[Federal Register Volume 60, Number 206 (Wednesday, October 25, 1995)]
[Proposed Rules]
[Pages 54651-54657]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-26427]



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NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 1845 and 1852


Revision to NASA FAR Supplement Coverage on Government Property

agency: Office of Procurement, Contract Management Division, National 
Aeronautics and Space Administration (NASA).

action: Notice of proposed rulemaking.

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summary: This rule proposes to amend the regulations pertaining to 
government property reporting by contractors, due to revisions of the 
reporting form, to clarify and simplify the reporting requirements and 
instructions, and make necessary changes to affected provisions and 
clauses. NASA has made extensive changes to its process of financial 
reporting of Government-Owned/Contractor-Held property. These changes 
were made necessary by the Chief Financial Officers Act of 1990, 
streamlining required by the National Performance Review, the need for 
more uniformity in reporting requirements between NASA and the 
Department of Defense (DOD), and changing internal management needs for 
information within NASA.


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dates: Comments must be received on or before December 26, 1995.

addresses: Submit comments to Larry G. Pendleton, Contract Management 
Division (Code HK), Office of Procurement, NASA Headquarters, 
Washington, DC 20546. Comments on the paperwork burden should also be 
addressed to the Office of Information and Regulatory Affairs of OMB, 
Attention: Desk Officer for NASA, Washington, DC 20503.

for further information contact: Mr. Larry G. Pendleton, (202) 358-
0487.

SUPPLEMENTARY INFORMATION:

Background

    The Chief Financial Officers (CFO) Act requires, among other 
things, that Federal agencies produce audited annual financial 
statements. At NASA, CFO Act audits have been performed by the Office 
of the Inspector General. Experience over the last three years with 
this process has led to changes in the reporting period and due date 
for receipt of contractor and grantee property reports, and 
identification of other necessary or desirable changes to property 
reporting. Other broad policy changes are being considered elsewhere, 
such as the work being done by the Federal Accounting Standards 
Advisory Board on accounting for Property, Plant and Equipment, and the 
rewrite of Federal Acquisition Regulation (FAR) Part 45 by a team led 
by the DOD. To the extent possible, these efforts have been considered 
in formulating changes to NASA regulations. Of primary concern has been 
the need to obtain timely, accurate financial information on NASA 
property in the custody of contractors in a way that minimizes impact 
on reporting entities.

Changes Highlights

    Revisions to NASA Form (NF) 1018 and related regulations 
incorporate the following:
    A. The Annual List of Selected Items of Space Hardware has been 
eliminated. The term ``space hardware'' is replaced by ``agency-
peculiar property'' (APP) to be consistent with the Federal Acquisition 
Regulation, and contractors will report all property in their 
possession meeting the NASA FAR Supplement (NFS) definition of APP.
    B. Schedule II, Space Hardware Reportable Items, of the current NF 
1018 has been eliminated as unnecessary. The NF 1018 will be a single 
page, with instructions on the back, rather than the present three-page 
form, and instructions.
    C. The NF 1018 title and format have been changed to make them more 
consistent with the DD Form 1662. Use of the DD Form 1662 only was 
considered, but NASA information requirements precluded this option.
    D. The requirement for a breakout of contractor-acquired property 
by funding classification has been eliminated.
    E. A requirement to report quantities by property category has been 
added to provide necessary management information.
    F. A requirement to breakout plant equipment by items over and 
under $5,000 has been added. Accounting information is required for 
items over $5,000 as this is the NASA capitalization threshold, 
consistent with General Accounting Office standards. Property 
management information is needed, however, for all plant equipment.
    G. A category for ``Construction in Progress'' has been added to be 
consistent with the Government-wide Standard General Ledger and NASA 
financial statements.
    H. The term ``disposals'' has been changed to ``deletions'' to be 
consistent with the DD Form 1662. Specific categories have been 
provided on the NF 1018 to make it simpler for contractors to classify 
the type of deletion, and for property management purposes.
    I. The lower section of the form has been revised to provide better 
information on contact persons and on contractor property system 
reviews.
    J. Reporting instructions on the NF 1018 have been revised to 
eliminate duplication with regulatory language in the NFS.
    K. Regulations have been changed to eliminate the optional use of 
monthly or quarterly reporting in accordance with the Presidents 
Memorandum of April 21, 1995, on regulatory reform and reduction of 
reports.
    L. Contract clauses have been changed to:
    (1) Make clear that NF 1018 submissions must be received by the 
cognizant NASA offices not later than October 31 of each reporting 
year; and
    (2) Provide for withholding of payment on invoices when required NF 
1018 reports are not received.

Regulatory Flexibility Act

    NASA certifies that these regulation changes will not have a 
significant economic impact on a substantial number of small entities 
under Regulatory Flexibility Act (5 U.S.C. 601 et seq.).

Paperwork Reduction Act

    This rule proposes to change the following report that was approved 
by the Office of Management and Budget (OMB) and assigned OMB Control 
Number 2700-0017. A copy of the proposed rule has been submitted to OMB 
for review under section 3507(d) of the Paperwork Reduction Act.
    Title: Report of Government-Owned/Contractor-Held Property.
    Summary: This report collects information on Government-owned/
contractor-held property accountable under NASA contracts.
    Description of the need for the information and proposed use of the 
information: NASA is required to account for Government-owned/
contractor-held property. The NASA Form 1018 submitted by contractors 
provides data necessary to ensure that the Agency's assets are 
accurately reflected on its audited financial statements, as well as 
essential property management information.
    Description of the likely respondents, including the estimated 
number of likely respondents, and proposed frequency of response to the 
collection of information: NASA contractors whose contracts contain the 
clause entitled ``Financial Report of NASA Property in the Custody of 
Contractors'' will be required to submit NASA Form 1018 annually. The 
number of respondents is estimated to be 1,900.
    Estimate of the total annual reporting and recordkeeping burden 
that will result from the collection of information: FAR part 45 
requires that contractors maintain the official Government property 
records for Government property in their possession. The NASA Form 1018 
provides a means for an annual collection of summary data derived from 
these records. The annual recordkeeping and reporting burden related to 
preparation and submission of NASA Form 1018 is estimated to be 5,700 
hours.
    Notice: Comments may be submitted to the OMB address shown under 
ADDRESSES.
    Time period within which the agency is requesting OMB to approve or 
disapprove the collection of information: NASA is requesting that OMB 
approve the proposed revisions to the collection of information within 
the next 60 days.
    In addition, comments may be submitted to NASA and OMB in order to 
help NASA--
    (i) Evaluate whether the proposed collection of information is 
necessary for the proper performance of the functions of the agency, 
including whether the information will have practical utility; 

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    (ii) Evaluate the accuracy of the agency's estimate of the burden 
of the proposed collection of information, including the validity of 
the methodology and assumptions used;
    (iii) Enhance the quality, utility, and clarity of the information 
to be collected; and
    (iv) Minimize the burden of the collection of information on those 
who are to respond, including through the use of appropriate automated, 
electronic, mechanical, or other technological collection techniquest 
or other forms of information technology, e.g., permitting electronic 
submission of responses.

List of Subjects in 48 CFR Parts 1845 and 1852

    Government procurement.
Tom Luedtke,
Deputy 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

Subpart 1845.1--General

    1. In section 1845.102-70, paragraph (a)(3) is revised to read as 
follows:


1845.102-70  Procedures.

    (a) * * *
    (3) Requirement that additional facilities that the offeror 
requests to be provided by the Government be described and identified 
by classification such as ``Land,'' ``Buildings,'' and ``Equipment'' 
(see subpart 1845.71); and
* * * * *
    2. In section 1845.106-70, paragraph (d) is revised, paragraph (i) 
is removed and paragraphs (j) and (k) are redesignated as (i) and (j) 
to read as follows:


1845.106-70  NASA contract clauses and solicitation provision.

* * * * *
    (d) The contracting officer shall insert the clause at 1852.245-73, 
Financial Reporting of NASA Property in the Custody of Contractors, in 
all cost reimbursement contracts or in all other types of contracts 
when it is known at the time of award that property will be provided to 
the contractor or that the contractor will acquire property, title to 
which vests in the Government prior to delivery of the contract 
products. Where all property to be provided is subject to the clause at 
1852.245-71, Installation-Provided Government Property (see paragraph 
(b) of this section), the clause at 1852.245-73 is not required. Where 
the clause is not included in contracts at the time of award, if 
Government property is subsequently provided to a contractor, or the 
contractor is authorized to acquire property to which the Government 
takes title, the clause shall be included in the contract at that time.
* * * * *


1845.301  [Amended]

    3. In section 1845.301, the definition heading ``Space property'' 
is revised to read ``Agency-peculiar property''.

Subpart 1845.5--Management of Government Property in the Possession 
of Contractors

    4. Section 1845.501 is amended as follows:
    (a) The definition heading ``Space property'' is revised to read 
``Agency-peculiar property'', the word ``peculiar'' is revised to read 
``unique'', and the last sentence is removed.
    (b) In the definition ``Centrally reportable equipment (CRE)'', the 
phrase ``space property'' is revised to read ``agency-peculiar 
property.''
    5. In section 1845.502-1, the title of the NASA Form 1018 ``Report 
of Government-Owned/Contractor-Held Property'' is revised to read 
``NASA Property in the Custody of Contractors''.
    6. Section 1845.505-14 is revised to read as follows:


1845.505-14  Reports of Government property.

    When required by the contract, the contractor shall submit a report 
of NASA Property in the Custody of Contractors, NASA Form 1018, in 
accordance with the instructions on the form, subpart 1845.71, and the 
contract clause at 1852.245-73. The contractors property control system 
shall distinguish Government furnished and contractor acquired property 
for purposes of reporting the acquisition cost in the property 
classifications shown in FAR 45.505-14(a) (1) through (5).

Subpart 1845.71--Forms Preparation

    7. In Sec. 1845.7101 the last sentence is revised to read as 
follows:


1845.7101  Instructions for preparing NASA Form 1018.

    * * * This report provides information for NASA financial 
statements and property management; accuracy and timeliness of the 
report are, therefore, very important. Contractors shall retain 
documents which support the data reported on NASA Form 1018 in 
accordance with FAR subpart 4.7, Contractor Records Retention. 
Classifications of property, related costs to be reported, and 
reporting requirements are set forth in this subpart.
    8. Section 1845.7101-1 is revised to read as follows:


1845.7101-1  Property classification.

    (a) Contractors shall report costs in the classifications required 
on NASA Form (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 cost of 
$5,000 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 cost of $5,000 of more and 
useful life of 2 years or more and
    (2) All items under $5,000, regardless of useful life.
    (b) Contractors shall report the amount for all Materials, 
regardless of unit cost.
    (c) Land. Includes costs of land and associated costs incidental to 
acquiring and preparing land for use, for example; appraisal fees, 
clearing costs, drainage, grading, landscaping, plats and surveys, 
removal and relocation of the property of others as part of a land 
purchase, removal or destruction of structures or facilities purchased 
but not used, and legal expenses.
    (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 the 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 

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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 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 for use in manufacturing supplies, performing services, or any 
general or administrative purpose; for example, machine tools, 
furniture, vehicles, computers, accessory or auxiliary items, and test 
equipment.
    (h) Construction in progress. Includes costs for work in process 
for the construction of Buildings, Other Structures and Facilities, 
Leasehold Improvements, and Equipment to which NASA has title.
    (i) Special tooling. Includes costs of equipment and manufacturing 
aids (and components and replacements of these items) that are of such 
a specialized nature that, without substantial modification or 
alteration, their use is limited to the development or production of 
particular supplies or parts, or to the 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. Do not include material 
that is part of work in process.
    (l) Agency-peculiar property. Includes actual or estimated costs of 
completed items, systems and subsystems, spare parts and components and 
work in process unique to NASA aeronautical and space programs. 
Examples include 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.
    9. Section 1845.7101-2 is revised to read as follows:


1845.7101-2  Transfers of property.

    The procedures in this section apply to all types of transfers. 
Only Government installations may furnish Government property to a 
contractor. Therefore, procurement, property, and financial 
organizations at NASA installations must effect all transfers of 
accountability, although physical shipment and receipt of property may 
be made directly by contractors. Such transfers include shipments 
between contractors of the same installation, contractors of different 
installations, a contractor of one installation to another 
installation, an installation to a contractor of another installation, 
and a contractor to another Government agency to its contractor. So 
that NASA may properly control and account for transfers, they shall be 
adequately documented. The procedures described in this section shall 
be followed in all cases, to provide an administrative and audit trail, 
even if property is physically shipped directly from one contractor to 
another. Contractors shipping property to NASA, another contractor, or 
another Government agency shall continue to be accountable for NASA 
Form (NF) 1018 reporting of that property, regardless of the method of 
shipment, until evidence of receipt is in the possession of the 
shipping entity. Property provided under fixed price repair contracts 
remains accountable to the cognizant NASA installation and is not 
reportable on NF 1018; property provided for repair under a cost-
reimbursable contract, however, is accountable to the contractor and 
reportable on NF 1018.
    (a) Approval and notification. The contractor must obtain the 
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, unit prices, and any other appropriate identifying 
or descriptive data. Unit prices shall be obtained from records 
maintained pursuant to FAR part 45 and part 1845 of this chapter. 
Shipping contracting 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 installation responsible for their respective contracts when 
accountability for Government property is transferred to, or received 
from, other contracts, contractors, NASA installations or Government 
agencies. Copies of shipping or receiving documents will suffice as 
notification in most instances.
    (b) Reclassification. If the 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. Reclassification of equipment, special tooling, special test 
equipment, or agency-peculiar property requires prior notification to 
the property administrator and approval of the contracting officer.
    (c) Incomplete documentation. If contractors receive transfer 
documents having sufficient detail to properly record the transfer 
(e.g., omission of property classification, unit prices, etc.) they 
shall request the omitted data directly from the shipping contractor or 
through the property administrator as provided as in FAR 45.505-2. 
Contractors may append a Government furnished property list to the NF 
1018 report when unable to obtain the required data, provided that the 
list includes--
    (1) A description of the property;
    (2) Quantity;
    (3) Shipping document reference;
    (4) Shippers identity;
    (5) Dates shipped or received
    (6) The dates data were requested and from whom (shipper or 
property administrator); and
    (7) The NF 1018 line item (classification) to be adjusted.
    10. Sections 1845.7101-3, 1845.7101-4, and 1845.7101-5 are removed, 
and section 1845.7101-6 is redesignated as section 1845.7101-3 and is 
revised to read as follows:


1845.7101-3  Computing costs of fabricated special tooling, special 
test equipment, and Agency-peculiar property.

    (a) Costs shall be computed in accordance with accepted accounting 
principles, be reasonably accurate, and be the product of any one or a 
combination of, the following:
    (1) Abstracts of cost data from contractor property or financial 
records.
    (2) Computations based on engineering and financial data.
    (3) Estimates based on NASA Form 533 reports.
    (4) Formula procedures (e.g., using a 50 percent factor for work in 
process items, on the basis of updated Standard Form 1411 estimates or 
the contractors approved estimating and pricing system).

[[Page 54655]]

    (5) Other approved methods.
    (b) Contractors shall report costs using records that are part of 
the prescribed property or financial control system as provided in this 
section, excluding fee. Fabrication costs shall be based on the 
contractors approved estimating and pricing system and should include--
    (1) Direct labor;
    (2) Direct materials and purchased parts (costs of purchased items 
shall be consistent with the contractors approved pricing methods);
    (3) Other direct costs (e.g., computer costs, travel, and 
transportation);
    (4) Burden (a percentage factor or rate applied to the direct costs 
or other applicable base); and
    (5) Costs of Government furnished property applied (data available 
from the Government shipping document or estimated, if necessary).
    (c) The contractor shall redetermine the costs of items returned 
for modification or rehabilitation to include the remaining portion of 
original cost plus the cost of any improvements.
    (d) The computation of work in process shall include the 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 that have been issued 
from inventory.
    11. Sections 1845.7101-7, 1845.7101-8, and 1845.7101-9 are removed, 
and section 1845.7101-10 is redesignated as section 1845.7101-4.

PART 1852--SOLICITATION PROVISIONS AND CONTRACT CLAUSES


1852.245-73  [Amended]

    12. In section 1852.245-73, the title, date, and paragraphs (a), 
(c) and (d) to the clause are revised and the introductory text, 
paragraph (e) and Alternates I and II to the clause are removed 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 
199X)

    (a) The Contractor shall submit annually a NASA Form (NF) 1018, 
NASA Property in the Custody of Contractors, in accordance with 
1845.505-14, the instructions on the form, and subpart 1845.71. 
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.
* * * * *
    (c) The annual reporting period shall be from October 1 of each 
year to September 30 of the following year. The report shall be 
submitted in time to be received by October 31. Failure to submit 
the report when due may result in withholding of payment on invoices 
for the month in which reports are to be submitted, based on 
noncompliance with contract requirements.
    (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)


1852.245-78  [Removed]

    13. Section 1852.245-78 is removed.

BILLING CODE 7510-01-M

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Appendix To The Proposed Rule NASA Form 1018--NASA Property In The 
Custody Of Contractors
[GRAPHIC][TIFF OMITTED]TP25OC95.004


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[GRAPHIC][TIFF OMITTED]TP25OC95.005



[FR Doc. 95-26427 Filed 10-24-95; 8:45 am]
BILLING CODE 7510-01-C