What is a Contractor Self Assessment, Really?
Are you a Government Contractor or Subcontractor? Do you manage Government Property (Government Furnished or supplied, or Contract Acquired)?
If so, then you likely have some form of Property Management System that meets all 22 outcomes that are required to properly manage that Government-owned property. And you likely have some oversight from either the Government or a Prime Contractor to make sure you’re managing the property well. This often takes the form of inventory audits and Property Management System assessments.
If you’ve been through these assessments (DCMA calls theirs a Property Management Systems Analysis, or PMSA), you know that supporting these assessments can be expensive and time consuming, and sometimes even painful.
- Typically this is overhead work which you will be unable to directly charge to a contract unless you can allocate the work to specific contracts
- If the Government, on their own, finds your Property Management System “inadequate” or “unapproved,” you could have partial payments withheld, or even have contracts suspended
It’s reasonable for the owner of the Property, the Government, to make sure you are managing their property well. They have to assure themselves that you are using what they own properly and only as they authorize, acquire it properly, know where it is, and dispose of it properly, according to their instructions. They also want to ensure, if you have Subcontractors using Government Property, that you are supervising your Subcontractors well.
What is a Contractor Self Assessment?
In the current Government fiscal climate, one way the Government ensures Government Property is managed well is by assigning a degree of risk to contractors, and to hold them accountable. The Government also works together with Contractors by assigning responsibility for doing their own assessments. That’s what a Contractor Self-Assessment (CSA) is.
A CSA is very much like a Property Management Systems analysis, but done either by the Contractor themselves, or at its direction by a Subcontractor. For a CSA to be considered acceptable, it needs to be done similarly to the way an oversight authority, like DCMA, would do it.
It also needs to be done by properly-trained resources that are not directly responsible for the day-to-day property operations for a Contractor. This ensures the results will be unbiased, without influence.
There are some key benefits of a CSA:
- If done properly, the results can be “safely” used and depended on by an oversight authority without their having to frequently perform the assessment themselves.
- Performing a CSA exposes strengths and weaknesses in a Contractor’s Property Management System. It’s a lot better to find them yourself, which allows you to fix what needs to be fixed, before the Government tells you have to.
Who performs the CSA?
First of all, who can and should do a CSA? I believe it really needs to be conducted in an unbiased manner. This means you want the staff conducting the CSA to be different, not influenced by the staff administering and managing the Property on a day-to-day basis.
If you have an internal Audit function, these individuals can be trained to conduct the CSA. Alternatively, if you have multiple sites, the staff that administers and manages Property at one site can conduct the CSA at another site, so long as there is no undue influence on the staff from site to site.
If neither of these approaches is available or realistic, you should consider engaging a subcontractor or consultant to perform an independent CSA. This approach assures independence of the process and findings.
If you choose this approach, either in addition to or in lieu of using unbiased employees at your organization, be sure the subcontractor or consultant has the necessary credentials and training to perform a comprehensive CSA. Look for individuals that have either NPMA (www.npma.org) certification credentials (Certified Professional Property Administrator – CPPA or Consulting Fellow – CF), or similar Defense Acquisition University (www.DAU.mil) training.
Keep in mind that Government Property Management is a specific discipline. Many very well-qualified financial auditors and consultants frequently do not have this specialized training.
What does a CSA include?
So what a CSA should include? A comprehensive CSA will start with an Assessment (or Audit) Plan, which will include the objectives, the parameters (locations, contracts, programs… to be included), and the methodologies to be used.
This plan will also detail personnel to be used, record and physical access required, and the findings report format, as well as the destination detail for the findings report.
Policies and procedures
A typical CSA will include a review of all policies, procedures and processes of the complete lifecycle of Government Property of all types in the custody of the Contractor – from acquisition, receipt and identification, record initiation, storage, use/consumption, maintenance and calibration, as applicable, to shipping, relief of stewardship and disposition, as applicable. The question to be answered in this part of the CSA is: if the procedures and policies are followed, will the required results be achieved?
After the policies and procedures are reviewed for content and completeness to achieve the 22 Government Property Management System Outcomes, the CSA will verify whether staff training is effective and complete. This is often accomplished via interviews with Property Administration Staff. This part of the CSA is to determine whether the procedures are understood and followed.
Of course, a CSA should include some form of inventory accuracy test. The methodology to be used for this examination is included in the Assessment/Audit Plan, as mentioned above. This can include any one or combination of inventory approaches, from location audits to item audits, to cycle counting and “A-B-C” audits, random, statistical sampling (single or double sampling) audits, to judgment or purposeful audits, and when appropriate, a full wall-to-wall audit.
The findings from each of these reviews and assessments are then consolidated into the form of a report that summarizes each section of the CSA process and the results.
This report should include a summary of methodologies used, exhibits that include the policies, procedures and policies, the detailed listing of inventory population examined and the subset inventory used to check inventory accuracy.
The CSA findings report should include the Auditor’s assessment on the adequacy of the Property Management System, as a whole, and as appropriate, the Auditor’s professional opinion on a level of risk associated with each of the findings.
If there are significant areas of risk identified, the CSA report should provide descriptions of specific areas of risks found, and recommended corrective steps, with time frames for completion if desired.
A Contractor Self Assessment, or CSA, is an important tool for government contractors to keep themselves informed about the adequacy of their Government Property Management systems.
It serves as an early warning system to identify areas of risk before significant problems arise. It provides valuable information to both the Contractor and Government Oversight Authorities, in order to improve the management of Government Property. It also can result in reducing the frequency of costly Government Oversight Assessments/Audits, and also exposes opportunities for cost savings, to the benefit of the Contractor and the Government.
If you’re planning to perform a Contractor Self Assessment soon, take a look at our downloadable CSA Checklist.