Letterhead - DoD Seal DEPUTY SECRETARY OF DEFENSE

1010 DEFENSE PENTAGON
WASHINGTON, DC 20301-1010

Letterhead - DoD 50th Anniversary Commemorative Seal

29 JUN 1999

MEMORANDUM FOR

SECRETARIES OF THE MILITARY DEPARTMENTS
CHAIRMAN OF THE JOINT CHIEFS OF STAFF
UNDER SECRETARIES OF DEFENSE
DIRECTOR, DEFENSE RESEARCH AND ENGINEERING
ASSISTANT SECRETARIES OF DEFENSE
GENERAL COUNSEL OF THE DEPARTMENT OF DEFENSE
INSPECTOR GENERAL OF THE DEPARTMENT OF DEFENSE
DIRECTOR, OPERATIONAL TEST AND EVALUATION
ASSISTANTS TO THE SECRETARY OF DEFENSE
DIRECTOR, ADMINISTRATION AND MANAGEMENT
DIRECTORS OF THE DEFENSE AGENCIES
DIRECTORS OF THE DOD FIELD ACTIVITIES

SUBJECT: Department of Defense Directive 51 -- Supplemental Department of Defense Reform Initiative Directive #19 Ė Transfer of the Defense Property Accountability System to the Defense Logistics Agency

The Department established a goal of obtaining an unqualified audit opinion on the FY 1999 Consolidated Financial Statements. The General Accounting Office indicated that the Department has over 80 percent of the Federal Governmentís property, plant, and equipment. Therefore, the accuracy of DoDís property, plant, and equipment information materially affects not only the Departmentís annual financial statements, but also the government-wide financial statements. Accordingly, if the Federal Government is to achieve an unqualified audit opinion, it needs to demonstrate that it is a trustworthy steward of the property, plant and equipment entrusted to it. As a result, it is imperative that the Department improve its accountability, as well as the accuracy of information recorded and reported for property, plant and equipment. (Property, plant and equipment are segregated into four categories for DoD: General Property, Plant and Equipment; National Defense Property, Plant and Equipment; Heritage Assets; and Stewardship Land. A definition of each of these four categories is provided in the attachment.)

To ensure that the Department improves its accountability for property, plant and equipment, as well as related information required for DoD financial statements, the Under Secretary of Defense (Acquisition and Technology) (USD(A&T)), in coordination with the Under Secretary of Defense (Comptroller) (USD(C)), shall develop and issue appropriate accountability guidance for DoD property, plant and equipment. While the USD(A&T) has responsibility for publishing property, plant, and equipment accountability regulations, it is the responsibility of each DoD Component to comply with such regulations.

Additionally, I am directing the USD(A&T), in coordination with the USD(C) and the Defense Logistics Agency (DLA), to:

  1. Develop a strategic plan/systems architecture for property accountability systems that addresses each category of property, plant and equipment (including government furnished property in the possession of contractors) within each DoD Component, and
  2. Develop a concept of operations for the Defense Property Accountability System (DPAS). (This is not applicable to government property in the possession of contractors.)

To assist the USD(A&T) in the above stated efforts, I am directing the head of each DoD Component to designate a senior level executive as the single point of contact for accountability for property, plant and equipment, and provide the name, organization, address and telephone number of that individual to the USD(A&T) point of contact (identified below) by April 26, 1999. These points of contact should ensure, among other things, that the DoD Component comply with each of the actions directed in the USD(A&T) memoranda dated September 30, 1998 and December 23, 1998. These memoranda directed each DoD Component to:

  1. Ensure that property, plant and equipment that meets accountability requirements or capitalization thresholds is properly recorded in an accountability system(s).
  2. Ensure that physical inventories of property, plant, and equipment are performed in accordance with DoD regulations.
  3. Implement and use real and personal property accountability systems that meet the requirements of federal-wide accounting standards.

The point of contact on this matter is Dr. Nancy Spruill who may be reached by e-mail: spruilnl@acq.osd.mil, or by telephone at (703) 614-5737.

John J. Hamre

Attachment

DEFINITIONS FOR THE FOUR CATEGORIES OF PROPERTY, PLANT AND EQUIPMENT

General Property, Plant and Equipment (PP&E). General PP&E consists of items that are used by federal entities to produce goods or services or to support the mission of the entity. All PP&E used in business-type activities is categorized as General PP&E. General PP&E includes land acquired for or in connection with other General PP&E. General PP&E includes real property and personal property assets.

 

 

National Defense Property, Plant and Equipment (PP&E). National Defense PP&E consists of (1) the PP&E components of weapon systems and support PP&E used by the Military Departments in the performance of military missions and (2) vessels held in a preservation status by the Maritime Administrationís National Defense Reserve Fleet. National Defense PP&E does not include ammunition and other types of munitions (i.e., small and large caliber ammunition, rockets, grenades, mines, and other explosives). The following four categories are intended to provide guidance in identifying assets to be included in National Defense PP&E.

Heritage Assets. Heritage Assets consists of assets that are unique for one or more of the following reasons:

Heritage Assets are generally expected to be preserved indefinitely. Not all Heritage Assets are used solely for heritage purposes Ė some serve two purposes by being used in day-to-day government operations (e.g., The Pentagon). The cost of renovating, improving, or reconstructing operating components of heritage assets used in government operations shall be included in general PP&E.

Stewardship Land. Stewardship Land is land and land rights owned by the Federal Government that was not acquired by purchase. Most Stewardship Land was previously Public Domain land. Land rights are interest and privileges in land owned by others, such as leaseholds, easements, rights-of-way, mineral rights, and other like interests in land.