The Defense Contract Management Agency (DCMA) is an agency tasked with supporting the Department of Defense (DoD), working directly with defense suppliers and contractors. The agency oversees the compliance process that was mandated by the DoD for the acquisition and handling of certain government equipment. A central part of DCMA’s mission is to ensure that all government supplies and services are delivered on time, within budget and meet all performance requirements. In addition to their auditing role, DCMA representatives routinely visit contractors both before a contract is awarded and throughout the life of the contract. This blog article is focused on the topic of helping Defense contractors understand how to prepare for DCMA and maintain proper contract compliance.
Identifying Qualifying Contracts
In meeting your contractual obligations for DCMA, one of the first tasks is to determine which shipments or items you are actually required to mark. These marking requirements should be detailed in your contract. To begin with, you should be looking for MIL STD 130 and for the DFARS clause 252.211-7003. You should also make note that there are two types of formats or “constructs” for your IUID marks – Construct #1 and Construct #2. Typically, Government Furnished Property (GFP) will require a Construct #1, which would be made up of your CAGE code and a serial number. End item deliverables usually require a Construct #2, which would consist of a CAGE code, a part number and a serial number.
What type of items are you required to mark?
There are three categories of items:
- End item deliverables
- GFP
- Legacy assets
*GFP and legacy are government property items.
Each category carries with it a specialized set of reporting requirements so you must determine which category in order to know what requirements you must meet when reporting.
Military shipping labels are marked with an RFID reference, typically going to a DLA location. The DoD has made this a strategic imperative. All shipments and items that require marking must be marked and traceable. This allows the assets to be easily identified beyond knowing what is in transit, what is in stock, or where they are within the inventory stores. It provides better insight into the assets throughout the entire lifecycle as well as how they are performing and if they are meeting expectations.
End Items vs Property Management
It is also important to understand how the data and shipments move through the system and where the contractors and the DoD entities fit in. The specific path that an asset has to take is best understood with real-life examples.
Let’s use the example of a contractor that’s shipping End items to the Government and we’ll make the assumption that the contractor is obligated to comply with DFARS clause 252.211-7003. The prime contractor is required to ensure that all assets are identified and reported. However, many prime contractors have tasked their subcontractors with identifying the assets and applying the IUID mark. This can be accomplished through a contract “Flow-down” clause; but, ultimately requires excellent communication and coordination between the subcontractor and the prime contractor. At the end of the day, the prime contractor is responsible for the asset identification and the reporting obligation and needs to make sure that all of the critical asset data and the mark itself is accurate and complete.
The prime contractor is responsible for reporting the invoice with line item data, including asset data. Prime contractors are the only ones who can submit the WAWF data and documentation for registering assets and shipments. This ensures that both line item and asset data flow through the system easily and reach the DCMA efficiently.
A contractor in property management operates under a different contract clause, 252.211-7007 obligation. Sometimes they will be required to mark the assets and other times they will only be required to report them.
It is a best practice, though to report assets and mark them. Failure to report the assets without physically marking them could cause a major problem in the inventory. If the assets are reported and the contractor has generated a virtual IUID — without actually attaching a physical mark — it opens up the possibility for someone downstream to assign and attach a new duplicate UID mark to that asset.
Prepare for DCMA
Preparing for a DCMA audit should be a primary concern for any contractor that is doing business with the DoD. We recommend putting in place a comprehensive execution plan (that includes a document that can be updated as needed) and a step by step process that ensures you fulfill all of your contract obligations.
Begin the execution plan by identifying items (down to the specific part number) that require an IUID as well as which shipments will require an RFID tag as part of the military shipping labels.
You will also need to determine how the items will be marked. There are several different types of materials and marking methods available for IUID labels and each one is designed for a specific use case. Identifying the environmental conditions that the asset will encounter in its lifetime will dictate the appropriate style needed. Understand that the IUID mark has to be scannable and readable to a certain grade level for the life of that asset.
Once the IUID mark has been applied there should be a plan in place to verify its quality. You need to ensure that the mark is readable and not just by the scanners in your facility but also be readable by all scanners downstream — throughout the asset’s lifecycle. A 2D barcode verifier will measure the quality of the IUID that you create. You need to have a plan in place to utilize the appropriate 2D Data Matrix verifiers to make sure that your labels are scanning to the quality and grade-level required by MIL STD 130.
There has to be a process in place so that the RFID-enabled Military Shipping labels are generated and submitted accurately, along with the Advanced Ship Notices (ASNs) to the government prior to the shipment or as they are shipping.
Possibly the most often overlooked step in this process is preparing the data for submission to the PIEE system. Utilizing an automated approach to the data management and reporting with a system, like A2B Tracking’s UC! Web, that can integrate directly and efficiently with government systems will save you considerable time versus a manual or spreadsheet-type of a solution. Using an automated software to collect and store all of the data from the different sources as well as help you confirm that the data is accurate and compliant to military policies before you submit it up to PIEE is a far superior solution.
Another critical element is to make sure that you have a thorough and accurate audit trail. If the DCMA performs an audit with your organization — they will request proof that the marks were created and applied appropriately and that the data has been managed and reported correctly – in other words, that the contractor has complied with all requirements, and has an audit trail to show every step of the process. Having the ability to show an auditor these asset history details stored in one convenient place (not in a spreadsheet that can be edited at any time, but instead in a proper Government Property Management system) will put an auditor at ease.
Learn more about preparing for DCMA’s requirements and your contract obligations by watching our full webinar on how to prepare for DCMA and Government Property Audits. You might also be interested in our free DCMA Survival Guide.
