# NASA FAR Supplement; Addressing Costs of Contractor Facilities in Procurement Plans, Business Management Proposals, and Prenegotiation Position Memoranda > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/fr%3A94-21998 ## Record - **Collection:** Federal Register - **Document type:** Uncategorized Document - **Published:** September 8, 1994 ## Text 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. ----------------------------------------------------------------------- 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) * * * ------------------------------------------------------------------------ OMB control NASA FAR supplement segment No. ------------------------------------------------------------------------ ***** 1815.406-70(b)(5)(iii)..................................... 2700-0082 ***** ------------------------------------------------------------------------ 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] BILLING CODE 7510-01-M --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A94-21998. Public record. Not legal advice.