[Federal Register Volume 64, Number 94 (Monday, May 17, 1999)]
[Proposed Rules]
[Pages 26721-26723]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-12372]

[[Page 26721]]



48 CFR Parts 1845 and 1852

Revisions to the NASA FAR Supplement on Property Reporting 

AGENCY: National Aeronautics and Space Administration (NASA).

ACTION: Proposed rule.


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.



    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 


    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).


    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 

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 

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 
    (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 
    (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 
    (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 
    (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 
    (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 

    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.


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

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

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

Financial Reporting of NASA Property in the Custody of Contractors 

    (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]