recipient storage practices is normally accomplished by visual inspections of GP storage areas. Special inspections may be made of some, or all storage areas or review may be made in conjunction with verification of location or control processes.

(1) The population for this process consists of all locations where GP is being stored.

(2) Evaluations are to include the overall safeguarding aspects, review of housekeeping, temperature, and static controls (if required), physical security, and preservation of GP within storage areas (i.e., storage areas are clean and well organized with access strictly limited to authorized personnel and with processes established to appropriately preserve GP in storage).

b. The GPA should review storage records to compare the date or timeframes that assets were originally placed into storage with completion dates for the accountable award to determine whether the award is active or complete. If GP is discovered in storage and the award is complete, the GP should have been declared excess and processed through the appropriate disposition process. The GPA shall issue a corrective action plan and report the information to the Center IPO and CO/GO and, if no resolution occurs as specified by the schedule within the corrective action plan, contact the HQ-CPPM in writing via e-mail within 10 business days.

c. All corrective action plans will be uploaded to the award’s PMSA section under Document tab in the APSR/NESS within five business days of receipt.

d. Preservation processes should ensure that materials stored indoors or outdoors are protected from corrosion or other deteriorating conditions. Hazardous material and other sensitive GP may require more stringent storage processes. Where appropriate, the review of special storage areas should be coordinated with other Government or recipient technical functional specialists, including safety, security, quality assurance, environmental, or production personnel.

5.6.5.9 Evaluation of Movement

a. The FAR clause Government Property, 48 CFR § 51.245-1 requires award recipients to properly move GP under their stewardship. The GPA shall ensure the recipient has established effective processes for movement of GP while in use, into and out of storage, or in transit. The basic objective in testing movement is to ensure that GP is moved under the appropriate authority and with the appropriate documentation, adequate protection is provided during movement, and location changes are promptly posted to records.

b. Assessing the effectiveness of the recipient’s process for protection of GP in use or in transit is generally accomplished by day-to-day observations of recipient actions. All Government personnel who have visibility of recipient operations should monitor recipient protection of GP being prepared for or while in transit.

c. The population for this review may consist of all issue slips, shipping tickets, location change orders, custodial transfer documents, maintenance work orders that require the movement of GP, routers/travelers, and other similar documents, and the GPA shall review one year or back to the last PMSA, whichever is less. This process verification may also be supplemented by information obtained from reports of loss of GP when the item was damaged during movement, either internal or external. The overall effectiveness of the process may be assessed based on the frequency and magnitude of loss of GP while property is in movement. Where losses are frequent and due to movement-related circumstances, a systemic deficiency may exist.

5.6.5.10 Evaluation of Consumption

a. The GPA shall evaluate the award recipient’s consumption of GP to ensure reasonable levels of inventory are on hand. Excessive quantities or out-of-stock conditions should be noted. Random statistical samples of records of item quantity and supporting consumption records should be used for this purpose.

b. The GPA shall determine whether quantities of material inventory on hand are reasonable based on blueprints, production schedules, and parts lists at a minimum. The GPA should consider other factors such as supplier’s bulk purchase requirements when they are relevant to the analysis.

c. When consumption analysis or other evidence shows that costs charged to Government awards do not appear to be reasonable, allowable, or allocable per the requirements in Contract Cost Principles and Procedures, 48 CFR pt. 31; Allowable Cost and Payment, 48 CFR § 52.216-7; Cost Accounting Standards, 48 CFR § 52.230-2; the GPA shall determine the extent of the deficiencies.

(1) If items appear to be unallowable, unreasonable, or not allocable, the GPA shall notify the CO for appropriate action. The notice will include proper documentation of findings serving as the basis to suspect an unallowable, unreasonable, or not allocable cost.

(2) If it appears that a systemic problem exists, the GPA notice to the CO/GO may recommend a DCAA audit for possible impact to the recipient disclosure statement.

d. The GPA shall review the recipient’s records to ensure that the value of items issued from stock for use in award work is incorporated into the costs of the item either constructed, manufactured, or kitted.

(1) The item resulting from the consumption process should be valued according to consistently applied, sound accounting practices.

(2) Items undergoing these processes are considered work in progress. An item should be considered a new item when complete, whether returned to stock in an altered form or delivered.

(3) New items that are returned to stock should be entered into the recipient’s records with appropriate value and quantities.

5.6.5.11 Evaluation of Reporting

a. 48 CFR § 52.245-1(f) requires award recipients to have a process to properly prepare and submit reports related to GP under their stewardship. VCS, ILPS, and CCPs provide significant guidance on reporting processes and typical metrics. Reports required by the Government Property clause include but are not limited to reports of discrepancies, loss, physical inventory results, audits and self-assessments, corrective actions, reanalysis reports and other property-related reports and, as directed by 48 CFR § 1852.245-73, also require annual and final property submission reports of NASA property in the custody of recipients. All recipients with GP complete electronic submission of these reports through NESS (https://ness.nasa.gov/contractor).

b. The GPA shall test the recipient’s processes to determine whether they meet award requirements for preparing and submitting reports of GP. This test typically involves a review of the full population of award-required reports, either manual reports or electronic versions based upon the recipient’s process that cover either one year or back to the last PMSA, whichever is less. Where the GPA chooses to treat this in a combined fashion, all these reports may be viewed as one population. Care should be taken in the evaluation process as the timeframes, forms, or data requirements for reporting these various actions may differ depending upon the recipient’s PMS and the type of report required.

c. In lieu of testing reports as a separate group or outcome, the GPA may evaluate this process in any other applicable process that requires the creating of a report, i.e., reports of discrepancies may be evaluated by the GPA when performing the audit of the receiving process; physical inventory reports may be evaluated when performing the audit of the physical inventory process; loss reports may be evaluated by the GPA when performing the audit of the relief of responsibility/liability process. When these reports are tested under the related process, the GPA shall ensure that a review is performed on any reports that were not addressed under the other processes.

d. Special attention should be given to award compliance for those recipients required to submit the annual property submission in accordance with GCAM and 48 CFR § 1852.245-73. Recipients will be evaluated on the timeliness of correct submissions starting October 1–31 each year until the end of award performance. As this report is pivotal to the completion of NASA’s financial reports, timeliness and correctness are equally important. Evaluation of the recipient’s ability to generate quality data may be based more on the recipient’s performance in the records, acquisition, and disposition segments of the property system than on the report itself. Failure to maintain accurate records or properly record addition and deletion transactions would obviate the recipient’s ability to submit an accurate report.

5.6.5.12 Evaluation of Maintenance

a. Award recipients are required to properly maintain property in their stewardship. The GPA shall ensure that the recipient has established and follows a process for properly maintaining GP in accordance with the section Equipment, and 48 CFR § 52.245-1(f)(1)(ix). The basic objective in testing the process of maintenance is to ensure that the recipient’s system of maintenance contains a process for disclosing the need for and performing routine, normal preventive maintenance, and unscheduled maintenance; disclosing and reporting to the Government the need for capital-type rehabilitation; and obtaining the CO/GO’s approval prior to commencement of work.

b. The population for analysis may be selected from all items that require maintenance as part of their normal operation or stratified by GP type requiring varying levels of maintenance actions, e.g., equipment, STE, ST, real property. The GPA shall review maintenance actions and records to determine that they have been performed and recorded in accordance with the maintenance standards and plans in the recipient’s PMS.

(1) The GPA will analyze maintenance and repair records to determine the cause of breakdown and ascertain the possibility of inadequate preventive or routine maintenance.

(2) The GPA may request assistance from other technical specialists (e.g., quality assurance representatives) in the review of this process.

c. Recipients may also be required by their award to comply with NASA technical manuals and orders when performing work on items of GP. GPAs shall familiarize themselves with and become knowledgeable of these requirements and obtain assistance from the appropriate Government technical personnel when needed.

5.6.5.13 Evaluation of Disposition

a. The GPA shall evaluate the award recipient’s property practices to ensure that the recipient reports excess GP in accordance with this section and 48 CFR § 52.245-1(j), any other terms and conditions of the award, any applicable law, and the recipient’s PMS. The basic objective of testing disposition is to determine the effectiveness of and compliance with the disposition process on screening for reutilization of property in support of other Government awards; identifying property that is excess to the requirements of the active award; submission of inventory schedules to the appropriate Government representative, generally the PLCO; obtaining the proper authority for transfer or disposal of excess and surplus GP; and reviewing the disposal of GP in accordance with Government direction or under an adequate scrap process.

b. This process is normally reviewed by selecting a random statistical sample from the population of disposal records including plant clearance cases, transfers, scrap tickets, GFM return documents, and other appropriate documents. These records should reflect in-house screening for reutilization and proper authority for disposal.

(1) The GPA shall ensure the recipient has a system for properly reporting and submitting or crediting the Government with the proceeds realized from the authorized sale of assets.

(2) If assistance is needed in verifying the crediting use of these proceeds, the GPA shall request assistance, through the CO/GO responsible for administration of the award, that a review be conducted by the cognizant audit authority.

c. The GPA shall evaluate the recipient’s scrap procedures.

(1) Recipients’ procedures may allow for the disposition of common scrap through a single scrap disposition process. The GPA should review the process to determine whether it is capable of fairly identifying the ratios between scrap generated from government work and scrap generated from the recipient’s other work.

(2) The GPA may select a random statistical sample of the population of all property that has been processed through the recipient’s scrap procedure for the past year or back to the last system audit.

(3) The GPA shall review the process and the documentation to ensure that the items processed through the recipient’s scrap procedure have been verified as being in “scrap” condition by an appropriate Government representative.

(4) The GPA shall review the recipient’s process to ensure for properly reporting and submitting or crediting the Government with the proceeds realized from the sale of scrap through scrap procedures.

(5) If assistance is needed in verifying the use of these proceeds, the GPA shall request assistance through the CO/GO administering the award from the cognizant DCAA auditor.

d. The GPA shall evaluate the recipient’s procedures to establish whether they have acted under appropriate authority for disposition.

(1) The GPA shall determine that the actual disposition of GP is based on award or other CO/GO, PLCO, or PDO authorization.

(2) When all GP has been dispositioned through the plant clearance process, the GPA may select samples from inventory schedules or other plant clearance documentation to determine that actions taken were properly authorized.

(3) If the disposal action was unauthorized, procedures for the GPA’s reporting loss are required before a determination to relieve the recipient of responsibility may be considered.

(4) The GPA shall review the recipient’s records and practices to ensure that they obtain any required CO/GO consent to disposition property provided under 48 CFR § 52.245-2 that disposition takes place only after notification to the CO/GO; that disposition is carried out by the recipient if there is no PLCO LOD; and that property is not returned to the Government for disposition.

5.6.5.14 Evaluation of Closeout

a. The GPA shall evaluate the recipient’s methods of ensuring award closeout actions related to property are completed in an accurate, effective, and timely manner in accordance with

48 CFR § 52.245-1(f)(1)(x).

b. This process may be analyzed during the GPA’s final review of recipient closeout actions or over a period. Subjective evaluation may include reviewing the timeliness of initiation and submission and the adequacy of the recipient’s method for tracking awards nearing completion to close out affected awards. Objective evaluations may include verifying required authorizations for property transfer, completed disposition actions, completion of liability determinations, and completions of award required reports, including closeout forms and/or correspondence with zero dollars remaining.

c. The GPA should review for any completed awards for which formal award closeout actions have not been taken or reported, including all final property submissions completed in NESS.

5.6.5.15 Evaluation of Loss/Relief of Stewardship Responsibility

a. Prior to conducting the PMSA, the GPA shall review reports of loss previously submitted and ensure that the reports have sufficient documentation of the reason for loss, the steps to be taken to prevent recurrence, the data elements required by 48 CFR § 52.245-1, and all supporting documentation.

b. The GPA shall note any incidence of failure to report loss in accordance with the requirements of 48 CFR § 52.245-1. Particular attention should be paid to losses discovered because of the recipient’s physical inventory. Timing between the completion of inventory and the submission of any report should be considered.

5.6.5.16 Evaluation of Overall Property Management

a. The GPA shall determine the effectiveness of the recipient’s PMS seen as a whole and identify possible systemic impacts of deficiencies identified within multiple segments of the PMSA. As such, this segment should provide a more holistic picture of the recipient’s PMSA. An additional objective of this audit is to provide a management overview that identifies causal factors that may contribute to deficiencies in other processes.

b. In their analysis of the overall PMS segment, the GPA should:

(1) Evaluate the property management activity (PMA) location within the organizational hierarchy.

(2) Establish whether the PMA is sufficiently independent from operational activities.

(3) Evaluate the authority of the PMA to develop, disseminate, and enforce property management policies, standards, practices, systems, and procedures.

(4) Consider whether the PMA is sufficiently resourced to execute the requirements of the award, execute the procedures and practices proposed by the recipient, and meet any performance standards. It is important to consider the balance between the cost and the effectiveness of the PMA operations.

(5) Evaluate the recipient’s self-assessment processes to determine the authority of the PMA to identify, report, and correct deficiencies in performance both within the PMA itself and within production, program, or project activities.

(6) Identify any instance in which the recipient’s management failed to correct identified deficiencies; failed to establish and implement adequate plans, standards, practices, or procedures; or failed to provide protection for GP adequate to prevent its loss.

(7) Evaluate the recipient’s self-assessment control environment as detailed in their procedures. The GPA’s audit of this process segment should utilize the products of the recipient’s assessment activities to direct attention to areas of concern and to support tests and findings.

5.7 Documentation of Audits

5.7.1 Documentation of Evaluations

5.7.1.1 The GPA shall fully document the processes used to test, the sample sizes, and the populations of each segment tested.

5.7.1.2 The GPA shall provide the results of the tests for each segment audited. The results will indicate whether the recipient performed satisfactorily, unsatisfactorily, or partially satisfactorily for that segment.

5.7.1.3 The GPA shall provide a summary of any actions taken by the recipient during the performance of the audit to ameliorate any risks or to address any findings related to the audit. The summary will indicate whether the actions were sufficient to restore any unsatisfactory or partially satisfactory segments or outcomes to satisfactory status or whether further action is required.

5.7.2 Preparation of Audit Report

5.7.2.1 The GPA shall prepare an audit report that contains the following at a minimum:

a. An executive summary that delineates and summarizes significant findings and recommendations as well as the award recipient’s responsiveness and cooperation in completion of the audit.

b. Details of findings and recommendations by segment.

c. Details of all tests to fully support any subsequent findings and recommendations.

d. Descriptions of test samples and procedures, along with documentation of detail supporting findings, produced for each applicable segment or outcome of the property system.

e. A full description of any situations requiring corrective action.

f. A requirement for the recipient to submit a response or to complete all actions required to correct deficiencies identified in the report, specifying an overall completion date in accordance with Contractors’ Property Management System Compliance,

48 CFR § 45.105(b), and this NPR.

g. A requirement for the recipient to provide a schedule for completion of individual remedial actions within the overall timeframe.

5.7.2.2 With the recipient’s consent, the report may record and acknowledge any processes, standards, or practices that exceed those typically required by VCS or that exceed CCPs and that prove to be cost-effective. The report will recommend recipient documentation and dissemination of such processes, standards, and practices as examples of potential ILPS.

5.7.3 Notification of Authorities

5.7.3.1 The GPA shall:

a. Notify the CO/GO and the Center IPO of any findings that may result in an overall determination of system inadequacy or failure to comply with award requirements within 30 days of the exit conference.

b. Notify the NASA CO/GO, IPO and HQ-CPPM via e-mail with award number when PMSA reports are identified with significant deficiencies, and ensure all information is uploaded to the NESS PMSA section Documents tab by award number. (See Section 1.3.8.3(j) for more information.)

5.7.3.2 After completion of the PMSA, the letter of determination is signed by the CO/GO and sent electronically to the award recipient, GPA, and IPO.

a. The GPA and IPO shall upload the PMSA, corrective action plan and reanalysis report into the NESS award under the PMSA Documents tab and complete the Summary and Outcome tabs in the PMSA screen.

b. The IPO shall ensure the determination letter is on each award in NESS PMSA section under Documents tab.

5.7.4 Receipt of Award Recipient Comments, Actions, and Plans

5.7.4.1 The GPA shall incorporate award recipient comments, actions, and plans into the final report.

5.7.4.2 Recipient responses should be evaluated to determine any corrective actions that may have been taken after the completion of the audit. If the recipient has taken corrective actions, the GPA shall evaluate those actions and determine if they are responsive to the findings and recommendations provided in any interim or draft report.

5.7.4.3 If the corrective actions are not completed, the GPA shall perform a reanalysis based on the circumstances and nature of the initial finding. The reanalysis tests the success of the correction action plan’s implementation, only transactions that occur after the corrective actions are completed will be included in a reanalysis population, unless the reanalysis is performed concurrently with a regular scheduled PMSA.

a. The GPA shall perform the reanalysis within 180 calendar days of issuance of CO/GO final determination.

b. If the corrective actions are completed, the GPA shall note their completion in the final report.

5.7.5 Post-Audit Communications with the Award Recipients

5.7.5.1 An exit conference is required for all PMSAs (Full or Limited). A full PMSA based on risk is more formal. A limited PMSA based on risk is more informal and can be performed via teleconference.

5.7.5.2 GPA shall hold exit conferences upon the completion of each element to keep the award recipient informed and provide timely feedback.

5.7.5.3 The GPA shall prepare a separate file for each PMSA to be uploaded to NESS PMSA screen under the Document tab by award number as follows:

a. The filename will be labeled noting the award number, recipient name, cage code, and date of review completion.

b. Correspondence advising the recipient of the scheduled PMSA, any associated response from the recipient, and documentation of the entrance conference will be placed on the filename.

c. Documentation of the GPA’s determination of whether segments of a property system should be reviewed will be labeled on the filename.

d. Findings of tested property segments will be placed on the file.

e. Correspondence with the recipient regarding the results of the audit along with the final report, the recipient’s response, and the exit conference documentation will be labeled and placed on the file.

f. Correspondence related to actions taken after the final report will be labeled and placed on the file.

g. Supporting documentation and the segment or segments tested labeled on filename.

h. Documentation of a desk audit with the findings and any associated correspondence and supporting documentation labeled on filename.

5.7.6 Recording PMSAs in NESS

5.7.6.1 Based on the audit report, the IPO or GPA shall record the results of the PMSA by award number along with any significant findings, either positive or negative, etc., in the APSR/NESS.

5.7.6.2 The IPO or GPA shall upload copies of all PMSAs, corrective action plans and reanalysis reports in pdf files when conducted by NASA or received from the FIP.

5.7.6.3 The IPO or GPA shall update the PMSA’s Summary and Outcome tabs and upload the PMSAs, corrective action plans, and reanalysis reports in the Documents tab by award number in NESS. (See Section 1.3.8.3(j) for more information.)

5.8 Loss of Government Property

5.8.1 Receipt of Award Recipient Reports

5.8.1.1 GPAs shall establish a file for all reports of loss within the award property file. All loss reports will then be uploaded to the NESS PMSA screen in the Documents tab by the IPO or assigned GPA.

5.8.1.2 IPOs shall establish files for all reports of loss for awards administered by other agencies within the award property file. (See Section 1.3.8.3(c) for more information.)

5.8.1.3 All property loss will be reported by award recipient to the GPA when notified and reported on annual or final property submission in NESS with supporting documentation.

a. GPAs shall notify the CO/GO, IPO, and HQ-CPPM of any instance in which property loss value exceeds $100,000 threshold.

b. The NASA IPO and HQ-CPPM reserve the right to request the entire report of findings.

5.8.2 Evaluation of Award Recipient Reports

5.8.2.1 GPA and/or IPO shall review the award recipients annual/final property submissions to determine whether the losses reported for the period are reflected in the documents received throughout the year.

5.8.2.2 In the event the GPA finds GP not entered in the recipient’s property system, the GPA shall report the finding within one business day to the NASA IPO and HQ-CPPM for further guidance. The finding needs to include property listing and description at a minimum.

5.8.3 GPA Authorities

5.8.3.1 The GPA shall review each incidence of loss. Based on the requirements of the award and the circumstances of the loss, when appropriate, GPAs are authorized to grant relief from responsibility to the recipient that is not processed through the Center report of survey (ROS) under 48 CFR § 45.105(d); Cross-Waiver of Liability, 14 CFR pt. 1266; the LOD; the GCAM; and this NPR.

a. The recipient may use NF 1876 if needed.

b. Loss incidents need to be reported within 30 calendar days after the action.

5.8.3.2 The GPA shall upload the loss report in NESS under the Document tab within 14 days of receipt. At a minimum, the report will include the following for each item of property:

a. Description of property; data elements required under 48 CFR § 52.245-1(f)(1)(iii)(A).

b. All applicable identification data.

c. The unit acquisition cost/value of each item as defined in the FAR section Definitions, 48 FAR § 45.101, and the section Definitions, 2 CFR § 200.1.

d. NASA identification number issued.

5.8.3.3 When the award language or the circumstances of the loss, (i.e., managerial neglect, fraud, or abuse) demand it, the GPA shall recommend to the CO/GO that the recipient be held responsible for the loss.

5.8.4 Decisions to Hold Award Recipients Responsible

5.8.4.1 In accordance with Responsibility and Liability for Government Property, 48 CFR § 45.104, and after consideration of the GPA’s recommendation and the overall circumstances of the award, the CO is required to render a decision on whether to hold recipients responsible and liable for property in their custody or whether to take an alternate action to protect the government’s interests in its property.

5.8.4.2 For grants and cooperative agreements, GOs shall consult with the NASA OGC to determine if an award recipient can and should be held liable for the loss of GP.

5.8.4.3 The GPA shall follow up with the CO/GO to obtain information regarding the CO’s/GO’s decision under sections 5.8.4.1 and 5.8.4.2, including documentation when available.

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NODIS

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