Property Management System

A property management system is the set of policies, procedures, and records a government contractor uses to control, track, and report on government-furnished property (GFP) and contractor-acquired property (CAP) in its custody, as required by FAR Part 45.

What is a Property Management System?

When the federal government provides a contractor with equipment, materials, tooling, or intellectual property to use in performing a contract, that property remains government-owned and must be tracked separately from the contractor's own assets. FAR Part 45 and its companion clause FAR 52.245-1 establish the contractor's responsibilities for stewardship of government property.

A compliant property management system must perform several functions: maintain a property record for each item including acquisition date, value, location, custodian, and contract number; conduct periodic physical inventories; investigate and report property loss, theft, or damage; and ensure proper disposal or return of property at contract end. DCMA Property Administrators conduct periodic Property System Analysis reviews to assess system adequacy.

Significant categories of government property include Government-Furnished Equipment (GFE), Government-Furnished Material (GFM), Government-Furnished Information (GFI), and Special Test Equipment (STE). On large defense programs, the dollar value of government property in a single contractor's custody can reach hundreds of millions of dollars, making the property management system a high-stakes audit area.

Why a property management system matters for government contractors

Contractors are financially liable for loss, damage, or destruction of government property unless they can demonstrate the loss resulted from causes beyond their control with no lack of due care. An inadequate property management system not only creates financial risk but can result in a formal system deficiency, billing withholdings, and reputational damage with agency program offices.

Example

A defense manufacturer holds $15M in government-furnished tooling under a production contract. DCMA's annual property system review finds that the contractor's physical inventory reconciliation has a 3% discrepancy from property records. DCMA issues a corrective action request. The contractor locates most discrepant items, writes off two lost items at replacement cost, and updates its inventory procedures to conduct cycle counts quarterly instead of annually.

Frequently Asked Questions

What is the difference between government-furnished property and contractor-acquired property?

Government-furnished property (GFP) is provided to the contractor by the government. Contractor-acquired property (CAP) is purchased by the contractor using contract funds; it also becomes government property upon acquisition. Both types must be tracked in the property management system.

Who conducts property system reviews for government contractors?

Defense Contract Management Agency (DCMA) Property Administrators conduct Property System Analysis (PSA) reviews for DoD contractors. For civilian agency contractors, the contracting officer or a designated property administrator conducts reviews under applicable agency policies.

What records must be maintained for each piece of government property?

FAR 52.245-1 requires records showing the item description, acquisition date and cost, contract number, location, custodian identity, identification number or serial number, condition, and ultimate disposition. Records must support physical inventory reconciliation and loss/damage investigations.

Can a contractor use government property for commercial work?

No. Government property may only be used in performance of the government contract for which it was provided, unless the contracting officer specifically authorizes other use. Unauthorized use of government property is a contractual violation and can constitute fraud.