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    Does the property financed with a progress payment (PPRA), title goes to the government when the PPRA is paid, have to be segregated from other property?


    Answer

    Interesting question. Attempts to contact the question submitter for context and clarification of the phrase “segregate from other property” were unsuccessful.

    Our strong assumption is this scenario relates to contractor acquired property (CAP), allowable costs, for which the contractor will invoice for with their progress payment requests.

    As a reminder, there are 3 scenarios that can result with CAP:

    1. CAP is consumed during performance.

    2. CAP is delivered to the Government or becomes GFP under the contract.

    3. CAP is dispositioned during or at the end of contract performance.

    In reviewing the Progress Payments Clause FAR 52.232-16

    FAR 52.232-16(d) Title. discusses an overview of the accounting principles and practices. While nothing in this paragraph specifically states “segregated” it clearly implies that CAP must be identifiable.

    FAR 52.232-16(f) Control of costs and property. The Contractor shall maintain an accounting system and controls adequate for the proper administration of this clause. Again, while no mention of “segregation” their system needs to be “proper for the administration of the clause”.

    In reviewing the Government Property Clause FAR 52.245-1

    52.245-1(f)(iii) explains records of Government property, again while it does not require “segregation” it does imply CAP must be identifiable and distinguishable from Government Furnished Property and non CAP.

    and 52.245-1(j)(1) does provide requirements the contractor must follow prior to disposal of CAP.

    We also reviewed the following: DFARS 252.232-7003 Electronic Submission of Payment Requests and Receiving Reports, DFARS 252.232-7006 Wide Area WorkFlow Payment Instructions, and DFARS 252.245-7003 Contractor Property Management System Administration.

    None of those clauses addressed segregation nor did anything in DFARS PGI 245.402-71 - Delivery of contractor-acquired property.

    Finally, we also reviewed some of the training found at this site DoD Procurement Toolbox GFP (and CAP) related training. Part of the P2P “Procure to Pay”. We suggest you review this, it does spell out with great screen shots of PIEE GFP module how the transfer process of CAP is accomplished once the Government formalizes it’s Title to the property.

    In conclusion, while we did not find anything that specifically states reimbursement requests for CAP on progress payment must be segregated; we could also find nothing that would prohibit you from requiring that in your contract.

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