Revision to NASA FAR Supplement Coverage on Pension Portability

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 1837 and 1852

RIN 2700-AB77

Revision to NASA FAR Supplement Coverage on Pension Portability

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 policies regarding pension portability

under NASA contracts. It amends NASA's policies dealing with vesting

period requirements, flowdown to subcontractors, and sets forth the

conditions when pension portability would be appropriate. The rule

establishes more consistent treatment of the vesting period and

subcontractor flowdown issues.

EFFECTIVE DATE: December 29, 1994.

FOR FURTHER INFORMATION CONTACT:

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

SUPPLEMENTARY INFORMATION:

Background

On April 19, 1994, a proposed rule to amend the NFS to revise

NASA's regulation on pension portability was published in the Federal

Register (59 FR 18518) for comment. All comments were reviewed. No

changes were made as a result of the comments. However, a review of the

proposed rule in response to one of the comments disclosed the omission

of a comma in 1852.237-71(a)(ii) between ``defined contribution plan''

and ``or a multiparty benefit plan.'' The comma is in the existing

clause at 1852.237-71 but had been inadvertently omitted in the

proposed rule. The final rule restores the comma.

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.). This rule does not

impose any reporting or record keeping requirements subject to the

Paperwork Reduction Act.

List of Subjects in 48 CFR Parts 1837 and 1852

Government procurement.

Tom Luedtke,

Deputy Associate Administrator for Procurement.

Accordingly, 48 CFR parts 1837 and 1852 are amended as follows:

1. The authority citation for 48 CFR parts 1837 and 1852 continues

to read as follows:

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

PART 1837--SERVICE CONTRACTING

2. Subpart 1837.1 is revised to read as follows:

Subpart 1837.1--Service Contracts--General

1837.101 Definitions.

1837.110 Solicitation provisions and contract clauses.

1837.170 Pension portability.

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

Subpart 1837.1--Service Contracts--General

1837.101 Definitions.

Pension portability means the recognition and continuation in a

successor service contract of the predecessor service contract

employees' pension rights and benefits.

1837.110 Solicitation provisions and contract clauses.

The contracting officer shall use the clause at 1852.237-71,

Pension Portability, in a solicitation, contract or negotiated contract

modification for additional work when the procurement officer

determines, in accordance with the requirements of 1837.170, that

pension portability is in the Government's best interest.

1837.170 Pension portability.

(a) It is NASA's policy not to require pension portability in

service contracts. However, pension portability requirements may be

included in a solicitation, contract, or contract modification for

additional work under the following conditions:

(1)(i) There is a continuing need for the same or similar services

for a minimum of five years (inclusive of options) and, if and when the

contractor changes, a high percentage of the predecessor contractor's

employees are expected to remain with the program; or

(ii) Where the employees under a predecessor contract were covered

by a portable pension plan, a follow-on contract or a contract

consolidating existing services shall include pension portability as

long as the total contract period covered by the plan, past and future,

covers five years.

(2) Only defined contribution plans, or multiparty defined benefit

plans operated under a collective bargaining agreement where the plan

follows the employee instead of the employer, shall be permitted in the

portability provisions;

(3) Vesting shall be 100 percent at the earlier of one year of

continuous employee service or contract termination;

(4) There is a clear description of the plan, including coverage

regarding service, pay, liabilities, vesting, termination, and benefits

from prior contracts, as appropriate; and

(5) The procurement officer has made a written determination that

such a provision is in the Government's best interest, including the

facts supporting that determination.

(b) The procurement officer shall maintain a record of all written

determinations that the use of pension portability is in the

Government's best interest.

PART 1852--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

3. Section 1852.237-71 is revised to read as follows:

1852.237-71 Pension portability.

As prescribed at 1837.110(a), insert the following clause:

Pension Portability

(Nov 1994)

(a) In order for pension costs attributable to employees

assigned to this contract to be allowable costs under this contract,

the plans covering such employees must:

(i) Comply with all applicable Government laws and regulations;

(ii) Be a defined contribution plan, or a multiparty defined

benefit plan operated under a collective bargaining agreement. In

either case, the plan must be portable, i.e., the plan follows the

employee, not the employer;

(iii) Provide for 100 percent employee vesting at the earlier of

one year of continuous employee service or contract termination; and

(iv) Not be modified, terminated, or a new plan adopted without

the prior written approval of the cognizant NASA Contracting

Officer.

(b) The Contractor shall include paragraph (a) of this clause in

all subcontracts for continuing services under a service contract

where (1) the prime contract requires pension portability, (2) the

subcontracted labor dollars (excluding any burdens or profit/fee)

exceed $2,500,000 and ten percent of the total prime contract labor

dollars (excluding any burdens or profit/fee), and (3) the

conditions at 1837.170 are satisfied.

[FR Doc. 94-29273 Filed 11-28-94; 8:45 am]

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