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

National Aeronautics and

Space Administration

Washington, DC 20546

##  PN 97-84

###  May 2, 2003

# DEFINITIONS

***BACKGROUND:*** This PN revises the NASA FAR Supplement (NFS) to amend
the definitions of "contracting activity" and "head of the contracting
activity" consistent with realignment of program management
responsibilities between NASA Headquarters and the field centers.

On November 14, 2002, the Assistant Administrator for Procurement
approved a deviation to NFS section 1802.101 to designate the Deputy
Associate Administrator for the International Space Station (ISS) and
Space Shuttle Programs in the Office of Space Flight as the head of the
contracting activity (HCA) in lieu of the Center Director(s) for all
contracts that directly support the ISS or Space Shuttle Program. This
deviation was approved in support of the realignment of program
management responsibilities between NASA Headquarters and the field
centers. This PN implements this deviation.

***ACQUISITIONS AFFECTED BY CHANGES:*** All contracts that directly
support the International Space Station (ISS) or Space Shuttle Program.

***ACTION REQUIRED BY CONTRACTING OFFICERS:*** Comply with the revised
definitions of "contracting activity" and "head of the contracting
activity (HCA)" whenever these are referred to in the FAR and NFS.

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

***PARTS AFFECTED:*** Changes are made in Parts 1802, 1806, 1815, 1816,
and 1843.

***REPLACEMENT PAGES:*** You may use the enclosed pages to replace Part
1802, 6:5, 15:15, 15:16, 16:5, 16:6, and Part 1843.

***TYPE OF RULE AND PUBLICATION DATE:*** The PN was published as a final
rule in the Federal Register (68 FR 23423 - 23424) on May 2, 2003.

***HEADQUARTERS CONTACT:*** Harold Nelson, Code HS, (202) 358-0436,
email: harold.a.nelson@nasa.gov.

R. Scott Thompson

Director, Contract Management Division

Enclosures

PART 1802

**DEFINITIONS OF WORDS AND TERMS**

**TABLE OF CONTENTS**

1802.000 Scope of part.

**SUBPART 1802.1 DEFINITIONS**

1802.101 Definitions.

**PART 1802**

**DEFINITIONS OF WORDS AND TERMS**

**1802.000 Scope of part.**

Commonly used words and terms are defined in FAR Subpart 2.1. This Part
1802 gives NASA-specific meanings for some of these words and terms and
defines other words and terms commonly used in the NASA acquisition
process.

**Subpart 1802.1\--Definitions**

**1802.101 Definitions.**

**"Administrator"** means the Administrator or Deputy Administrator of
NASA.

**"Senior Procurement Executive"** means the Assistant Administrator or
Deputy Assistant Administrator for Procurement, Office of Procurement,
NASA Headquarters (Code H).

**"Contracting activity"** in NASA includes the NASA Headquarters
installation and the following field installations: Ames Research
Center, Dryden Flight Research Center, Glenn Research Center at Lewis
Field, Goddard Space Flight Center, Johnson Space Center, Kennedy Space
Center, Langley Research Center, Marshall Space Flight Center and
Stennis Space Center. A major program that may have contracts at
multiple field centers may also be considered a "contracting activity."

**"Head of the agency"** or **"agency head"** means the Administrator or
Deputy Administrator of NASA.

**"Head of the contracting activity (HCA)"** means, for field
installations, the Director or other head and, for NASA Headquarters,
the Director for Headquarters Operations. For International Space
Station (ISS) and Space Shuttle Program contracts, the HCA is the
Headquarters Deputy Associate Administrator for ISS and Shuttle Programs
in lieu of the field Center Director(s).

**"Procurement officer"** means the chief of the contracting office, as
defined in FAR 2.101.

**"NASA Acquisition Internet Service (NAIS)"** means the Internet
service (URL: http://procurement.nasa.gov) NASA uses to broadcast its
business opportunities, procurement regulations, and associated
information.

**1806.304-70 Approval of NASA justifications.**

Concurrences and approvals for justifications of contract actions
conducted in accordance with FAR Subparts 6.2 and 6.3 shall be obtained
as follows:

\(a\) For proposed contracts over \$500,000 but not exceeding
\$10,000,000 -

\(1\) Concurring official: Procurement Officer

\(2\) Approving official: Center or Headquarters Competition Advocate.

\(b\) For proposed contracts over \$10,000,000 but not exceeding
\$50,000,000 -

\(1\) Concurring officials:

\(i\) Procurement Officer

\(ii\) Center or Headquarters Competition Advocate

\(2\) Approving official: Head of the contracting activity

\(c\) For proposed contracts over \$50,000,000 -

\(1\) Concurring officials:

\(i\) Procurement Officer

\(ii\) Center or Headquarters Competition Advocate

\(iii\) Head of the contracting activity.

\(iv\) Agency Competition Advocate

\(2\) Approving Official: Assistant Administrator for Procurement

\(d\) The approval authority of FAR 6.304(a)(3) may not be delegated to
other than the installation\'s Deputy Director.

\(e\) For proposed contract actions requiring approval by the Assistant
Administrator for Procurement, the original justification shall be
forwarded to the Assistant Administrator for Procurement (Code HS).

\(f\) Regardless of dollar value, class justifications shall be approved
by the Assistant Administrator for Procurement.

## Subpart 1806.5\--Competition Advocates

**1806.501 Requirement.**

**(1)** The Deputy Assistant Administrator for Procurement is the agency
competition advocate, reporting to the Associate Deputy Administrator on
issues related to competition of NASA acquisitions.

**(2)** The Center Deputy Directors or Associate Directors are the
competition advocates for their contracting activities.

**(3)** The Headquarters Chief Financial Officer, Code CF, is the
competition advocate for the Headquarters contracting activity.

**1806.502 Duties and Responsibilities.**

(b)**(i)** Center competition advocates shall submit annual reports to
the agency competition advocate (Code HS) on or before November 30.

**(ii)** The agency competition advocate shall submit an annual agency
report on or before January 31.

\(i\) Chairpersons of SEB committees, unless designated as voting
members.

\(ii\) The procurement officer of the installation, unless designated a
voting member.

\(iii\) The contracting officer responsible for the acquisition, unless
designated a voting member.

\(iv\) The Chief Counsel and/or designee of the installation.

\(v\) The installation small business specialist.

\(vi\) The SEB recorder.

\(g\) Evaluation.

\(1\) If committees are used, the SEB Chairperson shall send them the
proposals or portions thereof to be evaluated, along with instructions
regarding the expected function of each committee, and all data
considered necessary or helpful.

\(2\) While oral reports may be given to the SEB, each committee shall
submit a written report which should include the following:

\(i\) Copies of individual worksheets and supporting comments to the
lowest level evaluated;

\(ii\) An evaluation sheet summarized for the committee as a whole; and

\(iii\) A statement for each proposal describing any strengths,
deficiencies, or significant weaknesses which significantly affected the
evaluation and stating any reservations or concerns, together with
supporting rationale, which the committee or any of its members want to
bring to the attention of the SEB.

\(3\) The SEB process must be adequately documented. Clear traceability
must exist at all levels of the SEB process. All reports submitted by
committees or panels will be retained as part of the SEB records.

\(4\) Each voting SEB member shall thoroughly review each proposal and
any committee reports and findings. The SEB shall rate or score the
proposals for each evaluation factor and subfactor according to its own
collective judgment. SEB minutes shall reflect this evaluation process.

\(h\) SEB presentation.

\(1\) The SEB Chairperson shall brief the SSA on the results of the SEB
deliberations to permit an informed and objective selection of the best
source(s) for the particular acquisition.

\(2\) The presentation shall focus on the significant strengths,
deficiencies, and significant weaknesses found in the proposals, the
probable cost of each proposal, and any significant issues and problems
identified by the SEB. This presentation must explain any applicable
special standards of responsibility; evaluation factors and subfactors;
the significant strengths and significant weaknesses of the offerors;
the Government cost estimate, if applicable; the offerors\' proposed
cost/price; the probable cost; the proposed fee arrangements; and the
final adjectival ratings and scores to the subfactor level.

\(3\) Attendance at the presentation is restricted to people involved in
the selection process or who have a valid need to know. The designated
individuals attending the SEB presentation(s) shall:

\(i\) Ensure that the solicitation and evaluation processes complied
with all applicable agency policies and that the presentation accurately
conveys the SEB's activities and findings;

\(ii\) Not change the established evaluation factors, subfactors,
weights, or scoring systems; or the substance of the SEB\'s findings.
They may, however, advise the SEB to rectify procedural omissions,
irregularities or inconsistencies, substantiate its findings, or revise
the presentation.

\(4\) The SEB recorder will coordinate the formal presentation including
arranging the time and place of the presentation, assuring proper
attendance, and distributing presentation material.

\(5\) For Headquarters selections, the Headquarters Office of
Procurement (Code HS) will coordinate the presentation, including
approval of attendees. When the Administrator is the SSA, a preliminary
presentation should be made to the head of the contracting activity and
to the Official-in-Charge of the cognizant Headquarters Program Office.

\(i\) Recommended SEB presentation format.

\(1\) [Identification of the Acquisition]{.underline}. Identifies the
installation, the nature of the services or hardware to be acquired,
some quantitative measure including the Government cost estimate for the
acquisition, and the planned contractual arrangement. Avoids detailed
objectives of the acquisition.

\(2\) [Background.]{.underline} Identifies any earlier phases of a
phased acquisition or, as in the case of continuing support services,
identifies the incumbent and any consolidations or proposed changes from
the existing structure.

\(3\) [Evaluation Factors, Subfactors, and Elements.]{.underline}
Explains the evaluation factors, subfactor, and any special standards of
responsibility. Lists the relative order of importance of the evaluation
factors and the numerical weights of the Mission Suitability subfactors.
Presents the adjectival scoring system used in the Mission Suitability
and Past Performance evaluations.

\(4\) [Sources.]{.underline} Indicates the number of offerors solicited
and the number of offerors expressing interest (e.g., attendance at a
preproposal conference). Identifies the offerors submitting proposals,
indicating any small businesses, small disadvantaged businesses, and
women-owned businesses.

\(5\) [Summary of Findings]{.underline}. Lists the initial and final
Mission Suitability ratings and scores, the offerors\' proposed
costs/prices, and any assessment of the probable costs. Introduces any
clear discriminator, problem, or issue which could affect the selection.
Addresses any competitive range determination.

\(6\) [Significant Strengths, Deficiencies, and Significant Weaknesses
of Offerors]{.underline}*.* Summarizes the SEB\'s findings, using the
following guidelines:

\(i\) Present only the significant strengths, deficiencies, and
significant weaknesses of individual offerors.

\(ii\) Directly relate the significant strengths, deficiencies, and
significant weaknesses to the evaluation factors, and subfactors.

\(iii\) Indicate the results and impact, if any, of discussions and FPRs
on ratings and scores.

\(7\) [Final Mission Suitability Ratings and Scores]{.underline}.
Summarizes the evaluation subfactors, the maximum points achievable, and
the scores of the offerors in the competitive range.

\(8\) [Final Cost/Price Evaluation.]{.underline} Summarizes proposed
costs/prices and any probable costs associated with each offeror
including proposed fee arrangements. Presents the data as accurately as
possible, showing SEB adjustments to achieve comparability. Identifies
the SEB\'s confidence in the probable costs of the individual offerors,
noting the reasons for low or high confidence.

\(9\) [Past Performance]{.underline}. Reflects the summary conclusions,
supported by specific case data.

\(10\) [Special Interest.]{.underline} Includes only information of
special interest to the SSA that has not been discussed elsewhere, e.g.,
procedural errors or other matters that could affect the selection
decision.

**1816.402-2 Performance incentives.**

**1816.402-270 NASA technical performance incentives.**

\(a\) Pursuant to the guidelines in 1816.402, NASA has determined that a
performance incentive shall be included in all contracts based on
performance-oriented documents (see FAR 11.101(a)), except those awarded
under the commercial item procedures of FAR Part 12, where the primary
deliverable(s) is (are) hardware with a total value (including options)
greater than \$25 million. Any exception to this requirement shall be
approved in writing by the head of the contracting activity. Performance
incentives may be included in hardware contracts valued under \$25
million acquired under procedures other than Part 12 at the discretion
of the procurement officer upon consideration of the guidelines in
1816.402. Performance incentives, which are objective and measure
hardware performance after delivery and acceptance, are separate from
other incentives, such as cost or delivery incentives.

\(b\) When a performance incentive is used, it shall be structured to be
both positive and negative based on hardware performance after delivery
and acceptance, unless the contract type requires complete contractor
liability for product performance (e.g., fixed price). In this latter
case, a negative incentive is not required. In structuring the
incentives, the contract shall establish a standard level of performance
based on the salient hardware performance requirement. This standard
performance level is normally the contract\'s minimum performance
requirement. No incentive amount is earned at this standard performance
level. Discrete units of measurement based on the same performance
parameter shall be identified for performance above and, when a negative
incentive is used, below the standard. Specific incentive amounts shall
be associated with each performance level from maximum beneficial
performance (maximum positive incentive) to, when a negative incentive
is included, minimal beneficial performance or total failure (maximum
negative incentive). The relationship between any given incentive,
either positive and negative, and its associated unit of measurement
should reflect the value to the Government of that level of hardware
performance. The contractor should not be rewarded for above-standard
performance levels that are of no benefit to the Government.

\(c\) The final calculation of the performance incentive shall be done
when hardware performance, as defined in the contract, ceases or when
the maximum positive incentive is reached. When hardware performance
ceases below the standard established in the contract and a negative
incentive is included, the Government shall calculate the amount due and
the contractor shall pay the Government that amount. Once hardware
performance exceeds the standard, the contractor may request payment of
the incentive amount associated with a given level of performance,
provided that such payments shall not be more frequent than monthly.
When hardware performance ceases above the standard level of
performance, or when the maximum positive incentive is reached, the
Government shall calculate the final performance incentive earned and
unpaid and promptly remit it to the contractor.

\(d\) When the deliverable hardware lends itself to multiple, meaningful
measures of performance, multiple performance incentives may be
established. When the contract requires the sequential delivery of
several hardware items (e.g., multiple spacecraft), separate performance
incentive structures may be established to parallel the sequential
delivery and use of the deliverables.

\(e\) In determining the value of the maximum performance incentives
available, the contracting officer shall follow the following rules.

\(1\) For a CPFF contract, the sum of the maximum positive performance
incentive and fixed fee shall not exceed the limitations in FAR
15.404-4(c)(4)(i).

\(2\) For an award fee contract.

\(i\) The individual values of the maximum positive performance
incentive and the total potential award fee (including any base fee)
shall each be at least one-third of the total potential contract fee.
The remaining one-third of the total potential contract fee may be
divided between award fee and the maximum performance incentive at the
discretion of the contracting officer.

\(ii\) The maximum negative performance incentive for research and
development hardware (e.g., the first and second units) shall be equal
in amount to the total [earned]{.underline} award fee (including any
base fee). The maximum negative performance incentives for production
hardware (e.g., the third and all subsequent units of any hardware
items) shall be equal in amount to the total [potential]{.underline}
award fee (including any base fee). Where one contract contains both
cases described above, any base fee shall be allocated reasonably among
the items.

\(3\) For cost reimbursement contracts other than award fee contracts,
the maximum negative performance incentives shall not exceed the total
earned fee under the contract.

**1816.404 Fixed-price contracts with award fees.**

Section 1816.405-2 applies to the use of FPAF contracts as if they were
CPAF contracts. However, neither base fee (see 1816.405-271) nor
evaluation of cost control (see 1816.405-274) apply to FPAF contracts.

**1816.405 Cost-reimbursement incentive** **contracts.**

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

**1816.405-270 CPAF contracts.**

\(a\) Use of an award fee incentive shall be approved in writing by the
procurement officer. The procurement officer\'s approval shall include a
discussion of the other types of contracts considered and shall indicate
why an award fee incentive is the appropriate choice. Award fee
incentives should not be used on contracts with a total estimated cost
and fee less than \$2 million per year. The procurement officer may
authorize use of award fee for lower-valued acquisitions, but should do
so only in exceptional situations, such as contract requirements having
direct health or safety impacts, where the judgmental assessment of the
quality of contractor performance is critical.

\(b\) Except as provided in paragraph (c) of this section, an award fee
incentive may be used in conjunction with other contract types for
aspects of performance that cannot be objectively assessed. In such
cases, the cost incentive is based on objective formulas inherent in the
other contract types (e.g., FPI, CPIF), and the award fee provision
should not separately incentivize cost performance.

\(c\) Award fee incentives shall not be used with a cost-plus-fixed-fee
(CPFF) contract.

**1816.405-271 Base fee.**

\(a\) A base fee shall not be used on CPAF contracts for which the
periodic award fee evaluations are final (1816.405-273(a)). In these
circumstances, contractor performance during any award

fee period is independent of and has no effect on subsequent performance
periods or the final results at contract completion. For other
contracts, such as those for hardware or software

PART 1843

**CONTRACT MODIFICATIONS**

**TABLE OF CONTENTS**

**SUBPART 1843.2 CHANGE ORDERS**

1843.205 Contract clauses.

1843.205-70 NASA contract clauses.

**SUBPART 1843.70 UNDEFINITIZED CONTRACT ACTIONS**

1843.7001 Definitions.

1843.7002 Policy.

1843.7003 Procedures.

1843.7004 Exceptions.

1843.7005 Definitization.

**SUBPART 1843.71 SHARED SAVINGS**

1843.7101 Shared Savings Program.

1843.7102 Solicitation provision and contract clause.

**PART 1843**

**CONTRACT MODIFICATIONS**

**Subpart** **1843.2\--Change Orders**

**1843.205 Contract** **clauses.**

As authorized in the prefaces of clauses FAR 52.243-1, Changes- Fixed
Price; FAR 52.243-2, Changes\--Cost Reimbursement; and FAR 52.243-4,
Changes, and in the prescription at 43.205(c) for FAR 52.243-3,
Changes\--Time-and-Material or Labor-Hours, the period within which a
contractor must assert its right to an equitable adjustment may be
varied not to exceed 60 calendar days.

**1843.205-70 NASA** **contract** **clauses.**

(a)(1) The contracting officer may insert in contracts a clause
substantially the same as 1852.243-70, Engineering Change Proposals,
when ECPs are expected. Paragraphs (c) and (d) of the basic clause and
Alternate I of the clause shall be changed to reflect the specific type
of contract.

\(2\) If it is desirable to preclude a large number of small-dollar,
contractor-initiated engineering changes and to reduce the
administrative cost of reviewing them, the contracting officer shall use
the clause with its Alternate I.

\(3\) If the contract is a cost-reimbursement type, the contracting
officer shall use the clause with its Alternate II.

\(b\) The contracting officer may insert a clause substantially as
stated at 1852.243-72, Equitable Adjustments, in solicitations and
contracts for --

\(1\) Dismantling, demolishing, or removing improvements; or

\(2\) Construction, when the contract amount is expected to exceed the
simplified acquisition threshold and a fixed-price contract is
contemplated.

**Subpart** **1843.70\--Undefinitized Contract Actions**

**1843.7001  Definition~~s~~.**

**\"Undefinitized contract action (UCA)\"** means a unilateral or
bilateral contract modification or delivery/task order in which the
final price or estimated cost and fee have not been negotiated and
mutually agreed to by NASA and the contractor. (Issuance of letter
contracts and their modifications are governed by Subpart 1816.6.)

7002. **Policy.**

\(a\) Undefinitized contract actions may be issued only on an exception
basis, and centers must ensure that NASA liabilities and commitments are
minimized. When an undefinitized contract action is justified and
program requirements can be severed into smaller, discreet efforts, the
work authorized by the undefinitized contract action 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 undefinitized contract action and must be acquired through a
separate fully priced and definitized contract action.

\(b\) The contract file for each UCA shall be documented to justify
issuance and shall include a Government estimate for the changed
requirements.

1843.7003 Procedures.

(a)(1) Issuance of undefinitized contract actions with a Government
estimated cost or price over \$100,000 must be approved in writing by
the head of the contracting activity.

\(2\) All other undefinitized contract actions must be approved in
writing by the procurement officer.

\(3\) In emergency situations, approval may be given orally and
subsequently confirmed in writing.

\(4\) The approval authorities in paragraphs (a)(1) and (2) of this
section are not delegable.

(b)(1) Undefinitized contract actions exceeding \$100,000 must be issued
as bilateral agreements setting forth a ceiling price or \"not to
exceed\" estimated cost figure for the changed contractual requirements.
For fixed price contracts the negotiated price for the changed contract
requirements shall not exceed the established ceiling price. In the case
of cost type contracts any costs eventually negotiated for the changed
requirements in excess of the \"not to exceed\" estimated cost figure
shall be non-fee bearing. The ceiling price or \"not to exceed\"
estimated cost figures shall be separately identified in the UCA
instrument from the pricing structure of the basic contract.

\(2\) The head of the contracting activity may waive the ceiling price
or \"not to exceed\" estimated cost figure and bilateral agreement
requirements prior to UCA issuance on the basis of urgency. This waiver
authority is not delegable. Any waivers shall be documented in the
contract file.

\(c\) The changed contractual requirements set forth in the UCA shall be
clearly defined and shall be limited to the minimum effort required to
satisfy urgent program requirements while a cost proposal is prepared,
analyzed and negotiated.

\(d\) For undefinitized contract actions with a Government estimate
greater than \$1,000,000 and not excepted under subpart 1843.7004, a 180
day funding profile shall be obtained from the contractor prior to
execution of the undefinitized contract action.

\(e\) Undefinitized contract actions with a Government estimated cost or
price greater than \$1,000,000 shall include a requirement that the
change shall be separately accounted for by the contractor to the degree
necessary to provide the contracting officer visibility into actual
costs incurred pending definitization. The contracting officer may waive
this requirement for individual actions if there is a documented finding
that such accounting procedures would not be cost effective. Any such
waiver shall not affect existing NASA Form 533 or other financial
reporting requirements set forth in the contract.

**1843.7004 Exceptions.**

\(a\) Exceptions to the requirement for head of the contracting activity
or procurement officer approval of undefinitized contract actions are\--

\(1\) Modifications to facilities contracts;

\(2\) Modifications to construction contracts using Construction of
Facilities funding;

\(3\) Urgent modifications resulting from Shuttle manifest changes or
that involve immediate issues of safety or damage/loss of property;

\(4\) Modifications to decrease the contract value; or

\(5\) Modifications to letter contracts.

\(b\) The contract file for any of the modifications in paragraph (a) of
this section shall cite the exception and include complete supporting
rationale for its applicability.

**1843.7005 Definitization.**

\(a\) Undefinitized contract actions should be sufficiently complete and
detailed as to enable the contractor to begin immediate preparation of a
cost proposal for the changed requirement. The NASA goal is to
definitize UCAs within 180 days from date of issuance.

\(b\) Whenever possible, pre-change study efforts or engineering change
proposals (ECPs) shall be utilized to negotiate and definitize changes
prior to issuance.

**Subpart** **1843.71\--Shared Savings**

**1843.7101 Shared Savings Program.**

This subpart establishes and describes the methods for implementing and
administering a Shared Savings Program. This program provides an
incentive for contractors to propose and implement, with NASA approval,
significant cost reduction initiatives. NASA will benefit as the more
efficient business practices that are implemented lead to reduced costs
on current and follow-on contracts. In return, contractors are entitled
to share in cost savings subject to limits established in the contract.
The contracting officer may require the contractor to provide periodic
reporting, or other justification, or to require other steps (e.g., cost
segregation) to ensure projected cost savings are being realized.

**1843.7102 Solicitation provision and contract clause.**

The contracting officer shall insert the clause at 1852.243-71, Shared
Savings, in all solicitations and contracts expected to exceed
\$1,000,000, except those awarded under FAR Part 12, NRA and AO
procedures, or the SBIR and STTR programs.