![](media/image1.wmf){width="0.8243055555555555in"
height="0.6888888888888889in"} Procurement Notice

National Aeronautics and

Space Administration

Washington, DC 20546

##  PN 97-79

### November 12, 2002 

GOVERNMENT PROPERTY---INSTRUCTIONS FOR PREPARING NASA FORM 1018

***BACKGROUND:*** This PN revises the NASA FAR Supplement to provide
policies and procedures for proper reporting of heritage assets as part
of contractor annual reports of NASA property in its custody, and to
clarify other property classifications. This change will ensure
consistent reporting of NASA property by contractors.

***ACQUISITIONS AFFECTED BY CHANGES:*** All contracts that require NASA
Form 1018 reports.

***ACTION REQUIRED BY CONTRACTING OFFICERS:*** Ensure that 1018 reports
comply with the reporting changes.

***CLAUSE/PROVISION CHANGES:*** This PN makes no changes to clauses or
provisions.

***PARTS AFFECTED:*** Changes are made in Part 1845.

***REPLACEMENT PAGES:*** You may use the enclosed pages to replace 45:13
through 45:28.

***TYPE OF RULE AND PUBLICATION DATE:*** This PN was published as an
interim rule in the Federal Register (67 FR 68533 - 68535) on November
12, 2002.

***HEADQUARTERS CONTACT:*** Lou Becker, Code HK, (202) 358-4593, e-mail:
lbecker@hq.nasa.gov.

R. Scott Thompson

Director, Contract Management Division

Enclosures

**1845.615 Accounting for contractor inventory.**

A copy of Standard Form 1424, Inventory Disposal Report, shall be
provided to the center industrial property officer or the PDO.

**Subpart 1845.70\--Reserved**

**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 documentation that supports 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 NASA Center Industrial Property
Officer (IPO) to discuss corrective action. IPO's shall work with NASA
Center finance personnel to determine appropriate corrective action and
provide guidance to contractors.

**1845.7101-1 Property classification.**

(a) *General.*

\(1\) Contractors shall report costs in the classifications on NF 1018,
as described in this section. The cost of heritage assets will be
reported on the NF 1018 under the appropriate classification.
Supplemental reporting may also be required. Heritage assets are
property, plant and equipment that possess one or more of the following
characteristics:

\(i\) Historical or natural significance;

\(ii\) Cultural, educational or aesthetic value; or

\(iii\) Significant architectural characteristics.

\(2\) Examples of NASA heritage assets include buildings and structures
designated as National Historic Landmarks as well as aircraft,
spacecraft and related components on display to enhance public
understanding of NASA programs. Heritage assets which serve both a
heritage and government operation function are considered multi-use when
the predominant use is in general government operations. Multi-use
heritage assets will not be considered heritage assets for NF 1018
supplemental reporting purposes.

\(b\) *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 buildings 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 real property (i.e. 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). Software
integrated into and necessary to operate another item of Government
property is considered to be an auxiliary item (see FAR 45.501) and
should be considered part of the item of which it is an integral part.
Other software shall be classified as an individual item of equipment
for reporting purposes if \$100,000 or over. Software licenses are
excluded. 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 other items.

\(h\) *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 (see FAR 45.101). 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 other items.

\(i\) *Special Test Equipment.* Includes costs of equipment used to
accomplish special purpose

> testing in performing a contract, and items or assemblies of equipment
> (see FAR 45.101). 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 other items.

\(j\) *Material.* Includes costs of NASA-owned property held in
inventory regardless of whether or not it is unique to NASA programs
that may become a part of an end item or be expended in performing a
contract. Examples include raw and processed material, spares, 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.

\(k\) *Agency-Peculiar Property*. Includes costs of completed items,
unique to NASA aeronautical and space programs which are capable of
stand alone operation. 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. 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 Process.
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 other items.

\(l\) *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 probes.

**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 submit copies of
shipping and receiving documents to the Center Deputy Chief Financial
Officer, Finance, responsible for their respective contracts when
accountability for NASA property is transferred to, or received from,
other contracts, contractors, NASA Centers, or Government agencies.

\(b\) *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. The contracting officer shall assist the
Government Property Administrator and the receiving contractor to obtain
all required information for the receiving contractor to establish
adequate property records.

**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. The following is representative
of the types of costs that shall be included, when applicable:

\(1\) 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.

\(b\) Acquisition cost shall include, where appropriate, for contractor
acquired property, 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 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 fabrication.

\(e\) Only modifications that improve an item's capacity or extend its
useful life two years or more and that cost \$100,000 or more shall be
reported on the NF 1018 on the \$100,000 & Over line. The costs of any
other modifications, excluding routine maintenance, will be reported on
the Under \$100,000 line. 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 prime contract or other prime 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 moved.

\(d\) *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 moved.

\(e\) *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
destruction, or trade-ins.

\(h\) *Other*. Types of deletion other than those reported in paragraph
(a) through (g) of this section such as those resulting from
reclassifications (e.g. from equipment to agency-peculiar property).

**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.

7102. **Instructions for preparing DD Form 1419.**

\(a\) The contractor shall enter the essential information covering
Sections I and II before submission of DD Form 1419, DOD Industrial
Plant Equipment Requisition, to the Industrial Property Officer (IPO).
The IPO shall review each submission for completeness and authenticity.
Incomplete or invalid requests shall be returned for correction.

\(b\) When a suitable item is allocated in Section IV, inspection of the
equipment is recommended. Notification of acceptance or rejection of the
item offered must reach NASA within 30 days after allocation. A copy of
the DD Form 1419, or equivalent format, will serve as the clearance
document to inspect the equipment at the storage site. Note acceptance
or rejection of the item, without inspection or after inspection in
Section VI. If the item is acceptable, execute Section VII. Cite the
NASA appropriation symbol where applicable in Section VII.

\(c\) The IPO shall assign a requisition number to each DD Form 1419, or
equivalent format request.

\(d\) Next will be a four-digit entry comprised of the last digit of the
current calendar year and the Julian date of the year. For example,
April 15, 1997, would be written as 7095 (April 15 being the 95th day of
the year). The last entry will be a four-digit number from 0001 to 9999
to sequentially number requisition forms prepared on the same date. For
example, the ninth requisition prepared on April 15, 1997, would be
7095-0009, preceded by the FEDSTRIP/MILSTRIP Activity Address Code. When
submitting subsequent DD Forms 1419, or equivalent format, related to
the item requested, the IPO shall use the same requisition number and
add the alpha code to the end of the requisition number to indicate a
second or third action on the basic request. Alpha \"A\" would indicate
a second request, \"B\" a third, etc. In this manner, all actions,
correspondence, etc., relative to a given request can be identified at
all levels of processing by the use of the requisition number.

\(e\) Detailed directions for completing the DD Form 1419 follow. The
contractor may elect to provide the required data in an equivalent
format, which complies with these directions.

**Section I**

**Item Description.** To ensure adequate screening, the item description
must be complete. For single-purpose equipment or general-purpose
equipment with special features, requests must contain detailed
descriptive data as to size and capacities, setting forth special
operating features or particular operations required to be performed by
the item.

**Block 1**. Not applicable.

**Block 2.** Enter the manufacturer\'s name and Federal Supply Code for
manufacturer (Cataloging Handbook H4-1) of the item requested.

**Block 3**. Enter the manufacturer\'s model, style, or catalog number
assigned to the equipment being requisitioned. Always use the model
number, if available. The style number is the next preference. Enter
\"None\" in this block if the model, style or catalog number is not
known.

**Block 4.** Enter the first four digits of the National Stock Number,
if known.

**Block 5.** Not applicable.

**Block 6.** Self-explanatory.

**Block 7.** Place an \"X\" in the applicable block to indicate whether
you desire to physically inspect the item before acceptance.

**Block 8.** Self-explanatory.

**Block 9.** Enter the complete description of the item. Continue the
description in Block 53 if additional space is needed.

**Section II.**

**Block 10.** Enter the contractor\'s name, street address, city, state,
and zip code from which the requisition is being initiated. The address
should be the one to which inquiries of a technical nature will be
referred. Specify the telephone number of an individual who will respond
to inquiries concerning the request.

**Block 11**. Enter the contract number or document number authorizing
acquisition of the items shown in Section I. This normally will be a
facility contract number. Otherwise, it should be a purchase order or
procurement request number.

**Block 12**. Self-explanatory.

**Block 13.** Not applicable.

**Block 14.** Disregard the \"Military\" block. Show the NASA contract
number and program for which the item is to be used.

**Block 15**. Enter the specific function to be performed by the
equipment. When applicable, enter the tolerances, capacities,
specifications, etc., that the equipment must satisfy.

**Block 16.** Determine the date the item must be installed to meet
production requirements. From this date deduct the estimated number of
days required for installation. Enter the adjusted date in this block.

**Block 17.** Enter the date by which NASA must issue a Certificate of
Nonavailability. Determine the date by subtracting the acquisition lead
time and 30 days administrative lead time from the date shown in Block
16.

**Block 18.** Enter the Defense Priority and Allocations System (DPAS)
rating assigned to the contract or anticipated purchase order, if
applicable.

**Block 19.** Place an \"X\" in the appropriate box. If for replacement,
identify the item being replaced and the reason for replacement.

**Block 20.** Place an \"X\" in the appropriate box. Show the
appropriation symbol if the answer is \"yes.\"

**Block 21.** Not applicable.

**Blocks 22 and 23**. In addition to the official\'s title and
signature, type the signing official\'s name, office symbol or name, and
telephone number plus extension. The company representative who prepares
and submits the requirement to the cognizant NASA certifying office
should sign.

**Block 24.** Self-explanatory.

**Block 25a.** Not applicable.

**Block 25b.** Enter the name and address of the installation certifying
the requirement.

**Block 25c.** This block is for signature of the property administrator
or contracting officer at plant level.

**Block 25d.** Self-explanatory.

**Block 25e.** This block is for the signature of NASA installation
official certifying the requirement.

**Block 25f.** Self-explanatory.

**Section III.**

**Blocks 26-29.** Self-explanatory.

**Section IV.**

N/A.

**Section V.**

Complete this section if equipment is unavailable.

**Section VI.**

**Blocks 44-47.** The requesting official signing Section II, Block 23,
shall complete Section VI and shall list reasons for non-acceptance in
Section VIII, Remarks, or on a separate document attached to the DD Form
1419.

**Section VII.**

**Block 48.** Enter the complete name, street address, city, state, and
zip code of the contractor or installation to which the item is to be
shipped. Indicate railhead and truck delivery points when other than the
address named.

**Blocks 49 and 50.** Self-explanatory.

**Blocks 51a. and b.** Ensure that NASA appropriation symbols are
included with the work order number.

**Block 51c.** Enter the NASA appropriation symbol chargeable for any
special work ordered (e.g., rebuild, repair, or accessory replacement).

**Block 51d.** Enter the NASA installation and office symbol for the
organization that will make payment for transportation and packing,
crating, and handling.

**Block 52.** Self-explanatory.

**Section VIII.**

**Block 53**. This block can be used to expand or explain entries made
in Blocks 1 through 52. When requisitioning equipment from excess
listings, identify the issuing office, list number, date, control
number, and item number assigned to the equipment. When requesting
equipment from DOD inventories, refer to DOD instructions.

**Subpart 1845.72\--Contract Property Management**

**1845.7201 Definitions.**

**\"Supporting responsibility,\"** as used in this subpart, relates to
the assignment of a subcontract, or a portion of a prime contract being
performed at a secondary location of the prime contractor, to a property
administrator other than the individual assigned to the prime location.

**\"Property control system,\"** as used in this subpart, identifies a
contractor\'s internal management program encompassing the protection
of, preservation of, accounting for, and control of property from its
acquisition through disposition.

**1845.7202 General.**

This subpart describes major elements of the NASA Contract Property
Management Program. It provides guidance to NASA installation personnel
responsible for NASA contract property (NASA personal property in the
possession of contractors). It applies to all NASA installation
personnel charged with this responsibility, including industrial
property officers and specialists, property administrators, and plant
clearance officers. It also provides detailed procedures for property
administration. The NASA Contract Property Management Program includes
the following three major elements:

\(a\) Performance of property administration and plant clearance by DOD
under delegations from NASA, pursuant to 1842.101.

\(b\) Performance of property administration and plant clearance by NASA
under certain situations, pursuant to 1842.203.

\(c\) Maintenance of property administration and plant clearance
functional oversight, regardless of delegations.

**1845.7203 Delegations of property administration and plant
clearance.**

When delegated to DOD, property administration and plant clearance are
performed in accordance with DOD\'s regulations and procedures, as
amended by the NASA Letter of Contract Administration Delegation,
Special Instructions on Property Administration and Plant Clearance.
These Special Instructions are developed by the Headquarters Office of
Management Systems and Facilities Logistics Management Office (Code
JLG), and are available from that office upon request. The contracting
officer shall issue the Special Instructions with delegations whenever
Government property will be involved. Additional or more tailored
property instructions are not proscribed but must be coordinated with
Code JLG before issuance.

**1845.7204 Retention of property administration and plant clearance.**

NASA may occasionally retain the property administration and plant
clearance function, such as for contract work performed at the
installation awarding the contract and not subject to the clause at
1852.245-71, Installation-Accountable Government Property. In these
cases, property administration shall be performed in accordance with
1845.3 through 1845.6, and plant clearance shall be performed in
accordance with FAR Subpart 45.6 and 1845.6. Under the clause at
1852.245-71, property administration and plant clearance are neither
delegated nor retained; they are simply not required because the
property is treated as installation rather than contract property.

**1845.7205 Functional oversight of property administration and plant
clearance.**

NASA contracting officers retain functional management responsibility
for their contracts. Utilization of the contract administration services
of another Government agency in no way relieves NASA contracting
officers of their ultimate responsibility for the proper and effective
management of contracts. The functional management responsibility for
contract property is described in this section. Beyond individual
contracting officers, each NASA installation has designated an
industrial property officer to manage and coordinate property matters
among the various contracting officers, technical officials, contractor
officials, and delegated property administrators and plant clearance
officers. Generally, that individual is responsible for the entire
contract property management function outlined below; the installation
is responsible for the entire function regardless of how it is organized
and distributed. The responsibilities are:

\(a\) Provide a focal point for all management of contract property,
including Government property (Government-furnished and
contractor-acquired) provided to universities as well as to industry.

\(b\) Provide guidance to contracting and other personnel on the NASA
property provisions.

\(c\) To the extent feasible, review property provisions of acquisition
plans, solicitations, contracts, and modifications for potential
problems. Propose changes as necessary.

\(d\) To the extent feasible, participate in pre-award
surveys/post-award orientations when significant amounts of Government
property will be involved.

\(e\) Ensure that vesting-of-title determinations are made and
documented pursuant to FAR 35.014(b).

\(f\) Maintain effective communications with delegated property
administrators and plant clearance officers to keep fully informed about
contractor performance and progress on any property control problems.

\(1\) Obtain and review property control system survey summaries for all
contracts for which property administration has been delegated. Advise
Code JLG of any severe or continuing problems.

\(2\) Provide property administrators copies of all pertinent contract
property documentation.

\(g\) Review and analyze NASA Form 1018, NASA Property in the Custody of
Contractors.

\(h\) Negotiate, or ensure the negotiation of, facilities contracts when
required by FAR 45.302 and 1845.302. Advise Code JLG annually of new and
completed facilities contracts.

\(i\) Review property administrators\' approvals of relief of
responsibility for lost, damaged, and destroyed property and question
any excessive or repetitive approvals.

\(j\) When appropriate, make recommendations to source and performance
evaluation boards

regarding property management and award fee criteria and evaluations
regarding property management.

\(k\) Monitor plant clearance status to preclude delays in contract
closeout.

\(l\) Maintain contract property files for all transactions and
correspondence associated with each contract. Upon receipt of Standard
Form 1424, Inventory Disposal Report, and DD Form 1593, Contract
Administration Completion Record, or equivalents, merge all property
records for the contract and forward for inclusion with the official
completed file.

\(m\) Perform on-site property administration and plant clearance when
they are not delegated to DOD and the property is not subject to the
clause at 1852.245-71.

1845.7206 Responsibilities of property administrators and plant
clearance officers.

**1845.7206-1 Property administrators.**

\(a\) When property administration is not delegated to DOD, the property
administrator shall evaluate the contractor\'s management and control of
Government property and ascertain whether the contractor is effectively
complying with the contract provisions. The property administrator\'s
responsibilities include\--

\(1\) Developing and applying a system survey program for each
contractor under the property administrator\'s cognizance;

\(2\) Evaluating the contractor\'s property control system and approving
or recommending disapproval;

\(3\) Advising the contracting officer of any (i) contractor
noncompliance with approved procedures and (ii) other significant
problems the property administrator cannot resolve, and recommending
appropriate action, which may include disapproval of the contractor\'s
property control system;

\(4\) Resolving property administration matters as necessary with the
contractor\'s management, personnel from Government procurement and
logistics activities, and representatives of the NASA Headquarters
Office of the Inspector General, the Defense Contract Audit Agency
(DCAA), and other Government agencies; and

\(5\) Recognizing the functions of other Government personnel having
cognizance of Government property and obtaining their assistance when
required. (These functions include, but are not limited to, contract
audit, quality assurance, engineering, pricing, and other technical
areas. Assistance and advice on matters involving analyses of the
contractor\'s books and accounting records and on any other audit
matters deemed appropriate shall be obtained from the cognizant
auditor.)

\(b\) The participation of property administrators (or other Government
industrial property personnel) in pre-award surveys/post-award
orientations is required whenever significant amounts of Government
property will be involved, in order to reveal and resolve property
management problems early in the acquisition cycle.

**1845.7206-2 Plant clearance officers.**

When plant clearance is not delegated to DOD, NASA plant clearance
officers shall be responsible for\--

\(a\) Providing the contractor with instructions and advice regarding
the proper preparation of inventory schedules;

\(b\) Accepting or rejecting inventory schedules;

\(c\) Conducting or arranging for inventory verification;

\(d\) Initiating prescribed screening and effecting resulting actions;

\(e\) Final plant clearance of contractor inventory;

\(f\) Pre-inventory scrap determinations, as appropriate;

\(g\) Evaluating the adequacy of the contractor\'s procedures for
property disposal;

\(h\) Determining the method of disposal;

\(i\) Surveillance of any contractor-conducted sales;

\(j\) Accounting for all contractor inventory reported by the
contractor;

\(k\) Advising and assisting, as appropriate, the contractor, the Supply
and Equipment Management Officer (SEMO) and other Federal agencies in
all actions relating to the proper and timely disposal of contractor
inventory;

\(l\) Approving the method of sale, evaluating bids, and approving sale
prices for any contractor-conducted sales;

\(m\) Recommending the reasonableness of selling expenses related to any
contractor-conducted sales;

\(n\) Securing antitrust clearance, as required; and

\(o\) Advising the contracting officer on all property disposal matters.

**1845.7207 Declaration of excess property.**

A problem often disclosed by system analysis is the failure of a
contractor to report Government property not needed in performance of
the contract (excess). The property administrator shall fully document
and report any such finding to the administrative contracting officer.
After a report of excess received from a contractor has been referred to
the plant clearance officer for screening and ultimate disposition, the
property administrator shall ensure prompt disposition. For centrally
reportable plant equipment, the property administrator shall\--

\(a\) Assure the preparation and submission of individual reports
required of the contractor;

\(b\) Verify the permit certifications required by the forms; and

\(c\) Transmit the report to the NASA Industrial Property Officer.

**1845.7208 Closure of contracts.**

**1845.7208-1 Completion or termination.**

Upon completion or termination of a contract, the property administrator
shall\--

\(a\) Monitor the actions of the contractor in returning excess
Government property not referred to the plant clearance officer; and

\(b\) Advise the cognizant plant clearance officer as to the existence
at a contractor\'s plant of residual property requiring disposal.

**1845.7208-2 Final review and closing of contracts.**

\(a\) When informed that disposition of Government property under a
contract has been completed, the property administrator shall perform a
final review and sign a determination that\--

\(1\) Disposition of Government property has been properly accomplished
and documented;

\(2\) Adjustment documents, including any request of the contractor for
relief from responsibility, have been processed to completion;

\(3\) Proceeds from disposals or other property transactions, including
adjustments, have been properly credited to the contract or paid to the
Government as directed by the contracting officer;

\(4\) All questions regarding title to property fabricated or acquired
under the contract have been resolved and appropriately documented; and

\(5\) The contract property control record file is complete and ready
for retirement.

\(b\) When final review pursuant to paragraph (a) of this section
reveals that such action is proper, the property administrator shall
accomplish and sign a DD Form 1593, Contract Administration Completion
Record, or equivalent.

\(c\) The executed DD Form 1593 shall be forwarded to the contracting
officer, the Property Summary Data Record shall be so annotated, and the
contracting officer shall include it in the contract file.

**1845.7209 Special subjects.**

**1845.7209-1 Government property at alternate locations of the prime
contractor and subcontractor plants.**

\(a\) Government property provided to a prime contractor may be located
at other plants of the prime contractor or at subcontractor locations.
The prime contractor is accountable and responsible to the Government
for this property.

\(b\) A Government property administrator cognizant of the location of
the property shall normally be designated to (1) perform required
surveys of the property control system and (2) exercise surveillance
over the property as a supporting responsibility.

\(c\) If the property administrator determines that supporting property
administration is required, he or she shall write the cognizant contract
administration office asking that a property administrator be assigned.
The request for supporting property administration shall include\--

\(1\) The name and address of the prime contractor;

\(2\) The prime contract number;

\(3\) The name and address of the alternate location of the prime
contractor, or of the subcontractor where the property will be located;

\(4\) A listing of the property being furnished, or, if property is
being acquired locally, a statement to this effect; and

\(5\) A copy of the subcontract or other document under which the
property will be furnished or acquired.

\(d\) Concurrent with the action cited in paragraph (c) of this section,
the property administrator shall ascertain whether the prime contractor
will perform the necessary reviews and surveillance with the
contractor\'s own personnel, or elect to rely upon the system approval
and continuing surveillance by a supporting property administrator of
the property control system at the alternate location or subcontractor
plant. If the prime contractor advises that it will accept the findings
of a supporting property administrator, a statement in writing to that
effect shall be obtained. If the prime contractor does not so elect, it
shall be required to perform the requisite reviews and surveillance and
document its actions and findings.

\(e\) If a single item or limited quantities of property will be located
at an alternate location or subcontractor plant, the property
administrator may determine that supporting property administration is
unnecessary, provided\--

\(1\) The prime contractor\'s records adequately reflect the location
and use of the property;

\(2\) The nature of the property is such that the possibility of its use
for unauthorized purposes is unlikely; and

\(3\) The nature of the property is such that a program of preventive
maintenance is not required.

\(f\) When supporting property administration will not be requested, the
services of a property administrator in the contract administration
office cognizant of the site where the property is located may be
requested on an occasional basis for special reviews or such other
support as may be necessary. Repeated requests for assistance indicate a
requirement for requesting supporting property administration.

**1845.7209-2 Loss, damage, or destruction of Government property.**

\(a\) Normally, contract provisions provide for assumption of risk of
loss, damage, or destruction of Government property as described by the
following:

\(1\) Sealed-bid and certain negotiated fixed-price contracts provide
that the contractor assumes the risk for all Government property
provided under the contract (see the clause at FAR 52.245-2, Government
Property (Fixed-Price Contracts)).

\(2\) Other negotiated fixed-price contracts provide that the contractor
assumes the risk for all Government property provided under the
contract, with the exceptions set forth in the clause at [FAR
52.245-2](http://www.arnet.gov/far/current/html/52_245.html#1046483),
Alternate I and Alternate II.

\(3\) Cost-reimbursement contracts (see the clause at FAR 52.245-5,
Government Property (Cost-Reimbursement, Time-and-Material, or
Labor-Hour Contracts)) provide that the Government assumes the risk for
all Government property provided under the contract when there is no
willful misconduct or lack of good faith of any of the contractor\'s
managerial personnel as defined in the contract.

\(4\) There are certain events for which the Government does not assume
the risk of loss, damage, or destruction of Government property, such as
risks the contract expressly requires the contractor to insure against.
Therefore, before reaching a conclusion or making a determination, the
contracting officer shall obtain property administrator review of the
contract clause and shall obtain advice from appropriate legal counsel
on questions of legal meaning or intent.

\(5\) \"Willful misconduct\" may involve any intentional or deliberate
act or failure to act causing, or resulting in, loss, damage, or
destruction of Government property.

\(6\) \"Lack of good faith\" may involve gross neglect or disregard of
the terms of the contract or of appropriate directions of the
contracting officer or the contracting officer\'s authorized
representatives. Examples of lack of good faith may be demonstrated by
the failure of the contractor\'s managerial personnel to establish and
maintain proper training and supervision of employees and proper
application of controls in compliance with instructions issued by
authorized Government personnel.

\(b\) If part of the contractor\'s system is found to be unsatisfactory,
the property administrator shall increase surveillance of that part to
prevent, to the extent possible, any loss, damage, or destruction of
Government property. The property administrator shall give special
attention to reasonably ensuring that any loss, damage, or destruction
occurring during a period when a contractor\'s system is not approved is
identified before approval or reinstatement of approval.

**1845.7209-3 Loss, damage, or destruction of Government property while
in contractor\'s possession or control.**

\(a\) The property administrator shall require the contractor to report
any loss, damage, or destruction of Government property in its
possession or control (including property in the possession or control
of subcontractors) as soon as it becomes known.

\(b\) When physical inventories, consumption analyses, or other actions
disclose consumption of Government property considered unreasonable by
the property administrator or loss, damage, or destruction of Government
property not reported by the contractor, the property administrator
shall prepare a statement of the items and amount involved. This
statement shall be furnished to the contractor for investigation and
submission of a written report to the property administrator relative to
the incidents reported.

\(c\) The contractor\'s reports referenced in paragraphs (a) and (b) of
this section shall contain factual data as to the circumstances
surrounding the loss, damage, destruction, or excessive consumption,
including\--

\(1\) The contractor\'s name and the contract number;

\(2\) A description of items lost, damaged, destroyed, or unreasonably
consumed;

\(3\) The cost of property lost, damaged, destroyed, or unreasonably
consumed and cost of repairs in instances of damage (in event actual
cost is not known, use a reasonable estimate);

\(4\) The date, time (if pertinent), and cause or origin of the loss,
damage, destruction, or consumption;

\(5\) Known interests in any commingled property of which the Government
property lost, damaged, destroyed, or unreasonably consumed is (or was)
a part;

\(6\) Insurance, if any, covering the Government property or any part or
interest in any commingled property;

\(7\) Actions taken by the contractor to prevent further loss, damage,
destruction, or unreasonable consumption and to prevent repetition of
similar incidents; and

\(8\) Other facts or circumstances relevant to determining liability and
responsibility for repair or replacement.

\(d\) The property administrator shall investigate the incident to the
degree required to reach a valid and supportable conclusion as to the
contractor\'s liability for the loss, damage, destruction, or
unreasonable consumption under the terms of the contract, and the course
of action required to conclude the adjustment action. When required, the
assistance of the quality assurance representative, industrial
specialist, insurance officer, legal counsel, or other technician will
be secured. When the contractor acknowledges liability, the property
administrator shall forward a copy of the credit memorandum or other
adjusting document to the administrative contracting officer and
auditor, if appropriate, to assure proper credit. If analysis of
contract provisions and circumstances establishes that the loss, damage,
destruction, or consumption constitutes a risk assumed by the
Government, the property administrator shall so advise the contractor in
writing, thereby relieving the contractor of responsibility for the
property. A copy of the documentation and notification to the contractor
shall be retained in the Contract Property Control Data File for the
contract.

(e)(1) If the property administrator concludes that the contractor is
liable for the loss, damage, destruction, or unreasonable consumption of
Government property, he or she shall forward the complete file with
conclusions and recommendations to the contracting officer for review
and determination. The file shall contain\--

\(i\) A statement of facts as supported by investigation;

\(ii\) Recommendations as to the contractor\'s liability and its amount;

\(iii\) Recommendations as to action to be taken with regard to third
party liability, if appropriate;

\(iv\) Requirements for disposition, repair, or replacement of damaged
property; and

\(v\) Other pertinent comments.

\(2\) A copy of the contracting officer\'s determination shall be
furnished to the contractor and the property administrator, and a copy
shall be retained in the contracting officer\'s files. The property
administrator\'s copy shall be filed in the Contract Property Control
Data File for the contract when all pertinent actions, such as
compensation to the Government or repair or replacement of the property,
have been completed.

**1845.7209-4 Financial reports.**

The property administrator is responsible for obtaining financial
reports as prescribed in 1845.505-14 for all assigned contracts. Reports
shall be accumulated, reviewed and distributed as required. Contractors
are required to submit separate reports on each contract that contains
the property reporting clause (see 1852.245-73) except as noted in
1845.7101-4(c).

**1845.7210 Contractor utilization of Government property.**

**1845.7210-1 Utilization surveys.**

\(a\) The property administrator is responsible for ensuring that the
contractor has effective procedures for evaluating Government property
utilization. However, when necessary, the contract administration office
shall provide specialists qualified to perform the technical portion of
utilization surveys to assist the property administrator in determining
the adequacy of these procedures.

\(b\) Upon assignment of an initial contract under which
Government-owned plant equipment in particular will be provided to a
contractor, the property administrator shall ensure that the contractor
has established effective procedures and techniques for controlling its
utilization. The property administrator, with the assistance of
technical specialists, if necessary, shall evaluate these procedures. A
record of the evaluation shall be prepared and become a part of the
property administration file. If the procedures are determined
inadequate, the record shall identify the deficiencies and the
corrective actions necessary. If the deficiencies are not corrected by
the contractor, the property administrator shall promptly refer the
matter to the contracting officer.

\(c\) The property administrator shall perform annual surveys of the
contractor\'s procedures related to utilization of Government-owned
plant equipment. At contractor facilities having a substantial quantity
of plant equipment, the surveys should normally be conducted on a
continual basis, reviewing equipment utilization records and physically
observing a group of preselected items during each portion of the
survey. Surveys shall be conducted to the degree determined necessary,
considering the findings of prior surveys and the contractor\'s
performance history in identifying and declaring equipment excess to
authorized requirements. The contractor shall be required to justify, by
specific Government programs, the retention of all Government-owned
plant equipment. The property administrator shall make maximum use of
contractor\'s machine loading data, order boards, production planning
records, machine time records, and other production control methods.

\(d\) The property administrator shall conduct a special survey when a
significant change occurs in the contractor\'s production schedules,
such as a termination, completion of a contract, or a major adjustment
in a program. Special surveys may be limited to a given department,
activity, or division of a contractor\'s operation.

\(e\) In the absence of adequate justification for retention, the
contractor shall identify and report Government-owned plant equipment in
accordance with FAR 45.502(g) and 45.509-2(b)(4). Items that are part of
approved inactive package plants or standby lines are exempted from
utilization surveys. The contracting officer shall ascertain
periodically whether existing authorizations for standby or lay-away
requirements are current.

**1845.7210-2 Records of surveys.**

The property administrator shall prepare a record incorporating written
findings, conclusions, and recommendations at the conclusion of each
survey. If appropriate, the property administrator\'s record may be
limited to a statement expressing concurrence with the reports of other
specialists. The property administrator shall retain one copy of each
record in the property administration file.