41 C.F.R. PART 109–27—INVENTORY MANAGEMENT
Title 41 - Public Contracts and Property Management
Authority: Sec. 644, Pub. L. 95–91, 91 Stat. 599 (42 U.S.C. 7254).
Source: 63 FR 19627, Apr. 20, 1998, unless otherwise noted.
As used in this part the following definitions apply: Inventories mean stocks of stores, construction, supplies, and parts used in support of DOE programs. Inventory management means the efficient use of methods, procedures and techniques for recording, analyzing, and adjusting inventories in accordance with established policy. The following related functions are included: (1) Providing adequate protection against misuse, theft, and misappropriation. (2) Providing accurate analyses of quantities to determine requirements so that only minimal obsolescence losses will be encountered, while ensuring adequate inventory levels to meet program schedules. (3) Providing adequate and accessible storage facilities and services based upon analyses of program requirements so that a minimum and economical amount of time is required to service the program. Stock record means a device for collecting, storing, and providing historical data on recurring transactions for each line item of inventory. Sub-store means a geographically removed part of the main store's operation conducted as a subordinate element of it and subject to the same management policies and inventory controls. Systems contracting means a materials management purchasing technique for the purchase of general, common-use, and repetitive supply items in a particular product family. An example is office supplies, purchased from a commercial vendor, that are needed for immediate use instead of purchasing in bulk for future use, storing in warehouses, and issuing to customers by use of a requisitioning system. Systems contracting and just-in-time contracting are synonymous. Replenishment of inventories of stock items having recurring demands will be by use of the economic order quantity (EOQ) principle. However, when considered more suitable, designated contractors may use other generally accepted approaches to EOQ. Systems contracting may be used instead of or along with EOQ once a determination is made that such a system is feasible and cost effective, and that adequate controls are in place to ensure proper use. Systems contracting for supply operations is a proven cost-effective approach to meeting procurement needs and may be implemented in DOE offices and designated contractors wherever significant cost savings to the Government will result. Impacts on local suppliers and small and disadvantaged business concerns should be considered in the overall business strategy. (a) DOE OPMOs shall establish required property management controls relative to the implementation of systems contracting. (b) DOE offices and designated contractors operating a materials management function who have not performed an initial feasibility study for the implementation of systems contracting shall perform such a study for selected commodity groups. The study may be accomplished over a period of time, until all commodity groups have been considered. The study should address functional requirements, activity levels of commodity groups and individual items, and potential impacts on local suppliers and small and disadvantaged businesses. An industrial relations analysis on existing labor relations and union contracts may also be necessary. (c) As required in the DEAR, DOE offices and designated contractors are required to consider the use of GSA supply sources when economically advantageous to the Government. These sources must be considered in the conduct of the feasibility study. (d) DOE contracting offices shall evaluate the initial cost benefit studies performed by contractors to verify the savings and other benefits of systems contracting, and shall approve its implementation. In those instances where a cost benefit study has previously been performed, the DOE contracting office shall ensure that those studies have been evaluated and the approval to proceed with systems contracting has been provided to the contractor in writing. (e) DOE offices shall periodically reevaluate systems contracting operations conducted by their office and designated contractors to ensure that required property management controls are being followed. When considered more suitable, designated contractors may use other generally accepted approaches to the management of shelf-life materials. When considered more suitable, designated contractors may use other generally accepted approaches to maximizing use of inventories. When considered more suitable, designated contractors may use other generally accepted approaches to determine which items should be eliminated from inventory. Necessary inventories shall be established and maintained at reasonable levels, consistent with DOE requirements, applicable laws and regulations, and the following objectives: (a) The maintenance of adequate stock levels through accurate analyses of quantities to determine requirements and stock replenishments so that only minimal obsolescence losses will be encountered while ensuring adequate inventory levels to meet program schedules; (b) The protection of materials against misuse, theft, and misappropriation; (c) The maintenance of an efficient operation; and (d) The standardization of inventories to the greatest extent practicable. Comparison of investment in stores inventories to annual issues shall be made to assure that minimum inventories are maintained for the support of programs. This comparison may be expressed either as a turnover ratio (dollar value of issues divided by dollar value of inventory) or in the average number of month's supply on hand. Turnover or number of month's supply is calculated only on current-use inventory. Performance goals, i.e., a six months investment or a turnover ratio of 2.0, shall be established for each stores using activity. It is recognized, however, that extenuating operating circumstances may preclude the achievement of such objectives. (a) Stock control shall be maintained on the basis of stock record accounts of inventories on hand, on order, received, issued, and disposed of, and supported by proper documents in evidence of these transactions. Stock record accounts shall be available for review and inspection. (b) Personal property under stock control for greater than 90 days shall be maintained in stock record accounts. (a) Sub-stores shall be established when necessary to expedite delivery of materials and supplies to the users, serve emergencies, provide economy in transportation, reduce shop and site stocks, and enable stores personnel to provide assistance in obtaining materials and supplies as needed. (b) Items stored for issue in the sub-stores shall be treated as inventory items for control and reporting purposes. Stock records shall be integrated with central stock records so that the total amount on hand of any item at all locations is known. Shop, bench, cupboard or site stocks are an accumulation of small inventories of fast-moving materials at the point of use. Normally, these inventories are expensed at time of issue from controlled stores. However, when stocks of such inventories are not consumed or do not turn over in a reasonable period of time, which normally should not exceed 90 days, these items should be subject to the required physical controls and recorded in the proper inventory account. A stores catalog for customer use that lists items available from stock shall be established for each stores operation. Exceptions to this requirement are authorized where establishment of a catalog is impracticable or uneconomical because of small total value or number of items involved, or temporary need for the facility. The following procedures shall be established for taking physical inventory of stocks subjected to quantity controls as well as those under financial control: (a) Completion of a physical inventory not less frequently than every twelve months. (b) Reconciliation of inventory quantities with the stock records. (c) Preparation of a report of the physical inventory results. Discrepancies between physical inventories and stock records shall be adjusted and the supporting adjustment records shall be reviewed and approved by a responsible official at least one supervisory level above the supervisor in charge of the warehouse or storage facility. Items on an adjustment report which are not within reasonable tolerances for particular items shall be thoroughly investigated before report approval. Adjustment reports shall be retained on file for inspection and review. Effective procedures and practices shall provide for the management and physical security of controlled substances and potable alcohol from receipt to the point of use. Such procedures shall, as a minimum, provide for safeguarding, proper use, adequate records, and compliance with applicable laws and regulations. Controls and records of potable alcohol shall be maintained on quantities of one quart and above. Effective procedures and practices shall provide for the management and physical security of hypodermic needles and syringes to prevent illegal use. Controls shall include supervisory approval for issue, storage in locked repositories, and the rendering of the items useless prior to disposal. Containers furnished by vendors shall be administratively and physically controlled before and after issuance. Prompt action shall be taken to return such containers to vendors for credit after they have served their intended use. Metals and metal products shall be identified and marked in accordance with applicable Federal standards. This requirement applies to direct charges as well as to items procured for store, shop or floor stock, or for use on construction projects. Additional markings not covered by Federal standards should be used to show special properties, corrosion data, or test data as required. The preferred process is for the marking to be done in the manufacturing process, but it may be applied by suppliers when circumstances warrant. Exceptions to the marking requirement may be made when: (a) It is necessary to procure small quantities from suppliers not equipped to do the marking; (b) It would delay delivery of emergency orders; or (c) Procurement is from DOE or other Federal agency excess. This subpart provides policies, principles, and guidelines to be used in the management of purchased and recovered precious metals used to meet research, development, production, and other programmatic needs. Precious metals means uncommon and highly valuable metals characterized by their superior resistance to corrosion and oxidation. Included are gold, silver, and the platinum group metals—platinum, palladium, rhodium, iridium, ruthenium and osmium. DOE organizations and contractors shall establish effective procedures and practices for the administrative and physical control of precious metals in accordance with the provisions of this subpart. Each DOE organization and contractor holding precious metals shall designate in writing a Precious Metals Control Officer. This individual shall be the organization's primary point of contact concerning precious metals control and management, and shall be responsible for the following: (a) Assuring that the organization's precious metals activities are conducted in accordance with Departmental requirements. (b) Maintaining of an accurate list of the names of precious metals custodians. (c) Providing instructions and training to precious metals custodians and/or users as necessary to assure compliance with regulatory responsibilities. (d) Insuring that physical inventories are performed as required by, and in accordance with, these regulations. (e) Witnessing physical inventories. (f) Performing periodic unannounced inspections of a custodian's precious metals inventory and records. (g) Conducting an annual review of precious metals holdings to determine excess quantities. (h) Preparing and submitting to the Business Center for Precious Metals Sales and Recovery the annual forecast of anticipated withdrawals from, and returns to, the DOE precious metals pool. (i) Conducting a program for the recovery of silver from used hypo solution and scrap film in accordance with 41 CFR 101–45.10 and §109–45.10 of this chapter. (j) Preparing and submitting of the annual report on recovery of silver from used hypo solution and scrap film as required by §109–45.1002–2 of this chapter. (k) Developing and issuing current authorization lists of persons authorized by management to withdraw precious metals from stockrooms. DOE organizations and contractors shall contact the Business Center for Precious Metals Sales and Recovery to determine the availability of precious metals prior to acquisition on the open market. Precious metals shall be afforded exceptional physical protection from time of receipt until disposition. Precious metals not in use shall be stored in a noncombustible combination locked repository with access limited to the designated custodian and an alternate. When there is a change in custodian or alternate having access to the repository, the combination shall be changed immediately. Perpetual inventory records shall be maintained as specified in Chapter V of DOE Order 534.1, Accounting. (a) Physical inventories shall be conducted annually by custodians, and witnessed by the Precious Metals Control Officer or his designee. (b) Precious metals not in use shall be inspected and weighed on calibrated scales. The inventoried weight and form shall be recorded on the physical inventory sheets by metal content and percent of metal. Metals in use in an experimental process or contaminated metals, neither of which can be weighed, shall be listed on the physical inventory sheet as observed and/or not observed as applicable. (c) Any obviously idle or damaged metals should be recorded during the physical inventory. Justification for further retention of idle metals shall be required from the custodian and approved one level above the custodian, or disposed of in accordance with established procedures. (d) The dollar value of physical inventory results shall be reconciled with the financial records. All adjustments shall be supported by appropriate adjustment reports, and approved by a responsible official. Precious metals in stock are metals held in a central location and later issued to individuals when authorized requests are received. The following control procedures shall be followed for such metals: (a) Stocks shall be held to a minimum consistent with efficient support to programs. (b) The name and organization number of each individual authorized to withdraw precious metals, and the type and kind of metals, shall be prominently maintained in the stockroom. This authorization shall be issued by the Precious Metals Control Officer or his designee and updated annually. Issues of metals will be made only to authorized persons. (c) Accurate records of all receipts, issues, returns, and disposals shall be maintained in the stockroom. (d) Receipts for metal issues and returns to stock shall be provided to users. Such receipts, signed by the authorized requesting individual and the stockroom clerk, shall list the requesting organization, type and form of metal, quantity, and date of transaction. (a) After receipt, the using organization shall provide necessary controls for precious metals. Materials shall be stored in a non-combustible, combination locked repository at all times except for quantities at the actual point of use. (b) Each using organization shall maintain a log showing the individual user, type and form of metal, and the time, place, and purpose of each use. The log shall be kept in a locked repository when not in use. (c) The logs and secured locked storage facilities are subject to review by the Precious Metals Control Officer and other audit or review staffs as required. (d) Cognizant Departmental managers are responsible for assuring that minimum quantities of precious metals are withdrawn consistent with work requirements and that quantities excess to requirements are promptly returned to the stockroom. (e) Employee termination and transfer procedures shall include clearance for precious metals possession. (a) Unannounced inspections of custodian's precious metals inventory and records may be conducted between scheduled inventories. (b) DOE organizations and contractors holding precious metals shall annually review the quantity of precious metals on hand to determine if the quantity is in excess of program requirements. Precious metals which are not needed for current or foreseeable requirements shall be promptly reported to the DOE precious metals pool. The results of this annual review are to be documented and entered into the precious metals inventory records. The purpose of the precious metals pool is to recycle, at a minimum cost to pool participants, DOE-owned precious metals within the Department and to dispose of DOE-owned precious metals that are excess to DOE needs. However, if the pool is unable to accept any potential precious metal return, the using activity will dispose of the precious metals through the disposal process specified in subchapter H of the FPMR and this regulation. Pure metals, parts, fabricated products, catalysts, or solutions, are generally available and the Business Center for Precious Metals Sales and Recovery can provide assistance in supplying such requirements. Metals can be shipped to any facility to fulfill fabrication requirements. All excess precious metals must be returned to the precious metals pool except as noted in §109–27.5106–1 of this subpart. The pool is entirely dependent on metal returns; therefore, metal inventories should be maintained on an as-needed basis, and any excess metals must be returned to the pool for recycling. With the exception of silver, this includes precious metals in any form, including shapes, scrap, or radioactively contaminated. Only high grade nonradioactively contaminated silver should be included. Procedures have been developed by the precious metals pool contractor for metal returns, including storing, packaging, shipping, and security. The Business Center for Precious Metals Sales and Recovery will request annually from each DOE field organization its long-range forecast of anticipated withdrawals from the pool and returns to the pool. The Business Center for Precious Metals Sales and Recovery operates the precious metals pool. DOE organizations and contractors may obtain specific information regarding the operation of the precious metals pool (operating contractor's name, address, and telephone number; processing charges; etc.) by contacting the Chief, Property Management Branch, Oak Ridge Operations Office. The requirements for the recovery of silver from used hypo solution and scrap film are contained in §109–45.1003 of this chapter.
Title 41: Public Contracts and Property Management
PART 109–27—INVENTORY MANAGEMENT
Section Contents
§ 109-27.000-50 Definitions.
§ 109-27.102 Economic order quantity principle.
§ 109-27.102-1 Applicability.
§ 109-27.102-50 Systems contracting.
§ 109-27.102-51 Policy.
§ 109-27.102-52 Implementation.
§ 109-27.202 Applicability.
§ 109-27.302 Applicability.
§ 109-27.402 Applicability
§ 109-27.5001 Objectives.
§ 109-27.5002 Stores inventory turnover ratio.
§ 109-27.5003 Stock control.
§ 109-27.5004 Sub-stores.
§ 109-27.5005 Shop, bench, cupboard or site stock.
§ 109-27.5006 Stores catalogs.
§ 109-27.5007 Physical inventories.
§ 109-27.5007-1 Procedures.
§ 109-27.5007-2 Inventory adjustments.
§ 109-27.5008 Control of drug substances and potable alcohol.
§ 109-27.5009 Control of hypodermic needles and syringes.
§ 109-27.5010 Containers returnable to vendors.
§ 109-27.5011 Identification marking of metals and metal products.
§ 109-27.5011-1 General.
§ 109-27.5011-2 Exception.
§ 109-27.5100 Scope of subpart.
§ 109-27.5101 Definition.
§ 109-27.5102 Policy.
§ 109-27.5103 Precious Metals Control Officer.
§ 109-27.5104 Practices and procedures.
§ 109-27.5104-1 Acquisitions.
§ 109-27.5104-2 Physical protection and storage.
§ 109-27.5104-3 Perpetual inventory records.
§ 109-27.5104-4 Physical inventories.
§ 109-27.5104-5 Control and issue of stock.
§ 109-27.5104-6 Control by using organization.
§ 109-27.5105 Management reviews and audits.
§ 109-27.5106 Precious metals pool.
§ 109-27.5106-1 Purpose.
§ 109-27.5106-2 Withdrawals.
§ 109-27.5106-3 Returns.
§ 109-27.5106-4 Withdrawals/returns forecasts.
§ 109-27.5106-5 Assistance.
§ 109-27.5107 Recovery of silver from used hypo solution and scrap film.
§ 109-27.000-50 Definitions.
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Subpart 109–27.1—Stock Replenishment
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§ 109-27.102 Economic order quantity principle.
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§ 109-27.102-1 Applicability.
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§ 109-27.102-50 Systems contracting.
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§ 109-27.102-51 Policy.
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§ 109-27.102-52 Implementation.
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Subpart 109–27.2—Management of Shelf-Life Materials
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§ 109-27.202 Applicability.
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Subpart 109–27.3—Maximizing Use of Inventories
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§ 109-27.302 Applicability.
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Subpart 109–27.4—Elimination of Items From Inventory
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§ 109-27.402 Applicability
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Subpart 109–27.50—Inventory Management Policies, Procedures, and Guidelines
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§ 109-27.5001 Objectives.
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§ 109-27.5002 Stores inventory turnover ratio.
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§ 109-27.5003 Stock control.
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§ 109-27.5004 Sub-stores.
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§ 109-27.5005 Shop, bench, cupboard or site stock.
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§ 109-27.5006 Stores catalogs.
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§ 109-27.5007 Physical inventories.
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§ 109-27.5007-1 Procedures.
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§ 109-27.5007-2 Inventory adjustments.
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§ 109-27.5008 Control of drug substances and potable alcohol.
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§ 109-27.5009 Control of hypodermic needles and syringes.
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§ 109-27.5010 Containers returnable to vendors.
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§ 109-27.5011 Identification marking of metals and metal products.
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§ 109-27.5011-1 General.
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§ 109-27.5011-2 Exception.
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Subpart 109–27.51—Management of Precious Metals
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§ 109-27.5100 Scope of subpart.
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§ 109-27.5101 Definition.
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§ 109-27.5102 Policy.
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§ 109-27.5103 Precious Metals Control Officer.
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§ 109-27.5104 Practices and procedures.
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§ 109-27.5104-1 Acquisitions.
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§ 109-27.5104-2 Physical protection and storage.
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§ 109-27.5104-3 Perpetual inventory records.
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§ 109-27.5104-4 Physical inventories.
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§ 109-27.5104-5 Control and issue of stock.
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§ 109-27.5104-6 Control by using organization.
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§ 109-27.5105 Management reviews and audits.
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§ 109-27.5106 Precious metals pool.
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§ 109-27.5106-1 Purpose.
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§ 109-27.5106-2 Withdrawals.
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§ 109-27.5106-3 Returns.
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§ 109-27.5106-4 Withdrawals/returns forecasts.
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§ 109-27.5106-5 Assistance.
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§ 109-27.5107 Recovery of silver from used hypo solution and scrap film.
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