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  • Question

    If the government buys the database for the contractor, how does this fit in with the property clause where (f) Contractor plans and systems (1) Contractors shall establish and implement property management plans, systems, and procedures at the contract, program...Essentially , this would belong to the government and not the contractor, as defined in the property clause above. Has this been accomplished before for other contractors.


    Answer

    FAR 45.2 covers the contracting officer’s responsibilities concerning the solicitation and evaluation procedures.  FAR 45.201(c) states that the solicitation shall require all offerors to submit a description of their property management system, plan, and any customary commercial practices, voluntary consensus standards, or industry-leading practices and standards that they will be used to manage Government property.  FAR 45.201(c) clearly indicates that the expectation of the Government is for the offerors/contractors to already have a property management system, which would include any database used to record property and associated transactions.  To further illustrate the expectation that an offeror/contractor should have its own database to maintain Government property we can refer to FAR 45.202(b) which states “The contracting officer shall ensure the offeror’s property management plans, methods, practices, or procedures for accounting for property are consistent with the requirements of the solicitation.”  It appears that this was not accomplished with the cost-reimbursable Research and Development contract in question. 
    If the Government provides a database to the contractor and the other offerors did not have that information to consider when writing their proposals, the result could be that the contractor has received an unfair competitive advantage, which could lead to protests.  There are other possibilities to consider if the Government provides a database.  For instance the Government may sustain increased cost if the software that drives the database has to be updated to meet contractual requirements.  Also, use of the database could be limited to the contract used to acquire the software, which may result in multiple property management systems. 

    Now let’s move on to the contractor’s property management system requirements that are found in the Government Property clause at FAR 52.245-1
    .   Paragraph (b) requires the Contractor to have a system of internal controls to manage (control, use, preserve, protect, repair and maintain) Government property in its possession. It further states that the system shall be adequate to satisfy the requirements of this clause and 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 database is a key element of the contractor’s property management system. 
    To exemplify that point we can use FAR 52.245-1(f)(1)(iii) Records of Government property, which states property records shall enable a complete, current, auditable record of all transactions and shall, unless otherwise approved by the Property Administrator contain the data items listed in FAR 52.245-1(f)(1)(iii)(1 through 10).  By providing the database, the Government would have the burden of ensuring that the software will in no way prevent the contractor from having a system that is in compliance with the Government Property clause.  If the Government provides a database that does not allow for all of those elements it will prove difficult to hold the contractor responsible for the non-compliance for missing data elements that are due to the lack of capability within the software and database provided by the Government.  In the situation that you described, Government provision of a database would conflict with FAR 52.245-1.

    IF the contracting officer found that it was beneficial to the Government to provide a database, the contractor should have complete control of the software.  Government personnel should only have read-only access to ensure data integrity.  I have only seen this done once in my career.  It was at a Government-owned Contractor-operated site and the contractor was performing logistics support.  The contracts and contractors changed, but all of the historic data remained.  Whether it was beneficial to the Government is not for me to say without all of the facts.  I can say that there were costs associated with updating software modules and training.

    The question that should be asked is “How is the contractor managing and recording property that they own?” 
    The Government has no expectation that the contractor maintain dual property management systems, i.e., one system for their property and another for Government property.  Keep in mind that even if the Government provides the database under the contract, the Government still has to maintain its own records of Government property in an Accountable Property Record System (APSR) in accordance with DoDI 5000.64 Accountability and Management of DoD Equipment and Other Accountable Property.  Records of all property provided to a contractor as Government-furnished property must be recorded in an APSR.  The stewardship records that contractors are required to establish and maintain cannot supersede or replace records maintained by the Department of Defense.

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