[Federal Register Volume 65, Number 95 (Tuesday, May 16, 2000)]
[Rules and Regulations]
[Pages 31101-31103]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-12141]


=======================================================================
-----------------------------------------------------------------------

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 1804, 1806, 1815, 1823, 1832, and 1845


Contract Financing

AGENCY: Office of Procurement, Contract Management Division, National 
Aeronautics and Space Administration (NASA).

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: This final rule amends the NASA FAR Supplement (NFS) to: 
provide guidance on administering progress payments on indefinite-
delivery contracts; delete outdated performance-based payments 
guidance; and provide guidance on using performance-based payments in 
competitive negotiated acquisitions. These revisions result from the 
final FAR rule (FAR Case 98-400) on contract financing that was 
published in the March 27, 2000, Federal Register. This final rule also 
makes changes to conform the NFS with changes made by FAC 97-15; and 
makes editorial corrections and miscellaneous changes dealing with NASA 
internal and administrative matters.

EFFECTIVE DATE: May 16, 2000.

FOR FURTHER INFORMATION CONTACT: Mr. Joseph Le Cren, NASA Headquarters, 
Code HK, Washington, DC 20546, telephone: (202) 358-0444, e-mail: 
<a href="/cdn-cgi/l/email-protection#0b6164786e7b6325676e68796e654b637a25656a786a256c647d"><span class="__cf_email__" data-cfemail="82e8edf1e7f2eaaceee7e1f0e7ecc2eaf3acece3f1e3ace5edf4">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION:

A. Background

    A final FAR rule was published in the Federal Register that 
simplified and streamlined the administration of progress payments, and 
removed the prohibition against using performance-based payments in 
contracts for research and development and contracts awarded through 
competitive negotiation procedures.
    The FAR revisions deleted previous language on the administration 
of progress payments under indefinite delivery contracts that allowed 
administration on an overall contract basis, or for the treatment of a 
group of orders as a single unit. However, the FAR rule also allows for 
agency procedures to specify other procedures. In order to provide 
contracting officers with the maximum flexibility for administering 
progress payments, NASA chooses to retain the deleted FAR language.
    The FAR revisions incorporated language requiring that the amounts 
of performance-based payments not result in unreasonably low or 
negative level of contractor investment in the contract and provide 
guidance on how the contracting officer would assure this did not take 
place. As a result of this change, similar NFS language is unnecessary 
and is deleted. The FAR rule also deleted section 32.1006, Agency 
Approvals, and the NFS implementing guidance at 1832.1006 is no longer 
necessary and is likewise deleted.
    FAR 32.1001(a) requires two conditions for the use of performance-
based payments: ``the contracting officer finds them practical, and the 
contractor agrees to their use.'' Although the FAR does not offer any 
guidance for determining practicality of use, the preamble to the final 
FAR rule indicates that, relative to the use of performance-based 
payments in competitive negotiations, contracting officers may consider 
the effect on the source selection process and the ``potential impact 
on small business competitiveness'' among the factors for determining 
practicality. In the last few years, NASA has adopted a number of 
source selection streamlining procedures (awarding without discussions 
and requiring no cost information on firm-fixed-price competitions) 
that could be

[[Page 31102]]

compromised by the use of performance-based payments, a financing 
option that would almost always require discussions and cost 
information. In addition, NASA has been a leader in encouraging small 
business participation in its competitions, and will not take any 
action that might deter continued high levels of small business 
competitiveness. Accordingly, NASA believes it important to specify in 
the NFS that contracting officers should consider the procedural and 
small business competitiveness factors when determining the 
practicality of the use of performance-based payments in competitive 
negotiations. As a management control to ensure that the source 
selection process and small business competitiveness are not adversely 
affected, HQ approval is required for use of performance-based payments 
in competitions under $50M. NASA will use its Master Buy Plan process 
to obtain visibility into acquisitions over that amount.
    When performance-based payments are used in competitive negotiated 
acquisitions, FAR 32.1004(e) indicates that the solicitation should 
include a price adjustment ``if the contracting officer anticipates 
that the cost of providing performance-based payments would have a 
significant impact on determining the best value offer.'' However, the 
FAR also allows agencies to establish other evaluation procedures. NASA 
believes that the use of the price adjustment evaluation has the 
potential to lengthen the source selection process, require the 
submission of proposal information otherwise not required, and 
adversely impact small and small disadvantaged businesses. Accordingly, 
the NFS advises contracting officers to consider qualitative evaluation 
methods when performance-based payments are used in competitive 
negotiations under $50M.
    Finally, the NFS change also requires that when performance-based 
payments are planned to be used in competitive negotiated acquisitions, 
the draft RFP must request the potential offerors to suggest terms, 
including performance events or payment criteria. The information 
provided by the offerors will be used, when possible, to establish a 
common set of performance-based payment parameters in the formal 
solicitation.
    FAC 97-15 changed the section heading at 4.804-5 and deleted 
subpart 23.1. This final rule conforms the NFS with these changes; 
makes other editorial changes to correct referenced FAR citations, 
office designations; and provides an example of ``evidence of 
endorsement by another agency of the U.S. Government based on national 
security or foreign policy of the United States'' at section 1845.405-
70.

B. Regulatory Flexibility Act

    This final rule does not constitute a significant revision within 
the meaning of FAR 1.501 and Public Law 98-577, and publication for 
public comments is not required. However, comments from small entities 
concerning the affected NFS subpart will be considered in accordance 
with 5 U.S.C. 610. Such comments must be submitted separately and 
should cite 5 U.S.C. 601, et seq.

C. Paperwork Reduction Act

    The Paperwork Reduction Act does not apply because the changes to 
the NFS do not impose recordkeeping or information collection 
requirements, or collections of information from offerors, contractors, 
or members of the public which require the approval of the Office of 
Management and Budget under 44 U.S.C. 3501, et seq.

List of Subjects in 48 CFR Parts 1804, 1806, 1815, 1823, 1832, and 
1845

    Government procurement.

Tom Luedtke,
 Associate Administrator for Procurement.

    Accordingly, 48 CFR parts 1804, 1806, 1815, 1823, 1832 and 1845 are 
amended as follows:
    1. The authority citation for 48 CFR parts 1804, 1806,1815, 1823, 
1832, and 1845 continues to read as follows:

    Authority: 42 U.S.C. 2473 (c)(1).

PART 1804--ADMINISTRATIVE MATTERS

    2. In section 1804.804-5, revise the section heading and amend 
paragraphs (a) and (b) by removing the word ``shall'' and inserting the 
word ``must'' in its place. The revised section heading reads as 
follows:


1804.804-5  Procedures for closing out contract files.

* * * * *

PART 1806--COMPETITION REQUIREMENTS


1806.303-1   [Amended]

    3. Amend paragraph (d) of section 1806.303-1 by removing the 
reference ``FAR 25.403'' and adding ``FAR 25.401'' in its place.

PART 1815--CONTRACTING BY NEGOTIATION

    4. Amend section 1815.201 by redesignating paragraph (c)(6)(E) as 
1815.201(c)(6)(F) and adding a new paragraph (c)(6)(E) to read as 
follows:


1815.201  Exchanges with industry before receipt of proposals.

* * * * *
    (c)(6) * * *
    (E) If performance-based payments are planned to be used in a 
competitive negotiated acquisition, the DRFP shall request potential 
offerors to suggest terms, including performance events or payment 
criteria. Contracting officers shall use that information to establish 
a common set of performance-based payments parameters in the formal RFP 
when practicable.
* * * * *

PART 1823--ENVIRONMENT, CONSERVATION, OCCUPATIONAL SAFETY, AND 
DRUG-FREE WORKPLACE

Subpart 1823.1 [Removed]

    5. Remove subpart 1823.1

PART 1832--CONTRACT FINANCING

    6. Add sections 1832.503 and 1832.503-5 to read as follows:


1832.503  Postaward matters.


1832.503-5  Administration of progress payments. (NASA supplements 
paragraph (c).)

    (c)(i) If the contractor requests it and the contracting officer 
approving individual progress payments agrees, the administration of 
progress payments may be based on the overall contract agreement. Under 
this method, the contractor must include a supporting schedule with 
each request for a progress payment. The schedule should identify the 
costs applicable to each order.
    (ii) The contracting officer may treat a group of orders as a 
single unit for administration of progress payments if each order in 
the group is subject to a uniform liquidation rate and under the 
jurisdiction of the same payment office.
    7. Add section 1832.1001 to read as follows:


1832.1001  Policy.

    (a)(i) In determining whether performance-based payments are 
practical in competitive negotiated acquisitions, the contracting 
officer should consider the procedural impacts (e.g., proposal 
evaluation complications, longer evaluations, elimination of the 
potential for award without discussions, increased proposal information 
requirements) and the impact on small business competitiveness.

[[Page 31103]]

    (ii) The contracting officer must obtain approval from the Director 
of the Headquarters Office of Procurement Contract Management Division 
(Code HK) to use performance-based payments in competitive negotiated 
solicitations under $50M. The request for approval must include an 
assessment of the practicality of using performance-based payments, as 
well as the proposed performance-based payments evaluation approach 
(see 1832.1004(e)(1)(ii)).

    8. Revise section 1832.1004 to read as follows:


1832.1004  Procedures.

    (a) See 1815.201(c)(6)(E) for establishing performance bases and 
payment terms in competitive negotiated acquisitions.
    (e)(1)(ii) Use of the price adjustment evaluation technique may 
require obtaining and analyzing proposal information that is normally 
not required in NASA firm-fixed-price competitions (see 1815.403-3). 
When using performance-based payments in competitive negotiated 
acquisitions under $50 million, contracting officers should consider 
the use of alternative evaluation methods, e.g., qualitative evaluation 
under Mission Suitability or another appropriate factor.

    9. In section 1832.1005, add paragraph (b)(2) to read as follows:


1832.1005  Contract clauses.

* * * * *
    (b)(2) Contracting officers shall not use Alternate I in 
competitive negotiated acquisitions under $50 million, unless approval 
has been obtained to use performance-based payments (see 
1832.1001(a)(ii)).


1832.1006  [Removed]

    10. Remove section 1832.1006.

PART 1845--GOVERNMENT PROPERTY

    11. In section 1845.405-70, revise paragraphs (b) and (c)(9) to 
read as follows:


1845.405-70  NASA procedures.

* * * * *
    (b) The prior written approval of the Associate Administrator for 
Procurement (Code H) is required for the use of Government production 
and research property on work for foreign countries or for 
international organizations. The Logistics Management Office of the 
Headquarters Office of Management Systems (Code JG), the Office of 
General Counsel (Code G), and the Headquarters Office of External 
Relations (Code I) are required concurrences.
    (c) * * *
    (9) Any evidence of endorsement by another agency of the U.S. 
Government based on national security or foreign policy of the United 
States (e.g., an approved license or agreement from the Department of 
State or Department of Commerce).
* * * * *
[FR Doc. 00-12141 Filed 5-15-00; 8:45 am]
BILLING CODE 7510-01-P


</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>