[Federal Register Volume 60, Number 60 (Wednesday, March 29, 1995)]
[Rules and Regulations]
[Pages 16063-16065]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-7734]



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NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Parts 1815, 1837 and 1852

RIN 2700-AB40


Revision to NASA FAR Supplement; Uncompensated Overtime

AGENCY: Office of Procurement, Analysis Division, National Aeronautics 
and Space Administration (NASA).

[[Page 16064]] ACTION: Final rule.

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SUMMARY: This final rule sets forth the Agency's policy regarding the 
acceptability of uncompensated overtime (UCOT) in acquisition 
proposals. It establishes that UCOT provided by employees who are 
exempt from the Fair Labor Standards Act is neither encouraged nor 
discouraged, but that labor rates must be adjusted to account for any 
UCOT proposed. Further, any UCOT proposed must be supported by company 
policy, timekeeping and accounting systems, and the historical basis. 
The proposal evaluation will include a technical and cost risk 
assessment. A sample list of criteria to be considered during 
evaluation is included.
    This final rule includes a solicitation provision for use in 
procurements estimated to exceed $500,000. Its use is optional in 
procurements between $100,000 and $500,000. The solicitation provision 
sets forth the agency policy and specifies the type of information 
needed to support any proposed UCOT.
    This coverage was generated in response to industry and internal 
NASA requests for a uniform UCOT policy within the Agency. The coverage 
will promote consistent treatment of UCOT proposals, without 
constraining contractors' prerogatives in deciding whether to propose 
UCOT.

EFFECTIVE DATE: April 28, 1995.

FOR FURTHER INFORMATION CONTACT:
Mr. William T. Childs, Telephone: (202) 358-0454.

SUPPLEMENTARY INFORMATION: 

Background

    NASA published a proposed rule in 59 FR 9951, March 2, 1994, 
essentially the same as that being promulgated here. Based on a review 
of public comments on the proposed rule, only minor changes were made. 
Fourteen comments were received from eight sources:
    Two commenters recommended expansion of the applicability of the 
proposed rule, by deletion of the phrase ``in key technical positions'' 
in the first sentence of 48 CFR 1815.608-72. CONCUR--this change was 
accepted.
    Three commenters recommended that the clause at 48 CFR 1852.237-72 
include the policy statement that UCOT is neither encouraged nor 
discouraged. A fourth commenter expressed a similar concern. CONCUR--a 
preamble paragraph was added to address this in the clause, based on 
the policy in 48 CFR 1837.102(b).
    Five commenters recommended a policy reversal, so as to either 
prohibit bidding of UCOT or nullify any pricing advantage. NONCONCUR--
it is not our intention to restrict offerors' options in developing 
their proposals.
    The remaining comments addressed minor clarifications or editorial 
changes. Some editorial changes were made to better organize the 
coverage and correct typographical errors.
    In addition, a new paragraph (b) is added in 48 CFR 1815.608-72, 
containing a list of sample criteria for NASA personnel to consider in 
evaluating UCOT in proposals.

Availability of NASA FAR Supplement

    The NASA FAR Supplement, of which this will become a part, is 
codified in 48 CFR, chapter 18, and is available in its entirety on a 
subscription basis from the Superintendent of Documents, Government 
Printing Office, Washington, DC 20402. Cite GPO Subscription Stock 
Number 933-003-00000-1. It is not distributed to the public, whether in 
whole or in part, directly by NASA.

Regulatory Flexibility Act

    NASA certifies that this Final Rule will not have a significant 
economic impact on a substantial number of small entities within the 
meaning of the Regulatory Flexibility Act (5 U.S.C. 601, et seq.).

Paperwork Reduction Act

    The Office of Management and Budget (OMB) has approved the 
information collection requirements in this rule and assigned control 
number 2700-0080.

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

    Government procurement.
Thomas S. Luedtke,
Deputy Associate Administrator for Procurement.

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

PART 1815--CONTRACTING BY NEGOTIATION

    1. The authority citation for 48 CFR Parts 1815, 1837 and 1852 
continues to read as follows:

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

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


1815.608-72  Uncompensated overtime.

    (a) The contracting officer shall conduct a risk assessment of any 
proposal received for technical and professional services that includes 
unrealistically low labor rates, or uses a high level of uncompensated 
overtime (as defined in the provision at 48 CFR 1852.237-72, 
Identification of Uncompensated Overtime). Such practices on the part 
of the contractor may jeopardize its ability to successfully perform 
contract requirements due, for example, to its inability to hire or 
retain qualified personnel. Such a risk assessment shall be performed 
as part of the technical evaluation and considered in proposal 
evaluation (see 48 CFR (FAR) 22.11 and 48 CFR 1837.102(b)).
    (b) The risk assessment should consider factors such as--
    (1) The number of hours that current employees have been accustomed 
to working, and the normal number of work hours for the local industry;
    (2) The turnover rates for the firm and for the industry in the 
firm's geographical area;
    (3) Whether employees involved in uncompensated overtime share 
directly in the firm's profits; e.g., through employee-ownership or a 
profit-sharing plan;
    (4) Whether the contract period of performance is short, or whether 
uncompensated overtime will be used for only a relatively short period 
of time;
    (5) Whether the firm uses approximately the same level of 
uncompensated overtime in its non-government business;
    (6) Any potential for decline in quality or safety both during 
performance and in any deliverable produced; and
    (7) The ability of the contractor to respond to an emergency 
requiring additional effort.

PART 1837--SERVICE CONTRACTING

    3. Section 1837.102 is added to read as follows:


1837.102  Policy.

    (a) To the maximum extent practicable, it is the policy of NASA to 
acquire services on the basis of the task to be performed rather than 
on a labor-hour basis.
    (b) The use of uncompensated overtime (as defined in the provision 
at 48 CFR 1852.237-72, Identification of Uncompensated Overtime) is 
neither encouraged nor discouraged. When the proposed uncompensated 
overtime is consistent with an offeror's written policies and 
practices, NASA will consider it in proposal evaluation, including the 
evaluation of cost and of professional compensation (see 48 CFR (FAR) 
22.11). The provision at 48 CFR 1852.237-72 requires offerors to 
identify uncompensated overtime hours and the effective hourly rate for 
all Fair Labor Standards Act-exempt personnel [[Page 16065]] included 
in their proposals and subcontractor proposals. This includes 
uncompensated overtime hours that are in indirect cost pools for 
personnel whose regular hours are normally charged direct (see 48 CFR 
1815.608-72).
    4. Section 1837.110 is revised to read as follows:


1837.110  Solicitation provisions and contract clauses.

    (a) The contracting officer shall obtain the Associate 
Administrator for Procurement's (Code HC) approval before using in a 
solicitation, contract, or negotiated contract modification for 
additional work any installation-developed clause involving pension 
portability.
    (b) The following provision applies to procurements under which 
professional and technical services are acquired on the basis of the 
number of hours to be provided, rather than on the task to be 
performed.
    (1) If the resulting contract is expected to exceed $500,000, the 
contracting officer shall insert in the solicitation the provision at 
48 CFR 1852.237-72, Identification of Uncompensated Overtime.
    (2) If the resulting contract is expected to exceed $100,000 but 
not exceed $500,000, the contracting officer may insert in the 
solicitation the provisions at 48 CFR 1852.237-72, Identification of 
Uncompensated Overtime.

PART 1852--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

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


1852.237-72  Identification of Uncompensated Overtime.

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

IDENTIFICATION OF UNCOMPENSATED OVERTIME

(APRIL 1995)

    The use of uncompensated overtime is neither encouraged nor 
discouraged. When the proposed uncompensated overtime is consistent 
with an offeror's written policies and practices, NASA will consider 
it in proposal evaluation, including the evaluation of cost and of 
professional compensation (see 48 CFR (FAR) subpart 22.11).
    (a) Definitions. As used in this provision:
    Uncompensated overtime means the hours worked in excess of an 
average of 40 hours per week, by direct charge employees who are 
exempt from the Fair Labor Standards Act (FLSA) without additional 
compensation. Compensated personal absences, such as holidays, 
vacations, and sick leave shall be included in the normal work week 
for purposes of computing uncompensated overtime hours.
    Effective hourly rate is the rate that results from multiplying 
the hourly rate for a 40-hour work week by 40, and then dividing by 
the proposed hours per week. For example, 45 hours proposed on a 40-
hour work week basis at $20.00 per hour would be converted to an 
effective hourly rate of $17.78 per hour [($20.00 x 40) divided by 
45=$17.78.]
    (b) For any hours proposed against which an effective hourly 
rate is applied, the Offeror shall identify in its proposal the 
hours in excess of an average of 40 hours per week, at the same 
level of detail as compensated hours, and the effective hourly rate, 
whether at the prime or subcontract level. This includes 
uncompensated overtime hours that are in indirect cost pools for 
personnel whose regular hours are normally charged direct. The 
proposal shall include the rationale and methodology used to 
estimate the proposed amount of uncompensated overtime.
    (c) The Offeror's accounting practices used to estimate 
uncompensated overtime must be consistent with its cost accounting 
practices used to accumulate and report uncompensated overtime 
hours.
    (d) Proposals that include unrealistically low labor rates, or 
that do not otherwise demonstrate cost realism, will be considered 
in a technical and cost risk assessment and evaluated for award in 
accordance with that assessment.
    (e) The Offeror shall include with its proposal a copy of its 
policy addressing uncompensated overtime, a description of the 
timekeeping and accounting systems used to record all hours worked 
by FLSA-exempt employees, and the historical basis for the 
uncompensated overtime hours proposed.

(End of provision)

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