Revision to NASA FAR Supplement Coverage on Government Property

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 1845 and 1852

Revision to NASA FAR Supplement Coverage on Government Property

agency: Office of Procurement, Contract Management Division, National

Aeronautics and Space Administration (NASA).

action: Notice of proposed rulemaking.

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summary: This rule proposes to amend the regulations pertaining to

government property reporting by contractors, due to revisions of the

reporting form, to clarify and simplify the reporting requirements and

instructions, and make necessary changes to affected provisions and

clauses. NASA has made extensive changes to its process of financial

reporting of Government-Owned/Contractor-Held property. These changes

were made necessary by the Chief Financial Officers Act of 1990,

streamlining required by the National Performance Review, the need for

more uniformity in reporting requirements between NASA and the

Department of Defense (DOD), and changing internal management needs for

information within NASA.

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dates: Comments must be received on or before December 26, 1995.

addresses: Submit comments to Larry G. Pendleton, Contract Management

Division (Code HK), Office of Procurement, NASA Headquarters,

Washington, DC 20546. Comments on the paperwork burden should also be

addressed to the Office of Information and Regulatory Affairs of OMB,

Attention: Desk Officer for NASA, Washington, DC 20503.

for further information contact: Mr. Larry G. Pendleton, (202) 358-

0487.

SUPPLEMENTARY INFORMATION:

Background

The Chief Financial Officers (CFO) Act requires, among other

things, that Federal agencies produce audited annual financial

statements. At NASA, CFO Act audits have been performed by the Office

of the Inspector General. Experience over the last three years with

this process has led to changes in the reporting period and due date

for receipt of contractor and grantee property reports, and

identification of other necessary or desirable changes to property

reporting. Other broad policy changes are being considered elsewhere,

such as the work being done by the Federal Accounting Standards

Advisory Board on accounting for Property, Plant and Equipment, and the

rewrite of Federal Acquisition Regulation (FAR) Part 45 by a team led

by the DOD. To the extent possible, these efforts have been considered

in formulating changes to NASA regulations. Of primary concern has been

the need to obtain timely, accurate financial information on NASA

property in the custody of contractors in a way that minimizes impact

on reporting entities.

Changes Highlights

Revisions to NASA Form (NF) 1018 and related regulations

incorporate the following:

A. The Annual List of Selected Items of Space Hardware has been

eliminated. The term ``space hardware'' is replaced by ``agency-

peculiar property'' (APP) to be consistent with the Federal Acquisition

Regulation, and contractors will report all property in their

possession meeting the NASA FAR Supplement (NFS) definition of APP.

B. Schedule II, Space Hardware Reportable Items, of the current NF

1018 has been eliminated as unnecessary. The NF 1018 will be a single

page, with instructions on the back, rather than the present three-page

form, and instructions.

C. The NF 1018 title and format have been changed to make them more

consistent with the DD Form 1662. Use of the DD Form 1662 only was

considered, but NASA information requirements precluded this option.

D. The requirement for a breakout of contractor-acquired property

by funding classification has been eliminated.

E. A requirement to report quantities by property category has been

added to provide necessary management information.

F. A requirement to breakout plant equipment by items over and

under $5,000 has been added. Accounting information is required for

items over $5,000 as this is the NASA capitalization threshold,

consistent with General Accounting Office standards. Property

management information is needed, however, for all plant equipment.

G. A category for ``Construction in Progress'' has been added to be

consistent with the Government-wide Standard General Ledger and NASA

financial statements.

H. The term ``disposals'' has been changed to ``deletions'' to be

consistent with the DD Form 1662. Specific categories have been

provided on the NF 1018 to make it simpler for contractors to classify

the type of deletion, and for property management purposes.

I. The lower section of the form has been revised to provide better

information on contact persons and on contractor property system

reviews.

J. Reporting instructions on the NF 1018 have been revised to

eliminate duplication with regulatory language in the NFS.

K. Regulations have been changed to eliminate the optional use of

monthly or quarterly reporting in accordance with the Presidents

Memorandum of April 21, 1995, on regulatory reform and reduction of

reports.

L. Contract clauses have been changed to:

(1) Make clear that NF 1018 submissions must be received by the

cognizant NASA offices not later than October 31 of each reporting

year; and

(2) Provide for withholding of payment on invoices when required NF

1018 reports are not received.

Regulatory Flexibility Act

NASA certifies that these regulation changes will not have a

significant economic impact on a substantial number of small entities

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

Paperwork Reduction Act

This rule proposes to change the following report that was approved

by the Office of Management and Budget (OMB) and assigned OMB Control

Number 2700-0017. A copy of the proposed rule has been submitted to OMB

for review under section 3507(d) of the Paperwork Reduction Act.

Title: Report of Government-Owned/Contractor-Held Property.

Summary: This report collects information on Government-owned/

contractor-held property accountable under NASA contracts.

Description of the need for the information and proposed use of the

information: NASA is required to account for Government-owned/

contractor-held property. The NASA Form 1018 submitted by contractors

provides data necessary to ensure that the Agency's assets are

accurately reflected on its audited financial statements, as well as

essential property management information.

Description of the likely respondents, including the estimated

number of likely respondents, and proposed frequency of response to the

collection of information: NASA contractors whose contracts contain the

clause entitled ``Financial Report of NASA Property in the Custody of

Contractors'' will be required to submit NASA Form 1018 annually. The

number of respondents is estimated to be 1,900.

Estimate of the total annual reporting and recordkeeping burden

that will result from the collection of information: FAR part 45

requires that contractors maintain the official Government property

records for Government property in their possession. The NASA Form 1018

provides a means for an annual collection of summary data derived from

these records. The annual recordkeeping and reporting burden related to

preparation and submission of NASA Form 1018 is estimated to be 5,700

hours.

Notice: Comments may be submitted to the OMB address shown under

ADDRESSES.

Time period within which the agency is requesting OMB to approve or

disapprove the collection of information: NASA is requesting that OMB

approve the proposed revisions to the collection of information within

the next 60 days.

In addition, comments may be submitted to NASA and OMB in order to

help NASA--

(i) Evaluate whether the proposed collection of information is

necessary for the proper performance of the functions of the agency,

including whether the information will have practical utility;

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(ii) Evaluate the accuracy of the agency's estimate of the burden

of the proposed collection of information, including the validity of

the methodology and assumptions used;

(iii) Enhance the quality, utility, and clarity of the information

to be collected; and

(iv) Minimize the burden of the collection of information on those

who are to respond, including through the use of appropriate automated,

electronic, mechanical, or other technological collection techniquest

or other forms of information technology, e.g., permitting electronic

submission of responses.

List of Subjects in 48 CFR Parts 1845 and 1852

Government procurement.

Tom Luedtke,

Deputy Associate Administrator for Procurement.

Accordingly, 48 CFR Parts 1845 and 1852 are proposed to be amended

as follows.

1. The authority citation for 48 CFR Parts 1845 and 1852 continues

to read as follows:

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

PART 1845--GOVERNMENT PROPERTY

Subpart 1845.1--General

1. In section 1845.102-70, paragraph (a)(3) is revised to read as

follows:

1845.102-70 Procedures.

(a) * * *

(3) Requirement that additional facilities that the offeror

requests to be provided by the Government be described and identified

by classification such as ``Land,'' ``Buildings,'' and ``Equipment''

(see subpart 1845.71); and

* * * * *

2. In section 1845.106-70, paragraph (d) is revised, paragraph (i)

is removed and paragraphs (j) and (k) are redesignated as (i) and (j)

to read as follows:

1845.106-70 NASA contract clauses and solicitation provision.

* * * * *

(d) The contracting officer shall insert the clause at 1852.245-73,

Financial Reporting of NASA Property in the Custody of Contractors, in

all cost reimbursement contracts or in all other types of contracts

when it is known at the time of award that property will be provided to

the contractor or that the contractor will acquire property, title to

which vests in the Government prior to delivery of the contract

products. Where all property to be provided is subject to the clause at

1852.245-71, Installation-Provided Government Property (see paragraph

(b) of this section), the clause at 1852.245-73 is not required. Where

the clause is not included in contracts at the time of award, if

Government property is subsequently provided to a contractor, or the

contractor is authorized to acquire property to which the Government

takes title, the clause shall be included in the contract at that time.

* * * * *

1845.301 [Amended]

3. In section 1845.301, the definition heading ``Space property''

is revised to read ``Agency-peculiar property''.

Subpart 1845.5--Management of Government Property in the Possession

of Contractors

4. Section 1845.501 is amended as follows:

(a) The definition heading ``Space property'' is revised to read

``Agency-peculiar property'', the word ``peculiar'' is revised to read

``unique'', and the last sentence is removed.

(b) In the definition ``Centrally reportable equipment (CRE)'', the

phrase ``space property'' is revised to read ``agency-peculiar

property.''

5. In section 1845.502-1, the title of the NASA Form 1018 ``Report

of Government-Owned/Contractor-Held Property'' is revised to read

``NASA Property in the Custody of Contractors''.

6. Section 1845.505-14 is revised to read as follows:

1845.505-14 Reports of Government property.

When required by the contract, the contractor shall submit a report

of NASA Property in the Custody of Contractors, NASA Form 1018, in

accordance with the instructions on the form, subpart 1845.71, and the

contract clause at 1852.245-73. The contractors property control system

shall distinguish Government furnished and contractor acquired property

for purposes of reporting the acquisition cost in the property

classifications shown in FAR 45.505-14(a) (1) through (5).

Subpart 1845.71--Forms Preparation

7. In Sec. 1845.7101 the last sentence is revised to read as

follows:

1845.7101 Instructions for preparing NASA Form 1018.

* * * This report provides information for NASA financial

statements and property management; accuracy and timeliness of the

report are, therefore, very important. Contractors shall retain

documents which support the data reported on NASA Form 1018 in

accordance with FAR subpart 4.7, Contractor Records Retention.

Classifications of property, related costs to be reported, and

reporting requirements are set forth in this subpart.

8. Section 1845.7101-1 is revised to read as follows:

1845.7101-1 Property classification.

(a) Contractors shall report costs in the classifications required

on NASA Form (NF) 1018, as described in this section. For Land,

Buildings, Other Structures and Facilities, and Leasehold Improvements,

contractors shall report the amount for all items with a unit cost of

$5,000 or more and a useful life of 2 years or more. For Plant

Equipment, Special Tooling, Special Test Equipment and Agency-Peculiar

Property, contractors shall separately report--

(1) The amount for all items with a unit cost of $5,000 of more and

useful life of 2 years or more and

(2) All items under $5,000, regardless of useful life.

(b) Contractors shall report the amount for all Materials,

regardless of unit cost.

(c) Land. Includes costs of land and associated costs incidental to

acquiring and preparing land for use, for example; appraisal fees,

clearing costs, drainage, grading, landscaping, plats and surveys,

removal and relocation of the property of others as part of a land

purchase, removal or destruction of structures or facilities purchased

but not used, and legal expenses.

(d) Buildings. Includes costs of buildings, improvements to

buildings, and fixed equipment required for the operation of a building

which is permanently attached to and a part of the building and cannot

be removed without cutting into the walls, ceilings, or floors.

Examples of fixed equipment required for the functioning of a building

include plumbing, heating and lighting equipment, elevators, central

air conditioning systems, and built-in safes and vaults.

(e) Other structures and facilities. Includes costs of acquisitions

and improvements of structures and facilities other than buildings; for

example, airfield pavements, harbor and port facilities, power

production facilities and distribution systems, reclamation and

irrigation facilities, flood control and navigation aids, utility

systems (heating, sewage, water and

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electrical) when they serve several buildings or structures,

communication systems, traffic aids, roads and bridges, railroads,

monuments and memorials, and nonstructural improvements, such as

sidewalks, parking areas, and fences.

(f) Leasehold improvements. Includes costs of improvements to

leased buildings, structures, and facilities, as well as easements and

right-of-way, where NASA is the lessee or the cost is charged to a NASA

contract.

(g) Equipment. Includes costs of commercially available personal

property for use in manufacturing supplies, performing services, or any

general or administrative purpose; for example, machine tools,

furniture, vehicles, computers, accessory or auxiliary items, and test

equipment.

(h) Construction in progress. Includes costs for work in process

for the construction of Buildings, Other Structures and Facilities,

Leasehold Improvements, and Equipment to which NASA has title.

(i) Special tooling. Includes costs of equipment and manufacturing

aids (and components and replacements of these items) that are of such

a specialized nature that, without substantial modification or

alteration, their use is limited to the development or production of

particular supplies or parts, or to the performance of particular

services. Examples include jigs, dies, fixtures, molds, patterns, taps

and gauges.

(j) Special test equipment. Includes costs of equipment used to

accomplish special purpose testing in performing a contract, and items

or assemblies of equipment.

(k) Material. Includes costs of NASA owned property held in

inventory that may become a part of an end item or be expended in

performing a contract. Examples include raw and processed material,

parts, assemblies, small tools and supplies. Do not include material

that is part of work in process.

(l) Agency-peculiar property. Includes actual or estimated costs of

completed items, systems and subsystems, spare parts and components and

work in process unique to NASA aeronautical and space programs.

Examples include aircraft, engines, satellites, instruments, rockets,

prototypes and mock-ups. The amount of property, title to which vests

in the Government as a result of progress payments to fixed price

subcontractors, shall be included to reflect the pro rata cost of

undelivered agency-peculiar property.

9. Section 1845.7101-2 is revised to read as follows:

1845.7101-2 Transfers of property.

The procedures in this section apply to all types of transfers.

Only Government installations may furnish Government property to a

contractor. Therefore, procurement, property, and financial

organizations at NASA installations must effect all transfers of

accountability, although physical shipment and receipt of property may

be made directly by contractors. Such transfers include shipments

between contractors of the same installation, contractors of different

installations, a contractor of one installation to another

installation, an installation to a contractor of another installation,

and a contractor to another Government agency to its contractor. So

that NASA may properly control and account for transfers, they shall be

adequately documented. The procedures described in this section shall

be followed in all cases, to provide an administrative and audit trail,

even if property is physically shipped directly from one contractor to

another. Contractors shipping property to NASA, another contractor, or

another Government agency shall continue to be accountable for NASA

Form (NF) 1018 reporting of that property, regardless of the method of

shipment, until evidence of receipt is in the possession of the

shipping entity. Property provided under fixed price repair contracts

remains accountable to the cognizant NASA installation and is not

reportable on NF 1018; property provided for repair under a cost-

reimbursable contract, however, is accountable to the contractor and

reportable on NF 1018.

(a) Approval and notification. The contractor must obtain the

approval of the contracting officer or designee for transfers of

property before shipment. Each shipping document must contain contract

numbers, shipping references, property classifications in which the

items are recorded, unit prices, and any other appropriate identifying

or descriptive data. Unit prices shall be obtained from records

maintained pursuant to FAR part 45 and part 1845 of this chapter.

Shipping contracting shall furnish a copy of the shipping document to

the cognizant property administrator. Shipping and receiving

contractors shall promptly notify the financial management office of

the NASA installation responsible for their respective contracts when

accountability for Government property is transferred to, or received

from, other contracts, contractors, NASA installations or Government

agencies. Copies of shipping or receiving documents will suffice as

notification in most instances.

(b) Reclassification. If the property is transferred to another

contract or contractor, the receiving contractor shall record the

property in the same property classification and amount appearing on

the shipping document. For example, when a contractor receives an item

from another contractor that is identified on the shipping document as

equipment, but that the recipient intends to incorporate into special

test equipment, the recipient shall first record the item in the

equipment account and subsequently reclassify it as special test

equipment. Reclassification of equipment, special tooling, special test

equipment, or agency-peculiar property requires prior notification to

the property administrator and approval of the contracting officer.

(c) Incomplete documentation. If contractors receive transfer

documents having sufficient detail to properly record the transfer

(e.g., omission of property classification, unit prices, etc.) they

shall request the omitted data directly from the shipping contractor or

through the property administrator as provided as in FAR 45.505-2.

Contractors may append a Government furnished property list to the NF

1018 report when unable to obtain the required data, provided that the

list includes--

(1) A description of the property;

(2) Quantity;

(3) Shipping document reference;

(4) Shippers identity;

(5) Dates shipped or received

(6) The dates data were requested and from whom (shipper or

property administrator); and

(7) The NF 1018 line item (classification) to be adjusted.

10. Sections 1845.7101-3, 1845.7101-4, and 1845.7101-5 are removed,

and section 1845.7101-6 is redesignated as section 1845.7101-3 and is

revised to read as follows:

1845.7101-3 Computing costs of fabricated special tooling, special

test equipment, and Agency-peculiar property.

(a) Costs shall be computed in accordance with accepted accounting

principles, be reasonably accurate, and be the product of any one or a

combination of, the following:

(1) Abstracts of cost data from contractor property or financial

records.

(2) Computations based on engineering and financial data.

(3) Estimates based on NASA Form 533 reports.

(4) Formula procedures (e.g., using a 50 percent factor for work in

process items, on the basis of updated Standard Form 1411 estimates or

the contractors approved estimating and pricing system).

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(5) Other approved methods.

(b) Contractors shall report costs using records that are part of

the prescribed property or financial control system as provided in this

section, excluding fee. Fabrication costs shall be based on the

contractors approved estimating and pricing system and should include--

(1) Direct labor;

(2) Direct materials and purchased parts (costs of purchased items

shall be consistent with the contractors approved pricing methods);

(3) Other direct costs (e.g., computer costs, travel, and

transportation);

(4) Burden (a percentage factor or rate applied to the direct costs

or other applicable base); and

(5) Costs of Government furnished property applied (data available

from the Government shipping document or estimated, if necessary).

(c) The contractor shall redetermine the costs of items returned

for modification or rehabilitation to include the remaining portion of

original cost plus the cost of any improvements.

(d) The computation of work in process shall include the costs of

associated systems, subsystems, and spare parts and components

furnished or acquired and charged to work in process pending

incorporation into a finished item. These types of items make up what

is sometimes called production inventory and include programmed extra

units to cover replacement during the fabrication process (production

spares). Also included are deliverable items on which the contractor or

a subcontractor has begun work, and materials that have been issued

from inventory.

11. Sections 1845.7101-7, 1845.7101-8, and 1845.7101-9 are removed,

and section 1845.7101-10 is redesignated as section 1845.7101-4.

PART 1852--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

1852.245-73 [Amended]

12. In section 1852.245-73, the title, date, and paragraphs (a),

(c) and (d) to the clause are revised and the introductory text,

paragraph (e) and Alternates I and II to the clause are removed to read

as follows:

1852.245-73 Financial reporting of NASA property in the custody of

contractors.

As prescribed in 1845.106-70(d), insert the following clause:

FINANCIAL REPORTING OF NASA PROPERTY IN THE CUSTODY OF CONTRACTORS (XXX

199X)

(a) The Contractor shall submit annually a NASA Form (NF) 1018,

NASA Property in the Custody of Contractors, in accordance with

1845.505-14, the instructions on the form, and subpart 1845.71.

Subcontractor use of NF 1018 is not required by this clause;

however, the contractor shall include data on property in the

possession of subcontractors in the annual NF 1018.

* * * * *

(c) The annual reporting period shall be from October 1 of each

year to September 30 of the following year. The report shall be

submitted in time to be received by October 31. Failure to submit

the report when due may result in withholding of payment on invoices

for the month in which reports are to be submitted, based on

noncompliance with contract requirements.

(d) A final report is required within 30 days after disposition

of all property subject to reporting when the contract performance

period is complete.

(End of clause)

1852.245-78 [Removed]

13. Section 1852.245-78 is removed.

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Appendix To The Proposed Rule NASA Form 1018--NASA Property In The

Custody Of Contractors

[GRAPHIC][TIFF OMITTED]TP25OC95.004

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[FR Doc. 95-26427 Filed 10-24-95; 8:45 am]

BILLING CODE 7510-01-C