Revisions to the NASA FAR Supplement on Property Reporting Requirements

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 1845 and 1852

Revisions to the NASA FAR Supplement on Property Reporting

Requirements

AGENCY: National Aeronautics and Space Administration (NASA).

ACTION: Proposed rule.

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SUMMARY: This proposed rule would amend the NASA FAR Supplement (NFS)

to comply with OMB Bulletin 97-01 and make other changes to NASA

property reporting requirements. Specific changes include: raising the

reporting threshold for certain property categories from $5,000 to

$100,000; adding a requirement to include Federal Supply Classification

group codes for equipment, unit acquisition costs, and acquisition

dates on shipping documents; and adding a statement that contractors

are required to furnish, in addition to the information required by the

Form 1018, any information specified in supplemental instructions

issued by NASA for the current reporting period.

DATES: Comments should be submitted on or before July 16, 1999.

ADDRESSES: Interested parties should submit written comments to James

H. Dolvin, NASA Headquarters, Office of Procurement, Contract

Management Division (Code HK), Washington, DC 20546. Comments may also

be submitted by e-mail to [email protected].

FOR FURTHER INFORMATION CONTACT: James H. Dolvin, (202) 358-1279.

SUPPLEMENTARY INFORMATION:

Background

Federal Financial Accounting Standards Number 6, as implemented by

OMB Bulletin 97-01, provides for new financial accounting requirements

involving depreciation of Government property. New material is being

added to NFS Section 1845.7101, Instructions for preparing NASA Form

1018, to explain this change and to say that contractors will now be

required to submit supplemental information with the form, and that

this information may change from year to year, depending on OMB

requirements.

Impact

NASA certifies that this regulation will not have a significant

economic impact on a substantial number of small business entities

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

three per cent of NASA contracts with small businesses have property

reporting requirements.

Paperwork Reduction Act

The Paperwork Reduction Act, 44 U.S.C. 3501, et seq., applies to

this proposed rule because it contains information collection

requirements. However, approval for the additional requirements has

already been obtained under OMB Control No. 2700-0017, approving an

increase in burden hours from 5,700 to 8,144.

List of Subjects in 48 CFR Parts 1845 and 1852

Government procurement.

Tom Luedtke,

Acting Associate Administrator for Procurement.

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

as follows:

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

to read as follows:

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

PART 1845--GOVERNMENT PROPERTY

2. Subpart 1845.71 is revised to read as follows:

Subpart 1845.71--Forms Preparation

1845.7101 Instructions for preparing NASA Form 1018.

NASA Form 1018 (see 1853.3) provides critical information for NASA

financial statements and property management. Accuracy and timeliness

of the report are very important. NASA must account for and report

assets in accordance with 31 U.S.C. 3512 and 31 U.S.C. 3515, Federal

accounting standards, and Office of Management and Budget (OMB)

instructions. Since contractors maintain NASA's official records for

its assets in their possession, NASA must obtain annual data from those

records to meet these requirements. Changes in Federal accounting

standards and OMB reporting requirements may occur from year to year,

requiring contractor submission of supplemental information with the NF

1018. Contractors shall retain documents which support the data

reported on NF 1018 in accordance with FAR subpart 4.7, Contractor

Records Retention. Classifications of property, related costs to be

reported, and other reporting requirements are discussed in this

subpart.

1845.7101-1 Property Classification.

(a) General. Contractors shall report costs in the classifications

on the NF 1018, as described in this section. For Land, Buildings,

Other Structures and Facilities, and Leasehold Improvements,

contractors shall report the amount for all items with a unit

acquisition cost of $100,000 or more and a useful life of 2 years or

more. For Plant Equipment, Special Tooling, Special Test Equipment and

Agency-Peculiar Property, contractors shall separately report--

(1) The amount for all items with a unit acquisition cost of

$100,000 or more and a useful life of 2 years or more; and

(2) All items under $100,000, regardless of useful life.

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

Materials, regardless of unit acquisition cost.

(c) Land. Includes costs of land and improvements to land.

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

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

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

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

Examples of fixed equipment required for functioning of a building

include plumbing, heating and lighting equipment, elevators, central

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

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

and improvements of structures and facilities other than buildings; for

example, airfield pavements, harbor and port facilities, power

production facilities and distribution systems, reclamation and

irrigation facilities, flood control and navigation aids, utility

systems (heating, sewage, water and electrical) when they serve several

buildings or structures, communication systems, traffic aids, roads and

bridges, railroads, monuments and memorials, and nonstructural

improvements such as sidewalks, parking areas, and fences.

(f) Leasehold improvements. Includes NASA-funded costs of

improvements to leased buildings, structures, and facilities, as well

as easements and right-of-way, where NASA is the lessee or the cost is

charged to a NASA contract.

(g) Equipment. Includes costs of commercially available personal

property capable of stand-alone use in manufacturing supplies,

performing services, or any general or administrative purpose (for

example, machine tools, furniture, vehicles, computers, and test

equipment, including their accessory or auxiliary items).

[[Page 26722]]

(h) Construction in Progress. Includes costs of work in process for

the construction of Buildings, Other Structures and Facilities, and

Leasehold Improvements to which NASA has title.

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

aids (and their components and replacements) of such a specialized

nature that, without substantial modification or alteration, their use

is limited to development or production of particular supplies or

parts, or performance of particular services. Examples include jigs,

dies, fixtures, molds, patterns, taps and gauges.

(j) Special Test Equipment. Includes costs of equipment used to

accomplish special purpose testing in performing a contract, and items

or assemblies of equipment.

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

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

performing a contract. Examples include raw and processed material,

parts, assemblies, small tools and supplies. Material that is part of

work-in-process is not included.

(l) Agency-Peculiar Property. Includes costs of completed items,

systems and subsystems, spare parts and components unique to NASA

aeronautical and space programs. Examples include research aircraft,

engines, satellites, instruments, rockets, prototypes and mock-ups. The

amount of property, title to which vests in the Government as a result

of progress payments to fixed price subcontractors, shall be included

to reflect the pro rata cost of undelivered agency-peculiar property.

(m) Contract Work-in-Process. Includes costs of all work-in-

process; excludes costs of completed items reported in other

categories.

1845.7101-2 Transfers of property.

A transfer is a change in accountability between and among prime

contracts, centers, and other Government agencies (e.g., between

contracts of the same center, contracts of different centers, a

contract of one center to that of another center, a center to a

contract of another center, and a contract to another Government agency

or its contract). To enable NASA to properly control and account for

transfers, they shall be adequately documented. Therefore, procurement,

property, and financial organizations at NASA centers must effect all

transfers of accountability, although physical shipment and receipt of

property may be made directly by contractors. The procedures described

in this section shall be followed to provide an administrative and

audit trail, even if property is physically shipped directly from one

contractor to another. Property shipped between September 1 and

September 30, inclusively, shall be reported by the shipping

contractor, regardless of the method of shipment, unless written

evidence of receipt at destination has been received. Repairables

provided under fixed price repair contracts that include the clause at

1852.245-72, Liability for Government Property Furnished for Repair or

Other Services, remain accountable to the cognizant center and are not

reportable on NF 1018; repairables provided under a cost-reimbursement

contract, however, are accountable to the contractor and reportable on

NF 1018. All materials provided to conduct repairs are reportable,

regardless of contract type.

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

of the contracting officer or designee for transfers of property before

shipment. Each shipping document must contain contract numbers,

shipping references, property classifications in which the items are

recorded (including Federal Supply Classification group (FSC) codes for

all types of equipment), unit acquisition costs, original acquisition

dates and any other appropriate identifying or descriptive data. Where

the DD 250, Material Inspection and Receiving Report, is used as the

shipping document, the FSC code will be part of the national stock

number (NSN) entered in Block 16 or, if the NSN is not provided, the

FSC alone shall be shown in Block 16. The original acquisition date

shall be shown in Block 23, by item. Other formats should be clearly

annotated with the required information. Unit acquisition costs shall

be obtained from records maintained pursuant to FAR part 45 and this

part 1845 or, for uncompleted items where property records have not yet

been established, from such other record systems as are appropriate

such as manufacturing or engineering records used for work control and

billing purposes. Shipping contractors shall furnish a copy of the

shipping document to the cognizant property administrator. Shipping and

receiving contractors shall promptly notify the financial management

office of the NASA center responsible for their respective contracts

when accountability for Government property is transferred to, or

received from, other contracts, contractors, NASA centers, or

Government agencies. Copies of shipping or receiving documents will

suffice as notification in most instances.

(b) Reclassification. If property is transferred to another

contract or contractor, the receiving contractor shall record the

property in the same property classification and amount appearing on

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

from another contractor that is identified on the shipping document as

equipment, but that the recipient intends to incorporate into special

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

equipment account and subsequently reclassify it as special test

equipment when incorporated into that item. Reclassification of

equipment, special tooling, special test equipment, or agency-peculiar

property requires prior approval of the contracting officer or a

designee.

(c) Incomplete documentation. If contractors receive transfer

documents having insufficient detail to properly record the transfer

(e.g., omission of property classification, FSC, unit acquisition cost,

acquisition date, etc.) they shall request the omitted data directly

from the shipping contractor or through the property administrator as

provided in FAR 45.505-2.

1845.7101-3 Unit acquisition cost.

(a) The unit acquisition cost shall include all costs incurred to

bring the property to a form and location suitable for its intended

use. For example, the cost may include the following, as appropriate,

for the type of property:

(1) Amounts paid to vendors or other contractors;

(2) Transportation charges to the point of initial use;

(3) Handling and storage charges;

(4) Labor and other direct or indirect production costs (for assets

produced or constructed);

(5) Engineering, architectural, and other outside services for

designs, plans, specifications, and surveys;

(6) Acquisition and preparation costs of buildings and other

facilities;

(7) An appropriate share of the cost of the equipment and

facilities used in construction work;

(8) Fixed equipment and related installation costs required for

activities in a building or facility;

(9) Direct costs of inspection, supervision, and administration of

construction contracts and construction work;

(10) Legal and recording fees and damage claims;

(11) Fair values of facilities and equipment donated to the

Government;

(12) Material amounts of interest costs paid; and

(13) Where appropriate, for Special Test Equipment, Special

Tooling, Agency-Peculiar and Contract Work-in-process, related fees, or

a prorata

[[Page 26723]]

portion of fees, paid by NASA to the contractor. Situations where

inclusion of fees in the acquisition cost would be appropriate are

those in which the contractor designs, develops, fabricates or

purchases property for NASA and part of the fees paid to the contractor

by NASA are related to that effort.

(b) The use of weighted average methodologies is acceptable for

valuation of Material.

(c) Contractors shall report unit acquisition costs using records

that are part of the prescribed property or financial control system as

provided in this section. Fabrication costs shall be based on approved

systems or procedures and include all direct and indirect costs of

fabrication.

(d) The contractor shall redetermine unit acquisition costs of

items returned for modification or rehabilitation. If an item's

original acquisition cost is $100,000 or more, only modifications that

improve that item's capacity or extend its useful life two years or

more and that cost $100,000 or more shall be added to the original

acquisition cost reported on the NF 1018. The costs of any other

modifications will be considered to be expensed. If an item's original

unit acquisition cost is less than $100,000, but a single subsequent

modification costs $100,000 or more, that modification only will be

reported as an item $100,000 or more on subsequent NF 1018s. If an

item's acquisition cost is reduced by removal of components so that its

remaining acquisition cost is under $100,000, it shall be reported as

under $100,000.

(e) The computation of work in process shall include costs of

associated systems, subsystems, and spare parts and components

furnished or acquired and charged to work in process pending

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

is sometimes called production inventory and include programmed extra

units to cover replacement during the fabrication process (production

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

a subcontractor has begun work, and materials issued from inventory.

1845.7101-4 Types of deletions from contractor property records.

Contractors shall report the types of deletions from the property

reportable under a given contract as described in this section.

(a) Adjusted. Changes in the deletion amounts that result from

mathematical errors in the previous report.

(b) Lost, Damaged or Destroyed. Deletion amounts that result from

relief from responsibility under FAR 45.503 granted during the

reporting period.

(c) Transferred in Place. Deletion amounts that result from

transfer of property to a follow-on contract with the same contractor.

(d) Transferred to Center Accountability. Deletion amounts that

result from transfer of accountability to the center responsible for

the contract, whether or not items are physically moved.

(e) Transferred to Another NASA Center. Deletion amounts that

result from transfer of accountability to a center other than the one

responsible for the contract, whether or not items are physically

moved.

(f) Transferred to Another Government Agency. Deletion amounts that

result from transfer of property for reutilization to another

Government agency, as a part of the plant clearance process.

(g) Purchased at Cost/Returned for Credit. Deletion amounts that

result from contractor purchase or retention of contractor acquired

property as provided in FAR 45.605-1, or from contractor returns to

suppliers under FAR 45.605-2.

(h) Disposal Through Plant Clearance Process. Deletions other than

transfers, within the Federal Government e.g., donations to eligible

recipients, sold at less than cost, or abandoned/directed destruction.

1845.7101-5 Contractor's privileged financial and business

information.

If a transfer of property between contractors involves disclosing

costs of a proprietary nature, the contractor shall furnish unit

acquisition costs only on copies of shipping documents sent to the

shipping and receiving NASA centers. Transfer of the property to the

receiving contractor shall be on a no-cost basis.

PART 1852--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

3. Section 1852.245-73 is revised to read as follows:

1852.245-73 Financial Reporting of NASA Property in the Custody of

Contractors.

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

Financial Reporting of NASA Property in the Custody of Contractors

(XXX)

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

NASA Property in the Custody of Contractors, in accordance with the

provisions of 1845.505-14, the instructions on the form, subpart

1845.71, and any supplemental instructions for the current reporting

period issued by NASA. Subcontractor use of NF 1018 is not required

by this clause; however, the contractor shall include data on

property in the possession of subcontractors in the annual NF 1018.

(b) The contractor shall submit the original of the NF 1018 to

the Center Deputy Chief Financial Officer, Finance, and three copies

(through the Department of Defense (DOD) Property Administrator if

contract administration has been delegated to DOD) to the following

address: [Insert name and address of appropriate Center office .]

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

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

submitted in time to be received by October 31. The information

contained in these reports is entered into the NASA accounting

system to reflect current asset values for agency financial

statement purposes. Therefore, it is essential that required reports

be received no later than October 31. The Contracting Officer may,

in the Government's interest, withhold payment until a reserve not

exceeding $25,000 or 5 percent of the amount of the contract,

whichever is less, has been set aside, if the Contractor fails to

submit annual NF 1018 reports when due. Such reserve shall be

withheld until the Contracting Officer has determined that the

required reports have been received by the Government. The

withholding of any amount or the subsequent payment thereof shall

not be construed as a waiver of any Government right.

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

of all property subject to reporting when the contract performance

period is complete.

(End of clause)

[FR Doc. 99-12372 Filed 5-14-99; 8:45 am]

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