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    Can we target local contractors this way? Is there a place that outlines, in writing, how to select the sample of contractors to be audited? We have no high or medium risk contractors. they are all low risk.


    There are no Federal regulations or policies that prohibitan agency from directing that a property management system analysis (PMSA) beperformed on-site, (i.e., standard PMSA), for each local contractor only. FAR 45.105 -- Contractors’ property management system compliance, states that ananalysis of a contractor property management system is to be performed as frequentlyas conditions warrant, in accordance with agency procedures. It doesn’t appearthat your supervisor is “targeting” local contractors. The decision may bebased on resources or the lack thereof since emphasis has been placed on travelfunds. It could also be due to the need or desire to perform more in depthPMSAs when it is cost efficient. Of course, the possible reasons given are purelyspeculative. You should speak with your supervisor if you need clarityregarding the rationale behind the decision to perform standard PMSAs for localcontractors only.
    Randomly selecting a sample from a pool of contractors todetermine which contractor property management systems to audit may be thepolicy of your agency, but it is extremely rare. That is not the practice ofthe Department of Defense (DoD). Property administrators within DoD and otherFederal agencies apply random sample selection when using probability(statistical) sampling to test the contractor’s procedures and processes forcompliance with FAR 52.245-1 Government property. Determination ofwhich contractor systems to audit and which method to use (e.g., standard orlimited/desk audit) is based on the risk that the contractor’s property managementsystem poses to the Government and other criteria established at the agency andorganization level. Within DoD, either a standard or limited PMSAcan be performed when a contractor’s property management system is designatedas low risk. Some organizations within DoD choose to perform solely limitedPMSAs for low risk systems. However, limited PMSAs can be upgraded to standardPMSAs when the conditions warrant it, (e.g., discovery of sensitive property). Itreally depends on your particular agency and the procedures that you have tocomply with. The decision to designate standard PMSAs for only localcontractors should have no impact on your audit evidence. It is the methodologiesthat you use to perform PMSA and your documentation that factor into whetheryour audit evidence will hold up.

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