Original Date: 02/24/1997
Revision Date: 04/14/2003
Best Practice : Reduced Property Administration
The Federal Acquisition Regulation (FAR) Part 45 requires that Government Property at GOCO facilities be adequately controlled and managed to maintain accountability. This requirement has applied regardless of the cost of the item of property. The Industrial Operations Command (IOC) is taking actions to reduce the cost and manpower involved with property administration of the low cost items, and to minimize the effect of government regulatory requirements felt to be contributors to unnecessary costs.
Property administration has typically involved paying a contractor to establish and maintain records for property under their control, maintain a location tracking system, and conduct periodic physical inventories. A project to reduce the effort and cost expended to manage low value items was instituted in 1994 followed by processing a regulatory deviation in 1995. It was felt that more resources were being expended to extensively manage items of low value (less than $1,500) than was appropriate for any benefit gained. As an example, at Iowa Army Ammunition Plant, the 30,000 low-value property items encompassed 90% of all items, but only 10% of the total property value. The reduction of property administration by eliminating the tracking and location control requirements and periodic physical inventories, resulted in full property administration controls being applied to only 3,359 of the original 33,884 line items. Paperwork for physical inventories was reduced by 75%. Reduced property administration at ten Army Ammunition Plants for this contract year has resulted in $650,000 in contract negotiated cost savings. An additional $257,000 savings at five more plants is expected. Substantial cost avoidances are also anticipated for future contracts.
Efforts are continuing to pursue additional reductions in property administration making government requirements more comparable with industry where all items less than $1,500 are often expensed. Eliminating accountability of low value items at government operated facilities is also being pursued to further reduce costs. As part of the “Reinvention Laboratory” process, the IOC is working toward approval to expense items less than $2,500, thus removing them from property administration requirements and realizing additional savings.
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