What constitutes “accountable personal property?”
Accountable Personal Property is equipment or administrative property that meets the Department’s accountability threshold: It has an original acquisition threshold of $5,000 or greater and is classified, sensitive, or furnished to a contractor. Accountable personal property is required to be recorded and reported in the relevant accountable property management system or system of record, to be kept current and correct (including location) throughout its lifecycle.
What is my role as it pertains to the accountable personal property entrusted to me?
All persons entrusted with Government property are responsible for its proper use, care, and physical protection, including:
What role does Item Unique Identification (IUID) play in property accountability?
The IUID is required for all accountable personal property. The IUID will be housed in the IUID Registry, which provides the authoritative source for Unique Item Identifiers (UIIs) and their pedigree data, including acquisition cost. The UII shall be recorded in only one property accountability system of record at a time. Note that the IUID Registry is neither an accountability system, nor an asset-in-transit visibility system.
How often must I perform a physical inventory of the accountable property under my purview?
Capital, sensitive, and military equipment shall be inventoried at least annually; other property shall be inventoried at least every 3 years.
Physical inventory plans must be coupled with an awareness of the item’s general sensitivity, to include its acquisition or replacement cost, its security classification, and/or its criticality. Sampling methods may be used, where appropriate, provided they achieve statistically valid results. Such methods may not be appropriate for all types of property, e.g., hazardous, classified, or sensitive property.
How do I report the accountable personal property that has been lost, stolen, or damaged?
All personal property is to be fully accounted for throughout its lifecycle; from acquisition and use to re-use and final formal disposition.
When Government property has been lost (including theft), damaged, or destroyed, it is to be promptly reported on a Report of Survey (DD Form 200, “Financial Liability Investigation of Property Loss”) and processed in accordance with the requirements of Volume 12, Chapter 7, DoD 7000.14-R, “DoD Financial Management Regulation.”
What is the study being done on military equipment useful life?
The Property and Equipment Policy Office is conducting a study on the impacts of Operational Tempo (OPTEMPO) on the useful life of military equipment. The study is looking at how the changing operational demands impact the life expectancy, or useful life of military equipment.
What is military equipment useful life?
Military Equipment useful life is how long a piece of military equipment, such as a tank or airplane, can be used before it is worn down to a point where it either needs to be replaced or go through a major service life extension.
What has the study revealed about the useful life of military equipment impacted by increased OPTEMPO?
In looking at the variables that could impact the useful life of military equipment, there are two that seem to have the most dramatic effects:
Who conducted the study on the impacts of OPTEMPO on useful life and is a report available?
KPMG LLP, a support contractor for the Department, developed the methodology, with extensive assistance from DoD Comptroller and selected program management offices. The methodology was validated with additional programs. In addition, a determination was made as to which programs the methodology applies and to which it does not apply. The reports and memorandum may be found on the OPTEMPO web page.
What type of calculation or methodology will be used to determine the useful life of military equipment when based on increased OPTEMPO?
We are seeking to determine a method that analytically considers usage, fatigue, and losses. These three factors impact on program requirements; on the readiness of items of equipment and on how many items are available to meet rotational demands. So, the methodology needs to look collectively at the consumption of service life for a program.
When the methodology is derived, who will be responsible for determining the impact of increased OPTEMPO on military equipment, and how will the information be obtained?
Operators and Maintainers (e.g., Property Custodians and Hand Receipt Holders) of the equipment are ultimately responsible for determining the useful life impacts caused by increased OPTEMPO. The Department’s goal is to have the capability to extract the necessary data at the enterprise level from whatever Service systems the operators and maintainers use to record that information.
Will the OPTEMPO methodology treat annual peacetime and wartime OPTEMPO separately, such that each will have its own unique fatigue factor?
Yes it will. Also, different systems must be looked at in different ways. The fatigue factor generally would apply to more stressing environments. Therefore, it would seem logical to consider fatigue differently in combat or other high-stress operations (e.g., the use of helicopters to fight forest fires in California) than in normal peacetime operations. This concept will be considered to determine how it might apply to different systems in different operational circumstances.
Will the OPTEMPO methodology to determine useful life apply to all programs and all equipment?
Does the useful life study on OPTEMPO have implications for military equipment that did not participate in the Global War On Terrorism (GWOT)?
Yes it will. For example, increased operational support provided in disaster scenarios such as fighting forest fires or providing support after Hurricane Katrina, would be types of operations that are OPTEMPO related. And so, we would expect an impact on the useful life of military equipment.
Has there been an effort to standardize the terminology used to quantify the equipment usage so that it will be possible to make like comparisons between the different Services?
Yes, there has been a concerted effort to standardize much of the terminology associated with this effort. As an example, the Deputy Under Secretary of Defense for Logistics and Materiel Readiness recently signed a memorandum to standardize the use of the terms “reset” and “recap.”
Will technical obsolescence be a factor in considering the useful life of equipment impacted by increased OPTEMPO?
The OPTEMPO methodology does not consider technical obsolescence. The OPTEMPO methodology looks strictly at usage. The formula did not consider technology because it is difficult to predict future technological advances.
Can the same OPTEMPO methodology used to determine military equipment useful life be scaled down to evaluate the useful life on individual spare parts?
The OPTEMPO methodology was designed to assess impacts on the useful life of capitalized equipment with the intent of providing better information to leaders making investment decisions. The value gained for the effort expended is worthwhile in this case. Spare parts are funded differently and expensed differently on financial statements. No consideration has been given to the value to be gained for applying a similar process to spare parts.
Given that fatigue further degrades equipment usage and given that most legacy systems do not have integrated prognostic or diagnostic systems, does the Property and Equipment Policy Office support and advocate that future acquisition systems should have integrated/embedded prognostic/diagnostic systems?
The Department advocates the need to understand the impact of fatigue on military equipment that adversely affects useful life. The use of embedded systems to measure fatigue is one way to collect relevant data. However, the use of embedded systems is a programmatic decision that should be considered by the appropriate program office for applicability and cost effectiveness.
Is there any evidence that increased situational awareness (due to usage of sensors, unmanned systems, etc.) reduces a system’s fatigue?
This is not being considered in the ongoing analysis of the impacts of OPTEMPO on useful life. OPTEMPO is the pace at which a piece of equipment is used, and fatigue is determined based upon factors that occur during usage, such as overloading. If usage and fatigue are reduced for whatever reason, the impact on useful life is less. The OPTEMPO useful life study attempts to quantify the impacts of whatever amount of usage and fatigue that actually occurs on a given system.
How does OPTEMPO apply to rapid acquisition joint programs with non-conventional life, such as the Mine Resistant Ambush Protected (MRAP) Vehicles?
All equipment has an operating tempo, whether it is a common vehicle, like the HMMWV, or a non-conventional vehicle like the MRAP. When we look at useful life, we need to consider the operating tempo for that type of equipment. This is not a one-size-fits-all methodology that applies across the board. The OPTEMPO methodology is applied on a program-by-program basis.
How does General Support (GS) and Depot maintenance impact the useful life determination of equipment affected by increased OPTEMPO?
Maintenance at all levels is critical to keeping equipment operational. In the initial determination of useful life for an item of equipment, the assumption is made that operator and organizational maintenance will be performed as required to keep the item of equipment operational throughout its estimated life. Maintenance includes the replacement of broken or worn out parts at the appropriate maintenance level. The extent to which maintenance is performed or not performed will impact the useful life of equipment. However, normal maintenance does not restore useful life. And so, both general and intermediate maintenance as well as organizational maintenance all have an impact on equipment. And so, in looking at this formula, the assumption made is that the maintenance that needs to be done is continuing to be done. That will allow the Department to get the expected useful life out of the equipment that was originally planned.
What is property in the possession of a contractor?
Property in the possession of a contractor or “PIPC” is Government-owned property in the custody or stewardship of a contractor—accountable to a Government (DoD) contract.
There are four cohorts of PIPC:
What is Government Furnished Property (GFP)?
Government furnished property is property that is furnished to a contractor for performance of a Government (DoD) contract. There are two types of Government Furnished Property:
What is Government Furnished Equipment (GFE)?
Government furnished equipment or “GFE” consists of equipment, special tooling, or special test equipment that is provided to a contractor for use on a Government contract (reference Federal Acquisition Regulations, Part 45).
What is Government Furnished Material (GFM)?
Government furnished material (GFM) is another form of Government-owned property that is sometimes provided to contractors. Raw titanium for use in ship construction, nuts, bolts, washers, screws, and other consumable items are all examples of GFM. Material does not include equipment, special tooling, and special test equipment.
Unlike GFE, GFM is consumed or expended by the contractor during the performance of a contract. The cost of GFM is included in the cost of the contract end-item to be delivered.
Contractors establish and maintain records of GFM in accordance with FAR requirements (reference Federal Acquisition Regulations, Part 45).
Are DoD Components required to establish and maintain records of Government Furnished Equipment?
Yes. DoD Components are required to “establish records and maintain accountability for property (of any value) furnished to contractors as Government Furnished Property.” This requirement also includes property that is loaned and/or otherwise provided to outside entities such as Federal agencies, State and local governments, and foreign governments” (reference DoDI 5000.64). Contractors also keep and maintain records for stewardship purposes in accordance with FAR requirements (reference Federal Acquisition Regulations, Part 45). This requirement does not normally extend to GFM, as GFM is destined for consumption.
What is Contractor Acquired Property?
Contractor acquired property is property that Government contractors acquire under cost-reimbursement contracts—and to which the Government takes title (reference Federal Acquisition Regulations, Part 45). Unlike Government furnished property, contractor acquired property has not been delivered to the Government.
What is Progress Payment Inventory?
Progress Payment Inventory is property that Government contractors acquire under certain fixed-price contracts—and to which the Government takes title (reference Federal Acquisition Regulations, Part 31, Contract Cost Principles and Procedures). Like contractor acquired property, progress payment inventory also has not been delivered to the Government.
Are DoD Components required to establish records and maintain accountability of Contractor Acquired Property and Progress Payment Inventory?
No. This property is not recorded in DoD accountable property systems of record (reference DoD FMR 7000.14-R, Volume 4, Chapter 6; DoD Contractor Acquired Property Business Rule (December 22, 2007)). Why? Because although DoD may have title to such property, delivery, i.e., recognition has not yet taken place. Consistent with SFFAS No. 6, DoD recognizes P&E only upon delivery. Should this property be delivered, i.e., a contract line item established, the property would become Government furnished property to that contract. At that point, DoD Components are then required to establish records (in their accountable property system of record).
What about property accountability?
Contractors are required to establish and maintain records of such property in accordance with FAR requirements (reference Federal Acquisition Regulations, Part 45).
Property accountability is established and maintained through oversight of contractor systems. For Progress Payment Inventory, for example, contractors are required to “maintain an accounting system and controls adequate for the proper administration of the progress payment clause.” The accounting system is audited by the Defense Contract Audit Agency (DCAA). For contractor acquired property, contractors are required to establish and maintain a property management system; oversight, surveillance and audit of this system is conducted by the agency responsible for contract administration, e.g., DCMA (reference Federal Acquisition Regulations, 52.245-1, Government Property Clause).
Well then how does the proper financial treatment of PIPC take place?
For Government Furnished Equipment, the property should already be recorded in the accountable property system of record (reference DoDI 5000.64, paragraph 6.6), and so should be reported as if still in the possession of DoD. For contractor acquired property and progress payment inventory, the costs are incorporated into the end-item, as follows:
Did anything replace the DD Form 1662?
Contractors are required by DFARS 252.211-7007 to report to the DoD IUID Registry Government-furnished equipment in their possession. The IUID registry is an excellent source of information pertaining to contractor held Government furnished equipment—and is the authoritative source for its acquisition value (reference DoDI 8320.04).
What about Real Property?
Questions regarding Real Property should be referred to ODUSD Installations and Environment.