Rewrite of the NASA FAR Supplement (NFS)

Federal RegisterMar 25, 1997

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NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 1803, 1805, 1812, 1815, 1835, 1842, 1843, 1844, 1846,

1847, 1848, 1849, 1850, 1851, and 1852

Rewrite of the NASA FAR Supplement (NFS)

AGENCY: Office of Procurement, National Aeronautics and Space

Administration (NASA).

ACTION: Final rule.

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SUMMARY: Parts 1842 through 1851, except 1845, and clauses affected by

these parts are revised in their entirety. Part 1815, Contracting by

Negotiation, is revised by relocating the existing coverage on source

selection evaluation plans from 1815.612-70(g) to a new separately

titled section 1815.605-71, and by establishing a new section 1815.612,

Formal source selection. The revision to part 1842 also incorporates

the changes published as a proposed rule (61 FR 55264-55266, October

25, 1996). No public comments were received in response to the proposed

rule, and the proposed changes are adopted as final except for the

deletion of extraneous paragraph 1842.7201(d). Also included in this

final rule are editorial changes to 1803 and 1815; a revision to

1805.402 to reflect the prohibition in FAR 15.1005(f) on preaward

disclosure of the identify of offerors; a change to 1812 to authorize

use of an NFS contract clause in commercial acquisitions; and the

adoption as final rule the proposed changes to 1852.223-70 and

1852.247-73 described in the proposed rule to eliminate non-statutory

contractor certification requirements (61 FR 66643-66646).

EFFECTIVE DATE: March 25, 1997.

FOR FURTHER INFORMATION CONTACT:

Tom O'Toole, (202) 358-0478.

SUPPLEMENTARY INFORMATION:

Background

The National Performance Review urged agencies to streamline and

clarify their regulations. The NFS rewrite initiative was established

to pursue these goals by conducting a section by section review of the

NFS to verify its accuracy, relevancy, and validity. The NFS will be

rewritten in blocks of parts. Upon completion of all parts, the NFS

will be reissued in a new edition.

Impact

NASA certifies that this regulation will not have a significant

impact on a substantial number of small entities under the Regulatory

Flexibility Act (5 U.S.C. 602 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 1803, 1805, 1812, 1815, 1835,

1842, 1843, 1844, 1846, 1847, 1848, 1849, 1850, 1851, and 1852

Government procurement.

Tom Luedtke,

Deputy Associate Administrator for Procurement.

Accordingly, 48 CFR Parts 1803, 1805, 1812, 1815, 1835, 1842, 1843,

1844, 1846, 1847, 1848, 1849, 1850, 1851, and 1852 are amended as

follows:

1. The authority citation for 48 CFR 1803, 1805, 1812, 1815, 1835,

1842, 1843, 1844, 1846, 1847, 1849, 1850, 1851, and 1852 continues to

read as follows:

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

PART 1803--IMPROPER BUSINESS PRACTICES AND PERSONAL CONFLICTS OF

INTEREST

1803.101-1 [Amended]

2. The first sentence in section 1803.101-1 is revised to read as

follows:

1803.101-1 General.

The statutory prohibitions and their application to NASA personnel

are discussed in the Standards of Ethical Conduct for Employees of the

Executive Branch, 5 CFR part 2635, and the Supplemental Standards of

Ethical Conduct for Employees of the National Aeronautics and Space

Administration, 5 CFR part 6901.* * *

1803.101-2 [Amended]

3. In section 1803.101-2, the phrase ``(See Standards of Conduct

for NASA Employees, NHB 1900.1.)'' is removed.

1803.104-5 [Amended]

4. In paragraph (d)(1)(A) of section 1803.104-5, the phrase ``under

1870.303, App. I,'' is revised to read ``(see 1815.612-70)''.

PART 1805--PUBLICIZING CONTRACT ACTIONS

1805.402 [Amended]

5. Section 1805.402 is revised to read as follows:

1805.402 General public. (NASA paragraphs (1) and (2))

(1) Unless the head of the contracting activity determines that

disclosure would be prejudicial to the interests of NASA, the following

information on NASA acquisitions may be released:

(i) The names of firms invited to submit offers, and

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(iii) The names of firms that attended any pre-bid or pre-proposal

conferences.

(2) Other requests for information under the Freedom of Information

Act shall be processed in accordance with FAR 24.2 and 1824.2.

PART 1812--ACQUISITION OF COMMERCIAL ITEMS

1812.301 [Amended]

6. In section 1812.301, a new paragraph (f)(i)(J) is added to read

as follows:

1812.301 Solicitation provisions and contract clauses for the

acquisition of commercial items. (NASA Supplement paragraph (f))

(f)(i) * * *

(J) 1852.246-72, Material Inspection and Receiving Report. * * *

PART 1815--CONTRACTING BY NEGOTIATION

1815.605-71 [Added]

7. Section 1815.605-71 is added to read as follows:

1815.605-71 Source selection evaluation plan.

(a) A source selection evaluation plan shall be prepared for each

source selection. The plan shall include, as a minimum the general and

specific evaluation guidelines (and special standards of

responsibility, where applicable) established to assess each offeror's

proposal against the RFP evaluation factors, subfactors, and elements.

The evaluation guidelines are designed to focus the evaluators'

assessment. They are not weighted and are not listed in the RFP.

However, the substance of the guidelines may be included in a narrative

description of the subfactors and elements. In addition, the plan

includes the system used in conducting the evaluation (and scoring, if

applicable) of each offeror's proposal.

(b) The source selection evaluation plan shall be approved by the

source selection authority or other personnel designated in accordance

with installation procedures before the formal RFP is issued.

1815.612 [Added]

8. Section 1815.612 is added to read as follows:

1815.612 Formal source selection. (NASA supplements paragraph (c))

satisfied by incorporating the information required by 1815.605-71 into

the source selection plan. The consolidated plan shall be approved by

the source selection authority.

1815.612-70 [Amended]

9. In section 1815.612-70, the designated paragraph (g) is removed,

and the designated paragraphs (h) through (k) are redesignated as

paragraphs (g) though (j).

PART 1835--RESEARCH AND DEVELOPMENT CONTRACTING

1835.016-70 [Amended]

10. In paragraph (b)(2) of section 1835.016-70, the citation

``1815.201'' is revised to read ``1805.201''.

11. Part 1842 is revised to read as follows:

PART 1842--CONTRACT ADMINISTRATION

Subpart 1842.1--Interagency Contract Administration and Audit Services

1842.101 Policy.

1842.102 Procedures.

1842.102-70 Review of administration and audit services.

1842.170 Assignment of NASA personnel at contractor plants.

Subpart 1842.2--Assignment of Contract Administration

1842.202 Assignment of contract administration.

1842.203 Retention of contract administration.

1842.270 Contracting officer technical representative (COTR)

delegations.

1842.271 NASA clause.

Subpart 1842.5--Postaward Orientation

1842.503 Postaward conferences.

Subpart 1842.7--Indirect Cost Rates

1842.705 Final indirect cost rates.

1842.705-1 Contracting officer determination procedure.

1842.708 Quick-closeout procedure.

1842.708-70 NASA quick-closeout procedure.

Subpart 1842.8--Disallowance of Costs

1842.803 Disallowing costs after incurrence.

Subpart 1842.12--Novation and Change-of-Name Agreements

1842.1203 Processing agreements.

1842.1203-70 DOD processing of novation and change-of-name

agreements on behalf of NASA.

Subpart 1842.13--Suspension of Work, Stop-Work Orders, and Government

Delay of Work

1842.1305 Contract clauses.

Subpart 1842.14--Traffic and Transportation Management

1842.1405 Discrepancies incident to shipment of supplies.

Subpart 1842.70--Additional NASA Contract Clauses

1842.7001 Observance of legal holidays.

1842.7002 Travel outside of the United States.

Subpart 1842.71--Submission of Vouchers

1842.7101 Submission of vouchers.

Subpart 1842.72--NASA Contractor Financial Management Reporting

1842.7201 General.

1842.7202 Contract clause.

Subpart 1842.73--Audit Tracking and Resolution

1842.7301 NASA external audit follow-up system.

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

Subpart 1842.1--Interagency Contract Administration and Audit

Services

1842.101 Policy. (NASA supplements paragraph (a))

(a)(i) The Defense Contract Audit Agency (DCAA) has been designated

as the DOD agency responsible for the performance of audit functions

for NASA contracts, except those awarded to educational institutions

for which other agencies have audit cognizance under OMB Circular No.

88, those with Canadian contractors, and those for which NASA will

perform audits.

(ii) Cross-servicing arrangements are the responsibility of the

Headquarters Office of External Relations (Code ID). Contracting

officers should direct questions to the Headquarters Office of

Procurement (Code HS).

1842.102 Procedures.

1842.102-70 Review of administration and audit services.

(a) NASA installations shall assess their delegations to DOD

semiannually to determine changes in delegation patterns that could (1)

result in significant changes in DOD manpower requirements or (2) have

other important impacts on DOD contract administration activities.

Events such as major program cutbacks or expansions, changes in

locations of major programs, and sizable new acquisitions should be

considered in the assessment.

(b) A summary of significant changes shall be submitted to the

Headquarters Office of Procurement (Code HK). The summary shall

include--

(1) A description of the change in work requirements or delegation

pattern;

(2) The estimated duration of the impact;

[[Page 14018]]

(3) The results of discussions with affected DOD contract

administration offices including agreement and disagreements on the

predicted impact on DOD in terms of changes in manpower requirements or

other costs; and

(4) Any other significant impact on DOD or NASA resources or

contract performance risk.

1842.170 Assignment of NASA personnel at contractor plants.

(a)(1) NASA personnel normally shall not be assigned at or near a

contractor's facility to perform any contract administration functions

listed in FAR 42.302(a). Before such an assignment is made, a written

request shall be forwarded to the cognizant program director for

approval with the concurrence of the Associate Administrator for

Procurement (Code HS). The following supporting information shall be

forwarded with the request to make the assignment:

(i) A statement of the special circumstances that necessitate the

assignment.

(ii) The contract administration serves to be performed.

(iii) A summary of any discussions held with the cognizant contract

administration organization.

(iv) A staffing plan covering three years or such shorter period as

may be appropriate.

(2) The provisions of this paragraph (a) do not apply to NASA audit

personnel assigned to the field installations, to NASA technical

personnel covered by 1842.101 and paragraph (b) of this section, unless

they are performing any contract administration functions listed in FAR

42.302(a), or to personnel assigned to contractors' plants on NASA or

other Federal installations.

(b) NASA may assign technical personnel (such as quality assurance,

reliability, or engineering representatives) to contractors' plants or

laboratories to provide direct liaison with NASA and technical

assistance and guidance to the contractor and DOD. The duties and

responsibilities of these technical representatives shall be clearly

defined and shall not conflict with, duplicate, or overlap with

functions delegated to DOD personnel. NASA shall advise appropriate DOD

and contractor organizations of the duties and responsibilities of NASA

technical personnel.

personnel, and a DOD contract administration office are performing

contract administration functions for NASA contracts at the same

contractor's facility, the two offices shall execute a written

agreement clearly establishing the relationship between the two

organizations and the contractor. The agreement should eliminate

duplication in the performance of contract administration functions and

minimize procedural misunderstandings between the two organizations.

Such agreements shall be consistent with existing delegations to the

contract administration offices concerned and shall specify the

relationship of NASA nonprocurement resident personnel to their DOD and

contractor counterparts if such personnel will be involved in any

aspect of contract administration.

Subpart 1842.2--Assignment of Contract Administration

1842.202 Assignment of contract administration. (NASA supplements

paragraphs (b) and (d))

(b) Withholding normal functions. (1) The following functions are

normally retained by the contracting office.

(A) Approval of the final voucher (FAR 42.302(a)(7)).

(B) Countersigning NASA Form 456, Notice of Contract Costs

Suspended and/or Disapproved (FAR 42.302(a)(8)).

42.302(a)(10)).

(D) Contract payment (FAR 42.302(a)(13)).

(E) Execution of supplement agreements involving spare parts or

other items selected through provisioning procedures. However,

delegation of the negotiation of supplemental agreements for spare

parts and other items and forwarding for approval and signature of the

NASA contracting officer is permitted (FAR 42.302(a)(22)).

(F) Executive of supplemental agreements definitizing change orders

(see FAR 42.302(b)(1)).

(G) Issuing termination notices and executing supplemental

agreements for settlement of termination for default or for convenience

of the Government. However, delegation of the negotiation of

termination settlements and forwarding for approval and signature of

the NASA contracting officer is permitted using NASA Form 1432 (FAR

42.302(a)(23)).

(H) Consent to placement of subcontracts under FAR 42.302(a)(51).

(See 1844.202-1(a)).

(d) Transmittal and documentation. In addition to the instructions

at FAR 42.202(d) (1) through (4), contracting officers shall--

(i) Send delegations to DOD contract administration offices in

accordance with the instructions in the DOD Directory of Contract

Administration Services Components (DLAH 4105.4).

(ii) At time of contract award, prepared and forward NASA Form

1430, Letter of Contract Administration Delegation, General, to the

contract administration office. NASA Form 1430A, Letter of Contract

Administration, Special Instructions, will supplement the NASA Form

1430, to modify previously delegated functions and provide additional

or particular information considered necessary to ensure clear

understanding of all delegated functions.

(iii) Forward NASA Form 1431, Letter of Acceptance of Contract

Administration, with each NASA Form 1430 or 1430A. Contracting officers

shall use the returned NASA Form 1431 as contract file documentation

that the delegation has been accepted, modified or rejected by the

contract administration office and as a reference for points of

contract for each of the functional areas delegated.

(iv) Use NASA Form 1433, Letter of Audit Delegation, to delegate

the audit function and to amend previous delegations. Distribute copies

of the contract and NASA Form 1433 as follows:

(A) Audit office: One copy of the contract and three NASA Forms

1433. When the Department of Health and Human Services is designated as

the audit office, item 12 on NASA Form 1433 shall be marked ``Not

applicable.''

(B) Contractor: One NASA Form 1433.

Form 1433.

(v) For contracts with the Canadian Commercial Corporation (CCC),

audits are automatically arranged by the Department of Defense

Production (Canada) (DDP) in accordance with agreements between NASA

and DDP. Upon advice from DDP, CCC will certify the invoice and forward

it with Standard Form 1034, Public Voucher, to the contracting officer

for further processing and transmittal to the fiscal or financial

management officer.

(vi) For contracts placed directly with Canadian firms, audits are

requested by the contracting officer from the Audit Services Branch,

Comptroller of the Treasury, Department of Finance, Ottawa, Ontario,

Canada. Invoices are approved by the auditor on a provisional basis

pending completion of the contract and final audit. These invoices,

accompanied by SF 1034, are forwarded to the contracting officer for

further processing and transmittal to the fiscal or financial

management officer. Periodic advisory audit reports are

[[Page 14019]]

furnished directly to the contracting officer.

1842.203 Retention of contract administration. (NASA supplements

paragraph (a))

(a) The assignment of contract administration is optional for the

following contracts:

(i) Research and development study contracts not involving

deliverable hardware or Government furnished property.

(ii) Contracts with delivery schedules for 90 days or less.

(iii) Purchase orders without Government source inspection

requirements.

(iv) Contracts requiring only on-site performance.

(v) Contracts requiring work in the vicinity of the awarding center

where DOD contract administration services are not reasonably

available.

1842.270 Contracting officer technical representative (COTR)

delegations.

(a) Contracting officers may appoint a qualified Government

employee to act as their technical representatives in managing the

technical aspects of a particular contract. If necessary, the

contracting officer may appoint an alternate COTR to act during short

absences of the COTR. Technical organizations are responsible for

ensuring that the individual they recommend to the contracting officer

possesses training, qualifications and experience commensurate with the

duties and responsibilities to be delegated and the nature of the

contract.

(b) NASA Form 1634, Contracting Officer Technical Representative

(COTR) Delegation, shall be used to appoint COTRs. A COTR's duties and

responsibilities may not be redelegated by the COTR and the COTR may be

held personally liable for unauthorized acts. However, this does not

prohibit the COTR from receiving assistance for the purpose of

monitoring contractor progress and gathering information. When an

individual is appointed as a COTR on more than one contract, separate

delegations shall be issued for each contract. A separate NASA Form

1634 will be used to appoint an alternate COTR.

contract unless canceled in writing by the cognizant contracting

officer or at any level above that contracting officer. The contracting

officer may modify the delegation only by issuance of a new delegation

canceling and superseding the existing delegation.

(d) A COTR shall not be authorized to initiate procurement actions

or in any way cause a change to the contract or increase the

Government's financial obligations. However, delegations may be made to

construction contract COTRs to sign emergency on-site change orders

with an estimated value not to exceed the value specified in writing by

the contracting officer in the NASA Form 1634 but in no event to exceed

$25,000.

(e) Each COTR shall acknowledge receipt and accept the delegation

by signing the original delegation letter. The original of the COTR

delegation letter shall be filed in the applicable contract file.

Copies of the signed COTR delegation letter shall be distributed to the

COTR, the contractor, and each cognizant contract administration

office. Acknowledgment and distribution for terminations of COTR

delegations and COTR delegations which revise authority, duties and

responsibilities shall follow the same rules.

(f) Mandatory training for COTRs and their alternates shall include

the following core topic areas: contracting authority; procurement

integrity; performance-based contracting; contract modifications;

surveillance plans; contracting for inherently governmental functions,

personal services, and NASA policy on the acquisition of services; the

Service Contract Act; the Anti-Deficiency Act; contract financial

management; the ``Changes'' clause; the ``Disputes'' clause; the

``Inspection'' clause; Government property and policy procedures; and

the ``Limitation of Funds'' and ``Limitation of Cost'' clauses.

Procurement officers are responsible for assuring that the course(s)

utilized by their installation address the mandatory core topics in

sufficient detail for the purpose of COTR training.

(g) The contracting officer shall verify that the COTR has received

the mandatory training before signing NASA Form 1634. If an urgent need

arises for the appointment of a COTR and no trained and otherwise

qualified individual is available, then the procurement officer may

make a temporary COTR appointment not to exceed six months. Temporary

appointments must be so identified and clearly reflect the appointment

expiration date.

(h) No technical direction may be issued by a COTR relative to

performance-based contract requirements or when serving under a

temporary appointment.

1842.271 NASA clause.

Insert the clause at 1852.242-70, Technical Direction, when

paragraph 3(m) of the NASA Form 1634 specifically authorizes a COTR to

issue technical direction.

Subpart 1842.5--Postaward Orientation

1842.503 Postaward conferences. (NASA paragraphs (1) and (2))

(1) A postaward conference shall be held with representatives of

the contract administration office when--

(i) A contract is expected to exceed $10,000,000;

(ii) Contract performance is required at or near a NASA

installation or NASA-controlled launch site;

(iii) The delegation will impose an abnormal demand on the

resources of the contract administration office receiving the

delegation; or

(iv) Complex contract management problems are expected.

(2) Procurement officer approval is required to waive a post-award

planning conference for contracts meeting any of the criteria in

paragraph (1) of this section. The request for procurement officer

approval to waive a post-award conference shall address action taken

and planned to ensure effective communication with the contract

administration office during the performance of the contract.

Subpart 1842.7--Indirect Cost Rates

1842.705 Final indirect cost rates.

1842.705-1 Contracting officer determination procedure. (NASA

supplements paragraph (a))

(a) Applicability and responsibility. (i) Since many NASA

contractors are under DOD's final overhead rate determination

procedure, NASA's policy is to participate jointly with DOD for those

companies where NASA has a major financial interest. The NASA

participant shall be a representative from that installation having the

predominance of NASA work.

(ii) When NASA has been assigned the final indirect cost rate

determination authority, settlement of indirect costs shall be

conducted by the cognizant NASA contracting officer (normally from the

installation providing the preponderance of NASA funding).

1842.708 Quick-closeout procedure. (NASA supplements paragraph (a))

(a)(2)(ii) The 15 percent parameter does not apply to NASA

contracts. Instead, quick-closeout may be used if an individual

contract's value, excluding fee, is not greater than $2,000,000. Quick

closeout may be used for contracts above $2,000,000 with the prior

approval of the installation procurement officer.

[[Page 14020]]

1842.708-70 NASA quick-closeout procedures.

After a decision is made that the use of quick closeout is

appropriate, the contracting officer shall:

(a) Obtain a written agreement from the contractor to participate

in the quick-closeout process under FAR 42.708 for the selected

contract(s).

(b) Require the contractor to submit a final voucher and a summary

of all costs by cost element and fiscal year for the contract(s) in

question, as well as a copy of the contractor's final indirect cost

rate proposal for each fiscal year quick closeout is involved.

contract(s), and request: (1) the contractor's indirect cost history

covering a sufficient number of fiscal years to see the trend of

claimed, audit questioned, and disallowed costs; and (2) any other

information that could impact the decision to use quick-closeout

procedures. Indirect cost histories should be requested from the

contractor only when the cognizant audit activity is unable to provide

the information.

(d) Review the contract(s) for indirect cost rate ceilings and any

other contract limitations, as well as the rate history information.

(e) Establish final indirect cost rates using one of the following

rates:

(1) The contract's ceiling indirect cost rates, if applicable, and

if less than paragraphs (e)(2) through (e)(6) of this section.

(2) The contractor's claimed actual rates adjusted based on the

contractor's indirect cost history, if less than paragraphs (e)(3)

through (e)(6) of this section.

(3) Recommended rates from the cognizant audit agency, the local

pricing office, another installation pricing office, or other

recognized knowledgeable source.

(4) The contractor's negotiated billing rates, if less than

paragraphs (e)(5) or (e)(6) of this section.

(5) The previous year's final rates.

(6) Final rates for another fiscal year closest to the period for

which quick-closeout rates are being established.

(f) If an agreement is reached with the contractor, obtain a

release of all claims and other applicable closing documents.

(g) For those contracts where the indirect cost rate negotiation

function was delegated or falls under the cognizance of another agency,

send a copy of the agreement to that office.

Subpart 1842.8--Disallowance of Costs

1842.803 Disallowing costs after incurrance. (NASA supplements

paragraph (b))

(b) Auditor receipt of vouchers. (1) NASA has designated the

contract auditor as the contracting officer's representative for--

(A) Reviewing vouchers received directly from contractors;

(B) Approving vouchers for provisional payment and sending them to

the disbursing office;

designated contracting officer for approval.

(2)(A) When contract costs are questioned, the auditor shall

prepare and send to the cognizant contracting officer NASA Form 456,

Notice of Contract Costs Suspended and/or Disapproved.

(B) After coordination with other NASA and Federal agency

contracting officers administering contracts with the same contractor

under which a NASA Form 456 or a DCAA Form 1 has been issued for the

same items of cost, the NASA contracting officer shall take one of the

following actions:

(a) Assign a notice number and sign the NASA Form 456.

(b) Issue a new NASA Form 456 suspending the costs rather than

disapproving them pending resolution of the issues.

detailed explanation of why the suspension or disapproval is not being

signed, and process the contractor's claim for payment.

NASA contracting officer with the largest amount of contract dollars

affected is responsible for coordination of the NASA Form 456 with the

other contracting officers, including those of other Federal agencies,

listed in the notice.

(D) An original and three copies (which includes two acknowledgment

copies, one each for return to the contracting officer and the auditor)

of the NASA Form 456 shall be sent to the contractor by certified mail,

return receipt requested; one copy shall be attached to the Standard

Form 1034 and each copy of the Standard Form 1034A on which the

deduction for the suspension/disapproval is made.

(E)(a) If the amount of the deduction is more than the amount of

the public voucher, the installment method of deduction shall be

applied to the current and subsequent public vouchers until the amount

is fully liquidated. The deductions on any voucher may not exceed the

voucher amount to avoid processing of a voucher in a credit amount.

Public voucher(s) with zero amounts must be forwarded to the fiscal or

financial management office for appropriate action.

(b) If deductions are in excess of contractor claims, recovery may

be made through a direct refund from the contractor, in the form of a

check payable to NASA, or by a set-off deduction from the voucher(s)

submitted by the contractor under any other contract unless those

contracts contain a ``no set-off'' provision. If a set-off is affected,

the voucher(s) from which the deduction is made should be annotated to

identify the contract and appropriation affected and the applicable

NASA Form 456.

Subpart 1842.12--Novation and Change-of-Name Agreements

1842.1203 Processing agreements. (NASA supplements paragraphs (b) and

(f))

(b) The installation shall immediately notify the Headquarters

Office of Procurement (Code HS) of the request to execute a novation

(successor-in-interest) or change-of-name agreement.

(f) The contracting officer shall forward one copy of the agreement

to the Code HS.

1842.1203-70 DOD processing of novation and change-of-name agreements

on behalf of NASA.

(a) Appendix E of the NASA/DOD Agreement for Contract

Administration and Contract Audit Services authorizes DOD to process

novation and change-of-name agreements on behalf of NASA. Copies of

agreements executed by DOD on behalf of NASA are maintained by the

Headquarters Office of Procurement (Code HS).

(b) Code HS is the Agency point of contact for issues related to

proposed novation agreements. With the concurrence of Code HS, an

installation may execute a separate agreement with the contractor.

Subpart 1842.13--Suspension of Work, Stop-Work Orders, and

Government Delay of Work

1842.1305 Contract clauses. (NASA supplements paragraph (b))

(b) FAR 52.242-15, Stop-Work Order, shall not be used in

solicitations or contracts for research performed by educational or

other nonprofit institutions.

[[Page 14021]]

Subpart 1842.14--Traffic and Transportation Management

1842.1405 Discrepancies incident to shipment of supplies. (NASA

supplements paragraph (a))

(a) NASA personnel shall also report discrepancies and adjust

claims for loss of and damage to Government property in transit in

accordance with NHB 6200.1, NASA Transportation and General Traffic

Management.

Subpart 1842.70--Additional NASA Contract Clauses

1842.7001 Observance of legal holidays.

(a) The contracting officer shall insert the clause at 1852.242-72,

Observance of Legal Holidays, in contracts when work will be performed

at a NASA installation.

(b) The clause shall be used with its Alternate I in cost-

reimbursement contracts when it is desired that contractor employees

not have access to the installation during Government holidays. This

alternate may be appropriately modified for fixed-price contracts.

reimbursement contracts when Alternate I is used and it is desired that

administrative leave be granted contractor personnel in special

circumstances, such as inclement weather or potentially hazardous

conditions.

1842.7002 Travel outside of the United States.

The contracting officer shall insert the clause at 1852.242-71,

Travel Outside of the United States, in cost-reimbursement

solicitations and contracts where a contractor may travel outside of

the United States and it is appropriate to require Government approval

of the travel.

Subpart 1842.71--Submission of Vouchers

1842.7101 Submission of vouchers.

(a) Vouchers shall be submitted in accordance with the clause at

1852.216-87, Submission of Vouchers for Payment.

(b) The auditor shall retain an unpaid copy of the voucher.

1852.216-87 contains one or more individual direct freight charges of

$100 or more, an additional copy of Standard Form 1034A and Standard

Form 1035A shall be submitted and marked for return to the contractor

after payment. This copy shall be transmitted quarterly by the

contractor with the freight bills to the General Services

Administration. When a voucher is identified as the ``Completion

Voucher,'' an additional copy shall be submitted for transmittal to the

NASA contracting officer.

Subpart 1842.72--NASA Contractor Financial Management Reporting

1842.7201 General.

(a) Contracting officer responsibilities. (1) Contracting officers

must ensure contracts require cost reporting consistent with both

policy requirements and project needs. Contracting Officers shall

monitor contractor cost reports on a regular basis to ensure cost data

reported is accurate and timely.

Adverse trends or discrepancies discovered in cost reports should

be pursued through discussions with financial and project team members.

(2) Whenever cost performance threatens contract performance,

contracting officers shall require corrective action plans from the

contractors.

(b) Reporting requirements. (1) Use of the NASA Contractor

Financial Management Reports, the NASA form 533 series, is required on

cost-type, price redetermination, and fixed-price incentive contracts

when the following dollar, period of performance, and scope criteria

are met:

----------------------------------------------------------------------------------------------------------------

Contract value/scope Period of performance 533M 533Q

----------------------------------------------------------------------------------------------------------------

$500K to $999K...................... 1 year or more......... Required................ Optional.

$1,000,000 and over................. Less than 1 year....... Required................ Optional.

$1,000,000 and over................. 1 year or more......... Required................ Required.

----------------------------------------------------------------------------------------------------------------

(2) When it is probable that a contract will ultimately meet the

criteria in paragraph (b)(1) of this section through change orders,

supplemental agreements, etc., the reporting requirement must be

implemented in the contract based on the estimated final contract value

at the time of award.

(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, evaluation of the contractor's cost performance,

and forecasting of 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

the project manager. Such approval shall be documented and retained,

with the supporting rationale, in the contract file.

(5) The contractor's internal automated printout reports may be

substituted for the 533 reporting formats only if the substitute

reports contain all the data elements that would be provided by the

corresponding 533's. The contracting officer shall coordinate any

proposed substitute with the installation financial management office.

description of reporting categories, shall be detailed in the

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

clause prescribed 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 whenever 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.

1842.7202 Contract clause.

The contracting officer shall insert the clause at 1852.242-73,

NASA

[[Page 14022]]

Contractor Financial Management Reporting, when any of the NASA Form

533 series of reports are required from the contractor.

Subpart 1842.73--Audit Tracking and Resolution

1842.7301 NASA external audit follow-up system.

(a) This section implements OMB Circular No. A-50, NASA Management

Instruction (NMI) 9970.1A, Audit Follow-up, and NASA Audit Follow-up

Handbook 9970.2, which provide more detailed guidance. Recommendations

for external audits (contracts and OMB Circulars No. A-128, Audits of

State and Local Governments, and A-133, Audits of Institutions of

Higher Learning and Other Non-Profit Institutions) shall be resolved by

formal review and approval procedures analogous to those at 1815.807-

71.

(b) The external audit follow-up system tracks all contract and OMB

Circular A-128 or A-123 audits where NASA has resolution and

disposition authority. The objective of the tracking system is to

ensure that audit recommendations are resolved as expeditiously as

possible, but a maximum, within 6 months of the date of the audit

report.

under NASA cognizance are accomplished in cooperation with DCAA by

means of the DCAA form, Contract Audit Follow-up Summary Sheet. The use

of this form by DCAA and NASA is covered in Chapter 6 of the NASA Audit

Follow-up Handbook.

(2) Identification and tracking of A-128 and A-133 audit reports

are accomplished in cooperation with the NASA Office of the Inspector

General (OIG) by means of a transmittal memorandum. A transmittal

memorandum is sent by the OIG to the procurement officer of each NASA

field installation having an award (contract, grant, or other

agreement) covered by the audit report. The transmittal memorandum will

identify whether there were any audit findings.

(d)(1) Chapter 6 of the NASA Audit Follow-up Handbook identifies

which contract audit reports are reportable semiannually to the

Headquarters Office of Procurement (Code HC).

(2) Only trackable A-128 and A-133 audit reports involving the

following shall be reported semiannually to Code HC--

(i) A significant management control issue; or

(ii) For an individual NASA award, either the lower of 10 percent

or $10,000 of the costs incurred in the period covered by the audit are

questioned; or for institution-wide issues, the lower of 10 percent or

$10,000 of the total costs incurred involving Government funds for the

period covered by the audit are questioned.

(e)(1) The resolution and disposition of contract audits is covered

by Chapter 6 of the NASA Audit Follow-up Handbook.

(2) The resolution and disposition of A-128 and A-133 are handled

as follows:

(i) Audit findings pertaining to an individual NASA award are the

responsibility of the procurement officer administering that award.

(ii) Audit findings having an institution-wide impact are the

responsibility of the cognizant Federal agency or the agency

responsible for oversight. OMB's January 6, 1986, Federal Register

Notice (51 FR 552), titled ``Federal Agencies Responsible for Cost

negotiation and Audit of State and Local Governments,'' provides

cognizant agency assignments for OMB Circular A-128. For organizations

subject to OMB Circular A-133, there is either a cognizant agency or an

oversight agency. The cognizant agency is the Federal agency that

provides the predominant amount of direct funding to the recipient

organization unless OMB makes a specific agency cognizant, in which

case a notice will be published in the Federal Register. To provide for

the continuity of cognizance, the determination of the predominant

amount of direct funding will be based on the direct Federal awards

expended in the recipient's fiscal years ending in 1996, 2000, and

every fifth year thereafter. If there is no cognizant Federal agency,

there is an agency responsible for oversight. The oversight agency is

that agency which provides the predominant amount of direct funding.

When there is no direct funding, the Federal agency with the

predominant indirect funding is to assume the oversight

responsibilities. In cases where NASA is the cognizant or oversight

Federal agency, audit resolution and disposition is the responsibility

of the procurement officer for the field installation having the

largest amount of direct funding, or, if there is no direct funding,

the largest amount of indirect funding for the audited period. A copy

of the memorandum disappointing the findings shall be provided by each

field installation having resolution responsibility for the particular

report to the OIG Center office within whose geographic area of

responsibility the audited organization is located.

12. Part 1843 is revised to read as follows:

PART 1843--CONTRACT MODIFICATIONS

Subpart 1843.2--Change Orders

Sec.

1843.205 Contract clauses.

1843.205-70 NASA contract clause.

Subpart 1843.70--Undefinitized Contract Actions

1843.7001 Definitions.

1843.7002 Policy.

1843.7003 Procedures.

1843.7004 Exceptions.

1843.7005 Definitions.

Subpart 1843.71--Shared Savings

1843.7101 Shared Savings Program.

1843.7102 Solicitation provision and contract clause.

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

Subpart 1843.2--Change Orders

1843.205 Contract clauses.

As authorized in the prefaces of clauses FAR 52.243-1, Changes--

Fixed Price; FAR 52.243-2, Changes--Cost Reimbursement; FAR 52.243-3,

Changes--Time-and-Material or Labor-Hours; and FAR 52.243-4, Changes,

the period within which a contractor must assert its rights to an

equitable adjustment may be varied not to exceed 60 calendar days.

1843.205-70 NASA contract clause.

(a) The contracting officer may insert in contracts a clause

substantially the same as 1852.243-70, Engineering Change Proposals,

when ECPs are expected. Paragraphs (c) and (d) of the basic clause and

Alternate I of the clause shall be changed to reflect the specific type

of contract. A local format may be substituted for the MIL-STD-973

format.

(b) If it is desirable to preclude a large number of small-dollar,

contractor-initiated engineering changes and to reduce the

administrative cost of reviewing them, the contracting officer shall

use the clause with its Alternate I.

officer shall use the clause with its Alternate II.

Subpart 1843.70--Undefinitized Contract Actions

1843.7001 Definitions.

Undefinitized contract action (UCA) means a unilateral or bilateral

contract modification or delivery/task order in which the final price

or estimated cost and fee have not been negotiated and mutually agreed

to by NASA and the contractor. (Issuance of letter contracts

[[Page 14023]]

and their modifications are governed by subpart 1816.6.)

1843.7002 Policy.

Undefinitized contract actions shall be executed by contracting

officers on an exception basis and shall be limited to the minimum

urgent requirements. The contract file for all UCAs shall be documented

to justify issuance and shall include a Government estimate for the

changed requirements.

1843.7003 Procedures.

(a) Issuance of undefinitized contract actions with a Government

estimated cost or price over $1,000,000 must be approved in writing by

the Center Director. This approval authority is not delegable. Issuance

of undefinitized contract actions with a Government estimated cost or

price less than or equal to $1,000,000 shall also be minimized but may

be approved on an exception basis in accordance with installation

procedures.

(b) (1) Undefinitized contract actions exceeding $1,000,000

approved by the Center Director shall be issued as bilateral agreements

setting forth a ceiling price or ``not to exceed'' estimated cost

figure for the changed contractual requirements. For fixed price

contracts the negotiated price for the changed contract requirements

shall not exceed the established ceiling price. In the case of cost

type contracts any costs eventually negotiated for the changed

requirements in excess of the ``not to exceed'' estimated cost figure

shall be non-fee bearing. The ceiling price or ``not to exceed''

estimated cost figures shall be separately identified in the UCA

instrument from the pricing structure of the basic contract.

(2) The Center Director may waive the ceiling price or ``not to

exceed'' estimated cost figure and bilateral agreement requirements

prior to UCA issuance on the basis of urgency. This waiver authority is

not delegable. Any waivers shall be documented in the contract file.

be clearly defined and shall be limited to the minimum effort required

to satisfy urgent program requirements while a cost proposal is

prepared, analyzed and negotiated.

(d) For undefinitized contract actions with a Government estimate

greater than $1,000,000 and not excepted under subpart 1843.7004, a 180

day funding profile shall be obtained from the contractor prior to

execution of the undefinitized contract action.

(e) Undefinitized contract actions with a Government estimated cost

or price greater than $1,000,000 shall include a requirement that the

change shall be separately accounted for by the contractor to the

degree necessary to provide the contracting officer visibility into

actual costs incurred pending definitization. The contracting officer

may waive this requirement for individual actions if there is a

documented finding that such accounting procedures would not be cost

effective. Any such waiver shall not affect existing NASA Form 533 or

other financial reporting requirements set forth in the contract.

1843.7004 Exceptions.

(a) Exceptions to the requirement for Center Director approval for

issuance of undefinitized contract actions are--

(1) Modifications to facilities contracts;

(2) Modifications to construction contracts using Construction of

Facilities funding;

(3) Urgent modification resulting from Shuttle manifest changes or

that involve immediate issues of safety or damage/loss of property;

(4) Modifications to decrease the contract value; or

(5) Modification to letter contracts.

(b) The contract file for any of the modifications in paragraph (a)

of this section shall cite the exception and include complete

supporting rational for its applicability.

1843.7005 Definitization.

(a) Undefinitized contract actions should be sufficiently complete

and detailed as to enable the contractor to begin immediate preparation

of a cost proposal for the changed requirement. The NASA goal is to

definitive UCAs within 180 from date of issuance.

(b) Whenever possible, pre-change study efforts or engineering

change proposals (ECPs) shall be utilized to negotiate and definitize

changes prior to issuance.

Subpart 1843.71--Shared Savings

1843.7101 Shared Savings Program.

This subpart establishes and describes the methods for implementing

and administering a Shared Savings Program. This program provides an

incentive for contractors to propose and implement, with NASA approval,

significant cost reduction initiatives. NASA will benefit as the more

efficient business practices that are implemented lead to reduced costs

on current and follow-on contracts. In return, contractors are entitled

to share in cost savings subject to limits established in the contract.

The contracting officer may require the contractor to provide periodic

reporting, or other justification, or to require other steps (e.g.,

cost segregation) to ensure projected cost savings are being realized.

1843.7102 Solicitation provision and contract clause.

The contracting officer shall insert the clause at 1852.243-71,

Shared Savings, in all solicitations and contracts expected to exceed

$1,000,000, except those awarded under FAR part 12, NRA and AO

procedures, or the SBIR and STTR programs.

13. Part 1844 is revised to read as follows:

PART 1844--SUBCONTRACTING POLICIES AND PROCEDURES

Subpart 1844.2--Consent to Subcontracts

Sec.

1844.201 Consent requirements.

1844.201-1 Fixed-price prime contracts.

1844.201-2 Cost reimbursement and letter prime contracts.

1844.202 Contracting officer's evaluation.

1844.202-1 Responsibilties.

1844.204 Contract clauses.

1844.204-70 NASA contract clause.

Subpart 1844.3--Contractors' Purchasing Systems Reviews

1844.302 Requirements.

1844.302-70 DCMC-conducted contractor purchasing system reviews.

1844.302.71 NASA-conducted contractor purchasing systems reviews.

1844.304 Surveillance.

1844.304-70 Contracting officer surveillance.

1844.305 Granting, withholding, or withdrawing approval.

1844.305-70 Review of CPSR report.

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

Subpart 1844.2--Consent to Subcontracts

1844.201 Consent requirements.

1844.201-1 Fixed-price prime contracts. (NASA supplements paragraph

(b))

(b)(2) (A) In determining special surveillance consent

requirements, the contracting officer should consider specific

subcontract awards, as well as any individual systems, subsystems,

components, technologies, and services that should have contracting

officer consent prior to being subcontracted.

(B) For each planned contract award expected to exceed $1 million

in total estimated value (inclusive of options), the contracting

officer should consider such factors as the following to determine

whether certain subcontractors require special surveillance:

(a) The degree of subcontract pricing uncertainties at the time of

contract award;

[[Page 14024]]

(b) The overall quality of the contractor's approach to pricing

subcontractors;

contractor in the award of subcontracts;

(d) Technical complexity and the critically of specific supplies,

services, and technologies on the successful performance of the

contract; and

(e) The potential impact of planned subcontracts on source

selection or incentive arrangements.

the contract file. For contract modifications and change orders, the

contracting officer shall make the determination required by paragraph

(b)(2)(B) of this section whenever the value of any subcontract

resulting from the change order or modification is proposed to exceed

$100,000 or is one of the number of subcontracts with a single

subcontractor for the same or related supplies or services that are

expected cumulatively to exceed $100,000.

1844.201-2 Cost reimbursement and letter prime contracts. (NASA

supplements paragraph (c))

(c)(2) The policy in 1844.201-1(b)(2) shall be followed to

determine whether certain subcontracts require special surveillance. In

addition, any subcontract under a cost type prime contract shall be

identified for special surveillance if consent was not provided at the

time of contract award and cost of pricing data would be required in

accordance with FAR 15.806-2(a) (1) or (2).

1844.202 Contracting officer's evaluation.

1844.202 Responsibilities. (NASA supplements paragraph (a))

(a) NASA contracting officers shall retain consent to subcontract

authority unless delegation is approved in writing by the procurement

officer.

1844.204 Contract clauses.

1844.204-70 NASA contract clause.

The contracting officer shall insert the clause at 1852.244-70,

Geographic Participation in the Aerospace Program, in all research and

development solicitations and contracts of $500,000 or over that will

be performed within the United States.

Subpart 1844.3--Contractors' Purchasing Systems Reviews

1844.302 Requirements.

1844.302-70 DCMC-conducted contractor purchasing system reviews.

For contracts within their cognizance, NASA contracting officers

shall be aware of purchasing system approval status and should become

actively involved with the Defense Contract Management Command (DCMC)

in the Contractor Purchasing System Review (CPSR) process. Involvement

should include the following:

(a) Verifying that CPSRs are being conducted as required for each

contractor meeting the thresholds in FAR 44.302.

(b) Ensuring that purchasing system review specifically includes

the business unit performing the NASA contract.

representation, on DCMC CPSRs to review areas of NASA-specific

interest. At a minimum, such participation or representation shall be

arranged when the DCMC CPSR review involves--

(1) Contractors with major NASA programs;

(2) Contractors' business units where the total dollar value of

NASA contracts is substantial; or

(3) Any contractor system where the contracting officer has special

concerns.

(d) Ensuring that the selected CPSR sample to be reviewed reflects

the level of NASA business in the contractor's purchasing organization.

(e) Providing to the cognizant DCMC CPSR team leader any areas of

special emphasis regarding the contractor's purchasing system to ensure

that the review is tailored to address any NASA concerns.

1844.302-71 NASA-conducted contractor purchasing system reviews.

If a NASA activity is the cognizant contract administration

officer, or after coordination with the cognizant DCMC CPSR office it

is determined that a CPSR is required but cannot be accomplished by

DCMC, then a CPSR should be conducted by NASA personnel. The NASA CPSR

team leader:

(a) May use the DOD FAR Supplement, Contractor Purchasing System

Review (CPSR) guidance, as a general guide to conducting the CPSR.

(b) May vary the scope of review depending on the contractor and

contracts involved.

CPSRs at contractors under DOD cognizance.

1844.304 Surveillance.

1844.304-70 Contracting officer surveillance.

(a) In the period between complete CPSRs, NASA contracting officers

shall maintain a sufficient level of surveillance to ensure contractor

purchasing efforts in support of NASA contracts are accomplished in an

appropriate manner and protect the interests of the Agency.

(b) Surveillance shall be accomplished primarily through

performance of subcontract consent reviews. Other methods of

surveillance, including periodic reviews of contractor purchasing

records, may also be conducted. Contracting officers shall document the

results of subcontract consent reviews and periodic reviews,

maintaining a record of contractor subcontract or purchase order award

performance on NASA contracts. Contractor performance shall be

summarized on an annual basis and provided to the ACO cognizant of the

contractor's purchasing system. Annual reports should summarize the

number of consent reviews and other reviews conducted during the year

by NASA representatives, and summarize the types and quantity of

deficiencies identified during reviews, the need for special reviews,

and recommended areas of emphasis during future CPSRs.

1844.305 Granting, withholding, or withdrawing approval.

1844.305-70 Review of CPSR reports.

ACO actions related to purchasing system approval have a potential

impact on NASA contracting officer consent requirements. Accordingly,

NASA contracting officers shall review system deficiencies documented

in CPSR reports and when results of consent reviews and other sources

conflict with CPSR or DOD surveillance conclusions, formally

communicate such concerns to the ACO having cognizance of purchasing

system approval. Significant issues or significant conflicts with DOD

CPSR results should be formally referred to the Office of Procurement

(Code HS).

14. Part 1846 is revised to read as follows:

PART 1846--QUALITY ASSURANCE

Subpart 1846.3--Contract Clauses

Sec.

1846.370 NASA contract clauses.

Subpart 1846.4--Government Contract Quality Assurance

1846.470 Contract clause.

Subpart 1846.6--Material Inspection and Receiving Reports

1846.670 Introduction.

1846.670-1 General.

1846.670-2 Applicability.

1846.670-3 Use.

1846.670-4 Multiple shipments.

1846.670-5 Forms.

1846.671 Contract quality assurance on shipments between

contractors.

[[Page 14025]]

1846.672 Preparing DD Forms 250 and 250c.

1846.672-1 Preparation instructions.

1846.672-2 Consolidated shipments.

1846.672-3 Multiple consignee instructions.

1846.672-4 Correction instructions.

1846.672-5 Invoice instructions.

1846.672-6 Packing list instructions.

1846.672-7 Receiving instructions.

1846.673 Distribution of DD Forms 250 and 250c.

1846.674 Contract clause.

Subpart 1846.7--Warranties

1846.703 Criteria for use of warranties.

1846.703-70 Additional criteria.

1846.704 Authority for use of warranties.

1846.770 Administration.

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

Subpart 1846.3--Contract Clauses

1846.370 NASA contract clauses.

(a) The contracting officer shall insert the clause at 1852.246-70,

Mission Critical Space System Personnel Reliability Program, in

solicitations and contracts involving critical positions designated in

accordance with 14 CFR 1214.5, Mission Critical Space System Personnel

Reliability Program.

(b) The contracting officer shall insert the clause at 1852.246-73,

Human Space Flight Item, in solicitations and contracts for human space

flight hardware and flight-related equipment if the highest available

quality standards are necessary to ensure astronaut safety.

Subpart 1846.4--Government Contract Quality Assurance

1846.470 Contrct clause.

The contracting officer may insert a clause substantially as stated

at 1852.246-71, Government Contract Quality Assurance Functions, in

solicitations and contracts to specify the location(s) of quality

assurance functions.

Subpart 1846.6--Material Inspection and Receiving Reports.

1846.670 Introduction.

1846.670-1 General.

(a) This Subpart contains procedures and instructions for use of

the Material Inspection and Receiving Report (MIRR) (DD Form 250

series) and commercial shipping/packing lists used to evidence

Government contract quality assurance (CQA).

(b) MIRRs are used to document CQA, acceptance of supplies and

services, and shipments. MIRRs are not used for--

(1) Shipments by subcontractors not made to the Government;

(2) Shipment of contractor inventory (see FAR 45.601); or

(3) Movement of Government property unless for original

acquisition.

1846.670-2 Applicability.

(a) This subpart applies to all deliveries of supplies or services

acquired by or for NASA except:

(1) Acquisitions under FAR part 13;

(2) Negotiated subsistence acquisitions; or

(3) Contracts for which the end item is a technical or scientific

report.

(b) The DD Form 250 may be used for imprest fund purchases,

purchase orders, delivery orders placed against Federal Supply Schedule

contracts, delivery orders placed against indefinite-delivery

contracts, or delivery orders placed against blanket purchase

agreements, or when the purchasing, requisitioning, or ordering

document provides for inspection and/or acceptance.

activities, the MIRR shall be prepared in accordance with the

instructions of this subpart unless the contract specifies otherwise.

1846.670-3 Use.

The DD Form 250 is a multipurpose report used for--

(a) Providing evidence of CQA at origin or destination;

(b) Providing evidence of acceptance at origin or destination;

(d) Receiving;

(e) Shipping;

(f) Contractor invoice; and

(g) Contractor invoice support.

1846.670-4 Multiple shipments.

(a) If the ``shipped to,'' ``marked for,'' ``shipped from,''

``CQA,'' and ``acceptance'' data are the same for more than one

shipment made on the same day under the same contract in a single car,

truck, or other vehicle, one MIRR shall be prepared to cover all such

shipments.

(b) If the volume of the shipments precludes the use of a single

car, truck, or other vehicle, a separate MIRR shall be provided for

each vehicle.

1846.670-5 Forms.

(a) Contractors may obtain MIRR forms from the contracting office

at no cost.

(b) Contractors may print forms, provided their format and

dimensions are identical to the MIRR forms printed by the Government.

1846.671 Contract quality assurance on shipments between contractors.

(a) The supplier's commercial shipping document/packing list shall

indicate performance of required CQA actions at subcontract level.

The following entries shall be made on the document/packing list:

Required CQA of items has been performed.

----------------------------------------------------------------------

(Signature of Authorized Government Representative)

----------------------------------------------------------------------

(Date)

----------------------------------------------------------------------

(Typed Name and Office)

(b) Distribution for Government purposes shall be one copy each--

(1) With shipment;

(2) For the Government representative at consignee (via mail); and

(3) For the Government representative at consignor.

1846.672 Preparing DD Forms 250 and 250c.

1846.672-1 Preparation instructions.

(a) General. (1) Dates shall utilize seven spaces consisting of the

last two digits of the year, three-alpha month abbreviation, and two

digits for the day (e.g., 96SEP24).

(2) Addresses shall consist of the name, street address/P.O. box,

city, State, and ZIP code.

(3) The data entered in the blocks at the top of DD Form 250C shall

be identical to the comparable entries in Blocks 1, 2, 3, and 6 of the

DD Form 250.

(4) Overflow data of the DD Form 250 shall be entered in Block 16

or in the body of the DD Form 250c with block cross reference.

Additional DD Form 250c sheets solely for continuation of Block 23 data

shall not be numbered or distributed as part of the MIRR.

(b) Classified information. Classified information shall not appear

on the MIRR, nor shall the MIRR be classified.

number, with its identifying center prefix, as contained in the

contractual document, including any call/order number.

(d) Block 2--SHIPMENT NO. (1) The shipment number is a three-alpha

character prefix and a four-character numeric or alpha-numeric serial

number.

(i) The prefix shall be controlled and assigned by the prime

contractor and shall consist of three alpha characters for each

``shipped from'' address (Block 11). The prefix shall be different for

each ``Shipped From'' address and shall remain constant throughout the

contract period.

(ii) The serial number for the first shipment under a prime

contract from

[[Page 14026]]

each ``shipped from'' address shall be 0001; subsequent shipments under

that prime contract shall be consecutively numbered. Alpha-numerics

shall be used when more than 9,999 numbers are required. Alpha-numerics

shall be serially assigned, with the alpha in the first position,

followed by the three-position numeric serial number. The alpha-numeric

sequence shall be (the letters I and O shall not be used) A001 through

A999 (10,001 through 10,999); B001 through B999 (11,001 through

11,999); to Z999. When this series is completely used, numbering shall

revert to 0001.

(2) The shipment number of the initial shipment shall be reassigned

when a ``replacement shipment'' is involved (see paragraph (r)(4)(iv)

of this section).

(3) The prime contractor shall control deliveries and on the last

shipment of the contract shall suffix the shipment number with a ``Z''

in addition to that required for line items (see Block 17). If the

contract final shipment is from other than the prime contractor's

plant, the prime contractor may elect

(i) To direct the subcontractor to suffix the ``Z'' or

(ii), On receipt of the subcontractor final shipment information,

to correct the DD Form 250 covering the last shipment from the prime

contractor's plant by adding a ``Z'' to that shipment number.

(e) Block 3--DATE SHIPPED. Enter the date the shipment is released

to the carrier or the date of completion of services. If the shipment

will be released after the date of CQA and/or acceptance, enter the

estimated date of release. When the date is estimated, enter an ``E''

after it. Distribution of the MIRR shall not be delayed for entry of

the actual shipping date. Reissurance of the MIRR is not required to

show the actual shipping date.

(f) Block 4--B/L TCN. When applicable, enter the commercial or

Government bill of lading number after ``B/L''; and the Transportation

Control Number after ``TCN.''

(g) Block 5--DISCOUNT TERMS. (1) The Contractor may enter the

discount in terms of percentages on all copies of the MIRR.

(2) When the MIRR is used as an invoice, see 1846.672-5.

(h) Block 6--INVOICE. (1) The contractor may enter the invoice

number and actual or estimated date on all copies of the MIRR. When the

date is estimated, enter an ``E'' after the date. Do not correct MIRRs

other than invoice copies to reflect the actual date of invoice

submission.

(2) When the MIRR is used as an invoice, see 1846.672-5.

(i) Block 7--PAGE/OF. Consecutively number the pages comprising the

MIRR. On each page, enter the total number of pages of the MIRR.

(j) Block 8--ACCEPTANCE POINT. Enter an ``S'' for origin or ``D''

for destination as specified in the contract as the point of

acceptance. Enter an alphabetic ``O'' for other if the point of

acceptance is not specified in the contract.

(k) Block 9--PRIME CONTRACTOR. Enter the code and address.

(l) Block 10--ADMINISTERED BY. Enter the code and address of the

contracting office cited in the contract.

(m) Block 11--SHIPPED FROM/CODE/FOB. (1) Enter the code and address

of the ``shipped from'' location. If identical to Block 9, enter ``See

Block 9.''

(2) For performance of services that do not require delivery of

items upon completion, enter the code and address of the location at

which the services were performed. If the DD Form 250 covers

performance at multiple locations or if identical to Block 9, enter

``See Block 9.''

(3) Enter on the same line and to the right of ``FOB'' an ``S'' for

origin or ``D'' for destination as specified in the contract. Enter an

alphabetic ``O'' if the FOB point cited in the contract is other than

origin or destination.

(n) Block 12--PAYMENT WILL BE MADE BY. Enter the address of the

payment office cited in the contract.

(o) Block 13--SHIPPED TO/CODE. Enter the code and address from the

contract or shipping instructions.

(p) Block 14--MARKED FOR/CODE. Enter the code and address from the

contract or shipping instructions.

(q) Block 15--ITEM NO. Enter the item number used in the contract.

If four or fewer digits are used, position them to the left of the

vertical dashed line. Where a six-digit identification is used, enter

the last two digits to the right of the vertical dashed line.

(r) Block 16--STOCK/PART NO./DESCRIPTION. (1) Enter, as applicable,

for each item, using single spacing between each line item, the

following:

(i) The Federal Stock Number (FSN) or noncatalog number and, if

applicable, prefix or suffix. When a number is not provided or it is

necessary to supplement the number, include other identification such

as the manufacturer's name or Federal Supply Code (as published in

Cataloging Handbook H4-1), and part numbers. Additional part numbers

may be shown in parentheses. Also enter the descriptive noun of the

item nomenclature and, if provided, the Government-assigned management/

material control code. In the case of equal-kind supply items, the

first entry shall be the description without regard to kind (e.g.,

``Resistor''). Below this description, enter the contract item number

in Block 15 and stock/part number followed by the size or type in Block

16.

(ii) On the next printing line, if required by the contract for

control purposes, enter the make, model, serial number, lot, batch,

hazard indicator, and/or similar description.

(iii) On the next printing line, enter the FEDSTRIP requisition

number(s) when provided in the contract or shipping instructions.

(2) For service items, enter the word ``SERVICE'' followed by a

short description of less than 20 characters. Do not complete items 4,

13, and 14 when material is not shipped.

(3) For all contracts administered by the Defense Contract

Management Command, with the exception of fast pay procedures, enter

and complete the following:

Gross Shipping Wt.____(State weight in pounds only).

(4) Enter on the next line the following as appropriate (entries

may be extended through Block 20). When entries apply to more than one

item in the MIRR, enter them only once after the last item and

reference the applicable item numbers.

(i) Enter in capital letters any special handling instructions/

limits for material environmental control (e.g., temperature, humidity,

aging, freezing, and shock).

(ii) When an FSN is required by, but not cited in, a contract and

has not been furnished by the Government, shipment may be made at the

direction of the contracting officer. Enter the authority for the

shipment.

(iii) When Government-furnished property (GFP) is included with or

incorporated into the line item, enter ``GFP''.

(iv) When the shipment consists of replacements for supplies

previously furnished, enter in capital letters ``REPLACEMENT SHIPMENT''

(see paragraph (s)(3) of this section for replacement indicators.)

(v) For items shipped with missing components, enter and complete

the following: ``Item(s) shipped short of the following component(s):

FSN or comparable identification ________, Quantity ________, Estimated

Value ________, Authority ________.''

(vi) When shipment is made of components that were short on a prior

shipment, enter and complete the following: ``These components were

[[Page 14027]]

listed as shortages on Shipment Number ________, date

shipped________.''

(vii) When shipments involve drums, cylinders, reels, containers,

skids, etc., designated as returnable under contract provisions, enter

and complete the following: ``Return to ________, Quantity ________,

Item ________, Ownership (Government/contractor).''

(viii) Enter shipping container number(s), the type, and the total

number of the shipping container(s) included in the shipment.

(ix) The MIRR shall be used to record and report the waivers and

deviations from contract specifications, including the source and

authority for the waiver or deviation (e.g., the contracting office

authorizing the waiver or deviation and the identification of the

authorizing document).

(x) For shipments involving discount terms, enter ``DISCOUNT

EXPEDITE'' in at least one-inch outline-type letters.

(xi) When test/evaluation results are a condition of acceptance and

are not available before shipment, the following note shall be entered

if the shipment is approved by the contracting officer: ``Note:

Acceptance and payment are contingent upon receipt of approved test/

evalution results.'' The contracting officer shall advise (A) the

consignee of the results (approval/disapproval) and (B) the contractor

to withhold invoicing pending attachment to its invoice of the approved

test/evaluation results.

(xii) The copy of the DD Form 250 required to support payment for

destination acceptance (top copy of the four with shipment) or

Alternative Release Procedure (ARP) origin acceptance (additional copy

furnished to the Quality Assurance Representative (QAR)) shall be

identified by entering ``PAYMENT COPY'' in approximately one-half-inch

outline-type letters with ``FORWARD TO BLOCK 12 ADDRESS'' in

approximately one-quarter-inch letters immediately below. Do not

obliterate any other entries.

(xiii) A double line shall be drawn completely across the form

following the last entry.

(s) Block 17--QUANTITY SHIP/REC'D. (1) Enter the quantity shipped,

using the unit of measure indicated in the contract for payment. When a

second unit of measure is used for purposes other than payment, enter

the appropriate quantity directly below in parentheses.

(2) Enter a ``Z'' below the first digit of the quantity when the

total quantity of the item is delivered, including variations within

contract terms; and all shortages on items previously shipped short are

delivered.

(3) If a replacement shipment is involved, enter below the first

digit of the quantity the letter ``A'' top designate first replacement,

``B'' for second replacement, and so forth. The final shipment

indicator ``Z'' shall not be used when a final line item shipment is

replaced.

(t) Block 18 UNIT. Enter the abbreviation of the unit of measure

indicated in the contract for payment. When a second unit of measure is

indicated in the contract for purposes other than payment or is used

for shipping purposes, enter the abbreviation of the second unit of

measure directly below in parentheses. Authorized abbreviations are

listed in MIL-STD-129, Marking for Shipping and Storage.

(u) Block 19--UNIT PRICE. Enter the unit price on all NASA copies

whenever the MIRR is used for voucher or receiving purposes.

(v) Block 20--AMOUNT. Enter the extended amount when the unit price

is entered in Block 19.

(w) Block 21--CONTRACT QUALITY ASSURANCE. The words ``conform to

contract'' contained in the printed statements in Blocks A and B relate

to contract obligations pertaining to quality and to the quantity of

the items on the report. The statements shall not be modified. Notes

taking exception shall be entered in Block 16 or on attached supporting

documents with block cross reference.

(1) ``A. ORIGIN.''

(i) The authorized Government representative shall--

(A) Place an ``X'' when applicable in the appropriate CQA and/or

acceptance box(es) to evidence origin CQA and/or acceptance. When the

contract requires CQA at destination in addition to origin CQA, an

asterisk shall be entered at the end of the statement and an

explanatory note in Block 16;

(B) Sign and date; and

office code.

(2) ``B. DESTINATION.''

(i) When acceptance at origin is indicated in Block 21A, no entries

shall be made in Block 21B.

(ii) When acceptance of CQA and acceptance are at destination, the

authorized Government representative shall--

(A) Place an ``X'' in the appropriate box(es);

(B) Sign and date; and

office code.

(x) Block 22--RECEIVER'S USE. This block shall be used by the

receiving authority (Government or contractor) to denote receipt,

quantity, and condition. The receiving activity shall enter in this

block the date the supplies arrived. For example, when off-loading or

in-checking occurs subsequent to the day of arrival of the carrier at

the installation, the date of the carrier's arrival is the date

received for purposes of this block.

(y) Block 23--CONTRACTOR USE ONLY. This block is provided and

reserved for contractor use.

1846.672-2 Consolidated shipments.

When individual shipments are held at the contractor's plant for

authorized transportation consolidation to a single destination on a

single bill of lading, the applicable DD Forms 250 may be prepared at

the time of CQA or acceptance prior to the time of actual shipment (see

Block 3).

1846.672-3 Multiple consignee instructions.

The contractor may prepare one MIRR when the identical item(s) of a

contract is to be shipped to more than one consignee, with the same or

varying quantities, and the shipment requires origin acceptance.

Prepare the MIRR using the procedures in this subpart with the

following changes:

(a) Blocks 2, 4, 13, and, if applicable, 14--Enter ``See Attached

Distribution List.''

(b) Block 15--The contractor may group item numbers for identical

stock/part number and description.

applicable, grouped identical items.

(d) Use the DD Form 250c to list each individual ``Shipped To'' and

``Marked For'' with--

(1) Code(s) and complete shipping address and a sequential shipment

number for each;

(2) Item number(s);

(3) Quantity;

(4) The FEDSTRIP requisition number and quantity for each when

provided in the contract or shipping instructions; and

(5) If applicable, bill of lading number and mode of shipment code.

1846.672-4 Correction instructions.

When, because of errors or omissions, it is necessary to correct

the MIRR after distribution, it shall be revised by correcting the

original master and distributing the corrected form. The corrections

shall be made as follows:

(a) Circle the error and place the corrected information in the

same block. If space is limited, enter the corrected information in

Block 16, referencing the error page and block.

[[Page 14028]]

(b) When corrections are made to Blocks 15 and 17, enter the words

``CORRECTIONS HAVE BEEN VERIFIED'' on page 1. The authorized Government

representative shall date and sign immediately below the statement.

This verification statement and signature are not required for other

corrections.

(d) Clearly mark pages of the MIRR requiring correction with the

words ``CORRECTED COPY'', avoiding obliteration of any other entries.

Even though corrections are made on continuation sheets only, also mark

page 1 ``CORRECTED COPY''.

(e) Page 1 and only those continuation pages marked ``CORRECTED

COPY'' shall be distributed to the initial distribution. A complete

MIRR with corrections shall be distributed to new addressee(s) created

by error corrections.

1846.672-5 Invoice instructions.

The Government encourages, but does not require, contractors to use

copies of the MIRR as an invoice in lieu of a commercial form. If the

MIRR is used as an invoice, four copies shall be prepared and forwarded

to the payment office as follows:

(a) Complete Blocks 5, 6, 19, and 20.

(b) Mark, in letters approximately one inch high, the first copy

``ORIGINAL INVOICE'' and the remaining three copies ``INVOICE COPY''.

address).

1846.672-6 Packing list instructions.

Copies of the MIRR may be used as a packing list. The packing list

copies shall be in addition to the copies of the MIRR required for

distribution (see 1846.673) and shall be marked ``PACKING LIST''.

1846.672-7 Receiving instructions.

When the MIRR is used for receiving purposes, procedures shall be

as prescribed by local directives. If acceptance or CQA and acceptance

of supplies are required upon arrival at destination, see Block 21B for

instructions.

1846.673 Distribution of DD Forms 250 and 250c.

(a) DD Forms 250 and 250c shall be distributed in accordance with

installation procedures.

(b) The contractor is responsible for distributing DD Forms 250 and

250c in accordance with the provisions of the contract or instructions

of the contracting officer.

1846.674 Contract clause.

The contracting officer shall insert the clause at 1852.246-72,

Material Inspection and Receiving Report, in solicitations and

contracts, except those using simplified acquisition procedures or

where the only deliverable items are technical or scientific reports.

Insert the number of copies to be prepared. Paragraph (a) may be

changed to specify advance copies or separate distribution of the DD

Form 250.

Subpart 1846.7--Warranties

1846.703 Criteria for use of warranties.

1846.703-70 Additional criteria.

In deciding whether to use a warranty clause, at least the

following factors shall be considered in addition to those at FAR

46.703:

(a) Cost of correction or replacement, either by the contractor or

by another source, in the absence of a warranty;

(b) The warranty as a deterrent against the furnishing of defective

or nonconforming supplies;

provide adequate protection without a warranty, or, if not, whether a

warranty would cause the contractor to institute an effective quality

program;

(d) Reliance on ``brand-name'' integrity; and

(e) Whether a warranty is regularly given for a commercial

component of a more complex end item.

1846.704 Authority for use of warranties. (NASA paragraphs (1), (2)

and (3))

(1) A warranty clause may be used when it is found to be in the

best interests of the Government, after an analysis of the factors

listed in 1846.703-70 and FAR 46.703.

(2) Except for the warranty of commercial items (see FAR 12.404 and

46.709), and warranties contained in Federal, military, or construction

specifications, the decision to use a warranty clause or to include a

warranty provision in a specification other than a Federal, military,

or construction specification shall be made only upon the written

authorization of the procurement officer or a designee. This decision

may be made either for individual acquisitions or classes of

acquisitions.

(3) Warranties required by applicable architect-engineer

specifications shall be included in construction contracts.

1846.770 Administration.

When notified of a defect in warranted items, the contracting

officer should ascertain whether the warranty is currently in effect

and ensure that the contractor is given proper and timely notice of the

defect.

15. Part 1847 is revised to read as follows:

PART 1847--TRANSPORTATION

Subpart 1847.2--Contracts for Transportation or for Transportation-

Related Services

Sec.

1847.200 Scope of subpart.

1847.200-70 Charter of aircraft.

Subpart 1847.3--Transportation in Supply Contracts

1847.304 Determination of delivery terms.

1847.304-3 Shipments from CONUS for overseas delivery.

1847.304-370 NASA export privilege.

1847.305 Solicitation provisions, contract clauses, and

transportation factors.

1847.305-10 Packing, marking, and consignment instructions.

1847.305-13 Transit arrangements.

1847.305-70 NASA contract clauses.

Subpart 1847.5--Ocean Transportation by U.S.-Flag Vessels

1847.506 Procedures.

Subpart 1847.70--Protection of the Florida Manatee

1847.7001 Contract clause.

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

Subpart 1847.2--Contracts for Transportation or for Transportation-

Related Services

1847.200 Scope of subpart.

1847.200-70 Charter of aircraft.

When acquiring aircraft by charter, contracting officers shall

comply with NHB 7900.3, Aircraft Operations Management Manual.

Subpart 1847.3--Transportation in Supply Contracts

1847.304 Determination of delivery terms.

1847.304-3 Shipments from CONUS for overseas delivery.

1847.304-370 NASA export privilege.

NASA has export licensing privileges for moving commodities to

foreign destinations. Contracting officers shall request the advice of

the Center Export Administrator to ensure full and appropriate use is

made of these privileges.

1847.305 Solicitation provisions, contract clauses, and transportation

factors.

1847.305-10 Packing, marking, and consignment instructions.

In contracts providing for delivery f.o.b. origin and shipment

under Government bills of lading, consignment instructions may be

limited to the mail address of the

[[Page 14029]]

consignee (receiving activity), provided the contract instructions

state: ``Shipment other than mail shall be consigned as indicated on

the Government bill of lading furnished to the contractor.''

1847.305-13 Transit arrangements. (NASA supplements paragraph (a))

(a)(3)(ii) When the provision at FAR 52.247-56 is used, the

solicitation shall state that offers will be evaluated on the basis of

the lowest overall cost to the Government, including transportation

costs to NASA from point of origin to final destination, taking into

account any applicable transit privileges.

1847.305-70 NASA contract clauses.

(a) The contracting officer may insert a clause substantially as

stated at 1852.247-72, Advance Notice of Shipment, in solicitations and

contracts when the f.o.b. point is destination and special Government

assistance is required in the delivery or receipt of the items.

(b) The contracting officer may insert a clause substantially as

stated at 1852.247-73, Shipment of Government Bills of Lading, in

f.o.b. origin solicitations and contracts.

Subpart 1847.5--Ocean Transportation by U.S.-Flag Vessels

1847.506 Procedures. (NASA supplements paragraph (d))

(d)(i) The transportation officer in each installation shall

establish and maintain a register to reflect adherence to the Cargo

Preference Act. The register shall contain data related to shipments

made by the installation and by NASA contractors. Where no

transportation officer is available, it shall be maintained by the

contracting office. The register shall contain pertinent details of

ocean shipments including, but not limited to, the ports of origin and

destination of shipments, commodity descriptions, gross weight, freight

revenue, name of vessel, operator of vessel, and date of loading. The

the Cargo Preference Act can be ascertained at all times. To the

maximum practicable extent, compliance with the 50-percent minimum

requirements of the Cargo Preference Act shall be maintained on a

quarter-year basis; any deficiencies in maintaining compliance shall be

corrected by the end of the calendar year.

(ii) On the basis of the registers maintained under paragraph

(d)(i) of this section, the official maintaining the register shall

submit quarterly reports reflecting ocean shipments to the Division of

National Cargo, Office of Market Development, Maritime Administration,

Department of Transportation, Washington, DC, 20590. Negative reports

are required when applicable.

Subpart 1847.70--Protection of the Florida Manatee

1847.7001 Contract clause.

The contracting officer shall insert the clause at 1852.247-71,

Protection of the Florida Manatee, in solicitations and contracts when

deliveries or vessel operations, dockside work, or disassembly

functions under the contract will involve use of waterways inhabited by

manatees. The clause shall also be included in applicable subcontracts

(including vendor deliveries).

16. Part 1848 is revised to read as follows:

PART 1848--VALUE ENGINEERING

Subpart 1848.1--Policies and Procedures

Sec.

1848.102 Policies.

1848.103 Processing value engineering change proposals.

1848.104 Sharing arrangements.

1848.104-2 Sharing collateral savings.

Subpart 1848.2--Contract Clauses

1848.201 Clauses for supply or service contracts.

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

Subpart 1848.1--Policies and Procedures

1848.102 Policies. (NASA supplements paragraphs (a) and (f))

(a) The Associate Administrator for Procurement (Code HS) is the

approval authority for exemptions.

(f) In calculating instant or future contract savings on firm-

fixed-price contracts when the parties have not set out a specific

figure for profit, the contracting officer shall use the total contract

price as the basis for calculating the savings.

1848.103 Processing value engineering change proposals. (NASA

supplements paragraph (a))

(a) Upon receipt of a VECP, the contracting officer shall promptly

forward it to the technical officer responsible for the contract with

the following information:

(i) Date of VECP receipt;

(ii) Date for notifying the contractor of VECP acceptance or

rejection;

(iii) Notification of the potential for awarding concurrent,

future, or collateral savings to the contractor if the VECP is

accepted;

(iv) Request for a technical evaluation, with complete rationale

for recommended acceptance or rejection, to include if acceptance is

recommended:

(A) An estimate of the type of savings, Government costs, etc.,

that can be expected from its acceptance;

(B) A procurement request setting forth the specification changes

to be used in any contract modification accepting the VECP in whole or

in part; and

instant contract savings.

(v) Technical evaluation due date.

1848.104 Sharing arrangements.

1848.104-2 Sharing collateral savings.

The contracting officer is authorized to make the determination

that the cost of calculating and tracking collateral savings will

exceed the benefits to be derived.

Subpart 1848.2--Contract Clauses

1848.201 Clauses for supply or service contracts. (NASA supplements

paragraphs (a), (b), (c), and (d))

(a)(6) The Associate Administrator for Procurement (Code HS) is the

approval authority for exemptions.

(b) The contracting officer shall not insert the clause at FAR

52.248-1, Value Engineering, either with or without its Alternates, in

an R&D contract where the statement of work is essentially an

incorporation by reference of the prospective contractor's proposal. If

any other part of the statement of work in such a contract reflects a

Government specification that might benefit from application of VE

techniques, the contracting officer shall consider inserting the VE

incentive clause at FAR 52.248-1 with any applicable Alternate(s), and

establish the applicability of the clause to that part.

contracting officer shall insert the clause at FAR 52.248-1 with its

Alternate I in initial production contracts for major systems, and

major systems R&D contracts for full-scale development, unless the

contracting officer determines in writing that its use is

inappropriate. Use of Alternate I is appropriate for an R&D major

systems contract only if the contract specifications contain detailed

requirements that lend themselves to VE.

(d) The contracting officer shall insert the clause at FAR 52.248-1

with its Alternate II under the conditions prescribed in paragraph (c)

of this section

[[Page 14030]]

17. Part 1849 is revised to read as follows:

PART 1849--TERMINATION OF CONTRACTS

Subpart 1849.1--General Principles

Sec.

1849.101 Authorities and responsibilities.

1849.101-70 NASA authorities and responsibilities.

1849.101-71 Termination authority.

1849.102 Notice of termination.

1849.102-70 Prior clearance of significant contract terminations.

1849.105 Duties of termination contracting officer after issuance

of notice of termination.

1849.105-70 Termination docket checklist.

1849.110 Settlement negotiation memorandum.

1849.110-70 Memorandum contents.

1849.111 Review of proposed settlements.

Subpart 1849.5--Contract Termination Clauses

1849.505 Other termination clauses.

1849.505-70 NASA contract clause.

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

Subpart 1849.1--General Principles

1849.101 Authorities and responsibilities.

1849.101-70 NASA authorities and responsibilities.

(a) Installations shall appoint a termination contracting officer

(TCO) (see FAR 2.101) to perform specific duties relating to contract

termination as one of that individual's primary functions. In addition

to the responsibilities described in this part and FAR part 49, such

duties should include--

(1) Reviewing NASA Forms 1412, Termination Authority;

(2) Reviewing the contract and related documents before issuing the

notice of termination, to ensure protection of the Government's rights

under the contract; and

(3) Issuing notices of termination, reinstatement, and recision to

contractors;

(b) Contracting offices shall utilize the services of the

Department of Defense and other Government agencies whenever possible

to administer and negotiate settlement of terminated contracts.

Delegation of the negotiation of termination settlement function shall

be made in accordance with FAR subpart 42.2 and 1842.2.

1849.101-71 Termination authority.

NASA Form 1412, Termination Authority, is prescribed for use by

NASA installations when initiating action to terminate a contract for

convenience or default. The project manager or the activity initiating

the procurement request should initiate the action by completing NASA

Form 1412 and submitting it to the contracting officer.

1849.102 Notice of termination.

1849.102-70 Prior clearance of significant contract terminations.

(a) Congressional notification is required for any termination

involving a reduction in employment of 100 or more contractor

employees. Proposed terminations must be cleared through the

Headquarters Office of Legislative Affairs (Code LB) before release of

the termination notice, or any information on the proposed termination,

to the contractor. Proposed terminations expected to result in a

reduction of fewer than 100 should be similarly cleared if the

installation believes it to be significant.

(b) The contracting officer shall submit the following information

to Code LB, and a copy to the Office of Procurement (Code HS), as soon

as possible after the decision to terminate is made. Until clearance is

obtained, this information shall be treated as ``For Official Use

Only'' unless the information is classified.

(1) Contract number.

(2) Date of award.

(3) Type of award.

(4) Name of company.

(5) Nature of contract or end item.

(6) Reasons for the termination.

(7) Contract price of items terminated.

(8) Total number of contractor employees involved, including the

Government's estimate of the number that may be discharged.

(9) Anticipated impact on the company and the community.

(10) Name of the community affected.

(11) Area labor category.

(12) Whether contractor is large or small business.

(13) Any known impact on disadvantaged employment programs.

(14) Total number of subcontractors involved and the impact in this

area, if known.

(15) Unclassified draft of suggested press release.

the request and provide a response not later than two working days

after receipt of the information in paragraph (b) of this section.

1849.105 Duties of termination contracting officer after issuance of

notice of termination.

1849.105-70 Termination docket checklist.

The termination contracting officer shall complete NASA Form 1413,

Termination Docket Checklist.

1849.110 Settlement negotiation memorandum.

1849.110-70 Memorandum contents.

The TCO shall include the following information in the settlement

negotiation memorandum. Contractors and subcontractors are encouraged

to use this format appropriately modified for subcontract settlements

submitted for review and approval.

(a) General information--(1) Identification. (i) Name and address

of the contractor and any pertinent affiliation between prime

contractors and subcontractors relative to the overall settlement.

(ii) Names and titles of contractor and Government personnel who

participated in the negotiation.

(2) Description of terminated contract.

(i) Contract number;

(ii) Date of award;

(iii) Contract type;

(iv) General description of contract items;

(v) Total contract price; and

(vi) Applicable contract termination provisions and clause.

(3) Termination notice.

(i) Date of the termination notice;

(ii) Effective date of termination;

(iii) Scope and nature of termination (complete or partial);

(iv) Items terminated;

(v) Unit prices;

(vi) Total price of items terminated for fixed-price contracts or

the estimated cost and fee applicable to items terminated for cost-

reimbursement type contracts;

(vii) Whether the termination notice was amended and, if so, why;

(viii) Whether the contractor stopped work on the termination

effective date (if it did not, furnish details) and whether

subcontracts were terminated promptly;

(ix) Any redirection of common items and return of goods to the

contractor's suppliers; and

(x) Extent of contract performance and timely deliveries by the

contractor.

(b) Contractor's settlement proposal--(1) Date and amount. Date and

location where the claim was filed and its gross amount (if interim

settlement proposals were filed, information shall be furnished for

each claim).

(2) Basis of claim. E.g., inventory, total cost, or other basis,

including an explanation of any approvals granted in connection with

submission on other than an inventory basis.

(3) Examination of proposal. Types of reviews made and by whom

(audit, engineering, legal, or other).

cost

[[Page 14031]]

elements/items, the amounts claimed, the Government recommended

position (including auditor, field, and technical personnel

recommendations), and the negotiated settlement amounts. This summary

shall include, if appropriate, previously reimbursed and unreimbursed

costs applicable to the prime contractor and subcontractor, previous

profit/fees paid and unpaid; settlement cost less disposal credit or

other credits, and a recapitulation of previous settlements. The

summary of the negotiated settlement shall include the amount claimed

and allowed for contractor and/or subcontractor changes, disposal,

prior payment credits, and contract price.

(d) Settlement narrative summary.

(1) Contractor's cost.

(2) Profit/Fee.

(3) Settlement expenses not included in the audit.

(4) Number and dollar amount of any subcontractor settlements

approved by the TCO and concluded by the contractor under delegation of

authority.

(5) Total amount of any partial payments.

(6) Total of unliquidated progress or advance payments.

(7) Claims of the Government against the contractor included in

settlement agreement reservations.

(8) Assignments, including the name and address of each assignee.

(9) Disposal credits.

(10) Status of plant clearance actions and all inventory sold,

retained, or otherwise properly disposed of in accordance with

applicable plant clearance regulations, including a consolidated

closing plant clearance report, if applicable.

(11) Status of Government property accountability.

(12) Disposition of any special tooling, if applicable.

(13) Proposed reservations of rights to the Government or to the

contractor.

(e) Recommendation. Amount of the gross settlement recommended and

TCO statement that it is fair and reasonable to the Government and the

contractor.

(f) TCO Signature and date.

1849.111 Review of proposed settlements. (NASA paragraphs (1) and (2))

(1) Settlements shall be reviewed in accordance with center-

prescribed procedures.

(2) The TCO may authorize the contract administration office

cognizant of a lower-tier subcontractor grant approval or ratification

of proposed subcontractor settlements described in FAR 49.108-3(c) that

are first reviewed and referred by the prime contractor to the TCO.

This procedure is not applicable to settlements between the contractor

and its first tier subcontractors.

Subpart 1849.5--Contract Termination Clauses

1849.505 Other termination clause.

1849.505-70 NASA contract clause.

The contracting officer shall insert the clause at 1852.249-72,

Termination (Utilities), in all solicitations and contracts for

utilities services.

18. Part 1850 is revised to read as follows:

PART 1850--EXTRAORDINARY CONTRACTUAL ACTIONS

Subpart 1850.2--Delegation of and Limitations on Exercise of Authority

Sec.

1850.202 Contract adjustment boards.

Subpart 1850.3--Contract Adjustments

1850.305 Processing cases.

1850.305-70 Submission of request to the Contract Adjustment Board.

1850.306 Disposition.

1850.306-70 Implementation of the Contract Adjustment Board's

decision.

Subpart 1850.4--Residual Powers

1850.403 Special procedures for unusually hazardous or nuclear

risks.

1850.403-1 Indemnification requests.

1850.403-170 Subcontractor indemnification requests.

1850.403-2 Action on indemnification requests.

1850.470 Lead NASA installation.

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

Subpart 1850.2--Delegation of and Limitations on Exercise of

Authority

1850.202 Contract adjustment boards.

14 CFR part 1209, subpart 3, Contract Adjustment Board, establishes

the Contract Adjustment Board (CAB) as the approving authority to

consider and dispose of requests from NASA contractors for

extraordinary contractual actions.

Subpart 1850.3--Contract Adjustments

1850.305 Processing cases.

1850.305-70 Submission of request to the Contract Adjustment Board.

(a) After investigating the facts and issues relevant to the

contractor's request, the contracting officer shall forward the request

to the Associate General Counsel for General Law (Code GG), including

in the forwarding letter--

(1) The nature of the case;

(2) The recommended disposition; and,

(3) If contractual action is recommended, the contracting officer's

opinion that the action will facilitate the national defense.

(b) The forwarding letter shall enclose the contractor's request,

all supporting material submitted by the contractor, and any material

the contracting officer has obtained while investigating the facts and

issues relevant to the request. Any classified information in the

material forwarded shall be so identified.

1850.306 Disposition.

1850.306-70 Implementation of the Contract Adjustment Board's

decision.

(a) The contracting officer shall take action authorized in the

CAB's decision.

(b) Immediately upon execution, including any required Headquarters

approval, of a contract or contract modification or amendment

implementing the CAB decision, the contracting officer shall forward a

copy of the contractual document to the Associate General Counsel for

General Law (Code GG).

Subpart 1850.4--Residual Powers

1850.403 Special procedures for unusually hazardous or nuclear risks.

1850.403-1 Indemnification requests. (NASA supplements paragraph (a))

(a) The contractor shall also provide evidence, such as a

certificate of insurance or other customary proof of insurance, that

such insurance is either in force or is available and will be in force

during the indemnified period.

1850.403-170 Subcontractor indemnification requests.

Subcontractors shall submit requests for indemnification to the

prime contractor and through higher tier subcontractor(s), as

applicable. If the prime contractor agrees an indemnity clause should

be flowed down to the subcontractor, the prime contractor shall forward

its written request for subcontractor indemnification to the cognizant

contracting officer for approval in accordance with FAR 50.403-1. The

prime contractor's request shall provide information responsive to

1850.403-1, FAR 50.403-1, and FAR 50.403-2(a) (1), (2), (4), (5) and

(7). The agreed upon definition of the unusually hazardous risk to be

incorporated into the subcontract shall be the same as that

incorporated in the prime contract.

[[Page 14032]]

1850.403-2 Action on indemnification requests. (NASA supplements

paragraphs (a) and (d))

(a) If recommending approval, the contracting officer shall forward

the required information to the Associate Administrator for Procurement

(Code HS), along with the following:

(i) For contracts of five years duration or longer, a

determination, with supporting rationale, whether the indemnification

approval and insurance coverage and premiums should be reviewed for

adequacy and continued validity at points in time within the extended

contract period.

(ii) A recommended Memorandum of Decision. In addition to the

applicable requirements of FAR 50.306, the Memorandum of Decision shall

contain the following:

(A) The specific definition of the unusually hazardous risk to

which the contractor is exposed in the performance of the contract(s);

(B) A complete discussion of the contractor's financial protection

program; and

being approved for subcontracts.

(d) If approving subcontractor indemnification, the contracting

officer shall document the file with a memorandum for record addressing

the items set forth in FAR 50.403-2(a) and include an analysis of the

subcontractor's financial protection program. In performing this

analysis, the contracting officer shall take into consideration the

availability, cost, terms and conditions of insurance in relation to

the unusually hazardous risk.

1850.470 Lead NASA installation.

(a) Contractors applying for indemnification shall determine which

NASA installation has the highest dollar amount of contracts for which

indemnification is requested. The indemnification request should be

submitted to the procurement officer for that installation, who will

then designate a cognizant contracting officer. Contractors shall

submit a single request and ensure duplicate requests are not submitted

by associate divisions, subsidiaries, or central offices of the

contractor.

(b) The receiving installation will become the lead installation

and will remain so indefinitely. Lead installation designation may

change to another installation if the affected procurement officers

agree to the change. Should a change occur in the lead installation,

all records related to indemnification of that contractor shall be

transferred to the gaining installation.

19. Part 1851 is revised to read as follows:

PART 1851--USE OF GOVERNMENT SOURCES BY CONTRACTORS

Subpart 1851.1--Contractor Use of Government Supply Sources

Sec.

1851.101 Policy.

1851.102 Authorization to use Government supply sources.

1851.102-70 Contractor acquisition of filing cabinets.

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

Subpart 1851.1--Contractor Use of Government Supply Sources

1851.101 Policy.

Use of official Government mailing privileges by NASA contractors

is covered in NMI 1450.11, NASA Mail Management Program.

1851.102 Authorization to use Government supply sources. (NASA

supplements paragraph (e)).

(e) The contracting officer shall use substantially the following

format for letters authorizing contractor use of Government supply

sources:

SUBJECT: Authorization to Lease, Rent, or Purchase from General

Services Administration (GSA) Supply Sources

(Contractor's name)----------------------------------------------------

(Address)--------------------------------------------------------------

(1) You are hereby authorized to act for the Government in the

following matters:

(i) The acquisition of supplies and/or services under Contract

No. ________ available for purchase by Government agencies either

directly from GSA stock or under Federal Supply Schedules, including

GSA nonmandatory ADTS/ADP schedule contracts and GSA ADP

requirements contracts, subject to the limitations set forth in this

authorization.

(ii) The leasing or rental of equipment for use on Contract No.

________ available for lease or rental by Government agencies under

Federal Supply Schedules, including GSA nonmandatory ADTS/ADP

schedule contracts and GSA ADP requirements contracts, subject to

the limitations set forth in this authorization.

(iii) The issuance of tax exemption certificates in lieu of the

payment of State or other taxes for which the government is not

liable on supplies or services purchased under this authorization.

(2)(i) Purchase orders under GSA schedules and contracts shall

be placed in accordance with the terms and conditions of the GSA

schedule or contract and this authorization. A copy of this

authorization shall be attached to the order (unless a copy was

previously furnished to the GSA contractor) and shall contain the

following statement:

``This order is placed on behalf of the National Aeronautics and

Space Administration in furtherance of United States Government

Contract No. ________, pursuant to written authorization dated

________, a copy of which (is attached) (you have on file). In the

event of any inconsistency between the terms and conditions of this

order and those of the applicable GSA schedule/contract, the latter

will govern.''

(ii) Orders for items in the GSA Supply Catalog shall be placed

in accordance with the Catalog and this authorization and shall

include the address to which billings are to be sent. Bills are not

issued by GSA until after shipment has been made and should

therefore be paid promptly. Any necessary adjustments will be made

by GSA subsequent to payment. All orders shall contain the following

statement:

``This order is placed on behalf of the National Aeronautics and

Space Administration in furtherance of United States Government

Contract No. ________, pursuant to written authorization dated

________, a copy of which (is attached) (you have on file).''

(3) (Insert any other provisions and restrictions.)

(4) The authority hereby granted is not transferable or

assignable.

----------------------------------------------------------------------

(Contracting Officer)

(e)(3) Contracting officers shall use NHB 4100.1, NASA Materials

Inventory Management Manual, to obtain activity address codes to enable

use of FEDSTRIP and MILSTRIP.

1851.102-70 Contractor acquisition of filing cabinets.

(a) The Contractor officer must approve any planned contractor

acquisition of filing cabinets whose title will vest in the Government.

The contracting officer shall ensure that the contractor takes the

following actions before submitting a request for approval:

(1) Transfer inactive records to contractor storage areas;

(2) Dispose of unnecessary records in accordance with corporate

procedures;

(3) Use less expensive shelf filing methods; and

(4) Take other actions to reduce the need for filing cabinets.

(b) If after taking the actions in paragraphs (a)(1) through (4) of

this section, the contractor requires additional filing capacity, it

shall submit for contracting officer approval a request to order filing

cabinets. This request shall include a discussion of why sufficient

additional filing capacity is necessary and shall address the results

of the actions in paragraphs (a)(1) through (4) of this section. The

contracting officer shall review the request in consultation with the

Records Management Officer, the Property and Supply Officer, and the

project officer, is appropriate.

officer shall

[[Page 14033]]

attempt to fill the need by providing any available excess items of the

type required through appropriate property accountability channels.

Approved requests that cannot be filled from excess shall be returned

to the contractor with an authorization to obtain file cabinets,

preferably through GSA.

PART 1852--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

1852.211-72, 1852.211-74 [Removed]

20-21. Sections 1852.211-72 and 1852.211-74 are removed.

1852.223-70 [Amended]

22. In the clause to section 1852.223-70, the date ``(FEB 1996)''

is revised to read ``(MAR 1997)'', and in paragraph (g)(2) of the

clause the phrase ``A certification program'' is revised to read

``Qualification standards''.

1852.223-73 [Amended]

23. In the introductory text to section 1852.223-73, the citation

``1823.7001'' is revised to read ``1823.7001(c)'', and in the

introductory text to ALTERNATE I of section 1852.223-73, the citation

``1823-7001'' is revised to read ``1823.7001(d)''.

1852.243-70, 1852.243-71 [Amended]

24. Sections 1852.243-70 and 1852.243-71 are revised to read as

follows:

1852.243-70 Engineering change proposals.

As prescribed in 1843.205-70(a), insert the following clause,

modified to suit contract type:

ENGINEERING CHANGE PROPOSALS (MAR 1997)

(a) Definitions.

ECP means an Engineering Change Proposal (ECP) which is a

proposed engineering change and the documentation by which the

change is described, justified, and submitted to the procuring

activity for approval or disapproval.

MIL-STD-973 means a DOD publication entitled, Military Standard

Configuration Control--Egnineering Changes, Deviations and Waivers,

15 July 1988.

(b) Either party to the contract may originate ECPs. The

originator shall forward proposed ECPs to the Contracting Officer.

Unless another process has been approved by the Government or

specified by the Contracting Officer, the ECP formats, forms and

controls specified in MIL-STD-973 shall be used. Implementation of

an approved ECP may occur by either a supplemental agreement or, if

appropriate, as a written change order to the contract.

``not-to-exceed'' ______ [price or estimated cost] increase or

decrease adjustment amount, if any, and the required [time of

delivery or period of performance] adjustment, if any, acceptable to

the originator of the ECP. If the change is originated within the

Government, the Contracting Officer shall obtain a written agreement

with the Contractor regarding the ``not-to-exceed'' ______ [price or

estimated cost] and [delivery or period of performance] adjustments,

if any, prior to issuing an order for implementation of the change.

(d) After submission of a Contractor initiated ECP, the

Contracting Officer may require the Contractor to submit the

following information:

(1) Cost or pricing data in accordance with FAR 15.804-6 if the

proposed change meets the criteria for its submission under FAR

15.804-2; or

(2) Information other than cost or pricing data adequate for

Contracting Officer determination of price reasonableness or cost

realism. The Contracting Officer reserves the right to request

additional information if that provided by the Contractor is

considered inadequate for that purpose. If the Contractor claims

applicability of one of the exceptions to submission of cost or

pricing data, it shall cite the exception and provide rationale for

its applicability.

(e) If the ECP is initiated by NASA, the Contracting Officer

shall specify the cost information requirements, if any.

(End of clause)

ALTERNATE I (SEPT 1990)

As prescribed in 1843.205-70(b), add the following paragraph

(e), modified to suit contract type, to the basic clause:

(e) If the ______ [price of estimated cost] adjustment proposed

for any Contractor-originated ECP is ______ [Insert a percent or

dollar amount of the contract price or estimated cost.] or less, the

ECP shall be executed with no adjustment to the contract ______

[price or estimated cost].

ALTERNATE II (SEPT 1990)

As prescribed in 1843.205-70(c), add the following sentence at

the end of paragraph (c) of the basic clause:

An ECP accepted in accordance with the Changes clause of this

contract shall not be considered an authorization to the Contractor

to exceed the estimated cost in the contract Schedule, unless the

estimated cost is increased by the change order or other contract

modification.

1852.243-71 Shared savings.

As prescribed in 1843.7102, insert the following clause:

SHARED SAVINGS (MAR 1997)

(a) The Contractor is entitled, under the provisions of this

clause, to share in cost savings resulting from the implementation

of cost reduction projects which are presented to the Government in

the form of Cost Reduction Proposals (CRP) and approved by the

Contracting Officer. These cost reduction projects may require

changes to the terms, conditions or statement of work of this

contract. Any cost reduction projects must not change the essential

function of any products to be delivered or the essential purpose of

services to be provided under the contract.

(b) Definitions:

(1) Cost savings, as contemplated by this clause mean savings

that result from instituting changes to the covered contract, as

identified in an approved Cost Reduction Proposal.

(2) Cost Reduction Proposal--For the purposes of this clause, a

Cost Reduction Proposal means a proposal that recommends

alternatives to the established procedures and/or organizational

support of a contract or group of contracts. These alternatives must

result in a net reduction of contract cost and price to NASA. The

proposal will include technical and cost information sufficient to

enable the Contracting Officer to evaluate the CRP and approve or

disapprove it.

(3) Covered contract--As used in this provision, covered

contract means the contract, including unexercised options but

excluding future contracts, whether contemplated or not, against

which the CRP is submitted.

(4) Contractor implementation costs--As used in this provision,

Contractor implementation costs, or ``implementation costs'', shall

mean those costs which the Contractor incurs on covered contracts

specifically in developing, preparing, submitting, and negotiating a

CRP, as well as those costs the Contractor will incur on covered

contracts to make any structural or organizational changes in order

to implement an approved CRP.

(5) Government costs--As used in this provision, the term

Government costs means internal costs of NASA, or any other

Government agency, which result directly from development and

implementation of the CRP. These may include, but are not limited

to, costs associated with the administration of the contract or with

such contractually related functions such as testing, operations,

maintenance and logistics support. These costs also include costs

associated with other Agency contracts (including changes in

contract price or cost and fee) that may be affected as a result of

the implementation of a CRP. They do not include the normal

administrative costs of reviewing and processing the Cost Reduction

Proposal.

CRP's with supporting information as detailed in paragraph (e) of

this clause, to the Contracting Officer. The CRP will describe the

proposed cost reduction activity in sufficient detail to enable the

Contracting Officer to evaluate it and to approve or disapprove it.

The Contractor shall share in any net cost savings realized from

approved and implemented CRPs in accordance with the terms of this

clause. The Contractor's actual percentage share of the cost savings

shall be a matter for negotiation with the Contracting Officer, but

shall not, in any event, exceed 50 percent of the total cost savings

recognized by the Contracting Officer. The Contractor may propose

changes in other activities that impact performance on its contract,

including Government and other Contractor operations, if such

changes will optimize cost savings. A Contractor shall not be

entitled to share, however, in any cost savings that are

[[Page 14034]]

internal to the Government, or which result from changes made to any

contracts to which it is not a party even if those changes were

proposed as a part of its CRP. Early communication between the

Contractor and Government is encouraged. The communication may be in

the form of a concept paper or preliminary proposal. The Government

is not committed to accepting any proposal as a result of these

early discussions.

(d) Computation of cost savings. The cost savings to be shared

between the Government and the Contractor will be computed by the

Contracting Officer by comparing a current estimate to complete

(ETC) for the covered contract, as structured before implementation

of the proposed CRP, to a revised ETC which takes into account the

implementation of that CRP. The cost savings to be shared shall be

reduced by any cost overrun, whether experienced or projected, that

is identified on the covered contract before implementation of the

CRP. Although a CRP may result in cost savings that extend far into

the future, the period in which the Contractor may share in those

savings will be limited to no more than five years. Implementation

costs of the Contractor must be considered and specifically

identified in the revised ETC. The Contracting Officer shall offset

Contractor cost savings by any increased costs (whether implementing

or recurring) to the Government when computing the total cost

savings to be shared. The Contractor shall not be entitled, under

the provisions of this clause, to share in any cost reductions to

the contract that are the result of changes stemming from any action

other than an approved CRP. However, this clause does not limit

recovery of any such reimbursements that are allowed as a result of

other contract provisions.

(e) Supporting Information. As a minimum, the Contractor shall

provide the following supporting information with each CRP:

(1) Identification of the current contract requirements or

established procedures and/or organizational support which are

proposed to be changed.

(2) A description of the difference between the current process

or procedure and the proposed change. This description shall address

how proposed changes will meet NASA requirements and discuss the

advantages and disadvantages of the existing practice and the

proposed changes.

(3) A list of contract requirements which must be revised, if

any, if the CRP is approved, along with proposed revisions. Any

changes to NASA or delegated contract management processes should

also be addressed.

(4) Detailed cost estimates which reflect the implementation

costs of the CRP.

(5) An updated ETC for the covered contract, unchanged, and a

revised ETC for the covered contract which reflects changes

resulting from implementing the CRP. If the CRP proposes changes to

only a limited number of elements of the contract, the ETCs need

only address those portions of the contract that have been impacted.

Each ETC shall depict the level of costs incurred or to be incurred

by year, or to the level of detail required by the Contracting

Officer. If other CRPs have been proposed or approved on a contract,

the impact of these CRPs must be addressed in the computation of the

cost savings to ensure that the cost savings identified are

attributable only to the CRP under consideration in the instant

case.

(6) Identification of any other previous submissions of the CRP,

including the dates submitted, the agencies and contracts involved,

and the disposition of those submittals.

(f) Administration.

(1) The Contractor shall submit proposed CRPs to the Contracting

Officer who shall be responsible for the review, evaluation and

approval. Normally, CRP's should not be entertained for the first

year of performance to allow the Contracting Officer to assess

performance against the basic requirements. If a cost reduction

project impacts more than a single contract, the Contractor may,

upon concurrence of the Contracting Officers responsible for the

affected contracts, submit a single CRP which addresses fully the

cost savings projected on all affected contracts that contain this

Shared Savings Clause. In the case of multiple contracts affected,

responsibility for the review and approval of the CRP will be a

matter to be decided by the affected Contracting Officers.

(2) Within 60 days of receipt, the Contracting Officer shall

complete an initial evaluation of any proposed cost reduction plan

to determine its feasibility. Failure of the Contracting Officer to

provide a response within 60 days shall not be construed as approval

of the CRP. The Government shall promptly notify the Contractor of

the results of its initial evaluation and indicate what, if any,

further action will be taken. If the Government determines that the

proposed CRP has merit, it will open discussions with the Contractor

to establish the cost savings to be recognized, the Contractor's

share of the cost savings, and a payment schedule. The Contractor

shall continue to perform in accordance with the terms and

conditions of the existing contract until a contract modification is

executed by the Contracting Officer. The modification shall

constitute approval of the CRP and shall incorporate the changes

identified by the CRP, adjust the contract cost and/or price,

establish the Contractor's share of cost savings, and incorporate

the agreed to payment schedule.

(3) The Contractor will receive payment by submitting invoices

to the Contracting Officer for approval. The amount and timing of

individual payments will be made in accordance with the schedule to

be established with the Contracting Officer. Notwithstanding the

overall savings recognized by the Contracting Officer as a result of

an approved CRP, payment of any portion of the Contractor's share of

savings shall not be made until NASA begins to realize a net cost

savings on the contract (i.e., implementation, startup and other

increased costs resulting from the change have been offset by

cumulative cost savings). Savings associated with unexercised

options will not be paid unless and until the contract options are

exercised. It shall be the responsibility of the Contractor to

provide such justification as the Contracting Officer deems

necessary to substantiate that cost savings are being achieved.

(4) Any future activity, including a merger or acquisition

undertaken by the Contractor (or to which the Contractor becomes an

involved party), which has the effect of reducing or reversing the

cost savings realized from an approved CRP for which the Contractor

has received payment may be cause for recomputing the net cost

savings associated with any approved CRP. The Government reserves

the right to make an adjustment to the Contractor's share of cost

savings and to receive a refund of moneys paid if necessary. Such

adjustment shall not be made without notifying the Contractor in

advance of the intended action and affording the Contractor an

opportunity for discussion.

(g) Limitations. Contract requirements that are imposed by

statute shall not be targeted for cost reduction exercises. The

Contractor is precluded from receiving reimbursements under both

this clause and other incentive provisions of the contract, if any,

for the same cost reductions.

(h) Disapproval of, or failure to approve, any proposed cost

reduction proposal shall not be considered a dispute subject to

remedies under the Disputes clause.

(i) Cost savings paid to the Contractor in accordance with the

provisions of this clause do not constitute profit or fee within the

limitations imposed by 10 U.S.C. 2306(d) and 41 U.S.C. 254(b).

(End of clause)

1852.244-70 [Amended]

25. In the introductory text to section 1852.244-70, the citation

``1844.170'' is revised to read ``1844.204-70''.

1852.246-70 [Amended]

26. Section 1852.246-70 is revised to read as follows:

1852.246-70 Mission Critical Space System Personnel Reliability

Program.

As prescribed in 1846.370(a), insert the following clause:

MISSION CRITICAL SPACE SYSTEM

PERSONNEL RELIABILITY PROGRAM (MAR 1997)

(a) In implementation of the Mission Critical Space System

Personnel Reliability Program, described in 14 CFR 1214.5, the

Government shall identify personnel

[[Page 14035]]

positions that are mission critical. Some of the positions as

identified may now or in the future be held by employees of the

Contractor. Upon notification by the Contracting Officer that a

mission-critical position is being or will be filled by one or more

of the Contractor's employees, the Contractor shall (1) provide the

affected employees with a clear understanding of the investigative

and medical requirements and, (2) to the extent permitted by

applicable law, assist the Government by furnishing personal data

and medical records.

(b) The standard that will be used in certifying individuals for

a mission-critical position is that they must be determined to be

suitable, competent, and reliable in the performance of their

assigned duties in accordance with the screening requirements 14 CFR

1214.5. If the Government determines that a Contractor employee

occupying or nominated to occupy a mission-critical position will

not be certified for such duty, the Contracting Officer shall (1)

furnish to the employee the specific reasons for its action; (2)

advise the employee that he/she may avail himself/herself of the

review procedures that are a part of the certification system; and

(3) furnish him/her a copy of those procedures upon request.

not yet filled) a mission-critical position is not certified, the

Contractor agrees to defer the appointment to the position until the

employee has had an opportunity to pursue the referenced procedures.

If the employee is an incumbent to the position, the Contractor

agrees, upon the request of the Government, to remove him/her from

the position temporarily pending an appeal of the action under the

review procedures. If any employee not certified elects not to take

action under the procedures, or, if having taken action, is not

successful in obtaining a reversal of the determination, the

Contractor agrees not to appoint the employee to the position, or if

already appointed, to promptly remove the employee.

(End of clause)

1852.246-71 [Amended]

27. In the introductory text to section 1852.246-71, the citation

``1846.470-2(a)'' is revised to read ``1846.470''.

1852.246-73 [Amended]

28. Section 1852.246-73 is revised to read as follows:

1652.246-73 Human Space Flight Item.

As prescribed in 1845.370(b), insert the following clause:

HUMAN SPACE FLIGHT ITEM (MAR 1997)

The Contractor shall include the following statement in all

subcontracts and purchase orders placed by it in support of this

contract, without exception as to amount or subcontract level:

``FOR USE IN HUMAN SPACE FLIGHT; MATERIALS, MANUFACTURING, AND

WORKMANSHIP OF HIGHEST QUALITY STANDARDS ARE ESSENTIAL TO ASTRONAUT

SAFETY.

IF YOU ARE ABLE TO SUPPLY THE DESIRED ITEM WITH A HIGHER QUALITY

THAN THAT OF THE ITEMS SPECIFIED OR PROPOSED, YOU ARE REQUESTED TO

BRING THIS FACT TO THE IMMEDIATE ATTENTION OF THE PURCHASER.''

(End of clause)

1852.246-74, 1852.246-75 [Removed]

29. Section 1852.246-74 and 1852.246-75 are removed.

1852.247-70 [Removed]

30. Section 1852.247-70 is removed.

1852.247-72 [Amended]

31. In the introductory text to section 1852.247-72, the citation

``1847.305-70(b)'' is revised to read ``1847.305-70(a)''.

1852.247-73 [Amended]

32. In the introductory text to section 1852.247-73, the citation

``1847.305-70(c)'' is revised to read ``1847.305-70(b)''.

33. In the clause to section 1852.247-73, the date ``(MARCH 1989)''

is revised to read ``(MAR 1997)'', and in paragraph (b), the word

``certificate'' is revised to read ``statement''.

[FR Doc. 97-7075 Filed 3-24-97; 8:45 am]

BILLING CODE 7510-01-M

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.