[Federal Register Volume 62, Number 57 (Tuesday, March 25, 1997)]
[Rules and Regulations]
[Pages 14016-14035]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-7075]


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NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 1803, 1805, 1812, 1815, 1835, 1842, 1843, 1844, 1846, 
1847, 1848, 1849, 1850, 1851, and 1852


Rewrite of the NASA FAR Supplement (NFS)

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

ACTION: Final rule.

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SUMMARY: Parts 1842 through 1851, except 1845, and clauses affected by 
these parts are revised in their entirety. Part 1815, Contracting by 
Negotiation, is revised by relocating the existing coverage on source 
selection evaluation plans from 1815.612-70(g) to a new separately 
titled section 1815.605-71, and by establishing a new section 1815.612, 
Formal source selection. The revision to part 1842 also incorporates 
the changes published as a proposed rule (61 FR 55264-55266, October 
25, 1996). No public comments were received in response to the proposed 
rule, and the proposed changes are adopted as final except for the 
deletion of extraneous paragraph 1842.7201(d). Also included in this 
final rule are editorial changes to 1803 and 1815; a revision to 
1805.402 to reflect the prohibition in FAR 15.1005(f) on preaward 
disclosure of the identify of offerors; a change to 1812 to authorize 
use of an NFS contract clause in commercial acquisitions; and the 
adoption as final rule the proposed changes to 1852.223-70 and 
1852.247-73 described in the proposed rule to eliminate non-statutory 
contractor certification requirements (61 FR 66643-66646).

EFFECTIVE DATE: March 25, 1997.

FOR FURTHER INFORMATION CONTACT:
Tom O'Toole, (202) 358-0478.

SUPPLEMENTARY INFORMATION:

Background

    The National Performance Review urged agencies to streamline and 
clarify their regulations. The NFS rewrite initiative was established 
to pursue these goals by conducting a section by section review of the 
NFS to verify its accuracy, relevancy, and validity. The NFS will be 
rewritten in blocks of parts. Upon completion of all parts, the NFS 
will be reissued in a new edition.

Impact

    NASA certifies that this regulation will not have a significant 
impact on a substantial number of small entities under the Regulatory 
Flexibility Act (5 U.S.C. 602 et seq.). This rule does not impose any 
reporting or record keeping requirements subject to the Paperwork 
Reduction Act.

List of Subjects in 48 CFR Parts 1803, 1805, 1812, 1815, 1835, 
1842, 1843, 1844, 1846, 1847, 1848, 1849, 1850, 1851, and 1852

    Government procurement.
Tom Luedtke,
Deputy Associate Administrator for Procurement.

    Accordingly, 48 CFR Parts 1803, 1805, 1812, 1815, 1835, 1842, 1843, 
1844, 1846, 1847, 1848, 1849, 1850, 1851, and 1852 are amended as 
follows:
    1. The authority citation for 48 CFR 1803, 1805, 1812, 1815, 1835, 
1842, 1843, 1844, 1846, 1847, 1849, 1850, 1851, and 1852 continues to 
read as follows:

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

PART 1803--IMPROPER BUSINESS PRACTICES AND PERSONAL CONFLICTS OF 
INTEREST


1803.101-1  [Amended]

    2. The first sentence in section 1803.101-1 is revised to read as 
follows:


1803.101-1  General.

    The statutory prohibitions and their application to NASA personnel 
are discussed in the Standards of Ethical Conduct for Employees of the 
Executive Branch, 5 CFR part 2635, and the Supplemental Standards of 
Ethical Conduct for Employees of the National Aeronautics and Space 
Administration, 5 CFR part 6901.* * *


1803.101-2  [Amended]

    3. In section 1803.101-2, the phrase ``(See Standards of Conduct 
for NASA Employees, NHB 1900.1.)'' is removed.


1803.104-5  [Amended]

    4. In paragraph (d)(1)(A) of section 1803.104-5, the phrase ``under 
1870.303, App. I,'' is revised to read ``(see 1815.612-70)''.

PART 1805--PUBLICIZING CONTRACT ACTIONS


1805.402  [Amended]

    5. Section 1805.402 is revised to read as follows:


1805.402  General public. (NASA paragraphs (1) and (2))

    (1) Unless the head of the contracting activity determines that 
disclosure would be prejudicial to the interests of NASA, the following 
information on NASA acquisitions may be released:
    (i) The names of firms invited to submit offers, and

[[Page 14017]]

    (iii) The names of firms that attended any pre-bid or pre-proposal 
conferences.
    (2) Other requests for information under the Freedom of Information 
Act shall be processed in accordance with FAR 24.2 and 1824.2.

PART 1812--ACQUISITION OF COMMERCIAL ITEMS


1812.301  [Amended]

    6. In section 1812.301, a new paragraph (f)(i)(J) is added to read 
as follows:


1812.301  Solicitation provisions and contract clauses for the 
acquisition of commercial items. (NASA Supplement paragraph (f))

    (f)(i) * * *
    (J) 1852.246-72, Material Inspection and Receiving Report. * * *

PART 1815--CONTRACTING BY NEGOTIATION


1815.605-71  [Added]

    7. Section 1815.605-71 is added to read as follows:


1815.605-71  Source selection evaluation plan.

    (a) A source selection evaluation plan shall be prepared for each 
source selection. The plan shall include, as a minimum the general and 
specific evaluation guidelines (and special standards of 
responsibility, where applicable) established to assess each offeror's 
proposal against the RFP evaluation factors, subfactors, and elements. 
The evaluation guidelines are designed to focus the evaluators' 
assessment. They are not weighted and are not listed in the RFP. 
However, the substance of the guidelines may be included in a narrative 
description of the subfactors and elements. In addition, the plan 
includes the system used in conducting the evaluation (and scoring, if 
applicable) of each offeror's proposal.
    (b) The source selection evaluation plan shall be approved by the 
source selection authority or other personnel designated in accordance 
with installation procedures before the formal RFP is issued.
    (c) For formal source selections, see 1815.612(c).


1815.612  [Added]

    8. Section 1815.612 is added to read as follows:


1815.612  Formal source selection. (NASA supplements paragraph (c))

    (c) The requirement for a source selection evaluation plan may be 
satisfied by incorporating the information required by 1815.605-71 into 
the source selection plan. The consolidated plan shall be approved by 
the source selection authority.


1815.612-70  [Amended]

    9. In section 1815.612-70, the designated paragraph (g) is removed, 
and the designated paragraphs (h) through (k) are redesignated as 
paragraphs (g) though (j).

PART 1835--RESEARCH AND DEVELOPMENT CONTRACTING


1835.016-70  [Amended]

    10. In paragraph (b)(2) of section 1835.016-70, the citation 
``1815.201'' is revised to read ``1805.201''.
    11. Part 1842 is revised to read as follows:

PART 1842--CONTRACT ADMINISTRATION

Subpart 1842.1--Interagency Contract Administration and Audit Services

1842.101  Policy.
1842.102  Procedures.
1842.102-70  Review of administration and audit services.
1842.170  Assignment of NASA personnel at contractor plants.

Subpart 1842.2--Assignment of Contract Administration

1842.202  Assignment of contract administration.
1842.203  Retention of contract administration.
1842.270  Contracting officer technical representative (COTR) 
delegations.
1842.271  NASA clause.

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 1842.70--Additional NASA Contract Clauses

1842.7001  Observance of legal holidays.
1842.7002  Travel outside of the United States.

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.

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

Subpart 1842.1--Interagency Contract Administration and Audit 
Services


1842.101  Policy. (NASA supplements paragraph (a))

    (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. 
88, 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 HS).


1842.102  Procedures.


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 major program cutbacks or expansions, changes in 
locations of major programs, and sizable new acquisitions should be 
considered in the assessment.
    (b) A summary of significant changes shall be submitted to the 
Headquarters Office of Procurement (Code HK). The summary shall 
include--
    (1) A description of the change in work requirements or delegation 
pattern;
    (2) The estimated duration of the impact;

[[Page 14018]]

    (3) The results of discussions with affected DOD contract 
administration offices including agreement and disagreements on the 
predicted impact on DOD in terms of changes in manpower requirements or 
other costs; and
    (4) Any other significant impact on DOD or NASA resources or 
contract performance risk.


1842.170  Assignment of NASA personnel at contractor plants.

    (a)(1) NASA personnel normally shall not be assigned at or near a 
contractor's facility to perform any contract administration functions 
listed in FAR 42.302(a). Before such an assignment is made, a written 
request shall be forwarded to the cognizant program director for 
approval with the concurrence of the Associate Administrator for 
Procurement (Code HS). The following supporting information shall be 
forwarded with the request to make the assignment:
    (i) A statement of the special circumstances that necessitate the 
assignment.
    (ii) The contract administration serves to be performed.
    (iii) A summary of any discussions held with the cognizant contract 
administration organization.
    (iv) A staffing plan covering three years or such shorter period as 
may be appropriate.
    (2) The provisions of this paragraph (a) do not apply to NASA audit 
personnel assigned to the field installations, to NASA technical 
personnel covered by 1842.101 and paragraph (b) of this section, unless 
they are performing any contract administration functions listed in FAR 
42.302(a), or to personnel assigned to contractors' plants on NASA or 
other Federal installations.
    (b) NASA may assign technical personnel (such as quality assurance, 
reliability, or engineering representatives) to contractors' plants or 
laboratories to provide direct liaison with NASA and technical 
assistance and guidance to the contractor and DOD. The duties and 
responsibilities of these technical representatives shall be clearly 
defined and shall not conflict with, duplicate, or overlap with 
functions delegated to DOD personnel. NASA shall advise appropriate DOD 
and contractor organizations of the duties and responsibilities of NASA 
technical personnel.
    (c) When a NASA resident office, including any assigned technical 
personnel, and a DOD contract administration office are performing 
contract administration functions for NASA contracts at the same 
contractor's facility, the two offices shall execute a written 
agreement clearly establishing the relationship between the two 
organizations and the contractor. The agreement should eliminate 
duplication in the performance of contract administration functions and 
minimize procedural misunderstandings between the two organizations. 
Such agreements shall be consistent with existing delegations to the 
contract administration offices concerned and shall specify the 
relationship of NASA nonprocurement resident personnel to their DOD and 
contractor counterparts if such personnel will be involved in any 
aspect of contract administration.

Subpart 1842.2--Assignment of Contract Administration


1842.202  Assignment of contract administration. (NASA supplements 
paragraphs (b) and (d))

    (b) Withholding normal functions. (1) The following functions are 
normally retained by the contracting office.
    (A) Approval of the final voucher (FAR 42.302(a)(7)).
    (B) Countersigning NASA Form 456, Notice of Contract Costs 
Suspended and/or Disapproved (FAR 42.302(a)(8)).
    (C) Issuance of decisions under the disputes clause (FAR 
42.302(a)(10)).
    (D) Contract payment (FAR 42.302(a)(13)).
    (E) Execution of supplement agreements involving spare parts or 
other items selected through provisioning procedures. However, 
delegation of the negotiation of supplemental agreements for spare 
parts and other items and forwarding for approval and signature of the 
NASA contracting officer is permitted (FAR 42.302(a)(22)).
    (F) Executive of supplemental agreements definitizing change orders 
(see FAR 42.302(b)(1)).
    (G) Issuing termination notices and executing supplemental 
agreements for settlement of termination for default or for convenience 
of the Government. However, delegation of the negotiation of 
termination settlements and forwarding for approval and signature of 
the NASA contracting officer is permitted using NASA Form 1432 (FAR 
42.302(a)(23)).
    (H) Consent to placement of subcontracts under FAR 42.302(a)(51). 
(See 1844.202-1(a)).
    (d) Transmittal and documentation. In addition to the instructions 
at FAR 42.202(d) (1) through (4), contracting officers shall--
    (i) Send delegations to DOD contract administration offices in 
accordance with the instructions in the DOD Directory of Contract 
Administration Services Components (DLAH 4105.4).
    (ii) At time of contract award, prepared and forward NASA Form 
1430, Letter of Contract Administration Delegation, General, to the 
contract administration office. NASA Form 1430A, Letter of Contract 
Administration, Special Instructions, will supplement the NASA Form 
1430, to modify previously delegated functions and provide additional 
or particular information considered necessary to ensure clear 
understanding of all delegated functions.
    (iii) Forward NASA Form 1431, Letter of Acceptance of Contract 
Administration, with each NASA Form 1430 or 1430A. Contracting officers 
shall use the returned NASA Form 1431 as contract file documentation 
that the delegation has been accepted, modified or rejected by the 
contract administration office and as a reference for points of 
contract for each of the functional areas delegated.
    (iv) Use NASA Form 1433, Letter of Audit Delegation, to delegate 
the audit function and to amend previous delegations. Distribute copies 
of the contract and NASA Form 1433 as follows:
    (A) Audit office: One copy of the contract and three NASA Forms 
1433. When the Department of Health and Human Services is designated as 
the audit office, item 12 on NASA Form 1433 shall be marked ``Not 
applicable.''
    (B) Contractor: One NASA Form 1433.
    (C) Cognizant NASA fiscal or financial management office: One NASA 
Form 1433.
    (v) For contracts with the Canadian Commercial Corporation (CCC), 
audits are automatically arranged by the Department of Defense 
Production (Canada) (DDP) in accordance with agreements between NASA 
and DDP. Upon advice from DDP, CCC will certify the invoice and forward 
it with Standard Form 1034, Public Voucher, to the contracting officer 
for further processing and transmittal to the fiscal or financial 
management officer.
    (vi) For contracts placed directly with Canadian firms, audits are 
requested by the contracting officer from the Audit Services Branch, 
Comptroller of the Treasury, Department of Finance, Ottawa, Ontario, 
Canada. Invoices are approved by the auditor on a provisional basis 
pending completion of the contract and final audit. These invoices, 
accompanied by SF 1034, are forwarded to the contracting officer for 
further processing and transmittal to the fiscal or financial 
management officer. Periodic advisory audit reports are

[[Page 14019]]

furnished directly to the contracting officer.


1842.203  Retention of contract administration. (NASA supplements 
paragraph (a))

    (a) The assignment of contract administration is optional for the 
following contracts:
    (i) Research and development study contracts not involving 
deliverable hardware or Government furnished property.
    (ii) Contracts with delivery schedules for 90 days or less.
    (iii) Purchase orders without Government source inspection 
requirements.
    (iv) Contracts requiring only on-site performance.
    (v) Contracts requiring work in the vicinity of the awarding center 
where DOD contract administration services are not reasonably 
available.


1842.270  Contracting officer technical representative (COTR) 
delegations.

    (a) Contracting officers may appoint a qualified Government 
employee to act as their technical representatives in managing the 
technical aspects of a particular contract. If necessary, the 
contracting officer may appoint an alternate COTR to act during short 
absences of the COTR. Technical organizations are responsible for 
ensuring that the individual they recommend to the contracting officer 
possesses training, qualifications and experience commensurate with the 
duties and responsibilities to be delegated and the nature of the 
contract.
    (b) NASA Form 1634, Contracting Officer Technical Representative 
(COTR) Delegation, shall be used to appoint COTRs. A COTR's duties and 
responsibilities may not be redelegated by the COTR and the COTR may be 
held personally liable for unauthorized acts. However, this does not 
prohibit the COTR from receiving assistance for the purpose of 
monitoring contractor progress and gathering information. When an 
individual is appointed as a COTR on more than one contract, separate 
delegations shall be issued for each contract. A separate NASA Form 
1634 will be used to appoint an alternate COTR.
    (c) A COTR delegation remains in effect throughout the life of the 
contract unless canceled in writing by the cognizant contracting 
officer or at any level above that contracting officer. The contracting 
officer may modify the delegation only by issuance of a new delegation 
canceling and superseding the existing delegation.
    (d) A COTR shall not be authorized to initiate procurement actions 
or in any way cause a change to the contract or increase the 
Government's financial obligations. However, delegations may be made to 
construction contract COTRs to sign emergency on-site change orders 
with an estimated value not to exceed the value specified in writing by 
the contracting officer in the NASA Form 1634 but in no event to exceed 
$25,000.
    (e) Each COTR shall acknowledge receipt and accept the delegation 
by signing the original delegation letter. The original of the COTR 
delegation letter shall be filed in the applicable contract file. 
Copies of the signed COTR delegation letter shall be distributed to the 
COTR, the contractor, and each cognizant contract administration 
office. Acknowledgment and distribution for terminations of COTR 
delegations and COTR delegations which revise authority, duties and 
responsibilities shall follow the same rules.
    (f) Mandatory training for COTRs and their alternates shall include 
the following core topic areas: contracting authority; procurement 
integrity; performance-based contracting; contract modifications; 
surveillance plans; contracting for inherently governmental functions, 
personal services, and NASA policy on the acquisition of services; the 
Service Contract Act; the Anti-Deficiency Act; contract financial 
management; the ``Changes'' clause; the ``Disputes'' clause; the 
``Inspection'' clause; Government property and policy procedures; and 
the ``Limitation of Funds'' and ``Limitation of Cost'' clauses. 
Procurement officers are responsible for assuring that the course(s) 
utilized by their installation address the mandatory core topics in 
sufficient detail for the purpose of COTR training.
    (g) The contracting officer shall verify that the COTR has received 
the mandatory training before signing NASA Form 1634. If an urgent need 
arises for the appointment of a COTR and no trained and otherwise 
qualified individual is available, then the procurement officer may 
make a temporary COTR appointment not to exceed six months. Temporary 
appointments must be so identified and clearly reflect the appointment 
expiration date.
    (h) No technical direction may be issued by a COTR relative to 
performance-based contract requirements or when serving under a 
temporary appointment.


1842.271  NASA clause.

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

Subpart 1842.5--Postaward Orientation


1842.503  Postaward conferences. (NASA paragraphs (1) and (2))

    (1) A postaward conference shall be held with representatives of 
the contract administration office when--
    (i) A contract is expected to exceed $10,000,000;
    (ii) Contract performance is required at or near a NASA 
installation or NASA-controlled launch site;
    (iii) The delegation will impose an abnormal demand on the 
resources of the contract administration office receiving the 
delegation; or
    (iv) Complex contract management problems are expected.
    (2) Procurement officer approval is required to waive a post-award 
planning conference for contracts meeting any of the criteria in 
paragraph (1) of this section. The request for procurement officer 
approval to waive a post-award conference shall address action taken 
and planned to ensure effective communication with the contract 
administration office during the performance of the contract.

Subpart 1842.7--Indirect Cost Rates


1842.705  Final indirect cost rates.


1842.705-1  Contracting officer determination procedure. (NASA 
supplements paragraph (a))

    (a) Applicability and responsibility. (i) Since many NASA 
contractors are under DOD's final overhead rate determination 
procedure, NASA's policy is to participate jointly with DOD for those 
companies where NASA has a major financial interest. The NASA 
participant shall be a representative from that installation having the 
predominance of NASA work.
    (ii) When NASA has been assigned the final indirect cost rate 
determination authority, settlement of indirect costs shall be 
conducted by the cognizant NASA contracting officer (normally from the 
installation providing the preponderance of NASA funding).


1842.708  Quick-closeout procedure. (NASA supplements paragraph (a))

    (a)(2)(ii) The 15 percent parameter does not apply to NASA 
contracts. Instead, quick-closeout may be used if an individual 
contract's value, excluding fee, is not greater than $2,000,000. Quick 
closeout may be used for contracts above $2,000,000 with the prior 
approval of the installation procurement officer.

[[Page 14020]]

1842.708-70  NASA quick-closeout procedures.

    After a decision is made that the use of quick closeout is 
appropriate, the contracting officer shall:
    (a) Obtain a written agreement from the contractor to participate 
in the quick-closeout process under FAR 42.708 for the selected 
contract(s).
    (b) Require the contractor to submit a final voucher and a summary 
of all costs by cost element and fiscal year for the contract(s) in 
question, as well as a copy of the contractor's final indirect cost 
rate proposal for each fiscal year quick closeout is involved.
    (c) Notify the cognizant audit activity in writing, identify the 
contract(s), and request: (1) the contractor's indirect cost history 
covering a sufficient number of fiscal years to see the trend of 
claimed, audit questioned, and disallowed costs; and (2) any other 
information that could impact the decision to use quick-closeout 
procedures. Indirect cost histories should be requested from the 
contractor only when the cognizant audit activity is unable to provide 
the information.
    (d) Review the contract(s) for indirect cost rate ceilings and any 
other contract limitations, as well as the rate history information.
    (e) Establish final indirect cost rates using one of the following 
rates:
    (1) The contract's ceiling indirect cost rates, if applicable, and 
if less than paragraphs (e)(2) through (e)(6) of this section.
    (2) The contractor's claimed actual rates adjusted based on the 
contractor's indirect cost history, if less than paragraphs (e)(3) 
through (e)(6) of this section.
    (3) Recommended rates from the cognizant audit agency, the local 
pricing office, another installation pricing office, or other 
recognized knowledgeable source.
    (4) The contractor's negotiated billing rates, if less than 
paragraphs (e)(5) or (e)(6) of this section.
    (5) The previous year's final rates.
    (6) Final rates for another fiscal year closest to the period for 
which quick-closeout rates are being established.
    (f) If an agreement is reached with the contractor, obtain a 
release of all claims and other applicable closing documents.
    (g) For those contracts where the indirect cost rate negotiation 
function was delegated or falls under the cognizance of another agency, 
send a copy of the agreement to that office.

Subpart 1842.8--Disallowance of Costs


1842.803  Disallowing costs after incurrance. (NASA supplements 
paragraph (b))

    (b) Auditor receipt of vouchers. (1) NASA has designated the 
contract auditor as the contracting officer's representative for--
    (A) Reviewing vouchers received directly from contractors;
    (B) Approving vouchers for provisional payment and sending them to 
the disbursing office;
    (C) Reviewing completion/final vouchers and sending them to the 
designated contracting officer for approval.
    (2)(A) When contract costs are questioned, the auditor shall 
prepare and send to the cognizant contracting officer NASA Form 456, 
Notice of Contract Costs Suspended and/or Disapproved.
    (B) After coordination with other NASA and Federal agency 
contracting officers administering contracts with the same contractor 
under which a NASA Form 456 or a DCAA Form 1 has been issued for the 
same items of cost, the NASA contracting officer shall take one of the 
following actions:
    (a) Assign a notice number and sign the NASA Form 456.
    (b) Issue a new NASA Form 456 suspending the costs rather than 
disapproving them pending resolution of the issues.
    (c) Return the unsigned NASA Form 456 to the auditor with a 
detailed explanation of why the suspension or disapproval is not being 
signed, and process the contractor's claim for payment.
    (C) When more than one NASA contract is affected by a notice, the 
NASA contracting officer with the largest amount of contract dollars 
affected is responsible for coordination of the NASA Form 456 with the 
other contracting officers, including those of other Federal agencies, 
listed in the notice.
    (D) An original and three copies (which includes two acknowledgment 
copies, one each for return to the contracting officer and the auditor) 
of the NASA Form 456 shall be sent to the contractor by certified mail, 
return receipt requested; one copy shall be attached to the Standard 
Form 1034 and each copy of the Standard Form 1034A on which the 
deduction for the suspension/disapproval is made.
    (E)(a) If the amount of the deduction is more than the amount of 
the public voucher, the installment method of deduction shall be 
applied to the current and subsequent public vouchers until the amount 
is fully liquidated. The deductions on any voucher may not exceed the 
voucher amount to avoid processing of a voucher in a credit amount. 
Public voucher(s) with zero amounts must be forwarded to the fiscal or 
financial management office for appropriate action.
    (b) If deductions are in excess of contractor claims, recovery may 
be made through a direct refund from the contractor, in the form of a 
check payable to NASA, or by a set-off deduction from the voucher(s) 
submitted by the contractor under any other contract unless those 
contracts contain a ``no set-off'' provision. If a set-off is affected, 
the voucher(s) from which the deduction is made should be annotated to 
identify the contract and appropriation affected and the applicable 
NASA Form 456.

Subpart 1842.12--Novation and Change-of-Name Agreements


1842.1203  Processing agreements. (NASA supplements paragraphs (b) and 
(f))

    (b) The installation shall immediately notify the Headquarters 
Office of Procurement (Code HS) of the request to execute a novation 
(successor-in-interest) or change-of-name agreement.
    (f) The contracting officer shall forward one copy of the agreement 
to the Code HS.


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

    (a) Appendix E of the NASA/DOD Agreement for Contract 
Administration and Contract Audit Services authorizes DOD to process 
novation and change-of-name agreements on behalf of NASA. Copies of 
agreements executed by DOD on behalf of NASA are maintained by the 
Headquarters Office of Procurement (Code HS).
    (b) Code HS is the Agency point of contact for issues related to 
proposed novation agreements. With the concurrence of Code HS, an 
installation may execute a separate agreement with the contractor.

Subpart 1842.13--Suspension of Work, Stop-Work Orders, and 
Government Delay of Work


1842.1305  Contract clauses. (NASA supplements paragraph (b))

    (b) FAR 52.242-15, Stop-Work Order, shall not be used in 
solicitations or contracts for research performed by educational or 
other nonprofit institutions.

[[Page 14021]]

Subpart 1842.14--Traffic and Transportation Management


1842.1405  Discrepancies incident to shipment of supplies. (NASA 
supplements paragraph (a))

    (a) NASA personnel shall also report discrepancies and adjust 
claims for loss of and damage to Government property in transit in 
accordance with NHB 6200.1, NASA Transportation and General Traffic 
Management.

Subpart 1842.70--Additional NASA Contract Clauses


1842.7001  Observance of legal holidays.

    (a) The contracting officer shall insert the clause at 1852.242-72, 
Observance of Legal Holidays, in contracts when work will be performed 
at a NASA installation.
    (b) The clause shall be used with its Alternate I in cost-
reimbursement contracts when it is desired that contractor employees 
not have access to the installation during Government holidays. This 
alternate may be appropriately modified for fixed-price contracts.
    (c) The clause may be used with its Alternate II in cost-
reimbursement contracts when Alternate I is used and it is desired that 
administrative leave be granted contractor personnel in special 
circumstances, such as inclement weather or potentially hazardous 
conditions.


1842.7002  Travel outside of the United States.

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

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 value/scope           Period of performance             533M                      533Q         
----------------------------------------------------------------------------------------------------------------
$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

[[Page 14022]]

Contractor Financial Management Reporting, when any of the NASA Form 
533 series of reports are 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, NASA Management 
Instruction (NMI) 9970.1A, Audit Follow-up, and NASA Audit Follow-up 
Handbook 9970.2, which provide more detailed guidance. Recommendations 
for external audits (contracts and OMB Circulars No. A-128, Audits of 
State and Local Governments, and A-133, Audits of Institutions of 
Higher Learning and Other Non-Profit Institutions) shall be resolved by 
formal review and approval procedures analogous to those at 1815.807-
71.
    (b) The external audit follow-up system tracks all contract and OMB 
Circular A-128 or A-123 audits where NASA has resolution and 
disposition authority. The objective of the tracking system is to 
ensure that audit recommendations are resolved as expeditiously as 
possible, but a maximum, within 6 months of the date of the audit 
report.
    (c) (1) The identification and tracking of contract audit reports 
under NASA cognizance are accomplished in cooperation with DCAA by 
means of the DCAA form, Contract Audit Follow-up Summary Sheet. The use 
of this form by DCAA and NASA is covered in Chapter 6 of the NASA Audit 
Follow-up Handbook.
    (2) Identification and tracking of A-128 and A-133 audit reports 
are accomplished in cooperation with the NASA Office of the Inspector 
General (OIG) by means of a transmittal memorandum. A transmittal 
memorandum is sent by the OIG to the procurement officer of each NASA 
field installation having an award (contract, grant, or other 
agreement) covered by the audit report. The transmittal memorandum will 
identify whether there were any audit findings.
    (d)(1) Chapter 6 of the NASA Audit Follow-up Handbook identifies 
which contract audit reports are reportable semiannually to the 
Headquarters Office of Procurement (Code HC).
    (2) Only trackable A-128 and A-133 audit reports involving the 
following shall be reported semiannually to Code HC--
    (i) A significant management control issue; or
    (ii) For an individual NASA award, either the lower of 10 percent 
or $10,000 of the costs incurred in the period covered by the audit are 
questioned; or for institution-wide issues, the lower of 10 percent or 
$10,000 of the total costs incurred involving Government funds for the 
period covered by the audit are questioned.
    (e)(1) The resolution and disposition of contract audits is covered 
by Chapter 6 of the NASA Audit Follow-up Handbook.
    (2) The resolution and disposition of A-128 and A-133 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 an institution-wide impact are the 
responsibility of the cognizant Federal agency or the agency 
responsible for oversight. OMB's January 6, 1986, Federal Register 
Notice (51 FR 552), titled ``Federal Agencies Responsible for Cost 
negotiation and Audit of State and Local Governments,'' provides 
cognizant agency assignments for OMB Circular A-128. For organizations 
subject to OMB Circular 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 agency cognizant, in which 
case a notice will be published in the Federal Register. 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 1996, 2000, and 
every fifth year thereafter. If there is no cognizant Federal agency, 
there is an agency responsible for oversight. The oversight agency is 
that agency which provides the predominant amount of direct funding. 
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 field installation 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 disappointing the findings shall be provided by each 
field installation having resolution responsibility for the particular 
report to the OIG Center office within whose geographic area of 
responsibility the audited organization is located.
    12. Part 1843 is revised to read as follows:

PART 1843--CONTRACT MODIFICATIONS

Subpart 1843.2--Change Orders

Sec.
1843.205  Contract clauses.
1843.205-70  NASA contract clause.

Subpart 1843.70--Undefinitized Contract Actions

1843.7001  Definitions.
1843.7002  Policy.
1843.7003  Procedures.
1843.7004  Exceptions.
1843.7005  Definitions.

Subpart 1843.71--Shared Savings

1843.7101  Shared Savings Program.
1843.7102  Solicitation provision and contract clause.

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

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; FAR 52.243-3, 
Changes--Time-and-Material or Labor-Hours; and FAR 52.243-4, Changes, 
the period within which a contractor must assert its rights to an 
equitable adjustment may be varied not to exceed 60 calendar days.


1843.205-70  NASA contract clause.

    (a) 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. A local format may be substituted for the MIL-STD-973 
format.
    (b) 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.
    (c) If the contract is a cost-reimbursement type, the contracting 
officer shall use the clause with its Alternate II.

Subpart 1843.70--Undefinitized Contract Actions


1843.7001  Definitions.

    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

[[Page 14023]]

and their modifications are governed by subpart 1816.6.)


1843.7002  Policy.

    Undefinitized contract actions shall be executed by contracting 
officers on an exception basis and shall be limited to the minimum 
urgent requirements. The contract file for all UCAs shall be documented 
to justify issuance and shall include a Government estimate for the 
changed requirements.


1843.7003  Procedures.

    (a) Issuance of undefinitized contract actions with a Government 
estimated cost or price over $1,000,000 must be approved in writing by 
the Center Director. This approval authority is not delegable. Issuance 
of undefinitized contract actions with a Government estimated cost or 
price less than or equal to $1,000,000 shall also be minimized but may 
be approved on an exception basis in accordance with installation 
procedures.
    (b) (1) Undefinitized contract actions exceeding $1,000,000 
approved by the Center Director shall 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 Center Director 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 Center Director approval for 
issuance of undefinitized contract actions are--
    (1) Modifications to facilities contracts;
    (2) Modifications to construction contracts using Construction of 
Facilities funding;
    (3) Urgent modification 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) Modification 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 rational 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 
definitive UCAs within 180 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.
    13. Part 1844 is revised to read as follows:

PART 1844--SUBCONTRACTING POLICIES AND PROCEDURES

Subpart 1844.2--Consent to Subcontracts

Sec.
1844.201  Consent requirements.
1844.201-1  Fixed-price prime contracts.
1844.201-2  Cost reimbursement and letter prime contracts.
1844.202  Contracting officer's evaluation.
1844.202-1  Responsibilties.
1844.204  Contract clauses.
1844.204-70  NASA contract clause.

Subpart 1844.3--Contractors' Purchasing Systems Reviews

1844.302  Requirements.
1844.302-70  DCMC-conducted contractor purchasing system reviews.
1844.302.71  NASA-conducted contractor purchasing systems reviews.
1844.304  Surveillance.
1844.304-70  Contracting officer surveillance.
1844.305  Granting, withholding, or withdrawing approval.
1844.305-70  Review of CPSR report.

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

Subpart 1844.2--Consent to Subcontracts


1844.201  Consent requirements.


1844.201-1  Fixed-price prime contracts. (NASA supplements paragraph 
(b))

    (b)(2) (A) In determining special surveillance consent 
requirements, the contracting officer should consider specific 
subcontract awards, as well as any individual systems, subsystems, 
components, technologies, and services that should have contracting 
officer consent prior to being subcontracted.
    (B) For each planned contract award expected to exceed $1 million 
in total estimated value (inclusive of options), the contracting 
officer should consider such factors as the following to determine 
whether certain subcontractors require special surveillance:
    (a) The degree of subcontract pricing uncertainties at the time of 
contract award;

[[Page 14024]]

    (b) The overall quality of the contractor's approach to pricing 
subcontractors;
    (c) The extent of competition achieved, or to be achieved, by the 
contractor in the award of subcontracts;
    (d) Technical complexity and the critically of specific supplies, 
services, and technologies on the successful performance of the 
contract; and
    (e) The potential impact of planned subcontracts on source 
selection or incentive arrangements.
    (C) The contracting officer shall document results of the review in 
the contract file. For contract modifications and change orders, the 
contracting officer shall make the determination required by paragraph 
(b)(2)(B) of this section whenever the value of any subcontract 
resulting from the change order or modification is proposed to exceed 
$100,000 or is one of the number of subcontracts with a single 
subcontractor for the same or related supplies or services that are 
expected cumulatively to exceed $100,000.


1844.201-2  Cost reimbursement and letter prime contracts. (NASA 
supplements paragraph (c))

    (c)(2) The policy in 1844.201-1(b)(2) shall be followed to 
determine whether certain subcontracts require special surveillance. In 
addition, any subcontract under a cost type prime contract shall be 
identified for special surveillance if consent was not provided at the 
time of contract award and cost of pricing data would be required in 
accordance with FAR 15.806-2(a) (1) or (2).


1844.202  Contracting officer's evaluation.


1844.202  Responsibilities. (NASA supplements paragraph (a))

    (a) NASA contracting officers shall retain consent to subcontract 
authority unless delegation is approved in writing by the procurement 
officer.


1844.204  Contract clauses.


1844.204-70  NASA contract clause.

    The contracting officer shall insert the clause at 1852.244-70, 
Geographic Participation in the Aerospace Program, in all research and 
development solicitations and contracts of $500,000 or over that will 
be performed within the United States.

Subpart 1844.3--Contractors' Purchasing Systems Reviews


1844.302  Requirements.


1844.302-70  DCMC-conducted contractor purchasing system reviews.

    For contracts within their cognizance, NASA contracting officers 
shall be aware of purchasing system approval status and should become 
actively involved with the Defense Contract Management Command (DCMC) 
in the Contractor Purchasing System Review (CPSR) process. Involvement 
should include the following:
    (a) Verifying that CPSRs are being conducted as required for each 
contractor meeting the thresholds in FAR 44.302.
    (b) Ensuring that purchasing system review specifically includes 
the business unit performing the NASA contract.
    (c) Actively participating as a team member, or arranging NASA 
representation, on DCMC CPSRs to review areas of NASA-specific 
interest. At a minimum, such participation or representation shall be 
arranged when the DCMC CPSR review involves--
    (1) Contractors with major NASA programs;
    (2) Contractors' business units where the total dollar value of 
NASA contracts is substantial; or
    (3) Any contractor system where the contracting officer has special 
concerns.
    (d) Ensuring that the selected CPSR sample to be reviewed reflects 
the level of NASA business in the contractor's purchasing organization.
    (e) Providing to the cognizant DCMC CPSR team leader any areas of 
special emphasis regarding the contractor's purchasing system to ensure 
that the review is tailored to address any NASA concerns.


1844.302-71  NASA-conducted contractor purchasing system reviews.

    If a NASA activity is the cognizant contract administration 
officer, or after coordination with the cognizant DCMC CPSR office it 
is determined that a CPSR is required but cannot be accomplished by 
DCMC, then a CPSR should be conducted by NASA personnel. The NASA CPSR 
team leader:
    (a) May use the DOD FAR Supplement, Contractor Purchasing System 
Review (CPSR) guidance, as a general guide to conducting the CPSR.
    (b) May vary the scope of review depending on the contractor and 
contracts involved.
    (c) Shall maintain close coordination with the cognizant ACO during 
CPSRs at contractors under DOD cognizance.


1844.304  Surveillance.


1844.304-70  Contracting officer surveillance.

    (a) In the period between complete CPSRs, NASA contracting officers 
shall maintain a sufficient level of surveillance to ensure contractor 
purchasing efforts in support of NASA contracts are accomplished in an 
appropriate manner and protect the interests of the Agency.
    (b) Surveillance shall be accomplished primarily through 
performance of subcontract consent reviews. Other methods of 
surveillance, including periodic reviews of contractor purchasing 
records, may also be conducted. Contracting officers shall document the 
results of subcontract consent reviews and periodic reviews, 
maintaining a record of contractor subcontract or purchase order award 
performance on NASA contracts. Contractor performance shall be 
summarized on an annual basis and provided to the ACO cognizant of the 
contractor's purchasing system. Annual reports should summarize the 
number of consent reviews and other reviews conducted during the year 
by NASA representatives, and summarize the types and quantity of 
deficiencies identified during reviews, the need for special reviews, 
and recommended areas of emphasis during future CPSRs.


1844.305  Granting, withholding, or withdrawing approval.


1844.305-70  Review of CPSR reports.

    ACO actions related to purchasing system approval have a potential 
impact on NASA contracting officer consent requirements. Accordingly, 
NASA contracting officers shall review system deficiencies documented 
in CPSR reports and when results of consent reviews and other sources 
conflict with CPSR or DOD surveillance conclusions, formally 
communicate such concerns to the ACO having cognizance of purchasing 
system approval. Significant issues or significant conflicts with DOD 
CPSR results should be formally referred to the Office of Procurement 
(Code HS).
    14. Part 1846 is revised to read as follows:

PART 1846--QUALITY ASSURANCE

Subpart 1846.3--Contract Clauses

Sec.
1846.370  NASA contract clauses.

Subpart 1846.4--Government Contract Quality Assurance

1846.470  Contract clause.

Subpart 1846.6--Material Inspection and Receiving Reports

1846.670  Introduction.
1846.670-1  General.
1846.670-2  Applicability.
1846.670-3  Use.
1846.670-4  Multiple shipments.
1846.670-5  Forms.
1846.671  Contract quality assurance on shipments between 
contractors.

[[Page 14025]]

1846.672  Preparing DD Forms 250 and 250c.
1846.672-1  Preparation instructions.
1846.672-2  Consolidated shipments.
1846.672-3  Multiple consignee instructions.
1846.672-4  Correction instructions.
1846.672-5  Invoice instructions.
1846.672-6  Packing list instructions.
1846.672-7  Receiving instructions.
1846.673  Distribution of DD Forms 250 and 250c.
1846.674  Contract clause.

Subpart  1846.7--Warranties

1846.703  Criteria for use of warranties.
1846.703-70  Additional criteria.
1846.704  Authority for use of warranties.
1846.770  Administration.

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

Subpart 1846.3--Contract Clauses


1846.370  NASA contract clauses.

    (a) The contracting officer shall insert the clause at 1852.246-70, 
Mission Critical Space System Personnel Reliability Program, in 
solicitations and contracts involving critical positions designated in 
accordance with 14 CFR 1214.5, Mission Critical Space System Personnel 
Reliability Program.
    (b) The contracting officer shall insert the clause at 1852.246-73, 
Human Space Flight Item, in solicitations and contracts for human space 
flight hardware and flight-related equipment if the highest available 
quality standards are necessary to ensure astronaut safety.

Subpart 1846.4--Government Contract Quality Assurance


1846.470  Contrct clause.

    The contracting officer may insert a clause substantially as stated 
at 1852.246-71, Government Contract Quality Assurance Functions, in 
solicitations and contracts to specify the location(s) of quality 
assurance functions.

Subpart 1846.6--Material Inspection and Receiving Reports.


1846.670  Introduction.


1846.670-1  General.

    (a) This Subpart contains procedures and instructions for use of 
the Material Inspection and Receiving Report (MIRR) (DD Form 250 
series) and commercial shipping/packing lists used to evidence 
Government contract quality assurance (CQA).
    (b) MIRRs are used to document CQA, acceptance of supplies and 
services, and shipments. MIRRs are not used for--
    (1) Shipments by subcontractors not made to the Government;
    (2) Shipment of contractor inventory (see FAR 45.601); or
    (3) Movement of Government property unless for original 
acquisition.


1846.670-2  Applicability.

    (a) This subpart applies to all deliveries of supplies or services 
acquired by or for NASA except:
    (1) Acquisitions under FAR part 13;
    (2) Negotiated subsistence acquisitions; or
    (3) Contracts for which the end item is a technical or scientific 
report.
    (b) The DD Form 250 may be used for imprest fund purchases, 
purchase orders, delivery orders placed against Federal Supply Schedule 
contracts, delivery orders placed against indefinite-delivery 
contracts, or delivery orders placed against blanket purchase 
agreements, or when the purchasing, requisitioning, or ordering 
document provides for inspection and/or acceptance.
    (c) When NASA provides CQA and/or acceptance services for non-NASA 
activities, the MIRR shall be prepared in accordance with the 
instructions of this subpart unless the contract specifies otherwise.


1846.670-3  Use.

    The DD Form 250 is a multipurpose report used for--
    (a) Providing evidence of CQA at origin or destination;
    (b) Providing evidence of acceptance at origin or destination;
    (c) Packing list documentation;
    (d) Receiving;
    (e) Shipping;
    (f) Contractor invoice; and
    (g) Contractor invoice support.


1846.670-4  Multiple shipments.

    (a) If the ``shipped to,'' ``marked for,'' ``shipped from,'' 
``CQA,'' and ``acceptance'' data are the same for more than one 
shipment made on the same day under the same contract in a single car, 
truck, or other vehicle, one MIRR shall be prepared to cover all such 
shipments.
    (b) If the volume of the shipments precludes the use of a single 
car, truck, or other vehicle, a separate MIRR shall be provided for 
each vehicle.


1846.670-5  Forms.

    (a) Contractors may obtain MIRR forms from the contracting office 
at no cost.
    (b) Contractors may print forms, provided their format and 
dimensions are identical to the MIRR forms printed by the Government.


1846.671  Contract quality assurance on shipments between contractors.

    (a) The supplier's commercial shipping document/packing list shall 
indicate performance of required CQA actions at subcontract level.
    The following entries shall be made on the document/packing list:

    Required CQA of items has been performed.
----------------------------------------------------------------------
(Signature of Authorized Government Representative)

----------------------------------------------------------------------
(Date)

----------------------------------------------------------------------
(Typed Name and Office)

    (b) Distribution for Government purposes shall be one copy each--
    (1) With shipment;
    (2) For the Government representative at consignee (via mail); and
    (3) For the Government representative at consignor.


1846.672  Preparing DD Forms 250 and 250c.


1846.672-1  Preparation instructions.

    (a) General. (1) Dates shall utilize seven spaces consisting of the 
last two digits of the year, three-alpha month abbreviation, and two 
digits for the day (e.g., 96SEP24).
    (2) Addresses shall consist of the name, street address/P.O. box, 
city, State, and ZIP code.
    (3) The data entered in the blocks at the top of DD Form 250C shall 
be identical to the comparable entries in Blocks 1, 2, 3, and 6 of the 
DD Form 250.
    (4) Overflow data of the DD Form 250 shall be entered in Block 16 
or in the body of the DD Form 250c with block cross reference. 
Additional DD Form 250c sheets solely for continuation of Block 23 data 
shall not be numbered or distributed as part of the MIRR.
    (b) Classified information. Classified information shall not appear 
on the MIRR, nor shall the MIRR be classified.
    (c) Block 1--PROC. INSTRUMENT IDEN. (CONTRACT). Enter the contract 
number, with its identifying center prefix, as contained in the 
contractual document, including any call/order number.
    (d) Block 2--SHIPMENT NO. (1) The shipment number is a three-alpha 
character prefix and a four-character numeric or alpha-numeric serial 
number.
    (i) The prefix shall be controlled and assigned by the prime 
contractor and shall consist of three alpha characters for each 
``shipped from'' address (Block 11). The prefix shall be different for 
each ``Shipped From'' address and shall remain constant throughout the 
contract period.
    (ii) The serial number for the first shipment under a prime 
contract from

[[Page 14026]]

each ``shipped from'' address shall be 0001; subsequent shipments under 
that prime contract shall be consecutively numbered. Alpha-numerics 
shall be used when more than 9,999 numbers are required. Alpha-numerics 
shall be serially assigned, with the alpha in the first position, 
followed by the three-position numeric serial number. The alpha-numeric 
sequence shall be (the letters I and O shall not be used) A001 through 
A999 (10,001 through 10,999); B001 through B999 (11,001 through 
11,999); to Z999. When this series is completely used, numbering shall 
revert to 0001.
    (2) The shipment number of the initial shipment shall be reassigned 
when a ``replacement shipment'' is involved (see paragraph (r)(4)(iv) 
of this section).
    (3) The prime contractor shall control deliveries and on the last 
shipment of the contract shall suffix the shipment number with a ``Z'' 
in addition to that required for line items (see Block 17). If the 
contract final shipment is from other than the prime contractor's 
plant, the prime contractor may elect
    (i) To direct the subcontractor to suffix the ``Z'' or
    (ii), On receipt of the subcontractor final shipment information, 
to correct the DD Form 250 covering the last shipment from the prime 
contractor's plant by adding a ``Z'' to that shipment number.
    (e) Block 3--DATE SHIPPED. Enter the date the shipment is released 
to the carrier or the date of completion of services. If the shipment 
will be released after the date of CQA and/or acceptance, enter the 
estimated date of release. When the date is estimated, enter an ``E'' 
after it. Distribution of the MIRR shall not be delayed for entry of 
the actual shipping date. Reissurance of the MIRR is not required to 
show the actual shipping date.
    (f) Block 4--B/L TCN. When applicable, enter the commercial or 
Government bill of lading number after ``B/L''; and the Transportation 
Control Number after ``TCN.''
    (g) Block 5--DISCOUNT TERMS. (1) The Contractor may enter the 
discount in terms of percentages on all copies of the MIRR.
    (2) When the MIRR is used as an invoice, see 1846.672-5.
    (h) Block 6--INVOICE. (1) The contractor may enter the invoice 
number and actual or estimated date on all copies of the MIRR. When the 
date is estimated, enter an ``E'' after the date. Do not correct MIRRs 
other than invoice copies to reflect the actual date of invoice 
submission.
    (2) When the MIRR is used as an invoice, see 1846.672-5.
    (i) Block 7--PAGE/OF. Consecutively number the pages comprising the 
MIRR. On each page, enter the total number of pages of the MIRR.
    (j) Block 8--ACCEPTANCE POINT. Enter an ``S'' for origin or ``D'' 
for destination as specified in the contract as the point of 
acceptance. Enter an alphabetic ``O'' for other if the point of 
acceptance is not specified in the contract.
    (k) Block 9--PRIME CONTRACTOR. Enter the code and address.
    (l) Block 10--ADMINISTERED BY. Enter the code and address of the 
contracting office cited in the contract.
    (m) Block 11--SHIPPED FROM/CODE/FOB. (1) Enter the code and address 
of the ``shipped from'' location. If identical to Block 9, enter ``See 
Block 9.''
    (2) For performance of services that do not require delivery of 
items upon completion, enter the code and address of the location at 
which the services were performed. If the DD Form 250 covers 
performance at multiple locations or if identical to Block 9, enter 
``See Block 9.''
    (3) Enter on the same line and to the right of ``FOB'' an ``S'' for 
origin or ``D'' for destination as specified in the contract. Enter an 
alphabetic ``O'' if the FOB point cited in the contract is other than 
origin or destination.
    (n) Block 12--PAYMENT WILL BE MADE BY. Enter the address of the 
payment office cited in the contract.
    (o) Block 13--SHIPPED TO/CODE. Enter the code and address from the 
contract or shipping instructions.
    (p) Block 14--MARKED FOR/CODE. Enter the code and address from the 
contract or shipping instructions.
    (q) Block 15--ITEM NO. Enter the item number used in the contract. 
If four or fewer digits are used, position them to the left of the 
vertical dashed line. Where a six-digit identification is used, enter 
the last two digits to the right of the vertical dashed line.
    (r) Block 16--STOCK/PART NO./DESCRIPTION. (1) Enter, as applicable, 
for each item, using single spacing between each line item, the 
following:
    (i) The Federal Stock Number (FSN) or noncatalog number and, if 
applicable, prefix or suffix. When a number is not provided or it is 
necessary to supplement the number, include other identification such 
as the manufacturer's name or Federal Supply Code (as published in 
Cataloging Handbook H4-1), and part numbers. Additional part numbers 
may be shown in parentheses. Also enter the descriptive noun of the 
item nomenclature and, if provided, the Government-assigned management/
material control code. In the case of equal-kind supply items, the 
first entry shall be the description without regard to kind (e.g., 
``Resistor''). Below this description, enter the contract item number 
in Block 15 and stock/part number followed by the size or type in Block 
16.
    (ii) On the next printing line, if required by the contract for 
control purposes, enter the make, model, serial number, lot, batch, 
hazard indicator, and/or similar description.
    (iii) On the next printing line, enter the FEDSTRIP requisition 
number(s) when provided in the contract or shipping instructions.
    (2) For service items, enter the word ``SERVICE'' followed by a 
short description of less than 20 characters. Do not complete items 4, 
13, and 14 when material is not shipped.
    (3) For all contracts administered by the Defense Contract 
Management Command, with the exception of fast pay procedures, enter 
and complete the following:

Gross Shipping Wt.____(State weight in pounds only).

    (4) Enter on the next line the following as appropriate (entries 
may be extended through Block 20). When entries apply to more than one 
item in the MIRR, enter them only once after the last item and 
reference the applicable item numbers.
    (i) Enter in capital letters any special handling instructions/
limits for material environmental control (e.g., temperature, humidity, 
aging, freezing, and shock).
    (ii) When an FSN is required by, but not cited in, a contract and 
has not been furnished by the Government, shipment may be made at the 
direction of the contracting officer. Enter the authority for the 
shipment.
    (iii) When Government-furnished property (GFP) is included with or 
incorporated into the line item, enter ``GFP''.
    (iv) When the shipment consists of replacements for supplies 
previously furnished, enter in capital letters ``REPLACEMENT SHIPMENT'' 
(see paragraph (s)(3) of this section for replacement indicators.)
    (v) For items shipped with missing components, enter and complete 
the following: ``Item(s) shipped short of the following component(s): 
FSN or comparable identification ________, Quantity ________, Estimated 
Value ________, Authority ________.''
    (vi) When shipment is made of components that were short on a prior 
shipment, enter and complete the following: ``These components were

[[Page 14027]]

listed as shortages on Shipment Number ________, date 
shipped________.''
    (vii) When shipments involve drums, cylinders, reels, containers, 
skids, etc., designated as returnable under contract provisions, enter 
and complete the following: ``Return to ________, Quantity ________, 
Item ________, Ownership (Government/contractor).''
    (viii) Enter shipping container number(s), the type, and the total 
number of the shipping container(s) included in the shipment.
    (ix) The MIRR shall be used to record and report the waivers and 
deviations from contract specifications, including the source and 
authority for the waiver or deviation (e.g., the contracting office 
authorizing the waiver or deviation and the identification of the 
authorizing document).
    (x) For shipments involving discount terms, enter ``DISCOUNT 
EXPEDITE'' in at least one-inch outline-type letters.
    (xi) When test/evaluation results are a condition of acceptance and 
are not available before shipment, the following note shall be entered 
if the shipment is approved by the contracting officer: ``Note: 
Acceptance and payment are contingent upon receipt of approved test/
evalution results.'' The contracting officer shall advise (A) the 
consignee of the results (approval/disapproval) and (B) the contractor 
to withhold invoicing pending attachment to its invoice of the approved 
test/evaluation results.
    (xii) The copy of the DD Form 250 required to support payment for 
destination acceptance (top copy of the four with shipment) or 
Alternative Release Procedure (ARP) origin acceptance (additional copy 
furnished to the Quality Assurance Representative (QAR)) shall be 
identified by entering ``PAYMENT COPY'' in approximately one-half-inch 
outline-type letters with ``FORWARD TO BLOCK 12 ADDRESS'' in 
approximately one-quarter-inch letters immediately below. Do not 
obliterate any other entries.
    (xiii) A double line shall be drawn completely across the form 
following the last entry.
    (s) Block 17--QUANTITY SHIP/REC'D. (1) Enter the quantity shipped, 
using the unit of measure indicated in the contract for payment. When a 
second unit of measure is used for purposes other than payment, enter 
the appropriate quantity directly below in parentheses.
    (2) Enter a ``Z'' below the first digit of the quantity when the 
total quantity of the item is delivered, including variations within 
contract terms; and all shortages on items previously shipped short are 
delivered.
    (3) If a replacement shipment is involved, enter below the first 
digit of the quantity the letter ``A'' top designate first replacement, 
``B'' for second replacement, and so forth. The final shipment 
indicator ``Z'' shall not be used when a final line item shipment is 
replaced.
    (t) Block 18 UNIT. Enter the abbreviation of the unit of measure 
indicated in the contract for payment. When a second unit of measure is 
indicated in the contract for purposes other than payment or is used 
for shipping purposes, enter the abbreviation of the second unit of 
measure directly below in parentheses. Authorized abbreviations are 
listed in MIL-STD-129, Marking for Shipping and Storage.
    (u) Block 19--UNIT PRICE. Enter the unit price on all NASA copies 
whenever the MIRR is used for voucher or receiving purposes.
    (v) Block 20--AMOUNT. Enter the extended amount when the unit price 
is entered in Block 19.
    (w) Block 21--CONTRACT QUALITY ASSURANCE. The words ``conform to 
contract'' contained in the printed statements in Blocks A and B relate 
to contract obligations pertaining to quality and to the quantity of 
the items on the report. The statements shall not be modified. Notes 
taking exception shall be entered in Block 16 or on attached supporting 
documents with block cross reference.
    (1) ``A. ORIGIN.''
    (i) The authorized Government representative shall--
    (A) Place an ``X'' when applicable in the appropriate CQA and/or 
acceptance box(es) to evidence origin CQA and/or acceptance. When the 
contract requires CQA at destination in addition to origin CQA, an 
asterisk shall be entered at the end of the statement and an 
explanatory note in Block 16;
    (B) Sign and date; and
    (C) Enter the typed, stamped, or printed name of the signer and 
office code.
    (2) ``B. DESTINATION.''
    (i) When acceptance at origin is indicated in Block 21A, no entries 
shall be made in Block 21B.
    (ii) When acceptance of CQA and acceptance are at destination, the 
authorized Government representative shall--
    (A) Place an ``X'' in the appropriate box(es);
    (B) Sign and date; and
    (C) Enter the typed, stamped, or printed name of the signer and 
office code.
    (x) Block 22--RECEIVER'S USE. This block shall be used by the 
receiving authority (Government or contractor) to denote receipt, 
quantity, and condition. The receiving activity shall enter in this 
block the date the supplies arrived. For example, when off-loading or 
in-checking occurs subsequent to the day of arrival of the carrier at 
the installation, the date of the carrier's arrival is the date 
received for purposes of this block.
    (y) Block 23--CONTRACTOR USE ONLY. This block is provided and 
reserved for contractor use.


1846.672-2  Consolidated shipments.

    When individual shipments are held at the contractor's plant for 
authorized transportation consolidation to a single destination on a 
single bill of lading, the applicable DD Forms 250 may be prepared at 
the time of CQA or acceptance prior to the time of actual shipment (see 
Block 3).


1846.672-3  Multiple consignee instructions.

    The contractor may prepare one MIRR when the identical item(s) of a 
contract is to be shipped to more than one consignee, with the same or 
varying quantities, and the shipment requires origin acceptance. 
Prepare the MIRR using the procedures in this subpart with the 
following changes:
    (a) Blocks 2, 4, 13, and, if applicable, 14--Enter ``See Attached 
Distribution List.''
    (b) Block 15--The contractor may group item numbers for identical 
stock/part number and description.
    (c) Block 17--Enter the ``total'' quantity shipped by item or, if 
applicable, grouped identical items.
    (d) Use the DD Form 250c to list each individual ``Shipped To'' and 
``Marked For'' with--
    (1) Code(s) and complete shipping address and a sequential shipment 
number for each;
    (2) Item number(s);
    (3) Quantity;
    (4) The FEDSTRIP requisition number and quantity for each when 
provided in the contract or shipping instructions; and
    (5) If applicable, bill of lading number and mode of shipment code.


1846.672-4  Correction instructions.

    When, because of errors or omissions, it is necessary to correct 
the MIRR after distribution, it shall be revised by correcting the 
original master and distributing the corrected form. The corrections 
shall be made as follows:
    (a) Circle the error and place the corrected information in the 
same block. If space is limited, enter the corrected information in 
Block 16, referencing the error page and block.

[[Page 14028]]

    (b) When corrections are made to Blocks 15 and 17, enter the words 
``CORRECTIONS HAVE BEEN VERIFIED'' on page 1. The authorized Government 
representative shall date and sign immediately below the statement. 
This verification statement and signature are not required for other 
corrections.
    (c) MIRRs shall not be corrected for Block 19 and 20 entries.
    (d) Clearly mark pages of the MIRR requiring correction with the 
words ``CORRECTED COPY'', avoiding obliteration of any other entries. 
Even though corrections are made on continuation sheets only, also mark 
page 1 ``CORRECTED COPY''.
    (e) Page 1 and only those continuation pages marked ``CORRECTED 
COPY'' shall be distributed to the initial distribution. A complete 
MIRR with corrections shall be distributed to new addressee(s) created 
by error corrections.


1846.672-5  Invoice instructions.

    The Government encourages, but does not require, contractors to use 
copies of the MIRR as an invoice in lieu of a commercial form. If the 
MIRR is used as an invoice, four copies shall be prepared and forwarded 
to the payment office as follows:
    (a) Complete Blocks 5, 6, 19, and 20.
    (b) Mark, in letters approximately one inch high, the first copy 
``ORIGINAL INVOICE'' and the remaining three copies ``INVOICE COPY''.
    (c) Forward the four copies to the payment office (Block 12 
address).


1846.672-6  Packing list instructions.

    Copies of the MIRR may be used as a packing list. The packing list 
copies shall be in addition to the copies of the MIRR required for 
distribution (see 1846.673) and shall be marked ``PACKING LIST''.


1846.672-7  Receiving instructions.

    When the MIRR is used for receiving purposes, procedures shall be 
as prescribed by local directives. If acceptance or CQA and acceptance 
of supplies are required upon arrival at destination, see Block 21B for 
instructions.


1846.673  Distribution of DD Forms 250 and 250c.

    (a) DD Forms 250 and 250c shall be distributed in accordance with 
installation procedures.
    (b) The contractor is responsible for distributing DD Forms 250 and 
250c in accordance with the provisions of the contract or instructions 
of the contracting officer.


1846.674  Contract clause.

    The contracting officer shall insert the clause at 1852.246-72, 
Material Inspection and Receiving Report, in solicitations and 
contracts, except those using simplified acquisition procedures or 
where the only deliverable items are technical or scientific reports. 
Insert the number of copies to be prepared. Paragraph (a) may be 
changed to specify advance copies or separate distribution of the DD 
Form 250.

Subpart 1846.7--Warranties


1846.703  Criteria for use of warranties.


1846.703-70  Additional criteria.

    In deciding whether to use a warranty clause, at least the 
following factors shall be considered in addition to those at FAR 
46.703:
    (a) Cost of correction or replacement, either by the contractor or 
by another source, in the absence of a warranty;
    (b) The warranty as a deterrent against the furnishing of defective 
or nonconforming supplies;
    (c) Whether the contractor's quality program is reliable enough to 
provide adequate protection without a warranty, or, if not, whether a 
warranty would cause the contractor to institute an effective quality 
program;
    (d) Reliance on ``brand-name'' integrity; and
    (e) Whether a warranty is regularly given for a commercial 
component of a more complex end item.


1846.704  Authority for use of warranties. (NASA paragraphs (1), (2) 
and (3))

    (1) A warranty clause may be used when it is found to be in the 
best interests of the Government, after an analysis of the factors 
listed in 1846.703-70 and FAR 46.703.
    (2) Except for the warranty of commercial items (see FAR 12.404 and 
46.709), and warranties contained in Federal, military, or construction 
specifications, the decision to use a warranty clause or to include a 
warranty provision in a specification other than a Federal, military, 
or construction specification shall be made only upon the written 
authorization of the procurement officer or a designee. This decision 
may be made either for individual acquisitions or classes of 
acquisitions.
    (3) Warranties required by applicable architect-engineer 
specifications shall be included in construction contracts.


1846.770  Administration.

    When notified of a defect in warranted items, the contracting 
officer should ascertain whether the warranty is currently in effect 
and ensure that the contractor is given proper and timely notice of the 
defect.
    15. Part 1847 is revised to read as follows:

PART 1847--TRANSPORTATION

Subpart 1847.2--Contracts for Transportation or for Transportation-
Related Services

Sec.
1847.200  Scope of subpart.
1847.200-70  Charter of aircraft.

Subpart 1847.3--Transportation in Supply Contracts

1847.304  Determination of delivery terms.
1847.304-3  Shipments from CONUS for overseas delivery.
1847.304-370  NASA export privilege.
1847.305  Solicitation provisions, contract clauses, and 
transportation factors.
1847.305-10  Packing, marking, and consignment instructions.
1847.305-13  Transit arrangements.
1847.305-70  NASA contract clauses.

Subpart 1847.5--Ocean Transportation by U.S.-Flag Vessels

1847.506  Procedures.

Subpart 1847.70--Protection of the Florida Manatee

1847.7001  Contract clause.

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

Subpart 1847.2--Contracts for Transportation or for Transportation-
Related Services


1847.200  Scope of subpart.


1847.200-70  Charter of aircraft.

    When acquiring aircraft by charter, contracting officers shall 
comply with NHB 7900.3, Aircraft Operations Management Manual.

Subpart 1847.3--Transportation in Supply Contracts


1847.304  Determination of delivery terms.


1847.304-3  Shipments from CONUS for overseas delivery.


1847.304-370  NASA export privilege.

    NASA has export licensing privileges for moving commodities to 
foreign destinations. Contracting officers shall request the advice of 
the Center Export Administrator to ensure full and appropriate use is 
made of these privileges.


1847.305  Solicitation provisions, contract clauses, and transportation 
factors.


1847.305-10  Packing, marking, and consignment instructions.

    In contracts providing for delivery f.o.b. origin and shipment 
under Government bills of lading, consignment instructions may be 
limited to the mail address of the

[[Page 14029]]

consignee (receiving activity), provided the contract instructions 
state: ``Shipment other than mail shall be consigned as indicated on 
the Government bill of lading furnished to the contractor.''


1847.305-13  Transit arrangements. (NASA supplements paragraph (a))

    (a)(3)(ii) When the provision at FAR 52.247-56 is used, the 
solicitation shall state that offers will be evaluated on the basis of 
the lowest overall cost to the Government, including transportation 
costs to NASA from point of origin to final destination, taking into 
account any applicable transit privileges.


1847.305-70  NASA contract clauses.

    (a) The contracting officer may insert a clause substantially as 
stated at 1852.247-72, Advance Notice of Shipment, in solicitations and 
contracts when the f.o.b. point is destination and special Government 
assistance is required in the delivery or receipt of the items.
    (b) The contracting officer may insert a clause substantially as 
stated at 1852.247-73, Shipment of Government Bills of Lading, in 
f.o.b. origin solicitations and contracts.

Subpart 1847.5--Ocean Transportation by U.S.-Flag Vessels


1847.506  Procedures. (NASA supplements paragraph (d))

    (d)(i) The transportation officer in each installation shall 
establish and maintain a register to reflect adherence to the Cargo 
Preference Act. The register shall contain data related to shipments 
made by the installation and by NASA contractors. Where no 
transportation officer is available, it shall be maintained by the 
contracting office. The register shall contain pertinent details of 
ocean shipments including, but not limited to, the ports of origin and 
destination of shipments, commodity descriptions, gross weight, freight 
revenue, name of vessel, operator of vessel, and date of loading. The 
register shall be maintained current and organized so that adherence to 
the Cargo Preference Act can be ascertained at all times. To the 
maximum practicable extent, compliance with the 50-percent minimum 
requirements of the Cargo Preference Act shall be maintained on a 
quarter-year basis; any deficiencies in maintaining compliance shall be 
corrected by the end of the calendar year.
    (ii) On the basis of the registers maintained under paragraph 
(d)(i) of this section, the official maintaining the register shall 
submit quarterly reports reflecting ocean shipments to the Division of 
National Cargo, Office of Market Development, Maritime Administration, 
Department of Transportation, Washington, DC, 20590. Negative reports 
are required when applicable.

Subpart 1847.70--Protection of the Florida Manatee


1847.7001  Contract clause.

    The contracting officer shall insert the clause at 1852.247-71, 
Protection of the Florida Manatee, in solicitations and contracts when 
deliveries or vessel operations, dockside work, or disassembly 
functions under the contract will involve use of waterways inhabited by 
manatees. The clause shall also be included in applicable subcontracts 
(including vendor deliveries).
    16. Part 1848 is revised to read as follows:

PART 1848--VALUE ENGINEERING

Subpart 1848.1--Policies and Procedures

Sec.
1848.102  Policies.
1848.103  Processing value engineering change proposals.
1848.104  Sharing arrangements.
1848.104-2  Sharing collateral savings.

Subpart 1848.2--Contract Clauses

1848.201  Clauses for supply or service contracts.

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

Subpart 1848.1--Policies and Procedures


1848.102  Policies. (NASA supplements paragraphs (a) and (f))

    (a) The Associate Administrator for Procurement (Code HS) is the 
approval authority for exemptions.
    (f) In calculating instant or future contract savings on firm-
fixed-price contracts when the parties have not set out a specific 
figure for profit, the contracting officer shall use the total contract 
price as the basis for calculating the savings.


1848.103  Processing value engineering change proposals. (NASA 
supplements paragraph (a))

    (a) Upon receipt of a VECP, the contracting officer shall promptly 
forward it to the technical officer responsible for the contract with 
the following information:
    (i) Date of VECP receipt;
    (ii) Date for notifying the contractor of VECP acceptance or 
rejection;
    (iii) Notification of the potential for awarding concurrent, 
future, or collateral savings to the contractor if the VECP is 
accepted;
    (iv) Request for a technical evaluation, with complete rationale 
for recommended acceptance or rejection, to include if acceptance is 
recommended:
    (A) An estimate of the type of savings, Government costs, etc., 
that can be expected from its acceptance;
    (B) A procurement request setting forth the specification changes 
to be used in any contract modification accepting the VECP in whole or 
in part; and
    (C) Additional funds if acceptance of the VECP results in negative 
instant contract savings.
    (v) Technical evaluation due date.


1848.104  Sharing arrangements.


1848.104-2  Sharing collateral savings.

    The contracting officer is authorized to make the determination 
that the cost of calculating and tracking collateral savings will 
exceed the benefits to be derived.

Subpart 1848.2--Contract Clauses


1848.201  Clauses for supply or service contracts. (NASA supplements 
paragraphs (a), (b), (c), and (d))

    (a)(6) The Associate Administrator for Procurement (Code HS) is the 
approval authority for exemptions.
    (b) The contracting officer shall not insert the clause at FAR 
52.248-1, Value Engineering, either with or without its Alternates, in 
an R&D contract where the statement of work is essentially an 
incorporation by reference of the prospective contractor's proposal. If 
any other part of the statement of work in such a contract reflects a 
Government specification that might benefit from application of VE 
techniques, the contracting officer shall consider inserting the VE 
incentive clause at FAR 52.248-1 with any applicable Alternate(s), and 
establish the applicability of the clause to that part.
    (c) Except as prescribed in paragraph (b) of this section, the 
contracting officer shall insert the clause at FAR 52.248-1 with its 
Alternate I in initial production contracts for major systems, and 
major systems R&D contracts for full-scale development, unless the 
contracting officer determines in writing that its use is 
inappropriate. Use of Alternate I is appropriate for an R&D major 
systems contract only if the contract specifications contain detailed 
requirements that lend themselves to VE.
    (d) The contracting officer shall insert the clause at FAR 52.248-1 
with its Alternate II under the conditions prescribed in paragraph (c) 
of this section

[[Page 14030]]

    17. Part 1849 is revised to read as follows:

PART 1849--TERMINATION OF CONTRACTS

Subpart 1849.1--General Principles

Sec.
1849.101  Authorities and responsibilities.
1849.101-70  NASA authorities and responsibilities.
1849.101-71  Termination authority.
1849.102  Notice of termination.
1849.102-70  Prior clearance of significant contract terminations.
1849.105  Duties of termination contracting officer after issuance 
of notice of termination.
1849.105-70  Termination docket checklist.
1849.110  Settlement negotiation memorandum.
1849.110-70  Memorandum contents.
1849.111  Review of proposed settlements.

Subpart 1849.5--Contract Termination Clauses

1849.505  Other termination clauses.
1849.505-70  NASA contract clause.

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

Subpart 1849.1--General Principles


1849.101  Authorities and responsibilities.


1849.101-70  NASA authorities and responsibilities.

    (a) Installations shall appoint a termination contracting officer 
(TCO) (see FAR 2.101) to perform specific duties relating to contract 
termination as one of that individual's primary functions. In addition 
to the responsibilities described in this part and FAR part 49, such 
duties should include--
    (1) Reviewing NASA Forms 1412, Termination Authority;
    (2) Reviewing the contract and related documents before issuing the 
notice of termination, to ensure protection of the Government's rights 
under the contract; and
    (3) Issuing notices of termination, reinstatement, and recision to 
contractors;
    (b) Contracting offices shall utilize the services of the 
Department of Defense and other Government agencies whenever possible 
to administer and negotiate settlement of terminated contracts. 
Delegation of the negotiation of termination settlement function shall 
be made in accordance with FAR subpart 42.2 and 1842.2.


1849.101-71  Termination authority.

    NASA Form 1412, Termination Authority, is prescribed for use by 
NASA installations when initiating action to terminate a contract for 
convenience or default. The project manager or the activity initiating 
the procurement request should initiate the action by completing NASA 
Form 1412 and submitting it to the contracting officer.


1849.102  Notice of termination.


1849.102-70  Prior clearance of significant contract terminations.

    (a) Congressional notification is required for any termination 
involving a reduction in employment of 100 or more contractor 
employees. Proposed terminations must be cleared through the 
Headquarters Office of Legislative Affairs (Code LB) before release of 
the termination notice, or any information on the proposed termination, 
to the contractor. Proposed terminations expected to result in a 
reduction of fewer than 100 should be similarly cleared if the 
installation believes it to be significant.
    (b) The contracting officer shall submit the following information 
to Code LB, and a copy to the Office of Procurement (Code HS), as soon 
as possible after the decision to terminate is made. Until clearance is 
obtained, this information shall be treated as ``For Official Use 
Only'' unless the information is classified.
    (1) Contract number.
    (2) Date of award.
    (3) Type of award.
    (4) Name of company.
    (5) Nature of contract or end item.
    (6) Reasons for the termination.
    (7) Contract price of items terminated.
    (8) Total number of contractor employees involved, including the 
Government's estimate of the number that may be discharged.
    (9) Anticipated impact on the company and the community.
    (10) Name of the community affected.
    (11) Area labor category.
    (12) Whether contractor is large or small business.
    (13) Any known impact on disadvantaged employment programs.
    (14) Total number of subcontractors involved and the impact in this 
area, if known.
    (15) Unclassified draft of suggested press release.
    (c) To minimize termination costs, Code LB shall act promptly on 
the request and provide a response not later than two working days 
after receipt of the information in paragraph (b) of this section.


1849.105  Duties of termination contracting officer after issuance of 
notice of termination.


1849.105-70  Termination docket checklist.

    The termination contracting officer shall complete NASA Form 1413, 
Termination Docket Checklist.


1849.110  Settlement negotiation memorandum.


1849.110-70  Memorandum contents.

    The TCO shall include the following information in the settlement 
negotiation memorandum. Contractors and subcontractors are encouraged 
to use this format appropriately modified for subcontract settlements 
submitted for review and approval.
    (a) General information--(1) Identification. (i) Name and address 
of the contractor and any pertinent affiliation between prime 
contractors and subcontractors relative to the overall settlement.
    (ii) Names and titles of contractor and Government personnel who 
participated in the negotiation.
    (2) Description of terminated contract.
    (i) Contract number;
    (ii) Date of award;
    (iii) Contract type;
    (iv) General description of contract items;
    (v) Total contract price; and
    (vi) Applicable contract termination provisions and clause.
    (3) Termination notice.
    (i) Date of the termination notice;
    (ii) Effective date of termination;
    (iii) Scope and nature of termination (complete or partial);
    (iv) Items terminated;
    (v) Unit prices;
    (vi) Total price of items terminated for fixed-price contracts or 
the estimated cost and fee applicable to items terminated for cost-
reimbursement type contracts;
    (vii) Whether the termination notice was amended and, if so, why;
    (viii) Whether the contractor stopped work on the termination 
effective date (if it did not, furnish details) and whether 
subcontracts were terminated promptly;
    (ix) Any redirection of common items and return of goods to the 
contractor's suppliers; and
    (x) Extent of contract performance and timely deliveries by the 
contractor.
    (b) Contractor's settlement proposal--(1) Date and amount. Date and 
location where the claim was filed and its gross amount (if interim 
settlement proposals were filed, information shall be furnished for 
each claim).
    (2) Basis of claim. E.g., inventory, total cost, or other basis, 
including an explanation of any approvals granted in connection with 
submission on other than an inventory basis.
    (3) Examination of proposal. Types of reviews made and by whom 
(audit, engineering, legal, or other).
    (c) Tabular summary of contractor's claim and the settlement. The 
cost

[[Page 14031]]

elements/items, the amounts claimed, the Government recommended 
position (including auditor, field, and technical personnel 
recommendations), and the negotiated settlement amounts. This summary 
shall include, if appropriate, previously reimbursed and unreimbursed 
costs applicable to the prime contractor and subcontractor, previous 
profit/fees paid and unpaid; settlement cost less disposal credit or 
other credits, and a recapitulation of previous settlements. The 
summary of the negotiated settlement shall include the amount claimed 
and allowed for contractor and/or subcontractor changes, disposal, 
prior payment credits, and contract price.
    (d) Settlement narrative summary.
    (1) Contractor's cost.
    (2) Profit/Fee.
    (3) Settlement expenses not included in the audit.
    (4) Number and dollar amount of any subcontractor settlements 
approved by the TCO and concluded by the contractor under delegation of 
authority.
    (5) Total amount of any partial payments.
    (6) Total of unliquidated progress or advance payments.
    (7) Claims of the Government against the contractor included in 
settlement agreement reservations.
    (8) Assignments, including the name and address of each assignee.
    (9) Disposal credits.
    (10) Status of plant clearance actions and all inventory sold, 
retained, or otherwise properly disposed of in accordance with 
applicable plant clearance regulations, including a consolidated 
closing plant clearance report, if applicable.
    (11) Status of Government property accountability.
    (12) Disposition of any special tooling, if applicable.
    (13) Proposed reservations of rights to the Government or to the 
contractor.
    (e) Recommendation. Amount of the gross settlement recommended and 
TCO statement that it is fair and reasonable to the Government and the 
contractor.
    (f) TCO Signature and date.


1849.111  Review of proposed settlements. (NASA paragraphs (1) and (2))

    (1) Settlements shall be reviewed in accordance with center-
prescribed procedures.
    (2) The TCO may authorize the contract administration office 
cognizant of a lower-tier subcontractor grant approval or ratification 
of proposed subcontractor settlements described in FAR 49.108-3(c) that 
are first reviewed and referred by the prime contractor to the TCO. 
This procedure is not applicable to settlements between the contractor 
and its first tier subcontractors.

Subpart 1849.5--Contract Termination Clauses


1849.505  Other termination clause.


1849.505-70  NASA contract clause.

    The contracting officer shall insert the clause at 1852.249-72, 
Termination (Utilities), in all solicitations and contracts for 
utilities services.
    18. Part 1850 is revised to read as follows:

PART 1850--EXTRAORDINARY CONTRACTUAL ACTIONS

Subpart 1850.2--Delegation of and Limitations on Exercise of Authority

Sec.
1850.202  Contract adjustment boards.

Subpart 1850.3--Contract Adjustments

1850.305  Processing cases.
1850.305-70  Submission of request to the Contract Adjustment Board.
1850.306  Disposition.
1850.306-70  Implementation of the Contract Adjustment Board's 
decision.

Subpart 1850.4--Residual Powers

1850.403  Special procedures for unusually hazardous or nuclear 
risks.
1850.403-1  Indemnification requests.
1850.403-170  Subcontractor indemnification requests.
1850.403-2  Action on indemnification requests.
1850.470  Lead NASA installation.

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

Subpart 1850.2--Delegation of and Limitations on Exercise of 
Authority


1850.202  Contract adjustment boards.

    14 CFR part 1209, subpart 3, Contract Adjustment Board, establishes 
the Contract Adjustment Board (CAB) as the approving authority to 
consider and dispose of requests from NASA contractors for 
extraordinary contractual actions.

Subpart 1850.3--Contract Adjustments


1850.305  Processing cases.


1850.305-70  Submission of request to the Contract Adjustment Board.

    (a) After investigating the facts and issues relevant to the 
contractor's request, the contracting officer shall forward the request 
to the Associate General Counsel for General Law (Code GG), including 
in the forwarding letter--
    (1) The nature of the case;
    (2) The recommended disposition; and,
    (3) If contractual action is recommended, the contracting officer's 
opinion that the action will facilitate the national defense.
    (b) The forwarding letter shall enclose the contractor's request, 
all supporting material submitted by the contractor, and any material 
the contracting officer has obtained while investigating the facts and 
issues relevant to the request. Any classified information in the 
material forwarded shall be so identified.
    (c) Electronic submittal is preferred for unclassified material.


1850.306  Disposition.


1850.306-70  Implementation of the Contract Adjustment Board's 
decision.

    (a) The contracting officer shall take action authorized in the 
CAB's decision.
    (b) Immediately upon execution, including any required Headquarters 
approval, of a contract or contract modification or amendment 
implementing the CAB decision, the contracting officer shall forward a 
copy of the contractual document to the Associate General Counsel for 
General Law (Code GG).

Subpart 1850.4--Residual Powers


1850.403  Special procedures for unusually hazardous or nuclear risks.


1850.403-1  Indemnification requests. (NASA supplements paragraph (a))

    (a) The contractor shall also provide evidence, such as a 
certificate of insurance or other customary proof of insurance, that 
such insurance is either in force or is available and will be in force 
during the indemnified period.


1850.403-170  Subcontractor indemnification requests.

    Subcontractors shall submit requests for indemnification to the 
prime contractor and through higher tier subcontractor(s), as 
applicable. If the prime contractor agrees an indemnity clause should 
be flowed down to the subcontractor, the prime contractor shall forward 
its written request for subcontractor indemnification to the cognizant 
contracting officer for approval in accordance with FAR 50.403-1. The 
prime contractor's request shall provide information responsive to 
1850.403-1, FAR 50.403-1, and FAR 50.403-2(a) (1), (2), (4), (5) and 
(7). The agreed upon definition of the unusually hazardous risk to be 
incorporated into the subcontract shall be the same as that 
incorporated in the prime contract.

[[Page 14032]]

1850.403-2  Action on indemnification requests. (NASA supplements 
paragraphs (a) and (d))

    (a) If recommending approval, the contracting officer shall forward 
the required information to the Associate Administrator for Procurement 
(Code HS), along with the following:
    (i) For contracts of five years duration or longer, a 
determination, with supporting rationale, whether the indemnification 
approval and insurance coverage and premiums should be reviewed for 
adequacy and continued validity at points in time within the extended 
contract period.
    (ii) A recommended Memorandum of Decision. In addition to the 
applicable requirements of FAR 50.306, the Memorandum of Decision shall 
contain the following:
    (A) The specific definition of the unusually hazardous risk to 
which the contractor is exposed in the performance of the contract(s);
    (B) A complete discussion of the contractor's financial protection 
program; and
    (C) The extend to, and conditions under, which indemnification is 
being approved for subcontracts.
    (d) If approving subcontractor indemnification, the contracting 
officer shall document the file with a memorandum for record addressing 
the items set forth in FAR 50.403-2(a) and include an analysis of the 
subcontractor's financial protection program. In performing this 
analysis, the contracting officer shall take into consideration the 
availability, cost, terms and conditions of insurance in relation to 
the unusually hazardous risk.


1850.470  Lead NASA installation.

    (a) Contractors applying for indemnification shall determine which 
NASA installation has the highest dollar amount of contracts for which 
indemnification is requested. The indemnification request should be 
submitted to the procurement officer for that installation, who will 
then designate a cognizant contracting officer. Contractors shall 
submit a single request and ensure duplicate requests are not submitted 
by associate divisions, subsidiaries, or central offices of the 
contractor.
    (b) The receiving installation will become the lead installation 
and will remain so indefinitely. Lead installation designation may 
change to another installation if the affected procurement officers 
agree to the change. Should a change occur in the lead installation, 
all records related to indemnification of that contractor shall be 
transferred to the gaining installation.
    19. Part 1851 is revised to read as follows:

PART 1851--USE OF GOVERNMENT SOURCES BY CONTRACTORS

Subpart 1851.1--Contractor Use of Government Supply Sources

Sec.
1851.101  Policy.
1851.102  Authorization to use Government supply sources.
1851.102-70  Contractor acquisition of filing cabinets.

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

Subpart 1851.1--Contractor Use of Government Supply Sources


1851.101  Policy.

    Use of official Government mailing privileges by NASA contractors 
is covered in NMI 1450.11, NASA Mail Management Program.


1851.102  Authorization to use Government supply sources. (NASA 
supplements paragraph (e)).

    (e) The contracting officer shall use substantially the following 
format for letters authorizing contractor use of Government supply 
sources:

SUBJECT: Authorization to Lease, Rent, or Purchase from General 
Services Administration (GSA) Supply Sources
(Contractor's name)----------------------------------------------------
(Address)--------------------------------------------------------------

    (1) You are hereby authorized to act for the Government in the 
following matters:
    (i) The acquisition of supplies and/or services under Contract 
No. ________ available for purchase by Government agencies either 
directly from GSA stock or under Federal Supply Schedules, including 
GSA nonmandatory ADTS/ADP schedule contracts and GSA ADP 
requirements contracts, subject to the limitations set forth in this 
authorization.
    (ii) The leasing or rental of equipment for use on Contract No. 
________ available for lease or rental by Government agencies under 
Federal Supply Schedules, including GSA nonmandatory ADTS/ADP 
schedule contracts and GSA ADP requirements contracts, subject to 
the limitations set forth in this authorization.
    (iii) The issuance of tax exemption certificates in lieu of the 
payment of State or other taxes for which the government is not 
liable on supplies or services purchased under this authorization.
    (2)(i) Purchase orders under GSA schedules and contracts shall 
be placed in accordance with the terms and conditions of the GSA 
schedule or contract and this authorization. A copy of this 
authorization shall be attached to the order (unless a copy was 
previously furnished to the GSA contractor) and shall contain the 
following statement:
    ``This order is placed on behalf of the National Aeronautics and 
Space Administration in furtherance of United States Government 
Contract No. ________, pursuant to written authorization dated 
________, a copy of which (is attached) (you have on file). In the 
event of any inconsistency between the terms and conditions of this 
order and those of the applicable GSA schedule/contract, the latter 
will govern.''
    (ii) Orders for items in the GSA Supply Catalog shall be placed 
in accordance with the Catalog and this authorization and shall 
include the address to which billings are to be sent. Bills are not 
issued by GSA until after shipment has been made and should 
therefore be paid promptly. Any necessary adjustments will be made 
by GSA subsequent to payment. All orders shall contain the following 
statement:
    ``This order is placed on behalf of the National Aeronautics and 
Space Administration in furtherance of United States Government 
Contract No. ________, pursuant to written authorization dated 
________, a copy of which (is attached) (you have on file).''
    (3) (Insert any other provisions and restrictions.)
    (4) The authority hereby granted is not transferable or 
assignable.

----------------------------------------------------------------------
(Contracting Officer)

    (e)(3) Contracting officers shall use NHB 4100.1, NASA Materials 
Inventory Management Manual, to obtain activity address codes to enable 
use of FEDSTRIP and MILSTRIP.


1851.102-70  Contractor acquisition of filing cabinets.

    (a) The Contractor officer must approve any planned contractor 
acquisition of filing cabinets whose title will vest in the Government. 
The contracting officer shall ensure that the contractor takes the 
following actions before submitting a request for approval:
    (1) Transfer inactive records to contractor storage areas;
    (2) Dispose of unnecessary records in accordance with corporate 
procedures;
    (3) Use less expensive shelf filing methods; and
    (4) Take other actions to reduce the need for filing cabinets.
    (b) If after taking the actions in paragraphs (a)(1) through (4) of 
this section, the contractor requires additional filing capacity, it 
shall submit for contracting officer approval a request to order filing 
cabinets. This request shall include a discussion of why sufficient 
additional filing capacity is necessary and shall address the results 
of the actions in paragraphs (a)(1) through (4) of this section. The 
contracting officer shall review the request in consultation with the 
Records Management Officer, the Property and Supply Officer, and the 
project officer, is appropriate.
    (c) If the need for filing cabinets is approved, the contracting 
officer shall

[[Page 14033]]

attempt to fill the need by providing any available excess items of the 
type required through appropriate property accountability channels. 
Approved requests that cannot be filled from excess shall be returned 
to the contractor with an authorization to obtain file cabinets, 
preferably through GSA.

PART 1852--SOLICITATION PROVISIONS AND CONTRACT CLAUSES


1852.211-72, 1852.211-74  [Removed]

    20-21. Sections 1852.211-72 and 1852.211-74 are removed.


1852.223-70  [Amended]

    22. In the clause to section 1852.223-70, the date ``(FEB 1996)'' 
is revised to read ``(MAR 1997)'', and in paragraph (g)(2) of the 
clause the phrase ``A certification program'' is revised to read 
``Qualification standards''.


1852.223-73  [Amended]

    23. In the introductory text to section 1852.223-73, the citation 
``1823.7001'' is revised to read ``1823.7001(c)'', and in the 
introductory text to ALTERNATE I of section 1852.223-73, the citation 
``1823-7001'' is revised to read ``1823.7001(d)''.


1852.243-70, 1852.243-71  [Amended]

    24. Sections 1852.243-70 and 1852.243-71 are revised to read as 
follows:


1852.243-70  Engineering change proposals.

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

ENGINEERING CHANGE PROPOSALS (MAR 1997)

    (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--Egnineering 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'' ______ [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'' ______ [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 15.804-6 if the 
proposed change meets the criteria for its submission under FAR 
15.804-2; 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 (SEPT 1990)

    As prescribed in 1843.205-70(b), add the following paragraph 
(e), modified to suit contract type, to the basic clause:
    (e) If the ______ [price of 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 (SEPT 1990)

    As prescribed in 1843.205-70(c), 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 (MAR 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

[[Page 14034]]

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)


1852.244-70  [Amended]

    25. In the introductory text to section 1852.244-70, the citation 
``1844.170'' is revised to read ``1844.204-70''.


1852.246-70  [Amended]

    26. Section 1852.246-70 is revised to read as follows:


1852.246-70  Mission Critical Space System Personnel Reliability 
Program.

    As prescribed in 1846.370(a), insert the following clause:

MISSION CRITICAL SPACE SYSTEM

PERSONNEL RELIABILITY PROGRAM (MAR 1997)

    (a) In implementation of the Mission Critical Space System 
Personnel Reliability Program, described in 14 CFR 1214.5, the 
Government shall identify personnel

[[Page 14035]]

positions that are mission critical. Some of the positions as 
identified may now or in the future be held by employees of the 
Contractor. Upon notification by the Contracting Officer that a 
mission-critical position is being or will be filled by one or more 
of the Contractor's employees, the Contractor shall (1) provide the 
affected employees with a clear understanding of the investigative 
and medical requirements and, (2) to the extent permitted by 
applicable law, assist the Government by furnishing personal data 
and medical records.
    (b) The standard that will be used in certifying individuals for 
a mission-critical position is that they must be determined to be 
suitable, competent, and reliable in the performance of their 
assigned duties in accordance with the screening requirements 14 CFR 
1214.5. If the Government determines that a Contractor employee 
occupying or nominated to occupy a mission-critical position will 
not be certified for such duty, the Contracting Officer shall (1) 
furnish to the employee the specific reasons for its action; (2) 
advise the employee that he/she may avail himself/herself of the 
review procedures that are a part of the certification system; and 
(3) furnish him/her a copy of those procedures upon request.
    (c) If a Contractor employee who has been nominated for (but has 
not yet filled) a mission-critical position is not certified, the 
Contractor agrees to defer the appointment to the position until the 
employee has had an opportunity to pursue the referenced procedures. 
If the employee is an incumbent to the position, the Contractor 
agrees, upon the request of the Government, to remove him/her from 
the position temporarily pending an appeal of the action under the 
review procedures. If any employee not certified elects not to take 
action under the procedures, or, if having taken action, is not 
successful in obtaining a reversal of the determination, the 
Contractor agrees not to appoint the employee to the position, or if 
already appointed, to promptly remove the employee.

(End of clause)


1852.246-71  [Amended]

    27. In the introductory text to section 1852.246-71, the citation 
``1846.470-2(a)'' is revised to read ``1846.470''.


1852.246-73  [Amended]

    28. Section 1852.246-73 is revised to read as follows:


1652.246-73  Human Space Flight Item.

    As prescribed in 1845.370(b), insert the following clause:

HUMAN SPACE FLIGHT ITEM (MAR 1997)

    The Contractor shall include the following statement in all 
subcontracts and purchase orders placed by it in support of this 
contract, without exception as to amount or subcontract level:
    ``FOR USE IN HUMAN SPACE FLIGHT; MATERIALS, MANUFACTURING, AND 
WORKMANSHIP OF HIGHEST QUALITY STANDARDS ARE ESSENTIAL TO ASTRONAUT 
SAFETY.
    IF YOU ARE ABLE TO SUPPLY THE DESIRED ITEM WITH A HIGHER QUALITY 
THAN THAT OF THE ITEMS SPECIFIED OR PROPOSED, YOU ARE REQUESTED TO 
BRING THIS FACT TO THE IMMEDIATE ATTENTION OF THE PURCHASER.''

(End of clause)


1852.246-74, 1852.246-75  [Removed]

    29. Section 1852.246-74 and 1852.246-75 are removed.


1852.247-70  [Removed]

    30. Section 1852.247-70 is removed.


1852.247-72  [Amended]

    31. In the introductory text to section 1852.247-72, the citation 
``1847.305-70(b)'' is revised to read ``1847.305-70(a)''.


1852.247-73  [Amended]

    32. In the introductory text to section 1852.247-73, the citation 
``1847.305-70(c)'' is revised to read ``1847.305-70(b)''.
    33. In the clause to section 1852.247-73, the date ``(MARCH 1989)'' 
is revised to read ``(MAR 1997)'', and in paragraph (b), the word 
``certificate'' is revised to read ``statement''.

[FR Doc. 97-7075 Filed 3-24-97; 8:45 am]
BILLING CODE 7510-01-M