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

National Aeronautics and

Space Administration

Washington, DC 20546

##  PN 97-69

> **February 20, 2002**

## MAJOR BREACH OF SAFETY OR SECURITY

***BACKGROUND:*** This PN revises 1816.405-274, Award fee evaluation
factors, and 1852.223-75, Major Breach of Safety or Security.

Paragraph (b) of 1852.223-75 included outcomes that may result in a
major breach of security. However, paragraph (b) did not clearly state
that to be a major breach of security, the outcomes must result from an
act or omission by the contractor. The revised clause now states that a
major breach of security is an act or omission by the contractor that
results in various outcomes (compromise of classified information,
illegal technology transfer, etc.). This revision makes paragraph (b)
(major breach of security) consistent with paragraph (a) (major breach
of safety).

Additionally, 1852.223-75(b) stated that a major breach of security may
arise from damage or loss greater than \$250,000 to the Government, but
it was not clear if this outcome was a standalone provision or if it
applied to other outcomes in the clause (e.g., did a major breach occur
if illegal technology transfer or theft occurred, and the result was
damage or loss greater than \$250,000 to the Government). This revision
removes the reference to damage or loss greater than \$250,000 to the
Government, but also clarifies that two of the outcomes are equipment or
property damage from vandalism greater than \$250,000; or theft greater
than \$250,000.

The definitions of major breach of safety or security in
1816.405-274(c)(2) and (3) have been revised to make them consistent
with the definitions contained in the Major Breach of Safety or Security
clause at 1852.223-75.

Lastly, this revision correctly identifies OSHA as the Occupational
Safety and Health Administration in 1816.405-272 and 1852.223-75.

An editorial change is made throughout Part 1816 to revise the title of
the head of Code H to read Assistant Administrator for Procurement.

***ACTION REQUIRED BY CONTRACTING OFFICERS***: All solicitations and
contracts meeting the requirements of 1823.7001(d) issued after February
20, 2002, must include the revised clause 1852.223-75. Solicitations
issued before February 20, 2002, may be amended to include the revised
clause if including it would not unduly delay the acquisition.

***Clause Changes:*** This PN makes the following changes:

\(a\) 1852.223-75, Major Breach of Safety or Security, paragraph (a)
revised to include a corrected reference to the Occupational Safety and
Health Administration;

\(b\) 1852.223-75, Major Breach of Safety or Security, paragraph (b)
revised to state that a major breach of security is an act or omission
by the contractor that results in certain outcomes and to clarify that
two of the outcomes are equipment or property damage from vandalism
greater than \$250,000 or theft greater than \$250,000.

***PARTS AFFECTED:*** Changes are made in Parts 1816 and 1852.

***REPLACEMENT PAGES:*** You may use the enclosed pages to replace 16:1,
16:2, 16:7 thru 16:13, 52:30.1 thru 52:30.4, 52-93 and 52-94.

***TYPE OF RULE AND PUBLICATION DATE:*** This PN was published as a
final rule in the Federal Register (67 FR 7617-7618) on February 20,
2002.

***HEADQUARTERS CONTACT:*** Jeff Cullen, Code HK, (202) 358-1784,
e-mail: jcullen@hq.nasa.gov.

R. Scott Thompson

Director, Contract Management Division

Enclosures

PART 1816

TYPES OF CONTRACTS

**TABLE OF CONTENTS**

**SUBPART 1816.1 SELECTING CONTRACT TYPES**

1816.104 Factors in selecting contract types.

1816.104-70 Contract type of performance-based contracting (PBC).

**SUBPART 1816.2 FIXED-PRICE CONTRACTS**

1816.202 Firm-fixed-price contracts.

1816.202-70 NASA contract clause.

1816.203 Fixed-price contracts with economic price adjustment.

1816.203-4 Contract clauses.

**SUBPART 1816.3 COST-REIMBURSEMENT CONTRACTS**

1816.303-70 Cost-sharing contracts.

1816.306 Cost-plus-fixed-fee contracts.

1816.307 Contract clauses.

1816.307-70 NASA contract clauses.

**SUBPART 1816.4 INCENTIVE CONTRACTS**

1816.402 Application of pre-determined, formula-type incentives.

1816.402-2 Performance incentives.

1816.402-270 NASA technical performance incentives.

1816.404 Fixed-price contracts with award fees.

1816.405 Cost-reimbursement incentive contracts.

1816.405-2 Cost-plus-award-fee (CPAF) contracts.

1816.405-270 CPAF contracts.

1816.405-271 Base fee.

1816.405-272 Award fee evaluation periods.

1816.405-273 Award fee evaluations.

1816.405-274 Award fee evaluation factors.

1816.405-275 Award fee evaluation scoring.

1816.405-276 Award fee payments and limitations.

1816.406 Contract clauses.

1816.406-70 NASA contract clauses.

**SUBPART 1816.5 INDEFINITE-DELIVERY CONTRACTS**

1816.504 Indefinite quantity contracts.

1816.505 Ordering.

1816.505-70 Task Ordering.

1816.506-70 NASA contract clause.

**SUBPART 1816.6 TIME-AND-MATERIALS,** **LABOR-HOUR, AND LETTER
CONTRACTS**

1816.603 Letter contracts.

1816.603-2 Application.

1816.603-370 Approvals.

**PART 1816**

## TYPES OF CONTRACTS

**Subpart** **1816.1\--Selecting Contract Types**

**1816.104 Factors in selecting contract types.**

**1816.104-70 Contract type for performance-based contracting (PBC).**

\(a\) PBC is defined in FAR 2.101 and discussed in FAR 37.6. Although
FAR Part 37 primarily addresses services contracts, PBC is not limited
to these contracts. PBC is the preferred way of contracting for all
supplies and services at NASA. Generally, when contract performance risk
under a PBC specification can be fairly shifted to the contractor to
allow for the operation of objective incentives, a contract type with
objectively measurable incentives (e.g., FFP, FPIF, or CPIF) is
appropriate. However, when contractor performance (e.g., cost control,
schedule, or quality/technical) is best evaluated subjectively using
quantitative measures, a CPAF contract may be used.

\(b\) A level-of-effort contract is not PBC.

**Subpart** **1816.2\--Fixed-Price Contracts**

**1816.202 Firm-fixed-price contracts.**

**1816.202-70 NASA contract clause.**

The contracting officer shall insert the clause at **1852.216-78**,
Firm-Fixed-Price, in firm-fixed-price solicitations and contracts.
Insert the appropriate amount in the resulting contract.

**1816.203 Fixed-price contracts with** **economic price adjustment.**

**1816.203-4 Contract clauses.**

\(a\) In addition to the approval requirements in the prescriptions at
FAR 52.216-2 through 52.216-4, the contracting officer shall coordinate
with the installation\'s Deputy Chief Financial Officer (Finance) before
exceeding the ten-percent limit in paragraph (c)(1) of the clauses at
FAR 52.216-2 and 52.216-3 and paragraph (c)(4) of the clause at
52.216-4.

(d)(2) Contracting officers shall contact the Office of Procurement,
Code HK, for specific guidance on preparing clauses using cost indexes.
Such clauses require advance approval by the Assistant Administrator for
Procurement. Requests for approval shall be submitted to the
Headquarters Office of Procurement (Code HS).

**Subpart** **1816.3\--Cost-Reimbursement Contracts**

development, the procurement officer may authorize the use of a base fee
not to exceed 3 percent. Base fee shall not be used when an award fee
incentive is used in conjunction with another contract type (e.g.,
CPIF/AF).

\(b\) When a base fee is authorized for use in a CPAF contract, it shall
be paid only if the final award fee evaluation is \"satisfactory\" or
better. (See 1816.405-273 and 1816.405-275) Pending final evaluation,
base fee may be paid during the life of the contract at defined
intervals on a provisional basis. If the final award fee evaluation is
\"poor/unsatisfactory\", all provisional base fee payments shall be
refunded to the Government.

**1816.405-272 Award fee evaluation periods.**

\(a\) Award fee evaluation periods, including those for interim
evaluations, should be at least 6 months in length. When appropriate,
the procurement officer may authorize shorter evaluation periods after
ensuring that the additional administrative costs associated with the
shorter periods are offset by benefits accruing to the Government. Where
practicable, such as developmental contracts with defined performance
milestones (e.g., Preliminary Design Review, Critical Design Review,
initial system test), establishing evaluation periods at conclusion of
the milestones rather than calendar dates, or in combination with
calendar dates should be considered. In no case shall an evaluation
period be longer than 12 months.

\(b\) A portion of the total available award fee contract shall be
allocated to each of the evaluation periods. This allocation may result
in an equal or unequal distribution of fee among the periods. The
contracting officer should consider the nature of each contract and the
incentive effects of fee distribution in determining the appropriate
allocation structure.

**1816.405-273 Award fee evaluations.**

\(a\) *Service Contracts*. On contracts where the contract deliverable
is the performance of a service over any given time period, contractor
performance is often definitively measurable within each evaluation
period. In these cases, all evaluations are final, and the contractor
keeps the fee earned in any period regardless of the evaluations of
subsequent periods. Unearned award fee in any given period in a service
contract is lost and shall not be carried forward, or \"rolled-over,\"
into subsequent periods.

\(b\) *End Item Contracts*. On contracts, such as those for end item
deliverables, where the true quality of contractor performance cannot be
measured until the end of the contract, only the last evaluation is
final. At that point, the total contract award fee pool is available,
and the contractor\'s total performance is evaluated against the award
fee plan to determine total earned award fee. In addition to the final
evaluation, interim evaluations are done to monitor performance prior to
contract completion, provide feedback to the contractor on the
Government\'s assessment of the quality of its performance, and
establish the basis for making interim award fee payments (see
1816.405-276(a)). These interim evaluations and associated interim award
fee payments are superseded by the fee determination made in the final
evaluation at contract completion. The Government will then pay the
contractor, or the contractor will refund to the Government, the
difference between the final award fee determination and the cumulative
interim fee payments.

\(c\) *Control of evaluations*. Interim and final evaluations may be
used to provide past performance information during the source selection
process in future acquisitions and should be marked and controlled as
"Source Selection Information - See FAR 3.104".

**1816.405-274 Award fee evaluation factors.**

\(a\) Explicit evaluation factors shall be established for each award
fee period.

\(b\) Evaluation factors will be developed by the contracting officer
based upon the characteristics of an individual procurement. Normally,
technical and schedule considerations will be included in all CPAF
contracts as evaluation factors. Cost control shall be included as an
evaluation factor in all CPAF contracts. When explicit evaluation factor
weightings are used, cost control shall be no less than 25 percent of
the total weighted evaluation factors. The predominant consideration of
the cost control evaluation should be a measurement of the contractor\'s
performance against the negotiated estimated cost of the contract. This
estimated cost may include the value of undefinitized change orders when
appropriate.

(c)(1) The technical factor, if used, must include consideration of risk
management (including mission success, safety, security, health, export
control, and damage to the environment, as appropriate) unless waived at
a level above the contracting officer, with the concurrence of the
project manager. The rationale for any waiver shall be documented in the
contract file. When safety, export control, or security are considered
under the technical factor, the award fee plan shall allow the following
fee determinations, regardless of contractor performance in other
evaluation factors, when there is a major breach of safety or security.

\(i\) For evaluation of service contracts under 1816.405-273(a), an
overall fee determination of zero for any evaluation period in which
there is a major breach of safety or security.

\(ii\) For evaluation of end item contracts under 1816.405-273(b), an
overall fee determination of zero for any interim evaluation period in
which there is a major breach of safety or security. To ensure that the
final award fee evaluation at contract completion reflects any major
breach of safety or security, in an interim period, the overall award
fee pool shall be reduced by the amount of the fee available for the
period in which the major breach occurred if a zero fee determination
was made because of a major breach of safety or security.

\(2\) A major breach of safety must be related directly to the work on
the contract. A major breach of safety is an act or omission of the
Contractor that consists of an accident, incident, or exposure resulting
in a fatality or mission failure; or in damage to equipment or property
equal to or greater than \$1 million; or in any "willful" or "repeat"
violation cited by the Occupational Safety and Health Administration
(OSHA) or by a state agency operating under an OSHA approved plan.

\(3\) A major breach of security may occur on or off Government
installations, but must be directly related to the work on the contract.
A major breach of security is an act or omission by the contractor that
results in compromise of classified information, illegal technology
transfer, workplace violence resulting in criminal conviction, sabotage,
compromise or denial of information technology services, equipment or
property damage from vandalism greater than \$250,000, or theft greater
than \$250,000.

\(4\) The Assistant Administrator for Procurement (Code HS) shall be
notified prior to the determination of a zero award fee because of a
major breach of safety or security.

\(d\) In rare circumstances, contract costs may increase for reasons
outside the contractor\'s control and for which the contractor is not
entitled to an equitable adjustment. One example is a weather-related
launch delay on a launch support contract. The Government shall take
such situations into consideration when evaluating contractor cost
control.

\(e\) Emphasis on cost control should be balanced against other
performance requirement objectives. The contractor should not be
incentivized to pursue cost control to the point that overall
performance is significantly degraded. For example, incentivizing an
underrun that results in direct negative impacts on technical
performance, safety, or other critical contract objectives is both
undesirable and counterproductive. Therefore, evaluation of cost control
shall conform to the following guidelines:

\(1\) Normally, the contractor should be given a score of 0 for cost
control when there is a significant overrun within its control. However,
the contractor may receive higher scores for cost control if the overrun
is insignificant. Scores should decrease sharply as the size of the
overrun increases. In any evaluation of contractor overrun performance,
the Government shall consider the reasons for the overrun and assess the
extent and effectiveness of the contractor\'s efforts to control or
mitigate the overrun.

\(2\) The contractor should normally be rewarded for an underrun within
its control, up to the maximum score allocated for cost control,
provided the average numerical rating for all other award fee evaluation
factors is 81 or greater (see 1816.405-275). An underrun shall be
rewarded as if the contractor has met the estimated cost of the contract
(see 1816.405-274(d)(3)) when the average numerical rating for all other
factors is less than 81 but greater than 60.

\(3\) The contractor should be rewarded for meeting the estimated cost
of the contract, but not to the maximum score allocated for cost
control, to the degree that the contractor has prudently managed costs
while meeting contract requirements. No award shall be given in this
circumstance unless the average numerical rating for all other award fee
evaluation factors is 61 or greater.

\(f\) When an AF arrangement is used in conjunction with another
contract type, the award fee's cost control factor will only apply to a
subjective assessment of the contractor's efforts to control costs and
not the actual cost outcome incentivized under the basic contract type
(e.g. CPIF, FPIF).

(g)(1) The contractor\'s performance against the subcontracting plan
incorporated in the contract shall be evaluated. Emphasis may be placed
on the contractor\'s accomplishment of its goals for subcontracting with
small business, HUBZone small business, women-owned small business**,**
veteran-owned small business, and service-disabled veteran-owned small
business concerns.

\(2\) The contractor\'s performance against the contract target for
participation as subcontractors by small disadvantaged business concerns
in the NAICS Major Groups designated by the Department of Commerce (see
FAR 19.201(c)) shall also be evaluated if the clause at FAR 52.219-26,
Small Disadvantaged Business Participation - Incentive Subcontracting,
is not included in the contract (see FAR 19.1204(c)).

\(3\) The contractor\'s achievements in subcontracting high technology
efforts as well as the contractor\'s performance under the
Mentor-Protégé Program, if applicable, may also be evaluated.

\(4\) The evaluation weight given to the contractor\'s performance
against the considerations in paragraphs (g)(1) through (g)(3) of this
section should be significant (up to 15 percent of available award fee).
The weight should motivate the contractor to focus management attention
to subcontracting with small, HUBZone, women-owned, veteran-owned, and
service-disabled veteran-owned small business concerns, and with small
disadvantaged business concerns in designated NAICS Major Groups to the
maximum extent practicable, consistent with efficient contract
performance.

\(h\) When contract changes are anticipated, the contractor's
responsiveness to requests for change proposals should be evaluated.
This evaluation should include the contractor's submission of timely,
complete proposals and cooperation in negotiating the change.

\(i\) Only the award fee performance evaluation factors set forth in the
performance evaluation plan shall be used to determine award fee scores.

\(j\) The Government may unilaterally modify the applicable award fee
performance evaluation factors and performance evaluation areas prior to
the start of an evaluation period. The contracting officer shall notify
the contractor in writing of any such changes 30 days prior to the start
of the relevant evaluation period.

**1816.405-275 Award fee evaluation scoring.**

\(a\) A scoring system of 0-100 shall be used for all award fee ratings.
Award fee earned is determined by applying the numerical score to the
award fee pool. For example, a score of 85 yields an award fee of 85
percent of the award fee pool. No award fee shall be paid unless the
total score is 61 or greater.

\(b\) The following standard adjectival ratings and the associated
numerical scores shall be used on all award fee contracts.

\(1\) **[Excellent]{.underline}** (100-91): Of exceptional merit;
exemplary performance in a timely, efficient, and economical manner;
very minor (if any) deficiencies with no adverse effect on overall
performance.

\(2\) **[Very good]{.underline}** (90-81): Very effective performance,
fully responsive to contract requirements; contract requirements
accomplished in a timely, efficient, and economical manner for the most
part; only minor deficiencies.

\(3\) **[Good]{.underline}** (80-71): Effective performance; fully
responsive to contract requirements; reportable deficiencies, but with
little identifiable effect on overall performance.

\(4\) **[Satisfactory]{.underline}** (70-61): Meets or slightly exceeds
minimum acceptable standards; adequate results; reportable deficiencies
with identifiable, but not substantial, effects on overall performance.

\(5\) **[Poor/Unsatisfactory]{.underline}** (less than 61): Does not
meet minimum acceptable standards in one or more areas; remedial action
required in one or more areas; deficiencies in one or more areas which
adversely affect overall performance.

\(c\) As a benchmark for evaluation, in order to be rated \"Excellent,\"
the contractor must be under cost, on or ahead of schedule, and have
provided excellent technical performance.

\(d\) A scoring system appropriate for the circumstances of the
individual contract requirement should be developed. Weighted scoring is
recommended. In this system, each evaluation factor (e.g., technical,
schedule, cost control) is assigned a specific percentage weighting with
the cumulative weightings of all factors totaling 100. During the award
fee evaluation, each factor is scored from 0-100 according to the
ratings defined in 1816.405-275(b). The numerical score for each factor
is then multiplied by the weighting for that factor to determine the
weighted score. For example, if the technical factor has a weighting of
60 percent and the numerical score for that factor is 80, the weighted
technical score is 48 (80 x 60 percent). The weighted scores for each
evaluation factor are then added to determine the total award fee score.

**1816.405-276 Award fee payments and limitations.**

\(a\) *Interim Award Fee Payments*. The amount of an interim award fee
payment (see 1816.405-273(b)) is limited to the lesser of the interim
evaluation score or 80 percent of the fee allocated to that interim
period less any provisional payments (see paragraph (b) of this
subsection) made during the period.

\(b\) *Provisional Award Fee Payments*. Provisional award fee payments
are payments made within evaluation periods prior to an interim or final
evaluation for that period. Provisional payments may be included in the
contract and should be negotiated on a case-by-case basis. For a service
contract, the total amount of award fee available in an evaluation
period that may be provisionally paid is the lesser of a percentage
stipulated in the contract (but not exceeding 80 percent) or the prior
period\'s evaluation score. For an end item contract, the total amount
of provisional payments in a period is limited to a percentage not to
exceed 80 percent of the prior interim period's evaluation score.

\(c\) *Fee Payment*. The Fee Determination Official\'s rating for both
interim and final evaluations will be provided to the contractor within
45 calendar days of the end of the period being evaluated. Any fee,
interim or final, due the contractor will be paid no later than 60
calendar days after the end of the period being evaluated.

**1816.406 Contract clauses.**

**1816.406-70 NASA contract clauses.**

\(a\) As authorized by FAR 16.406(e), the contracting officer shall
insert the clause at 1852.216-76, Award Fee for Service Contracts, in
solicitations and contracts when an award-fee contract is contemplated
and the contract deliverable is the performance of a service.

\(b\) As authorized by FAR 16.406(e), the contracting officer shall
insert the clause at 1852.216-77, Award Fee for End Item Contracts, in
solicitations and contracts when an award fee contract is contemplated
and the contract deliverables are hardware or other end items for which
total contractor performance cannot be measured until the end of the
contract. When the clause is used in a fixed-price award-fee contract,
it shall be modified by deleting references to base fee in paragraphs
(a), and by deleting paragraph (c)(1), the last sentence of (c)(4), and
the first sentence of (c)(5).

\(c\) The contracting officer may insert a clause substantially as
stated at 1852.216-83, Fixed Price Incentive, in fixed-price-incentive
solicitations and contracts utilizing firm or successive targets. For
items subject to incentive price revision, identify the target cost,
target profit, target price, and ceiling price for each item.

\(d\) The contracting officer shall insert the clause at 1852.216-84,
Estimated Cost and Incentive Fee, in cost-plus-incentive-fee
solicitations and contracts.

\(e\) The contracting officer may insert the clause at 1852.216-85,
Estimated Cost and Award Fee, in award-fee solicitations and contracts.
When the contract includes performance incentives, use Alternate I. When
the clause is used in a fixed-price award fee contract, it shall be
modified to delete references to base fee and to reflect the contract
type.

\(f\) As provided at 1816.402-270, the contracting officer shall insert
a clause substantially as stated at 1852.216-88, Performance Incentive,
when the primary deliverable(s) is (are) hardware and total estimated
cost and fee is greater than \$25 million. A clause substantially as
stated at 1852.216-88 may be included in lower dollar value hardware
contracts with the approval of the procurement officer.

**Subpart** **1816.5\--Indefinite-Delivery Contracts**

**1816.504 Indefinite quantity contracts.**

(a)(4)(ii) ID/IQ service contract values and task order values shall be
expressed only in dollars.

(a)(4)(v) See 1815.7003.

**1816.505 Ordering.**

\(a\) (2) Task and delivery orders shall be issued by the contracting
officer.

(b)(5) The Agency and installation ombudsmen designated in accordance
with 1815.7001 shall review complaints from contractors on task order
contracts and delivery order contracts.

**1816.505-70 Task ordering.**

\(a\) The contracting officer shall, to the maximum extent possible,
state task order requirements in terms of functions and the related
performance and quality standards such that the standards may be
objectively measured.

\(b\) To the maximum extent possible, contracting officers shall solicit
contractor task plans to use as the basis for finalizing task order
requirements and enable evaluation and pricing of the contractor\'s
proposed work on a performance based approach as described in
1816.104-70(a).

\(c\) Task order contract type shall be individually determined, based
on the nature of each task order\'s requirements.

\(1\) Task orders may be grouped by contract type for administrative
convenience (e.g., all CPIF orders, all FFP orders, etc.) for contractor
progress and cost reporting.

\(2\) Under multiple awards, solicitations for individual task plans
shall request the same pricing structure from all offerors.

\(d\) Any undefinitized task order issued under paragraph (f) of the
clause at 1852.216-80, Task Ordering Procedure, shall be treated and
reported as an undefinitized contract action in accordance with 1843.70.

**1816.506-70 NASA contract clause.**

Insert the clause at 1852.216-80, Task Ordering Procedure, in
solicitations and contracts when an indefinite-delivery, task order
contract is contemplated. The clause is applicable to both fixed-price
and cost-reimbursement type contracts. If the contract does not require
533M reporting (see NPG 9501.2, NASA Contractor Financial Management
Reporting System), use the clause with its Alternate I.

**Subpart** **1816.6\--Time-and-Materials, Labor-Hour, and Letter
Contracts**

**1816.603 Letter contracts.**

**1816.603-2 Application.**

\(a\) Centers must ensure that NASA liabilities and commitments are
minimized under letter contracts. When a letter contract is justified
and program requirements can be severed into smaller, discreet efforts,
the work authorized by the letter contract must be limited to the
minimum severable effort required to satisfy the urgent program
requirements. The remaining requirements may not be initially included
in the letter contract and must be acquired through a separate fully
priced and definitized contract action.

**1816.603-370 Approvals.**

\(a\) All requests for authority to issue a letter contract shall
include the following:

\(1\) Proposed contractor\'s name and address.

\(2\) Location where contract is to be performed.

\(3\) Contract number, including modification number, if applicable.

\(4\) Brief description of the work or services to be performed.

\(5\) Performance period or delivery schedule.

\(6\) Amount of letter contract.

\(7\) Performance period of letter contract.

\(8\) Estimated total amount of definitive contract.

\(9\) Type of definitive contract to be executed.

\(10\) A statement that the definitive contract will contain all
required clauses or identification of specific clause deviations that
have been approved.

\(11\) A statement as to the necessity and advantage to the Government
of the proposed letter contract.

\(12\) The definitization schedule described in FAR 16.603-2(c) expected
to be negotiated with the contractor.

\(b\) Requests for authority to issue letter contracts having an
estimated definitive contract amount equal to or greater than the Master
Buy Plan submission thresholds of 1807.7101 (or modifications thereto)
shall be signed by the procurement officer and submitted to the
Assistant Administrator for Procurement (Code HS) for approval.

\(c\) Authority to approve the issuance of letter contracts below the
Master Buy Plan submission thresholds specified in 1807.7101 is
delegated to the procurement officer.

\(d\) Any modification of an undefinitized letter contract approved by a
procurement officer in accordance with paragraph (c) of this section
that increases the estimated definitized contract amount to or above the
Master Buy Plan submission thresholds must have the prior approval of
the Assistant Administrator for Procurement (Code HS).

**SAFETY AND HEALTH PLAN**

**(SEPTEMBER 2001)**

The offeror shall submit a detailed safety and occupational health plan
as part of its proposal

(see NPG 8715.3, NASA Safety Manual, Appendices). The plan must include
a detailed discussion of the policies, procedures, and techniques that
will be used to ensure the safety and occupational health of contractor
employees and to ensure the safety of all working conditions throughout
the performance of the contract. The plan must similarly address safety
and occupational health for subcontractor employees for any proposed
subcontract whose value is expected to exceed \$500,000, including
commercial services and services provided in support of a commercial
item. Also, when applicable, the plan must address the policies,
procedures, and techniques that will be used to ensure the safety and
occupational health of: (1) the public, (2) astronauts and pilots, (3)
the NASA workforce (including other contractor employees working on NASA
contracts), and (4) high-value equipment and property. This plan, as
approved by the Contracting Officer, will be included in any resulting
contract.

**(End of provision)**

**ALTERNATE I**

**(OCTOBER 2001)**

As prescribed in 1823.7001(c), delete the first sentence of the basic
provision and substitute the following:

The apparent low bidder, upon request by the Contracting Officer, shall
submit a detailed safety and occupational health plan (see NPG 8715.3,
NASA Safety Manual, Appendices). The plan shall be submitted within the
time specified by the Contracting Officer. Failure to submit an
acceptable plan shall make the bidder ineligible for the award of a
contract.

**1852.223-74 Drug- and alcohol-free workforce.**

As prescribed in 1823.570-3, insert the following clause:

**DRUG- AND ALCOHOL-FREE WORKFORCE**

**(MARCH 1996)**

\(a\) **Definitions.** As used in this clause the terms **\"employee,\"
\"controlled substance,\"** **\"employee in a sensitive position,\"**
and **"use, in violation of applicable law or Federal regulation, of
alcohol"** are as defined in 48 CFR 1823.570-2.

(b)(1) The Contractor shall institute and maintain a program for
achieving a drug-and alcohol-free workforce. As a minimum, the program
shall provide for preemployment, reasonable suspicion, random,
post-accident, and periodic recurring (follow-up) testing of contractor

employees in sensitive positions for use, in violation of applicable law
or Federal regulation, of alcohol or a controlled substance. The
Contractor may establish its testing or rehabilitation program in
cooperation with other contractors or organizations.

\(2\) This clause neither prohibits nor requires the Contractor to test
employees in a foreign country. If the Contractor chooses to conduct
such testing, this clause does not authorize the Contractor to violate
foreign law in conducting such testing.

\(3\) The Contractor\'s program shall test for the use of marijuana and
cocaine. The Contractor\'s program may test for the use of other
controlled substances.

\(4\) The Contractor\'s program shall conform to the \"Mandatory
Guidelines for Federal Workplace Drug Testing Programs\" published by
the Department of Health and Human Services (59 FR 29908, June 9, 1994)
and the procedures in 49 CFR Part 40, \"Procedures for Transportation
Workplace Drug Testing Programs,\" in which references to \"DOT\" shall
be read as \"NASA\", and the split sample method of collection shall be
used.

(c)(1) The Contractor\'s program shall provide, where appropriate, for
the suspension, disqualification, or dismissal of any employee in a
sensitive position in any instance where a test conducted and confirmed
under the Contractor\'s program indicates that such individual has used,
in violation of applicable law or Federal regulation, alcohol or a
controlled substance.

\(2\) The Contractor\'s program shall further prohibit any such
individual from working in a sensitive position on a NASA contract,
unless such individual has completed a program of rehabilitation
described in paragraph (d) of this clause.

\(3\) The Contractor\'s program shall further prohibit any such
individual from working in any sensitive position on a NASA contract if
the individual is determined under the Contractor\'s program to have
used, in violation of applicable law or Federal regulation, alcohol or a
controlled substance and the individual meets any of the following
criteria:

\(i\) The individual had undertaken or completed a rehabilitation
program described in paragraph (d) of this clause prior to such use;

\(ii\) Following such determination, the individual refuses to undertake
such a rehabilitation program;

\(iii\) Following such determination, the individual fails to complete
such a rehabilitation program; or

\(iv\) The individual used a controlled substance or alcohol while on
duty.

\(d\) The Contractor shall institute and maintain an appropriate
rehabilitation program which shall, as a minimum, provide for the
identification and opportunity for treatment of employees whose duties
include responsibility for safety-sensitive, security, or National
security functions who are in need of assistance in resolving problems
with the use of alcohol or controlled substances.

\(e\) The requirements of this clause shall take precedence over any
state or local Government laws, rules, regulations, ordinances,
standards, or orders that are inconsistent with the requirements of this
clause.

\(f\) For any collective bargaining agreement, the Contractor will
negotiate the terms of its program with employee representatives, as
appropriate, under labor relations laws or negotiated agreements. Such
negotiation, however, cannot change the requirements of this clause.
Employees covered under collective bargaining agreements will not be
subject to the requirements of this clause until those agreements have
been modified, as necessary; provided, however, that if one year after
commencement of negotiation the parties have failed to reach agreement,
an impasse will be determined to have been reached and the Contractor
will unilaterally implement the requirements of this clause.

\(g\) The Contractor shall insert a clause containing all the terms of
this clause, including this paragraph (g), in all subcontracts in which
work is performed by an employee in a sensitive position, except
subcontracts for commercial items (see FAR Parts 2 and 12).

**(End of clause)**

**1852.223-75 Major Breach of Safety or Security.**

As prescribed in 1823.7001(d), insert the following clause:

**MAJOR BREACH OF SAFETY OR SECURITY**

**(FEBRUARY** **2002)**

\(a\) Safety is the freedom from those conditions that can cause death,
injury, occupational

illness, damage to or loss of equipment or property, or damage to the
environment. Safety is essential to NASA and is a material part of this
contract. NASA's safety priority is to protect: (1) the public; (2)
astronauts and pilots; (3) the NASA workforce (including contractor
employees working on NASA contracts); and (4) high-value equipment and
property. A major breach of safety may constitute a breach of contract
that entitles the Government to exercise any of its rights and remedies
applicable to material parts of this contract, including termination for
default. A major breach of safety must be related directly to the work
on the contract. A major breach of safety is an act or omission of the
Contractor that consists of an accident, incident, or exposure resulting
in a fatality or mission failure; or in damage to equipment or property
equal to or greater than \$1 million; or in any \"willful\" or
\"repeat\" violation cited by the Occupational Safety and Health
Administration (OSHA) or by a state agency operating under an OSHA
approved plan.

\(b\) Security is the condition of safeguarding against espionage,
sabotage, crime (including computer crime), or attack. A major breach of
security may constitute a breach of contract that entitles the
Government to exercise any of its rights and remedies applicable to
material parts of this contract, including termination for default. A
major breach of security may occur on or off Government installations,
but must be related directly to the work on the contract. A major breach
of security is an act or omission by the Contractor that results in
compromise of classified information, illegal technology transfer,
workplace violence resulting in criminal conviction, sabotage,
compromise or denial of information technology services, equipment or
property damage from vandalism greater than \$250,000, or theft greater
than \$250,000.

\(c\) In the event of a major breach of safety or security, the
Contractor shall report the breach to the Contracting Officer. If
directed by the Contracting Officer, the Contractor shall conduct its
own investigation and report the results to the Government. The
Contractor shall cooperate with the Government investigation, if
conducted.

**(End of clause)**

**1852.225-8** **Duty-Free Entry of Space Articles.**

As prescribed in 1825.1101(e), add the following paragraph (k) to the
basic clause at FAR 52.225-8:

\(k\) The following supplies will be given duty-free entry:

\[Insert the supplies that are to be accorded duty-free entry.\]

**(End of addition)**

**1852.225-70 Export Licenses.**

As prescribed in 1825.1103-70(b), insert the following clause:

**EXPORT LICENSES**

**(FEBRUARY 2000)**

\(a\) The Contractor shall comply with all U.S. export control laws and
regulations, including the International Traffic in Arms Regulations
(ITAR), 22 CFR Parts 120 through 130, and the Export Administration
Regulations (EAR), 15 CFR Parts 730 through 799, in the performance of
this contract. In the absence of available license
exemptions/exceptions, the Contractor shall be responsible for obtaining
the appropriate licenses or other approvals, if required, for exports of
hardware, technical data, and software, or for the provision of
technical assistance.

\(b\) The Contractor shall be responsible for obtaining export licenses,
if required, before utilizing foreign persons in the performance of this
contract, including instances where the work is to be performed on-site
at \[*insert name of NASA installation*\], where the foreign person will
have access to export-controlled technical data or software.

\(c\) The Contractor shall be responsible for all regulatory record
keeping requirements associated with the use of licenses and license
exemptions/exceptions.

\(d\) The Contractor shall be responsible for ensuring that the
provisions of this clause apply to its subcontractors.

**(End of clause)**

**ALTERNATE I**

**(FEBRUARY 2000)**

As prescribed in 1825.1103-70(b), add the following paragraph (e) as
Alternate I to the clause:

\(e\) The Contractor may request, in writing, that the Contracting
Officer authorize it to export ITAR-controlled technical data (including
software) pursuant to the exemption at 22 CFR 125.4(b)(3). The
Contracting Officer or designated representative may authorize or direct
the use of the exemption where the data does not disclose details of the
design, development, production, or manufacture of any defense article.