Revision to NASA FAR Supplement; Uncompensated Overtime

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 1815, 1837 and 1852

RIN 2700-AB40

Revision to NASA FAR Supplement; Uncompensated Overtime

AGENCY: Office of Procurement, Analysis Division, National Aeronautics

and Space Administration (NASA).

[[Page 16064]] ACTION: Final rule.

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SUMMARY: This final rule sets forth the Agency's policy regarding the

acceptability of uncompensated overtime (UCOT) in acquisition

proposals. It establishes that UCOT provided by employees who are

exempt from the Fair Labor Standards Act is neither encouraged nor

discouraged, but that labor rates must be adjusted to account for any

UCOT proposed. Further, any UCOT proposed must be supported by company

policy, timekeeping and accounting systems, and the historical basis.

The proposal evaluation will include a technical and cost risk

assessment. A sample list of criteria to be considered during

evaluation is included.

This final rule includes a solicitation provision for use in

procurements estimated to exceed $500,000. Its use is optional in

procurements between $100,000 and $500,000. The solicitation provision

sets forth the agency policy and specifies the type of information

needed to support any proposed UCOT.

This coverage was generated in response to industry and internal

NASA requests for a uniform UCOT policy within the Agency. The coverage

will promote consistent treatment of UCOT proposals, without

constraining contractors' prerogatives in deciding whether to propose

UCOT.

EFFECTIVE DATE: April 28, 1995.

FOR FURTHER INFORMATION CONTACT:

Mr. William T. Childs, Telephone: (202) 358-0454.

SUPPLEMENTARY INFORMATION:

Background

NASA published a proposed rule in 59 FR 9951, March 2, 1994,

essentially the same as that being promulgated here. Based on a review

of public comments on the proposed rule, only minor changes were made.

Fourteen comments were received from eight sources:

Two commenters recommended expansion of the applicability of the

proposed rule, by deletion of the phrase ``in key technical positions''

in the first sentence of 48 CFR 1815.608-72. CONCUR--this change was

accepted.

Three commenters recommended that the clause at 48 CFR 1852.237-72

include the policy statement that UCOT is neither encouraged nor

discouraged. A fourth commenter expressed a similar concern. CONCUR--a

preamble paragraph was added to address this in the clause, based on

the policy in 48 CFR 1837.102(b).

Five commenters recommended a policy reversal, so as to either

prohibit bidding of UCOT or nullify any pricing advantage. NONCONCUR--

it is not our intention to restrict offerors' options in developing

their proposals.

The remaining comments addressed minor clarifications or editorial

changes. Some editorial changes were made to better organize the

coverage and correct typographical errors.

In addition, a new paragraph (b) is added in 48 CFR 1815.608-72,

containing a list of sample criteria for NASA personnel to consider in

evaluating UCOT in proposals.

Availability of NASA FAR Supplement

The NASA FAR Supplement, of which this will become a part, is

codified in 48 CFR, chapter 18, and is available in its entirety on a

subscription basis from the Superintendent of Documents, Government

Printing Office, Washington, DC 20402. Cite GPO Subscription Stock

Number 933-003-00000-1. It is not distributed to the public, whether in

whole or in part, directly by NASA.

Regulatory Flexibility Act

NASA certifies that this Final Rule will not have a significant

economic impact on a substantial number of small entities within the

meaning of the Regulatory Flexibility Act (5 U.S.C. 601, et seq.).

Paperwork Reduction Act

The Office of Management and Budget (OMB) has approved the

information collection requirements in this rule and assigned control

number 2700-0080.

List of Subjects in 48 CFR Parts 1815, 1837 and 1852

Government procurement.

Thomas S. Luedtke,

Deputy Associate Administrator for Procurement.

Accordingly, 48 CFR Parts 1815, 1837 and 1852 are amended as

follows:

PART 1815--CONTRACTING BY NEGOTIATION

1. The authority citation for 48 CFR Parts 1815, 1837 and 1852

continues to read as follows:

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

2. Section 1815.608-72 is added to read as follows:

1815.608-72 Uncompensated overtime.

(a) The contracting officer shall conduct a risk assessment of any

proposal received for technical and professional services that includes

unrealistically low labor rates, or uses a high level of uncompensated

overtime (as defined in the provision at 48 CFR 1852.237-72,

Identification of Uncompensated Overtime). Such practices on the part

of the contractor may jeopardize its ability to successfully perform

contract requirements due, for example, to its inability to hire or

retain qualified personnel. Such a risk assessment shall be performed

as part of the technical evaluation and considered in proposal

evaluation (see 48 CFR (FAR) 22.11 and 48 CFR 1837.102(b)).

(b) The risk assessment should consider factors such as--

(1) The number of hours that current employees have been accustomed

to working, and the normal number of work hours for the local industry;

(2) The turnover rates for the firm and for the industry in the

firm's geographical area;

(3) Whether employees involved in uncompensated overtime share

directly in the firm's profits; e.g., through employee-ownership or a

profit-sharing plan;

(4) Whether the contract period of performance is short, or whether

uncompensated overtime will be used for only a relatively short period

of time;

(5) Whether the firm uses approximately the same level of

uncompensated overtime in its non-government business;

(6) Any potential for decline in quality or safety both during

performance and in any deliverable produced; and

(7) The ability of the contractor to respond to an emergency

requiring additional effort.

PART 1837--SERVICE CONTRACTING

3. Section 1837.102 is added to read as follows:

1837.102 Policy.

(a) To the maximum extent practicable, it is the policy of NASA to

acquire services on the basis of the task to be performed rather than

on a labor-hour basis.

(b) The use of uncompensated overtime (as defined in the provision

at 48 CFR 1852.237-72, Identification of Uncompensated Overtime) is

neither encouraged nor discouraged. When the proposed uncompensated

overtime is consistent with an offeror's written policies and

practices, NASA will consider it in proposal evaluation, including the

evaluation of cost and of professional compensation (see 48 CFR (FAR)

22.11). The provision at 48 CFR 1852.237-72 requires offerors to

identify uncompensated overtime hours and the effective hourly rate for

all Fair Labor Standards Act-exempt personnel [[Page 16065]] included

in their proposals and subcontractor proposals. This includes

uncompensated overtime hours that are in indirect cost pools for

personnel whose regular hours are normally charged direct (see 48 CFR

1815.608-72).

4. Section 1837.110 is revised to read as follows:

1837.110 Solicitation provisions and contract clauses.

(a) The contracting officer shall obtain the Associate

Administrator for Procurement's (Code HC) approval before using in a

solicitation, contract, or negotiated contract modification for

additional work any installation-developed clause involving pension

portability.

(b) The following provision applies to procurements under which

professional and technical services are acquired on the basis of the

number of hours to be provided, rather than on the task to be

performed.

(1) If the resulting contract is expected to exceed $500,000, the

contracting officer shall insert in the solicitation the provision at

48 CFR 1852.237-72, Identification of Uncompensated Overtime.

(2) If the resulting contract is expected to exceed $100,000 but

not exceed $500,000, the contracting officer may insert in the

solicitation the provisions at 48 CFR 1852.237-72, Identification of

Uncompensated Overtime.

PART 1852--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

5. Section 1852.237-72 is added to read as follows:

1852.237-72 Identification of Uncompensated Overtime.

As prescribed in 48 CFR 1827.110(b), insert the following

provision:

IDENTIFICATION OF UNCOMPENSATED OVERTIME

(APRIL 1995)

The use of uncompensated overtime is neither encouraged nor

discouraged. When the proposed uncompensated overtime is consistent

with an offeror's written policies and practices, NASA will consider

it in proposal evaluation, including the evaluation of cost and of

professional compensation (see 48 CFR (FAR) subpart 22.11).

(a) Definitions. As used in this provision:

Uncompensated overtime means the hours worked in excess of an

average of 40 hours per week, by direct charge employees who are

exempt from the Fair Labor Standards Act (FLSA) without additional

compensation. Compensated personal absences, such as holidays,

vacations, and sick leave shall be included in the normal work week

for purposes of computing uncompensated overtime hours.

Effective hourly rate is the rate that results from multiplying

the hourly rate for a 40-hour work week by 40, and then dividing by

the proposed hours per week. For example, 45 hours proposed on a 40-

hour work week basis at $20.00 per hour would be converted to an

effective hourly rate of $17.78 per hour [($20.00 x 40) divided by

45=$17.78.]

(b) For any hours proposed against which an effective hourly

rate is applied, the Offeror shall identify in its proposal the

hours in excess of an average of 40 hours per week, at the same

level of detail as compensated hours, and the effective hourly rate,

whether at the prime or subcontract level. This includes

uncompensated overtime hours that are in indirect cost pools for

personnel whose regular hours are normally charged direct. The

proposal shall include the rationale and methodology used to

estimate the proposed amount of uncompensated overtime.

(c) The Offeror's accounting practices used to estimate

uncompensated overtime must be consistent with its cost accounting

practices used to accumulate and report uncompensated overtime

hours.

(d) Proposals that include unrealistically low labor rates, or

that do not otherwise demonstrate cost realism, will be considered

in a technical and cost risk assessment and evaluated for award in

accordance with that assessment.

(e) The Offeror shall include with its proposal a copy of its

policy addressing uncompensated overtime, a description of the

timekeeping and accounting systems used to record all hours worked

by FLSA-exempt employees, and the historical basis for the

uncompensated overtime hours proposed.

(End of provision)

[FR Doc. 95-7734 Filed 3-28-95; 8:45 am]

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