Last year, we wrote about the Department of Defense (DoD) proposing a change to the Defense Federal Acquisition Regulation Supplement (DFARS) that would possibly simplify Government property clauses by consolidating four clauses into a single management clause. This became a reality in December 2023 when the DoD issued a final rule consolidating the four clauses into DFARS 252.245-7005, Management and Reporting of Government Property. The new clause had an effective date of January 22, 2024.
This singular clause replaces the clauses listed below. The clauses below will be removed and reserved.
- 211-7007: Reporting of Government-Furnished Property
- 245-7001: Tagging, Labeling and Marking of Government-Furnished Property
- 245-7002: Reporting Loss of Government Property
- 245-7004: Reporting, Reutilization and Disposal
The new clause does not lessen compliance requirements for contractors when it comes to reporting, tagging, and overall tracking, but it consolidates and simplifies requirements that were contained in the four old clauses. The change also makes it easier for contractors to keep up with a single clause that covers these requirements instead of having to search for four different clauses. That does not include FAR 52.245-1 Government Property and DFARS 252.245-7003 Contractor Property Management Administration, which should be included along with the new DFARS 252.245-7005 Management and Reporting of Government Property. The new clause gives more explicit details for using the Government-Furnished Property (GFP) module in the Procurement Integrated Enterprise Environment (PIEE). The Government intends for PIEE to be a tool for the complete lifecycle of GFP, from the initial reporting to final disposition and closeout.
As we have discussed in our blogs and webinars many times, the Government property process has changed greatly over the last twenty years. Like contractors, Government contracting personnel have also struggled to keep up with the changes, mainly when to include the correct Government property clauses in contracts. The four removed clauses above were constant trouble spots for both contractors and Government contracting personnel. So, this new clause should simplify the process for both sides.
Below is an excerpt from the memo from Mr. John M. Tenaglia from the Department of Defense implementing the new clause:
“This new policy is the culmination of years of effort developing standardized capabilities within the PIEE GFP Module, enabling the retirement of multiple legacy systems, and will be an enabling factor in achieving the Department’s Financial Improvement and Audit Remediation priorities.”
The “Department’s Financial Improvement and Audit Remediation priorities” here is the huge financial statement audit the DoD has undergone each year since 2018. And, each year since 2018, Government property (mainly under contractor control) has been a major finding in the audits. So yes, the Department of Defense believes this change will help both sides administer Government property.
So, what’s next? Contractors with contracts that contain Government property should expect the new clause DFARS 252.245-7005 Management and Reporting of Government Property, to be inserted into those contracts through appropriate modifications.
If you have any questions about this new clause or any other clauses or topics related to Government property, we are here to help. We deal with the Government property business system daily and would love to help ensure your property management system is adequate.
Jonas is a Managing Consultant for Special Projects for Redstone Government Consulting, Inc. Jonas works with the Redstone GCI client base on a variety of issues pertaining to government cost and compliance. His specialty areas include development of compliant cost volumes and proposal pricing, as well as assisting contractors after contract award with program control, financial, cost accounting and audit issues. Jonas works on incurred cost proposals, indirect rate calculation and analysis, proposals and project control issues for Redstone. Professional Experience During his over 20‐year career in the GovCon industry Jonas has worked for both large and small contractors in a variety of roles within program finance, contracts and accounting. A substantial portion of his experience included working with a small business contractor that grew into a $100M+ large business prime contractor. In this role he served in various positions where his responsibility progressed to the Business Operations Manager for the NASA and Army Programs Division. During his career he has also worked as a Controller for a large NASA prime contractor. Jonas has twenty‐plus years’ experience in virtually every aspect of corporate business management. He has extensive proposal experience, specializing in pricing and cost volumes. He has audit experience dealing with DCAA and DCMA. He has extensive experience working with both NASA and DoD government customers in program management and program control, across all contract types. Education Jonas earned a Masters of Business Administration from Nova Southeastern University, and a BSBA in Finance from Athens State University.