Revision to NASA FAR Supplement Coverage on Pension Portability

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 1837 and 1852

Revision to NASA FAR Supplement Coverage on Pension Portability

AGENCY: Office of Procurement, Procurement Policy Division, National

Aeronautics and Space Administration (NASA).

ACTION: Notice of proposed rulemaking.

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SUMMARY: This rule proposes to amend the regulation on pension

portability under NASA contracts. Questions from NASA personnel and

industry identified a need for consistency regarding the vesting period

requirements, flowdown to subcontractors, and how to determine when

pension portability would be appropriate. The rule proposes more

consistent treatment of those issues.

DATES: Comments must be received on or before June 20, 1994.

ADDRESSES: Submit comments to Mr. Joseph Le Cren, Contract Pricing and

Finance Division (Code HC), Office of Procurement, NASA Headquarters,

Washington, DC 20546.

FOR FURTHER INFORMATION CONTACT: Mr. Joseph Le Cren, (202) 358-0444.

SUPPLEMENTARY INFORMATION:

Background

Questions were raised by both industry and within NASA regarding

certain aspects of the coverage on pension portability. The majority of

the questions concerned the lack of consistency of NASA's installations

regarding the vesting period requirements and whether the pension

portability requirements should apply to subcontracts. The purpose of

this change is to address those issues. The rule also requires the use

of the clause at 48 CFR 1852.237-71 rather than allowing a clause

substantially the same as that one. It also adds a condition for

determining when pension portability would be appropriate. Furthermore,

the rule replaces the requirement that a copy of each written

determination by the procurement officer to use pension portability be

sent to the Associate Administrator for Procurement with one that the

procurement officer only need keep a record of all such determinations.

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.

Deidre A. Lee,

Associate Administrator for Procurement.

Accordingly, 48 CFR parts 1837 and 1852 are proposed to be amended

as follows.

PART 1837--[AMENDED]

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

to read as follows:

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

2. In part 1837, subpart 1837.1 is revised to read as follows:

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--[AMENDED]

3. In part 1852, 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

(XXX 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.

(End of Clause)

[FR Doc. 94-9399 Filed 4-18-94; 8:45 am]

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