Federal Government Procedures Manual

(Revised- February 2018 )

  1. Purpose

    1. To establish general procedures for the management and control of Government Owned equipment (GOVT) in the custody of the Pennsylvania State University (hereinafter referred to as the University).

    2. Definition of Government Owned Equipment

      Government Owned Equipment is equipment furnished or acquired by purchase on contracts or grants where the Government’s sponsoring agency retains ownership.

    3. Responsibility

      The responsibility for the management and control of GOVT equipment has been assigned to the Office of the Corporate Controller, Property Inventory Department (hereinafter referred to as Property Inventory).

  2. Furnished or Acquired

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    1. Introduction

      The University receives GOVT equipment through two methods:

      1. GOVT Furnished Equipment (GFE) or (GFP) – equipment in the University’s custody that has been made available for use by a government agency.
      2. Contractor Acquired Property (CAP) – equipment that is acquired by the University and the Government retains title.
    2. Preaquisition Screening

      The University has policies and procedures for federally-funded capital equipment preacquisition screening certification in accordance with regulations. See Federally-Funded Capital Equipment Preacquisition Screening Certification. See Procedure CR2055.

    3. Aquisition

      1. The Office of Administrative Information Services (AIS) prepares daily and monthly listings based on Object Classification Codes for Capital and Non-Capital Equipment purchases. These listings are transferred to the Electronic Document Distribution System (eDDS) where Property Inventory can view and print through the use of an imaging system, INTERVIEWER (aka DocFinity).
      2. The listings are separated into a variety of groups, one of which is Restricted Funds. This Restricted Funds listing has multiple fields including Ownership. This is where Property Inventory will find GOVT CAP.
      3. Equipment may be purchased by the Office of Physical Plant (OPP) while building or renovating structures. When this project is billed to the appropriate budget, an OPP Billing Statement is produced. Property Inventory personnel analyze these statements for capital expenditures. Equipment items identified are tagged and placed into Integrated Business Information System data base (IBIS) under the name of “Property Inventory System”.
      4. With the exception of the Applied Research Laboratory, all CAP purchasing documentation is reviewed by the Assistant Supervisor of Property Inventory for review and distributed to the appropriate Property Inventory personnel for tagging.
      5. The financial records of the University include equipment administration data in the Federal Administrative Contracting Officer (FACO) field in IBIS. See FACO Codes.
    4. Leases

      CAP with GOVT retaining title will be analyzed using the same methodology as in Section II.E of the General Equipment Procedures Manual.

    5. Fabricated Equipment

      A department wishing to fabricate capital equipment must first request permission from Property Inventory to use object classification code 705 – Fabrication of Equipment. Property Inventory reviews the request verifying that equipment can be purchased on specified budget/fund and assigns a Fabrication Number. Guidelines for Use of 705 are distributed to the Custodian/PI, Administrative Area’s financial officer and any other necessary personnel.

      Equipment fabricated by the Office of Physical Plant (OPP) is reported on the OPP Billing Statements. Property Inventory personnel analyze these statements for capital expenditures.

      As with other acquired equipment, a tag number is assigned to the fabricated item and is physically placed on the equipment, when possible for identification. See Equipment Tag Examples. The value of the project is added to the asset records.

    6. Miscellaneous Additions

      Miscellaneous additions allow for inventory adjustments and occur as a result of the following:

      1. GOVT CAP equipment erroneously reported as University Owned in a previous fiscal year.
      2. GOVT CAP equipment purchased on incorrect object codes and found in another fiscal year.
      3. Lease-purchase equipment.
      4. Fabricated equipment.
      5. Government Furnished – GFP or GFE
      6. Netbook value from an asset being traded for a new item.
    7. Tagging or Identification

      All GFE are assigned an inventory tag number, regardless of their value. All CAP are assigned an inventory tag number according to the dollar value listed in the contract/grant. In most instances where the government is retaining title, this amount is $5,000 or greater with a one year life.

      The Office of Sponsored Programs (OSP) will notify Property Inventory if the tagging threshold is different. Property Inventory will forward this information to the respective administrative area’s Financial Officer letting them know that when purchasing items from this particular contract/grant, items at this dollar value should be appropriately coded.

      The inventory tag number becomes the control in IBIS. Where possible, a permanent tag with the assigned number is physically attached to the equipment for identification. Equipment that cannot be tagged such as radioactive equipment, high temperature, magnetic, etc.; or equipment that has not been seen by Property Inventory; or items temporarily assigned tag numbers; is identified on numerical listings by one of two Condition Codes.

      1. Condition Codes. Equipment Condition Codes.
        • W Number Assigned – Tag not on item.
        • Z Number assigned – Equipment not yet tagged (Temporary).
      2. Currently, there are two types of tags used by Property Inventory for tagging GOVT owned equipment. See Equipment Tag Examples.
        1. Penn State University Equipment Tag: A white tag with a black bar code and number, used for University owned equipment. The words, “Penn State,” are printed on the tags in black.
        2. Government Furnished Equipment Tag: A red and white tag with a black bar code and number is used for US Government owned equipment. The words, “PENN STATE-GOV’T” are printed on the tag in black within the red area of the tag. In addition to this tag, we have a red and white tag without a black bar code and number. This tag is available to use on accessory items needing identified as Government Owned.
        3. Permanent IUID Tag (UII) will be assigned to Department of Defense (DOD) contracts/grants for GFE/GFP valued $5,000.00 or more or items that are mission critical. DFAR clause 252.211-7007.
        4. Permanent IUID Tag (UII) will be assigned to Department of Defense (DOD) contacts/grants that have End Item Deliverables (EID’s) property. DFAR clause 252.211-7003.

      Prior to 2004, the white Penn State University Equipment Tag with the bar code and a separate red and silver tag with a red Nittany Lion logo and the words, “U.S. Govt. Owned,” were used. These tags remain on a number of Government Owned equipment.

      The red tags on equipment, because of the color and wording, help alert equipment custodians and other Penn State personnel that they cannot transfer, repair, replace, dispose, etc. of GOVT owned equipment in the same manner as University owned equipment.

      Each tag number is assigned an Administrative Area number that denotes the area of responsibility Assigned Administrative Areas. Administrative Support Assistants (A.S.A.'s) tagging responsibilities are assigned by administrative area.

      Numbering sequence for the basic tag is eight numerical bytes and one alpha byte. The alpha byte is used to designate items such as:

      • Cost On – multiple funds purchased item or item was paid for over multiple fiscal years
      • Upgrade – the main item was upgraded
      • Accessory – items that add value, usually purchased to aid in the usage of the item

      Equipment located at the Applied Research Laboratory (ARL) buildings are tagged and physically inventoried by their employees because of security requirements and/or location.

      It is the Custodian/PI responsibility to notify Property Inventory when GFE is received. Property Inventory should be forwarded all pertinent documentation including any GOVT forms.

      Item Unique Identifier (IUID): Required by Department of Defense (DOD) only. If an agreement is received with DFARS Rule 252.211-7003 and 252.211-7007, Penn State will affix a 2D UII tag on the applicable item(s) and record them into the IUID Registry. A Penn State Government ID tag will also be placed on the item(s).

      Department of Defense awards require a DD 250 form to be completed when End Item Deliverables (EID's) are built and are shipped to the sponsor at the conclusion of the award. Detail EID requirements can be found in sections E and F of a contract.

      NOTE: Department of Defense requires certain hardware deliverables to be tagged with a UII - see DFARS clauses 252-711-7003 (Deliverables) and 252-211-7007 (Reporting) for detail on requirements.

      For instructions on completing a DD 250 form and editable form can be accessed at the following links:

      DD 250 Instructions

      DD 250 Form

    8. Maintenance

      Government property routine and preventive maintenance is managed at the technical division level by the custodian. Maintenance requirements, including timing, are determined by reference to equipment technical manuals.

  3. Equipment Records

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    1. Computer Database

      Equipment records are kept and maintained by Property Inventory on a computerized database that was developed internally by the University. Equipment information on the database is available for inquiry to all University personnel with access to the IBIS system.

      The inventory tag number is the control for the database. However, information can be searched by various other elements such as manufacturer name, building number, item description, etc.

      Ad hoc reports can also be run against the database to generate listings in other formats as needed.

      Currently, a File Transfer Protocol, FTP file, is sent weekly to a SQL Server in the Office of Financial Information Services (FIS). FIS provides the Corporate Controller’s Office with computer programming support. Property Inventory utilizes these files in Microsoft Access to facilitate various report requests.

    2. Ownership and Location Source Data

      Much of the information used to update the database comes from transfer forms. These forms are sent to Property Inventory any time equipment is transferred from one University location to another University location. This is the same form used for University Owned equipment disposals. See Report of Disposition or Permanent Transfer of Tangible Assets form.

      On GOVT owned CAP, Journal Vouchers (JVs) and Interdepartmental Charges and Credits (IDCCs) are also a source of information. These forms are used to transfer the payment for equipment from one budget and fund to another. As a result, CAP equipment may be transferred to a different administrative area and fund sources. This may cause a change in equipment ownership. If multiple budgets and funds are used to acquire an item and one of those budgets and funds are GOVT owned, the entire item becomes GOVT owned equipment. The monthly listings described in the Purchasing section, Section II.C, General Equipment Procedures Manual, includes JVs and IDCCs. They are analyzed to verify the transactions and the Property Inventory System is updated accordingly.

      At the end of each physical inventory, any changes discovered are updated on the database. These changes may involve room numbers, building numbers, custodians, etc.

    3. Transfers

      Transfers -GOVT owned equipment cannot be Transferred or Loaned to another University, entity or subcontractor or received by The Pennsylvania State University without prior written approval from the Government’s Procurement Contracting Officer (PCO). A copy of all correspondence should be forwarded to the delegated Administrative Contracting Officer (ACO). Transfer requests are handled by the University’s Research Administration Personnel (RAP). ARL submits their requests directly to the applicable PCO or ACO with a copy to the Supervisor of Property Inventory. Equipment should not leave the University until approval has been received from the PCO or ACO. Property Inventory should be notified after receipt of the PCO or ACO approval. At which time the equipment can be shipped to the new University, entity or subcontractor.

    4. Custodians/Principal Investigators(PI)

      The person who uses a particular piece of equipment is named the Custodian/PI on the database for that item. The Custodian /PI is verified/updated during physical inventories or when notified by the Administrative Area.

      Property Inventory also receives a listing, from the Office of Human Resources, of personnel who have ended their employment with the University. The listing is compared with the equipment database. If items of equipment are assigned to an individual on the list, the administrative area is notified and asked to update Property Inventory as soon as a new equipment custodian is identified. Property Inventory then updates the database.

      Custodians are normally the person responsible for verifying the receipt of the purchase, the safe storage and use of the equipment, as well as making sure the item is being used and maintained properly.

    5. Equipment Condition

      There are two fields on the screen for condition code and appear on listings as COND. Condition Code 1 and 2 are both one byte fields. Both are alphanumeric fields. See Equipment Codes. Most of the categories are self-explanatory.

      Most of these condition codes can be used for CAP equipment. GFE received by the University are normally listed as Condition Code 1 = U, Used-Usable Without Repairs and Condition Code 2 = 2, Good.

      The GOVT Disposal Condition Codes are used only by Property Inventory when requesting disposition instructions.

    6. Subcontractor

      Equipment items procured with GOVT title by the subcontractor are controlled by the subcontractor and submitted to the RAP upon request or at award close. The RAP submits this information to UP Property Inventory. Approval should be obtained from responsible GOVT PCO/ACO prior to sending GFE and CAP to Subcontractors or by having appropriate language written in the award. Appropriate shipping documents are to be prepared to reflect the movement.

    7. Disposals

      Property Inventory requests disposition instructions from the delegated PCO and/or ACO. The Custodian/PI sends a request to Property Inventory requesting disposition by using the Government/Sponsor Disposition Request Form, an internal form that details each equipment item using the Government’s Disposal Condition Codes. Property Inventory will notify the Custodian/PI and the RAP when instructions are received.

    8. Storage

      While awaiting disposition instructions Custodians are to store Federal government equipment separately from all other equipment per FAR 52.245-1(f)(vii)(b) and at the direction of the ACO.

  4. Physical Inventories

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    1. Purpose

      Physical inventories are taken by Property Inventory personnel to verify all pertinent equipment information such as location, serial and model numbers, custodians, etc. Inventories are also taken to verify the existence and use of equipment that is on the IBIS equipment database. Due to the nature of movable assets, a physical check is needed to keep track of equipment and to verify that procedures are being followed.

      At the Commonwealth Colleges and Campuses and Research areas not located near University Park, the physical inventory is completed by a designated employee located in that particular area. ARL employees do their own inventories due to the classified/secure nature of these sites. Consistent with the Property Inventory processes, ARL employees located at University Park utilize barcode readers or prepared listings. Commonwealth campus employees use prepared listings provided to them to conduct their inventories.

    2. Frequency

      A physical inventory is taken every two years of all Government Owned Equipment.

    3. Method

      1. A memo and a Pre-Inventory listing is sent to the Custodian/PI or with a copy of the memo only to the Financial Officer of the administrative area or college that is associated with the item approximately two weeks prior of the date the inventory is scheduled to begin. Departmental Contacts are encouraged to help Property Inventory Personnel locate the GOVT owned item(s).
      2. One week prior to the inventory Property Inventory personnel begin to contact by phone or email the Custodian/PI to set up an appointment to see the equipment item(s).
      3. Property Inventory will visit the area to be inventoried, and check all items against the listing. If an item is already tagged, the information on the listing is verified for accuracy. Any incorrect information is noted and any missing data is added. Property Inventory personnel will ask if the equipment is: not being used, broken, scrap, etc. If the Custodian/PI tells them one of the mentioned scenarios, they will ask if Property Inventory should seek disposition instructions from the sponsor. Their response is noted and if disposition is required, Property Inventory will contact Custodian/PI at the end of the inventory and seek dispositions instructions from the delegated PCO and/or ACO.
      4. Items not located will be noted and, at the end of the physical inventory, Property Inventory will contact the Custodian/PI asking for an explanation. Property Inventory will then request relief of accountability from the delegated PCO/ACO providing the explanation given and the Lost, Damaged, Destroyed, Theft (LDDT) report. Copies of this correspondence will also be provided to the Dean or Administrative Officer of the unit, the Financial Officer and the RAP of the area involved.
    4. Utilization of Property per FAR 52.245-1(f)(1)(viii)

      While conducting the physical inventory each principal investigator or custodian is requested to provide verbal communication that the item(s) are needed and/or are being used as authorized under the appropriate Grant/Contract/or other. Property no longer required will be reported to the sponsor’s administration in a timely fashion.

  5. Reports

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    1. Financial

      Final Property Close-Out Reports are required by a number of agencies such as ONR and NASA. It is extremely important that Penn State close programs in a timely manner. Delinquencies call into question the effectiveness of the University’s property control system. Penn State through Property Inventory Department identifies contracts/grants that are closing through various agency websites that are made available to them by Office of Sponsored Programs (OSP). These reports identify contracts/grants that are closing within the next 60 day period. The Final Property Report is due to the respective ACO 90 days after the contract end date.

      Annual Property Reports as of September 30 are due to the awarding agency or delegated ACO by October 15 or 31 if contractually required. An example of such a report is the NASA NF 1018.

      Other sponsors requesting reports, either Government or Industrial, send a request to OSP requesting a Final Property Close-Out Report. OSP forwards these requests to Property Inventory for completion.

      PSU compliance to the FAR 52.245-1, Alternate II, requirement;

      “The Contractor shall furnish the Contracting Officer a list of all property to which title is vested in the Contractor under this paragraph within 10 days following the end of the calendar quarter during which it was received.”

      PSU invoices are submitted with commodity object codes, which identify the property required under Alt. II.

    2. Department Listings

      Many departments request listings of the equipment assigned to them. Our current computer system, FTP File and Access Data base allows such listings to be generated. Property Inventory can provide many requested listings to the departments electronically. Additionally, Departments may view browse screens within IBIS. See IBIS Property Inventory Browse Screens.

    3. Subcontracts

      Subcontracts will have the appropriate terms and conditions placed on their sub-award to comply with the base contract. Subcontractors will be required to send detailed property reports upon request, annually and at the end of the award.

      The Applied Research Laboratory at Penn State requires subcontractors to complete a limited property survey analysis annually. This completed survey insures the contractor of their responsibilities and provides proof of their adequate property controls at their locations. See ARL Limited Subcontractor Survey. See Exhibit C.

      The University guideline for subrecipient monitoring is outlined in RAG80

      In situations where the subcontractors are not reporting to the University in a timely manner, we have been instructed by our current ACO to email the subcontractor’s representative with copies to our ACO and PLCO (Plant Contracting Officer).

    4. Property Closeout Process

      Property Inventory is responsible for monitoring awards and notifying Principal Investigators or department personnel of their property closeout responsibilities. The Principal Investigator is required to review and sign the “Property Closeout Certification Form”. After receiving direction from department or Principal Investigator the following will occur:

      • If there is accountable property still remaining on award:
        • Disposition request will be sent to sponsor by Property Inventory
        • Transfer request will be sent from the departments contracts office with a carbon copy going to Property Inventory
        • Final sponsor forms will be completed, by Property Inventory or ARL
        • Property Inventory will review all forms for accuracy and sign off
        • Forms will be submitted to sponsor by Property Inventory and ARL
        • Official University and Sponsor databases (IUID Registry) will be updated by Property Inventory
  6. Property Audits

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    Property management systems, policies, and processes are routinely reviewed and audited to determine whether performance standards and acceptable levels of compliance are being met.

    Audits provide a systemic check or assessment, review, and evaluation of PSU’s property control system. Results serve as a basis to confirm effectiveness and identify areas for potential improvement and risk management. The key to an acceptable property management system and a successful audit is timely, verifiable, accurate, and complete record keeping that are in compliance with all established policies, procedures, and standards.

    Satisfactory audit results are critical. Compliance with University and Sponsor requirements help ensure ongoing availability of assets and maximize the benefits and support to University instruction, research, and administration. Departments are responsible for facilitating ongoing property awareness and enabling compliance with established policies and procedures.

    1. Key Policy Statements

      • Property Inventory (P.I.) is the primary liaison for property related audits.
      • Departments are responsible for facilitating ongoing property awareness and enabling compliance with established policies and procedures.
      • Departments should notify Property Inventory if they are directly contacted by an external auditor for a property related audit.
      • Departments are responsible for providing and maintaining documentation as necessary for audit support.
      • A Department Property Contact (DPC) should attend all relevant ongoing training to remain aware of property compliance requirements.
    2. Auditing Organizations

      Various organizations, both internal and external, perform or participate in the performance of property audits at PSU. These include but are not limited to:

      • PSU’s Office of Internal Audit (OOIA)
      • Office of Naval Research (ONR)
      • Defense Contract Audit Agency (DCAA)
      • Deloitte & Touche LLP (D&T), PSU’s independent auditor
      • Sponsors
      • PSU Self-Assessment

      Property Inventory assumes the role of primary liaison between the University and the departments for property-related audits. If an outside agency contacts a DPC or other department personnel directly regarding an audit, refer the auditor to the Property Inventory department.

      When audits are scheduled, Property Inventory will give as much advance notification to the departments as possible. The DPC should be actively involved and may be requested to participate as an escort. They must be able to locate and identify property as requested by auditors and be able to provide supporting documentation upon request. If the DPC cannot provide these services, it is important that they inform the audit liaison of someone that can, such as the Property Custodian.

    3. External Audits

      The government and PSU’s independent auditor, D&T, conduct broad, procedural, audits on a regular basis. These audits may be property-specific or include property-related transactions as part of other system audits.

      The ONR is delegated administrative and contractual oversight for the majority of federal awards received by PSU. They are the primary external auditing agency which conducts the Property Control Systems Analysis (PCSA) reviews on behalf of the government at PSU. In addition, there may be other sponsors, such as Department of Energy (DoE) and National Institute of Health (NIH), which also conduct property audits. The DCAA also performs audits involving property management. D&T is responsible for the financial systems audits per OMB uniform guidance.

      The purpose of these audits is to determine whether the policies and procedures which reflect government, other sponsor and PSU requirements are documented and established standards are met. Successful completion of these audits is critical to ensure appropriate systems controls are in place to mitigate financial or compliance risk as well as continued approval of PSU’s property management system.

    4. Internal Audit By PSU/Self-Assessment

      As a proactive measure, PSU’s OOIA is responsible for conducting audits to ensure system-wide database integrity and training efficacy as well as to confirm that detailed transactions are accurate and timely. OOIA, from an institutional compliance perspective, ensures that laws, regulations and contractual requirements are being met at all levels within the University.

      Property Inventory abd ARL may periodically conduct self assessments. Self assessments are necessary in order to determine whether Property Inventory and the departments meet established standards for management of property; results are provided as part of the supporting documentation requested by external auditors.

      NOTE: The University has hired a third-party consultant to design and conduct the FAR 52.245-1 (b)(4) required property control system self-analysis. Last completed, May 26, 2015.

    5. Property Audit Scope

      Property management audits review business processes associated with all the facets of the asset life cycle. The scope and audit methodology are determined by the auditing team and is dependent on the purpose for which the audit is being performed. Within the scope of an audit, compliance with any or all of the following areas may be examined:

      • property management policies and procedures
      • property awareness and compliance with procedures and standards
      • pre-purchase screening and approvals
      • acquisition and procurement practices
      • receiving and identification
      • record completeness, accuracy and timeliness
      • subcontract management
      • physical inventory
      • utilization of property
      • property reports
      • excess property disposal process
      • award closeout
      • availability and completeness of supporting documentation and records retention
      • other facets of property management (i.e. maintenance of equipment and subcontractor property control, system, Item Unique Identification, and property security)
    6. Audit Results

      Throughout an audit, close interaction should occur between the auditor(s) and the designated PSU liaison. Audit results should be provided in writing and include a detailed report of the audit activity.

      OOIA audit activities are coordinated directly with department management, usually with a courtesy copy to the Property Inventory department. OOIA also provides copies to Property Inventory of audit results and requests for implementation of corrective actions that are related to property.

      Audit findings and recommendations may require changes in policies and procedures or departmental practices. Responses are prepared by Property Inventory. A copy is provided to the OOIA. Creation and oversight of corrective action plans, where needed, are the responsibility of Property Inventory. Departments having audit findings are notified and participation by key personnel is required to ensure identification and implementation of corrective actions.

      Key personnel and their supervisors are informed of general changes via Property Forums, Email notifications and information posted on the Property Inventory Website.

    7. Record Retention

      It is important that physical or electronic copies of essential property documents are saved and readily available to support audits and self-assessment or other types of reviews.

    8. Audit Impact

      Satisfactory audit results are critical. Compliance with University and Sponsor requirements facilitate the ongoing availability of assets for instruction, research, and administration. Effective property controls and management processes help ensure that new proposals and on-going research continue unimpeded and that the potential liability associated with risk of loss is minimized.