Building the Necessary Foundation for an Effective Property Management Plan
Editor’s Note: This post was previously published as a series, but is now compiled into one post. Last edited June 2019.
Every contractor should have a property management plan in order to bid and qualify for federal government contracts.
For government contractors and subcontractors, if the contract has a property clause under FAR 52.245-1, they are required to institute a Government Property Management Plan for Government Furnished Property (GFP).
Since property management plans are required under these circumstances, it’s important to know how to develop an effective plan.
In this post, we’ll discuss what it takes to create an effective property management plan, including:
- property management plan basic requirements
- help you to understand asset management systems
- the audit process
- reporting standards
- protocols on equipment handling
What is a Property Plan?
A property plan is a high-level document outlining how an organization is going to manage the properties either owned by them or furnished by the government while they are performing a government contract.
The property plan can be established at different levels of the organization, and steps should be taken to ensure that it is established at the appropriate level, whether that is the contract, program, site or entity level.
Some questions you should ask yourself that will help determine at which level the plan should be implemented are:
- Is the work being performed under this contract different than your organization’s core business?
- Does your organization have different business area?
- Does your organization have multiple sites?
Property Plan Outcomes for Government Property Management
A property plan for government property management should achieve 10 outcomes:
- Asset acquisition
- Receipt of assets
- Asset records
- Physical inventory
- Subcontract control
- Relief of asset stewardship responsibilities
- Utilizing government property
- Asset closeout
Taking time to write out the property plans for government property management along with the systems and procedures that will safeguard that property is a major step to battle the bandits. But what happens once it’s written?
Purpose of a Property Plan for Government Property Management
Do you put the property plan on a shelf simply to take up space?
Your property plan needs to be a fluid, working document that employees know about, have access to and understand how to implement. Leaders within the organization must have an even better understanding, allowing them to provide oversight and support to the employees implementing the plan. An asset management system can bring the property plan to life.
Data Security in Your Property Plan
Why is data security important to government property management important? In any business, without maintaining proper data on your equipment, maintenance schedule, and asset inventory, you cannot make good business decisions. Bad decisions result in added costs and lost customers.
Data security for government property management is even more crucial, because without having the proper protocols in place, you risk fines and audits. If the errors are egregious enough, you can be blacklisted from being able to contract with, or receive equipment grants from, the government.
In a property plan, it’s important to have protocols to ensure data security for government property management.
1. Protect Against Unauthorized Changes
One of the primary purposes a property plan serves is to provide you with a blueprint for protecting data.
Data security for government property management is crucial. If you do not have protocols in place to protect your data from being the victim of unauthorized changes that reduce accuracy, you will be at risk – not just of losing data but also of losing government contracts, grants, and support.
Unauthorized changes leave your company vulnerable. You may not be able to accurately verify inventory, optimize the usage of your assets, maintain your assets, or manage asset lifecycles if you do not have a plan that addresses who can make changes and how those changes are tracked.
2. Secure Logins
By clearly identifying who within your company should have access to information, you prevent unauthorized employees from making changes to your equipment management system.
Your property plan should not only identify the roles each person plays in managing data security for government property management, but also provide the requirement for each person to have a unique login to access the system.
Successful data security requires the use of a system designed to track not only where your equipment is and what it is doing, but also who put it there and why.
3. Track Changes to Data
What happens when the people on your team use a shared spreadsheet to manage equipment data? Beyond losing the ability to see who made changes to the data, you also lose the ability to see what the change was, because the information simply overwrites the previous information contained in the cell.
You also lose the ability to do many of the following important asset management steps:
- Analyze trends in inventory usage
- Monitor sales volumes
- Track assets throughout their life cycle
- Optimize asset usage and disposal
- Track disposal methods
An asset management system is the tool you use to implement your property plan and enable data security for government property management. Much like a key on a map, your property plan can function as the key to developing and managing your asset management system. Using an asset management to implement a well-designed property plan can help you avoid making key mistakes during the asset life cycle.
Attention to data security should be implemented in each stage of the asset life cycle. In the recently years, there is an increasing focus on asset disposal, data destruction, and electronics recycling. When disposing of government-owned property, there are protocols that must be followed and civilian entities must comply with these rules.
The EPA, in their outline for the Recycling of Federal Electronic Equipment, explains that civilian facilities have a number of options available to assist them in recycling their electronic equipment. They can:
- Use an electronics recycler certified to the Responsible Recycling (R2) Practices Use in Accredited Certification Programs for Electronics Recyclers
- Use an electronics recycler certified through the e-Stewards Standard for Responsible Recycling and Reuse of Electronic Equipment®
- Use UNICOR
- Use manufacturer take-back services for electronics recycling
- Select and use another environmentally responsible electronics recycler
Reporting and Auditing in Your Property Plan
While most businesses are capable of meeting the basics of developing a property plan and may even address data security, a critical area of failure happens when additional steps are not taken to put the property plan in action.
The purpose of a property plan is more than just looking good on paper; it is about getting out from behind the cubicle walls and taking physical inventory of your assets, recording the information about those assets, and then double-checking your efforts through audit.
Unfortunately, poor reporting and infrequent audits run rampant in most businesses. And because inventorying your assets can be a long and arduous process, most teams are tempted to ignore these problems. That is where the property plan becomes worth no more than the paper on which it is written.
There are three things you need to have in place to support reporting and auditing in the most efficient way:
Leverage the record in the enterprise asset management system to reduce the amount of asset to be audited.
Did you know that you don’t need to physically audit a piece of equipment if there is a record showing it is used in the past six month? Your period audit only needs to focus on the property that hasn’t been used for a while.
If you have an enterprise asset management system in place, the software should be able to automatically generate a report for inventory items that haven’t been touched in the past six months. That way, you focus on these items identified by the report for the physical audit, which will save you a lot of time and effort.
Make sure you have a system that will link assets with purchase orders, contracts, sites, projects, and task orders.
Government property management plans require contractors to report the use of equipment by contracts, by task orders. Your company’s internal operation would also need to track equipment by purchase orders, by projects, and by other groupings.
Government furnished property often gets carried through from one project to another. So, the system needs to be designed in a way that the information can be organized in different groups, easily exported to excel reports. While property moves from one project to another, the historical use information of the property should continue to exist in the system.
Make sure your enterprise asset management system has pre-built templates for standard reports required by government contracts, such as DD1662, or DD1149.
It should also be flexible enough to handle additional reporting templates without having to pay outside consultants for customization.
Finally, remember that when it comes to reporting, it’s better to create an automated data fields to generate reports, instead of having to make ad hoc reports all the time. It is easy to convince yourself that you will have time to update an asset later.
The key to a successful property plan, however, is to establish protocols that require reporting as tasks occur. Properly recorded data is critical to government property management, and the only way to ensure your data is accurate and up to date is to record changes as they happen.
Furthermore, to ensure that any change recorded is done properly, you have to establish restrictions about who can enter the changes. Unique logins for each team member, along with limited access based on the user’s role are necessary security measures.
The Last Parts of the Asset Lifecycle in Your Property Plan
In this final section we will focus on the business processes to assign and track asset use, as well as asset disposal.
The requirements for these processes are outlined in FAR part 45 and part 52, guidelines for managing GFP. From the lifecycle management perspective, we can break the protocols into three stages. Let’s try to understand how the property management system should support the activities in each stage.
There are three key things that need to be done during this stage: record the cost of equipment and source of it, follow the established procedures for entering the equipment into the asset management system, and linking the equipment with a specific contract, task order, or project.
In order to support these, the asset management system for GPF needs to have the following functions:
Integrate with the procurement and contract management system,
This will ensure the information about the equipment (e.g. vendor, model number, serial number, purchasing cost) will feed into the asset management system automatically.
It will also eliminate errors in data entry, and remove the need for reconciliation later. If the asset management system is integrated with the contract management system, the equipment will be linked to the contract number, task order, or project.
As the contracts evolve, and the equipment gets reassigned, these relationships only need to get updated once, in either the asset management system or the contract management system. This will reduce delay, confusion, or errors.
Group assets by the specific contract, project or task order, so they can be managed together.
If the decision is made to take one piece of equipment from a particular contract to another, certain approval process needs to be followed. The system should support these activities.
Tracking and Transferring Equipment
Throughout the physical life cycle of the equipment, assets need to be tracked. Each piece of equipment should have its asset history, including physical locations, chain of custody changes, assignment to different contracts, and any changes to its financial value. The asset history log should be maintained throughout the lifecycle.
Chain of custody tracking is of particular importance. When a piece of equipment is moved, it should trigger some notice, and approval if needed, and the digital record of the change in custody. This custody report not only ensures accountability but also supports financial transactions later (e.g. reimbursement).
When dealing with government property management, there are specific protocols that must be used when disposing of government-owned property. The EPA’s outline for the Recycling of Federal Electronic Equipment provides a number of disposal options, but for any option, proper documentation of the equipment’s usage, maintenance, and life cycle history is required.
When equipment handling is done properly, companies can identify assets that are costing them money (every asset in a company contributes to the overall tax burden; most assets within a company are considered when calculating insurance costs). By properly maintaining equipment records, equipment disposal can occur more efficiently and rapidly when the asset is no longer needed.