1845.7201 Definitions.
"Category," as used in this subpart, means a major segment of a contractor's property control system (e.g., acquisition, receiving, records, storage and movement, consumption, utilization, maintenance, physical inventories, subcontractor control, or disposition).
"Characteristic," as used in this subpart, means a segment of a functional area subject to analysis or review. Characteristics are classified as Class I, subject to statistical sampling, and Class II, subject to judgment or observation techniques.
"Lot," as used in this subpart, means an aggregation of documents, records, articles, or actions selected for review because of common characteristics. For evaluation of the lot, all characteristics for which a lot is tested must be common to all units within the lot.
"Supporting responsibility," as used in this subpart, relates to the assignment of a subcontract, or a portion of a prime contract being performed at a secondary location of the prime contractor, to a property administrator other than the individual assigned to the prime location.
"Property control system," as used in this subpart, identifies a contractor's internal management program encompassing the protection of, preservation of, accounting for, and control of property from its acquisition through disposition.
1845.7202 General.
This subpart describes major elements of the NASA Contract Property Management Program. It provides guidance to NASA installation personnel responsible for NASA contract property (NASA personal property in the possession of contractors). It applies to all NASA installation personnel charged with this responsibility, including industrial property officers and specialists, property administrators, and plant clearance officers. It also provides detailed procedures for property administration. The NASA Contract Property Management Program includes the following three major elements:
(a) Performance of property administration and plant clearance by DOD under delegations from NASA, pursuant to 1842.101.
(b) Performance of property administration and plant clearance by NASA under certain situations, pursuant to 1842.203.
(c) Maintenance of property administration and plant clearance functional oversight, regardless of delegations, pursuant to 1842.175.
1845.7203 Delegations of property administration and plant clearance.
When delegated to DOD, property administration and plant clearance are performed in accordance with DOD's regulations and procedures, as amended by the NASA Letter of Contract Administration Delegation, Special Instructions on Property Administration and Plant Clearance. These Special Instructions are developed by NASA Headquarters, Logistics Management Office, Code JLG, and are available from that office upon request. The contracting officer shall issue the Special Instructions with delegations whenever Government property will be involved. Additional or more tailored property instructions are not proscribed but must be coordinated with Code JLG before issuance.
1845.7204 Retention of property administration and plant clearance.
NASA may occasionally retain the property administration and plant clearance function, such as for contract work performed at the installation awarding the contract and not subject to the clause at 1852.245-71, Installation-Provided Government Property. In these cases, property administration shall be performed in accordance with Subparts 1845.2 through 1845.7, and plant clearance shall be performed in accordance with FAR Subpart 45.6 and Subpart 1845.6. Under the clause at 1852.245-71, property administration and plant clearance are neither delegated nor retained; they are simply not required because the property is treated as installation rather than contract property.
1845.7205 Functional oversight of property administration and plant clearance.
NASA contracting officers retain functional management responsibility for their contracts. Utilization of the contract administration services of another Government agency in no way relieves NASA contracting officers of their ultimate responsibility for the proper and effective management of contracts. The functional management responsibility for contract property is outlined below. Beyond individual contracting officers, each NASA installation has designated an industrial property officer to manage and coordinate property matters among the various contracting officers, technical officials, contractor officials, and delegated property administrators and plant clearance officers. Generally, that individual is responsible for the entire contract property management function outlined below; the installation is responsible for the entire function regardless of how it is organized and distributed. The responsibilities are as follows:
(a) Provide a focal point for all management of contract property, including Government property (Government-furnished and contractor-acquired) provided to universities as well as to industry.
(b) Provide guidance to contracting and other personnel on the NASA property provisions.
(c) To the extent feasible, review property provisions of procurement plans, solicitations, contracts, and modifications for potential problems. Propose changes as necessary.
(d) To the extent feasible, participate in pre-award surveys/post-award orientations when significant amounts of Government property will be involved.
(e) Ensure that vesting-of-title determinations are made and documented pursuant to FAR 35.014(b).
(f) Maintain effective communications with delegated property administrators and plant clearance officers to keep fully informed about contractor performance and progress on any property control problems.
(1) Obtain and review property control system survey summaries for all contracts for which property administration has been delegated. Advise Headquarters Code JLG of any severe or continuing problems.
(2) Provide property administrators copies of all pertinent contract property documentation.
(g) Work with the NASA Equipment Management System (NEMS) Coordinator and contracting officers to ensure contractor reporting to and screening of NEMS.
(1) Monitor contractors' performance in submitting DD Form 1419's or equivalent request format before acquiring centrally reportable equipment (CRE) and in submitting DD Form 1342's or equivalent report format after receiving CRE.
(2) Ensure that an annual NEMS verification is performed in accordance with 1845.505-670(c) and NHB 4200.1, paragraph 4.406b.
(h) Review and analyze NASA Form 1018's, Reports of Government-Owned/Contractor-Held Property.
(1) Ensure an annual comparison of 1018's with NEMS in accordance with NHB 4200.1, paragraph 4.406c, to detect possible over/under reporting to NEMS and possible failure to screen NEMS.
(2) Check new disparities disclosed under subparagraph (1) above with the appropriate property administrator and document the results.
(i) Negotiate, or ensure the negotiation of, facilities contracts when required by FAR 45.302 and 1845.302. Advise Headquarters Code JLG annually of new and completed facilities contracts.
(j) Review property administrators' approvals of relief of responsibility for lost, damaged, and destroyed property and question any excessive or repetitive approvals.
(k) When appropriate, make recommendations to source and performance evaluation boards regarding property management and award fee criteria and evaluations regarding property management.
(l) Monitor plant clearance status to preclude delays in contract closeout.
(m) Maintain contract property files for all transactions and correspondence associated with each contract. Upon receipt of Standard Form 1424, Inventory Disposal Report, and DD Form 1593, Contract Administration Completion Record, or equivalents, merge all property records for the contract and forward for inclusion with the official completed file.
(n) Perform on-site property administration and plant clearance when they are not delegated to DOD and the property is not subject to the clause at 1852.245-71. (The remainder of this subpart provides detailed guidance on such property administration).
1845.7206 Responsibilities of property administrators and plant clearance officers.
1845.7206-1 Property administrators.
(a) When property administration is not delegated to DOD, the property administrator shall evaluate the contractor's management and control of Government property and ascertain whether the contractor is effectively complying with the contract provisions. The property administrator's responsibilities include--
(1) Developing and applying a system survey program for each contractor under the property administrator's cognizance;
(2) Evaluating the contractor's property control system and approving or recommending disapproval;
(3) Advising the contracting officer of any (i) contractor noncompliance with approved procedures and (ii) other significant problems the property administrator cannot resolve, and recommending appropriate action, which may include disapproval of the contractor's property control system;
(4) Resolving property administration matters as necessary with the contractor's management, personnel from Government procurement and logistics activities, and representatives of the NASA Office of the Inspector General, of the Defense Contract Audit Agency (DCAA), and of other Government agencies; and
(5) Recognizing the functions of other Government personnel having cognizance of Government property and obtaining their assistance when required. (These functions include, but are not limited to, contract audit, quality assurance, engineering, pricing, and other technical areas. Assistance and advice on matters involving analyses of the contractor's books and accounting records and on any other audit matters deemed appropriate shall be obtained from the cognizant auditor.)
(b) The participation of property administrators (or other Government industrial property personnel) in pre-award surveys/post-award orientations is required whenever significant amounts of Government property will be involved, in order to reveal and resolve property management problems early in the procurement cycle.
1845.7206-2 Plant clearance officers.
When plant clearance is not delegated to DOD, NASA plant clearance officers shall be responsible for--
(a) Providing the contractor with instructions and advice regarding the proper preparation of inventory schedules;
(b) Accepting or rejecting inventory schedules and DD Form 1342;
(c) Conducting or arranging for inventory verification;
(d) Initiating prescribed screening and effecting resulting actions;
(e) Final plant clearance of contractor inventory;
(f) Pre-inventory scrap determinations, as appropriate;
(g) Evaluating the adequacy of the contractor's procedures for property disposal;
(h) Determining the method of disposal;
(i) Surveillance of any contractor-conducted sales;
(j) Accounting for all contractor inventory reported by the contractor;
(k) Advising and assisting, as appropriate, the contractor, the supply and equipment management officer, other Federal agencies, and higher headquarters in all actions relating to the proper and timely disposal of contractor inventory;
(l) Approving the method of sale, evaluating bids, and approving sale prices for any contractor-conducted sales;
(m) Recommending the reasonableness of selling expenses related to any contractor-conducted sales;
(n) Securing antitrust clearance, as required; and
(o) Advising the contracting officer on all property disposal matters.
1845.7207 Initiation of property administration.
1845.7207-1 Control of assignments.
(a) The procurement officer or a designee shall establish and maintain a Contract Assignment Control Register for each contractor, showing the--
(1) Contractor's name and address;
(2) Contract number;
(3) Type of contract;
(4) Date of assignment of the property administrator and his or her name; and
(5) Date of completion or termination of the contract, or transfer of the property administrator.
(b) Property reported received at a contractor's plant without contractual coverage shall be recorded in a suspense file, pending investigation and resolution by the property administrator.
1845.7207-2 Analysis of contract and establishment of contract property control data files.
(a) The property administrator shall analyze each contract providing for Government property to estimate the property administration effort to be applied. The analysis shall be sufficient to establish the management controls necessary for ensuring compliance with contract requirements and development of a suitable system survey program.
(b) The property administrator shall establish Property Summary Data Record containing--
(1) The contractor's name and address, and the contract number;
(2) The type of contract, modifications (including change orders), and special or nonstandard clauses pertaining to Government property;
(3) The date of final review and date of execution and transmittal of the DD Form 1593 or equivalent;
(4) Supporting property administration assignments; and
(5) Name(s) of the property administrator(s) and date(s) of tenure.
(c) (1) The property administrator shall establish a Contract Property Control Data File, which shall include as a minimum--
(i) The Property Summary Data Record;
(ii) A copy of the contract or provisions pertinent to property administration, and comparable data regarding any subcontracts involving Government property;
(iii) The record of initial review, evaluation, and approval of the contractor's property control system; and, if applicable, the record of withdrawal of approval and basis for it, reinstatement of approval, and deviations granted;
(iv) A record of visits and property system surveys performed, including appropriate work papers, deficiencies disclosed, and corrective actions taken;
(v) Contractor's receipts for Government property, when required;
(vi) The record of final review and execution of the property administrator's statement of closure of the contract property account;
(vii) Other pertinent correspondence and documents, including, as applicable, inventory adjustments, investigations, recommendations, and determinations;
(viii) Records concerning supporting property administration delegations; assist actions involving special reviews; and other applicable reviews at subcontractor's plants;
(ix) Records of inspection and audits performed by other activities; and
(x) Reports relating to Government property prepared by the contractor pursuant to the contract.
(2) When more than one contract is involved at one contractor location, records relating to more than one contract shall be transferred to a contractor's General File, and the Property Summary Data Record shall be so annotated.
1845.7208 Initial evaluation and approval of contractor's property control system.
1845.7208-1 General.
Normally, the initial contact by the contract administration office with a contractor is through a postaward orientation. When a conference is held for this purpose, the property administrator shall ensure suitable discussion of property administration requirements and responsibilities. When a conference is not held, the property administrator, upon assignment of a contract, shall forward a letter to the contractor--
(a) Inviting attention to the contractor's responsibilities regarding Government property under the contract, including any specialized controls, and the extent of the contractor's liability for loss, damage, or destruction of Government property during any period in which the contractor's property control system does not have the written approval of the property administrator;
(b) Requesting the name of the contractor's representatives to contact for review and discussion of the proposed property control system; and
(c) Requesting that policies, instructions, and procedures necessary for fully implementing the property control system be available for evaluation.
1845.7208-2 Review of procedures.
(a) Following assignment of an initial contract, the property administrator shall review the contractor's proposed property control system procedures to determine--
(1) Inadequate or questionable areas in the proposed procedures for compliance with NASA contract requirements;
(2) Essential controls not provided by the proposed procedures;
(3) Areas in the proposed procedures requiring physical observation or verification; and
(4) Subcontractors, or secondary locations of prime contract performance, and the need for physical observation or verification of property controls at those locations.
(b) It is normal industry practice to provide for property control by means of written procedures that communicate company standards, techniques, and instructions to operational personnel for uniform application. However, a contractor with few employees may not need written procedures for effective management of Government property. In such cases, the property administrator shall evaluate the adequacy of the contractor's system on the basis of the contractor's explanation of its controls and observation of their application, and shall prepare a brief description of the procedures for inclusion in the Contract Property Control Data File. In the latter instance, the contractor's signature shall be obtained signifying concurrence with the property administrator's written description.
(c) The contractor's plant shall be visited to determine that the contractor's operation of the system provides adequate controls for the Government property to be furnished or acquired.
(d) The means of obtaining the information necessary for approving the contractor's property control system is a matter for the property administrator's judgment. Test examinations and verification in specific categories may be necessary to ensure the reliability of the final evaluation and permit conclusions as to the acceptability of controls for all categories and the system as a whole.
(e) The property administrator shall examine the contractor's procedures to determine whether they meet the contractual requirements for property control. The property administrator shall test and analyze the contractor's system, noting or commenting on the acceptability of the procedures in preparing the record of system evaluation (see 1845.7208-4).
(f) If the contractor's property control system has previously been approved and a new contract requires the expansion of existing or the establishment of additional controls, the property administrator should normally limit the review to the new requirements. If the system is adequate, the property administrator shall record this fact on the Property Summary Data Record for the contract. Notification to the contractor is not required. However, if the property administrator determines that the contractor's property control system does not adequately meet the new contract requirements, the property administrator shall annotate the Property Summary Data Record for the contract involved appropriately and notify the contractor in writing of the required changes.
(g) In reviewing the contractor's property control system, the property administrator shall consider the provisions of 1845.505-14 and ensure that the contractor's system provides for maintaining financial data and furnishing required reports within the time limits specified.
1845.7208-3 Exit interview with the contractor.
Upon completing the review, the property administrator shall hold an exit interview with the contractor to discuss any category in which the controls or procedures were found inadequate and shall advise where corrective action is required before an approval of the system can be granted. When the contractor is willing to correct a deficiency or questionable practice immediately, the documentation supporting the property administrator's findings and conclusions shall include a statement to this effect. The contracting officer responsible for the predominant value of NASA property at the facility shall attend the exit interview with the contractor if major deficiencies exist in the property control system, past deficiencies remain uncorrected, or the value of the personal property involved exceeds $1,000,000.
1845.7208-4 Record of system evaluation.
Upon completing the evaluation of the contractor's system, the property administrator shall prepare a written summary of findings to support approval of the system or any requirement for corrective action before approval. A report of visit or other documentation may be utilized if the participating contractor and Government personnel are listed, actions taken are adequately described, and the property administrator's determination is clearly stated.
1845.7208-5 Notification of deficiencies.
If deficiencies have been found, the property administrator shall prepare a letter to the contractor for signature by the contracting officer, listing them and noting any agreement by the contractor to correct them. The contractor shall respond within 30 days, providing the precise action to be taken and the time required to correct each deficiency.
1845.7208-6 Resolution of differences.
If the contractor's response is unsatisfactory, the contracting officer, along with the property administrator, shall meet with the contractor in an effort to arrive at a mutually satisfactory corrective program. The contractor shall be requested to confirm in writing any new commitments arising from this meeting. If the contractor fails to correct deficiencies in its property control system within a reasonable period, the contracting officer shall refer the matter by memorandum to appropriate levels of management within the NASA installation and Headquarters staff offices, depending on the criticality of the problem involved. The memorandum shall include--
(a) A specific, concise, and documented statement of the problem;
(b) A statement of the contractor's position; and
(c) The recommended action.
1845.7208-7 Letter of approval.
(a) Approval of a contractor's property control system shall be conditioned upon a joint determination, by the property administrator and the contracting officer that no deficiencies exist in the property control system or that only minor deficiencies exist and the contractor has agreed to correct them.
(b) If the contractor's property control system is acceptable, the property administrator shall advise the contractor in writing. However, if the approval was preceded by correspondence between the contracting officer and the contractor (1845.7208-5 and -6), the property administrator shall reference it in the approval and advise the contractor that the corrective action taken or planned is acceptable. A copy of the letter of approval shall be sent to the contracting officer.
(c) If the contract involves Government property at subcontractor plants or prime contractor secondary locations, or both, and the controls for it are determined adequate, the approval shall be expanded to include the procedures governing Government property at those locations.
1845.7209 Property administration during contractor performance.
1845.7209-1 Property administration plan.
(a) The property administrator shall develop a property administration plan for each contractor's plant, covering the property control system utilized on Government contracts. The plan shall provide for surveys and shall be augmented to cover responsibilities imposed by new contracts, changing conditions, or marginal performance. If approval of the contractor's system is unduly delayed at inception of the contract by the contractor's failure to provide an acceptable system, or is withdrawn because of unsatisfactory conditions disclosed after approval, the property administration plan shall be expanded as necessary to reasonably ensure that loss, damage, or destruction of Government property is disclosed in a timely manner. Special attention shall be given to reasonably ensuring that any loss, damage, or destruction occurring during a period when a contractor's system is not approved is identified before approval or reapproval.
(b) The property administrator must exercise judgment in developing the plan and in determining which categories (see Table 1845-1) of the contractor's property control system warrant examination. Dollar amounts and volume of activity, types of property, complexity of the contractor's system, risk to the Government, and previous experience regarding the adequacy of the contractor's controls are factors determining the extent and scope of the system survey plan.
(This is not an exclusive list and may be modified as necessary.)
Acquisition. The process of acquiring Government property either through requisition or transfer from Government sources or through purchase, including purchases from the contractor's stores.
a. Functional Area: Government-furnished property.
Class Characteristic I (1) Item is contractually authorized. I (2) Requesting document is properly prepared and processed. I (3) Quantity requested is reasonable but not available in existing stocks at the plant site for use on the requiring contract. I (4) Requests are controlled until items are received or requirement cancelled. Status file is maintained. II (5) Requests are submitted in a timely manner to minimize use of emergency priorities.
b. Functional Area: Contractor-acquired property.
Class Characteristic I (1) Item is contractually authorized. I (2) Quantity ordered is reasonable but not available in existing stocks at the plant site for use on the requiring contract. I (3) Purchase order distribution, cancellation, and change are properly controlled. I (4) Item description, contract number, and price, are reflected in purchase order. I (5) Consent or approval by the contracting officer is obtained as required.
Receiving. The process of Government property initially entering into a contractor's custody.
Functional Area: Receiving process.
Class Characteristic I (1) Receiving report adequately describes item and shows count and condition. If quantity, condition, or description differs from that shown on inbound shipping document, proper adjustment document is prepared and property administrator is notified. I (2) Receiving report is promptly and properly prepared and controlled, and distribution includes copy to property accounting organization. I (3) Item received is properly classified (e.g., special tooling). I (4) Item is properly identified and marked during the receiving process. II (5) Returnable and reusable containers are properly controlled and accounted for. II (6) Misdirected shipments are adequately controlled pending receipt of disposition instructions.
Records. The official accounting and subsidiary records maintained by a contractor to show status and to control all Government property furnished to or acquired by it.
a. Functional Area: Inventory control (real and personal property).
Class Characteristic I (1) Accounting record conforms to FAR and NASA FAR Supplement requirements and is accurate. I (2) Documentation in support of accounting entries is sufficient. I (3) Accounting entries are made without undue delay. I (4) Stock levels and reorder points are reflected on record, are reasonably sound, and are consistent with the contract. I (5) Accounting records are closed by means of proper accounting entry, adequately supported by documentation. I (6) Locator system is adequate and accurate.
b. Functional Area: Fabrication records.
Class Characteristic I (1) Records of items fabricated conform to FAR requirements and are accurate. I (2) Documentation in support of accounting entries is sufficient.
c. Functional Area: Receipt and issue file.
Class Characteristic I Records of items conform to FAR and NASA FAR Supplement requirements and are accurate.
d. Functional Area: Custodial records.
Class Characteristic I (1) Custodial record is adequate and accurate. I (2) Records are properly closed.
e. Functional Area: Scrap and salvage records.
Class Characteristic I (1) Scrap and salvage records are adequate and accurate. I (2) Items reclaimed during salvage operations are properly classified. I (3) Documentation in support of record is adequate. I (4) Records are properly closed.
f. Functional Area: Multicontract cost and material control system.
Class Characteristic I (1) Records conform to FAR requirements and are accurate. I (2) Documentation in support of record is adequate. I (3) Accounting entries are made promptly. I (4) Records are properly closed.
Storage and movement. The process of storing and moving all types of Government property includes movement from one point to another for any purpose and protection during movement and storage.
a. Functional Area: Warehousing.
Class Characteristic II (1) Housekeeping is adequate. II (2) Government property is segregated from contractor property. II (3) Adequate protection of Government property, including hazardous material, precious metals, sensitive items, etc., is provided. II (4) Measures for corrosion prevention, age control, etc., are adequate.
b. Functional Area: Internal and external movements.
Class Characteristic II (1) Item is moved under proper authority, supported by issue slip, shipping ticket, location change order, etc. II (2) Adequate protection is provided during movement, such as packing, covering, skidding, proper handling equipment and techniques, and safety precautions. II (3) Loss or damage occurring during movement is reported to the property administrator.
Consumption. The process of incorporating Government-owned property into an end item or otherwise consuming it in performance of a contract.
a. Functional Area: Reasonableness of consumption.
Class Characteristic I (1) Quantities consumed are reasonable when compared to bill of material, material requirement lists, established scrap rates, etc. II (2) Serially numbered or selectively matched items are incorporated in appropriate end item.
b. Functional Area: Conservation.
Class Characteristic II (1) Excesses are promptly returned to stores and recorded. II (2) Where appropriate, maximum use is made of repair and salvage procedures in lieu of using new items. II (3) Where appropriate, a first-in, first-out (FIFO) system is employed with respect to "dated" items.
Utilization. The process of utilizing plant equipment, special tooling, special test equipment, material, and space property for the purpose for which furnished or acquired.
a. Functional Area: Plant equipment, special tooling, special test equipment.
Class Characteristic I (1) Item is used for purpose authorized by contract (not diverted to other use). I (2) Degree of utilization justifies retention.
b. Functional Area: Material and space property.
Class Characteristic I (1) Item is used for purpose authorized (not diverted to other use). I (2) Degree of utilization justifies retention of stock on hand.
Maintenance. The process of providing the amount of care necessary to obtain a high quality of production and the most useful life of Government property.
a. Functional Area: Preventive and corrective maintenance.
Class Characteristic I (1) Item is scheduled for periodic maintenance (including technical order compliance). I (2) Maintenance is performed according to schedule. I (3) Records of normal maintenance and corrective actions are adequate and accurate.
b. Functional Area: Capital-type rehabilitation (includes real property).
Class Characteristic I (1) Inspection is scheduled to determine need for major repair, replacement, or other rehabilitation . II (2) Inspection is performed as scheduled and results are reported. II (3) Rehabilitation is accomplished when authorized. II (4) Records of major repair, replacement, or other rehabilitation, including cost, are adequate and accurate.
Physical inventories. The process of physically inventorying Government property and comparing it to records of the property (includes locating and counting, tagging or marking, describing, recording, and reporting results to the property administrator).
a. Functional Area: Performance.
Class Characteristic II (1) Periodic physical inventories are performed. II (2) Physical inventories are performed upon termination or completion of contract unless waived by property administrator. I (3) Inventoried property is appropriately tagged or marked. I (4) Inventory count is accurate. II (5) Inventory procedures provide that personnel who perform inventory are not those who maintain the property records or have custody of the property, unless the contractor's operation is so small as to make this impracticable. II (6) Results of inventories are reported to property administrator within 30 days.
b. Functional Area: Reconciliation and adjustment.
Class Characteristic II (1) Each instance of loss and discovery of unrecorded property is investigated. II (2) Causes are determined for above discrepancies. II (3) Actions necessary to prevent recurrence are determined and taken for above discrepancies. II (4) Adjustments to records (other than for property losses) are made within 30 days. II (5) Adjustments to records for property losses are made within 30 days of contracting officer's or property administrator's notification of relief of responsibility or other determination.
Subcontract control. The process of prime contractor control over subcontractors with respect to Government property.
a. Functional Area: Prime contractor controls.
Class Characteristic I (1) Subcontract reflects adequate instructions with respect to subcontractor responsibilities. I (2) Records of Government property in possession of subcontractors conform to FAR and NASA FAR Supplement requirements. I (3) Adequate documentation supports accounting entries. II (4) Prime contractor's surveillance over Government property in possession of subcontractors is adequate.
b. Functional Area: Subcontractor control. If the prime contractor has designated the subcontractor's records and controls as the official contract records and controls of Government property in the subcontractor's possession, or if adequacy of controls cannot be determined by review of the prime contractor's control, the subcontactor's property control system shall be evaluated in the same manner as that of a prime contractor, in accordance with procedures and criteria set forth in this Subpart 1845.72.
Disposition. The process of requesting disposition instructions and effecting disposal of Government property.
a. Functional Area: Disclosure of excess.
Class Characteristic I (1) Excess items are screened for use on other contracts before declaration as excess. I (2) Items determined excess are promptly reported. I (3) Declaration as excess is complete and accurate. I (4) Item was allocable to contract from which declared excess.
b. Functional Area: Disposal.
Class Characteristic I (1) There is proper authority for disposition. I (2) Item was disposed of within a reasonable time after authority was received. I (3) Identification tag is removed from item prior to disposal, when appropriate. I (4) Documentation of disposition is complete and reflects authority, disposal action, and date of disposal and is posted to record. I (5) When appropriate, proceeds have been credited to the Government.
1845.7209-2 System surveys: surveillance.
The property administrator shall conduct a complete system survey annually to obtain thorough knowledge of the contractor's efficiency and system of property control. Completion of a system survey involving complex property control systems may require detailed tests and evaluations over an extended period of time. If deficiencies in physical control or records are disclosed, the property administrator must (a) ensure that the contractor takes corrective action and (b) evaluate its effectiveness. In such instances, test and evaluation of any one category shall be completed as expeditiously as possible, and the working papers and analysis shall be retained for consideration and incorporation into the summary and survey case file.
1845.7209-3 System surveys: scheduling and planning.
(a) At the beginning of each calendar year, the property administrator shall prepare a schedule showing the names of the contractors and the dates on which each system survey is to be initiated and completed.
(b) Before initiating any system survey, the property administrator shall establish a survey plan providing, as a minimum--
(1) Identification and listing of the categories, functional areas, and characteristics to be evaluated (see Table 1845-1);
(2) Evaluation of approved property control procedures applicable to the categories to be examined, and noting of any portions of them that should be reviewed with operating personnel for possible updating (if a functional area of the property control system is not covered by procedures, no attempt should be made to survey that area at that time, but that area should be recorded as unsatisfactory and action taken to correct the condition); and
(3) Directions for preparing work papers necessary to document the file.
1845.7209-4 Testing the system.
In conducting tests of the contractor's property control system, the following factors should be considered to assure adequate coverage of requirements peculiar to particular classes of property and functional areas:
(a) Materials. Materials should be considered as bulk quantities, as contrasted to individual items. Examinations should be directed to--
(1) Tracing inbound transportation units from (i) bills of lading or other transportation documents to receiving reports, in order to verify the receiving reports and to ensure that proper action is taken on shortages, damages, and other discrepancies, and (ii) stock records to assure that the receipts were accurately posted;
(2) Abstracting nomenclature and balance data from stock records and making physical counts to determine accuracy of the stock records;
(3) Tracing posting of credits to (i) stock records (by date, reference number, and quantity) and (ii) issue documents, in order to assure accuracy of the postings and validity of the documents (signature by authorized individual and indication of reasons for issue or point of delivery, or both, to indicate proper contract use); and
(4) Determining, to the extent practicable at the point of receipt and use, whether undue quantities are issued, charged to cost, and held on the plant floor rather than being held under better security in stores.
(b) Custodial items. Issues shall be traced from stores records to tool cribs, office stock rooms, uniform rooms, and the like, to determine whether they are taken into account as part of a sound control system. It should be determined that issues to contractor personnel are covered by tool chits, uniform slips, or other mechanisms to ensure return, or ability to locate items to be returned, ensuring that new items are not issued without return of worn-out items or that suitable explanation is provided.
(c) End items. General techniques for surveying materials are applicable to end items placed in storage pending shipment. Examination shall include tracing from Government acceptance records of the contractor's claims for reimbursement to physical quantities on hand and quantities on validated shipping documents.
(d) Plant equipment costing less than $5,000. If summary stock records are used for this class of property, examination using the "bulk quantities" approach in paragraph (a) above is applicable but shall also cover--
(1) Identification if required pursuant to FAR 45.505-5 (any identification numbers shall be physically verified); and
(2) Location as prescribed in FAR 45.505(g), creating need for physical verification of presence or absence of the property in the location shown by the location record.
(e) Plant equipment costing $5,000 or more. Testing on an item-by-item basis is usually required to achieve desired results. Determinations demanding special attention include whether--
(1) Government screening and approval requirements are observed;
(2) Classification of property is accurate, both at time of requisition or purchase and at time of receipt, through the use of Cataloging Handbooks H2-1, H2-2, and H2-3;
(3) An item is actually applied to the requirement for which acquired, and, if deviation is made, that any necessary notice and Government approval have been obtained;
(4) Receiving documentation is complete and accurate, indicating assignment of identification number, treatment of accessory and auxiliary equipment as required, and the DD Form 1342 (DoD Property Record), or equivalent format, is prepared and processed when required by 1845.505-670;
(5) From physical inspection of the property, the equipment records are accurate, including location and classification as to use (examination shall be conducted from property to records and from records to property); and
(6) Disposition is initiated as required if equipment is no longer required at the plant (examination shall include the adequacy of the procedure for preparing and submitting DD Form 1342 (Property Record), or equivalent format, where specified, propriety of authority for shipment, and proper accounting for accessory and auxiliary equipment).
(f) Special test equipment. The examination of special test equipment shall be essentially the same as for plant equipment costing $5,000 or more, except for recognizing the greater complexity of assemblies classified as single items and the possible need for assistance and advice of engineering personnel. Examinations shall include tracing of individual components into the assembly to assure a clear trail, particularly with respect to general purpose test equipment components, and propriety of disposition of components upon disassembly.
(g) Special tooling. Testing for plant equipment, as in paragraphs (d) and (e) above, may be used as a guide to establish the method and sampling for special tooling. When option as to title to special tooling is involved under terms of the contract (see the clause at FAR 52.245-17, Special Tooling), examination need only be sufficient to comply with the request of the contracting officer.
(h) Real property. After initial turnover of real property to a contractor, tests and examinations normally shall be directed to work orders of the contractor and documentation from Government sources as to additions and other capital improvements or disposals or capital decreases.
(i) Scrap and salvage. Tests relating to scrap and salvage may be similar to those for materials as outlined in paragraph (a) above. However, special attention should be given to--
(1) Tracing from credit entries on materials records (showing turn-in to scrap) to corresponding debits to scrap records;
(2) Determining from analysis of consumption of materials over a given period that the quantities indicated as being scrapped or spoiled are matched with comparable receipts in the scrap and salvage accounts; and
(3) Determining that, when conversions of units of property to pounds of scrap or from estimated to scale weights or to other units of measure are made, the formula for the conversion is shown on the document affected or is readily available in the approved contractor procedure.
(j) Analyzing consumption of materials. It shall be determined by both physical examination and analysis of records that quantities consumed are for proper purposes and in reasonable amounts. In analyzing consumption of component parts or other production materials, unit allowance (equalling amount required per end-item plus normal spoilage) for each line item of materials may be available in the contract, bill of materials, blueprints, or shop drawings of items fabricated, or in cost computations supporting the end-item price. If such unit allowance information is not available, technical personnel may be consulted as to whether quantities consumed are within accepted industry standards.
(k) Testing of physical inventories. The property administrator has the option of conducting tests of the contractor's physical inventories either during the performance of the inventory or subsequent to its completion. In either event, tests shall evidence physical counts of selected items without knowledge of record balances, verification of the entries on count slips, comparisons with records, preparation of documents necessary to any adjustments required, approval of adjustments, and the referral of lists of adjustments to the property administrator pursuant to FAR 45.508-2.
(l) Examination of maintenance program. The property administrator shall trace the actions scheduled to determine whether they have been performed and that the actions stated by the contractor's procedures have been included. Also, records of the maintenance or repair shop or the contractor's purchase orders shall be examined as to causes of breakdowns of equipment to determine whether they were the result of inadequate preventive or routine maintenance.
1845.7209-5 Performing the system survey.
In performing the system survey, the property administrator shall follow the procedures in paragraphs (a) through (e) below.
(a) (1) The lot size shall be estimated. Insofar as possible, lots selected shall consist of all the following current operations of the contractor:
(i) Those transactions (excepting disposition transactions) that have occurred during the last 90 days preceding the date of sampling and the documents recording those actions. (If no transactions have taken place during the last 90 days, samples will be taken from transactions going back to the last system survey.)
(ii) Articles in the possession or control of the contractor at that time.
(iii) Dispositions occurring since the last survey was made.
(2) The lot should encompass the maximum number of units possible within a functional area. For example, transactions pertaining to special tooling, special test equipment, and plant equipment may be combined into a single lot and sampled for their common characteristics. Characteristics not common to units sampled shall be extracted for evaluation as a part of a separate lot.
(b) Sample sizes and statistical sampling techniques shall be in accordance with 1845.7213.
(c) After the examinations are performed and the findings recorded, the findings shall be analyzed and the conclusions and recommendations recorded. Decisions as to satisfactory or unsatisfactory conditions shall be made for each lot at the functional area level.
(d) If any category is found unsatisfactory during a survey, the property administrator shall determine the effects upon the complete system. All other applicable categories shall be surveyed to identify other defects and the extent of defectiveness in the overall system.
(e) The property administrator shall discuss problems disclosed during the survey with the contractor's personnel as they are noted, or during the exit interviews, and shall strive to resolve differences informally. Resolved problem areas shall be reported in the record of system evaluation, with the notation that they have been corrected.
1845.7209-6 System survey summary.
(a) The property administrator shall prepare a formal record at the conclusion of each system survey in the format set forth below:
(1) Introduction: contractor's name and address, period of survey, and types of property involved.
(2) Method used: explain method of performing the survey.
(3) Conclusions: state conclusions reached (if unsatisfactory categories, functional areas, or characteristics are found, identify the defects found).
(4) Action required: state any actions necessary to correct unsatisfactory conditions.
(b) The property administrator shall forward a summary of the system survey to the contractor, advising of any unsatisfactory conditions and requesting the contractor to correct them within the time limitations agreed to during the exit interview. The property administrator shall also advise the contractor in this letter that failure to correct the unsatisfactory conditions may result in disapproval of its property control system. A copy of the summary shall also be retained in a survey case file, and whenever unsatisfactory conditions have been disclosed, a copy of the summary shall be provided to the administrative contracting officer. When conditions dictate (e.g., indication of significant noncompliance with contract requirements or other continued failures jeopardizing the interest of the Government), the purchasing office and the pre-award survey monitor shall also be advised in writing.
1845.7209-7 Correction of unsatisfactory conditions.
If unsatisfactory conditions are disclosed, the property administrator shall ensure that corrective action is taken. If the contractor fails to take corrective action or to respond to the letter forwarded as prescribed in 18 45.7209-6 above, the property administrator shall proceed in accordance with 1845.7208-6 and FAR 45.104(c).
1845.7209-8 Survey case file.
The property administrator shall establish a case file for each system survey, containing the survey plan, work papers, and summary. The case file shall be maintained in the Contract Property Control Data File or the general file which the property administrator maintains for matters pertaining to that contractor.
1845.7209-9 Additional administrative responsibilities.
The initial review, evaluation, and subsequent visits should give the property administrator a reasonable indication of future workload with each contractor. Loss, damage, destruction, or excessive consumption of Government property demand the property administrator's significant and prompt attention, particularly when the contractor's system is not approved.
1845.7209-10 Declaration of excess property.
A problem often disclosed by systems surveys is the failure of a contractor to report Government property not needed in performance of the contract (excess). The property administrator shall fully document and report any such finding to the administrative contracting officer. After a report of excess received from a contractor has been referred to the plant clearance officer for screening and ultimate disposition, the property administrator shall ensure prompt disposition. For centrally reportable plant equipment, the property administrator shall--
(a) Assure the preparation and submission of individual reports (DD Form 1342 or equivalent) required of the contractor;
(b) Verify to permit certifications required by the forms; and
(c) Transmit the report to the NASA Industrial Property Officer.
1845.7210 Closure of contracts.
1845.7210-1 Completion or termination.
Upon completion or termination of a contract, the property administrator shall--
(a) Monitor the actions of the contractor in returning excess Government property not referred to the plant clearance officer; and
(b) Advise the cognizant plant clearance officer as to the existence at a contractor's plant of residual property requiring disposal.
1845.7210-2 Final review and closing of contracts.
(a) When informed that disposition of Government property under a contract has been completed, the property administrator shall perform a final review and sign a determination that--
(1) Disposition of Government property has been properly accomplished and documented;
(2) Adjustment documents, including any request of the contractor for relief from responsibility, have been processed to completion;
(3) Proceeds from disposals or other property transactions, including adjustments, have been properly credited to the contract or paid to the Government as directed by the contracting officer;
(4) All questions as to title to property fabricated or acquired under the contract have been resolved and appropriately documented; and
(5) The contract property control record file is complete and ready for retirement.
(b) When final review pursuant to paragraph (a) above reveals that such action is proper, the property administrator shall accomplish and sign a DD Form 1593, Contract Administration Completion Record, or equivalent.
(c) The executed DD Form 1593 shall be forwarded to the contracting officer, the Property Summary Data Record shall be so annotated, and the contracting officer shall include it in the contract file.
1845.7211 Special subjects.
1845.7211-1 Government property at alternate locations of the prime contractor and subcontractor plants.
(a) Government property provided to a prime contractor may be located at other plants of the prime contractor or at subcontractor locations. The prime contractor is accountable and responsible to the Government for this property.
(b) A Government proty administrator cognizant of the location of the property shall normally be designated to (1) perform required surveys of the property control system and (2) exercise surveillance over the property as a supporting responsibility.
(c) If the property administrator determines that supporting property administration is required, he or she shall write the cognizant contract administration office asking that a property administrator be assigned. The request for supporting property administration shall include--
(1) The name and address of the prime contractor;
(2) The prime contract number;
(3) The name and address of the alternate location of the prime contractor, or of the subcontractor where the property will be located;
(4) A listing of the property being furnished, or, if property is being acquired locally, a statement to this effect; and
(5) A copy of the subcontract or other document under which the property will be furnished or acquired.
(d) Concurrent with the action cited in paragraph (c) above, the property administrator shall ascertain whether the prime contractor will perform the necessary reviews and surveillance with the contractor's own personnel, or elect to rely upon the system approval and continuing surveillance by a supporting property administrator of the property control system at the alternate location or subcontractor plant. If the prime contractor advises that it will accept the findings of a supporting property administrator, a statement in writing to that effect shall be obtained. If the prime contractor does not so elect, it shall be required to perform the requisite reviews and surveillance and document its actions and findings.
(e) If a single item or limited quantities of property will be located at an alternate location or subcontractor plant, the property administrator may determine that supporting property administration is unnecessary, provided--
(1) The prime contractor's records adequately reflect the location and use of the property;
(2) The nature of the property is such that the possibility of its use for unauthorized purposes is unlikely; and
(3) The nature of the property is such that a program of preventive maintenance is not required.
(f) When supporting property administration will not be requested, the services of a property administrator in the contract administration office cognizant of the site where the property is located may be requested on an occasional basis for special reviews or such other support as may be necessary. Repeated requests for assistance indicate a requirement for requesting supporting property administration.
1845.7211-2 Loss, damage, or destruction of Government property.
(a) Normally, contract provisions provide for assumption of risk of loss, damage, or destruction of Government property as described below:
(1) Sealed-bid and certain negotiated fixed-price contracts provide that the contractor assumes the risk for all Government property provided under the contract (see the clause at FAR 52.245-2, Government Property (Fixed-Price Contracts)).
(2) Other negotiated fixed-price contracts provide that the contractor assumes the risk for all Government property provided under the contract, with the exceptions set forth in the clause at FAR 52.245-2, Alternate I and Alternate II.
(3) Cost-reimbursement contracts (see the clause at FAR 52.245-5, Government Property (Cost-Reimbursement, Time-and-Material, or Labor-Hour Contracts)) provide that the Government assumes the risk for all Government property provided under the contract when there is no willful misconduct or lack of good faith of any of the contractor's managerial personnel as defined in the contract.
(4) There are certain events for which the Government does not assume the risk of loss, damage, or destruction of Government property, such as risks the contract expressly requires the contractor to insure against. Therefore, before reaching a conclusion or making a determination, the contracting officer shall obtain property administrator review of the contract clause and shall obtain advice from appropriate legal counsel on questions of legal meaning or intent.
(5) "Willful misconduct" may involve any intentional or deliberate act or failure to act causing, or resulting in, loss, damage, or destruction of Government property.
(6) "Lack of good faith" may involve gross neglect or disregard of the terms of the contract or of appropriate directions of the contracting officer or the contracting officer's authorized representatives. Examples of lack of good faith may be demonstrated by the failure of the contractor's managerial personnel to establish and maintain proper training and supervision of employees and proper application of controls in compliance with instructions issued by authorized Government personnel.
(b) If part of the contractor's system is found to be unsatisfactory, the property administrator shall increase surveillance of that part to prevent, to the extent possible, any loss, damage, or destruction of Government property. The property administrator shall give special attention to reasonably ensuring that any loss, damage, or destruction occurring during a period when a contractor's system is not approved is identified before approval or reinstatement of approval.
1845.7211-3 Loss, damage, or destruction of Government property while in contractor's possession or control.
(a) The property administrator shall require the contractor to report any loss, damage, or destruction of Government property in its possession or control (including property in the possession or control of subcontractors) as soon as it becomes known.
(b) When physical inventories, consumption analyses, or other actions disclose (1) consumption of Government property considered unreasonable by the property administrator or (2) loss, damage, or destruction of Government property not reported by the contractor, the property administrator shall prepare a statement of the items and amount involved. This statement shall be furnished to the contractor for investigation and submission of a written report to the property administrator relative to the incidents reported.
(c) The contractor's reports referenced in paragraphs (a) and (b) above shall contain factual data as to the circumstances surrounding the loss, damage, destruction, or excessive consumption, including--
(1) The contractor's name and the contract number;
(2) A description of items lost, damaged, destroyed, or unreasonably consumed;
(3) The cost of property lost, damaged, destroyed, or unreasonably consumed and cost of repairs in instances of damage (in event actual cost is not known, use reasonable estimate);
(4) The date, time (if pertinent), and cause or origin of the loss, damage, destruction, or consumption;
(5) Known interests in any commingled property of which the Government property lost, damaged, destroyed, or unreasonably consumed is (or was) a part;
(6) Insurance, if any, covering the Government property or any part or interest in any commingled property;
(7) Actions taken by the contractor to prevent further loss, damage, destruction, or unreasonable consumption and to prevent repetition of similar incidents; and
(8) Other facts or circumstances relevant to determining liability and responsibility for repair or replacement.
(d) The property administrator shall investigate the incit to the degree required to reach a valid and supportable conclusion as to (1) the contractor's liability for the loss, damage, destruction, or unreasonable consumption under the terms of the contract, and (2) the course of action required to conclude the adjustment action. When required, the assistance of the quality assurance representative, industrial specialist, insurance officer, legal counsel, or other technician will be secured. When the contractor acknowledges liability, the property administrator shall forward a copy of the credit memorandum or other adjusting document to the administrative contracting officer and auditor, if appropriate, to assure proper credit. If analysis of contract provisions and circumstances establishes that the loss, damage, destruction, or consumption constitutes a risk assumed by the Government, the property administrator shall so advise the contractor in writing, thereby relieving the contractor of responsibility for the property. A copy of the documentation and notification to the contractor shall be retained in the Contract Property Control Data File for the contract.
(e) (1) If the property administrator concludes that the contractor is liable for the loss, damage, destruction, or unreasonable consumption of Government property, he or she shall forward the complete file with conclusions and recommendations to the contracting officer for review and determination. The file shall contain--
(i) A statement of facts as supported by investigation;
(ii) Recommendations as to the contractor's liability and its amount;
(iii) Recommendations as to action to be taken with regard to third party liability, if appropriate;
(iv) Requirements for disposition, repair, or replacement of damaged property; and
(v) Other pertinent comments.
(2) A copy of the contracting officer's
determination shall be furnished to the contractor and the property administrator, and a copy shall be retained in the contracting officer's files. The property administrator's copy shall be filed in the Contract Property Control Data File for the contract when all pertinent actions, such as compensation to the Government or repair or replacement of the property, have been completed.
1845.7211-4 Financial reports.
The property administrator is responsible for obtaining financial reports as prescribed in 1845.505-14 for all contracts assigned to him or her. Reports shall be accumulated, reviewed and distributed as required. Contractors are required to submit separate reports on each contract that contains the property reporting clause (see 1852.245-73) except as noted in 1845.7101-4(c).
1845.7212 Contractor utilization of Government property.
1845.7212-1 Utilization surveys.
(a) The property administrator is responsible for ensuring that the contractor has effective procedures for evaluating Government property utilization. However, when necessary, the contract administration office shall provide specialists qualified to perform the technical portion of utilization surveys to assist the property administrator in determining the adequacy of these procedures.
(b) Upon assignment of an initial contract under which Government-owned plant equipment in particular will be provided to a contractor, the property administrator shall ensure that the contractor has established effective procedures and techniques for controlling its utilization. The property administrator, with the assistance of technical specialists, if necessary, shall evaluate these procedures. A record of the evaluation shall be prepared and become a part of the property administration file. If the procedures are determined inadequate, the record shall identify the deficiencies and the corrective actions necessary. If the deficiencies are not corrected by the contractor, the property administrator shall promptly refer the matter to the contracting officer.
(c) The property administrator shall perform annual surveys of the contractor's procedures related to utilization of Government-owned plant
equipment. At contractor facilities having a substantial quantity of plant equipment, the surveys should normally be conducted on a continual basis, reviewing equipment utilization records and physically observing a group of preselected items during each portion of the survey. Surveys shall be conducted to the degree determined necessary, considering the findings of prior surveys and the contractor's performance history in identifying and declaring equipment excess to authorized requirements. The contractor shall be required to justify, by specific Government programs, the retention of all Government-owned plant equipment. The property administrator shall make maximum use of contractor's machine loading data, order boards, production planning records, machine time records, and other production control methods.
(d) The property administrator shall conduct a special survey when a significant change occurs in the contractor's production schedules, such as a termination, completion of a contract, or a major adjustment in a program. Special surveys may be limited to a given department, activity, or division of a contractor's operation.
(e) In the absence of adequate justification for retention, the contractor shall identify and report Government-owned plant equipment in accordance with FAR 45.502(g) and FAR 45.509-2(b)(4). Items that are part of approved inactive package plants or standby lines are exempted from utilization surveys. The contracting officer shall ascertain periodically whether existing authorizations for standby or lay-away requirements are current.
1845.7212-2 Records of surveys.
The property administrator shall prepare a record incorporating written findings, conclusions, and recommendations at the conclusion of each survey. If appropriate, the property administrator's record may be limited to a statement expressing concurrence with the reports of other specialists. The property administrator shall retain one copy of each record in the property administration file.
1845.7212-3 Scope of survey.
The property administrator shall consider and use as appropriate the following in preparing for, conducting, and recording the results of the plant equipment utilization surveys:
(a) Identification of contracts under which plant equipment was furnished or acquired.
(b) Number and dollar value of plant equipment items in contractor's possession.
(c) Adequacy of equipment use records.
(d) Identification of contracts for which use of plant equipment is authorized.
(e) Other authorized use (Government or commercial) of the plant equipment, whether required approvals have been obtained, and whether rental payment is required.
(f) Planned machine loadings, including performance of a physical review of selected plant equipment items.
(g) Whether contractor-owned equipment of like function is loaded before loading Government-owned plant equipment.
(h) Items reported by quality assurance representatives or other personnel to be in a questionable use and utilization status.
(i) Items of plant equipment that may be made available for other use by combining the work of two or more machines on a single machine with low utilization rate. In such case the survey record should indicate the date the DD Form 1342, DoD Property Record or equivalent format, was forwardto the NASA contracting officer.
1845.7213 Statistical sampling.
(a) General. Statistical sampling supports, but does not replace, the property administrator's judgment. It is used to evaluate and determine the performance level for each functional area and category within each property control system. The lot to be examined for defects should encompass the maximum possible number of line items of property, records and documents. All items in the lot must have common characteristics and the same control elements of the property control system must apply or more than one lot will be necessary. Items selected for sampling may be used to examine characteristics of more than one category (i.e., items selected under records may be used to examine characteristics of acquisition, stock control, storage and movement, maintenance, physical inventory, utilization, and consumption).
(b) Use of statistical sampling plans. The Government's risk shall not exceed 10 percent excepting any slight variations due to changes in lot sizes. Table 1845-2 contains sampling plans for use in achieving a confidence level of 90 percent, i.e., there is 90 percent confidence of rejecting lots having 10 percent or more defectives. The sample sizes to be examined may be determined from either Table 1845-2A or B.
(c) Random number table.
(1) Use of a table of random numbers is a common technique for drawing a sample. (A table is available from the NASA Headquarters Logistics Management Office (Code JLG).) However randomization techniques may be applied provided they are defined beforehand in the property administration survey plan and exhibit clear protection against bias. In any event, the number of items in the lot must not be overestimated to avoid selection of random numbers greater than the lot. For example, if the lot is 9,000, only numbers lower than 9,001 shall be selected. Using a random table to draw a random sample requires the following four steps:
(i) First step. A pattern must be established between the numbers in the table and items in the lot to be sampled. It is possible to use the whole random number or any portion thereof. For instance, the number 18,967 may appear in the table. If the lot size is more than 99 but less than 1,000, a three digit number is required and either the first three digits (189) or the last three (967) may be used. If the lot size is more than 999 but less than 10,000, a four digit number is required and either the first four digits (1,896) or the last four (8,967) may be used. Once this pattern has been established, it must be consistently used throughout the sample selection process.
(ii) Second step. A procedure for selecting the numbers from the table must be selected. Any systematic path for going through the table, if the path is clear and does not cross over or reuse any number previously used, is acceptable. It is possible to proceed across rows, down columns, diagonally, clockwise, counter-clockwise, or in some combinations of these methods; however, it is usually desirable to choose a simple pattern and go down columns or across rows.
(iii) Third step. The starting point in the table shall be selected at random. The most used method is to open the table of random numbers to any page and to use the number indicated by an arbitrarily placed pencil point.
(iv) Fourth step. Beginning at the starting point and proceeding through the table as planned in the second step, record the numbers found in succession in the table, using all or part of the number as planned in the first step. Duplicate numbers shall be skipped. The selection process shall be continued until the required sample size is drawn.
(2) Numbers taken from the random table shall be arranged and recorded in numerical order. If the units of the lot to be examined are already consecutively numbered, the units having the numbers corresponding to those taken from the random table become the sample units. Otherwise, the sample units shall be found by counting to the numbers taken from the random table.
Sample Limits Lot Size Size Satisfactory Unsatisfactory 1-17 All 0 1 18-50 17 0 1 51-90 31 1 2 91-150 44 2 3 Over 150 65 3 4
Accept if Sum Reject if Sum Continue of Defects in of Defects in Accept if Reject if with Sample 2 Samples 1 and Samples 1 and 2 Lot Sample Defects in Defects in if Defects in Sample 2 Equals or is Equals or Range Size 1 Sample 1 Are Sample 1 Are Sample 1 Are Size 2 Less Than Exceeds 1-18 All 0 1 - - - - 19-50 18 0 1 - - - - 51-90 21 0 2 1 21 1 2 91-150 25 0 3 1 or 2 25 2 3 151-400 32 0 4 1, 2, or 3 32 3 4 401-10,000 34 0 4 1, 2, or 3 34 3 4 10,001-35,000 40 0 5 1, 2, 3, or 4 40 4 5 35,001-100,000 46 0 6 1, 2, 3, 4, or 5 46 5 6 100,000+ 52 0 7 1, 2, 3, 4, 5, or 6 52 6 7