Procurement Notice

National Aeronautics and

Space Administration

Washington, DC 20546

#  PN 04-24

> **June 13, 2007**

**CONTRACT ADMINISTRATION: INSTRUCTIONS FOR**

**PREPARING NASA FORM 1430; AUDIT TRACKING AND RESOLUTION**

***BACKGROUND:*** This PN revises the NASA FAR Supplement (NFS) to \--

1\. Provide a complete listing of those contract administration
functions normally retained by the contracting office;

2\. Address the new NASA Form (NF) 1430, Letter of Contract
Administration Delegation, General; and

3\. Clarify contracting officer responsibilities in the resolution and
disposition process after receiving a reportable audit from the Defense
Contract Audit Agency (DCAA).

***ACQUISITIONS AFFECTED BY CHANGES:*** Solicitations issued and
contracts awarded after the effective date of this PN; and any existing
or new contract that is impacted by a reportable audit as defined in OMB
Circular No. A-133.

***ACTION REQUIRED BY CONTRACTING OFFICERS:*** When delegating contract
administration functions (including quality assurance, property
administration and plant clearance), contracting officers must use the
new NF 1430 and the appropriate appendices.

For reportable audits, the NASA contracting officer responsible for
resolution and disposition of the audit will be required to communicate
and coordinate his or her actions with other NASA contracting officers
when the audit findings affect more than one NASA contract. When a NASA
contract is impacted but the responsibility for resolution and
disposition rests with the Department of Defense (DOD), the NASA
contracting officer shall maintain a dialogue with the DOD
administrative contracting officer, and track the status and disposition
of significant audit findings.

***CLAUSE CHANGES:*** None

***PARTS AFFECTED:*** Part 1842.

**REPLACEMENT PAGES:** You may use the enclosed pages to replace 42:3,
42:4, 42:5, 42:6, 42:11, 42:12, 42:13, and 42:14 of the NFS.

***TYPE OF RULE AND PUBLICATION DATE:*** These changes do not have a
significant impact beyond the internal operating procedures of NASA and
do not have a significant cost or administrative impact on contractors
or offerors, and therefore do not require codification in the Code of
Federal Regulations (CFR) or publication for public comment.

***CANCELLATION:*** PIC 06-14.

***HEADQUARTERS CONTACT:*** Lou Becker, Office of Procurement, (202)
358-4593, email: lou.becker@nasa.gov.

Sheryl Goddard

Acting Assistant Administrator for Procurement

Enclosures

**DISTRIBUTION:**

**PN List**

a written request shall be forwarded to the cognizant program director
for approval with the concurrence of the Assistant Administrator for
Procurement (Code HS). The following supporting information shall be
forwarded with the request to make the assignment:

\(i\) A statement of the special circumstances that necessitate the
assignment.

\(ii\) The contract administration services to be performed.

\(iii\) A summary of any discussions held with the cognizant contract
administration organization.

\(iv\) A staffing plan covering three years or such shorter period as
may be appropriate.

\(2\) The provisions of this paragraph do not apply to NASA audit
personnel assigned to the field installations, to NASA technical
personnel covered by 1842.101 and paragraph (b) of this section, unless
they are performing any contract administration functions listed in FAR
42.302(a), or to personnel assigned to contractors\' plants on NASA or
other Federal installations.

\(b\) NASA may assign technical personnel (such as quality assurance,
reliability, or engineering representatives) to contractors\' plants or
laboratories to provide direct liaison with NASA and technical
assistance and guidance to the contractor and DOD. The duties and
responsibilities of these technical representatives shall be clearly
defined and shall not conflict with, duplicate, or overlap with
functions delegated to DOD personnel. NASA shall advise appropriate DOD
and contractor organizations of the duties and responsibilities of NASA
technical personnel.

\(c\) When a NASA resident office, including any assigned technical
personnel, and a DOD contract administration office are performing
contract administration functions for NASA contracts at the same
contractor\'s facility, the two offices shall execute a written
agreement clearly establishing the relationship between the two
organizations and the contractor. The agreement should eliminate
duplication in the performance of contract administration functions and
minimize procedural misunderstandings between the two organizations.
Such agreements shall be consistent with existing delegations to the
contract administration offices concerned and shall specify the
relationship of NASA nonprocurement resident personnel to their DOD and
contractor counterparts if such personnel will be involved in any aspect
of contract administration.

## Subpart 1842.2\--Contract Administration Services

**1842.202 Assignment** **of** **contract** **administration.**

\(b\) *Special instructions*.

**(i)** The functions described in 42.302(b)(1) and the following
subparagraphs of 42.302(a) are normally retained: (3), (10), (12), (13),
(14), (15), (17), (18), (19), (20), (21), (22), (23), (24), (29), (32),
(43), (44), (45), (46), (48), (51), (56), (58), (59), (62), (63), (64),
(65), (69), and (70).

\(d\) *Transmittal and documentation*. In addition to the instructions
at FAR 42.202(d)(1) through (4), contracting officers shall \--

**(i)** Send delegations to DOD contract administration offices in
accordance with the instructions in the DOD Directory of Contract
Administration Services Components (DLAH 4105.4).

**(ii)** At time of contract award, prepare and forward NASA Form 1430,
Letter of Contract Administration Delegation, General, and appropriate
appendices (NASA Form 1430A, 1430B, 1430C, and 1430D) to the contract
administration office.

**(iii)** Forward NASA Form 1431, Letter of Acceptance of Contract
Administration, with each NASA Form 1430 and appropriate appendices.
Contracting officers shall use the returned NASA Form 1431 as contract
file documentation that the delegation has been accepted, modified or
rejected by the contract administration office and as a reference for
points of contact for each of the functional areas delegated.

**(iv)** Use NASA Form 1433, Letter of Audit Delegation, to delegate the
audit function and to amend previous delegations. Distribute copies of
the contract and NASA Form 1433 as follows:

**(A)** *Audit office:* One copy of the contract and three NASA Forms
1433. When the Department of Health and Human Services is designated as
the audit office, item 12 on NASA Form 1433 shall be marked \"Not
applicable.\"

**(B)** *Contractor:* One NASA Form 1433.

**(C)** *Cognizant NASA fiscal or financial management office:* One NASA
Form 1433.

**(v)** For contracts with the Canadian Commercial Corporation (CCC),
audits are automatically arranged by the Department of Defense
Production (Canada) (DDP) in accordance with agreements between NASA and
DDP. Audit reports are furnished to DDP. Upon advice from DDP, CCC will
certify the invoice and forward it with Standard Form 1034, Public
Voucher, to the contracting officer for further processing and
transmittal to the fiscal or financial management officer.

**(vi)** For contracts placed directly with Canadian firms, audits are
requested by the contracting officer from the Audit Services Branch,
Comptroller of the Treasury, Department of Finance, Ottawa, Ontario,
Canada. Invoices are approved by the auditor on a provisional basis
pending completion of the contract and final audit. These invoices,
accompanied by SF 1034, are forwarded to the contracting officer for
further processing and transmittal to the fiscal or financial management
officer. Periodic advisory audit reports are furnished directly to the
contracting officer.

**1842.202-70 Retention of contract administration.**

\(a\) The assignment of contract administration is optional for the
following contracts:

**(1)** Research and development study contracts not involving
deliverable hardware or Government furnished property.

**(2)** Contracts with periods of performance of 90 days or less.

**(3)** Contracts with periods of performance of 91 to 180 days that do
not include all of the following:

\(i\) A small business subcontracting plan.

\(ii\) Government-furnished property.

\(iii\) Progress payments, if a fixed-price type contract.

**(4)** Purchase orders without Government source inspection
requirements.

**(5)** Contracts requiring only on-site performance.

**(6)** Contracts requiring work in the vicinity of the awarding center
where DOD contract administration services are not reasonably available.

\(b\) The determination to assign Quality Assurance, Property
Administration or Plant Clearance for administration shall be made after
review by the cognizant technical personnel.

**1842.270 Contracting officer technical representative (COTR)
delegations.**

\(a\) The cognizant contracting officer may appoint a qualified
Government employee to act as their representative in managing the
technical aspects of a particular contract. If necessary, the
contracting officer may appoint an alternate COTR to act during short
absences of the COTR. Technical organizations are responsible for
ensuring that the individual they recommend to the contracting officer
possesses training, qualifications and experience commensurate with the
duties and responsibilities to be delegated and the nature of the
contract.

\(b\) NASA Form 1634, Contracting Officer Technical Representative
(COTR) Delegation, shall be used to appoint COTRs. A COTR's duties and
responsibilities may not be redelegated by the COTR and the COTR may be
held personally liable for unauthorized acts. However, this does not
prohibit the COTR from receiving assistance for the purpose of
monitoring contractor progress and gathering information. When an
individual is appointed as a COTR on more than one contract, separate
delegations shall be issued for each contract. A separate NASA Form 1634
will be used to appoint an alternate COTR.

\(c\) A COTR delegation remains in effect throughout the life of the
contract unless canceled in writing by the cognizant contracting officer
or at any level above that contracting officer. The contracting officer
may modify the delegation only by issuance of a new delegation canceling
and superseding the existing delegation.

\(d\) A COTR shall not be authorized to initiate procurement actions or
in any way cause a change to the contract or increase the Government\'s
financial obligations. However, delegations may be made to construction
contract COTRs to sign emergency on-site change orders with an estimated
value not to exceed the value specified in writing by the contracting
officer in the NASA Form 1634 but in no event to exceed \$25,000.

\(e\) Each COTR shall acknowledge receipt and accept the delegation by
signing the original delegation letter. The original of the COTR
delegation letter shall be filed in the applicable contract file. Copies
of the signed COTR delegation letter shall be distributed to the COTR,
the contractor, and each cognizant contract administration office.
Acknowledgment and distribution for terminations of COTR delegations and
COTR delegations which revise authority, duties and responsibilities
shall follow the same rules.

(f)(1) Mandatory training for COTRs and their alternates shall include
the following core topic areas:

\(i\) Contracting authority and contract modifications (including
non-personal services and inherently governmental functions);

\(ii\) Inspection and surveillance;

\(iii\) Changes and performance-based acquisition;

\(iv\) Contract financial and property management (including
\"Limitation of Cost\" clause, Anti-Deficiency Act, \"Limitation of
Funds\" clause); and

\(v\) Disputes.

\(2\) Those COTRs for whom it has been more than five (5) years since
they received comprehensive training shall receive refresher training.

\(3\) Procurement officers are responsible for assuring that the
course(s) utilized by their center address the mandatory core topics in
sufficient detail for the purpose of COTR training. Procurement officers
may accept the following training alternative(s) in satisfaction of
comparable requirement(s) specified in paragraph (f)(1) of this section:

\(i\) Another center\'s COTR training; or

\(ii\) Annual ethics training.

\(g\) The contracting officer shall verify that the COTR has received
the mandatory training before signing NASA Form 1634. If an urgent need
arises for the appointment of a COTR and no trained and otherwise
qualified individual is available, then the procurement officer may make
a temporary COTR appointment not to exceed six months. Temporary
appointments must be so identified and clearly reflect the appointment
expiration date.

\(h\) No technical direction may be issued by a COTR relative to
performance-based acquisition requirements or when serving under a
temporary appointment.

**1842.271 NASA clause.**

Insert the clause at 1852.242-70, Technical Direction, when paragraph
3(m) of the NASA Form 1634 specifically authorizes a COTR to issue
technical direction.

**Subpart** **1842.3\--Contract Administration Office Functions**

**1842.302 Contract administration functions.**

\(a\) In addition to the responsibilities listed in FAR 42.302(a),
responsibility for reviewing earned value management system (EVMS) plans
and verifying initial and continuing contractor compliance with NASA and
DoD EVMS criteria and conformity with ANSI/EIA Standard 748, Industry
Guidelines for EVMS, is normally delegated to DCMA.

**Subpart** **1842.5\--Postaward Orientation**

**1842.503 Postaward conferences.**

**(1)** A postaward conference shall be held with representatives of the
contract administration office when \--

**(i)** A contract is expected to exceed \$10,000,000;

**(ii)** Contract performance is required at or near a NASA installation
or NASA-controlled launch site;

**(iii)** The delegation will impose an abnormal demand on the resources
of the contract administration office receiving the delegation; or

**(iv)** Complex contract management problems are expected, particularly
risk management areas identified during program and acquisition
planning, e.g., significant or unusual mission success, technical, cost,
schedule, safety, security, occupational health, environmental
protection, and export control risks.

**(2)** Procurement officer approval is required to waive a post-award
planning conference for contracts meeting any of the criteria in
paragraph (1) of this section. The request for procurement officer
approval to waive a post-award conference shall address action taken and
planned to ensure effective communication with the contract
administration office during the performance of the contract.

**1842.7002  Travel outside of the United** **States.**

The contracting officer shall insert the clause at 1852.242-71, Travel
Outside of the United States, in cost-reimbursement solicitations and
contracts where a contractor may travel outside of the United States and
it is appropriate to require Government approval of the travel.

**1842.7003 Emergency medical services and evacuation.**

The contracting officer must insert the clause at 1852.242-78, Emergency
Medical Services and Evacuation, in all solicitations and contracts when
employees of the contractor are required to travel outside the United
States or to remote locations in the United States.

### Subpart 1842.71\--Submission of Vouchers

**1842.7101 Submission of vouchers.**

\(a\) Vouchers shall be submitted in accordance with the clause at
1852.216-87, Submission of Vouchers for Payment.

\(b\) The auditor shall retain an unpaid copy of the voucher.

\(c\) When a voucher submitted in accordance with the clause at
1852.216-87 contains one or more individual direct freight charges of
\$100 or more, an additional copy of Standard Form 1034A and Standard
Form 1035A shall be submitted and marked for return to the contractor
after payment. This copy shall be transmitted quarterly by the
contractor with the freight bills to the General Services
Administration. When a voucher is identified as the \"Completion
Voucher,\" an additional copy shall be submitted for transmittal to the
NASA contracting officer.

**Subpart** **1842.72\--NASA Contractor Financial Management Reporting**

**1842.7201 General.**

\(a\) **Contracting officer responsibilities.**

\(1\) Contracting officers must ensure contracts require cost reporting
consistent with both policy requirements and project needs. Contracting
Officers shall monitor contractor cost reports on a regular basis to
ensure cost data reported is accurate and timely. Adverse trends or
discrepancies discovered in cost reports should be pursued through
discussions with financial and project team members.

\(2\) Whenever cost performance threatens contract performance,
contracting officers shall require corrective action plans from the
contractors.

\(b\) **Reporting requirements.**

\(1\) Use of the NASA Contractor Financial Management Reports, the NASA
Form 533 series, is required on cost-type, price redetermination, and
fixed-price incentive contracts when the following dollar, period of
performance, and scope criteria are met:

  ----------------------- ----------------------- ----------- -----------
  **Contract              **Period of             **533M**    **533Q**
  value/scope**           Performance**                       

  \$500K to \$999K        1 year or more          Required    Optional

  \$1,000,000 and over    Less than 1 year        Required    Optional

  \$1,000,000 and over    1 year or more          Required    Required
  ----------------------- ----------------------- ----------- -----------

\(2\) When it is probable that a contract will ultimately meet the
criteria in paragraph (b)(1) of this section through change orders,
supplemental agreements, etc., the reporting requirement must be
implemented in the contract based on the estimated final contract value
at the time of award.

\(3\) NF 533Q reporting may be waived by the contracting officer, with
the concurrence of the center chief financial officer and cognizant
project manager, for support service or task order contracts, when NF
533M reports and other data are sufficient to ensure accurate monthly
cost accruals, evaluation of the contractor's cost performance, and
forecasting of resource requirements.

\(4\) Where a specific contractual requirement differs from the standard
system set forth in NPR 9501.2, NASA Contractor Financial Management
Reporting, but is determined to be in the best interests of the
Government and does not eliminate any of the data elements required by
the standard NF 533 formats, it may be approved by the contracting
officer with the concurrence of the center chief financial officer and
the project manager. Such approval shall be documented and retained,
with the supporting rationale, in the contract file.

\(5\) The contractor\'s internal automated printout reports may be
substituted for the 533 reporting formats only if the substitute reports
contain all the data elements that would be provided by the
corresponding 533\'s. The contracting officer shall coordinate any
proposed substitute with the installation financial management office.

\(c\) **Contract requirements.**

\(1\) Reporting requirements, including a description of reporting
categories, shall be detailed in the procurement request, and reports
shall be required by inclusion of the clause prescribed in 1842.7202.
The contract schedule shall include report addressees and numbers of
copies. Reporting categories shall be coordinated with the center
financial management office to ensure that data required for agency cost
accounting will be provided by the reports. Reporting dates shall be in
accordance with NPR 9501.2, except that earlier submission is encouraged
whenever feasible. No due date shall be permitted which is later than
the date by which the center financial management office needs the data
to enter an accurate monthly cost accrual in the accounting system.

\(2\) The contractor shall be required to submit an initial report in
the NF 533Q format, time phased for the expected life of the contract,
within 30 days after authorization to proceed has been granted. NF 533M
reporting will begin no later than 30 days after incurrence of cost. NF
533Q reporting begins with the initial report.

**1842.7202 Contract clause.**

The contracting officer shall insert the clause at 1852.242-73, NASA
Contractor Financial Management Reporting, in solicitations and
contracts when any of the NASA Form 533 series of reports is required
from the contractor.

## Subpart 1842.73\--Audit Tracking and Resolution

**1842.7301 NASA external audit follow-up system.**

\(a\) This section implements OMB Circular No. A-50 and NASA Policy
Directive (NPD) 9910.1, "Government Accountability Office/NASA Office of
Inspector General Audit Liaison, Resolution, and Followup", which
provides more detailed guidance. Recommendations from external audits
(OMB Circular No. A-133, Audits of States, Local Governments, and
Non-Profit Institutions) shall be resolved by formal review and approval
procedures analogous to those at 1815.406-171.

\(b\) The external audit followup system tracks all contract and OMB
Circular No. A-133 audits where NASA has resolution and disposition
authority. The objective of the tracking system is to ensure that audit
recommendations are resolved within 6 months after receipt of the audit
report and corrected as expeditiously as possible.

(c)(1) The identification and tracking of contract audit reports under
NASA cognizance are accomplished in cooperation with the DCAA.

\(2\) Identification and tracking of OMB Circular No. A-133 audit
reports are accomplished in cooperation with the NASA Office of the
Inspector General (OIG).

(d)(1) All reportable contract audit reports as defined by Chapter 15,
Section 6, of the DCAA Contract Audit Manual (CAM) shall be entered into
NASA's Corrective Action Tracking System (CATS), with the information
updated at least quarterly until the audit recommendations are all
resolved and dispositioned (see paragraph (e) (1) of this section); and

\(2\) Only OMB Circular No. A-133 audit reports involving the following
shall be reported quarterly to the Headquarters Office of Procurement
Analysis Division:

\(i\) A significant management control issue; or

\(ii\) Questioned costs of \$10,000 or more due to an audit finding (see
Subpart E-Auditor, paragraph 510 of OMB Circular No. A-133).

\(3\) NASA contracting officers will maintain a dialogue with DOD
Administrative Contracting Officers (ACO) who have been delegated
activities on NASA contracts. A review will be conducted no less
frequently than semiannually, and the status and disposition of
significant audit findings will be documented in the contract file.
During this review, NASA contracting officers should discuss with the
ACO both prime and subcontract audit reports that have been delegated to
DOD. Should these reports contain any findings or recommendations, the
NASA contracting officer should obtain their status and document the
contract file accordingly.

(e)(1) The terms "resolution" and "corrective action/disposition" are
defined as follows:

\(i\) Resolution - The point at which the IG and Management agree on the
action to be taken on audit report findings and recommendations.

\(ii\) Corrective action/disposition - Management action responsive to
an agreed upon audit recommendation.

\(2\) The resolution and disposition of DCAA audit reports issued to
NASA contracting officers are handled as follows:

\(i\) Audit findings pertaining to an individual NASA contract are the
responsibility of the NASA contracting officer.

\(ii\) Audit findings impacting more than one NASA contract are the
responsibility of the NASA contracting officer providing the
preponderance of funding to the particular contractor for the contractor
fiscal year covered by the audit report (lead contracting officer). The
lead contracting officer should furnish a copy of the audit report to
all NASA contracting officers with contracts impacted by the audit
report. Those contracting officers should be provided the opportunity to
participate in the negotiations or provide input into the negotiation
strategy. At the conclusion of the negotiations, the lead contracting
officer is to provide a copy of the negotiation memorandum to the DCAA
office that issued the audit report, as well as to the contracting
officers for the other impacted NASA contracts.

\(3\) The resolution and disposition of OMB Circular No. A-133 audits
are handled as follows:

\(i\) Audit findings pertaining to an individual NASA award are the
responsibility of the procurement officer for the Center that awarded
the contract.

\(ii\) Audit findings having a Governmentwide impact are the
responsibility of the cognizant Federal agency responsible for
oversight. For organizations subject to OMB Circular No. A-133, there is
either a cognizant agency or an oversight agency. The cognizant agency
is the Federal agency that provides the predominant amount of direct
funding to the recipient organization unless OMB makes a specific
cognizant agency for audit assignment. To provide for the continuity of
cognizance, the determination of the predominant amount of direct
funding will be based on the direct Federal awards expended in the
recipient's fiscal years ending in 1995, 2000, 2005, and every fifth
year thereafter. When there is no direct funding, the Federal agency
with the predominant indirect funding is to assume the oversight
responsibilities. In cases where NASA is the cognizant or oversight
Federal agency, audit resolution and disposition is the responsibility
of the procurement officer for the Center having the largest amount of
direct funding, or, if there is no direct funding, the largest amount of
indirect funding for the audited

period. A copy of the memorandum dispositioning the findings shall be
provided by each Center having resolution responsibility for the
particular report to the Headquarters OIG office, the Headquarters
Office of Procurement Analysis Division, and each Center procurement
office that has awards impacted by the dispositioned findings.