[Federal Register: October 31, 2003 (Volume 68, Number 211)]
[Rules and Regulations]
[Page 62023-62026]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr31oc03-12]
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NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Parts 1845 and 1852
RIN 2700-AC73
Government Property--Instructions for Preparing NASA Form 1018
AGENCY: National Aeronautics and Space Administration.
ACTION: Interim rule.
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SUMMARY: This interim rule amends the NASA Federal Acquisition
Regulation Supplement (NFS) to provide a definition of obsolete
property, to address contractor validation of 1018 data, to clarify
reporting of software to which NASA has title, to clarify other
property classifications, and to revise the date for submission of
annual property reports. NASA uses the data contained in contractor
reports for annual financial statements and property management. This
change will provide for consistent reporting of NASA property by
contractors.
DATES: Effective Date: This interim rule is effective October 31, 2003.
Comment Date: Comments should be submitted to NASA on or before
December 30, 2003.
ADDRESSES: Lou Becker, NASA Headquarters, Office of Procurement,
Contract Management Division (Code HK), Washington, DC 20546.
FOR FURTHER INFORMATION CONTACT: Lou Becker, NASA Headquarters, Office
of Procurement, Contract Management Division (Code HK), Washington, DC 20546, telephone: (202) 358-4593, e-mail to: lou.becker@nasa.gov.
SUPPLEMENTARY INFORMATION
A. Background
Each year, NASA's financial statements are audited in accordance
with generally accepted government auditing standards. NASA must
maintain adequate controls to reasonably assure that property, plant
and equipment and materials are presented fairly in its financial
statements. Since contractors maintain NASA's official records for its
assets in their possession, NASA uses the data contained in contractor
reports for annual financial statements and property management. This
interim rule provides policies and procedures related to obsolete
property, contractor validation of 1018 data, and proper reporting of
software to which NASA has title. This change will provide for
consistent reporting of NASA property by contractors. It also reflects
the need to change the date of submission for
[[Page 62024]]
annual property reports from October 31st to October 15th.
B. Regulatory Flexibility Act
NASA certifies that this interim rule will not have a significant
economic impact on a substantial number of small businesses within the
meaning of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.)
because it clarifies existing property reporting policies and
procedures contractors must follow when accounting for and reporting
assets.
C. Paperwork Reduction Act
The Paperwork Reduction Act does not apply because the changes to
the NFS do not impose new recordkeeping or information collection
requirements which require the approval of the Office of Management and
Budget under 44 U.S.C. 3501, et seq.
D. Determination To Issue an Interim Rule
In accordance with 41 U.S.C. 418(d), NASA has determined that
urgent and compelling reasons exist to promulgate this interim rule.
The basis for this determination is that the clarifications contained
in this interim rule are needed to ensure consistent reporting of NASA
assets in contractor annual reports to be submitted for Fiscal Year
2003. Public comments received in response to this interim rule will be
considered in the formation of the final rule.
List of Subjects in 48 CFR Parts 1845 and 1852
Government procurement.
Tom Luedtke,
Assistant Administrator for Procurement.
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Accordingly, 48 CFR Parts 1845 and 1852 are amended as follows:
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1. The authority citation for 48 CFR Parts 1845 and 1852 continues to
read as follows:
Authority: 42 U.S.C. 2473(c)(1).
PART 1845--GOVERNMENT PROPERTY
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2. Revise section 1845.7101 to read as follows:
1845.7101 Instructions for preparing NASA Form 1018.
NASA must account for and report assets in accordance with 31
U.S.C. 3512 and 31 U.S.C. 3515, Federal Accounting Standards, and
Office of Management and Budget (OMB) instructions. Since contractors
maintain NASA's official records for its assets in their possession,
NASA must obtain periodic data from those records to meet these
requirements. Changes in Federal Accounting Standards and OMB reporting
requirements may occur from year to year, requiring contractor
submission of supplemental information with the NASA Form (NF) 1018.
The specific Statements of Federal Financial Accounting Standards
(SFFAS) to be used for property records are SFFAS No. 3 ``Accounting
for Inventory and Related Property'', SFFAS No. 6 ``Accounting for
Property, Plant and Equipment'', SFFAS No. 10 ``Accounting for Internal
Use Software'', and SFFAS No. 11 ``Amendments to PP&E: Definitions''
issued by the Federal Accounting Standards Advisory Board.
Classifications of property, related costs to be reported, and other
reporting requirements are discussed in this subpart. NF 1018 (see
1853.3) provides critical information for NASA financial statements and
property management. Accuracy, completeness, and timeliness of the
report are critical to many aspects of NASA's operations.
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3. Amend section 1845.7101-1 by revising paragraph (a), the
introductory text of paragraphs (g) and (k) and paragraph (l) to read
as follows:
1845.7101-1 Property classification.
(a) General. (1) Contractors shall report costs in the
classifications on NF 1018, as described in this section. The cost of
heritage assets and obsolete property will be reported on the NF 1018
under the appropriate classification. Supplemental reporting may also
be required.
(2)(i) Heritage assets are property, plant and equipment that
possess one or more of the following characteristics:
(A) Historical or natural significance;
(B) Cultural, educational or artistic importance; or
(C) Significant architectural characteristics.
(ii) Examples of NASA heritage assets include buildings and
structures designated as National Historic Landmarks as well as
aircraft, spacecraft and related components on display to enhance
public understanding of NASA programs. Heritage assets which serve both
a heritage and government operation function are considered multi-use
when the predominant use is in general government operations. Multi-use
heritage assets will not be considered heritage assets for NF 1018
supplemental reporting purposes.
(3) Obsolete property is property for which there are no current
plans for use in its intended purpose (i.e., it no longer provides
service to NASA operations). Examples of obsolete property are items in
configurations which are no longer required or used by NASA or items
held for engineering evaluation purposes only. NASA may have approved
the retention of these items for programmatic reasons even though they
have no current plans for use.
* * * * *
(g) Equipment. Includes costs of commercially available personal
property capable of stand-alone use in manufacturing supplies,
performing services, or any general or administrative purpose (for
example, machine tools, furniture, vehicles, computers, software, test
equipment, including their accessory or auxiliary items). Software
integrated into and necessary to operate another item of Government
property is considered to be an auxiliary item (see FAR 45.501) and
should be considered part of the item of which it is an integral part.
Other software to which NASA has title shall be classified as an
individual item of equipment for reporting purposes if it has a useful
life of 2 years or more and acquisition cost of $1,000,000 or more
(also see 1845.7101-3(g)). Enhancement costs for existing software
should be added to the software acquisition cost if the enhancement
results in significant additional capability beyond that for which the
software was originally developed (i.e., a capability that was not
included in the original software specifications, the total cost of the
enhancement is $1,000,000 or more, or the expected useful life of the
enhanced software is 2 years or more). Software licenses are excluded.
Contractors shall separately report:
* * * * *
(k) Agency-Peculiar Property. Includes costs of completed items,
unique to NASA aeronautical and space programs, which are capable of
stand-alone operation. Examples include research aircraft, reusable
space vehicles, ground support equipment, prototypes, and mock-ups. The
amount of property, title to which vests in NASA as a result of
progress payments to fixed price subcontractors, shall be included to
reflect the pro rata cost of undelivered agency-peculiar property.
Completed end items not related to the International Space Station or
the Space Shuttle program which otherwise meet the definition of
Agency-Peculiar Property, and are destined for permanent operation in
space, such as satellites and space probes, shall not be reported.
Contractors shall separately report:
* * * * *
(l) Contract Work-in-Process. Work-in-process (WIP) consists of
property items under construction (i.e., not complete).
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It includes costs of all work-in-process regardless of value, and
excludes costs of completed items reported in other categories. While
the costs of WIP for International Space Station and Space Shuttle
components should be included as WIP, satellites and space probes and
their components should be excluded from WIP as those items will be
accounted for by NASA.
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4. Amend section 1845.7101-2 by revising the introductory text and
paragraphs (a) and (c) to read as follows:
1845.7101-2 Transfers of property.
A transfer is a change in accountability between and among prime
contracts, NASA Centers, and other Government agencies (e.g., between
contracts of the same NASA Center, contracts of different NASA Centers,
a contract of one NASA Center to another, a NASA Center to a contract
of another NASA Center, and a contract to another Government agency or
its contract). To enable NASA to properly control and account for all
transfers, they shall be adequately documented. Adequate documentation
includes the appropriate dollar amount of the asset(s) transferred (as
prescribed in 1845.7101-3) and the formal, signed NASA or contractor
authorization approving the transfer. In addition, procurement,
property, and financial organizations at NASA Centers must effect all
transfers of accountability, although physical shipment and receipt of
property may be made directly by contractors. The procedures described
in this section shall be followed to provide an administrative and
audit trail, even if property is physically shipped directly from one
contractor to another. Property shipped between September 1 and
September 30, inclusively, shall be accounted for and reported by the
shipping contractor, regardless of the method of shipment, unless
written evidence of receipt at destination has been received.
Repairables provided under fixed price repair contracts that include
the clause at 1852.245-72, Liability for Government Property Furnished
for Repair or Other Services, remain accountable to the cognizant NASA
Center and are not reportable on NF 1018; repairables provided under a
cost-reimbursement contract, however, are accountable to the contractor
and reportable on NF 1018. All materials provided to conduct repairs
are reportable, regardless of contract type.
(a) Approval and notification. The contractor must obtain approval
of the contracting officer or designee for transfers of property off
the prime contract before shipment. Each shipping document must be
signed by the contracting officer or designee demonstrating such
approval. Each shipping document must contain contract numbers,
shipping references, property classifications in which the items are
recorded (including Federal Supply Classification group (FSC) codes for
equipment), unit acquisition costs (as defined in 1845.7101-3, Unit
Acquisition Cost), original Government acquisition dates for items with
a unit acquisition cost of $100,000 or more and a useful life of two
years or more, and any other appropriate identifying or descriptive
data. Where the DD Form 250, Material Inspection and Receiving Report,
is used, the FSC code will be part of the national stock number (NSN)
entered in Block 16 or, if the NSN is not provided, the FSC alone shall
be shown in Block 16. The original Government acquisition date shall be
shown in Block 23, by item. Other formats, such as the DD Form 1149,
Requisition and Invoice/Shipping Document, should be clearly annotated
with the required information. Unit acquisition costs shall be obtained
from records maintained pursuant to FAR Part 45 and this Part 1845, or,
for uncompleted items where property records have not yet been
established, from such other record systems as are appropriate such as
manufacturing or engineering records used for work control and billing
purposes. Shipping contractors shall furnish a copy of the formally
approved shipping document to the cognizant property administrator.
Shipping and receiving contractors shall promptly submit copies of
shipping and receiving documents to the Center Deputy Chief Financial
Officer, Finance, responsible for their respective contracts when
accountability for NASA property is transferred to, or received from,
other contracts, contractors, NASA Centers, or Government agencies.
* * * * *
(c) Incomplete documentation. If contractors receive transfer
documents having insufficient detail to properly record the transfer
(e.g., omission of property classification, FSC, unit acquisition cost,
Government acquisition date, required signatures, etc.) they shall
request the omitted data directly from the shipping contractor or
through the property administrator as provided in FAR 45.505-2. The
contracting officer shall assist the Government Property Administrator
and the receiving contractor to obtain all required information for the
receiving contractor to establish adequate property records.
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5. Amend section 1845.7101-3 by--
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(a) Redesignating paragraphs (c), (d), (e), and (f) as (d), (e), (f)
and (h) respectively;
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(b) Adding a new paragraph (c);
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(c) Adding a new paragraph (g); and
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(d) Revising the redesignated paragraph (h).
Paragraphs (c), (g) and (h) read as follows:
1845.7101-3 Unit acquisition cost.
* * * * *
(c) Acquisition cost shall be developed using actual costs to the
greatest extent possible, especially costs directly related to
fabrication such as labor and materials. Where estimates are used,
there must be a documented methodology based on a historical basis. All
acquisition costs shall be properly documented, supported and retained.
Supporting documentation shall be made available upon request.
* * * * *
(g) Software acquisition costs include software costs incurred up
through acceptance testing and material internal costs incurred to
implement the software and otherwise make the software ready for use.
Costs incurred after acceptance testing are excluded. License,
maintenance, training, and data conversion costs are also excluded. If
the software is purchased as part of a package, the costs will need to
be segregated in such manner as to ensure that the excluded costs
(maintenance, training, etc.) are not reported as part of the
software's acquisition cost. Enhancement costs for existing software
should be added to the acquisition cost if the enhancement results in
significant additional capability beyond that for which the software
was originally developed (i.e. a capability that was not included in
the original software specifications), the total cost of the
enhancement is $1,000,000 or more, and the expected useful life of the
enhanced software is 2 years or more. Include the same types of cost as
indicated above under new software. Costs incurred solely to repair a
design flaw or perform minor upgrades should not be included.
(h) The computation of work in process (WIP) shall include all
direct and indirect costs of fabrication, including associated systems,
subsystems, and spare parts and components furnished or acquired and
charged to work in process pending incorporation into a finished item.
These types of items make up what is sometimes called production
inventory and include programmed extra units to cover replacement
during the fabrication process (production spares). Also included are
deliverable items on which the contractor or a subcontractor
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has begun work, and materials issued from inventory. The computation of
WIP shall incorporate the other requirements for unit acquisition cost
as outlined in paragraphs (a) through (e) of this section. In addition,
acquisition cost of property furnished by the Government, which has
been incorporated in the property item under construction or in process
of fabrication, should be included. Do not include costs for operation
or repairing existing completed property items. Once the property is
complete, include all the costs outlined above in its acquisition value
in the property record. The WIP values are inception to date until such
time as the WIP is completed. It does not include future costs.
PART 1852--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
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6. Amend the clause at section 1852.245-73 by revising the date of the
clause and revising paragraph (c) to read as follows:
1852.245-73 Financial Reporting of NASA Property in the Custody of
Contractors.
* * * * *
Financial Reporting of NASA Property in the Custody of Contractors (Oct
2003)
* * * * *
(c)(1) The annual reporting period shall be from October 1 of
each year through September 30 of the following year. The report
shall be submitted in time to be received by October 15. The
information contained in these reports is entered into the NASA
accounting system to reflect current asset values for agency
financial statement purposes. Therefore, it is essential that
required reports be received no later than October 15. Some activity
may be estimated for the month of September, if necessary, to ensure
the NF 1018 is received when due. However, contractors procedures
must document the process for developing these estimates based on
planned activity such as planned purchases or NASA Form 533 (NF 533
Contractor Financial Management Report) cost estimates. It should be
supported and documented by historical experience or other
corroborating evidence, and be retained in accordance with FAR
Subpart 4.7, Contractor Records Retention. Contractors shall
validate the reasonableness of the estimates and associated
methodology by comparing them to the actual activity once that data
is available, and adjust them accordingly. In addition, differences
between the estimated cost and actual cost must be adjusted during
the next reporting period. Contractors shall have formal policies
and procedures, which address the validation of NF 1018 data,
including data from subcontractors, and the identification and
timely reporting of errors. The objective of this validation is to
ensure that information reported is accurate and in compliance with
the NASA FAR Supplement. If errors are discovered on NF 1018 after
submission, the contractor shall contact the cognizant NASA Center
Industrial Property Officer (IPO) within 30 days after discovery of
the error to discuss corrective action.
(2) The Contracting Officer may, in NASA's interest, withhold
payment until a reserve not exceeding $25,000 or 5 percent of the
amount of the contract, whichever is less, has been set aside, if
the Contractor fails to submit annual NF 1018 reports in accordance
with 1845.505-14 and any supplemental instructions for the current
reporting period issued by NASA. Such reserve shall be withheld
until the Contracting Officer has determined that NASA has received
the required reports. The withholding of any amount or the
subsequent payment thereof shall not be construed as a waiver of any
Government right.
* * * * *
[FR Doc. 03-27490 Filed 10-30-03; 8:45 am]
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