PROPERTY - cdn.ymaws.com · NPMA now offers two (2) types of professional certification programs....

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ISSN-1072-2858

08.2017VOL 29 ISSUE 4

PROPERTYP R O F E S S I O N A L

T H E

FEATURED IN THIS ISSUEPaper: Friend or Foe?

Location, Location, Location

Title to Contract Property

NPMA Facilitates Formation of New ASTM Subcommittee

"Cradle-to-Cradle" Sustainment Strategy – Exchange Sale Process

THE MANAGEMENT OF FIXED ASSETS IN THE DEFENSE INDUSTRYDURING MERGERS AND ACQUISITIONS

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rights reserved. Reproduction of the contents of The Property Professional in whole or in part by

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The Property Professional is published bimonthly by the National Property Management

Association, Inc. and is mailed third class. The articles, opinions and ideas expressed by the

authors are the sole responsibility of the contributors and do not imply an opinion on the part

of the officers or members of NPMA. Readers are advised that NPMA is not responsible in

any way, manner or form for these articles, opinions and ideas. Readers are urged to exercise

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the authors. The NPMA magazine welcomes and encourages contributions and suggestions

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POSTMASTER: Send change of address notices to Membership Coordinator, National Office -

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V O L 2 9 I S S U E 4

C O N T E N T S

S O C I A L facebook.com/groups/NPMAAssetManagement linkedin.com/groups/NPMA-1676387 NPMA Asset Management channel

SPECIAL FEATURES

13 Paper: Friend or Foe?

BY JUDY WINDLE, CPPS, THREE RIVERS CHAPTER

14 Location, Location, Location

BY MARLA WILLIAMS, CPPM, FEDERAL CENTER CHAPTER

17 Title to Contract Property

BY NANCY JOHNSON, CPPM, OHIO VALLEY CHAPTER

20 NPMA Facilitates Formation of New ASTM Subcommittee

BY NORMAN PUGH-NEWBY, CPPA, FEDERAL CENTER CHAPTER

22 Tale of a Government Property Rookie – That's Not GFP!

BY PATRICK O' TOOLE, EMERALD COAST CHAPTER

24 The Billion Dollar Animal RFID Industry

BY MEGAN DIMOND, CPPS, FEDERAL CENTER CHAPTER

26 "Cradle-to-Cradle" Sustainment Strategy –

Exchange Sale Process

BY ROBERT PEARCE, LOGISTICS MANAGEMENT SPECIALIST,

USAF PROPULSION MATERIEL EXCHANGE PROGRAM AND

RON REGALADO, CPPM, NORTH TEXAS CHAPTER

REGULAR FEATURES

04 National President’s Column

05 Editor’s Column

07 Special Interest Groups

19 Puzzle Challenge

31 #AssetManagement – Trending Now – IoT, Ambient

Computing and The Case of the Disappearing Computer

33 Ask the Expert

INDUSTRY CHATTER

06 Declassification and Partnership Needed to

Better Protect Space

16 Fedex is Using Autonomous Robots to

Essentially Replace the Mailroom Clerk

30 United Therapeutics Partners with 3-D Printer

to Make Human Organs

30 A Drone Flew 97 Continuous Miles to Complete One

of the Longest Drone Deliveries in the U.S.

30 Aerospace Market Looks to Assets for Innovation

EDUCATION

29 NPMA's Asset Management Certification Program

34 September and October Course Schedule

ADVERTISERS

02 AssetSmart

06 GP Consultants

32 NPMA FES

35 ASTM International Ad

36 Sunflower Systems

The Management of Fixed Assets in the Defense Industry During Mergers and Acquisitions08

COVER STORY

BY DAVID L. LADOUCEUR, CPPMEMERALD COAST CHAPTER

4 THE PROPERTY PROFESSIONAL VOLUME 29, ISSUE 4

NATIONAL PRESIDENT CINDA BROCKMAN, CPPM, CF

When you receive this month’s issue of The Property Professional Magazine, NES 2017 will be underway. Currently, there are 35 registered to take their certification exams at the pre-classes at NES. It is becoming more and more important for professionals to continue their education and part of this can be accomplished by becoming certified in their field.

NPMA now offers two (2) types of professional certification programs. The first one in Property/Asset Management where three (3) levels of certifications can be obtained, starting with Certified Professional Property Specialist (CPPS), then Certified Professional Property Administrator (CPPA), and the last level is Certified Professional Property Manager (CPPM). The second certification is the NPMA Federal Fleet Management Program. The Federal Fleet Management Program also offers three (3) levels of certification, Certified Federal Fleet Specialist (CFFS), Certified Federal Fleet Administrator (CFFA), and the last level is the Certified Federal Fleet Manager (CFFM).

Both of these certification programs help the individual gain practical skills for the job, as they focus on the knowledge and skills needed to perform job responsibilities, realize maximum benefit from a wide range of expertise areas and learn all aspects of Property or Fleet Management while also providing an organization with a standard of assured excellence from these professionals.

Obtaining a certification in Property/Asset Management or Federal Fleet Management shows that an individual possesses knowledge and skill in the field and that you are willing to put time and effort in either of these two areas. Becoming certified is not an easy task, but the hard work you put in to receive your certification will pay off in the end.

Certification adds value in the sense that it may make the difference during the selection process when reviewing a candidate for a job, and it sets a minimum standard and expectation. When I am looking to hire an asset manager, my company sets a filter in the form of a certification requirement. The fact that a candidate has a certification demonstrates their commitment to the profession and also validates that they have a solid level of knowledge requested. It does not mean that without the certification you don’t have the knowledge…it’s just that by having the certification, it makes it easy for everyone to know your expertise and that it is viewed as a proactive career development step. Having a certification may make you a more attractive candidate when reviewing all the applicants for the position.

Since last year’s NES, 320 certifications have been issued for Property/Asset Management and 112 certifications have been issued for Fleet Management.

CERTIFICATIONS EARNED IN THE PAST YEAR

Property Management Fleet Management CPPS = 222 CFFS = 71 CPPA = 84 CFFA = 41 CPPM = 14

The education you receive from NPMA is something you can be tremendously proud of whether you receive your Property/Asset Management or Federal Fleet Management certifications. Congratulations to those that have received their certifications in the past and to those who have planned to pursue one of the certification programs at NES in Phoenix.

Certification adds value in the sense that it may make the difference during the selection process when reviewing a candidate for a job, and it sets a minimum standard and expectation."

‘‘

CERTIFICATION CANMAKE THE DIFFERENCE

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A man purchased a pair of running shoes for his wife to use in a marathon race. She kept them in his closet. The day before the race, he could not find her running shoes in his closet. Therefore, he went to the store and bought her a second pair of running shoes. The next day, using the second pair of running shoes, she successfully ran the marathon race. The day after the race, the man found the original pair of running shoes that the dog had dragged into the doghouse.

From this story, one may ask, “Did the man have the right for an equitable reimbursement for the purchase of the second pair of running shoes?”

The answer proverbially starts with “It depends.” Some of the “it depends” may be: was there any formal or informal agreements between the man and woman; was the original and/or second pair of running shoes purchased using a joint account; why were the shoes kept in his closet; who was responsible for putting them in and taking them out of his closet? Other “it depends” concerns the dog (we can’t leave out the dog!)…was the dog a regular visitor to the room where the man’s closet was located? If not, who let the dog in that room and who left the closet door open.

This hypothetical story illustrates issues we may encounter in our “real story” asset world. When we encounter troubling asset situations how do we best handle them? One of the best ways is to increase our knowledge and learn from others.

Winston Churchill said, “I am always ready to learn, but I don’t like being taught.” Fortunately, we have many avenues of learning but we also need a willingness to be taught – and by those in other fields.

I encourage you to attend seminars, webinars, and chapter meetings. I also encourage you to avail yourself of literature and other sources to increase your knowledge. By doing so, when a “pair of running shoes” is missing you will know how to handle that situation and the many other situations that come along.

This issue of our magazine leads off with the second offering by David L. Ladouceur, "The Management of Fixed Assets in the Defense Industry during Mergers and Acquisitions" followed by; "Paper: Friend or Foe? by Judy Windle; "Location, Location, Location" by Marla Williams; "Title to Contract Property" by Nancy Johnson; "NPMA Facilitates Formation of New ASTM Subcommittee" by Norman Pugh-Newby; "Tale of a Government Property Rookie – That’s not GFP!!!!" by Patrick O’Toole; "The Billion Dollar Animal RFID Industry" by Megan Dimond; ans we end with another repeat author from the last issue. Ron Regalado, who with Robert Pearce, gave us “'Cradle-to Cradle' Sustainment Strategy – Exchange Sale Process."

We present volume 29 issue 4 of The Property Professional.

THE CASE OF THE MISSING RUNNING SHOES

WESTERN REGION EDITOR KEITH RECORD, CPPM

C O N T A C T U S

NPMA NATIONAL OFFICE

3525 Piedmont Rd, Building 5, Suite 300 Atlanta, GA 30305 Tel: 404-477-5811 Fax: 404-240-0998

NPMA NATIONAL OFFICE STAFF

ME PROGRAM MANAGER: Jennifer (Jen) Sanford [email protected] AND MARKETING COORDINATOR: Kelsey Oliver [email protected] AND EDUCATION SPECIALIST: Lisa Williams [email protected]: Sharronn Turner [email protected] SENIOR COORDINATOR: Jessie Palmer [email protected] FLEET CERTIFICATION MANAGER: Emily Rhodes [email protected]

THE PROPERTY PROFESSIONAL EDITORIAL TEAM

NATIONAL EDITOR: Billie Jo Perchla, CPPM, CF [email protected] EDITOR: Meg Lombardo, [email protected] EMERITUS: Dr. Douglas Goetz, CPPM, CF [email protected] REGION EDITOR: Ann Foster, CPPA [email protected] REGION EDITOR: Toby V. Bell, CPPM [email protected] REGION EDITOR: Keith Record, CPPM [email protected]

NPMA EXECUTIVE BOARD

NATIONAL PRESIDENT: Cinda Brockman, CPPM, CFTel: 858-361-4270 [email protected] VICE PRESIDENT: Brandon Kriner, CPPM, CFTel: 310-813-4566 [email protected] PAST PRESIDENT: Marcia Whitson, CPPM, CFTel: 865-947-3047 [email protected] PRESIDENT ADMINISTRATION: Kimberly Saeger, CPPSTel: 520-850-2438 [email protected] PRESIDENT CERTIFICATION: Iris Thompson, CPPM, CFTel: 562-500-0300 [email protected] PRESIDENT COMMUNICATIONS AND MARKETING: Jessica Dzara, CPPM, CFTel: 703-400-3170 [email protected] PRESIDENT FINANCE: Gary Quinn, CPPMTel: 575-415-3299 [email protected] PRESIDENT MEMBERSHIP: Ivonne Bachar, CPPM, CFTel: 650-723-9095 [email protected] PRESIDENT PARLIAMENTARY PROCEDURES: Dr. Douglas Goetz, CPPM, CFTel: 937-306-8372 [email protected] PRESIDENT PROFESSIONAL DEVELOPMENT: Tara Miller, CPPM, CFTel: 321-867-8910 [email protected] PRESIDENT CENTRAL REGION: Ken Black, CPPM Tel: 512-776-2738 [email protected] PRESIDENT EASTERN REGION: Bill Franklin, CPPMTel: 434-549-8689 [email protected] PRESIDENT WESTERN REGION: Robert Kaehler, CPPSTel: 925-209-0944 [email protected]

NATIONAL DIRECTORS

AWARDS PROGRAM AND COMMUNICATIONS: Amanda Jensen, CPPS CERTIFICATION: Tanya Meza-Andino, CPPSCERTIFICATION GOVERNING BOARD CHAIR: Frank Gonzalez, CPPM, CFCOUNCIL OF FELLOWS: Pam McFarland, CPPM, CFFOUNDATION ADMINISTRATOR: Patricia Jacklets, CPPM, CF MARKETING - CHAPTER GROWTH: Matthew Hatam, CPPS MARKETING - SOCIAL MEDIA: Angel Rosario MEMBERSHIP - CHAPTER SUPPORT: Kim Kaehler, CPPSMEMBERSHIP - NEW MEMBER ACTIVITIES: Loril Stephens, CPPM, CFSEMINARS: Wes Carter, CPPM, CFSPECIAL INTEREST GROUPS: Shawn Megaw, CPPS


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According to an April 6, 2017 article by Phillip Swarts for Space

News, U.S. Air Force General John Hyten said government should

rethink what space capabilities are classified to enable more

cooperation with companies.

Having too much information [that could] be considered classified,

he argued, is “an impediment to our ability to conduct our operations.”

“We have so many capabilities now,” he said. “There are all these

special classifications that I can’t talk about, and if you look at those

capabilities you wonder why are they classified so high. So we’re going

to push those down. We’re going to get back to authorities in the right

place. We’re going to treat space as any other war fighting domain."

STRATCOM and the Air Force are also working with commercial

partners at the National Space Defense Center (NSDC), known until

this week as the Joint Interagency Combined Space Operations

Center, or JICSpOC. The Air Force is looking to expand its information

sharing not just with the commercial industry, but with international

partners as well.

The full article can be viewed at: http://spacenews.com/

declassification-partnerships-needed-for-better-space-defense-

hyten-says/

DECLASSIFICATION AND PARTNERSHIP NEEDED TO BETTER PROTECT SPACE

WWW.NPMA.ORG 7

SPECIAL INTEREST GROUPS (SIGS)

SIG HIGHLIGHT -

In the last issue I laid out some of the perks of attending SIG sessions at NES, and this month I’d like to share an example of how a simple question posed to the SIG community can return a wealth of information. Following is an example from the Contract Property SIG where a question was posed and answered by three different subject matter experts (Angel Rosario, Kathy McFarland, and Doug Goetz).

Situation: During analysis of “Maintenance” one sample is discovered to be in a location other than what is reported in the Property Management System of Record (PMSR). But the Item had the correct location noted in the maintenance system database.

Question: Would this be considered a deficiency or an observation?

Angel Rosario Responds: 1. If location is correct in maintenance

database, then no finding, observation only.

2. Is this issue addressed in the contractor’s procedures?

3. Were they able to locate the item within a reasonable timeframe?

Kathy McFarland Responds:1. Common practice for contractors

to use multiple databases, but their primary records as well as their maintenance records should have the current location.

Doug Goetz Responds:1. Bottom line – not a significant finding – 2. Since this was a “Maintenance” audit,

any findings would have to be related to that outcome.

3. Would be proper to note as an “observation” to an outcome unrelated to “maintenance”

This is just one example of how a single question stimulates the community to respond with a wave of support. And this isn’t even all of the responses for this question! Remember, a challenge brought to the SIG forum provides an opportunity for the community to respond and the resulting discussion broadens the scope of knowledge available to everyone. So take a look at the boards, find the one that suits your field and get your questions answered, and broaden the knowledge available to your fellow Property Professionals in the process.

Best regards, Shawn Megaw, CPPSNational Director of [email protected]

THE VALUE OF A SIMPLE QUESTION

GotQUESTIONS?

Start

today!Join NPMA SIGs to be part of a professional community that advances knowledge, as well as leadership, and provides the tools, resources, and opportunities to enhance and support your professional performance.

JOIN NPMA SIGS

S I G SAND THEIR CHAIRPERSONS

CONTRACT PROPERTY

Carolynn Bundy, CPPM, CF

and Shawn Megaw, CPPS

DOE/NNSA & CONTRACTORS

Cheri Cross, CPPM, CF

EXCESS PROPERTY & DISPOSITION

David Robbins, CPPM

FEDERAL PROPERTY MANAGEMENT

Angela Cooper, CPPM

FLEET MANAGEMENT

Russ Johnson

HOSPITALS & MEDICAL FACILITIES

Kevin Bryant, CPPS, PMP

NASA & CONTRACTORS

Marjorie Jackson, CPPS

PROPERTY INVENTORY MANAGEMENT

Brian Ross, CPPS

STATE & LOCAL GOVERNEMENT

Patti Eldred, CPPA

SUBCONTRACTOR-HELD PROPERTY

Niki Milsaps, CPPM, CF and

Terri Snook, CPPM, CF

UID

Pat Jacklets, CPPM, CF

and Dan Tully, CPPM

UNIVERSITY, COLLEGE & OTHER

NON-PROFITS

Stan Dunn, CPPM


BY DAVID L. LADOUCEUR, CPPM, EMERALD COAST CHAPTER

THE MANAGEMENT OF FIXED ASSETS IN THE DEFENSE INDUSTRYDURING MERGERS AND ACQUISITIONS

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The

focus here is on

mergers and acquisitions within

the defense industry with interest in the management of

fixed assets. Fixed assets are factors of production that are directly related

to the profitability or success of any business or organization. This article strictly focuses on

the importance of inventory, property control, and knowing what’s on hand. Businesses and organizations

must understand how many assets they have, their use, and their operational state. These critical factors should be considered during mergers and acquisitions. Mergers and acquisitions are important aspects of strategic asset management. Government contractors face additional challenges in the merger and acquisition environment as they need to consider company-owned and government-owned assets.

Keywords: Mergers and Acquisitions, Fixed Assets, Management

Beginning with a brief discussion of mergers and acquisitions, this article discusses mergers and acquisitions as part of government contracting, and focuses on defense contractor industry trends in this area over the past few years. It also outlines reasons why businesses seek mergers and acquisitions and some of the challenges involved. It concludes with a brief discussion of fixed asset management and offers some recommendations for 21st century business managers.

LITERATURE REVIEWThroughout the literature, the terms “merger” and “acquisition”

are used interchangeably as the distinction between mergers and acquisitions may be rather elusive.i A merger is the combination of two businesses or organizations into a single entity, combining debt and equity. An acquisition, on the other hand, is the taking over of one business by another either in a friendly or hostile manner.

A friendly acquisition occurs

when shareholders vote for the acquisition,

whereas a hostile takeover could occur when a business acquires a firm

through the purchase of firm’s equity in the stock market.

Mergers and acquisitions involving government contractors and subcontractors present particular challengesii

that must be understood before the associated risks can be managed. Mergers and acquisitions require government approval to transfer government contracts, but approval is not required for stock purchases. Government approval is achieved through a novation agreement.iii When it is in the Government’s interest to decline the transfer of a contract from one company to another company, the original contractor remains under contractual obligation to the Government, and the contract may be terminated for reasons of default should the original contractor not perform. A novation agreement requires detailed information and may take several months to process (see endnote ii). The entire process can be burdensome and time consuming, and the government can withhold approval and terminate the contract. Cost reimbursement contracts are subject to principles that limit the types of costs the government will reimburse. Failure to comply with these requirements can result in significant liability, including cost disallowances and potential penalties. The acquiring firm should determine whether the selling firm has contracts that involve certain cost accounting standards or the cost principles and, if so, determine how they will comply with these requirements.

Despite the many challenges, defense contractors are constantly pursuing new mergers and acquisitions as government business is big business.iv Orbital Sciences merged with ATK's aerospace and defense sectors, while Engility acquired TASC. Harris purchased Exelis for $4.56 Billion,v and is expected to have 23,000 employees with more than $8 billion in sales, (see endnote iv). ManTech bought 7Delta, a company that specializes in software design and application to support information assurance and security architectures for the Department of Veterans Affairs, and Allied Technology Group, an engineering and information management contractor that specializes on the Department of Homeland Security. NCI recently purchased Computech, a


company whose current business interest include the Federal Communications Commission and the Internal Revenue Service. NCI is interested in acquiring new businesses that total $200 million in sales. Booz Allen Hamilton acquired two health-sector companies and is interested in acquiring more. BDO's government purchasing and contracts division has its eyes on a myriad of acquisitions. This trend throughout the defense industry will likely continue as individual companies are encouraged and optimistic about the future. The Dow Jones Industrial Average recently broke the 20,000 then 21,000 marks, and the current Trump administration has plans to rebuild our defense sector even further.

The reasons for the mergers and acquisitions vary as some defense contractors pursue businesses with special interest like aerospace engineering, communications, or cybersecurity, while others hope to increase their size through consolidation. Defense contractors also pursue mergers and acquisitions to create value, generate synergies and augment their performance, (see endnote i). Businesses which have similar resource objectives may merge or acquire other businesses which allow them to create unique

products or services to achieve greater economies of scale and more profit. The creation of value may be explained through a resource based view since mergers and acquisitions of businesses with similar resources often create synergies. Mergers and acquisitions are a product of organizational growth which allows businesses to rapidly develop.

One of the principal reasons behind any strategic business decision is to maximize shareholder value.vi Mergers and acquisitions are one of the most important and biggest investment decisions that corporate management strategist confront.vii

They are also one of the most complex transactions that require organizations to simultaneously decide on the transaction approach, financial approach, and how to align financing requirements with the desired capital structure. Mergers and acquisitions, though, don’t necessarily result in a win-win situation for everyone. Arindam Das and Sheeba Kapil examined mergers and acquisitions that involved performance and discovered diverse and sometimes inconsistent results.viii Lockheed Martin purchased Sikorsky for close to $9 billion in November of 2015. At the time, most analysts believed Lockheed Martin overpaid. Additionally, they believed that Sikorsky would have fit better at Textron, which manufactures Bell helicopters.ix While mergers and acquisitions continue to be a favorite growth strategy for the businesses worldwide, some academic scholars are divided on the extent to which they provide real benefits to acquiring firms.

To persuade stakeholders on a proposed merger or acquisition, the seller must make the offer financially attractive while disclosing the terms of the proposed merger and acquisition (see endnote vi). While a merger occurs when two businesses combine to form a new entity it can also be viewed as a transaction

involving two or more companies where stock is exchanged and only one corporation survives. Mergers can be viewed as mechanisms that shift control over assets from one company to the next. An acquisition occurs when one company acquires another company. The company that is acquired loses its identity and become part of the acquiring company. Acquisition is a relatively easy and effective way to enter international markets and synergistic benefits can result when a company acquires another company with similar product lines and a good distribution network.

WWW.NPMA.ORG 11

Businesses also undertake mergers and acquisitions to diversify and access foreign markets to reinforce their market power.x The many challenges involved include the valuation of the targeted business, integration of human resources, and property accountability. In terms of property accountability or the management of fixed assets, the process of identifying and recording assets acquired through corporate and public mergers is complex.xi It involves a team of property or physical asset management professionals that are involved from the strategic planning phase through implementation and operations. It is virtually impossible to conduct a Return on Assets (ROA) financial analysis without conducting a physical inventory, as the inventory will document all company assets. Therefore, participation by property or fixed asset management personnel throughout the merger or acquisition is critical to insure inventory accuracy, system integration, and compliance. When viewed from a strategic asset management perspective, inventory management, property transfers, operations and disposal actions are integral aspects of a well-orchestrated merger and acquisition.

While understanding the quantity, type, value, and operational condition of fixed assets is important, Linda M. Cohen found that physical asset management is often overlooked during mergers and acquisitions despite the many tactical and strategic advantages that can occur.xii Fixed assets can play a significant role in driving, defending and managing mergers and acquisitions. By affecting both financial and organizational outcomes, physical assets are a powerful strategic resource within the manager's toolkit. One way to think of merger and acquisition strategies involving fixed assets is to categorize them in terms of whether the desired outcomes will occur before or after the merger and acquisition transaction. Deter-and-defend strategies reduce merger and acquisition vulnerability and defend against hostile raiders. Whereas improperly-managed fixed assets can be a source of vulnerability akin to predator stalking or striking a weaker prey…well maintained and good operational assets often indicate the strength of a company. Maintenance and utilization is just one small aspect of strategic asset management.xiii Additionally, another deter-and-defend strategy involves the asset’s book value relative to its true market value due to conservative valuation and/or depreciation accounting practices. A low book value is an invitation for corporate raiders to attack since they can make “easy money” by simply selling the undervalued assets. To reduce this vulnerability, executives must think like raiders and extract more value out of physical assets, removing the “red flags” that would cause an unwanted acquirer to take notice.

While unimaginative managers may view fixed assets as simply playing a limited functional role and as a necessary cost of doing business, (see endnote xii) they tend to forget that fixed assets are one of the primary factors of production (aside from land, labor, and entrepreneurship) and the principle reason for an organization’s success. Physical assets are a valuable strategic resource that effective and forward-thinking managers use to significantly affect financial and organizational outcomes. Mergers and acquisitions are no exception. How companies manage their physical assets, both before and after a merger and acquisition transaction, can affect financial and organizational outcomes. Many businesses perform physical inventories and detailed record analysis to verify the existence and condition of their equipment. Physical inventories also provide valuable financial information, as the value of a company’s equipment and consumable items may significantly affect the company’s overall value.

A review of the literature reveals several factors that address merger and acquisition management and financial performance (see endnotes ii & vi). As many mergers and acquisitions occur among defense contractors, the complexities involved are doubled as they consider not only their own capital asset structure but any government property they possess. The Federal Acquisition Regulation (FAR) for government property addresses the requirements for managing government fixed assets in the possession of contractors.xiv The Federal Government has a long history of placing importance on maintenance and accountability of public property in the possession of government contractors.xv Today, these responsibilities of stewardship are passed to the contractors through the FAR Government Property contract clause incorporated into the contractual documentation.xvi While government contractors should consider the value and serviceability of any company assets they acquire during mergers and acquisitions, they are also responsible for ensuring government property is inventoried, maintained, and accounted for properly. Running a business is no different than performing a government service. The key to any successful business or government enterprise is through strategic asset management.xvii

APPLICATIONCapital asset structure is an important factor in determining the

profitability and efficiency of a business or organization.xviii One of the best financial ratios for determining this is ROA.xix ROA is calculated by dividing the organization’s annual net income by its total assets. While the Federal Government may not achieve net income, it has a fiduciary responsibility to ensure that public assets are maintained in the most efficient and effective manner in serving the public’s best interest.xx Government property accountability is accomplished through physical inventory,xxi and an important part of mergers and acquisitions involves inventory and asset management. While government contractors have an interest in getting the most return from the company’s capital assets they acquire during a merger or acquisition, they are equally as interested in ensuring that government property accounted for properly. This concept is particularly important today among defense contractors as the Department of Defense (DoD) has initiated its Financial Improvement and Audit Readiness (FIAR) assessment as mandated by the National Defense Authorization Act (NDAA) for Fiscal Year 2010.xxii

“The Department of Defense (DoD or the Department) is the largest and most complex organization in the world. Each of the Military Departments is larger than most American companies. The Department’s annual budget represents almost half of the Federal Government’s discretionary budget and it holds more than 70 percent of the Federal government’s assets, as reported on the Federal Government’s Consolidated Financial Statements.”

The DoD and its defense contractors must be audit ready by September 30, 2017. Companies such as Orbital-ATK, Booz Allen-Hamilton, Harris-Exelis, Lockheed Martin-Sikorsky, and others could pay fines or lose contracts if they fail to meet their property management contractual obligations that are inherently a part of mergers and acquisitions.


RECOMMENDATIONSIt’s necessary that 21st century business managers understand

how property accountability or the management of fixed assets adds value to their company or organization. The management of fixed assets has a lifecycle that begins with acquisition and ends with disposal.xxiii While company-owned fixed assets are factors of production and add to the bottom line via increased shareholder value, government fixed assets in the possession of government contractors are factors of production that provide public goods and services. If the F-35 costs too much and doesn’t perform as expected, its value for the American taxpayer is diminished. The rewards for stewardship and public service are achieved through favorable defense authorizations; follow on awards and the awarding of new government contracts.

CONCLUSIONThis paper began with a discussion of mergers and acquisitions

and highlighted the similarities and differences between these two activities. It discussed how mergers and acquisitions are part of government contracting and focused on recent merger and acquisition industry trends among defense contractors. Discussion was provided around the reasons why companies seek mergers and acquisitions and some of the challenges involved with each. The article concluded with a brief discussion on the importance of property accountability or fixed asset management during mergers and acquisitions offered recommendations for 21st century business managers.

REFERENCESi Nuno, R. (2015). An overview of three decades of mergers and acquisitions research. Revista Ibero - Americana de Estratégia, 14(2), 51-71. Retrieved from http://revistaiberoamericana.org/ojs/index.php/ibero/article/view/2222ii Chierichella, J., & Szeliga, K. (2016). Contractor mergers and acquisitions: Issues to watch. National Defense, 100(751), 15-16. Retrieved from http://www.nationaldefensemagazine.org/archive/2016/June/Pages/ContractorMergersandAcquisitionsIssuestoWatch.aspxiii Federal acquisition Regulation. (2017, January 19). Novation and Change-of-Name Agreements, 48 CFR, Subpart 42.12. Washington D. C. Retrieved from https://www.acquisition.gov/far/html/Subpart%2042_12.htmliv Censer, M. (2015). Defense contractors say time is right for more acquisitions. Inside the Pentagon, 31(9). Retrieved from https://insidedefense.com/share/167709v Padgett, P. (2015, May 29). Harris corporation completes acquisition of exelis. Retrieved from https://www.harris.com/press-releases/2015/05/harris-corporation-completes-acquisition-of-exelisvi Sachdeva, T., Sinha, N., & Kaushik, K. P. (2015). Impact of merger and acquisition announcement on shareholders' wealth: An empirical study using event study methodology. Delhi Business Review, 16(2), 19-36. Retrieved from http://www.delhibusinessreview.org/V16n2/dbr_v16n2c.pdfvii Izadi, R., Khadivi, A. M., Mehrabanfar, E., & Shavrini, S. K. (2015). The role of finance in corporate strategy. European Online Journal of Natural and Social Sciences, 4(1(s)), 332-341. Retrieved from http://european-science.com/eojnss_proc/article/view/4236viii Das, A., & Kapil, S. (2012). Explaining M&A performance: A review of empirical research, Journal of Strategy and Management, 5(3), 284-330. Retrieved from http://www.emeraldinsight.com/doi/abs/10.1108/17554251211247580?journalCode=jsmaix Team, T. (2017, February 1). Lockheed Martin: The Sikorsky acquisition one year on. Forbes. Retrieved from https://www.forbes.com/sites/greatspeculations/2017/02/01/lockheed-martin-the-sikorsky-acquisition-one-year-on/#30f41874bd32x Polyak, J. (2015, December). Merger and acquisition activity. The Property Professional, 27(6), 17. Retrieved from http://c.ymcdn.com/sites/www.npma.org/resource/resmgr/Property_Professional_/GEN-1364_Prop_Pro_Mag_27-6_N.pdfxi ibixxii Cohen, L. M. (2010). Physical assets in the M&A mix: A strategic

option. The Journal of Business Strategy, 31(6), 28-36. doi:http://dx.doi.org/10.1108/02756661011089053xiii Stimie, J. E., & Vlok, P. J. (2016). A mechanism for the early detection and management of physical asset management strategy execution failure. South African Journal of Industrial Engineering, 27(3), 158-173. doi:10.7166/27-3-1651Velmurugan, R. S., & Dhingra, T. (2015). Maintenance strategy selection and its impact in maintenance function. International Journal of Operations & Production Management, 35(12), 1622-1661. Retrieved from http://www.emeraldinsight.com/doi/abs/10.1108/IJOPM-01-2014-0028xiv Government Property, 48 C.F.R. pt. 45, (2012, April). Retrieved from https://www.acquisition.gov/far/current/html/Subpart%2045_1.html#wp1023556xv Franklin, B. (1755). Advertisement to Wagoners, 6 May 1755. Retrieved from http://founders.archives.gov/documents/Franklin/01-06-02-0013Hodgdon, S. (1791, September 23). Accounting for horses. Retrieved from http://wardepartmentpapers.org/document.php?id=5747xvi Government Property, 48 C.F.R., Part 45, § 52.245-1, (2017, January). Retrieved from https://www.acquisition.gov/sites/default/files/current/far/html/52_245.htmlxvii Bandur, K. M., Katicic, L., & Dulcic, Z. (2015). Physical asset management: A new approach in industrial management. International OFEL Conference on Governance, Management and Entrepreneurship, 616-625. Retrieved from http://www.ciru.hr/index.php/ofel-conference/3rd-international-ofel-conference-2015Cohen, L. M. (2010). Physical assets in the M&A mix: A strategic option. The Journal of Business Strategy, 31(6), 28-36. doi:http://dx.doi.org/10.1108/02756661011089053xviii Porter, M. (2008). The five competitive forces that shape strategy. Harvard Business Review, 78-93. Retrieved from https://mgmt4001winter2012.wikispaces.com/file/view/The+Five+Competitive+Forces+That+Shape+Strategy.pdf xix Holland, S. F. (2013). Maintenance: Is it ready to perform when you really need it? The Property Professional, 25(6). Retrieved from http://c.ymcdn.com/sites/www.npma.org/resource/resmgr/Property_Professional_/PP25-6.pdfxx De George, R. T. (2015, November 17). A history of business ethics. Markkula Center for Applie Ethics,. Retrieved from https://www.scu.edu/ethics/focus-areas/business-ethics/resources/a-history-of-business-ethics/xxi ASTM. (2017). Standard practice for inventory verification: Electronic and physical inventory of assets. Designation: E2132 − 17. Retrieved from https://www.astm.org/Standard/standards-and-publications.htmlxxii Department of Defense. (2016, April). Financial Improvement and Audit Readiness (FIAR) Guidance. Retrieved from http://comptroller.defense.gov/Portals/45/documents/fiar/FIAR_Guidance.pdfxxiii ASTM. (2013). Standard practice for determining the life-cycle cost of ownership of personal property. Designation: E2453 − 13. Retrieved from https://www.astm.org/Standard/standards-and-publications.htmlO'Connor, E. P. (2014). Major equipment life cycle cost analysis. (1584651 M.S.), Iowa State University, Ann Arbor. Retrieved from http://lib.dr.iastate.edu/cgi/viewcontent.cgi?article=5223&context=etd

ABOUT THE AUTHOR:

David Ladouceur is a retired Marine Corps Supply and Fiscal Officer (20 years). In this capacity, he formulated the battalion budget, purchased all supplies and equipment, managed all storage and warehousing activities, maintained inventory accountability for all supplies and equipment, and reported directly to the Commanding Officer. After his career in the military, he served as a Government Property Analyst for CACI Inc. and Lockheed Martin (10 years). David is a Certified Professional Property Manager (CPPM). He has a B.A. from U.C.L.A., a M.A. from Troy University in Public Administration, and is currently pursuing his Doctorate in Business Administration at C.T.U. with an emphasis on how the management of fixed assets adds value. His proposed study will involve qualitative research encompassing all phases of the equipment life cycle. The significance of the study will help business leaders understand the value that fixed assets bring to the organization.

“Would you like your receipt printed or emailed to you?” “Would you like to opt out of paper billing statements?” “Would you like to setup direct deposit?”

As technology is advancing and the world is becoming “paperless” these are questions that we are now asked every day. Virtually every aspect of our personal lives – from banking to shopping to paying parking tickets – is increasingly going paperless as digital and electronic technologies continue to evolve seemingly by the minute. The reality is that “paperless” is now the default option and the preference of many. Efficiencies, cost-savings, security considerations and an increased focus on reducing carbon footprints associated with paper use are driving these trends. Both the public and private sectors are utilizing various technologies to enable an increasingly paperless economy. Consider this research highlighted by the National Center for The Middle Market: “An average office worker uses 10,000 sheets of copy paper a year, according to data cited in Entrepreneur. On average, a four-drawer filing cabinet costs $25,000 to fill and $2,000 to maintain just for one year.”i A statistic such as this one can certainly motivate a company to consider paperless options!

There are cases in our personal and professional lives as property managers where the use of paper can be decreased dramatically or simply eliminated. Think airline boarding passes, billing statements or property passes. Is a paper copy necessary or are we stuck in our old ways? Paper is easy to lose, difficult to manage and expensive to store. Paperless-focused asset management operating strategies drive efficiencies, reduce costs and improve workforce productivity. An implementation of paperless-focused strategies takes leadership buy-in and a set of operational activities focused in, at a minimum, these 4 areas: Technology, Policies and Procedures, Training and Execution.

TECHNOLOGYUtilizing a comprehensive and secure asset management system

enables property professionals to execute their responsibilities in a reliable manner. With a proper asset management system organizations have the ability to refer back to a record, electronic property pass or form without sifting through file cabinets or mountains of paper. If there is a signature requirement have you considered electronic signatures? As you probably have experienced, it is becoming increasingly common and acceptable to electronically sign documents that can then be saved to your workstation or a shared drive. Additionally, if your asset management system records transaction history or shows an “electronic-handshake” (where two parties electronically agree on a transaction before it’s executed) perhaps this capability satisfies signature requirement policy. This type of technology and accessibility improves accountability, boosts efficiencies and most importantly eliminates the need to dig up a crinkled property pass at the bottom of your work bag!

Proper system security is a key component of any asset management system. Appropriate security policies must be in place that governs both the administration and usage of the system. Using

an asset management system supports data accuracy, confidence and accessibility, however it’s imperative that the data is secure, access is restricted and the system is backed-up frequently.

POLICIES AND PROCEDURESA set of processes and procedures to govern your paperless

approach must be clearly defined and precisely written – with buy-in from senior management – to support paperless initiatives. Policy changes like these are easy to conceptualize yet difficult to implement. The correct tools also must be in place to foster a paperless environment and reflected in the policy and procedure documentation. The new procedures should make sense to your organization and be specific and achievable. Leverage your National Property Management Association (NPMA) Property Professional relationships to gain an understanding of what has worked for them. Will it require conducting research, rewriting internal polices, and getting decision makers aligned? Absolutely, but it’s worth it.

TRAINING AND EXECUTIONTeam members must fully understand and follow paperless

implementation guidance and activities. Creation and implementation of a training program should include reviewing specific paperless planning and guidance and also provide training on all tools that are enabling the paperless initiative. This is a cultural change and a paperless strategy won’t be adopted overnight, but rather over time and with steady and enforced guidance. Routine reviews should be performed to assess progress made towards paperless goals and to also determine if the policies and procedures are indeed achievable for the property community. Other recommendations are to disperse regular communications such as pointers, quick guides and reminders about the policies to be followed. Communication is the key to success.

We have all heard first-hand the main reason why organizations are still paper heavy: “Because that’s the way we’ve always done it.” Maybe it’s time to consider a change and lighten your office’s paper load. A bold move like this will allow property management professionals in your office to spend more time on adding value to other activities, improve productivity, and increase accountability. And as they say, less is more.

Ask yourself: is paper your friend or foe?

ENDNOTEi Dwilson, Stephanie. (2015, Dec. 3). Going Paperless: Benefits That Make the Investment Worthwhile. Retrieved from http://www.middlemarketcenter.org

ABOUT THE AUTHOR:

Judy Windle is a Senior Manager with Sunflower Systems. She has over 9 years of property and asset management experience primarily focusing on consultant, account management and implementation services. Judy resides in the Pittsburgh area and is a member of Three Rivers Chapter.

PAPER: FRIEND OR FOE?By Judy Windle, CPPS, Three Rivers Chapter

WWW.NPMA.ORG 13


Physical location has always been a very important part of asset management. In the past, the only way to identify a location was by its physical site. Automatic monitoring tools used by Information Technology (IT) have made it possible to confirm the existence and “virtual” location of computers and other IT assets across an enterprise. Global positioning devices provide us the real time location of vehicles and vessels. Understanding how to gather and incorporate these types of data into your asset records is becoming an important and valuable asset management tool.

This article discusses the different types of locations and data elements that may be included in an organization’s accountable records so that assets can be located; and their existence verified readily. Regardless of the method used, organizations should be consistent with the formatting and data used within location names throughout all of their systems in order to support enterprise wide asset management and reporting.

PHYSICAL LOCATIONSMany warehouses contain multi-level racks for bulk storage.

Most warehouse management systems have detailed location fields to tell warehouse personnel exactly where an asset is stored. If warehouse personnel do not know exactly which row and bay an asset is in, they might have to walk several aisles or the entire building looking for an item. Therefore, in a warehouse, they may

want to use:

BUILDING | ROW | BAY | SLOT | LEVEL

If they have administrative space in the same one or two buildings, they may also need to know which building, floor, or room/area the item is in.

BUILDING | FLOOR | ROOM/AREA

A larger organization, with locations throughout the United States may also need:

STATE | CITY OR COUNTY | ZIP CODE | STREET ADDRESS

These fields can be attached to the Building Name in a separate look-up table or automatically populate when the Building is selected.

BUILDING NAMESIf an organization has more than 5 buildings, the Facilities

Department should assign Building Names to be used throughout the organization. If you are unsure of the correct name of a building, check with the Facilities Department. This will facilitate enterprise-wide reporting. Also, the ability to link asset management records to Facilities Work Orders and/or Computer-Aided Facility Management Systems can benefit both

LOCATION, LOCATION, LOCATION

By Marla Williams, CPPM, Federal Center Chapter

WWW.NPMA.ORG 15

departments. Facilities would have access to an up-to-date list of assets for space planning and coordinating internal moves, and Asset Management could receive updates when facilities move assets.

WORLD-WIDEIf an organization has locations throughout the world, they may

need to fine tune the list to include:

COUNTRY | STATE OR PROVINCE | CITY OR COUNTY OR TOWNSHIP | ZIP CODE OR POSTAL CODE | STREET ADDRESS

Country is very important in asset management outside the United States. There are currently 15 different types of electrical outlet plugs in use today, each of which has been assigned a letter by the US Department of Commerce International Trade Administration (ITA), starting with A and moving through the alphabet. Many equipment manufacturers have different part numbers for each country based on the style of electrical plug required. Knowing what country an asset is located in may also identify its power requirements and the manufacturer’s part number.

GLOBAL POSITIONINGIf your organization has vehicles, remote structures, or facilities,

you may need to rely on Global Positioning System (GPS) to identify asset locations. GPS is a Global Navigation Satellite System (GNSS) owned by the United States Government. GPS is a satellite system that is used to pinpoint the geographic location of a user's receiver anywhere in the world. The receiver's location is converted to latitude, longitude and altitude (height relative

to sea level). This is the same system that our automobiles and mobile phones use to display moving maps, and information about location, speed and direction.

MOBILE WORK FORCEIf you have teleworkers or a mobile work force, you might use

contact information to locate your assets:

USER NAME | USER E-MAIL ADDRESS | MOBILE PHONE NUMBER

ELECTRONIC INVENTORY VERIFICATION Most IT Departments use Configuration Management Systems

(CMS) to automatically collect detailed hardware, software, configuration, and logon information from computers and network infrastructure. Although these systems do not provide precise physical locations, these systems do provide virtual locations.

CMS can provide:• BIOS Serial Number which should match the Serial Number

on the outside of the equipment. This field is critical to linking asset records to the CMS data.

• Internet Protocol (IP) Address is the “logical” address assigned by software on the server or router. It is usually static (always the same) for network devices and can be dynamic (created each time you log on) for users.

• Media Access Control (MAC) Address is a unique serial number that identifies that device globally.

• Domain is group of computers that can be accessed and administered as a group. A Windows domain is a group in which all user accounts, computers, printers and other security devices are registered in a central database called Active Directory.

• Last Logon User and Date. If meaningful User Names are entered into Active Directory, we know who used the computer last and when. If we can link that to their e-mail or Cost Center, we have everything we need to locate the asset.

DATA STRUCTUREMany organizations have some of each type of location.

Consider identifying a location type (e.g. Physical Office, Physical Warehouse, Electronic Computer, and GNSS or GPS) as follows:

Consistent Building Names are important to Federal

Agencies in particular because they are required to

identify Buildings, Structures and Unimproved Land,

their condition and status, as part of the Federal Real

Property Profile (FRPP). The FRPP is the Federal

"database of all real property under the custody

and control of all executive branch agencies” in

accordance with Executive Order 13327. One of the

data elements required is the Real Property Unique

Identifier. There are also Installation Identifiers and

Installation IDs assigned by the reporting agency and

Sub-Installation Identifiers. Using the same identifiers

for naming buildings in the asset management system

will allow Asset Management to support FRPP and

status reporting.

Federal Agencies are also required to identify the

longitude and latitude of each real property asset in

the FRPP required by Executive Order 13327.

Federal Agencies should coordinate with their senior

agency officials for geospatial information (SAOGI).

The SAOGI is responsible per OMB Circular A-16,

Coordination of Geographic Information Related

Spatial Data Activities and OMB Memorandum

M-06-07: Designation of a SAOGI, for promoting

the allocation of agency resources to fulfill the

responsibility of effective spatial data collection,

production and stewardship.


Whichever data elements you use, always consider the cost of obtaining and maintaining the information and value of the data to various departments within the organization. You may also look to ASTM E2499-17 Classification of Asset Electronic and Physical Location Information for additional information.

ABOUT THE AUTHOR:

Marla Williams is a Certified Professional Property Manager (CPPM) and a Senior Consultant with Grant Leading Technology, LLC. She is a past President of the Federal Center Chapter of the National Property Management Association (NPMA) and a regular contributor to the NPMA National Education Seminar.

PHYSICAL OFFICE LOCATION

PHYSICAL WAREHOUSE

LOCATION

ELECTRONIC COMPUTER LOCATION

GNSS LOCATION (GPS, GLONASS,

GALILEO OR BEIDOU

Space Space Space Space

Country Country Country Country

State or Province State or Province State or Province State or Province

City or Township

or County

City or Township

or County

City or Township

or County

City or Township

or County

Site or Campus Site or Campus Site or Campus Site or Campus

Building Building Domain Building

Floor Floor Network IP AddressHeight/Geoid

(e.g. EGM96)

Room/Area Row MAC Address Latitude

Desk/User Name Bay Log in or User Name Longitude

Precise Slot or LevelBIOS Serial# or

Workstation ID

FEDEX IS USING AUTONOMOUS ROBOTS TO ESSENTIALLY REPLACE THE MAILROOM CLERK

According to an article written by Mike Murphy contained in the April 13, 2017 issue of Quartz, over the last year FedEx has been working with Savioke, a Silicon Valley company that makes autonomous indoor delivery robots, to develop a robot delivery system for its repair facility in Collierville, Tennessee. The bots are used by workers to move items around the office, cutting down on wasted time and storage space, as workers no longer have to spend time walking around picking up and dropping off items, or need a mailroom clerk to do it for them. “Our goal is to change the way we think about moving items from one place to another,” Adrian Canoso, Savioke’s head of product and design, told Quartz. Just about every office, apartment complex, hospital, and warehouse in the world has items that people waste hours moving around each day. Whether it’s packages going from a lobby to an apartment, or medical supplies being transported from one hospital ward to another—there are always little things that waste so much time when added up over the course of the work day. For FedEx, this means repair staff working on complex devices don’t have to worry about remembering where the product they’re working on needs to go next—they can just call the Relay and send it along. “We want Relay to be pretty much everywhere,” Canoso said. FedEx is currently using seven Relay robots in its Tennessee facility, as well as one at a Kinkos (a copy and a mailing chain it owns) in Manhattan. Canoso said FedEx’s Relays have completed tens of thousands of deliveries, and have traveled over 1,000 miles through its offices.

The full article can be found at: https://qz.com/997853/the-most-underrated-workplace-benefit-the-low-key-office-hang/

WWW.NPMA.ORG 17

Ownership and the record keeping requirements for property acquired, received or used during the performance of a contract can be very confusing to the everyday property user. Defining basic ownership principles can help foster a common understanding. A review of contractual fundamentals also aides in determining if ownership is not apparent by the type of property tag affixed to a piece of property. First, let’s explore the major contract types to understand the role a contract type plays in determining property ownership.

FIXED-PRICE CONTRACTSA closer look at Federal Acquisition Regulation (FAR) 45.402

provides confirmation of what we assume to be generally understood. ”… Under fixed-price type contracts, in the absence of financing provisions or other specific requirements for passage of title in the contract, the contractor retains title to all property acquired by the contractor for use on the contract, except for property identified as a deliverable end item…”

Why is that the rule? Fixed-price contracts are usually awarded for commercial-type parts or parts that a contractor has produced in the past where there is little risk for both the Government and the contractor. Property ownership on this type of contract is usually limited and easy to determine because the Government will identify a formal list of the property they consider theirs. The Government Furnished Property (GFP) list is contained within the contract. This can usually be found in either Section J of the contract or as a special Attachment/Enclosure to the Contract.

In most cases, contractors will affix a property tag to the GFP to show that the Government is the owner of the property (unless there is a size restriction or other reason not to affix a tag). The GFP is then the only property that is required to be controlled in accordance with FAR 52.245-1. This also means that the Government has title to the consumed property required for delivery as Contract Line Items (CLINs) identified in Section B - the Schedule of the Contract. The leftover residual property procured by the contractor for the performance of the contract then becomes Contractor Owned as confirmed by the referenced FAR clause above.

The ownership of excess property and the record keeping responsibility for the contractor is clear in fixed price contracts. The Government does not expect any residual property to be delivered since they do not have a CLIN established in the contract to show acceptance for it. Any excess property leftover after the delivery of the CLINs is a potential benefit to a contractor, as this is part of the additional risk assumed by the contractor for accepting a fixed-price contract. This does not mean that the Government can never take title to any excess material acquired during the performance of the contract if they have a true need for it. It just means that if the Government wants to take title of the excess, they must identify in the contract exactly the parts for which they want to take title. The Government, via a CLIN, must also provide the means for the contractor to deliver the excess items to them.

By Nancy Johnson, CPPM, Ohio Valley Chapter

TITLE TO CONTRACT PROPERTY


Further, if a fixed-price contract has progress payments and if the contractor fails to meet his contractual deliveries, the ownership rules can change. The Government has a right to title the material being bought under a fixed-price contract if the contractor is paid progress payments. And, if a fixed-price contract is terminated, property ownership is determined by the settlement agreed upon between the contractor and the Government and is not determined strictly by the contract type.

COST-TYPE AND TIME & MATERIAL CONTRACTSWhat about property acquired on a cost type or time and

materials contract? Again, using FAR 52.245-1(e)(3) as a reference point, we see that the Government acquires title to all property to which the contractor is entitled to reimbursement. What does this mean?

FAR Clause 52.245-1 (e) (3) (ii), says title to property under cost-reimbursable, or time and materials contracts, or cost reimbursable line items under Fixed-Price contracts, passes to the Government whenever any of these three occurrences takes place.

1. The property is issued for use in contract performance;2. The commencement of processing of the property for use in

contract performance;3. Or the Government reimburses the cost of the property,

whichever occurs first. This is saying that as soon as any property arrives within a

contractor’s plant, the contractor should assume it belongs to the Government and track it accordingly. Per FAR 52.245-1, the property under these types of contracts need to be controlled, reported and tracked as Government owned since any one of the three title changers mentioned can occur quickly and sometimes go unnoticed until after the event occurs. Since the Government reimburses the contractor for all the incurred allowable costs to the contract, they expect that any leftover property is Government-owned. It is usually safe to assume that if a contractor is working on a cost type contract, unless marked otherwise, all of the contract’s accountable property belongs to the Government. Even though the risk level for a contractor on a cost type contract may be somewhat reduced, in that the Government recognizes all incurred allowable costs, if this is a development contract, there is still a high-risk level for the contractor. There is also a high-risk level for the Property Manager (PM) in that they are required to tag, track and report on all of this property. The record keeping burden on the PM in this instance is significant because the FAR does not state a certain dollar threshold requirement. The records requirements apply to all types and values of government property and contractor acquired property on a cost type contract.

An approved Material Management Accounting System (MMAS) is important when discussing title of property acquired for a cost type contract. Per the guidelines of the DFARS MMAS clause, DFARS 242.7204, contractors are required to have a system in place for the planning, controlling and accounting for the acquisition, use, issuing and disposition of property bought for a cost type contract. Once established, this system provides the basic processes for determining a contractor’s MMAS. The Government will periodically review and approve this system and it may also be a part of an overall property management system review by the Government in a Property Management System Analysis (PMSA). As PMs, we recognize that the MMAS

approval is a critical part of a PMSA since it demonstrates the control of purchased property which includes titled Government property. Even with an approved MMAS in place, title to acquired property can change. Property can be transferred between projects and comingled within a storeroom when adequate auditable controls of cost accountability and cost transfers are shown by the contractor. These are important efficiency factors to consider when working toward achieving an approved MMAS. An approved MMAS allows the best utilization of acquired property by both the Government and the contractor, which benefits both parties in contract performance.

What about a contractor that is operating together with the Government at a Government site or what may be called a GOCO (Government-owned-contractor- operated) site?

The ownership line and reporting responsibility gets complicated at a GOCO site and is probably the hardest situation for a PM to manage. Typically, the Government will assign a Property Book Officer at Government sites. There are specific military property control procedures written for a military site or installation outlining how government property should be controlled, tracked and reported. Since the contractor has no input on any control factors at a Government site, it is assumed the Government has total ownership and responsibility for the property at the GOCO unless limitations are identified in a special Government program document or contract.

Even though the procedures used on a GOCO may be similar to the FAR, they are not and this can have an impact on the contractor. Thus, the FAR guidance is intended for the contractor and not military personnel on a military base. Ownership property tags that are applied by the contractor at a GOCO facility can become much more important than in other locations. Additionally, all contractual language -- especially any Government property control requirements -- must be explicit and direct who (the Government or the contractor) has control of what property at the site.

To summarize, ownership and record keeping requirements for any property acquired, received or used during the performance of a contract must be known and understood by the property users and PMs. Ownership can be determined in various ways, but the contract type and contract provisions are key resources that provide information as to property ownership. Key documents include the GFP list and all special contract property requirements. PMs should review these documents before, during and after contract award to be sure that these requirements have not changed. Though challenging at times, understanding a piece of property’s ownership is essential for the PM to keep their property control system approved.

ABOUT THE AUTHOR:

Nancy Johnson has worked for Lockheed Martin Rotary Mission Systems in Akron, Ohio for a total of 35 years. Twenty six of those years have been as a Property Analyst and 9 years were as a Contract Administrator. Her NPMA membership dates back to the 1990s.

WWW.NPMA.ORG 19

PUZZLECHALLENGE

Welcome to The Property Professional ‘‘Puzzle Challenge.’’ The use of puzzles are great for

challenging the working mind in a fun and stimulating way. In this edition, we have given

you a word search based on informationtaken from this issue. Take a look, consider

the facts, rack your brain for some of those hidden answers, and good luck!

AMBIENT COMPUTINGASSET LEVEL DATAASTMCERTIFICATIONCLINCOST TYPE CONTRACTDECOMMISIONINGDFARSDRONEEXCESS

FARFASTFIXEDA SSETSFIXED PRICE CONTRACTFLEET MANAGEMENTGLOBAL POSITIONING SYSTEMGOVERNMENT PROPERTYGSAINNOVATIONINTERNET OF THINGS

INVENTORYLOCATIONMERGERS ANDA CQUISITIONSOWNERSHIPPAPERLESSPHOENIXSUSTAINMENTTASK GROUPTITLEUS CODE

ANSWERS PAGE 35


The well-established bonds between NPMA and ASTM just got stronger with the recent establishment of Subcommittee E53.30, Decommissioning and Disposal of Medical Supplies, Medical Equipment, and Hospitals. This subcommittee will operate within the E53 Committee, Asset Management. The idea for the establishment of this particular ASTM alliance was developed by members of the work group on Decommissioning Medical Equipment and Supplies, which falls under the Hospitals and Medical Facilities (HMF) Special Interest Group (SIG).

NPMA FACILITATES FORMATION OF NEW

ASTM SUBCOMMITTEEBy Norman Pugh-Newby, CPPA, Federal Center Chapter

WWW.NPMA.ORG 21

The initial goal of the work group was to compile a knowledge base of leading practices on the disposition of medical equipment and supplies. These resources would assist NPMA members and medical property managers at-large with the disposition of used medical devices and other equipment commonly found in the healthcare environment. However, work group members had concerns as to how to effectively share these leading practices beyond the NPMA boundaries. The concept of standards was taken from the HMF SIG objectives which include the creation of standards as well as leading practices. The creation and distribution of standards via some national or international body resonated with the desire of work group members for wider dissemination of their work. The result was the bold step to approach ASTM with the idea of establishing a subcommittee that would develop standards on the Decommissioning and Disposal of Medical Supplies, Medical Equipment, and Hospitals.

The thinking of the workgroup members was that leading practices developed on the Decommissioning and Disposal of Medical Supplies, Medical Equipment, and Hospitals, would serve as a resource pool that could be distilled to produce an array of standards. The work group defined a leading practice as a technique or methodology that, through experience and research, has proven reliably to lead to a desired result. They further defined the following criteria for selecting leading practices:

• Effectiveness: The practice must work and achieve measurable results;

• Efficiency: The practice must produce results with a reasonable level of resources and time;

• Relevance: The practice must address the priority issue;• Ethically Sound: The practice must be aligned with

commonly accepted rules of ethics;• Sustainability: The practice must be implementable over a

long period of time; • Replicability: The practice, as carried out, must be replicable

in multiple locations, nationally and internationally; and• Implementability: The practice, as carried out, must be fairly

easily implementable by a competent team. These leading practices would be developed across the following

focus areas:• Inventory reduction and disposal of medical supplies;• Decommissioning and disposal of medical equipment;• Valuation of used medical devices; and• Decommissioning of hospitals.

The journey from the idea of an ASTM subcommittee to the reality of an ASTM subcommittee was expertly guided and facilitated by the leadership of ASTM and consisted of four main phases: assessment of need, due diligence as to whether the need was currently satisfied by some other standards organization, proper placement within ASTM, and acceptance by members of the target committee identified for placement of the subcommittee. We began our journey by having a series of meetings with Cinda Brockman, Chair of ASTM E53 Committee, Asset Management. Ms. Brockman provided us with valuable insight into how ASTM operates. She then introduced us to Katerina Koperna, Manager, ASTM Technical Committee Operations. Ms. Brockman and Ms. Koperna then guided us through the four phases described above. The work group provided insight on the need for and current lack of standards related to the Decommissioning and Disposal

of Medical Supplies, Medical Equipment, and Hospitals. Both the ASTM and the work groups conducted extensive research to identify standard organizations that might currently provide standards on the Decommissioning and Disposal of Medical Supplies, Medical Equipment, and Hospitals. The ASTM conducted extensive internal reviews of various committees that might provide a good fit for our subcommittee and finally determined that E53 provided the best fit. Finally, on April 24, the ASTM E53 Board met for its bi-monthly meeting and voted unanimously on adding our proposed Subcommittee to the E53 Committee.

The work group has updated its charter to reflect this important achievement. It has added the goal of compiling and publishing a set of standards to guide practitioners involved with the decommissioning of medical equipment and supplies on the efficient and effective execution of these responsibilities. These standards will serve as principles established by agreement within ASTM to measure the quality or performance of practices and procedures associated with the disposition and disposal of medical equipment and supplies. Three task groups have been established under E53.30, Decommissioning and Disposal of Medical Supplies, Medical Equipment, and Hospitals. They are:

• E53.30.02, Inventory Reduction and Disposal of Medical Supplies;

• E53.30.03, Decommissioning and Disposal of Medical Equipment; and

• E53.30.04, Decommissioning Hospitals.

Material from the focus group on the valuation of used medical devices will be incorporated in the task groups E53.30.03 and E53.30.04.

The work group is actively compiling a knowledge base of leading practice resources and looks forward to the follow-on phase of distilling these resources to produce standards that will be reviewed, refined, and developed through the discipline and science of the ASTM process, and ultimately distributed worldwide.

ABOUT THE AUTHOR:

Norman Pugh-Newby is the Chairperson of the work group on Decommissioning Medical Equipment and Supplies, which falls under the Hospitals and Medical Facilities (HMF) Special Interest Group (SIG). He is a Certified Professional Property Administrator (CPPA) and is currently a Specialist Master within the Fixed Asset Management practice of Deloitte Advisory Services LLP. Prior to Deloitte, Mr. Pugh-Newby served as a career logistician within the United States Army retiring as a Lieutenant Colonel after 20 years of service. Mr. Pugh-Newby holds additional certifications as a Project Management Professional (PMP) and Lean Six Sigma Green Belt. Mr. Pugh-Newby’s education includes a Master of Business Administration degree from Ohio University and a Master of Science degree in Operations Research from the Naval Postgraduate School.


By Patrick O’Toole, Emerald Coast Chapter

TALE OF AGOVERNMENTPROPERTYROOKIETHAT’S NOT GFP!

I work for a small but growing Defense Contracting company. Last year, as a result of our company’s recent large contract wins, I was asked to fill the corporate role of “full time” Government Property Manager (GPM). This position did not previously exist in our organization, so I was on my own to create the policies, procedures and interdepartmental business processes necessary to facilitate a complete and compliant Government Property Management System.

The first year in my new position has been full of rapid learning, mistakes, collaborations and growth. I had been involved in the handling or management of Government Property for over 20 years as either a user or site level manager, but my exposure to the contract negotiation and management side of this job- including the very specific contract Federal Acquisition Regulation (FAR) requirements- had been very limited. Recent changes to the FAR and the Defense Federal Acquisition Regulation Supplement (DFARS) meant I could no longer rely on the old “That’s how we’ve always done it” crutch. I was surprised that even though I had served 20 plus years in the Government property environment I still had so much to learn!

My association with NPMA has been the single most effective resource for my successful transition to this new leadership position. It has helped me by expanding my network and exposing me to important requirements, regulations and emerging concepts in the field of Government Property Management.

I have quickly learned that one of the most important roles in my new position is that of “Government Property Educator.” I am often asked questions about the proper method of transferring or adding Government Furnished Property (GFP) or Government Furnished Equipment (GFE) to our Government contracts. I always ask the same 3 simple questions.

1. Is the GFP/GFE to be transferred clearly document in the contract?

2. Does the Contract contain the proper GFP clauses?3. Does the Company have a Government Property Management

System in place including a system of records to support ‘cradle to grave’ accountability of the Government Property?

WWW.NPMA.ORG 23

There are many other questions that may need to be asked, but these three are usually a good barometer to tell if the contract is set up properly, the company Program Manager understands how to properly manage the GFP, and if some additional digging and possible contract modifications are in order.

One issue that continues to come up is what GFP is and is not. There are many misconceptions about GFP, and it is critical that Government Contractors managing Government property understand the difference between “Property of the Government” and “Government Furnished Property.” All Government Property is not GFP, but all GFP is Government Property!

Government Property is simply all property owned by or leased to the Government or acquired by the Government under the terms of a contract. It can be divided into two major categories;

• Property - Plant and Equipment assets, (both Real Property or Real Estate, and Personal Property)

• Inventory - Operations, maintenance & Supply items Government Property is accountable to the Government and

in the possession of the Government. If property is leased by the Government and subsequently made available to a contract it is treated as GFP.

GFP is property in the possession of, or directly acquired by, the Government and subsequently furnished to the contractor for performance of a contract. Government-furnished property includes, but is not limited to, spares and property furnished for repair, maintenance, overhaul, or modification. Government-furnished property also includes contractor-acquired property if the contractor-acquired property is a deliverable under a cost contract when accepted by the Government for continued use under the contract” (FAR 45.101).

Nearly every week I am asked to review contracts or Requests for Proposals (RFPs) that contain the potential transfer of GFP, only to find that the items listed actually fall under the definition of “Government Property that is incidental to the place of performance…” as found in FAR 45.000(b)(5)). The “Scope of Part” section specifically provides definitions for those items to which the FAR applies. Scope of Part also provides specific examples of items that might be considered incidental to the place of performance. This misunderstanding and misuse of the term “GFP” is typically found with service related contracts where a company’s personnel are located at a Government site or installation performing specific tasks or services.

The GFP to be provided in these cases often includes the following items:

• Office Space• Desk• Chair• Telephone (for official use only)• Computer work station• Fax machine• Electricity, heating and cooling services

These items are considered incidental to the place of performance. They are not, by FAR definition, GFP and as such should not be reflected in a contract as GFP.

In each case, I request that our Contract Administrators and Program Managers go back to the Government’s/Contracting Officer to ask them to clarify the contract with regard to the transfer of GFP. I point out that the items listed do not meet the criteria for GFP and rather are simply Government Property incident to the place of performance. Since the contractor will never take possession of the property, there is no Property Management Plan required. Eliminating this administrative burden from the contract results in more competitive pricing from the contractor and cost savings to the Government. Understanding what is, and what is not GFP can help simplify and streamline the contracting process by eliminating unnecessary clauses and requirements from the contract.

Knowing the FAR requirements, understanding the contracting process, and having a close relationship with the various departments within my organization that have customer touch points are all very important aspects to being an effective Government Property Manager. At the end of the day, I take comfort in knowing that whenever I run into a situation where I don’t know an answer or require additional information, I can count on my NPMA family who may have found themselves in a similar situation and are always willing to share their solution with me. I want to thank those people in NPMA who so generously provided educational resources, mentoring, and positive motivation during my rookie year as a Government Property Manager.

ABOUT THE AUTHOR:

Patrick O’Toole is a Government Property Manager at UIC Government Services, NPMA Rookie (First year member) / Emerald Coast Chapter Secretary.

Office Space at the Pentagon = NOT GFP!


Gathering an athlete’s performance statistics, analyzing items that enter and exit a clothing store’s fitting room, and tracking the number of miles a farm animal roams in a day: Would you guess that without RFID technology collecting this type of data would be nearly impossible? While traditionally used to track the location and movement of assets or property from one location to another, the use of RFID technology has expanded into a multitude of other industries to include sports, retail, entertainment and farming. RFID technology provides the ability to collect valuable data that allows organizations to make decisions on everything from marketing campaigns to a farmer’s milking schedule. The animal industry- including local shelters, nation-wide farms and zoos across the world- relies on RFID technology to provide data that is used to ensure that their animals are safe, healthy and thriving in their environment.

Household pets are a “part-of-the-family.” In many cases they are treated just as well, if not better, than their human family members! I would go crazy if my sweet Black Lab, Nellie, (who’s lying at my feet as I write this article), lost her way. When Nellie was brought

home, it was an easy decision to “chip” her. If you are a pet owner or have recently visited an animal shelter you are probably familiar with this term, but might not realize that the technology used to “chip” an animal is the same RFID technology that we use on a daily basis in the property management world.

While two types of chips support RFID technology- active and passive- it’s the passive RFID chips that are used most often to track animals. Passive chips have no internal power source, such as a battery, and don’t actively transmit data. An RFID reader can read a passive chip up to 20 feet away using an RFID reader. A unique identifier contained on the chip is scanned by manually passing a reader over the chip and, via a built-in antenna, data is passed from the chip to the reader.1 In animals the chip, about the size of a grain of rice, is inserted just beneath the surface of the skin between an animal’s shoulder blades. No anesthetic is required and the process, performed by a veterinarian, is similar to a vaccine injection. The chip usually bonds to subcutaneous tissue within 24 hours preventing it from moving around inside the body. This permanent ID can never be removed or become impossible to read and it lasts

THE BILLION DOLLAR ANIMAL RFID INDUSTRY

By Megan Dimond, CPPS, Federal Center Chapter

WWW.NPMA.ORG 25

the lifetime of your pet (approximately 25 years).2, 3

A common misconception is that microchips in animals hold personal information, however, they only store a unique identification number for your pet. Microchipping Fido is worthless, though, if the owner doesn’t take the time to register their pet’s unique identifier in the appropriate database. For domesticated pets, the tracking database is typically provided by the RFID chip manufacturer. If a pet is lost and no information is attached to the chip in a system of record there is no way to locate the owner, even if the pet is subsequently found.4 Similarly, in our property management world, if accurate information isn’t tracked and routinely updated in a property management system of record, gathering RFID data is simply worthless. The tag, the technology and the system need to work in concert to provide the most current information on the tracked item.

Shelter statistics support why pet owners microchip their furry family members. Research led by Linda Lord, an assistant professor of veterinary medicine at The Ohio State University, found that of the 7,704 stray animals at shelters that were microchipped, and were truly lost and not surrendered, almost 75% of the owners were reunited with their lost pet due to an implanted chip. The number one reason the numbers aren’t higher for chipped pets is due to the lack of owner information attached to the RFID tag (incorrect phone numbers, owners’ failure to respond or unregistered microchips).5 This reinforces how critical it is to properly register and track the RFID information in the appropriate system of record.

Domestic pets, though, aren’t the only animals that utilize RFID technology to promote safety and wellbeing. The billion-dollar animal industry also includes traditional farm animals like cows, pigs, horses, sheep, goats, deer, fish and pigeons. Hundreds of millions of farm animals are either chipped under the skin or physically tagged on a body part with an RFID tag. With this number increasing by about 30% each year, the demand to gather data on farm animals via RFID technology continues to increase. There are varying reasons why livestock are microchipped or tagged, but all support the ability to make informed decisions regarding livestock health and overall farm growth and prosperity.6

Theft protection and the risks associated with loss are major motivating factors for farmers to incorporate RFID technology into their livestock management lifecycle. When livestock are tagged their current location can be easily tracked, as can their daily movement from place-to-place, significantly diminishing the animals’ ability to “roam- off.” Other benefits relate to overall health and wellness of the animals. Data gathered via RFID technology supports disease control and food safety via the ability to store and update vaccination records and identify those flocks affected by an outbreak. RFID technology also fosters a more streamlined and automated auction management process, as up-to-date animal information, such as proof-of-breed and verification of age, is at the seller and buyer’s fingertips.7, 8, 9

Zoo animals, such as elephants, also benefit from the use of RFID technology. The Dallas Zoo was on a mission to counteract negative criticism regarding animal welfare in zoos and prove their elephants were well-cared for and thriving in their environment. After opening the Giants of the Savanna exhibit in May 2010, (which now houses five African elephants, giraffes and zebras), the goal was to monitor the elephants in real time, collect data and enhance the overall visitor experience. Just 14 months later their goal became a reality when the zoo implemented an RFID-

based system called TangaTracker (“tanga” means “wander” in Swahili). This solution was introduced to observe the elephants’ behavior and natural movements in their actual state. Using this solution to track the movement and behavior of the in their natural environment, the Dallas Zoo proved that their elephants were in similar physical shape to their wild counterparts. Aside from becoming a huge attraction, the exhibits successfully corroborated the Zoo’s assertions that their elephants were walking more and were in overall better shape than critics claimed.10

While we are used to applying RFID technology in our property management environment to track items like IT equipment, laboratory samples and machine parts, the technology continues to grow and impact other industries and environments. Data gathered via RFID technology in the billion-dollar animal industry allows decision makers like animal shelters, farmers and zoo keepers to make informed decisions that allow both their animals and businesses to thrive. A tiny chip (and a lot of technology) can have a profound, positive effect on an animal- from a family’s dog, to a famer’s cow, to a zoo’s elephant.

ENDNOTES:1. http://www.abr.com/Passive-RFID-Tags-vs-Active-RFID-Tags/2. https://www.homeagain.com/microchipping-facts.html3. http://www.humanesociety.org/animals/resources/tips/microchips.html4. Ibid5. http://researchnews.osu.edu/archive/shelterchip.htm6. https://nxp-rfid.com/applications/livestock-management/7. Ibid8. http://www.datamars.com/key-markets-overview/9. https://www.microchipidsystems.com/your-work/livestock/10. https://www.rfidjournal.com/purchaseaccess?type=Article&id=9558&r=

%2Farticles%2Fview%3F9558

ABOUT THE AUTHOR:

Megan Dimond, CPPS, is a senior consultant with Sunflower Systems and a member of NPMA’s Federal Center Chapter. She works with Sunflower’s federal government customers focusing on account management and implementation services. Prior to her career in asset management Megan worked in public relations with Major and Minor League Baseball teams. A lover of animals and sports, Megan played collegiate field hockey and holds a B.S. in Management from Ithaca College.


This article does not represent the views of the Department of Defense, the United States Air Force or the Defense Contract Management Agency and should not be construed as official Department of Defense policy. They are the views of the authors and only the authors.

I wrote an article for The Property Professional magazine (Vol. 28, Issue 3), published in June 2016 titled, “Plant Clearance Teaming, A Fresh Unexpected Twist to an Old Idea.” The article discusses how exchange sale transactions have been used by the Naval Air Systems Command (NAVAIR) and the United States Air Force (USAF) to recover precious, scarce and strategic metals. This article provides additional and amplifying information to my previously published article and also provides a USAF Owning Agency perspective.

Department of Defense (DoD) Owning Agencies have used exchange sale transactions for various products to reutilize parts, such as helicopter or missile platforms, for use on more current models of similar products. In 2009, NAVAIR began using the

exchange/sale process for complete jet engines and parts. Two years ago, the Air Force Jet Propulsion Directorate recognized this as a best practice and began using exchange/sale.

Over the past two years the exchange/sale process has enabled the Air Force Jet Propulsion Directorate to recover and retain close to $1 million in strategic, scarce and precious metals. This year, the USAF is on track to capture an additional $1M. Since September 2009, NAVAIR has recovered over $3M and is on track to recover an additional $3M. Other methods of scrapping these parts do not ensure the metals stay in the Air Force supply chain, and over the years, many of these metals have been processed by smelters and shipped outside the continental United States.

The USAF needed to obtain the proper approvals and management support prior to implementing this process. The following section, written by Robert Pearce, Logistics Management Specialist, USAF Jet Propulsion Office, describes the, sometimes bumpy, path that it took to institute the exchange/sale process at that command.

“CRADLE-TO-CRADLE”

SUSTAINMENT STRATEGY –

EXCHANGE SALE

PROCESSBy Robert Pearce, Logistics Management Specialist,

USAF Propulsion Materiel Exchange Program and Ron Regalado, CPPM, North Texas Chapter

WWW.NPMA.ORG 27

PARADIGMS, PERCEPTIONS, AND POLICIESRobert PearcePropulsion Materiel Exchange Program AFLCMC/LPSCB3001 Staff Drive (Suite 2AB1 105A)Tinker AFB, Oklahoma 73145

During the initial stages of exchange program development program offices ran into a continuous series of “this doesn’t sound legal,” “this has never been done,” or “upper management will never support this.” These types of paradigms and perceptions continue to this day but are becoming more of a rarity as knowledge of program processes and success stories have spread

The Exchange/Sale authority – “40 U.S. Code § 503" - Exchange or sale of similar items

a. Authority of Executive Agencies. - In acquiring personal property, an executive agency may exchange or sell similar items and may apply the exchange allowance or proceeds of sale in whole or in part payment for the property acquired.

b. Applicable Regulation and Law - (1) Regulations prescribed by administrator of general services. - A transaction under subsection (a) must be carried out in accordance with regulations the Administrator of General Services prescribes, subject to regulations prescribed by the Administrator for Federal Procurement Policy under division B (except sections 1704 and 2303) of subtitle I of title 41. It should be emphasized that 40 U.S. Code § 503 is public law. The specific congressional intent is to encourage agencies of the U.S. Government to utilize the exchange/sale authority to offset the cost of agency replacement property. Note: Defense Federal Acquisition Regulation (DFAR) 217.7002 specifically states that it is Department of Defense (DoD) policy to exchange and not sell.

Exchange program developers will encounter challenges that often arise due to perception issues and long-standing paradigms. Below we have provided the rationales for our counter-arguments to some of these challenges.

DOD “EXCESS” VERSUS GENERAL SERVICES ADMINISTRATION (GSA) “NON-EXCESS”

No other concept in the exchange/sale program development generated more discussion in driving towards a “meeting of the minds” than the GSA meaning of “non-excess” and how it relates to the DoD meaning of “excess.”

Within the DoD lexicon the concept of “excess” is more attributable to items under DoD management that constitute obsolete or unserviceable stock that serve no purpose and that need to be disposed. In some cases, the disposal of these items will provide budgetary justification for use of appropriated funds to replace these items.

Under Federal Management Regulation (FMR) §102.39.20 “Excess property” is defined as “personal property under the control of any Federal agency that is no longer required for that agency’s needs or responsibilities, as determined by the agency head or designee.” This should be considered a “mission oriented” philosophy in that if that type of property is still needed to support DoD missions then it is not excess. Utilizing the FMR guidance, this DoD property is classified as “non-excess” and to continue to support DoD mission requirements the property needs to be replaced. In other words, “non-excess”

property is property that has lost its “functionality” because it is obsolete, condemned, or unserviceable and due to mission requirements, an upgrade or alteration of mission requirements, it must be replaced and exchange allowances can be used to offset the cost of similar DoD property!

MISCELLANEOUS RECEIPTS ACT (MRA) - 31 U.S. CODE § 3302 - “CUSTODIANS OF MONEY”

The MRA directs that any government official that receives money for the United States Government from any source must deposit that money with the U.S. Treasury. For example, when DoD property is auctioned off by the Defense Logistics Agency (DLA) Defense Reutilization and Marketing Office (DRMO) the proceeds from these sales must be deposited with the U.S. Treasury and not retained by the DoD.

The Exchange /Sale Authority under 40 U.S. Code § 503 is an exception to the MRA. The first paragraph of 31 U.S. Code § 3302 specifically states: “Except as provided by another law.” The Exchange / Sale Authority is another public law. To apply the MRA would nullify the congressional intent specifically expressed in §503. Under § 503 proceeds of exchange will remain within the DoD and can be applied to acquire replacement property.

ILLEGAL AUGMENTATION OF APPROPRIATIONSOne of the specific concerns expressed by DoD contracting

officers during program development was that use of exchange allowances or credits amounted to an illegal augmentation of appropriations.

This issue was specifically addressed by the General Services Administration in the Federal Register (Vol. 73, No. 169, 29 Aug 2008, page 50879).

“In summary, if an agency has a continuing need for an item, the agency may exchange or sell the item and use the proceeds to acquire a similar replacement item….Also the exchange/ sale authority is NOT an illegal augmentation of appropriations; rather, the law expressly authorizes the use of sales proceeds in the acquisition of similar items.”

STRATEGIC METALS STOCKPILING ACT - 50 U.S. CODE § 98C

DoD turbofan engines contain a variety of recoverable metallurgical compositions. These compositions include rare earth elements or “exotic” type of metals (Rhenium or Platinum, for instance). On many occasions, our propulsion exchange programs have been incorrectly referred to as “Strategic Metals Programs.” Nothing could be further from the truth! DoD propulsion exchange programs are essentially recycling a variety of engine materiel for their remaining intrinsic values and applying those values as exchange allowances for replacement propulsion property. How does our propulsion exchange program apply to the Strategic Metals Stockpiling Act? It doesn’t! Under 50 U.S. 50 U.S. Code § 98c-4(b) (2) only property “determined by the head of such department or agency to be excess to its needs and responsibilities” has to be transferred to the DoD Strategic Metals Program.


DEPARTMENT OF DEFENSE POLICIES / DIRECTIVESThere are a variety of Department of Defense Manuals (DoDM),

policies, and directives that refer to the exchange / sale authority. For example:

1. DoDM 4140.01- V9 (February 10, 201) - DoD Supply Chain Materiel Management Procedures: Materiel Programs states in part: a. “In acquiring personal property, the DoD Components may exchange or sell eligible non-excess items. The exchange allowance or proceeds may be applied in whole or partial payment for the item acquired. b. The DoD Components will use the authority to exchange or sell eligible non-excess items the maximum extent consistent with the economical and efficient accomplishment of an approved program.”

2. DoDM 4160.21-V1, October 22, 2015 Defense Materiel Disposition: Disposal Guidance and Procedures - Enclosure 5 (page 55)

Section 4. Special Donations (Gifts), Loans, and Exchanges Outside the FMR, a. Compliance. The DoD Components:

1. Comply with the specific governing statute for the type of property and ensure the limitations of the governing statute are observed. In accordance with section 2572 of Reference (k) and DoD issuances, the Secretary of a Military Department or the Secretary of the Treasury is permitted to donate, lend, or exchange, as applicable, without expense to the United States, books, manuscripts, works of art, historical artifacts, drawings, plans, models, and condemned or obsolete combat materiel that are not needed by the Military Services. (Emphasis added)

2. Establish supplementary procedures governing loans, donations, and exchanges.

3. May donate, loan or exchange items, as identified in paragraph 4a of this enclosure, if the special donation, loan, or exchange action occurs prior to transfer to DLA Disposition Services for disposition. It is not authorized after property has been officially declared excess and transferred to DLA Disposition Services.

3. United States Air Force – Air Force Policy Directive (AFPD) 23-1 (15 February 2011) - Materiel Management (Mandatory Compliance) This AFPD establishes direction for determining and stocking materiel requirements, ordering, receiving, storing, issuing, demilitarization and disposal of materiel.

Section 2.3.3 specifically directs Air Force Materiel Command (AFMC): “Develops procedures and processes to: Reviews assets for reutilization, exchange / sale / lease potential, technology transfer, and support of educational partnership agreements while ensuring cost-effective recycling and reuse of materiel to reduce the volume of materiel disposed as scrap or waste.”

The USAF Jet Propulsion Directorate is maintaining extensive records of the types and amounts of metals captured and their associated dollar values. The program is currently on track to exceed $2 million (cumulative sales proceeds) this calendar year and projections foresee much more as the program kicks into high gear.

NAVAIR initiated OEM-centric engine material reclamation program in September, 2009. There are currently 40 transactions in work involving over 1.3M pounds of engines. NAVAIR has recovered over $3.3M in exchange allowances to date. The transactions in work will yield approximately an additional $3M.

Once additional opportunities are identified and exchange/sale is fully implemented, acquisition professionals can ensure precious, strategic and scarce metals are retained perpetually in the Air Force and NAVAIR supply chains.

ABOUT THE AUTHORS:

Ron Regalado is currently a Plant Clearance Officer with the Defense Contract Management Agency. Mr. Regalado has over thirteen years’ Federal service in the Department of Defense with the U.S. Navy, Defense Logistics Agency and the Defense Contract Management Agency. In addition to Ron’s Government service, he has over 25 years’ experience working in industry in virtually every aspect of Government and company asset management.

Robert Pearce is from Bowling Green, Kentucky and is a 1976 Graduate of Western Kentucky University. Mr. Pearce is a former USAF Officer (Major). He spent three years with the North American Aerospace Defense Command as a Weapons Assignment Officer, two years as the Executive Officer for a Forward Air Control unit in Bremerhaven Germany, and eight years as a Senior Weapons Director for the 552 Airborne Warning and Control System (AWACS). He was awarded the USAF Air Medal. From 2000-2017 Robert has worked as a USAF Logistics Management Specialist and since 2014 he has been the Project Officer for the AFLCMC/LPS Propulsion Materiel Exchange Program.

Rare elements such as Rhenium can be retained perpetually in the Air Force and Naval Air Systems Command supply

chains through the exchange/sale process. (Photo courtesy of the Air Force Jet Propulsion Directorate)

WWW.NPMA.ORG 29

CHANGES TO CPPA CERTIFICATION PROGRAM

READY. SET. LEARN.

On August 1, 2017, NPMA will begin selling the updated Intermediate Studies Manual (Copyright 2007 – 2015) and issuing the corresponding CPPA Module 3 and Module 4 Exams.

Those who have already begun the CPPA program using the current study material (Copyright 2007) and purchased the exams prior to July 31,2017, but have not yet taken them, will be able to do so until their exam expiration date or until November 1, 2017, whichever comes first.

In the past, NPMA published five different versions of the CPPA Module 4 exam that corresponded with the Supplement Manuals. The new exams will no longer have the various versions and the Supplement Manuals will no longer be a part of the CPPA Certification Program. There will be only one version of the CPPA Module 4 Exam.

NPMA is thrilled to launch the new My Learning system where you can

have instant access to professional development, learning transcripts

and specialty certificates!

My Learning will allow you to take control of your future and enhance

your learning transcript!

• View your CEUs and learning transcript instantaneously!

• Track continuing education credits from other organizations!

• Enhance your professional knowledge by customizing you

learning preferences!

• Easy access to certification exams with immediate results!

• Launch on-demand web seminars to receive valuable CEUs!

• Gain essential knowledge through the specialty

certificate program!

Learn more! www.npma.org/MyLearningFAQs

For more information, please visit the CPPA page under the Certification tab at www.npma.org.


According to an article written by Tina Reed contained in the May 2, 2017 issue of the

Washington Business Journal, United Therapeutics has partnered with a 3-D Bioprinting

company, 3D Systems, to begin manufacturing transplantable human organs. The collaboration

— specifically with United Therapeutics' transplantation-focused subsidiary, Lung Biotechnology

PBC— will use patient-specific biological material, including re-differentiated stem cells, to create

materials for the transplants. The project will be based out of 3D Systems new bioprinting lab in

San Diego. Studies have highlighted the significant challenges ahead for this type of regenerative

medicine, but Martine Rothblatt, founder of United Therapeutics Corp., said the science is

developing fast and can be transformative for health care. "We expect one personalized organ

transplant will avoid years of health care spending on palliative medical therapies," she said in

an announcement, adding, "There will no longer be a need for immunosuppression and a vastly

greater number of patients can extend their enjoyment of life through organ transplantation."

The full article can be found at: http://www.bizjournals.com/bizwomen/news/latest-

news/2017/05/united-therapeutics-partners-with-3-d-printer-to.html?page=all

UNITED THERAPEUTICS PARTNERS WITH 3-D PRINTER TO MAKE HUMAN ORGANS

A DRONE FLEW 97 CONTINUOUSMILES TO COMPLETE ONE OF THELONGEST DRONE DELIVERIES IN THE U.S.

AEROSPACE MARKET LOOKS TO ASSETS FOR INNOVATION

According to an article

written by April Glaser

contained in the May 11,

2017 issue of Recode, a

drone flew a total of 97

miles to and from Austin,

Texas completing one of the

longest drone deliveries yet

in the United States, ferrying

a four-pound package with

a machine part. The drone flew a set route over various Texas farm

roads before reversing course to finally deliver the package to a person

inside Austin’s city limits. The flight, which lasted a little over two

hours, was completed by a group that has been flying drones in the

Federal Aviation Administration-designated Nevada drone test site,

with support from three different drone service companies and Embry-

Riddle Aeronautical University. Although the drone flew autonomously,

observers were positioned along the route throughout the entire

operation in order to keep the aircraft within line of sight, which is

currently required by the FAA. The drone that flew this particular

mission was a fixed-wing aircraft, meaning it didn’t have rotors like a

quadcopter. To communicate with operators on the ground, the drone

had a cellular chip mounted inside its body, which allowed it to connect

back to the ground using existing cell tower infrastructure. The group

reported it experienced no gaps in connection during the flight.

The full article can be found at: https://www.recode.

net/2017/5/11/15603814/drone-97-miles-texas-longest-drone-

delivery

Based on an April 17, 2017 article written

by Sandra Erwin for National Defense

Magazine, the aerospace industry at large

faces market pressures all around in its

commercial and government businesses,

and that is driving companies to widen the

search for innovation, said Steve Nordlund,

president of Boeing’s new venture capital arm known as HorizonX.

So when a Northern Virginia startup figured out how to combine

“augmented reality” smart glasses with voice-recognition software

to help assembly-line workers become more productive, The Boeing

Co. decided this was something worth investing in. The world’s largest

airplane manufacturer, now a minority investor in the wearable

technology company Upskill, is on the lookout for such opportunities

Boeing has tested the wearable technology in a pilot program over

the past two years focused on the wiring bundle process. Every Boeing

aircraft has multiple configurations, each with its own wiring scheme.

About 130 miles of wiring go into every new Boeing 747. In years past,

technicians used “phone books” full of diagrams to do their work,

executives said in a promotional video. Laptops helped, but had the

same basic problem: constant look-away interruptions as workers read

directions and cross-checked diagrams.

Boeing workers using Google smart glasses and Upskill’s software

cut wiring production time by 25 percent and reduced error rates to

almost zero. The software gives technicians the instructions right in

their viewfinder so they don’t have to look away or tap a laptop. Upskill

has received financial backing from other corporate giants like GE.

The full story can be read at: http://www.nationaldefensemagazine.

org/articles/2017/4/17/boeing-sees-practical-payoffs-from-tech-

investments

WWW.NPMA.ORG 31

voice command, a person entering the room, a change in blood chemistry, a shift in temperature or even a simple thought will instead activate the capability. Our homes, cars, offices, clothing and even eye glasses will be packed with computers and sensors, but they won’t be in our way, or even distinguishable, as the devices that we know and use today. The future of IoT, Ambient Computing, seamlessly transforms the environment around us with intelligence and capabilities that require little more than a user interface for engagement.

WHAT DOES AN EXAMPLE OF AMBIENT COMPUTING LOOK LIKE TODAY?

Google is developing the first smart contact lens to tackle one of the biggest health problems facing the country today: diabetes. The concept lens houses a sensor that measures the glucose levels in tears. A tiny pinhole in the lens lets tear fluid seep over the glucose monitor to get regular readings. Once the reading happens, the lens displays the meter reading. The sensors and display are built into the lens technology, with the goal of not requiring additional devices- such as a mobile phone or computer- to display or analyze the resulting data. The experience for the patient and the physician is seamless and requires only the lens.

WHAT ARE POTENTIAL IMPLICATIONS FOR THE PROPERTY MANAGEMENT INDUSTRY?

Ambient computing will have a profound effect on the property management industry by enabling a more efficient and effective execution method for property management activities. Instead of performing physical inventories in a traditional manner- which are typically time consuming and labor intensive- imagine having functionality built into a contact lens or pair of glasses that allows

THE INTERNET OF THINGS (IOT)- A REAL-LIFE USE CASE

As I write this article on my laptop my mobile phone is next to me- never further than arms-length away. I just ordered lunch delivery via a mobile phone app, and based on my previous lunch orders, the app suggested several lunch options that I might enjoy. I know that the delivery man has arrived with lunch 15 minutes later thanks to a video doorbell that’s installed next to my front door. Connected to my home wireless network, it alerts me via a mobile app that there is motion within 30 feet from my front door based on sensor data that the device continually captures. After opening the mobile app and seeing the delivery man holding my lunch via a camera, I’m at the door before he can even ring the doorbell. It’s a sweltering summer afternoon on the East Coast. After setting my thermostat at the same temperature a few days in a row to account for the unbearable heat, the smart thermostat has learned that during this heat wave I like the house a little cooler, and automatically adjusts the temperature based on my previous actions and preferences.

The interaction of wireless devices, sensors and smartphones -- and the data that that these devices capture -- is the Internet of Things (IoT) in-action. While this is a small-scale example, it illustrates how the IoT impacts every-day life.

THE NEXT STEP- AMBIENT COMPUTING

What if we take IoT a step further? In the future, there is a good chance that the devices- the smartphone, laptop and even the apps- controlling these functions won’t be needed. As these devices grow smaller, more connected and more integrated into our environment the technology essentially fades into our surroundings until only the user interface remains perceivable by users. In some cases, the technology may entirely disappear. A

you to visually inventory a piece property. Once you have inventoried an item, the technology allows you to wirelessly connect to your asset management system of record to review the item record and mark as inventoried. Order fulfillment becomes much more streamlined, as the lens or glasses can guide the wearer to the location of the specific item in the warehouse and instruct the wearer on the quantity to pull. Time necessary to complete these types of basic property management functions significantly decreases, as data is gathered, analyzed and presented to users in real-time to drive faster and more efficient task completion.

Ambient computing is poised to turn everything that we’ve come to know and expect from technology on its head. It will revolutionize how we make decisions, perform daily work tasks and share information. No longer will we be tethered to devices to consume, create or analyze information. The convergence of powerful networks, troves of data, the IoT and Artificial Intelligence will enable information delivery in the most discreet and convenient ways possible.

SOURCES Mossberg: The Disappearing Computer: Recode, May 25, 2017 https://www.recode.net/2017/5/25/15689094/mossberg-final-column

Tech Trends 2015- The Fusion of Business and IT: Deloitte University Press https://dupress.deloitte.com/dup-us-en/focus/tech-trends/2015/tech-trends-2015-ambient-computing.html

Googles Smart Contact Lens- What it Does and How it Works: Washington Post, January 17, 2014 https://www.washingtonpost.com/business/technology/googles-smart-contact-lens-what-it-does-and-how-it-works/2014/01/17/96b938ec-7f80-11e3-93c1-0e888170b723_story.html?utm_term=.85f5dc47d2d4&wpisrc=nl_az_most&wpmk=

#ASSETMANAGEMENTTRENDING NOW –IOT, AMBIENT COMPUTING AND THE CASE OF THE DISAPPEARING COMPUTER

By Meg Lombardo, CPPS, Queen City Chapter

#AssetManagement is a regular column in The Property Professional that highlights trends in the world of asset management.


Kickin’ it up in

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November 15-16, 2017 | Wyndham Garden Inn | Austin, TX

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DEAR EXPERT PANEL,May I drive a Federal government vehicle

into Canada on official business?

FROM, BOBBY BORDER

DEAR BOBBY BORDER

There are many missions in the Federal government that require Federal government owned and leased vehicles (GOV) to travel into foreign countries. Most countries, such as Canada, have a requirement that all U.S. Government vehicles be fully insured before entering their country unless your mission is covered by a diplomatic treaty or Status of Forces Agreement (SOFA) - most civilian agencies are not covered by a treaty or SOFA.

Most countries, including Canada, do not recognize the U.S. Government's "self-insurance," so civilian agencies must purchase private insurance. If it is just a one-time, short-term trip, then it’s more cost effective to commercially rent a vehicle that includes insurance. If it’s a routine occurrence, there are brokers in the U.S. who will sell your agency insurance for driving outside the U.S. Also, the Federal Tort Claims Act only protects Federal employees from personal liability while performing duties within the United States. This is another reason to commercially rent for a short-term trip or obtain private insurance for frequent trips to protect the employee's personal liability while conducting official business in a foreign country. You should contact your agency fleet manager to see if your agency already has a contract for insurance and to request internal guidance on this topic.

FROM, YOUR EXPERT PANEL

DEAR EXPERT PANEL,I hear that Federal agencies will be

required to report “asset level data” for the current Federal fiscal year, 2017, in October. What is asset level data and what changes do Federal agency fleet managers have to make to report it?

FROM, FRED FLEET

DEAR FRED FLEET,

Asset level data simply means that all the data you report will be tied to specific vehicles, not aggregated by vehicle class or fuel type the way it has been in the past. This will actually make reporting easier for you, since your existing fleet management information system is almost certainly already set up that way, and reporting at the asset level will eliminate the middle step of organizing your data in a way that you don’t ordinarily use it anyway. All you need to do is make sure you are collecting the right data elements, and that you apply the right edits to make sure those elements are accepted. You can download the guidance documents from the Federal Automotive Statistical Tool (FAST) website—of course, you already know that FAST is the system that collects Federal agencies’ fleet data—by going to https://fastweb.inl.gov/ and clicking where it says “Help: Vehicle-level data reporting in FAST.”

FROM, YOUR EXPERT PANEL

LEGAL DISCLAIMER:This email and the advice contained within is for recommendation purposes only. NPMA makes no representations or warranties of any kind, express or implied, including without limitation any implied warranty of fitness for a particular purpose. Please note that additional issues may exist that could affect the treatment of the recommendation. The recommendation does not consider or reach a conclusion with respect to additional issues. This is not to be construed as legal advice and NPMA is not liable for any damages, etc. that result from following (or not following) their advice. In no event shall NPMA be liable for any lost profits, lost data, or any form of special, incidental, indirect, consequential or punitive damages of any kind (whether or not foreseeable), whether based on breach of contract, tort (including negligence), product liability or otherwise, even if it is informed in advance of the possibility of such damages.

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INTERMEDIATE CONTRACT/GOVERNMENT PROPERTY MANAGEMENT

SEPTEMBER 18 - 22 // FLUSHING, NEW YORKDr. Goetz will offer a comprehensive intensive four and one-half

day application and case study oriented seminar covering the more advanced aspects of Contract/Government Property Management. Challenge your intellect! This course presents the next logical step in the Contract Property Professionals educational development. It moves beyond learning the regulatory material that drives application and performance and now goes to the higher levels of learning -- analysis, evaluation and even creating. Through legal readings, case studies, and technical problem-solving exercises you, the adult learner, will increase your depth and breadth of knowledge in contract property.

FLEET MANAGEMENT – CERTIFIED FEDERAL FLEET SPECIALIST

OCTOBER 17 - 19 // WASHINGTON, DCThe NPMA, in partnership with Mercury Associates, is proud

to offer the first Certification for the Federal Fleet Manager. The Certified Federal Fleet Specialist (CFFS) level training is designed for persons who have basic Fleet Management responsibilities or dual roles such as the vehicle control officer. Course subjects include Basic Fleet Management, Fleet Information Management: Regulations, Systems and Data, and Optimizing the Fleet. Certification testing will be performed during the 3-day course.

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BY ATTENDING AN NPMA course, you’ll gain the knowledge and skills you need to succeed on the job. Don’t wait, register today! Seating is limited!

IF YOU HAVE QUESTIONS about NPMA courses, call 404.477.5811 or email [email protected]. For more information or to register, visit the website at www.npma.org and click on the Education tab.

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NPMA CERTIFICATION REVIEW & TESTINGThe NPMA Certification Program is designed to elevate

professional standards and enhance individual performance for those who demonstrate a high level of competence that is essential to the practice of property management. If you have made a commitment to a career in property management, you should consider obtaining your NPMA certification. Join a distinguished group of peers worldwide who have chosen to attain this high level of excellence.

For information about NPMA certification, visit the website at www.npma.org/pages/certification

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