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    Reference FAR 52.245-1 (f) (1) (v) (B), Subcontractor Control. This paraagraph states the following: The Contractor shall assure its subcontracts are properly administered and reviews are "Reference FAR 52.245-1 (f) (1) (v) (B), Subcontractor Control. This paraagraph states the following: The Contractor shall assure its subcontracts are properly administered and reviews are "periodically" performed to determine the adequacy of the subcontractor's property management system. How long is "periodically?"


    Answer

    FAR 52.245-1(b) Government Property - Property management states in part:
    (1) The Contractor shall have a system of internal controls to manage (control, use, preserve, protect, repair, and maintain) Government property in its possession. The system shall be adequate to satisfy the requirements of this clause. In doing so, the Contractor shall initiate and maintain the processes, systems, procedures, records, and methodologies necessary for effective and efficient control of Government property. The Contractor shall disclose any significant changes to its property management system to the Property Administrator prior to implementation of the changes. The Contractor may employ customary commercial practices, voluntary consensus standards, or industry-leading practices and standards that provide effective and efficient Government property management that are necessary and appropriate for the performance of this contract (except where inconsistent with law or regulation).
     (3) The Contractor shall include the requirements of this clause in all subcontracts under which Government property is acquired or furnished for subcontract performance.
    There are two words within paragraph (b)(1) of the Government Property clause that I would like to focus on.  Those words are “effective” and “efficient.”  As we can see, the requirement is for the Contractor to initiate and maintain the processes, systems, procedures, records, and methodologies necessary for effective and efficient control of Government property.  Let’s take a look at how the two words are defined in the Merriam-Webster Dictionary.
    “Efficient” means capable of producing desired results without wasting materials, time, or energy.
    “Effective” means producing a result that is wanted: having an intended effect.

    Based on the definitions above we can interpret FAR 52.245-(b)(1) to mean with regard to the management of Government property, the Contractor shall initiate and maintain processes, systems, procedures, records, and methodologies necessary to produce desired results (outcomes in paragraph f) without wasting materials, time, or energy.


    Now, for any organization to be efficient there must be some form of measurement.  How else would one know if materials, time, or energy is being wasted?  It is the Contractor who shall initiate and maintain a property management system (both written and application).  Therefore, it is the Contractor who should be defining what “periodically” means as it relates to its property management system.  Subjective terms relative to timeframes, such as “periodically” and “timely” should be clearly defined in the Contractor’s written property management procedures. 


    In my opinion it would not have been prudent for the authors of the Government Property clause to attempt to define certain timeframes for every Contractor and every situation since contracts, Contractors, and property management systems vary in scope, size, and complexity.  For example, it may be “reasonable” for a small Contractor with less than 100 items Government property located in one small building to try to locate an item within 24 hours.  However, the same may not be true for a large Contractor with many large warehouses and more than 100,000 items.  That is why it is important and necessary for the Contractor to define such terms in its procedures. Failure to establish such timeframes may result in loss of Government property, delays in delivery, increased costs, etc.


    Thank you for using this forum to ask your question.  This is a topic that arises often. I hope this helps.


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