NASA FAR Supplement; Addressing Costs of Contractor Facilities in Procurement Plans, Business Management Proposals, and Prenegotiation Position Memoranda

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 1801, 1807 and 1815

NASA FAR Supplement; Addressing Costs of Contractor Facilities in

Procurement Plans, Business Management Proposals, and Prenegotiation

Position Memoranda

AGENCY: Office of Procurement, Procurement Policy Division, National

Aeronautics and Space Administration (NASA).

ACTION: Final rule.

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SUMMARY: This rule amends the regulations pertaining to procurement

plans, the instructions for technical and business management

proposals, and the contents of the prenegotiation position memorandum

in order to emphasize the importance of facilities in the contract

planning and decision making process.

EFFECTIVE DATE: September 30, 1994.

FOR FURTHER INFORMATION CONTACT:

Mr. Joseph Le Cren (202) 358-0444.

SUPPLEMENTARY INFORMATION:

Background

Over the last several years, NASA's Office of the Inspector General

has issued several reports critical of the agency and its contractors

regarding facilities leasing practices. One report addressed the issue

on an agency-wide basis. That report stated that NASA was paying

several times over for the same facilities due to contractors entering

into a series of short-term leases. This rule emphasizes the importance

of facilities by requiring installation procurement plans address

facilities, specifying the information needed from contractors in their

business management plans for the agency to properly evaluate the

proposed costs, and requiring that the prenegotiation memorandum

discuss the factors considered in the evaluation of facilities. This

rule also revises the current coverage on procurement plans requiring

Headquarters approval to better address the major facilities issues

which should be considered.

No comments were received in response to the proposed rule (59 FR

24104, May 10, 1994). No changes have been made from the proposed rule.

Impact

NASA certifies that this regulation will not have a significant

economic impact on a substantial number of small entities under the

Regulatory Flexibility Act (5 U.S.C. 601 et seq.). The information

collection requirements in this rule have been approved by the Office

of Management and Budget under 44 U.S.C. 3504(h) (OMB Control Number

2700-0082 expires July 31, 1997).

List of Subjects in 48 CFR Parts 1801, 1807 and 1815

Government procurement.

Tom Luedtke,

Deputy Associate Administrator for Procurement.

Accordingly, 48 CFR Parts 1801, 1807 and 1815 are amended as

follows:

1. The authority citation for 48 CFR parts 1801, 1807 and 1815

continues to read as follows:

Authority: 42 U.S.C. 2473(c)(1).

PART 1801--FEDERAL ACQUISITION REGULATIONS SYSTEM

2. Section 1801.105 is amended in paragraph (a) by adding the

following entry in numerical order in the table as follows:

1801.105 OMB approval under the Paperwork Reduction Act.

(a) * * *

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OMB control

NASA FAR supplement segment No.

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1815.406-70(b)(5)(iii)..................................... 2700-0082

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PART 1807--ACQUISITION PLANNING

3. Section 1807.170-1 is amended by revising paragraph (b)(10)(i)

to read as follows:

1807.170-1 Procurement plans requiring approval by NASA Headquarters.

(a) * * *

(b) * * *

(10) Item 10. Contractor-owned or leased and Government-furnished

property. (i) If the proposed contract period of performance (exclusive

of options) will be for a shorter period than the useful life, for the

program, of any required contractor-owned or leased facilities (as

defined in (FAR) 48 CFR 45.301), the facilities are unlikely to be

needed by the contractor for any purpose other than the program effort

being contracted for, and the facilities will represent a significant

cost to the contract, then the procurement plan shall discuss the

feasibility of the Government acquiring the right to use the facilities

for longer than the proposed contract period, as well as the proposed

procurement strategy for accomplishing this use.

(A) If program uncertainties for continuing beyond the contract

period of performance (exclusive of options) are significant, it may be

in the Government's best interests to acquire use of the facilities

during only that time. This strategy may make the facilities more

costly to the Government for the contract period than if a contractual

arrangement for longer use were made. However, it should reduce the

program risks associated with longer-term Government facilities

obligations;

(B) If the program uncertainties for continuing beyond the contract

period of performance (exclusive of options) are not significant, it

may be in the Government's best interests to acquire the right to use

the facilities for longer than the proposed contract period of

performance (exclusive of options) in order to take advantage of

economies in long-term facilities investment. In such cases, the

following shall be considered:

(1) Whether the amount of the potential cost savings to the

Government arising from the contractor entering into a long-term

arrangement (lease, purchase or construction) continuing beyond the

contract period of performance (exclusive of options) could be

significant;

(2) If a long-term investment by the contractor could result in

significant cost savings to the Government, the type of long-term

arrangement that is believed would be most appropriate (e.g., long-term

lease with the right of assignment to a third party or the Government,

at the Government's option; purchase or construction of the facilities,

with depreciation and cost of money either accelerated to cover the

contract period of performance (exclusive of options) or over the

useful life of the facilities); and

(3) Whether the contractor might require a financial guarantee be

provided by the Government in order to enter into a long-term

arrangement and, if so, what the potential amount of such a guarantee

might be, should the contract end (e.g., options are not exercised, or

the contractor is not selected in a recompetition).

* * * * *

4. Section 1807.170-2 is amended by adding a sentence at the end of

the paragraph to read as follows:

1807.170-2 Procurement plans requiring approval at the installation

level.

* * * In addition, installation prescribed formats shall ensure

that plans for procurements in excess of $2,500,000 address the

considerations at 1807.170-1(b)(10).

PART 1815--CONTRACTING BY NEGOTIATION

5. Section 1815.406-70 is amended by republishing paragraph (b)

introductory text and paragraph (b)(5) introductory text and revising

paragraph (b)(5)(iii) to read as follows:

1815.406-70 Instructions for technical proposal and business

management proposal submission.

(a) * * *

(b) Business management proposal. Proposals should include the

following:

* * * * *

(5) A statement as to--

* * * * *

(iii) The cost of any additional facilities (as defined at (FAR) 48

CFR 45.301) required to perform the work and how the costs are to be

charged, with information as to whether the facilities will be

contractor-furnished or Government-furnished and, if contractor-

furnished, the alternatives considered (e.g., short-term lease, long-

term lease with option to transfer the lease to a third party,

purchase), including the long and short term benefits of each

alternative, a description of any unique requirements or arrangements

involved with each alternative, as well as the reasons for the

alternative selected, a copy of the proposed lease or purchase

agreement, identification of all costs included in the lease and

ownership alternatives considered; and

* * * * *

6. Paragraph (c)(5) of section 1815.807-70 is revised to read as

follows:

1815.807-70 Content of the prenegotiation position memorandum.

* * * * *

(c) * * *

(5) Contractor/Government investment in facilities and equipment

(and any modernization to be provided by the contractor/Government).

Although not all inclusive, the following are to be covered:

(i) The facilities needed by the contractor;

(ii) How the facilities are to be provided (Government or

contractor);

(iii) If to be provided by the contractor, the alternatives

considered (operating lease, capital lease, contractor purchase or

construction, or other alternatives);

(iv) Whether a financial guarantee has been requested by the

offeror;

(v) The reasons for the alternative selected; and

(vi) How the costs are to be charged;

* * * * *

[FR Doc. 94-21998 Filed 9-7-94; 8:45 am]

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