245.7201 Performing inventory verifications and determination of allocability.

Use the following guidance for verifying inventory schedules-

(a) Allocability.

(1) Review contract requirements, delivery schedules, bills of material, and other pertinent material. Determine whether schedules include material which-

(i) Is more than required or reasonably expected to be required for completion of the contract; or

(ii) Might be usable on the current contract, or diverted to other commercial work or Government use.

(2) Review the contractor's-

(i) Recent purchases of similar material;

(ii) Plans for current and scheduled production;

(iii) Stock record entries; and

(iv) Bills of material for similar items.

(b) Quantity. Ensure available inventory is in accordance with quantities listed on the inventory schedules. While a complete physical count of each item is not required, perform sufficient checks to ensure accurate quantities.