[Federal Register Volume 81, Number 143 (Tuesday, July 26, 2016)]
[Proposed Rules]
[Pages 48726-48728]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-17559]



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NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 1845 and 1852

RIN 2700-AE33


NASA Federal Acquisition Regulation Supplement: Contractor 
Financial Reporting of Property (2016-N024)

AGENCY: National Aeronautics and Space Administration.

ACTION: Proposed rule.

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SUMMARY: NASA is proposing to amend the NASA Federal Acquisition 
Regulation Supplement (NFS) to add a monthly reporting requirement for 
contractors having custody of $10 million or more in NASA-owned 
Property, Plant and Equipment (PP&E).

DATES: Interested parties should submit comments to NASA at the address 
below on or before September 26, 2016 to be considered in the formation 
of a final rule.

ADDRESSES: Submit comments identified by NFS Case 2016-N024, using any 
of the following methods:
    [cir] Regulations.gov: http://www.regulations.gov. Submit comments 
via the Federal eRulemaking portal by entering ``NFS Case 2016-N024'' 
under the heading ``Enter keyword or ID'' and selecting ``Search.'' 
Select the link ``Submit a Comment'' that corresponds with ``NFS Case 
2016-N024.'' Follow the instructions provided at the ``Submit a 
Comment'' screen. Please include your name, company name (if any), and 
``NFS Case 2016-N024'' on your attached document.
    [cir] Email: [email protected]. Include NFS Case 2016-N024 in 
the subject line of the message.
    [cir] Fax: (202) 358-3082.
    [cir] Mail: National Aeronautics and Space Administration, 
Headquarters, Office of Procurement, Contract and Grant Policy 
Division, Attn: Andrew O'Rourke, LP-011 (Suite 5L32), 300 E. Street 
SW., Washington, DC 20546-0001.

FOR FURTHER INFORMATION CONTACT: Andrew O'Rourke, NASA, Office of 
Procurement, Contract and Grant Policy Division, LP-011 (Suite 5L32); 
(202) 358-4560; email: [email protected].

SUPPLEMENTARY INFORMATION: 

I. Background

    NASA is proposing to revise the NFS to add a monthly reporting 
requirement at 1852.245-73 for contracts in which the contractor has 
custody of NASA-owned PP&E valued at $10 million or more to ensure 
contractor-held PP&E are more accurately represented in NASA financial 
statements. In accordance with the Statement of Federal Financial 
Accounting Standard (SFFAS) No. 6, Accounting for Property, Plant, and 
Equipment, Federal agencies are--
     Required to record as property and equipment all items 
that meet certain characteristics, such as a useful life of two (2) 
years or more; and
     Permitted to establish individual capitalization 
thresholds and useful life policies due to their diverse size and uses 
of PP&E.
    NASA Procedural Requirement (NPR) 9250.1, Property, Plant, and 
Equipment and Operating Materials and Supplies, which implements SSFAS 
No. 6, requires contractors with custody of NASA-owned PP&E to report 
financial property information to NASA on a yearly basis, and also 
requires contractors with custody of $10 million or more in NASA-owned 
PP&E to report financial property information to NASA on a monthly 
basis.
    NFS subpart 1845.71 requires contractors in possession of NASA PP&E 
to submit annually a NASA Form (NF) 1018, NASA Property in the Custody 
of Contractors. NFS clause 1852.245-73, Financial Reporting of NASA 
Property in the Custody of Contractors, paragraph (a), states the 
Contractor shall submit annually a NASA Form (NF) 1018, NASA Property 
in the Custody of Contractors, in accordance with this clause, the 
instructions on the form and NFS subpart 1845.71, and any supplemental 
instructions for the current reporting period issued by NASA. 
Currently, if at any time during performance of the contract the amount 
of NASA property in the custody of the contractor is equal to or in 
excess of $10 million, the contractor has received instructions from 
the NASA contracting officer to submit a monthly report.
    In order to ensure that PP&E are being presented fairly in the 
Agency's financial statements, independent auditors recommended to NASA 
that the NFS policy regarding property financial reporting be revised 
to specify that the supplemental instructions in paragraph (a) of the 
clause specifically includes the requirement that all contractors 
having custody of NASA PP&E with a value of $10 million or more are 
required to report this information on a monthly basis to NASA.

II. Discussion

    The following sections of the NFS are being revised relative to 
PP&E reporting requirements:
     NASA is proposing to update NFS clause 1852.245-73 and the 
associated prescription at NFS 1845.107-70 regarding the reporting of 
NASA-owned and contractor-held PP&E that equals $10 million or more on 
a monthly basis.
     NASA is proposing to update NFS clause 1852.245-73 to add 
the cognizant NASA Center Industrial Property Officer to the 
distribution list for the hard copy NF 1018.
     NASA is proposing to update NFS clause 1852.245-73 to 
revise the annual report submission date from October 15th to October 
31st to allow contractors additional time to develop and submit this 
report.

III. Executive Orders 12866 and 13563

    Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess 
all costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health, and safety effects, distributive impacts, and equity). E.O. 
13563 emphasizes the importance of quantifying both costs and benefits, 
of reducing costs, of harmonizing rules, and of promoting flexibility. 
This is not a significant regulatory action and, therefore, was not 
subject to review under section 6(b) of E.O. 12866, Regulatory Planning 
and Review, dated September 30, 1993. This rule is not a major rule 
under 5 U.S.C. 804.

IV. Regulatory Flexibility Act

    NASA does not expect this proposed rule to 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 the affected NASA contractors with custody of NASA-owned PP&E 
valued at $10 million or greater are primarily large businesses. 
However, an initial regulatory flexibility analysis has been performed 
and is summarized as follows:
    The objective of this rule is to add a monthly reporting 
requirement for contractors having custody of NASA-owned PP&E valued at 
$10 million or greater to ensure that contractor-held PP&E are more 
accurately represented in NASA financial statements in accordance with 
the Statement of Federal Financial Accounting Standard (SFFAS) No. 6, 
Accounting for Property, Plant, and Equipment and NASA Procedural 
Requirement (NPR) 9250.1, Property, Plant, and Equipment and Operating 
Materials and Supplies.
    The requirements under this proposed rule would apply to any 
contract award

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(including contracts for supplies, services, construction, and major 
systems) that requires contractors to use Government property. 
According to NASA Property Records in Fiscal Year (FY) 2015 there were 
643 contracts that required reporting NASA contractors with custody of 
Government property to report that property. Of the 643 contracts, 
approximately 20% or 129 contracts were with small business 
contractors. Of the 643 contracts, 32 contracts had NASA-owned and 
contractor-held PP&E with a value of $10 Million or more and required 
monthly reporting. Of those 32 contracts, only three were awarded to 
small business contractors.
    The rule contains information collection requirements, however, 
this rule does not impose additional information collection 
requirements to the paperwork burden previously approved under OMB 
Control Number 2700-0017, titled NASA Property in the Custody of 
Contractors and OMB Control No. 9000-0075, titled Government Furnished 
Property Requirements. The impact of this reporting requirement is 
minimal on small entities based on FY 2015 NASA property records that 
show only three contractors with custody of NASA PP&E valued at $10 
million or more. No alternatives were identified that would meet the 
objectives of this proposed rule.
    NASA invites comments from small business concerns and other 
interested parties on the expected impact of this proposed rule on 
small entities. NASA will also consider comments from small entities 
concerning the existing regulations in subparts affected by this 
proposed rule in accordance with 5 U.S.C. 610. Interested parties must 
submit such comments separately and should cite 5 U.S.C. 610 (NFS Case 
2016-N024) in correspondence.

V. Paperwork Reduction Act

    The rule contains information collection requirements that require 
the approval of the Office of Management and Budget (OMB) under the 
Paperwork Reduction Act (44 U.S.C. chapter 35); however, these changes 
to the NFS do not impose additional information collection requirements 
to the paperwork burden previously approved under OMB Control Number 
2700-0017, titled NASA Property in the Custody of Contractors and OMB 
Control No. 9000-0075, titled Government Furnished Property 
Requirements.

List of Subjects in 48 CFR Parts 1845 and 1852

    Government procurement.

Manuel Quinones,
NASA FAR Supplement Manager.

    Accordingly, 48 CFR parts 1845 and 1852 are proposed to be amended 
as follows:

PART 1845--GOVERNMENT PROPERTY

0
1. The authority citation for part 1845 is revised to read as follows:

    Authority: 51 U.S.C. 20113(a) and 48 CFR chapter 1.

0
2. Amend section 1845.107-70 by revising paragraph (d) to read as 
follows:


1845.107-70   NASA solicitation provisions and contract clauses.

* * * * *
    (d) The contracting officer shall insert the clause at 1852.245-73, 
Financial Reporting of NASA Property in the Custody of Contractors, in 
cost reimbursement solicitations and contracts and in all contracts in 
which the contractor has custody of NASA owned-property with a value of 
$10 million or more, unless all property to be provided is subject to 
the clause at 1852.245-71, Installation-Accountable Government 
Property. Insert the clause 1852.245-73 in other types of solicitations 
and contracts when it is known at award that property will be provided 
to the contractor or that the contractor will acquire property title to 
which will vest in the Government prior to delivery.
* * * * *

PART 1852--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
3. The authority citation for part 1852 continues to read as follows:

    Authority: 51 U.S.C. 20113(a) and 48 CFR chapter 1.

0
4. Amend section 1852.245-73 by--
0
a. Revising the date of the clause;
0
b. In paragraph (a), removing the words ``in accordance this clause'' 
and adding ``in accordance with this clause'' in its place; and
0
c. Revising paragraphs (b)(2) and (c).
    The revised text reads as follows:


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

* * * * *

Financial Reporting of NASA Property in the Custody of Contractors 
(Date)

* * * * *
    (b)(1) * * *
    (2) The Contractor shall mail the original signed NF 1018 
directly to the cognizant NASA Center Industrial Property Officer 
and a copy to the cognizant NASA Center Deputy Chief Financial 
Officer, Finance, unless the Contractor uses the NF 1018 Electronic 
Submission System (NESS) for report preparation and submission.
    (c)(1) 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 31st. 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 31st.
    (2) Some activity may be estimated for the month in which the 
report is submitted, if necessary, to ensure the NF 1018 is received 
when due. However, contractors' procedures must document the process 
for developing these estimates based on planned activity such as 
planned purchases or NASA Form 533 (NF 533) Contractor Financial 
Management Report cost estimates. It should be supported and 
documented by historical experience or other corroborating evidence, 
and be retained in accordance with FAR Subpart 4.7, Contractor 
Records Retention. Contractors shall validate the reasonableness of 
the estimates and associated methodology by comparing them to the 
actual activity once that data is available, and adjust them 
accordingly. In addition, differences between the estimated cost and 
actual cost must be adjusted during the next reporting period. 
Contractors shall have formal policies and procedures, which address 
the validation of NF 1018 data, including data from subcontractors, 
and the identification and timely reporting of errors. The objective 
of this validation is to ensure that information reported is 
accurate and in compliance with the NASA FAR Supplement. If errors 
are discovered on NF 1018 after submission, the contractor shall 
contact the cognizant NASA Center Industrial Property Officer (IPO) 
within 30 days after discovery of the error to discuss corrective 
action.
    (3) In addition to an annual report, if at any time during 
performance of the contract, NASA-owned property in the custody of 
the contractor has a value of $10 million or more, the contractor 
shall also submit a report no later than the 21st of each month in 
accordance with the requirements of paragraph (c)(2) of this clause.
    (4) 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 in accordance 
with NFS subpart 1845.71, any monthly report in accordance with 
(c)(3) of this clause, and any supplemental instructions for the 
current reporting period issued by NASA. Such reserve shall be 
withheld until the Contracting Officer has determined that NASA has 
received the required reports. The withholding of any amount or the 
subsequent

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payment thereof shall not be construed as a waiver of any Government 
right.
* * * * *
[FR Doc. 2016-17559 Filed 7-25-16; 8:45 am]
 BILLING CODE 7510-13-P