Revision to NASA FAR Supplement Coverage on Contractor Financial Management Reporting

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 1842 and 1852

Revision to NASA FAR Supplement Coverage on Contractor Financial

Management Reporting

AGENCY: Office of Procurement, Contract Management Division, National

Aeronautics and Space Administration (NASA).

ACTION: Notice of Proposed rulemaking.

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SUMMARY: Changes are proposed to update the NASA FAR Supplement (NFS)

coverage on contractor financial management reporting to make it

compatible with current NASA reporting policy, including accounting

requirements imposed by the Chief Financial Officers Act of 1990, the

need for complete, timely and accurate project cost information and

reassessment of the appropriate level of responsibility and authority

in accordance with Government downsizing initiatives.

The revised NFS coverage eliminates requirements for use of the

Monthly Contractor Financial Management Performance Analysis Report,

NASA Form 533P, and the clause included in 1852.242-74. NASA no longer

uses the NF 533P format and is revising its approach to performance

measurement reporting as a result of discussions with other Government

agencies and industry. Revisions to the NASA performance measurement

requirements will be published at a later date. The revised coverage

gives regulatory effect to the publication of revised guidance on NASA

Contractor Financial Management Reporting in NASA Procedures and

Guidelines (NPG) 9501.2; provides for approval of exceptions from the

standard reporting requirements set forth in the NPG at NASA Centers,

rather than at Headquarters; permits waiver of NF 533Q reporting for

certain contracts where NF 533M reporting provides adequate

information; encourages the submission of reports earlier than the

required due dates whenever feasible; and permits the use of

alternative due dates, but only when data will be received in time for

use in NASA's monthly cost accrual process. The time period for

submission of the initial report is extended from 10 to 30 days after

authorization to proceed has been granted. Contracting officers are

given additional options to direct the contractor to report only when

actual cost changes occur or suspend reporting altogether when the

contract effort is completed and NASA has accepted all contract line

items. Prime contractors are no longer required to use NASA Forms 533

for subcontractor reporting, but must ensure that their NF 533 reports

include accurate and timely subcontractor cost data. The revised

procedures will be required to be used on all new contracts issued

after the proposed regulations are adopted as a final rule. Existing

contracts at that time will not require modification to incorporate the

changes unless: requested by the contractor; there is a demonstrated

cost savings; or there will be no cost for implementation.

DATES: Comments must be received on or before November 25, 1996.

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 be

addressed to the Office of Information and Regulatory Affairs, Office

of Management and Budget, Attention: Desk Officer for NASA, Washington,

DC 20503.

FOR FURTHER INFORMATION CONTACT: Mr. Larry G. Pendleton, NASA

Headquarters, Code HK, (202) 358-0487.

SUPPLEMENTARY INFORMATION:

Background

NASA is updating its requirements for contractor financial

management reporting in order to comply with the Chief Financial

Officers Act of 1990, obtain complete, timely and accurate project cost

information, and implement changes in the responsibilities and

authorities of both NASA Headquarters and subordinate organizational

elements.

The Chief Financial Officers Act of 1990 requires that NASA publish

audited annual financial statements. This requirement has placed

additional emphasis on the need for timely and accurate contract cost

data to ensure the accuracy of NASA accounting information.

NASA's guidance for contractor financial management reporting, NPG

9501.2, has been revised to clarify reporting requirements, address

problems and questions that have arisen over time, and reassign

responsibilities and authorities to permit more effective operations in

today's environment. Training on NASA's expectations for contractor

financial management reporting has been presented to all NASA

contractors holding cost-reimbursement contracts over the past two

years, and contractors have informally reviewed and commented upon the

revised guidance. These changes to the NFS recognize the modified NPG

9501.2 and provide complimentary coverage.

Based upon discussions with other Government agencies and industry

representatives, NASA has eliminated the Monthly Contractor Financial

Management Performance Report, NF 533P, from the NASA Contractor

Financial Management Reporting system. The agency is revising its

approach to performance measurement, or earned value, reporting to make

it more consistent with Department of Defense requirements and existing

contractor systems.

Change Highlights

The following revisions eliminate the use of the Monthly Contractor

Financial Management Performance Analysis Report, NASA Form 533P. The

contract clause at 1852.242-74 which required use of NF 533P is

deleted. Exceptions from the standard reporting requirements are

authorized to be approved at NASA Centers rather than at NASA

Headquarters. The time period for submission of the initial report is

extended from 10 to 30 days after contract authorization to proceed has

been granted. Prime contractors are no

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longer required to use NASA Forms 533 for subcontractor reporting, but

must ensure that their NF 533 reports include accurate and timely

subcontractor cost data.

Regulatory Flexibility Act

NASA certifies that these regulation changes 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.).

Paperwork Reduction Act

This rule proposes to eliminate the following report that was

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

Control Number 2700-0003.

Title: Monthly Contractor Financial Management Performance Analysis

Report.

Summary: This report provided NASA project management with a timely

and comprehensive assessment of the contractor's performance over the

reporting period, including cost, technical and schedule status.

Notice: Comments on the elimination of this report may be submitted

to the OMB address shown under ADDRESSEES.

List of Subjects in 48 CFR Parts 1842 and 1852

Government procurement.

Tom Luedtke,

Deputy Associate Administrator for Procurement.

Accordingly, 48 CFR 1842 and 1852 are proposed to be amended as

follows:

1. The authority citation for 48 CFR Parts 1842 and 1852 continues

to read as follows:

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

PART 1842--CONTRACT ADMINISTRATION

Subpart 1842.72--NASA Contractor Financial Management Reporting

1842.7201 [Amended]

2. In paragraph (b)(1) to section 1842.7201, the graphics box

containing reporting criteria and report format is revised to read as

follows:

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Criteria Report Format

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Period of

Contract Value/Scope Performance 533M 533Q

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$500K to $999K............... 1 Year or More...... Required......................... Optional.

$1,000,000 and Over.......... 1 Less than 1 Year.. Required......................... Optional.

$1,000,000 and Over.......... 1 Year or More...... Required......................... Required.

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3. In paragraph (b)(2) to section 1842.7201, the phrase ``as

initially awarded.'' is revised to read ``, based on the estimated

final contract value at the time of award.''

4. In section 1842.7201, paragraph (b)(3) is revised and a new

paragraph (b)(4) is added to read as follows:

1842.7201 General.

(a) * * *

(b) * * *

(3) NF 533Q reporting may be waived by the Contracting Officer,

with the concurrence of the Center Chief Financial Officer and

cognizant Project Manager, for support service or task order contracts,

when NF 533M reports and other data are sufficient to ensure accurate

monthly cost accruals, evaluate the contractor's cost performance and

forecast resource requirements.

(4) Where a specific contractual requirement differs from the

standard system set forth in NPG 9501.2, NASA Contractor Financial

Management Reporting, but is determined to be in the best interests of

the Government and does not eliminate any of the data elements required

by the standard NF 533 formats, it may be approved by the Contracting

Officer with the concurrence of the Center Chief Financial Officer and

cognizant Project Manager. Such approval shall be documented and

retained, with the supporting rationale, in the contract file.

* * * * *

5. In section 1842.7201, the existing paragraph (c) is redesignated

as a new paragraph (b)(5), and paragraphs (d) and (e) are redesignated

as paragraphs (c) and (d) and are revised to read as follows:

(c) Contract requirements. (1) Reporting requirements, including a

description of reporting categories, shall be detailed in the

procurement request, and reports shall be required by inclusion of the

clause in 1842.7202. the contract schedule shall include report

addressees and numbers of copies. Reporting categories shall be

coordinated with the Center Financial Management Office to ensure that

data required for agency cost accounting will be provided by the

reports. Reporting dates shall be in accordance with NPG 9501.2, except

that earlier submission is encouraged wherever feasible. No due date

shall be permitted which is later than the date by which the Center

Financial Management Office needs the data to enter an accurate monthly

cost accrual in the accounting system.

(2) The contractor shall be required to submit an initial report in

the NF 533Q format, time phased for the expected life of the contract,

within 30 days after authorization to proceed has been granted. NF 533M

reporting will begin no later than 30 days after incurrence of cost. NF

533Q reporting begins with the initial report.

(d) Deviations. Deviations from the financial management reporting

clause require approval in accordance with 1801.471, and the

concurrence of the Director, Financial Management Division and the

official-in-charge of the cognizant Headquarters Program Office.

6. Section 1842.7202 is revised to read as follows:

1842.7202 Contract clauses.

The clause at 1852.242-73, NASA Contractor Financial Management

Reporting, shall be used when any of the NASA Form 533 reports are

required from the contractor.

1852--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

7. Section 1852.242-73 is revised to read as follows:

1852.242-73 NASA Contractor Financial Management Reporting.

As prescribed in 1842.7202, insert the following clause in

contracts that require submission of NASA Form 533M or 533Q reports.

NASA Contractor Financial Management Reporting

August 1996.

(a) The Contractor shall submit NASA Contractor Financial

Management Reports on NASA Forms 533 in accordance with the

instructions in NASA Contractor Financial Management Reporting (NPG

9501.2) and on the reverse side of the forms, as supplemented in the

Schedule of this contract. The detailed reporting categories to be

used, which shall correlate with technical

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and schedule reporting, shall be set forth in the Schedule.

Contractor implementation of reporting requirements under this

clause shall include NASA approval of the definitions of the content

of each reporting category and give due regard to the Contractor's

established financial management information system.

(b) Lower level detail used by the Contractor for its own

management purposes to validate information provided to NASA shall

be compatible with NASA requirements.

(c) Reports shall be submitted in the number of copies, at the

time, and in the manner set forth in the Schedule or as directed in

writing by the Contracting Officer. Upon completion and acceptance

by NASA of all contract line items, the Contracting Officer may

direct the Contractor to submit Form 533 reports on a quarterly

basis only, report only when changes in actual cost occur, or

suspend reporting altogether.

(d) The Contractor shall ensure that its NF 533 reports include

accurate subcontractor cost data, in the proper reporting

categories, for the reporting period.

(e) If, during the performance of this contract, NASA requires a

change in the information or reporting requirements specified in the

Schedule, or as provided for in paragraph (a) or (c) of this clause,

the Contracting Officer shall effect that change in accordance with

the Changes clause of this contract.

(End of clause)

1852.242-74 [Removed]

8. Section 1852.242-74 is removed.

[FR Doc. 96-26336 Filed 10-24-96; 8:45 am]

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