[Federal Register Volume 64, Number 221 (Wednesday, November 17, 1999)]
[Rules and Regulations]
[Pages 62600-62603]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-29910]


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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: Final rule.

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SUMMARY: This final rule amends the NASA FAR Supplement (NFS) to comply 
with OMB Bulletin 97-01 and makes 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 report 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 NASA 
Form (NF) 1018, any information specified in supplemental instructions 
issued by NASA for the current reporting period.

EFFECTIVE DATE: November 17, 1999.

FOR FURTHER INFORMATION CONTACT: James H. Dolvin, NASA Headquarters, 
Code HK, Washington, DC 20546, (202) 358-1279, 
[email protected].

SUPPLEMENTARY INFORMATION:

A. 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. Additional guidance 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.
    A proposed rule was published in the Federal Register at 64 FR 
26721-23, dated May 17, 1999. Revisions in this final rule consist of 
minor editorial changes in 1845.7101-1(b), 1845.7101-2(a), 1845.7101-
3(e), and 1852.245-73 (b) and (d). Comments were received from the 
Aerospace Industries Association and the University of California at 
Berkeley. All comments were considered in the development of this final 
rule.

B. 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.)

[[Page 62601]]

because less than three per cent of NASA contracts with small 
businesses have property reporting requirements.

C. 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. Approval for the additional requirements has 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,
Associate Administrator for Procurement.

    Accordingly, 48 CFR Parts 1845 and 1852 are 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. Sections 1845.7101, 1845.7101-1, 1845.7101-2, 1845.7101-3, 
1845.7101-4, and 1845.7101-5 are 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 in inventory, 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, test equipment, 
including their accessory or auxiliary items).
    (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 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

[[Page 62602]]

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 
equipment), unit acquisition costs, original acquisition dates for 
items with a unit acquisition cost of $100,000 or more and a useful 
life of two years or more, and any other appropriate identifying or 
descriptive data. Where the DD Form 250, Material Inspection and 
Receiving Report, is used, 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, such as the DD Form 
1149, Requisition and Invoice/Shipping Document, 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. 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.
    (13) Where appropriate, for Special Test Equipment, Special 
Tooling, Agency-Peculiar Property and Contract Work-In-Process, related 
fees, or a prorata 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. The 
original acquisition cost of the item will continue to be included in 
the under $100,000 total. The quantity for the modified item will 
remain ``1'' and be reported with the original acquisition cost of the 
item. 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 all direct and 
indirect costs of fabrication, including 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.

[[Page 62603]]

1845.7101-4  Types of deletions from contractor property records

    Contractors shall report the types of deletions from contract 
property records 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 to another Government agency.
    (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 
(Month/Year)

    (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)(1) The Contractor shall mail the original signed NF 1018 
directly to the Center Deputy Chief Financial Officer, Finance.
    (2) Three copies shall be submitted (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.], unless the Contractor uses 
the NASA NF 1018 Electronic Submission System (NESS) for report 
preparation and submission.
    (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 shall be submitted within 30 days after 
disposition of all property subject to reporting when the contract 
performance period is complete in accordance with (b)(1) and (2) of 
this clause.

(End of clause)

[FR Doc. 99-29910 Filed 11-16-99; 8:45 am]
BILLING CODE 7510-01-P