3 Steps Government Contractors Can Take in Managing Government Property to Support DOD’s Goal for Achieving a Clean Audit in 2017
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The Department of Defense has a goal for achieving a clean audit in 2017. In a testimony to the House Armed Services Committee in October 2011, then Department of Defense (DOD) Secretary Leon E. Panetta said, “Today DOD is one of only two major agencies that has never had a clean audit opinion on its financial statements. That is inexcusable, and it must change.”
This change has significant implications for DOD contractors when it comes to how they manage government furnished property. There will be in increased scrutiny on contractors’ business processes and systems for managing government property. More DCMA audits are possible. The agencies within DOD are tightening their internal controls when moving government property, so they require the same discipline and tight controls from their contractors.
Army Chief of Staff Gen. Raymond T. Odierno, through an April 16, 2012, General Officer Management Office message, said, “Leaders at all levels are responsible for instilling proper levels of discipline and oversight into all business processes within their command. The processes span all functional areas of our Army—resource management, acquisition, personnel, and logistics. Auditability is not just a Comptroller function.” On the same day, then Vice Chief of Staff of the Army Gen. Lloyd J. Austin III sent a message through the General Officer Management Office specifically about property accountability. He stated, “Everyone in the Army is responsible for accounting for assigned property and other resources. By effectively accounting for our property we will ensure we are responsible stewards of tax payer dollars. This will ultimately enable a stronger and more capable Army.”
So how can government contractors prepare themselves to meet the needs for increased discipline and tightened controls on their property management practice? They can take 3 key steps.
- Take a Contractor Self Assessment to identify gaps in their business processes. This assessment can be accomplished in-house or by a third party independent expert. Often, contractors don’t have in-depth experience in-house, so a third party independent consultant can be a good investment.
- Install a system that supports all 10 outcomes of government property management required in FAR 52.245-1. There are different systems in the marketplace, most of them will require significant customization to be used for government property management. It’s important to assess their functionality and the total cost of ownership. If you want to get a quick primer on the systems, you can read more here…
- Make sure you start to think about how to comply to the changed requirements for reporting Government Furnished Property to the IUID registry starting in January 1, 2014. If you would like to learn more details, join our free webinar at 11:00 a.m. (EDT), on Sep. 12.