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

National Aeronautics and

Space Administration

Washington, DC 20546

##  PN 97-100

###  June 24, 2004

# MISCELLANEOUS ADMINISTRATIVE REVISIONS

***BACKGROUND*:** NASA has modified its current practice for issuance
and maintenance of the NASA FAR Supplement (NFS) by only publishing in
the Federal Register those regulations which may have a significant
effect beyond the internal operating procedures of the Agency or have a
significant cost or administrative impact on contractors or offerors and
are subject to public comment. The NFS will continue to integrate into a
single document both regulations subject to public comment and internal
Agency guidance and procedures that do not require public comment. The
single official NASA-maintained version of the NFS is available on the
Internet. NASA personnel must comply with all regulatory and internal
guidance and procedures contained in the NFS.

The periodic review of the NFS conducted in concert with the above new
practice identified various administrative and editorial changes. In
addition to the changes required for completeness and understanding of
regulatory text, editorial and administrative changes are made to
internal guidance and procedures to update document references and
titles.

***CLAUSE CHANGES:*** None.

**PARTS AFFECTED:** Parts 1831, 1832, 1836, and 1837.

***REPLACEMENT PAGES:*** You may use the enclosed pages to replace Part
1831, 32:3, 32:4, 36:6, and Part 1837 of the NFS.

***TYPE OF RULE AND PUBLICATION DATES:*** These changes were published
as final rules in the Federal Register (69 FR 35270 - 35272) on June 24,
2004.

***HEADQUARTERS CONTACT:*** Celeste Dalton, Code HK, (202) 358-1645,
email: Celeste.M.Dalton@nasa.gov.

James A. Balinskas

Director, Contract Management Division

Enclosures

# PART 1831

# CONTRACT COST PRINCIPLES AND PROCEDURES

**TABLE OF CONTENTS**

**SUBPART 1831.2 CONTRACTS WITH COMMERCIAL ORGANIZATIONS**

1831.205 Selected costs.

1831.205-6 Compensation for personal services.

1831.205-670 Evaluation of contractor and subcontractor compensation for

service contracts.

1831.205-671 Solicitation provision.

1831.205-32 Precontract costs.

1831.205-70 Contract clause.

**PART 1831**

# CONTRACT COST PRINCIPLES AND PROCEDURES

**Subpart 1831.2\--Contracts with Commercial Organizations**

**1831.205 Selected costs.**

**1831.205-6 Compensation for personal services.**

**1831.205-670 Evaluation of contractor and subcontractor compensation
for service contracts.**

\(a\) The contracting officer must evaluate the reasonableness of
compensation for service contracts:

\(1\) Prior to the award of a cost reimbursement or non-competitive
fixed-price type contract which has a total potential value in excess of
\$500,000, and

\(2\) Periodically after award for cost reimbursement contracts, but at
least every three years.

\(b\) The contracting officer must ensure the reasonableness of
compensation is evaluated for cost reimbursement or non-competitive
fixed-price type service subcontracts under a prime contract meeting the
criteria in paragraph (a)(1) of this section where:

\(1\) The subcontract has a total potential value in excess of
\$500,000; and

\(2\) The cumulative value of all of a subcontractor\'s service
subcontracts under the prime contract is in excess of 10 percent of the
prime contract\'s total potential value.

(c)(1) Offerors must be required to submit as part of their proposals a
compensation plan addressing all proposed labor categories. Offerors
also must demonstrate in writing that their proposed compensation is
reasonable.

\(2\) Subcontractors meeting the criteria in paragraph (b) of this
section must be required to comply with paragraph (c)(1).

\(d\) The contracting officer\'s preaward evaluation of each offeror\'s
and their subcontractors\' compensation should be done as part of, or in
addition to DCAA audits, price analyses, or any other means deemed to be
necessary.

\(e\) The results of the contracting officer\'s evaluation, including
any excessive compensation found and its planned resolution, must be
addressed in the prenegotiation position memorandum, with the final
resolution discussed in the price negotiation memorandum.

\(f\) The contracting officer must ensure that the reasonableness of
compensation for cost reimbursement subcontracts meeting the criteria in
paragraphs (b)(1) and (2) of this section is periodically reviewed after
award, but at least every three years.

\(g\) The results of the periodic evaluations of contractor and
subcontractor compensation after contract award must be documented in
the contract file.

**1831.205-671 Solicitation provision.**

The contracting officer must insert a provision substantially the same
as the provision at 1852.231-71, Determination of Compensation, in
solicitations for services which contemplate the award of a cost
reimbursement or non-competitive fixed-price type service contract
having a total potential value in excess of \$500,000.

**1831.205-32 Precontract costs.**

**(1)** Precontract costs are applicable only to **\--**

**(i)** Sole source awards, except those resulting in firm-fixed price
or fixed-price with economic price adjustment contracts; or

**(ii)** Awards resulting from broad agency announcements.

**(2)** The procurement officer is the approval authority for the use of
precontract costs. Authorization must be in writing and shall address
the following:

**(i)** The necessity for the contractor to initiate work prior to
contract award.

**(ii)** The start date of such contractor effort.

**(iii)** The total estimated time of the advanced effort.

**(iv)** The cost limitation.

**(3)** Authorization to incur precontract costs must be provided to the
contractor in writing and shall include the following:

**(i)** The start date for incurrence of such costs.

**(ii)** The limitation on the total amount of precontract costs which
may be incurred.

**(iii)** A statement that the costs are allowable only to the extent
they would have been if incurred after formal contract award.

**(iv)** A statement that the Government is under no obligation to
reimburse the contractor for any costs unless a contract is awarded.

**1831****.205-70 Contract clause.**

The contracting officer must insert the clause at 1852.231-70,
Precontract Costs, in contracts for which specific coverage of
precontract costs is authorized.

**Subpart** **1832.2\--Commercial Item Purchase Financing**

**1832.202-1 Policy.**

(b)(6) Advance payment limitations do not apply to expendable launch
vehicle (ELV) service contracts.

**1832.206 Solicitation provisions and contract clauses.**

(g)(2) The installment payment rate shall be that which is common in the
commercial marketplace for the purchased item. If there is no commonly
used rate, the contracting officer shall determine

the appropriate rate. In no case shall the rate exceed that established
in the clause at FAR 52.232-30**.**

**Subpart** **1832.4\--Advance Payments for Non-Commercial Items**

**1832.402 General.**

(e)(1) The Director of the Headquarters Office of Procurement Contract
Management Division (Code HK) is the approval authority for all advance
payments except the following:

**(A)** The procurement officer is the approval authority for non-fee
bearing contracts with domestic entities when the cumulative contract
value is \$25,000,000 or less, and for all increases to such contracts
over \$25,000,000 previously approved by the Headquarters Office of
Procurement as long as the advance payment amount outstanding at any
time is not increased.

**(B)** The contracting officer is the approval authority for the
following actions. In these cases, a findings and determination (see FAR
32.410) is not required.

***(a)*** Small Business Innovation Research (SBIR) and Small Business
Technology Transfer (STTR) Phase I contracts. A class deviation has been
signed authorizing use of advance payments on these contracts. The
contracting officer shall annotate the contract file that the deviation
is on file at the NASA Headquarters Office of Procurement (Code HK).

***(b)*** Expendable launch vehicle (ELV) service contracts. 42 U.S.C.
2459c authorizes advance payments for these contracts. The contracting
officer shall document the contract file with the rationale for
approving the use of advance payments.

(e)(2) All advance payment authorization requests, except those
authorized by 1832.402(e)(1)(B), shall be coordinated with the
installation Deputy Chief Financial Officer.

**1832.406 Letters of credit.**

(b)(1) Each installation is considered a contracting agency for the
purposes of this requirement.

**1832.407 Interest.**

(d)(1) Advance payments without interest are authorized.

**1832.409 Contracting officer action.**

1.  **Recommendation for approval.**

**1832.409-170 NASA procedure for approval.**

In addition to the items listed in FAR 32.409-1, requests for
Headquarters approval of advance payments (see 1832.402(e)(1)) shall
include the following information:

\(a\) Name of the cognizant NASA Headquarters program or staff office;

\(b\) Name and phone number of the contracting officer or negotiator;

\(c\) A copy of the proposed advance payments clause;

\(d\) If a profit/fee is contemplated, the factors considered in
determining the profit/fee (see 1815.404-470);

\(e\) Information justifying the adequacy of security to cover the
maximum advance payment amount at any time outstanding.

**1832.410 Findings, determination, and** **authorization.**

\(b\) Generally, the format in FAR 32.410 should be used, tailored as
follows:

**(i)** In format subparagraph (a)(2), use the phrase \"Advance payments
(in an amount not to exceed \$....\.... at any time outstanding)\" in
all determinations and findings. The phrase means the maximum
unliquidated dollar amount a contractor would need in advance payments
at any point in time for the particular contract. The amount would not
usually be the full contract value. The amount inserted should be based
on an analysis of the contractor\'s financing needs (monthly or other
appropriate period) for the specific contract involved.

**(ii)** In the second sentence of format subparagraph (a)(4), delete
the reference to a special financial institution account if no special
financial institution account is required.

**(iii)** Use format subparagraph (a)(6), not (a)(7) or (a)(8).

**(iv)** At the end of format paragraph (b), use \"is in the public
interest.\"

**(v)** In format paragraph (c), use the phrase "(the amount at any time
outstanding)\" in all determinations and findings.

**1832.412 Contract clause.**

\(e\) The contracting officer shall use Alternates IV and V when advance
payments are

provided on Phase I contracts of the Small Business Innovation Research
(SBIR) or Small Business Technology Transfer (STTR) programs.

\(f\) See 1832.412(e).

**1832.412-70 NASA contract clauses.**

When the clause at FAR 52.232-12 or its Alternates II or V are used,
insert the clause at 1852.232-70, NASA Modification of FAR 52.232-12.

**Subpart** **1832.5\--Progress Payments** **Based on Costs**

**1832.501 General.**

**1832.501-1 Customary progress payment** **rates.**

\(a\) The customary progress payment rate for all NASA contracts is 85
percent for large business, 90 percent for small business, 95 percent
for small disadvantaged business, and 100 percent for Phase II contracts
in the Small Business Innovation Research (SBIR) and Small Business
Technology Transfer (STTR) programs. The contracting officer shall
insert the applicable percentage in paragraphs (a) and (b) of the clause
at FAR 52.232-16.

**\"Partnering\"** means a relationship of open communication and close
cooperation that involves both Government and Contractor personnel
working together for the purpose of establishing a mutually beneficial,
proactive, cooperative environment within which to achieve contract
objectives and resolve issues and implementing actions as required.

**1836.7002 General.**

\(a\) The establishment of a partnering environment usually leads to
higher quality products completed more quickly at lower overall costs
and with fewer accidents and litigation.

\(b\) The use of partnering is encouraged as it has been shown to reduce
the average contract cost and schedule growth and to reduce contract
claims and litigation.

\(c\) Partnering is a voluntary contract relationship within the
management process that is not to be used to unofficially alter terms of
the contract.

**1836.7003 Policy.**

\(a\) Partnering should be used on a contract when the contracting
officer, in coordination with the project manager, determines that the
benefits to be achieved from its use are expected to be greater than the
costs.

\(b\) In determining whether the benefits of partnering are greater than
the costs, the following factors should be considered:

\(1\) The estimated dollar value of the contract;

\(2\) The complexity of the work to be performed;

\(3\) The contemplated length of the contract; and

\(4\) The estimated costs to be incurred in conducting the partnership
development and team building initial and follow-up workshops.

**1836.7004 NASA solicitation provision and contract clause.**

The contracting officer may insert a clause substantially the same as
stated at 1852.236-75, Partnering for Construction Contracts, in
solicitations and contracts for construction, when it has been
determined that the benefits to be derived from partnering exceed the
costs.

PART 1837

**SERVICE CONTRACTING**

# TABLE OF CONTENTS

**SUBPART 1837.1 SERVICE CONTRACTS \-- GENERAL**

1837.101 Definitions.

1837.104 Personal services contracts.

1837.110 Solicitation provisions and contract clauses.

1837.110-70 NASA solicitation provision and contract clauses.

1837.170 Pension portability.

**SUBPART 1837.2 ADVISORY AND ASSISTANCE SERVICES**

1837.203 Policy.

1837.204 Guidelines for determining availability of personnel.

**PART 1837**

**SERVICE CONTRACTING**

**Subpart** **1837.1\--Service Contracts\--General**

**1837.101 Definitions.**

**"Pension portability"** means the recognition and continuation in a
successor service contract of the predecessor service contract
employees\' pension rights and benefits.

**1837.104 Personal services contracts.**

\(b\) Section 203(c)(9) of the National Aeronautics and Space Act of
1958 (42 U.S.C. 2473(c)(9)) authorizes NASA \"to obtain services as
authorized by Section 3109 of Title 5, United States Code.\" It is NASA
policy to obtain the personal services of experts and consultants by
appointment rather than by contract. The policies, responsibilities, and
procedures pertaining to the appointment of experts and consultants are
in NPR 3300.1, Appointment of Personnel To/From NASA, Chapter 4,
Employment of Experts and Consultants.

**1837.110 Solicitation provisions and contract clauses.**

**1837.110-70 NASA solicitation provision and contract clauses.**

\(a\) The contracting officer shall insert the clause at 1852.237-70,
Emergency Evacuation Procedures, in solicitations and contracts for
on-site support services where emergency evacuations of the NASA
installation may occur, e.g., snow, hurricanes, tornadoes, earthquakes,
or other emergencies.

\(b\) The contracting officer shall insert the clause at 1852.237-71,
Pension Portability, in solicitations, contracts or negotiated contract
modifications for additional work when the procurement officer makes the
determination in 1837.170(a)(2).

**1837.170 Pension portability.**

\(a\) It is NASA\'s policy not to require pension portability in service
contracts. However, pension portability requirements may be included in
solicitations, contracts, or contract modifications for additional work
under the following conditions:

(1)(i) There is a continuing need for the same or similar services for a
minimum of five years (inclusive of options), and, if the contractor
changes, a high percentage of the predecessor contractor\'s employees
are expected to remain with the program; or

\(ii\) The employees under a predecessor contract were covered by a
portable pension plan, a follow-on contract or a contract consolidating
existing services is awarded, and the total contract period covered by
the plan covers a minimum of five years (including both the predecessor
and successor contracts); and

\(2\) The procurement officer determines in writing, with full
supporting rationale, that such a requirement is in the Government\'s
best interest. The procurement officer shall maintain a record of all
such determinations.

\(b\) When pension portability is required, the plan shall comply with
the requirements of the clause at 1852.237-71, Pension Portability, (see
1837.110-70(b)), and the contract shall also include a clear description
of the plan, including service, pay, liabilities, vesting, termination,
and benefits from prior contracts.

**Subpart 1837.2\--Advisory and Assistance Services**

**1837.203**  **Policy.**

\(c\) Advisory and assistance services of individual experts and
consultants shall normally be obtained by appointment rather than by
contract (see NPR 3300.1, Appointment of Personnel To/From NASA, Chapter
4, Employment of Experts and Consultants).

**1837.204 Guidelines for determining availability of personnel.**

(a)**(i)** Outside peer review evaluators may be used to evaluate SBIR,
STTR, NRA, AO, and unsolicited proposals without making the
determination of non-availability.

**(ii)** For all other actions, the NASA official one level above the
NASA program official responsible for the evaluation shall make the
determination, with the concurrence of the legal office. The contracting
officer shall ensure that a copy of the determination is in the contract
file prior to issuance of a solicitation.

\(b\) The official designated in paragraph (a)(ii) of this section is
responsible for the actions required in FAR 37.204(b).

\(c\) The agreement shall be made by the program official responsible
for the evaluation and the contracting officer.

\(e\) The Assistant Administrator for Procurement (Code HS) is the
approval authority for class determinations. The class determination
request shall include the assessment required by FAR 37.204(b).