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

National Aeronautics and

Space Administration

Washington, DC 20546 **PN 97-60**

> **April 5, 2001**

**EMERGENCY MEDICAL SERVICES AND EVACUATION**

***PURPOSE:*** To add a prescription and clause requiring contractors to
make all arrangements for emergency medical services and evacuation for
its employees when performing a NASA contract outside the United States
or in remote locations in the United States

***BACKGROUND:*** This PN sets forth a prescription and clause requiring
contractors to make all arrangements for emergency medical services and
evacuation, if necessary, for their employees when performing a NASA
contract outside the United States or in remote locations in the United
States. The clause also requires contractors to reimburse the Government
for costs incurred by the agency in those cases when the Government is
requested and it agrees to provide the medical services or evacuation.
This PN is in response to cases where contractor employees required
emergency medical services and evacuation while performing on NASA
contracts outside the United States. Although not responsible for
providing the emergency medical or evacuation services, NASA believed
the interests of the contractor employees were paramount. However, this
resulted in situations where NASA incurred significant costs, which
ultimately were reimbursed by the contractor, but possibly could have
been disputed.

***REGULATION:*** Changes are made in Parts 1842 and 1852 as set forth
in the enclosed replacement pages.

***REPLACEMENT PAGES:*** You may use the enclosed pages to replace 42:1,
42:2, 42:11, 42:12, 42:13, 42:14, 52:3, 52:4, 52:4.1 (added), 52:77,
52:78, 52:78.1, 52:78.2, 52:78.3, 52:78.4, 52-97 and 52:98 of the NFS.

***REGULATORY COMPLIANCE:*** This PN was published as a final rule in
the Federal Register (65 FR 18053-18054, April 5, 2001).

***EFFECTIVE DATE:*** This PN is effective as dated and shall remain in
effect until canceled or superseded.

***HEADQUARTERS CONTACT:*** Louis Becker, Code HK, (202) 358-4593,
email: joseph.lecren@hq.nasa.gov.

R. Scott Thompson

Director, Contract Management Division

Enclosures

**PART 1842**

**CONTRACT ADMINISTRATION AND AUDIT SERVICES**

**TABLE OF CONTENTS**

**SUBPART 1842.1 CONTRACT AUDIT SERVICES**

1842.101 Contract audit responsibilities.

1842.102 Assignment of contract audit services.

1842.102-70 Review of administration and audit services.

1842.170 Assignment of NASA personnel at contractor plants.

**SUBPART 1842.2 CONTRACT ADMINISTRATION SERVICES**

1842.202 Assignment of contract administration.

1842.202-70 Retention of contract administration.

1842.270 Contracting officer technical representative (COTR)
delegations.

1842.271 NASA clause.

**SUBPART 1842.3 CONTRACT ADMINISTRATION OFFICE FUNCTIONS**

1842.302 Contract administration functions.

**SUBPART 1842.5 POSTAWARD ORIENTATION**

1842.503 Postaward conferences.

**SUBPART 1842.7 INDIRECT COST RATES**

1842.705 Final indirect cost rates.

1842.705-1 Contracting officer determination procedure.

1842.708 Quick-closeout procedure.

1842.708-70 NASA Quick-closeout procedure.

**SUBPART 1842.8 DISALLOWANCE OF COSTS**

1842.803 Disallowing costs after incurrence.

**SUBPART 1842.12 NOVATION AND CHANGE-OF-NAME AGREEMENTS**

1842.1203 Processing agreements.

1842.1203-70 DOD processing of novation and change-of-name agreements on

behalf of NASA.

**SUBPART 1842.13 SUSPENSION OF WORK, STOP-WORK ORDERS, AND GOVERNMENT
DELAY OF WORK**

1842.1305 Contract clauses.

**SUBPART 1842.14 TRAFFIC AND TRANSPORTATION MANAGEMENT**

1842.1405 Discrepancies incident to shipment of supplies.

**SUBPART 1842.15 CONTRACTOR PERFORMANCE INFORMATION**

1842.1501 General.

1842.1502 Policy.

1503. Procedures.

**SUBPART 1842.70 ADDITIONAL NASA CONTRACT CLAUSES**

1842.7001 Observance of legal holidays.

1842.7002 Travel outside of the United States.

1842.7003 Emergency medical services and evacuation.

**SUBPART 1842.71 SUBMISSION OF VOUCHERS**

1842.7101 Submission of vouchers.

**SUBPART 1842.72 NASA CONTRACTOR FINANCIAL MANAGEMENT**

**REPORTING**

1842.7201 General.

1842.7202 Contract clause.

**SUBPART 1842.73 AUDIT TRACKING AND RESOLUTION**

1842.7301 NASA external audit follow-up system.

**SUBPART 1842.74 EARNED VALUE MANAGEMENT**

1842.7401 Earned Value Management Systems (EVMS).

1842.7402 Solicitation provisions and contract clauses.

**PART 1842**

**CONTRACT ADMINISTRATION AND AUDIT SERVICES**

**Subpart 1842.1\-- Contract Audit Services**

**1842.101**  **Contract audit responsibilities.**

(a)**(i)** The Defense Contract Audit Agency (DCAA) has been designated
as the DOD agency responsible for the performance of audit functions for
NASA contracts, except those awarded to educational institutions for
which other agencies have audit cognizance under OMB Circular No. A-133,
those with Canadian contractors, and those for which NASA will perform
audits.

**(ii)** Cross-servicing arrangements are the responsibility of the
Headquarters Office of External Relations (Code ID). Contracting
officers should direct questions to the Headquarters Office of
Procurement (Code HK).

**1842.102**  **Assignment of contract audit services.**

**1842.102-70 Review of administration and audit services.**

\(a\) NASA installations shall assess their delegations to DOD
semiannually to determine changes in delegation patterns that could (1)
result in significant changes in DOD manpower requirements or (2) have
other important impacts on DOD contract administration activities.
Events such as

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 NPG 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 NPG 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) 1200.10 "Internal Management Controls and Audit Liaison
and Followup", which provide 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 reported
quarterly to the Headquarters Office of Procurement (Code HK); and

\(2\) Only OMB Circular No. A-133 audit reports involving the following
shall be reported quarterly to Code HK:

\(i\) 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 "disposition" are defined in 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 - Management action responsive to an agreed
upon audit recommendation.

\(2\) 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 administering that award.

\(ii\) 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 and Code HK.

**Subpart 1842.74\--Earned Value Management**

**1842.7401 Earned Value Management Systems (EVMS).**

When an offeror or contractor is required to provide an EVMS plan to the
Government in accordance with NASA Policy Directive (NPD) 9501.3, Earned
Value Management, the contracting officer shall forward a copy of the
plan to the cognizant administrative contracting officer (ACO) to obtain
the assistance of the ACO in determining the adequacy of the proposed
EVMS plan.

**1842.7402 Solicitation provisions and contract clauses.**

\(a\) When the Government requires Earned Value Management, the
contracting officer shall insert:

\(1\) The provision at 1852.242-74, Notice of Earned Value Management
System, in solicitations; and

\(2\) The clause at 1852.242-75, Earned Value Management System, in
solicitations and contracts.

\(b\) The contracting officer shall insert the clause at 1852.242-76,
Modified Cost Performance Report, in solicitations and contracts
requiring modified cost performance reporting (see NPD 9501.3, Earned
Value Management).

\(c\) The contracting officer shall insert the provision at 1852.242-77,
Modified Cost Performance Report Plans, in solicitations for contracts
requiring modified cost performance reporting (see NPD 9501.3).

1852.232-77 Limitation of Funds (Fixed-Price Contract).

1852.232-79 Payment for On-Site Preparatory Costs.

1852.232-81 Contract Funding.

1852.232-82 Submission of Requests for Progress Payments.

1852.233-70 Protests to NASA.

1852.235-70 Center for AeroSpace Information - Final Scientific and

Technical Reports.

1852.235-71 Key Personnel and Facilities.

1852.235-72 Instructions for Responding to NASA Research Announcements.

1852.236-71 Additive or Deductive Items.

1852.236-72 Bids with Unit Prices.

1852.236-73 Hurricane Plan.

1852.236-74 Magnitude of Requirement.

1852.236-75 Partnering for Construction Contracts.

1852.237-70 Emergency Evacuation Procedures.

1852.237-71 Pension Portability.

1852.239-70 Alternate Delivery Points.

1852.241-70 Renewal of Contract.

1852.242-70 Technical Direction.

1852.242-71 Travel Outside of the United States.

1852.242-72 Observance of Legal Holidays.

1852.242-73 NASA Contractor Financial Management Reporting.

1852.242-74 Notice of Earned Value Management System.

1852.242-75 Earned Value Management System.

1852.242-76 Modified Cost Performance Report.

1852.242-77 Modified Cost Performance Report Plans.

1852.242-78 Emergency Medical Services and Evacuation.

1852.243-70 Engineering Change Proposals.

1852.243-71 Shared Savings.

1852.243-72 Equitable Adjustments.

1852.244-70 Geographic Participation in the Aerospace Program.

1852.245-70 Contractor Requests for Government-Owned Equipment.

1852.245-71 Installation-Accountable Government Property.

1852.245-72 Liability for Government Property Furnished for Repair or

>   Other Services.

1852.245-73 Financial Reporting of NASA Property in the Custody of
Contractors.

1852.245-74 Contractor Accountable On-Site Government Property.

1852.245-75 Title to Equipment.

1852.245-76 List of Government-Furnished Property.

1852.245-77 List of Installation-Accountable Property and Services.

1852.245-79 Use of Government-Owned Property.

1852.245-80 Use of Government Production and Research Property on a
No-Charge Basis.

1852.246-70 Mission Critical Space System Personnel Reliability  

Program.

1852.246-71 Government Contract Quality Assurance.

1852.246-72 Material Inspection and Receiving Report.

1852.246-73 Human Space Flight Item.

1852.247-71 Protection of the Florida Manatee.

1852.247-72 Advance Notice of Shipment.

1852.247-73 Shipment by Government Bills of Lading.

1852.249-72 Termination (Utilities).

**SUBPART 1852.3 PROVISION AND CLAUSE MATRIX**

1852.300 Scope of Subpart.

1852.301 Solicitation Provisions and Contract Clauses (Matrix).

**PART 1852**

**SOLICITATION PROVISIONS AND CONTRACT CLAUSES**

**1852.000 Scope of part.**

This part, in conjunction with FAR Part 52, (a) sets forth the
provisions and clauses prescribed in the NFS, (b) gives instructions for
their use, and (c) presents a matrix listing the provisions and clauses
applicable to each principal contract type and/or purpose (e.g.,
fixed-price supply, cost-reimbursement research and development).

**Subpart 1852.1\--Instructions for Using Provisions and Clauses**

**1852.101 Using Part 52.**

(b)(2)(i)(B) NASA contracting offices prescribing or developing clauses
shall ensure that the requirements of Subpart 1801.3 are met.

(e)(1) The NFS matrix in Subpart 1852.3 is formatted similarly to that
in the FAR. The first page of the NFS matrix contains a key to column
headings, a dollar threshold chart, and requirement symbols. To fully
determine the applicability of a provision or clause in the
\"required-when-applicable\" and \"optional\" categories, Contracting
Officers shall refer to the NFS text (cited in the matrix) that
prescribes its use.

\(4\) The NFS matrix may be reproduced by field installations for the
purpose of supplementing it with installation-developed provisions and
clauses.

**1852.103 Identification of provisions and clauses.**

\(b\) Provisions and clauses prescribed by a field installation to
satisfy its needs shall be identified as stated in paragraphs (b)(i) and
(ii) of this section. Articles, formats, and similar language shall be
treated as provisions and clauses for purposes of this section 1852.103.

**(i)** A provision or clause shall be numbered using a prefix, a base,
and a suffix. The prefix shall be an alphabetical abbreviation of the
installation name (e.g., ARC, DFRC, GRC, GSFC, JSC, KSC, LARC, MSFC,
SSC, or SSPO). The base shall be a numeric value beginning with
\"52.2,\" with the next two digits corresponding to the number of the
FAR or NFS subject part to which the provision or clause relates. The
suffix shall be a hyphen and sequential number assigned within each
part. NASA installations shall use suffix numbers from -90 to -199. For
example, the first Johnson Space Center (JSC) provision or clause
relating to Part 36 of the FAR

or NFS shall be JSC 52.236-90, the second JSC 52.236-91, and so forth.
Provisions and clauses shall be dated in accordance with FAR 52.101(f).

**(ii)** Contracting officers shall identify provisions and clauses as
in the following examples:

**1852.242-77 Modified Cost Performance Report Plans.**

As prescribed in 1842.7402(c), insert the following provision;

**MODIFIED COST PERFORMANCE PLANS**

**(MARCH 1999)**

\(a\) The offeror shall submit in its proposal a written summary of the
management procedures it will establish, maintain, and use in the
performance of any resultant contract to comply with the requirements of
the clause at 1852.242-76, Modified Cost Performance Report.

\(b\) The offeror may propose to use a cost/schedule control system that
has been recognized by the cognizant Administrative Contracting Officer
as:

\(1\) Complying with the earned value management system criteria of NASA
Policy Directive 9501.3, Earned Value Management, or DoD 5000.2-R,
Mandatory Procedures for Major Defense Acquisition Programs and Major
Automated Information Systems Acquisition Programs; or

\(2\) Conforming with the full intentions of the guidelines presented in
ANSI/EIA Standard 748, Industry Guidelines for Earned Value Management
Systems.

In such cases, the offeror may submit a copy of the documentation of
such recognition instead of the written summary required by paragraph
(a) of this provision.

**(End of provision)**

**1852.242-78 Emergency Medical Services and Evacuation.**

As prescribed in 1842.7003, insert the following clause:

**EMERGENCY** **MEDICAL SERVICES AND EVACUATION**

**(APRIL** **2001)**

The Contractor shall, at its own expense, be responsible for making all
arrangements for emergency medical services and evacuation, if required,
for its employees while performing work under this contract outside the
United States or in remote locations in the United States. If necessary
to deal with certain emergencies, the Contractor may request the
Government to provide medical or evacuation services. If the Government
provides such services, the Contractor sha1l reimburse the Government
for the costs incurred.

**(End** **of clause)**

**1852.243-70 Engineering Change Proposals.**

As prescribed in 1843.205-70(a)(1), insert the following clause,
modified to suit contract type:

**ENGINEERING CHANGE PROPOSALS**

**(FEBRUARY 1998)**

\(a\) Definitions.

**"ECP\"** means an Engineering Change Proposal (ECP) which is a
proposed engineering change and the documentation by which the change is
described, justified, and submitted to the procuring activity for
approval or disapproval.

**\"MIL-STD-973\"** means a DOD publication entitled, Military Standard
Configuration Control - Engineering Changes, Deviations and Waivers, 15
July 1988.

\(b\) Either party to the contract may originate ECPs. The originator
shall forward proposed ECPs to the Contracting Officer. Unless another
process has been approved by the Government or specified by the
Contracting Officer, the ECP formats, forms and controls specified in
MIL-STD-973 shall be used. Implementation of an approved ECP may occur
by either a supplemental agreement or, if appropriate, as a written
change order to the contract.

\(c\) Any ECP submitted to the Contracting Officer shall include a
\"not-to-exceed\" [     ]{.underline}  \[price or estimated cost\]
increase or decrease adjustment amount, if any, and the required \[time
of delivery or period of performance\] adjustment, if any, acceptable to
the originator of the ECP. If the change is originated within the
Government, the Contracting Officer shall obtain a written agreement
with the contractor regarding the \"not-to-exceed\" [     ]{.underline}
\[price or estimated cost\] and \[delivery or period of performance\]
adjustments, if any, prior to issuing an order for implementation of the
change.

\(d\) After submission of a contractor initiated ECP, the contracting
officer may require the contractor to submit the following information:

\(1\) Cost or pricing data in accordance with FAR 15.403-5 if the
proposed change meets the criteria for its submission under FAR
15.403-4; or

\(2\) Information other than cost or pricing data adequate for
contracting officer determination of price reasonableness or cost
realism. The contracting officer reserves the right to request
additional information if that provided by the contractor is considered
inadequate for that purpose. If the contractor claims applicability of
one of the exceptions to submission of cost or pricing data, it shall
cite the exception and provide rationale for its applicability.

\(e\) If the ECP is initiated by NASA, the contracting officer shall
specify the cost information requirements, if any.

**(End of clause)**

**ALTERNATE I**

**(JULY 1997)**

As prescribed in 1843.205-70(a)(2), add the following paragraph (f),
modified to suit contract type, to the basic clause:

\(f\) If the \_\_\_ \[price or estimated cost\] adjustment proposed for
any Contractor-originated ECP is \_\_\_ \[insert a percent or dollar
amount of the contract price or estimated cost\] or less, the ECP shall
be executed with no adjustment to the contract \_\_\_ \[price or
estimated cost\].

**ALTERNATE II**

**(SEPTEMBER 1990)**

As prescribed in 1843.205-70(a)(3), add the following sentence at the
end of paragraph (c) of the basic clause:

An ECP accepted in accordance with the Changes clause of this contract
shall not be considered an authorization to the Contractor to exceed the
estimated cost in the contract Schedule, unless the estimated cost is
increased by the change order or other contract modification.

**1852.243-71 Shared Savings.**

As prescribed in 1843.7102, insert the following clause:

**SHARED SAVINGS**

**(MARCH 1997)**

\(a\) The Contractor is entitled, under the provisions of this clause,
to share in cost savings resulting from the implementation of cost
reduction projects which are presented to the Government in the form of
Cost Reduction Proposals (CRP) and approved by the Contracting Officer.
These cost reduction projects may require changes to the terms,
conditions or statement of work of this contract. Any cost reduction
projects must not change the essential function of

any products to be delivered or the essential purpose of services to be
provided under the contract.

\(b\) **Definitions:**

\(1\) **Cost savings**, as contemplated by this clause mean savings that
result from instituting changes to the covered contract, as identified
in an approved Cost Reduction Proposal.

\(2\) **Cost Reduction Proposal** - For the purposes of this clause, a
Cost Reduction Proposal means a proposal that recommends alternatives to
the established procedures and/or organizational support of a contract
or group of contracts. These alternatives must result in a net reduction
of contract cost and price to NASA. The proposal will include technical
and cost information sufficient to enable the Contracting Officer to
evaluate the CRP and approve or disapprove it.

\(3\) **Covered contract** - As used in this provision, covered contract
means the contract, including unexercised options but excluding future
contracts, whether contemplated or not, against which the CRP is
submitted.

\(4\) **Contractor implementation costs** - As used in this provision,
Contractor implementation costs, or \"implementation costs\", shall mean
those costs which the Contractor incurs on covered contracts
specifically in developing, preparing, submitting, and negotiating a
CRP, as well as those costs the Contractor will incur on covered
contracts to make any structural or organizational changes in order to
implement an approved CRP.

\(5\) **Government costs** - As used in this provision, the term
Government costs means internal costs of NASA, or any other Government
agency, which result directly from development and implementation of the
CRP. These may include, but are not limited to, costs associated with
the administration of the contract or with such contractually related
functions such as testing, operations, maintenance and logistics
support. These costs also include costs associated with other Agency
contracts (including changes in contract price or cost and fee) that may
be affected as a result of the implementation of a CRP. They do not
include the normal administrative costs of reviewing and processing the
Cost Reduction Proposal.

\(c\) General. The Contractor will develop, prepare and submit CRP\'s
with supporting information as detailed in paragraph (e) of this clause,
to the Contracting Officer. The CRP will describe the proposed cost
reduction activity in sufficient detail to enable the Contracting
Officer to evaluate it and to approve or disapprove it. The Contractor
shall share in any net cost savings realized from approved and
implemented CRPs in accordance with the terms of this clause. The
Contractor\'s actual percentage share of the cost savings shall be a
matter for negotiation with the Contracting Officer, but shall not, in
any event, exceed 50 percent of the total cost savings recognized by the
Contracting Officer. The Contractor may propose changes in other
activities that impact performance on its contract, including Government
and other Contractor operations, if such changes will optimize cost
savings. A Contractor shall not be entitled to share, however, in any
cost savings that are internal to the Government, or which result from
changes made to any contracts to which it is not a party even if those
changes were proposed as a part of its CRP. Early communication between
the Contractor and Government is encouraged. The communication may be in
the form of a concept paper or preliminary proposal. The Government is
not committed to accepting any proposal as a result of these early
discussions.

\(d\) Computation of cost savings. The cost savings to be shared between
the Government and the Contractor will be computed by the Contracting
Officer by comparing a current estimate to complete (ETC) for the
covered contract, as structured before implementation of the proposed
CRP, to a revised ETC which takes into account the implementation of
that CRP. The cost savings to be shared shall be reduced by any cost
overrun, whether experienced or projected, that is identified on the
covered contract before implementation of the CRP. Although a CRP may
result in cost savings that extend far into the future, the period in
which the Contractor may share in those savings will be limited to no
more than five years. Implementation costs of the Contractor must be
considered and specifically identified in the revised ETC. The
Contracting Officer shall offset Contractor cost savings by any
increased costs (whether implementing or recurring) to the Government
when computing the total cost savings to be shared. The Contractor shall
not be entitled, under the provisions of this clause, to share in any
cost reductions to the contract that are the result of changes stemming
from any action other than an approved CRP. However, this clause does
not limit recovery of any such reimbursements that are allowed as a
result of other contract provisions.

\(e\) Supporting Information. As a minimum, the Contractor shall provide
the following supporting information with each CRP:

\(1\) Identification of the current contract requirements or established
procedures and/or organizational support which are proposed to be
changed.

\(2\) A description of the difference between the current process or
procedure and the proposed change. This description shall address how
proposed changes will meet NASA requirements and discuss the advantages
and disadvantages of the existing practice and the proposed changes.

\(3\) A list of contract requirements which must be revised, if any, if
the CRP is approved, along with proposed revisions. Any changes to NASA
or delegated contract management processes should also be addressed.

\(4\) Detailed cost estimates which reflect the implementation costs of
the CRP.

\(5\) An updated ETC for the covered contract, unchanged, and a revised
ETC for the covered contract which reflects changes resulting from
implementing the CRP. If the CRP proposes changes to only a limited
number of elements of the contract, the ETCs need only address those
portions of the contract that have been impacted. Each ETC shall depict
the level of costs incurred or to be incurred by year, or to the level
of detail required by the Contracting Officer. If other CRPs have been
proposed or approved on a contract, the impact of these CRPs must be
addressed in the computation of the cost savings to ensure that the cost
savings identified are attributable only to the CRP under consideration
in the instant case.

\(6\) Identification of any other previous submissions of the CRP,
including the dates submitted, the agencies and contracts involved, and
the disposition of those submittals.

\(f\) Administration.

\(1\) The Contractor shall submit proposed CRPs to the Contracting
Officer who shall be responsible for the review, evaluation and
approval. Normally, CRP\'s should not be entertained for the first year
of performance to allow the Contracting Officer to assess performance
against the basic requirements. If a cost reduction project impacts more
than a single contract, the Contractor may, upon concurrence of the
Contracting Officers responsible for the affected contracts, submit a
single CRP which addresses fully the cost savings projected on all
affected contracts that contain this Shared Savings Clause. In the case
of multiple contracts affected, responsibility for the review and
approval of the CRP will be a matter to be decided by the affected
Contracting Officers.

\(2\) Within 60 days of receipt, the Contracting Officer shall complete
an initial evaluation of any proposed cost reduction plan to determine
its feasibility. Failure of the Contracting Officer to provide a
response within 60 days shall not be construed as approval of the CRP.
The Government shall promptly notify the Contractor of the results of
its initial evaluation and indicate what, if any, further action will be
taken. If the Government determines that the proposed CRP has merit, it
will open discussions with the Contractor to establish the cost savings
to be recognized, the Contractor's share of the cost savings, and a
payment schedule. The Contractor shall continue to perform in accordance
with the terms and conditions of the existing contract until a contract
modification is executed by the Contracting Officer. The modification
shall constitute approval of the CRP and shall incorporate the changes
identified by the CRP, adjust the contract cost and/or price, establish
the Contractor's share of cost savings, and incorporate the agreed to
payment schedule.

\(3\) The Contractor will receive payment by submitting invoices to the
Contracting Officer for approval. The amount and timing of individual
payments will be made in accordance with the schedule to be established
with the Contracting Officer. Notwithstanding the overall savings
recognized by the Contracting Officer as a result of an approved CRP,
payment of any portion of the Contractor's share of savings shall not be
made until NASA begins to realize a net cost savings on the contract
(i.e., implementation, startup and other increased costs resulting from
the change have been offset by cumulative cost savings). Savings
associated with unexercised options will not be paid unless and until
the contract options are exercised. It shall be the responsibility of
the Contractor to provide such justification as the Contracting Officer
deems necessary to substantiate that cost savings are being achieved.

\(4\) Any future activity, including a merger or acquisition undertaken
by the Contractor (or to which the Contractor becomes an involved
party), which has the effect of reducing or reversing the cost savings
realized from an approved CRP for which the Contractor has received
payment may be cause for recomputing the net cost savings associated
with any approved CRP. The Government reserves the right to make an
adjustment to the Contractor\'s share of cost savings and to receive a
refund of moneys paid if necessary. Such adjustment shall not be made
without notifying the Contractor in advance of the intended action and
affording the Contractor an opportunity for discussion.

\(g\) Limitations. Contract requirements that are imposed by statute
shall not be targeted for cost reduction exercises. The Contractor is
precluded from receiving reimbursements under both this clause and other
incentive provisions of the contract, if any, for the same cost
reductions.

\(h\) Disapproval of, or failure to approve, any proposed cost reduction
proposal shall not be considered a dispute subject to remedies under the
Disputes clause.

\(i\) Cost savings paid to the Contractor in accordance with the
provisions of this clause do not constitute profit or fee within the
limitations imposed by 10 U.S.C. 2306(d) and 41 U.S.C. 254(b).

**(End of clause)**

**1852.243-72 Equitable Adjustments.**

As prescribed in 1843.205-70(b), insert the following clause.

**EQUITABLE ADJUSTMENTS**

**(APRIL 1998)**

\(a\) The provisions of all other clauses contained in this contract
which provide for an equitable adjustment, including those clauses
incorporated by reference with the exception of the "Suspension of Work"
clause (FAR 52.242-14), are supplemented as follows:

> Upon written request, the Contractor shall submit a proposal for
> review by the Government. The proposal shall be submitted to the
> contracting officer within the time limit indicated in the request or
> any extension thereto subsequently granted. The proposal shall provide
> an itemized breakdown of all increases and decreases in the contract
> for the Contractor and each subcontractor in at least the following
> detail: material quantities and costs; direct labor hours and rates
> for each trade; the associated FICA, FUTA, SUTA, and Workmen's
> Compensation Insurance; and equipment hours and rates.

\(b\) The overhead percentage cited below shall be considered to include
all indirect costs including, but not limited to, field and office
supervisors and assistants, incidental job burdens, small tools, and
general overhead allocations. "Commission" is defined as profit on work
performed by others. The percentages for overhead, profit, and
commission are negotiable according to the nature, extent, and
complexity of the work involved, but in no case shall they exceed the
following ceilings:

+----------------------------------+----------+---------+-------------+
|                                  | **Ov     | **P     | **C         |
|                                  | erhead** | rofit** | ommission** |
|                                  |          |         |             |
|                                  | **(Pe    | **(Per  |             |
|                                  | rcent)** | cent)** |             |
+----------------------------------+----------+---------+-------------+
| To Contractor on work performed  | \        | \-      | 10 percent  |
| by other than its own forces     | -\-\-\-- | \-\-\-- |             |
+----------------------------------+----------+---------+-------------+
| To first tier subcontractor on   | \        | \-      | 10 percent  |
| work performed by its            | -\-\-\-- | \-\-\-- |             |
| subcontractors                   |          |         |             |
+----------------------------------+----------+---------+-------------+
| To Contractor and/or             | 10       | 10      | \-\-\-\--   |
| subcontractors on work performed | percent  | percent |             |
| with their own forces            |          |         |             |
+----------------------------------+----------+---------+-------------+

\(c\) Not more than four percentages for overhead, profit, and
commission shall be allowed regardless of the number of subcontractor
tiers.

\(d\) The Contractor or subcontractor shall not be allowed overhead or
commission on the overhead, profit, and/or commission received by its
subcontractors.

\(e\) Equitable adjustments for deleted work shall include credits,
limited to the same percentages for overhead, profit, and commission in
paragraph (b) of this clause.

\(f\) On proposals covering both increases and decreases in the amount
of the contract, the application of the overhead, profit, and commission
shall be on the net change in direct costs for the Contractor or the
subcontractor performing the work.

\(g\) After receipt of the Contractor's proposal, the contracting
officer shall act within a reasonable period, provided that when the
necessity to proceed with a change does not permit time to properly
check the proposal, or in the event of a failure to reach an agreement
on a proposal, the contracting officer may order the Contractor to
proceed on the basis of the price being determined at the earliest
practicable date. In such a case, the price shall not be more than the
increase or less than the decrease proposed.

**(End of clause)**

**1852.244-70** **Geographic** **Participation** **in** **the**
**Aerospace** **Program.**

As prescribed in 1844.204-70, insert the following clause:

**GEOGRAPHIC PARTICIPATION IN THE AEROSPACE PROGRAM**

(APRIL 1985)