[Federal Register Volume 65, Number 176 (Monday, September 11, 2000)]
[Rules and Regulations]
[Pages 54813-54816]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-23005]



48 CFR Parts 1845 and 1852

Property Reporting Requirements

AGENCY: National Aeronautics and Space Administration (NASA)

ACTION: Interim rule.


SUMMARY: This interim rule amends the NASA FAR Supplement (NFS) to 
comply with OMB Bulletin 97-01 and makes other changes to NASA's 
property reporting requirements. Specific changes include: Additional 
instructions on how to adjust previously reported values; a new 
definition of Agency Peculiar Property to exclude completed end items 
destined for permanent operation in space; and a new definition of Work 
in Process to include completed end items destined for permanent 
operation in space which otherwise meet the definition of Agency 
Peculiar Property.

DATES: Effective Date: September 11, 2000.
    Comment Date: Comments should be submitted to NASA at the address 
below on or before November 13, 2000.

ADDRESSES: Comments should be sent to James H. Dolvin, NASA 
Headquarters, Code HK, Washington, DC 20546, (202) 358-1279, 

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


A. Background

    OMB Bulletin 97-01, Form and Content of Agency Financial 
Statements, prescribes financial accounting and reporting requirements 
for Federal agencies. Included are accounting standards which apply to 
property, plant and equipment. Comments have been received from 
contractors regarding NASA's initial implementation of the standards 
through the NASA Form 1018 reporting format. In addition to changes 
being made to respond to contractors' concerns, changes are needed in 
NASA's reporting requirements to ensure compliance with the accounting 
standards and accurate and timely financial statements.

B. Regulatory Flexibility Act

    NASA certifies that this interim 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.) 
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.

[[Page 54814]]

D. Determination to Issue an Interim Rule

    In accordance with 41 U.S.C. 418(d), NASA has determined that 
urgent and compelling reasons exist to promulgate this interim rule. 
The basis for this determination is that the new definitions and 
reporting requirements in this interim rule are needed to comply with 
OMB Bulletin 97-01, and that it is necessary to issue these changes 
immediately so they can be incorporated into NASA contractor property 
reports for the year ending September 30, 2000. Public comments 
received in response to this interim rule will be considered in the 
formation of the final rule.

List of Subjects in 48 CFR Part 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).


    2. Subpart 1845.71 is revised to read as follows:

Table of Contents

Subpart 1845.71--Forms Preparation

1845.7101  Instructions for preparing NASA Form 1018.
1845.7101-1  Property classification.
1845.7101-2  Transfers of property.
1845.7101-3  Unit acquisition cost.
1845.7101-4  Types of deletions from contractor property records.
1845.7101-5  Contractor's privileged financial and business 

Subpart 1845.71--Forms Preparation

1845.7101  Instructions for preparing NASA Form 1018.

    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 NASA Form (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. 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. If errors are discovered on NF 1018 after 
submission, the contractor shall contact the cognizant Center 
Industrial Property Officer (IPO) to discuss corrective action. IPO's 
shall work with Center finance personnel to determine appropriate 
corrective action and provide guidance to contractors.

1845.7101-1  Property classification.

    (a) General. Contractors shall report costs in the classifications 
on NF 1018, as described in this section.
    (b) Land. Includes costs of land and improvements to land. 
Contractors shall report land with a unit acquisition cost of $100,000 
or more.
    (c) 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. 
Contractors shall report land with a unit acquisition cost of $100,000 
or more. 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.
    (d) 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. Contractors 
shall report other structures and facilities with a unit acquisition 
cost of $100,000 or more and a useful life of two years or more.
    (e) 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. Contractors shall report leasehold 
improvements with a unit acquisition cost of $100,000 or more and a 
useful life of two years or more.
    (f) 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, regardless of value.
    (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, software, test 
equipment, including their accessory or auxiliary items). 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 two years or more; and
    (2) All items under $100,000, regardless of useful life.
    (h) 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. 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 two years or more; and
    (2) All items under $100,000, regardless of useful life.
    (i) Special test equipment. Includes costs of equipment used to 
accomplish special purpose testing in performing a contract, and items 
or assemblies of equipment. 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 two years or more; and
    (2) All items under $100,000, regardless of useful life.
    (j) 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. Contractors shall report the amount 
for all Materials in inventory, regardless of unit acquisition cost.

[[Page 54815]]

    (k) 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, 
reusable space vehicles, ground support equipment, prototypes, and 
mock-ups. The amount of property, title to which vests in NASA as a 
result of progress payments to fixed price subcontractors, shall be 
included to reflect the pro rata cost of undelivered 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 two years or more; and
    (2) All items under $100,000, regardless of useful life. Completed 
end items which otherwise meet the definition of Agency-Peculiar 
Property, but are destined for permanent operation in space, such as 
satellites and space probes, shall be reported as Contract Work in 
    (l) Contract work-in-process. Includes costs of all work-in-process 
regardless of value; excludes costs of completed items reported in 
other categories. Includes completed end items of property which 
otherwise meet the definition of Agency-Peculiar Property, but are 
destined for permanent operation in space, such as satellites and space 

1845.7101-2  Transfers of property.

    A transfer is a change in accountability between and among prime 
contracts, NASA centers, and other Government agencies (e.g., between 
contracts of the same NASA Center, contracts of different NASA Centers, 
a contract of one NASA Center to another, a NASA Center to a contract 
of another NASA 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 accounted for and 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 NASA 
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 (as defined in 1845.7101-3, Unit 
Acquisition Cost), 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 NASA 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 shall include the following, as appropriate:
    (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.
    (b) Acquisition cost shall include, where appropriate, for 
contractor acquired Special Test Equipment, Special Tooling, Agency-
Peculiar Property and Contract Work-In-Process, related fees, or a pro 
rata portion of fees, paid by NASA to the contractor. Situations where 
inclusion of fees in the acquisition cost would be appropriate

[[Page 54816]]

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.
    (c) The use of weighted average methodologies is acceptable for 
valuation of Material.
    (d) 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 
    (e) 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.
    (f) 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. Work in Process shall 
include the unit acquisition cost of completed end items of property 
which otherwise meet the definition of Agency-Peculiar Property, but 
which are destined for permanent operation in space, such as satellites 
and space probes.

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) Lost, damaged or destroyed. Deletion amounts that result from 
relief from responsibility under FAR 45.503 granted during the 
reporting period.
    (b) Transferred in place. Deletion amounts that result from 
transfer of property to a follow-on contract with the same contractor.
    (c) Transferred to NASA Center accountability. Deletion amounts 
that result from transfer of accountability to the NASA Center 
responsible for the contract, whether or not items are physically 
    (d) Transferred to another NASA Center. Deletion amounts that 
result from transfer of accountability to a NASA Center other than the 
one responsible for the contract, whether or not items are physically 
    (e) Transferred to another Government agency. Deletion amounts that 
result from transfer of property to another Government agency.
    (f) 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.
    (g) Disposed of 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 
    (h) Other. Types of deletion other than those reported in 
paragraphs (a) through (g) of this section.

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. Revise section 1852.245-73 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

September, 2000.

    (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.
    (b)(1) 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.
    (2) The Contractor shall mail the original signed NF 1018 
directly to the Center Deputy Chief Financial Officer, Finance.
    (3) 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 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 NASA'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 NASA. 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) through (3) 
of this clause.
(End of clause)

[FR Doc. 00-23005 Filed 9-8-00; 8:45 am]