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SUBCONTRACT MANAGEMENT. Pamela McFarland. AGENDA. Statement of Work (SOW) Terms and Conditions Risk Assessment Site Visits Liability Records Disposition. STATEMENT OF WORK. Incorporate requirements into SOW as deliverable line items Physical Inventory Requirements

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subcontract management

SUBCONTRACTMANAGEMENT

Pamela McFarland

agenda
AGENDA
  • Statement of Work (SOW)
  • Terms and Conditions
  • Risk Assessment
  • Site Visits
  • Liability
  • Records
  • Disposition
statement of work
STATEMENT OF WORK
  • Incorporate requirements into SOW as deliverable line items
    • Physical Inventory Requirements
    • Financial Reporting Requirements
    • Gov’t Property System “Adequate” Letters
    • Property Plans/Procedure Requirements
    • Disposal Requirements
statement of work4
STATEMENT OF WORK
  • Requires Close working relationship with:
    • Procurement
    • Contracts
    • Engineering
    • Cost Accounting Managers
    • Quality (to incorporate possible property audits with quality audits ……cost effective!)
terms and conditions
TERMS and CONDITIONS
  • Flow all property requirements (FAR 52.245, and NASA or DoD Supplements) into the Terms and Conditions of Every Contract
    • May seem redundant, but acquisition or furnishing GP/CP may not be known at time of SOW.
    • Be careful on flowing Limited Risk of Loss.
risk assessment
RISK ASSESSMENT
  • Once the subcontract is in place and property is accountable.
  • Assessments should consider the following:
      • Total Dollar Value of property
      • Is there a Property Plan?
      • Does the sub have an “adequate” system?
      • Have they had LDD’s?
      • Do they have lower tier subs?
      • Have they implemented UID? (DoD)
      • Do they have procedures?
      • Does the sub use Metrics?
risk assessment7
RISK ASSESSMENT
  • Assessments should be completed annually:
    • To ascertain surveillance requirements (i.e., “on-site” versus desk surveillance)
    • Review for support property administration delegation
      • DCMA is NOT going to approve 99% of the requests for SPA delegation. Oversight is a requirement of the Prime.
risk assessment8
RISK ASSESSMENT
  • PURPOSE

To provide an objective and disciplined risk assessment analysis of subcontractors

  • METHODOLOGY
    • Identify areas of vulnerability
    • Focus on optimal levels of risk
    • Efficient commitment of resources
  • KEY ATTRIBUTES

The risk categories and the corresponding measurements have been identified in the following charts

site visits
SITE VISITS
  • If the risk assessment determines a site visit is required, prior preparation is essential.
      • Limit the scope to 5 functional elements or less
      • Request property listings a week prior for random sample selection and preparation
      • Complete audit spreadsheets and entrance briefings prior to start of visit (See Handout)
liability
LIABILITY
  • Limited Risk of Loss
      • If the Prime has limited risk, the potential exists to flowdown these requirements.
determining risk provision
Determining Risk Provision

FIRST SIMPLE APPLICATION

COST REIMBURSEMENT SUBCONTRACTOR

Being awarded a subcontract

Exceeding $650,000

AND

Containing 52.215-12*

AND

Providing Government Property

+

GP Requirements

FIXED PRICE SUBCONTRACTOR

Being awarded a subcontract

(Competitive or Negotiated)

Exceeding $650,000

AND

Containing 52.215-12*

AND

Providing Government Property +

GP Requirements

Automatically Flow Down The Limited Risk of Loss GP Provision

COST REIMBURSEMENT or FIXED PRICE (NEGOTIATED) PRIME CONTRACT/CONTRACTOR EXCEEDING $650,000 (Requiring a Cert of Current Cost and Pricing Data) and FAR 52.215-12* and WITH GOVERNMENT PROPERTY CLAUSE of FAR 52.245-1 LIMITED RISK OF LOSS

*NOTE: There are Exceptions at 15.403-1 where this clause is NOT required.

determining risk provision14
Determining Risk Provision

SECOND SIMPLE APPLICATION

FIXED PRICE (COMPETITIVE)

PRIME CONTRACT/CONTRACTOR

WITH NO

Requirement for a Cert of Current Cost and Pricing Data

WITH GOVERNMENT PROPERTY CLAUSE

Of FAR 52.245-1 (Alternate I)

FULL RISK OF LOSS

REGARDLESS OF THE PRICING ARRANGEMENT OF THE SUBCONTRACT, PRIME WOULD AUTOMATICALLY FLOW DOWN THE

FULL RISK OF LOSS

TO ITS SUBCONTRACTORS AND VENDORS WHEN GP IS PROVIDED TO SUB

+

GP REQUIREMENTS

determining risk provision15
Determining Risk Provision

REQUIRES SOME THOUGHT

COST REIMBURSEMENT or FIXED PRICE (NEGOTIATED)

PRIME CONTRACT/CONTRACTOR EXCEEDING $650,000

(Requiring a Cert of Current Cost and Pricing Data) AND

FAR 52.215-12* AND WITH GOVERNMENT PROPERTY CLAUSE

Of FAR 52.245-1

LIMITED RISK OF LOSS

FIXED PRICE NEGOTIATEDSUBCONTRACT Being Awarded to a Subcontractor UNDER $650,000 AND NOT Containing 52.215-12 AND Providing Government Property

+

GP REQUIREMENTS

FIXED PRICE COMPETITIVE SUBCONTRACT/

SUBCONTRACTOR AND

Providing Government Property

+

GP Requirements

PRIME FLOWS DOWN FULL RISK

PRIME MAY FLOW DOWN LIMITED RISK OF LOSS IF….PRIME REQUIRES SUB TO EXCLUDE INSURANCE FOR GP. IF UNABLE/UNWILLING TO EXCLUDE INSURANCE – FLOW DOWN FULL!

*NOTE: There are exceptions at 15.403-1 where this clause is NOT required.

liability16
LIABILITY

Remember……………..

If the subcontractor does NOT have the limited risk clause, then YOU, as the prime, are responsible for obtaining payment.

records
RECORDS
  • Subcontractor Records
      • Two methods exist pertaining to records
        • The subcontractor maintains the record, or ……
        • YOU, the prime, maintain the record
  • Pros and Cons for both methods
      • You must rely on the subcontractor for everything, when the sub keeps the records.
      • If you keep the records, are they “up to date”? How do you get notified when the property moves, gets issued, or ships?
disposition
DISPOSITION
  • Program Screening MUST be completed first.
  • Several Methods of Disposal
    • PCARSS (Plant Clearance Reutilization Screening System)
    • Ship back to Prime for retention/reutilization
    • Ship back to Prime for disposal (Yikes!)
managing subcontractors
MANAGING SUBCONTRACTORS
  • REMEMBER …………We must reflect the value that property management adds to the company “bottom line”. We must be resourceful and flexible, and we can NOT do it alone. Creating and maintaining a good working rapport with your subcontractor is …….

ESSENTIAL !!

questions
QUESTIONS
  • QUESTIONS ?
  • CONCERNS ?
  • COMMENTS ?

Thank You

Pamela McFarland, Raytheon Technical Services Co., LLC

Work: 260-486-5237

Cell: 260-446-7190