81 FR 91045 - NASA Federal Acquisition Regulation Supplement: Contractor Financial Reporting of Property (2016-N024)
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION Federal Register Volume 81, Issue 242 (December 16, 2016)
Federal Register Volume 81, Issue 242 (December 16, 2016)
| Page Range | 91045-91048 | |
| FR Document | 2016-30157 |
[Federal Register Volume 81, Number 242 (Friday, December 16, 2016)] [Rules and Regulations] [Pages 91045-91048] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-30157] ======================================================================= ----------------------------------------------------------------------- NATIONAL AERONAUTICS AND SPACE ADMINISTRATION 48 CFR Parts 1845 and 1852 RIN 2700-AE33 NASA Federal Acquisition Regulation Supplement: Contractor Financial Reporting of Property (2016-N024) AGENCY: National Aeronautics and Space Administration. ACTION: Final rule. ----------------------------------------------------------------------- SUMMARY: NASA is issuing a final rule amending the NASA Federal Acquisition Regulation Supplement (NFS) to add a monthly reporting requirement for contractors having custody of $10 million or more in NASA-owned Property, Plant and Equipment (PP&E). DATES: Effective: January 17, 2017. [[Page 91046]] FOR FURTHER INFORMATION CONTACT: Andrew O'Rourke, telephone 202-358- 4560. SUPPLEMENTARY INFORMATION: I. Background NASA published a proposed rule in the Federal Register at 81 FR 48726 on July 26, 2016, to amend the NFS to add a monthly reporting requirement at 1852.245-73 for contracts in which the contractor has custody of NASA-owned PP&E valued at $10 million or more to ensure contractor-held PP&E are more accurately represented in NASA financial statements. Two respondents provided comments in response to the proposed rule. II. Discussion and Analysis NASA reviewed the public comments in the development of the final rule. A discussion of the comments and any changes made to the rule as a result of these comments is provided, as follows: A. Changes. No changes are being made to the final rule as a result of the public comments received with the exception of minor editorial changes. B. Analysis of Public Comments. 1. Recommend use of different approach to asset management. Comment: One respondent agreed with the overall objective of the rule, but disagreed with NASA's proposed approach and changes in the rule. The respondent commented that the NFS clause is fundamentally flawed, is non-GAAP accounting, and it does not in of itself create adequate infrastructure to provide reliable accounting data and financial reporting. The respondent commented that the clause inappropriately combines and transforms property management accountability data under a contract based upon FAR 45 Government Property, into Financial Accounting Standards Board (FASB) accounting data. The respondent commented that NASA-owned and contractor-furnished internal use property, acquired under a contract that is accountable to a contract is generally not subject to NASA's capitalization threshold of $500,000; however, what is acquired and furnished includes property transactions for research and development, period cost, program cost . . ., probably very little individual capital items, per FASAB No. 6-- Accounting for property, plant, and equipment. The respondent commented that using property accountability data subject to FAR 45, for financial accounting data is wrong, as it does not provide faithful representation of NASA's PP&E as well as external reporting of property accountability in all other Government agencies is not on a monthly basis. The respondent commented that reporting this information will not result in improved decision making. The respondent also stated that reporting unreliable financial data on a yearly basis or monthly basis is a waste of NASA resources, the cost to increase the reporting cycle from annual to monthly is not inconsequential, and NASA should expect their contractors to ask for a contract modification with due consideration. The respondent recommended that NASA not proceed with the proposed rule, rather NASA should migrate to the new ISO 55000 Asset Management standard. Response: NASA does not concur with the respondent's stance on the proposed rule. The objective of the rule is to clarify and emphasize the supplemental instructions in paragraph (a) of NFS clause 1852.245- 73 that all contractors having custody of NASA Property, Plant, and Equipment (PP&E) with a value of $10 million or more are required to report this information on a monthly basis to NASA. The property reporting requirement is to help assess the efficiency and effectiveness of asset management consistent with the Statement of Federal Financial Accounting Standard (SFFAS) No. 6, Accounting for Property, Plant, and Equipment, and NASA Procedural Requirement (NPR) 9250.1, Property, Plant, and Equipment and Operating Materials and Supplies, which implements SFFAS No. 6. The respondent failed to provide data to support their comments concerning the NFS clause or the recommendation to migrate to a new standard. Thus, no changes were made in response to this comment. 2. Difference between monthly and annual reporting. Comment: One respondent submitted the following questions on the proposed rule:If a contractor has $10M worth of property, is reporting is required? If the value drops below $10M, does the contractor stop reporting on a monthly basis? Is the $10M per contract or the sum of NASA property accountable to the contractor? Is the NASA Form 1018 required for the monthly reporting or is another format/system used? If NASA is going to require monthly financial reporting, are they referring to how the contractor reports monthly financials on the CHATS report or how the contractor reports on the NASA Form 1018? Will NASA require the contractor to submit a NASA Form 1018 monthly or a CHATS monthly? Currently in the month of September an annual and a monthly financial report is due. Will NASA eliminate one of these if they are going to require 1018s on a monthly basis? Response: If at any time during performance of the contract, NASA- owned property in the custody of the contractor has a value of $10 million or more for the contract, the contractor shall submit a report no later than the 21st of each month. At any time during performance of the contract if the value of property for the contract drops below $10M, the contractor does not have to submit the monthly report. A contractor having NASA-owned property in their custody of $10 million or more will be required to report both the monthly and yearly reporting in accordance with the requirements of paragraph (c)(1) and paragraph (c)(2) of the clause utilizing the NASA Form 1018, the NASA Form 1018 Electronic Submission System (NESS), NASA Form 533 Contractor Financial Management Report, and any supplemental instructions issued by the contracting officer. Accordingly, no changes were made in response to this respondent's questions. III. Executive Orders 12866 and 13563 Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This is not a significant regulatory action and, therefore, was not subject to review under section 6(b) of E.O. 12866, Regulatory Planning and Review, dated September 30, 1993. This rule is not a major rule under 5 U.S.C. 804. IV. Regulatory Flexibility Act A final regulatory flexibility analysis has been prepared consistent with the Regulatory Flexibility Act, 5 U.S.C. 601, et seq., and is summarized as follows: The objective of this rule is to add a monthly reporting requirement for contractors having custody of NASA-owned PP&E valued at $10 million or greater to ensure that contractor-held PP&E are more accurately represented in NASA financial statements consistent with the Statement of Federal Financial [[Page 91047]] Accounting Standard (SFFAS) No. 6, Accounting for Property, Plant, and Equipment and NASA Procedural Requirement (NPR) 9250.1, Property, Plant, and Equipment and Operating Materials and Supplies. Two respondents provided comments in response to the proposed rule, but none of the comments were submitted in response to the Initial Regulatory Flexibility Act request in the proposed rule. Thus, no changes were made to the final rule. NASA does not expect this final rule to have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601 et seq., because the affected NASA contractors with custody of NASA-owned Property, Plant, and Equipment (PP&E) valued at $10 million or greater are primarily large businesses. The requirements under this rule apply to any contract award (including contracts for supplies, services, construction, and major systems) that requires contractors to use Government property. According to NASA Property Records in Fiscal Year (FY) 2015 there were 643 contracts that required reporting NASA contractors with custody of Government property to report that property. Of the 643 contracts, approximately 20% or 129 contracts were with small business contractors. Of the 643 contracts, 32 contracts had NASA-owned and contractor-held PP&E with a value of $10 million or more and required monthly reporting. Of those 32 contracts, only three were awarded to small business contractors. Each NASA contractor is required to submit annually the NASA Form 1018, NASA Property in the Custody of Contractors. This rule will add a new reporting requirement requiring contractors to submit a report if at any time during performance of the contract NASA-owned property in the custody of the contractor has a value of $10 million or more. However, the impact of this reporting requirement is minimal on small entities based on FY 2015 NASA property records that show only three small business contractors with custody of NASA PP&E valued at $10 million or more. There are no additional professional skills necessary in this area on the part of small businesses. There are no significant alternatives that could further minimize the already minimal impact on businesses, small or large. New PP&E reporting requirements are the same for both large and small businesses once the NASA-owned PP&E threshold of $10 million is reached. V. Paperwork Reduction Act The rule contains information collection requirements that require the approval of the Office of Management and Budget (OMB) under the Paperwork Reduction Act (44 U.S.C chapter 35); however, these changes to the NFS do not impose additional information collection requirements to the paperwork burden previously approved under OMB Control Number 2700-0017, titled NASA Property in the Custody of Contractors and OMB Control No. 9000-0075, titled Government Furnished Property Requirements. List of Subjects in 48 CFR Parts 1845 and 1852 Government procurement. Manuel Quinones, NASA FAR Supplement Manager. Accordingly, 48 CFR parts 1845 and 1852 are amended as follows: PART 1845--GOVERNMENT PROPERTY 0 1. The authority citation for part 1845 continues to read as follows: Authority: 51 U.S.C. 20113(a) and 48 CFR chapter 1. 0 2. Amend section 1845.107-70 by revising paragraph (d) to read as follows: 1845.107-70 NASA solicitation provisions and contract clauses. * * * * * (d) The contracting officer shall insert the clause at 1852.245-73, Financial Reporting of NASA Property in the Custody of Contractors, in cost reimbursement solicitations and contracts and in all contracts in which the contractor has custody of NASA-owned property with a value of $10 million or more, unless all property to be provided is subject to the clause at 1852.245-71, Installation-Accountable Government Property. Insert the clause 1852.245-73 in other types of solicitations and contracts when it is known at award that property will be provided to the contractor or that the contractor will acquire property title to which will vest in the Government prior to delivery. * * * * * PART 1852--SOLICITATION PROVISIONS AND CONTRACT CLAUSES 0 3. The authority citation for part 1852 continues to read as follows: Authority: 51 U.S.C. 20113(a) and 48 CFR chapter 1. 0 4. Amend section 1852.245-73 by-- 0 a. Revising the date of the clause; and 0 b. Revising paragraphs (b)(2) and (c). The revised text reads 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 (Jan 2017) * * * * * (b) * * * (2) The Contractor shall mail the original signed NF 1018 directly to the cognizant NASA Center Industrial Property Officer and a copy to the cognizant NASA Center Deputy Chief Financial Officer, Finance, unless the Contractor uses the NF 1018 Electronic Submission System (NESS) for report preparation and submission. * * * * * (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 31st. 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 31st. (2) Some activity may be estimated for the month in which the report is submitted, 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 [[Page 91048]] the cognizant NASA Center Industrial Property Officer (IPO) within 30 days after discovery of the error to discuss corrective action. (3) In addition to an annual report, if at any time during performance of the contract, NASA-owned property in the custody of the contractor has a value of $10 million or more, the contractor shall also submit a report no later than the 21st of each month in accordance with the requirements of paragraph (c)(2) of this clause. (4) 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 NFS subpart 1845.71, any monthly report in accordance with (c)(3) of this clause, 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. 2016-30157 Filed 12-15-16; 8:45 am] BILLING CODE 7510-13-P
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any identified commercial interest in makes a deposit on the fee in an amount give the submitter written notice which
disclosure. LSC ordinarily shall determined by LSC. shall include:
presume that where a news media (j) Interest may be charged to those (1) A description of the information to
requester has satisfied the public requesters who fail to pay the fees be released and a notice that LSC
interest standard, the public interest charged. Interest will be assessed on the intends to release the information;
will be the interest primarily served by amount billed, starting on the 31st day (2) A statement of the reason(s) why
disclosure to that requester. Disclosure following the day on which the billing the submitter’s request for withholding
to data brokers or others who merely was sent. The rate charged will be as is being rejected; and
compile and market government prescribed in 31 U.S.C. 3717. (3) A specified disclosure date, which
information for direct economic return (k) If LSC reasonably believes that a must be a reasonable time after the
shall not be presumed primarily to serve requester or group of requesters is notice.
a public interest. attempting to break a request into a (d) The requirements of this section
(3) Where LSC has determined that a series of requests for the purpose of shall not apply if:
fee waiver or reduction request is evading the assessment of fees, LSC (1) LSC determines upon initial
justified for only some of the records to shall aggregate such requests and charge review of the requested confidential
be released, LSC shall grant the fee accordingly. Likewise, LSC will commercial information that the
waiver or reduction for those records. aggregate multiple requests for requested information should not be
(4) Requests for fee waivers and disclosed;
documents received from the same
reductions shall be made in writing and (2) The information has been
requester within 45 days.
must address the factors listed in this previously published or officially made
paragraph as they apply to the request. § 1602.15 Submitter’s rights process. available to the public; or
(h) Requesters must agree to pay all (3) Disclosure of the information is
(a) When LSC receives a FOIA request
fees charged for services associated with required by statute (other than FOIA) or
seeking the release of confidential
their requests. LSC will assume that LSC’s regulations.
commercial information, LSC shall
requesters agree to pay all charges for (e) Whenever a requester files a
provide prompt written notice of the
services associated with their requests lawsuit seeking to compel disclosure of
request to the submitter in order to
up to $25 unless otherwise indicated by a submitter’s information, LSC shall
afford the submitter an opportunity to
the requester. For requests estimated to promptly notify the submitter.
object to the disclosure of the requested
exceed $25, LSC will consult with the (f) Whenever LSC provides a
confidential commercial information.
requester prior to processing the submitter with notice and opportunity
The notice shall reasonably describe the
request, and such requests will not be to oppose disclosure under this section,
deemed to have been received by LSC confidential commercial information
requested, inform the submitter of the LSC shall notify the requester that the
until the requester agrees in writing to submitter’s rights process under this
pay all fees charged for services. LSC process required by paragraph (b) of this
section, and provide a reasonable time section has been triggered. Likewise,
will also make available its FOIA Public whenever a submitter files a lawsuit
Liaison or other FOIA professional to period for the submitter to respond.
(b) If a submitter who has received seeking to prevent the disclosure of the
assist any requester in reformulating a submitter’s information, LSC shall
request to meet the requester’s needs at notice of a request for the submitter’s
confidential commercial information notify the requester.
a lower cost.
(i) No requester will be required to wishes to object to the disclosure of the Dated: December 12, 2016.
make an advance payment of any fee confidential commercial information, Stefanie K. Davis,
unless: the submitter must provide LSC within Assistant General Counsel.
(1) The requester has previously failed the time period set forth in the notice, [FR Doc. 2016–30144 Filed 12–15–16; 8:45 am]
to pay a required fee within 30 days of a detailed written statement identifying BILLING CODE P
the date of billing, in which case an the information which it objects. The
advance deposit of the full amount of submitter must send its objections to the
the anticipated fee together with the fee Office of Legal Affairs or, if it pertains NATIONAL AERONAUTICS AND
then due plus interest accrued may be to Office of Inspector General records, to SPACE ADMINISTRATION
required (and the request will not be the Office of Inspector General, and
deemed to have been received by LSC must specify the grounds for 48 CFR Parts 1845 and 1852
until such payment is made); or withholding the information under
FOIA or this part. In particular, the RIN 2700–AE33
(2) LSC determines that an estimated
fee will exceed $250, in which case the submitter must demonstrate why the NASA Federal Acquisition Regulation
requester shall be notified of the amount information is commercial or financial Supplement: Contractor Financial
of the anticipated fee or such portion information that is privileged or Reporting of Property (2016–N024)
thereof as can readily be estimated. confidential. If the submitter fails to
Such notification shall be transmitted as respond to the notice from LSC within AGENCY: National Aeronautics and
soon as possible, but in any event the time period specified in the notice, Space Administration.
within five working days of receipt by LSC will deem the submitter to have no ACTION: Final rule.
LSC, giving the best estimate then objection to the disclosure of the
available. The notification shall offer the information. SUMMARY: NASA is issuing a final rule
asabaliauskas on DSK3SPTVN1PROD with RULES
requester the opportunity to confer with (c) Upon receipt of written objection amending the NASA Federal
appropriate representatives of LSC for to disclosure by a submitter, LSC shall Acquisition Regulation Supplement
the purpose of reformulating the request consider the submitter’s objections and (NFS) to add a monthly reporting
so as to meet the needs of the requester specific grounds for withholding in requirement for contractors having
at a reduced cost. The request will not deciding whether to release the custody of $10 million or more in
be deemed to have been received by disputed information. Whenever LSC NASA-owned Property, Plant and
LSC for purposes of the initial 20-day decides to disclose information over the Equipment (PP&E).
response period until the requester objection of the submitter, LSC shall DATES: Effective: January 17, 2017.
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![91048 Federal Register / Vol. 81, No. 242 / Friday, December 16, 2016 / Rules and Regulations
the cognizant NASA Center Industrial the requirements of paragraph (c)(2) of the current reporting period issued by
Property Officer (IPO) within 30 days this clause. NASA. Such reserve shall be withheld
after discovery of the error to discuss (4) The Contracting Officer may, in until the Contracting Officer has
corrective action. NASA’s interest, withhold payment determined that NASA has received the
until a reserve not exceeding $25,000 or required reports. The withholding of
(3) In addition to an annual report, if 5 percent of the amount of the contract,
at any time during performance of the any amount or the subsequent payment
whichever is less, has been set aside, if thereof shall not be construed as a
contract, NASA-owned property in the the Contractor fails to submit annual NF
custody of the contractor has a value of waiver of any Government right.
1018 reports in accordance with NFS
$10 million or more, the contractor shall subpart 1845.71, any monthly report in * * * * *
also submit a report no later than the accordance with (c)(3) of this clause, [FR Doc. 2016–30157 Filed 12–15–16; 8:45 am]
21st of each month in accordance with and any supplemental instructions for BILLING CODE 7510–13–P
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Document Created: 2018-02-14 09:07:16
Document Modified: 2018-02-14 09:07:16
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Rules and Regulations | |
| Action | Final rule. | |
| Dates | Effective: January 17, 2017. | |
| Contact | Andrew O'Rourke, telephone 202-358- 4560. | |
| FR Citation | 81 FR 91045 | |
| RIN Number | 2700-AE33 | |
| CFR Citation | 48
CFR
1845 48 CFR 1852 |
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