18032 Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations

to be used in all decisions involved in

promulgating and implementing a

policy action. This interim final rule,

when finalized, will revise certain

policy and procedural requirements.

States which contract with DOE will be

subject to this rule. However, DOE has

determined that this rule will not have

a substantial direct effect on the

institutional interests or traditional

functions of the States.

List of Subjects in 48 CFR Parts 915,

916, and 970

Government procurement.

Richard H. Hopf,

Deputy Assistant Secretary for Procurement

and Assistance Management.

For the reasons set out in the

preamble, Chapter 9 of Title 48 of the

Code of Federal Regulations is amended

as set forth below.

1. The authority citations for Parts 915

and 916 continue to read as follows:

Authority: 42 U.S.C. 7254; 40 U.S.C.

486(c).

PART 915—CONTRACTING BY

NEGOTIATION

2. Subsection 915.804–70 is revised to

read as set forth below:

915.804–70 Uncertified cost or pricing

data.

Anytime an offeror or contractor is

not required to submit certified cost or

pricing data, the contracting officer may

require the offeror or contractor to

submit uncertified cost or pricing data.

The amount of data required to be

submitted should be limited to that data

necessary to allow the contracting

officer to determine the reasonableness

of the price.

PART 916—TYPES OF CONTRACTS

916.301–3 [Removed]

3. Subsection 916.301–3, Limitations,

is removed.

PART 970—DOE MANAGEMENT AND

OPERATING CONTRACTS

4. The authority citation for Part 970

is revised to read as follows:

Authority: Sec. 161 of the Atomic Energy

Act of 1954 (42 U.S.C. 2201), sec. 644 of the

Department of Energy Organization Act,

Public Law 95–91 (42 U.S.C. 7254).

5. Subsection 970.5204–24 is

amended by revising paragraphs (a),

(a)(2), (c), (d), (f), (g), and paragraph (b)

following ‘‘NOTE’’ at the end of the

clause to read as set forth below:

970.5204–24 Subcontractor cost or pricing

data.

* * * * *

(a) The following clause shall be inserted

in all subcontracts where such subcontracts,

and any modifications thereto, exceed the

cost or pricing data threshold at FAR 15.804–

2(a)(1), even though the original amount of

the subcontract was below the threshold.

* * * * *

(2) Except as provided in (a)(3) of this

clause, certified cost or pricing data shall be

submitted prior to (i) award of each subsubcontract, the price of which is expected

to exceed the cost or pricing data threshold

at FAR 15.804–2(a)(1), and (ii) the

negotiation of the price of each change or

modification to the sub-subcontract under

this subcontract for which the price

adjustment is expected to exceed the cost or

pricing data threshold at FAR 15.804–2(a)(1).

* * * * *

(c) For purposes of verifying that certified

cost or pricing data submitted in conjunction

with the negotiation of this subcontract

change or other modification involving an

amount in excess of the cost or pricing data

threshold at FAR 15.804–2(a)(1) were

accurate, complete, and current, DOE shall,

until the expiration of 3 years from the date

of final payment under this subcontract, have

the right to examine those books, records,

documents, papers, and other supporting

data which involve transactions related to

this subcontract or which will permit

adequate evaluation of the cost or pricing

data submitted, along with the computations

and projections used therein.

(d) If the original price of this subcontract

exceeds the cost or pricing data threshold at

FAR 15.804–2(a)(1) or the price of any

change or other modification to this

subcontract is expected to exceed the cost or

pricing data threshold at FAR 15.804–2(a)(1),

the subcontractor agrees to furnish the

contractor certified cost or pricing data, using

the certificate set forth in paragraph (b) of

this clause, unless the price is based on

adequate price competition, established

catalog or market prices of commercial items

sold in substantial quantities to the general

public, or prices set by law or regulation.

* * * * *

(f) The subcontractor agrees to insert

paragraph (c) of this clause, without change,

and the substance of paragraphs (a), (b), (d),

(e), and (f) of this clause in each subsubcontract hereunder in excess of the cost

or pricing data threshold at FAR 15.804–

2(a)(1) and in each sub-subcontract that is

less than the threshold when making a

change or other modification thereto in

excess of the cost or pricing data threshold

at FAR 15.804–2(a)(1).

(g) If the prime contractor determines that

any price, including profit or fee, negotiated

in connection with this subcontract or any

cost reimbursable under this subcontract was

increased by any significant sum because the

subcontractor or any sub-subcontractor,

pursuant to this clause or any subsubcontract clause herein required, furnished

incomplete or inaccurate cost or pricing data

or data not current as certified in the

subcontractor’s certificate of current cost or

pricing data, then such price or cost shall be

reduced accordingly and the contract shall be

modified in writing to reflect such reduction.

* * * * *

Note. * * *

(b) This clause may also be used for

subcontracts in which the amount of the

subcontract is less than the cost or pricing

data threshold at FAR 15.804–2(a)(1), if a

certificate of cost or pricing data is obtained;

if so used, the amount stated in the clause

should be modified appropriately.

* * * * *

6. Subsection 970.7104–11 is

amended by revising paragraphs (a)(1)(i)

and (ii) to read as set forth below:

970.7104–11 Cost or pricing data.

(a) * * *

(1) * * *

(i) Award of a negotiated subcontract

when the price is expected to exceed the

threshold for cost or pricing data at 48

CFR (FAR) 15.804–2(a)(1), or

(ii) Modifications of any subcontract

when the price adjustment is expected

to exceed the threshold for cost or

pricing data at 48 CFR (FAR) 15.804–

2(a)(1), unless unrelated and separately

priced changes, for which certified cost

or pricing data would not otherwise be

required, are included.

* * * * *

[FR Doc. 95–8748 Filed 4–7–95; 8:45 am]

BILLING CODE 6450–01–P

NATIONAL AERONAUTICS AND

SPACE ADMINISTRATION

48 CFR Parts 1802, 1850, and 1852

Indemnification under Public Law 85–

804

AGENCY: Office of Procurement, National

Aeronautics and Space Administration

(NASA).

ACTION: Final rule.

SUMMARY: This rule amends the NASA

policy and approval process on

indemnifying contractors. This revision

is part of NASA’s efforts to simplify its

regulations. The streamlined policy

relies more on Federal-wide policies.

EFFECTIVE DATE: April 10, 1995.

FOR FURTHER INFORMATION CONTACT:

Harold Nelson, (202) 358–0436.

SUPPLEMENTARY INFORMATION:

Background

NASA is reviewing and rewriting 48

CFR chapter 18, the NASA FAR

Supplement, in its entirety in order to

implement recommendations of the

National Performance Review. During

this review, NASA is eliminating

reporting requirements and making

other changes in order to reduce and

simplify the regulation. This final rule

48 CFR parts 1802, 1850, and 1852 for

the following reasons.
Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations 18033

Section 1802.101 is revised in order to

define the acronym ‘‘FAR.’’

Section 1850.202 is revised in order to

add a reference to 14 CFR subpart

1209.3 on the Contract Adjustment

Board.

Until now, requests for

indemnification under Public Law 85–

804 have been processed using a twostep approach. Under the first step, the

Administrator signed a ‘‘Memorandum

Decision Under Public Law 85–804’’

which recognized a class of contracts for

which the statutory criteria for

approving such requests could be met.

Specifically, this document described

the existence of the unusually

hazardous risk, explained how approval

of requests would facilitate the national

defense, and set any other conditions for

approval of requests to incorporate the

indemnification clause in specific

NASA prime contracts. Two

Memorandum Decisions, one applicable

to contracts under the Shuttle Program

and the other applicable to contracts for

launch services using expendable

launch vehicles have been signed.

The second step of the process

involved the submission of an approval

package for specific contracts, citing the

pertinent Memorandum Decision. The

Administrator signed a second

document, an ‘‘Approval Under Public

Law 85–804’’, to grant approval to

include the indemnification clause in

designated contracts. 48 CFR 1850.402

also envisioned circumstances where a

combined Memorandum Decision and

Approval Under Public Law 85–804

could be signed by the Administrator in

instances where requests were not

covered by a current Memorandum

Decision.

The above described two-step

approach is not required by 48 CFR

(FAR) part 50, which prescribes a single

document approach. Since one of the

above mentioned Decision

Memorandums expired in September

1994 and the other is due to expire in

July 1995, NASA Headquarters

reviewed continuation of the two step

approach. Based on this review, it has

been decided to abandon the two step

approach in favor of following the FAR

procedure. Upon issuance of this notice,

when NASA contractors request

indemnification, the contracting officer

will take the actions set forth in 48 CFR

(FAR) 50.403. The contracting officer

will also submit a ‘‘Memorandum of

Decision Under Public Law 85–804’’ for

each contract, or group of contracts, for

which indemnification is being sought.

This Memorandum of Decision will

contain all the required information

which has been previously distributed

between the two documents, the

Memorandum Decision Under Pub. L.

85–804 and the Approval Under Pub. L.

85–804.

The need for separate NASA clauses

covering indemnification—48 CFR

1852.250–70, Indemnification Under

Public Law 85–804, and 48 CFR

1852.250–72, Space Activity—

Unusually Hazardous Risks, was also

reviewed. 48 CFR 1852.250–70 was

extremely similar to the existing FAR

clause (48 CFR 52.250–1,

Indemnification Under Public Law 85–

804). However, the NASA clause

differed in ways that were not

consistent with Executive Order 10789,

as amended, which implements the

statutory authority (50 U.S.C. 1431–

1435) authorizing indemnification.

Therefore, it was determined that the

clause should be deleted and the FAR

clause used. Also, practically from the

time that 48 CFR 1852.250–72, Space

Activity—Unusually Hazardous Risks,

was adopted; it was recognized that the

contractors could not merely cite the

clause to substantiate their requests for

the indemnification clause. Contractors

are required to describe the nature of the

unusually hazardous risk associated

with performance of the specific

contract in detail. Therefore, it has been

determined that the standard clause be

deleted and the definition and

description of the unusually hazardous

risks be addressed on a case by case

basis.

Impact

NASA certifies that this regulation

will not have a significant economic

impact on a substantial number of small

entities under the Regulatory Flexibility

Act (5 U.S.C. 601 et seq.). This rule does

not impose any reporting or record

keeping requirements subject to the

Paperwork Reduction Act.

Lists of Subjects in 48 CFR Parts 1802,

1850 and 1852

Government procurement.

Tom Luedtke,

Deputy Associate Administrator for

Procurement.

Accordingly, 48 CFR parts 1802, 1850

and 1852 are amended as follows.

1. The authority citation for 48 CFR

parts 1802, 1850 and 1852 continues to

read as follows:

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

PART 1802—DEFINITIONS OF WORDS

AND TERMS

2. Section 1802.101 is amended by

adding the following definition in

alphabetical order in paragraph (b):

1802.101 Definitions.

* * * * *

(b) * * *

FAR means the Federal Acquisition

Regulation as codified at 48 CFR chapter

1.

* * * * *

PART 1850—EXTRAORDINARY

CONTRACTUAL ACTIONS

3. Section 1850.202 is revised to read

as follows:

1850.202 Contract adjustment boards.

NMI 1152.5, 14 CFR part 1209,

subpart 3, Contract Adjustment Board,

establishes the Contract Adjustment

Board as the approving authority to

consider and dispose of requests from

NASA contractors for extraordinary

contractual actions.

4. Section 1850.402 is removed.

5. Section 1850.403–1 is revised to

read as follows:

1850.403–1 Indemnification requests.

In addition to the information

required by 48 CFR (FAR) 50.403–1(a),

the contractor shall 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.

6. Section 1850.403–2 is revised to

read as follows:

1850.403–2 Action on indemnification

requests.

(a) The Administrator will execute a

Memorandum of Decision to approve a

request to use the indemnification

clause in a contract or group of

contracts.

(b) For contracts of five years duration

or longer, in addition to information

required to be submitted by the

contracting officer under 48 CFR (FAR)

part 50, the submission should include

discussion and determination on

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.

(c) If a contracting officer

recommends that a request for

indemnification be approved, the

required information specified in 48

CFR (FAR) 50.403–2(a) shall be

forwarded to the Associate

Administrator for Procurement (Code

HS) for review and processing to the

Administrator. The contracting officer

shall also provide a recommended

Memorandum of Decision. This

document provides the specific

approval to include an indemnification

clause in a NASA contract, or group of
18034 Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations

contracts. In addition to the applicable

requirements of 48 CFR (FAR) 50.306,

the Memorandum of Decision shall

contain the following:

(1) The specific definition of the

unusually hazardous risk to which the

contractor is exposed in the

performance of the contract(s).

(2) A complete discussion of the

contractor’s financial protection

program that the Administrator will

review in order to approve the request

for indemnification.

(3) As appropriate, the extent to, and

conditions under, which

indemnification is being approved for

subcontracts.

(d) Before presentation to the

Administrator, Code HS will obtain

concurrences from the General Counsel,

Comptroller, Associate Administrator

for Procurement, Associate Deputy

Administrator and Deputy

Administrator, as appropriate.

(e) Since indemnification coverage

must flow through the prime contractor,

subcontractors shall submit requests for

indemnification to the prime contractor

and through higher tier subcontractor(s),

as applicable. If the prime contractor

agrees indemnity 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. The

prime contractor’s request shall provide

information responsive to 1850.403–1,

and 48 CFR (FAR) 50.403–1 and 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.

(f) If the contracting officer approves

indemnification of a subcontractor by

the prime, the contracting officer shall

document the file with a memorandum

for record addressing the items set forth

in 48 CFR (FAR) 50.403–2(a). This

memorandum shall address the items

set forth in 48 CFR (FAR) 50.403–2(a)

and contain 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.

The contracting officer may rely on the

analysis of the prime contractor’s

financial protection program in relation

to the approval of indemnification of the

prime contractor, to the extent this

analysis is applicable.

(g) Code HS will maintain records of

each Memorandum of decision executed

by the Administrator.

7. Sections 1850.403–3, 1850.403–

370, and 1850.403–70 are removed.

1850.403–3—[Removed]

1850.403–370—[Removed]

1850.403–70—[Removed]

PART 1852—SOLICITATION

PROVISIONS AND CONTRACT

CLAUSES

8. Sections 1852.250–70 and

1852.250–72 are removed.

1852.250–72—[Removed]

1852.250–72—[Removed]

[FR Doc. 95–8511 Filed 4–7–95; 8:45 am]

BILLING CODE 7510–01–M