[Federal Register Volume 61, Number 210 (Tuesday, October 29, 1996)]
[Rules and Regulations]
[Pages 55765-55774]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-26338]
[[Page 55765]]
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NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Parts 1828, 1829, 1830, 1831, 1832, 1833 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: As part of the National Performance Review initiative to
streamline and clarify regulations, NASA is issuing a rewrite of those
regulations in its Federal Acquisition Regulations Supplement relating
to bonds and insurance (part 1828); taxes (part 1829); cost accounting
standards (part 1830); contract cost principles and procedures (part
1831); contract financing (part 1832); and protests, disputes, and
appeals (part 1833). In addition, conforming amendments are made to
solicitation provisions and contract clauses (part 1852) regarding
aircraft ground and flight risk and other provisions.
EFFECTIVE DATE: This rule is effective October 29, 1996.
FOR FURTHER INFORMATION CONTACT: Mr. Thomas O'Toole, (202) 358-0478;
Mr. Bruce King, (202) 358-0461.
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 and issued through Procurement Notices
(PNs). 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
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.
List of Subjects in 48 CFR Parts 1828, 1829, 1830, 1831, 1832,
1833, and 1852
Government procurement.
Tom Luedtke,
Deputy Associate Administrator for Procurement.
Accordingly, 48 CFR chapter 18 is amended as follows:
1.-2. Part 1828 is revised to read as follows:
PART 1828--BONDS AND INSURANCE
Sec.
Subpart 1828.1 Bonds
1828.101 Bid guarantees.
1828.101-70 NASA solicitation provision.
1828.103 Performance and payment bonds and alternative payment
protections for other than construction contracts.
1828.103-70 Subcontractors performing construction work under
nonconstruction contracts.
1828.103-71 Solicitation requirements and contract clauses.
1828.106 Administration.
1828.106-6 Furnishing information.
Subpart 1828.2 Sureties
1828.202 Acceptability of corporate sureties.
1828.203 Acceptability of individual sureties.
Subpart 1828.3 Insurance
1828.307 Insurance under cost-reimbursement contracts.
1828.307-1 Group insurance plans.
1828.307-2 Liability.
1828.307-70 Insurance of industrial facilities.
1828.311 Solicitation provision and contract clause on liability
insurance under cost-reimbursement contracts.
1828.311-1 Contract clause.
1828.311-2 Agency solicitation provisions and contract clauses.
1828.370 Fixed-price contract clauses.
1828.371 Clauses for cross-waivers of liability for Space Shuttle
services, Expendable Launch Vehicle (ELV) launches, and Space
Station activities.
1828.372 Clause for minimum insurance coverage.
Authority: 42 U.S.C. 2473(c)(1).
Subpart 1828.1--Bonds
1828.101 Bid guarantees.
1828.101-70 NASA solicitation provision.
The contracting officer shall insert the provision at 1852.228-73,
Bid Bond, in construction solicitations where offers are expected to
exceed $100,000 and a performance bond or a performance and payment
bond is required (see FAR 28.102 and 28.103). The contracting officer
may increase the amount of the bid bond to protect the Government from
loss, as long as the amount does not exceed $3 million.
1828.103 Performance and payment bonds and alternative payment
protections for other than construction contracts.
1828.103-70 Subcontractors performing construction work under
nonconstruction contracts.
(a) The contracting officer shall require prime contractors on
nonconstruction contracts to obtain the following performance and/or
payment protection from subcontractors performing construction work:
(1) Performance and payment bonds when the subcontract construction
work is in excess of $1000,000 and is determined by NASA to be subject
to the Miller Act.
(2) An appropriate payment protection determined according to FAR
28.102-1(b)(1) when the subcontract construction work is greater than
$25,000 but not greater than $100,000.
(b) The contracting officer shall establish the penal amount in
accordance with FAR 28.102-2 based on the subcontract value.
(c) The bonds shall be provided on SF 25, Performance Bond, and SF
25A, Payment Bond. These forms shall be modified to name the NASA prime
contractor as well as the United States of America as obligees.
1828.103-71 Solicitation requirements and contract clause.
When performance and payment bonds or alternative payment
protections are required from subcontractors performing construction
work under nonconstruction prime contracts, the contracting officer
shall follow the procedures in FAR 28.102-3. When alternative payment
protections are required, insert a clause substantially the same as FAR
52.228-13, Alternative Payment Protections, appropriately modified.
1828.106 Administration.
1828.106-6 Furnishing information. (NASA supplements paragraph (c))
(c) The contracting officer is the agency head's designee.
Subpart 1828.2--Sureties
1828.202 Acceptability of corporate sureties. (NASA supplements
paragraph (d))
(d) Contracting officers may obtain access to Department of
Treasury Circular 570 through the internet at http://www.ustreas.gov/
treasury/bureaus/finman/c570.html.
1828.203 Acceptability of individual sureties. (NASA supplements
paragraph (g))
(g) Notification of suspected criminal or fraudulent activities,
with all supporting documentation, shall be submitted to the
Headquarters Office of Procurement (Code HS).
Subpart 1828.3--Insurance
1828.307 Insurance under cost-reimbursement contracts.
1828.307-1 Group insurance plans. (NASA supplements paragraph (a))
(a) The procurement officer is the approval authority.
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1828.307-2 Liability. (NASA supplements paragraph (b))
(b)(2)(A) The procurement officer may approve a requirement for
property damage liability insurance when:
(a) A commingling of operations permits property damage coverage at
a nominal cost to NASA under insurance carried by the contractor in the
course of its commercial operations; or
(b) The contractor is engaged in the handling of high explosives or
in extra hazardous research and development activities undertaken in
populated areas.
(B) In all other circumstances, the Associate Administrator for
Procurement (Code HS) is the approval authority.
1828.307-70 Insurance of industrial facilities.
When industrial facilities are provided by the Government under a
facilities contract or a lease, the contract or lease shall require
that during the period of construction, installation, alteration,
repair, or use, and at any other time as directed by the contracting
officer, the contractor or lessee shall ensure or otherwise provide
approved security for liabilities to third persons (including employees
of the contractor or lessee) in the manner and to the same extent as
required in FAR 28.307-2.
1828.311 Solicitation provision and contract clause on liability
insurance under cost-reimbursement contracts.
1828.311-1 Contract clause.
The contracting officer shall insert the clause at FAR 52.228-7,
Insurance-Liability to Third Persons, as prescribed in FAR 28.311-1
unless waived by the procurement officer.
1828.311-2 Agency solicitation provisions and contract clauses.
The contracting officer shall insert the clause at 1852.228-71,
Aircraft Flight Risks, in all cost-reimbursement contracts for the
development, production, modification, maintenance, or overhaul of
aircraft, or otherwise involving the furnishing of aircraft to the
contractor, except when the aircraft are covered by a separate
bailment.
1828.370 Fixed-price contract clauses.
(a) The contracting officer shall insert the clause at 1852.228-70,
Aircraft Ground and Flight Risk, in all negotiated fixed-price
contracts for the development, production, modification, maintenance,
or overhaul of aircraft, or otherwise involving the furnishing of
aircraft to the contractor, except as provided in paragraph (b) of this
section, unless the aircraft are covered by a separate bailment. See
the clause preface for directions for modifying the clause to
accommodate various circumstances.
(b) The Government need not assume the risk of aircraft damage,
loss, or destruction as provided by the clause at 1852.228-70 if the
best estimate of premium costs that would be included in the contract
price for insurance coverage for such damage, loss, or destruction at
any plant or facility is less than $500. If it is determined not to
assume this risk, the clause at 1852.228-70 shall not be made a part of
the contract, and the cost of necessary insurance to be obtained by the
contractor to cover this risk shall be considered in establishing the
contract price. In such cases, however, if performance of the contract
is expected to involve the flight of Government-furnished aircraft, the
substance of the clause at 1852.228-71, Aircraft Flight Risks, suitably
adapted for use in a fixed-price contract, shall be used.
(c) When the clause at 1852.228-70 is used, the term ``Contractor's
premises'' shall be expressly defined in the contract Schedule and
shall be limited to places where aircraft may be located during the
performance of the contract. Contractor's premises may include, but are
not limited to, those owned or leased by the contractor or those for
which the contractor has a permit, license, or other right of use
either exclusively or jointly with others, including Government
airfields.
1828.371 Clauses for cross-waivers of liability for Space Shuttle
services, Expendable Launch Vehicle (ELV) launches, and Space Station
activities.
(a) In agreements covering Space Shuttle services, certain ELV
launches, and Space Station activities, NASA and other signatories (the
parties) agree not to bring claims against each other for any damage to
property or for injury or death of employees that occurs during the
time such a cross-waiver is in effect. These agreements involving NASA
and other parties include, but are not limited to, Memoranda of
Understanding with foreign Governments, Launch Services Agreements, and
other agreements for the use of NASA facilities. These agreements
require the parties to flow down the cross-waiver provisions to their
related entities so that contractors, subcontractors, customers, and
other users of each party also waive their right to bring claims
against other parties and their similarly related entities for damages
arising out of activities conducted under the agreements. The purpose
of the clauses prescribed in this section is to flow down the cross-
waivers to NASA contractors and subcontractors.
(b) The contracting officer shall insert the clause 1852.228-72,
Cross-waiver of Liability for Space Shuttle Services, in solicitations
and contracts of $100,000 or more when the work to be performed
involves ``Protected Space Operations'' (applicable to the Space
Shuttle) as that term is defined in the clause. If Space Shuttle
services under the contract are being conducted in support of the Space
Station program, the contracting officer shall insert the clause
prescribed by paragraph (d) of this section and designate application
of the clause to those particular activities.
(c) The contracting officer shall insert the clause at 1852.228-78,
Cross-Waiver of Liability for NASA Expendable Launch Vehicle (ELV)
Launches, in solicitations and contracts of $100,000 or more for the
acquisition of ELV launch services when the service is being acquired
by NASA pursuant to an agreement described in paragraph (a) of this
section. If, under a contract that covers multiple launches, only some
of the launches are for payloads provided pursuant to such agreements,
an additional clause shall be inserted in the contract to designate the
particular launches to which this clause applies. If a payload is being
launched by use of an ELV in support of the Space Station program, the
contracting officer shall insert the clause prescribed by paragraph (d)
of this section and designate application of the clause to that
particular launch.
(d) The contracting officer shall insert the clause at 1852.228-76,
Cross-Waiver of Liability for Space Station Activities, in
solicitations and contracts of $100,000 or more when the work is to be
performed involves ``Protected Space Operations'' (relating to the
Space Station) as that term is defined in the clause.
(e) At the contracting officer's discretion, the clauses prescribed
by paragraphs (b), (c), and (d) of this section may be used in
solicitations, contracts, new work modifications, or extensions, to
existing contracts under $100,000 involving Space Shuttle activities,
ELV launch services, or Space Station activities, respectively, in
appropriate circumstances. Examples of such circumstances are when the
value of contractor property on a Government installation used in
performance of the contract is significant, or when it is likely that
the contractor or subcontractor will have its valuable property exposed
to risk or damage caused by other participants in the Space Shuttle
services, ELV launches, or Space Station activities.
[[Page 55767]]
1828.372 Clause for minimum insurance coverage.
In accordance with FAR 28.306(b) and 28.307, the contracting
officer may insert a clause substantially as stated at 1852.228-75,
Minimum Insurance Coverage, in fixed-price solicitations and in cost-
reimbursement contracts. The contracting officer may modify the clause
to require additional coverage, such as vessel liability, and higher
limits if appropriate for a particular acquisition.
3. Part 1829 is revised to read as follows:
PART 1829--TAXES
Sec.
Subpart 1829.1 General
1829.101 Resolving tax problems.
Subpart 1829.2 Federal Excise Taxes
1829.203 Other Federal tax exemptions.
1829.203-70 NASA Federal tax exemptions.
Authority: 42 U.S.C. 2473(c)(1).
Subpart 1829.1--General
1829.101 Resolving tax problems. (NASA supplements paragraph (a))
(a)(i) The Headquarters Office of the General Counsel (Code G) is
the designated legal counsel for all external contacts on FAR part 29
tax issues, including communications with the Department of Justice,
other Federal agencies, and any taxing authority.
(ii) Tax problems that cannot be solved readily by reference to FAR
Part 29 shall be forwarded to Code G through the installation's Office
of Chief Counsel. The following material, as applicable, shall be
forwarded to Code G with a copy to the Associate Administrator for
Procurement (Code HS):
(A) A comprehensive statement of pertinent facts, including
documents and correspondence.
(B) A copy of the contract.
(C) A thorough review of the legal issues involved and recommended
action.
(D) If appropriate, a statement of the problem's effects on
acquisition policies and procedures, with recommendations.
Subpart 1829.2--Federal Excise Taxes
1829.203 Other Federal tax exemptions.
1829.203.70 NASA Federal tax exemptions.
(a) The Associate Administrator for Procurement has obtained a
permit from the Bureau of Alcohol, Tobacco, and Firearms (Treasury
Department) enabling NASA and its contractors to purchase spirits
(e.g., specially denatured spirits) tax-free for nonbeverage Government
use. Installations can obtain copies of the permit from the
Headquarters Office of Procurement (Code HS).
(b) When purchasing spirits for use by NASA personnel, the
contracting officer shall attach a copy of the permit to the contract.
Upon receipt of the spirits, the permit shall be returned to the
contracting officer unless future orders are anticipated.
(c) When a NASA contractor requires spirits to perform a NASA
contract, the contracting officer shall furnish the contractor a copy
of the permit to provide its vendor. Upon receipt of the spirits, the
contractor shall return the permit to the contracting officer unless
future orders are anticipated. In any event, the permit shall be
returned upon completion of the contract.
(d) The contracting officer shall post a copy of the permit for
inspection.
4. Part 1830 is revised to read as follows:
PART 1830--COST ACCOUNTING STANDARDS
Sec.
Subpart 1830.2 CAS Program Requirements
1830.201-5 Waiver.
Subpart 1830.70 Facilities Capital Employed for Facilities in Use and
For Facilities Under Construction
1830.7001 Facilities capital employed for facilities in use.
1830.7001-1 Contract facilities capital estimates.
1830.7001-2 DD Form 1861 completion instructions.
1830.7001-3 Preaward FCCOM applications.
1830.7001-4 Postaward FCCOM applications.
1830.7002 Facilities capital employed for facilities under
construction.
1830.7002-1 Definitions.
1830.7002-2 Cost of money calculations.
1830.7002-3 Representative investment calculations.
1830.7002-4 Determining imputed cost of money.
Authority: 42 U.S.C. 2473(c)(1).
Subpart 1830.2--CAS Program Requirements
1830.201-5 Waiver.
The procurement officer shall forward all requests for waiver of
CAS requirements to the Associate Administrator for Procurement (Code
HC).
Subpart 1830.70--Facilities Capital Employed for Facilities in Use
and for Facilities Under Construction
1830.7001 Facilities capital employed for facilities in use.
1830.7001-1 Contract facilities capital estimates.
To estimate facilities capital cost of money (FCCOM), the
contracting officer shall use DD Form 1861, Contract Facilities Capital
Cost of Money, after evaluating the contractor's cost proposal,
establishing cost of money factors, and developing a prenegotiation
cost objective.
1830.7001-2 DD For 1861 completion instructions.
(a) List overhead pools and direct-charging services centers (if
used) in the same structure as they appear on the contractor's cost
proposal and Form CASB-CMF. The structure and allocation base units-of-
measure must be compatible on all three displays.
(b) Extract appropriate contract overhead allocation base data, by
year, from the evaluated cost breakdown or prenegotiation cost
objective, and list them against each overhead pool and direct-charging
service center.
(c) Multiply each allocation base by its corresponding cost of
money factor to compute the FCCOM estimated to be incurred each year.
The sum of these products represents the estimated contract FCCOM for
the year's effort.
(d) Add the yearly estimates to calculate the total contract FCCOM.
1830.7001-3 Preaward FCCOM applications.
Apply FCCOM in establishing cost and price objectives as follows:
(a) Cost objective. Us the FCCOM with normal, booked costs in
establishing a cost objective or the target cost of an incentive type
contract. Do not subsequently adjust these target costs when actual
cost of money rates become available during the contract performance
period.
(b) Profit/fee objective. Do not include FCCOM in the cost base
when establishing a prenegotiation profit/fee objective. Use only
normal, booked costs in this cost base.
1830.7001-4 Postaward FCCOM applications.
(a) Interim billings based on costs incurred. (1) The contractor
may include FCCOM in cost reimbursement and progress payment invoices.
To determine the amount that qualifies as cost incurred, multiply the
incurred portions of the overhead pool allocation bases by the latest
available cost of
[[Page 55768]]
money factors. These FCCOM calculations are interim estimates subject
to adjustment.
(2) As actual cost of money factors are finalized, use the new
factors to calculate FCCOM for the next accounting period.
(b) Final settlements. (1) Contract FCCOM for final cost
determination or repricing is based on each year's final cost of money
factors determined under CAS 414 and supported by separate Forms CASB-
CMF.
(2) Separately compute contract FCCOM in a manner similar to yearly
final overhead rates. As in overhead rates, include in the final
settlement an adjustment from interim to final contract FCCOM. Do not
adjust the contract estimated or target cost.
1830.7002 Facilities capital employed for facilities under
construction.
1830.7002-1 Definitions.
(a) Cost of money rate is either--
(1) The interest rate determined by the Secretary of the Treasury
under Public Law 92-41 (85 Stat. 97); or
(2) The time-weighted average of such rates for each cost
accounting period during which the capital asset is being constructed,
fabricated, or developed.
(b) Representative investment is the calculated amount considered
invested by the contractor during the cost accounting period to
construct, fabricate, or develop the capital asset.
1830.7002-2 Cost of money calculations.
(a) The interest rate referenced in 1830.7002-1(a)(1) is
established semi-annually and published in the Federal Register during
the fourth week of December and June.
(b) To calculate the time-weighted average interest rate referenced
in 1830.7002-1(a)(2), multiply the rates in effect during the months of
construction by the number of months each rate was in effect, and then
divide the sum of the products by the total number of months.
1830.7002-3 Representative investment calculations.
(a) The calculation of the representative investment requires
consideration of the rate or expenditure pattern of the costs to
construct, fabricate, or develop a capital asset.
(b) If the majority of the costs were incurred toward the
beginning, middle, or end of the cost accounting period, the contractor
shall either:
(1) Determine a representative investment for the cost accounting
period by calculating the average of the month-end balances for that
cost accounting period; or
(2) Treat month-end balances as individual representative
investments.
(c) If the costs were incurred in a fairly uniform expenditure
pattern throughout the construction, fabrication, or development
period, the contractor may either:
(1) Determine a representative investment for the cost accounting
period by averaging the beginning and ending balances of the
construction, fabrication, or development cost account for the cost
accounting period; or
(2) Treat month-end balances as individual representative
investments.
(d) The method chosen by the contractor to determine the
representative investment amount may be different for each capital
asset being constructed, fabricated, or developed, provided the method
fits the expenditure pattern of the costs incurred.
1830.7002-4 Determining imputed cost of money.
(a) Determine the imputed cost of money for an asset under
construction, fabrication, or development by applying a cost of money
rate (see 1830.7002-2) to the representative investment (see 1830.7002-
3).
(1) When a representative investment is determined for a cost
accounting period in accordance with 1830.7002-3(b)(1) or 1830.7002-
3(c)(1), the cost of money rate shall be the time-weighted average
rate.
(2) When a monthly representative investment is used in accordance
with 1830.7002-3(b)(2) or 1830.7002-3(c)(2), the cost of money rate
shall be that in effect each month. Under this method, the FCCOM is
determined monthly, and the total for the cost accounting period is the
sum of the monthly calculations.
(b) The imputed cost of money will be capitalized only once in any
cost accounting period, either at the end of the accounting period or
the end of the construction, fabrication, or development period,
whichever comes first.
(c) When the construction, fabrication, or development of an asset
takes more than one accounting period, the cost of money capitalized
for the first accounting period will be included in determining the
representative investment for any future cost accounting periods.
5. Part 1831 is revised to read as follows:
PART 1831--CONTRACT COST PRINCIPLES AND PROCEDURES
Sec.
Subpart 1831.2 Contracts With Commercial Organizations
1831.205 Selected costs.
1831.205-18 Independent research and development and bid and
proposal costs.
1831.205-32 Precontract costs.
1831.205-70 Contract clause.
Authority: 42 U.S.C. 2473(c)(1).
Subpart 1831.2--Contracts with Commercial Organizations
1831.205 Selected costs.
1831.205-18 Independent research and development and bid and proposal
costs. (NASA supplements paragraph (e))
(e) A class deviation exists to permit costs contributed by a
contractor under a cooperative arrangement with NASA to be considered
as allowable IR & D costs if the work performed would have been allowed
as contractor IR & D had there been no cooperative arrangement. This
deviation does not apply to costs contributed by the contractor under
cost-sharing contracts described in FAR 16.303 and 1816.303.
1831.205-32 Precontract costs.
(1) Precontract costs are applicable only to sole source awards,
except those resulting in firm-fixed price or fixed-price with economic
price adjustment contracts.
(2) The procurement officer is the approval authority for the use
of precontract costs. Authorization shall be in writing and shall
address the following:
(i) The necessity for the contractor to initiate work prior to
contract award;
(ii) The start date of such contractor effort;
(iii) The total estimated time of the advanced effort; and
(iv) The cost limitation.
(3) Authorization to incur precontract costs shall be provided to
the contractor in writing and shall include the following:
(i) The start date for incurrence of such costs;
(ii) The limitation on the total amount of precontract costs which
may be incurred;
(iii) A statement that the costs are allowable only to the extent
they would have been if incurred after formal contract award; and
(iv) A statement that the Government is under no obligation to
reimburse the contractor for any costs unless a contract is awarded.
1831.205-70 Contract clause.
The contracting officer shall insert the clause at 1852.231-70,
Precontract
[[Page 55769]]
Costs, in contracts for which specific coverage of precontract costs is
authorized under 1831.205-32.
6. Part 1832 is revised to read as follows:
PART 1832--CONTRACT FINANCING
Sec.
1832.006-2 Definitions.
Subpart 1832.1 Non-Commercial Item Purchase Financing
1832.111 Contract clauses for non-commercial purchases.
1832.111-70 NASA contract clause.
Subpart 1832.2 Commercial Item Purchase Financing
1832.202-1 Policy.
1832.206 Solicitation provisions and contract clauses.
Subpart 1832.4 Advance Payments For Non-Commercial Items
1832.402 General.
1832.406 Letters of credit.
1832.407 Interest.
1832.409 Contracting officer action.
1832.409-1 Recommendation for approval.
1832.409-170 NASA procedure for approval.
1832.410 Findings, determination, and authorization.
1832.412 Contract clause.
Subpart 1832.5 Progress Payments Based on Costs
1832.501 General.
1832.501-1 Customary progress payment rates.
1832.501-2 Unusual progress payments.
1832.502 Preaward matters.
1832.502-2 Contract finance office clearance.
1832.502-4 Contract clauses.
1832.502-470 NASA contract clause.
1832.504 Subcontracts.
Subpart 1832.7 Contract Funding
1832.702 Policy.
1832.702-70 NASA policy.
1832.704 Limitation of cost or funds.
1832.704-70 Incrementally funded fixed-price contracts.
1832.705 Contract clauses.
1832.705-2 Clauses for limitation of cost or funds.
1832.705-270 NASA clauses for limitation of cost or funds.
Subpart 1832.9 Prompt Payment
1832.903 Policy.
1832.906 Contract financing payments.
1832.908 Contract clauses.
1832.970 Payments to Canadian Commercial Corporation.
Subpart 1832.10 Performance-Based Payments
1832.1004 Procedures.
1832.1005 Contract clauses.
1832.1006 Agency approvals.
1832.1009 Title.
Authority: 42 U.S.C. 2473(c)(1).
1832.006-2 Definitions.
The Associate Administrator for Procurement is the Agency remedy
coordination official.
Subpart 1832.1--Non-Commercial Item Purchase Financing
1832.111 Contract clauses for non-commercial purchases.
1832.111-70 NASA contract clause.
The contracting officer shall insert the clause at 1852.232-79,
Payment for On-Site Preparatory Costs, in solicitations and contracts
for construction on a fixed-price basis when progress payments are
contemplated and pro rata payment of on-site preparatory costs to the
contractor is appropriate.
Subpart 1832.2--Commercial Item Purchase Financing
1832.202-1 Policy. (NASA supplements paragraph (b))
(b)(6) Advance payment limitations do not apply to expendable
launch vehicle (ELV) service contracts. (see 1832.402).
1832.206 Solicitation provisions and contract clauses. (NASA
supplements paragraph (g))
(g)(2) The installment payment rate shall be that which is common
in the commercial marketplace for the purchased item. If there is no
commonly used rate, the contracting officer shall determine the
appropriate rate. In no case shall the rate exceed that established in
the clause at FAR 52.232-30.
Subpart 1832.4--Advance Payments for Non-Commercial Items
1832.402 General. (NASA supplements paragraph (e))
(e)(1) The Director of the Headquarters Office of Procurement
Analysis Division (Code HC) is the approval authority for all advance
payments except the following:
(A) The procurement officer is the approval authority for non-fee
bearing contracts with domestic entities when the cumulative contract
value is $25,000,000 or less, and for all increases to such contracts
over $25,000,000 previously approved by Code HC as long as the advance
payment amount outstanding at any time is not increased.
(B) The contracting officer is the approval authority for the
following actions. In these cases, a findings and determination (see
FAR 32.410) is not required.
(a) Small Business Innovation Research (SBIR) and Small Business
Technology Transfer (STTR) Phase I contracts. A class deviation has
been signed, effective through September 30, 2000 (for SBIRs) and
September 30, 1997 (for STTRs), authorizing use of advance payments on
these contracts. The contracting officer shall annotate the contract
file that the deviation is on file at the NASA Headquarters Office of
Procurement (Code HC).
(b) Expendable launch vehicle (ELV) service contracts. 42 U.S.C.
2459c authorize advance payments for these contracts. The contracting
officer shall document the contract file with the rationale for
approving the use of advance payments.
(e)(2) All advance payment authorization requests, except those
authorized by 1832.402(e)(1)(B), shall be coordinated with the
installation Deputy Chief Financial Officer.
1832.406 Letters of credit. (NASA supplements paragraph (b))
(b)(1) Each installation is considered a contracting agency for the
purposes of this requirement.
1832.407 Interest. (NASA supplements paragraph (d))
(d)(1) Advance payments without interest are authorized.
1832.409 Contracting officer action.
1832.409-1 Recommendation for approval.
1832.409-170 NASA procedure for approval.
In addition to the items listed in FAR 32.409-1, requests for
Headquarters approval of advance payments (see 1832.402(e)(1)) shall
include the following information:
(a) Name of the cognizant NASA Headquarters program or staff
office;
(b) Name and phone number of the contracting officer or negotiator;
(c) A copy of the proposed advance payments clause;
(d) If a profit/fee is contemplated, the factors considered in
determining the profit/fee (see subpart 1815.9);
(5) Information justifying the adequacy of security to cover the
maximum advance payment amount at any time outstanding.
1832.410 Findings, determination, and authorization. (NASA supplements
paragraph (b))
(b) Generally, the format in FAR 32.410 should be used, tailored as
follows:
(i) In format subparagraph (a)(2), use the phrase ``Advance
payments (In an amount not to exceed $* * * at any time outstanding)''
in all determinations and findings. The phrase means the maximum
unliquidated dollar amount a contractor would need in advance
[[Page 55770]]
payments at any point in time for the particular contract. The amount
would not usually be the full contract value. The amount inserted
should be based on an analysis of the contractor's financing needs
(monthly or other appropriate period) for the specific contract
involved.
(ii) In the second sentence of format subparagraph (a)(4), delete
the reference to a special bank account if no special bank account is
required.
(iii) Use format subparagraph (a)(6), and not (a)(7) or (a)(8).
(iv) At the end of format paragraph (b), use ``is in the public
interest.''
(v) In format paragraph (c), use the phrase ``(the amount at any
time outstanding)'' in all determinations and findings.
1832.412 Contract clause. (NASA supplements paragraphs (a), (e) and
(f))
(a) When the clause at FAR 52.232-12, Advance Payments, is used,
make the following modifications:
(i) In the ``Maximum Payment'' paragraph (either paragraph (d) or
(e)), in the sentence that begins ``When the sum of'', change the word
``When'' to lower case and insert before it: ``Unliquidated advance
payments shall not exceed $. * * * at any time outstanding. In addition
* * *''.
(ii) In paragraph (m)(1) delete ``in the form prescribed by the
administering office'' and substitute ``on Standard Form 272, Federal
Cash Transactions Report, and, if appropriate, Standard Form 272-A,
Federal Cash Transactions Report Continuation''.
(iii) Annotate the clause ``as modified by NASA (October 1996)''.
(e) See 1832.412(f).
(f) The contracting officer shall use Alternates IV and V when
advance payments are provided on Phase I contracts of the Small
Business Innovation Research (SBIR or Small Business Technology
Transfer (STTR) programs. Annotate the clause ``as modified by NASA
(October 1996)'', delete paragraph (a) of Alternate V, and substitute
the following:
(f) Requirements for payment. Advance payments will be made
under this contract upon receipt of invoices from the Contractor.
Invoices should be clearly marked ``Small Business Innovation
Research Contract'' or ``Small Business Technology Transfer
Contract,'' as appropriate, to expedite payment processing. One-
third of the total contract price will be available to be advanced
to the contractor immediately after award, another one-third will be
advanced three months after award, and the final one-third will be
paid upon acceptance by NASA of the Contractor's final report. By
law, full payment must be made no later than 12 months after the
date that contract requirements are completed. The Contractor shall
flow down the terms of this clause to any subcontractor requiring
advance payments.
Subpart 1832.5--Progress Payments Based on Costs
1832.501 General.
1832.501-1 Customary progress payment rates. (NASA supplements
paragraph (a))
(a) The customary progress payment rate for all NASA contracts is
85 percent for large business, 90 percent for small business, 95
percent for small disadvantaged business, and 100 percent for Phase II
contracts in the Small Business Innovation Research (SBIR) and Small
Business Technology Transfer (STTR) programs. The contracting officer
shall insert the applicable percentage in paragraphs (a) and (b) of the
clause at FAR 52.232-16.
1832.501-2 Unusual progress payments.
The Director of the Headquarters Office of Procurement Analysis
Division (Code HC) is the approval authority for the use of unusual
progress payments.
1832.502 Preaward matters.
1832.502-2 Contract finance office clearance.
The Director of the Headquarters Office of Procurement Analysis
Division (Code HC) is the approval authority for the actions in FAR
32.502-2, except the Associate Administrator for Procurement (Code HC)
is the approval authority for any deviations addressed in FAR 32.502-
2(b).
1832.502-4 Contract clauses.
1832.502-470 NASA contract clause.
The contracting officer may insert a clause substantially as stated
at 1852.232-82, Submission of Requests for Progress Payments, in fixed-
price solicitations and contracts that provide for progress payments.
The recipient of the requests and number of copies may be changed as
required.
1832.504 Subcontracts. (NASA supplements paragraph (c))
(c) Unusual progress payments to subcontractors shall be approved
in accordance with 1832.501-2.
Subpart 1832.7--Contract Funding
1832.702 Policy.
1832.702-70 NASA policy.
(a) Cost-reimbursement contracts may be incrementally funded only
if all the following conditions are met (except that, for cost-
reimbursement R&D contracts under which no supplies are deliverable,
only the condition in paragraph (a)(3) of this section applies):
(1) The total value of the contract (including options as defined
in FAR subpart 17.2) is $1,000,000 or more.
(2) The period of performance under the contract overlaps the
succeeding fiscal year.
(3) The funds are not available to fund the total contract value
fully at award.
(b) Fixed-price contracts, other than those for research and
development, shall not be incrementally funded.
(c)(1) Fixed-price contracts for research and development may be
incrementally funded if the conditions in 1832.702-70(a) (1) through
(3) are met and the initial funding of the contract is not less than 50
percent of the total fixed price.
(2) Incrementally funded fixed-price contracts shall be fully
funded as soon as adequate funding becomes available.
(d) The procurement officer, with the concurrence of the
installation Comptroller, may waive any of the conditions set forth in
paragraphs 1832.702-70 (a) through (c). The procurement officer shall
maintain a record of all such approvals during the fiscal year.
(e) A class deviation from the conditions set forth in paragraphs
1832.702-70 (a) through (c) exists to permit incremental funding of
contracts under Phase II of the Small Business Innovation Research
(SBIR) Program (through September 30, 2000) and Phase II of the Small
Business Technology Transfer (STTR) program (through September 30,
1997). This deviation exists with the understanding that the contracts
will be fully funded when funds become available.
1832.704 Limitation of cost or funds.
1832.704-70 Incrementally funded fixed-price contracts.
(a) Upon receipt of the contractor's notice under paragraph (c)(1)
of the clause at 1852.232-77, Limitation of Funds (Fixed Price
Contract), the contracting officer shall promptly provide written
notice to the contractor that the Government is--
(1) Allotting additional funds in a specified amount for continued
performance;
(2) Terminating the contract; or
(3) Considering whether to allot additional funds; and
(i) The contractor is entitled to stop work in accordance with
paragraph (b) of the clause at 1852.232-77, Limitation of Funds; and
(ii) Any costs expended beyond the amount specified in paragraph
(a) of the clause at 1852.232-77, Limitation of
[[Page 55771]]
Funds, are incurred at the contractor's risk.
(b) Upon determining that the contract will receive no further
funds, the contracting officer shall promptly give notice of the
Government's decision and terminate for the convenience of the
Government.
1832.705 Contract clauses.
1832.705-2 Clauses for limitation of cost or funds.
1832.705-270 NASA clauses for limitation of cost or funds.
(a) The contracting officer shall insert the clause at 1852.232-77,
Limitation of Funds (Fixed-Price Contract), in solicitations and
contracts for fixed-price incrementally funded research and
development.
(b) The contracting officer shall insert a clause substantially as
stated at 1852.232-81, Contract Funding, in Section B of solicitations
and contracts containing the clause at FAR 52.232-22, Limitation of
Funds. Insert the amounts of funds available for payment, the items
covered, and the applicable period of performance. The amount obligated
for fee in paragraph (b) of the clause should always be sufficient to
pay fee anticipated to be earned for the work funded by the amount in
paragraph (a) of the clause.
Subpart 1832.9--Prompt Payment
1832.903 Policy.
Invoice and contractor financing payments for contracts (other than
Fixed-Price Architect-Engineer Contracts, Construction Contracts, and
contracts for meats, perishables and dairy products) with the Canadian
Commercial Corporation (CCC) shall be made earlier than the standard
contract payment due dates. (See 1832.970).
1832.906 Contract financing payments. (NASA supplements paragraph (a))
(a) Except as authorized in 1832.903, it is NASA's policy to make
contract financing payments on the 30th day after the designated
billing office has received a proper request. However the due date for
making contract financing payments for a specific contract may be
earlier than the 30th day, but not earlier than 7 days, after the
designated billing office has received a proper request, provided that:
(i) The contractor provides consideration whose value is determined
to be greater than the cost to the United States Treasury of interest
on funds paid prior to the 30th day, calculated using the Current Value
of Funds Rate published annually in the Federal Register (subject to
quarterly revision);
(ii) The contracting officer approves the payment date change, with
the concurrence of the installation Financial Management Officer; and
(iii) The contract file includes documentation regarding the value
of the consideration and the analysis determining that value.
1832.908 Contract clauses. (NASA supplements paragraphs (c) and (d))
(c) When the clause at FAR 52.232-25, Prompt Payment, is used in
contracting with the CCC subject to the conditions at 1832.903, make
the following modifications:
(i) Insert ``17'' in lieu of ``30'' in paragraphs (a)(2) (i) and
(a)(2) (ii); and
(ii) Insert ``17th'' in paragraph (b) (2).
(iii) Annotate the clause ``as modified by NASA (October 1960''.
(d) When a clause at FAR 52.232-25, 52.232-26 or 52.232-27 is used,
the clause at 52.232-28 shall be used, modified as follows:
(i) Delete the words ``and contract number'' from paragraph (d).
(ii) Insert the following language in lieu of paragraph (b)(4):
``The Contractor shall submit a Standard Form 3881 to the
installation awarding this contract. If a Standard Form 3881
previously submitted to the installation awarding this contract is
still valid, resubmittal is not necessary, unless requested by
NASA.''
(iii) Annotate the clause ``as modified by NASA (October 1996)''.
1832.970 Payments to Canadian Commercial Corporation.
As authorized by FAR 32.903, the phrase ``the 17th day'' shall be
used in lieu of the ``the 30th day'' at FAR 32.905(a)(1), 32.905(a)(2)
and 32.906(a).
Subpart 1832.10--Performance-Based Payments
1832.1004 Procedure. (NASA supplements paragraph (b))
(b) (2) In determining the amount of performance-based payments,
contracting officers shall ensure that the payments will not result in
an unreasonably low or negative level of contractor investment. To make
this assessment, contracting officers shall request the contractor to
submit with its proposal a numeric and graphic funding profile showing
the cash flow and contractor investment in the contract.
1832.1005 Contract clauses. (NASA supplements paragraph (a))
(a) If the contract is for launch services, the contracting officer
shall delete paragraph (f) of the clause at FAR 52.232-32 in accordance
with 1832.1009.
1832.1006 Agency approvals.
Performance-based payments shall be approved in accordance with
field installation procedures.
1832.1009 Title.
In accordance with 42 U.S.C. 2465d, NASA shall not take title to
launch vehicles under contracts for launch services unless one of the
exceptions in the law applies. However, the law does not eliminate
NASA's right to take title to other property acquired or produced by
the contractor under a contract containing a title provision.
7. Part 1833 is revised to read as follows:
PART 1833--PROTESTS, DISPUTES, AND APPEALS
Sec.
Subpart 1833.1--Protests
1833.103 Protests to the agency.
1833.104 Protest to GAO.
1833.106 Solicitation provision and contract clause.
Subpart 1833.2--Disputes and Appeals
1833.209 Suspected fraudulent claims.
1833.211 Contracting officer's decision.
1833.215 Contract clause.
Authority: 42 U.S.C. 2473(c)(1).
Subpart 1833.1--Protests
1833.103 Protests to the agency. (NASA supplements paragraph (b))
(b)(1) Protests received at NASA offices or locations other than
that of the cognizant contracting officer shall be immediately referred
to the contracting officer for disposition (see 1833.106(a)). The
contracting officer shall advise the Headquarters Officer of the
General Counsel (Code GK) of the receipt of the protest and the planned
and actual dispositions.
1833.104 Protests to GAO. (NASA supplements paragraphs (a), (b), (c),
and (f))
The Associate Administrator for Procurement is the sole authority
for deciding whether to defend a protest to GAO or to direct remedial
action. NASA personnel shall take no action to respond to or resolve
any protest filed with GAO other than in accordance with this part and
other guidance provided by NASA Headquarters.
(a)(2) The Headquarters Office of Procurement (Code HS) shall
notify the contracting officer of protest receipt, and the contracting
officer shall immediately give notice of the protest to all interested
parties. Oral contracting officer notices shall be subsequently
confirmed in writing, and the
[[Page 55772]]
contracting officer shall also send a copy of the written confirmation
to Code HS, the Headquarters Office of the General Counsel (Code GK),
and the installation Chief Counsel.
(3)(i) The contracting officer shall send four copies of the
protest report, consisting of the protest file, the contracting
officer's statement of facts, and a draft memorandum of law to Code GK
within 20 days after GAO notification of protest receipt. Also include
a copy of the file index in electronic format. The contracting officer
shall retain a minimum of two copies of the protest file.
(ii) When an actual or prospective offeror requests access to a
protest file, the contracting officer shall take the following actions,
except the actions defined in paragraph (a)(3)(ii) (a) and (b) are not
required if already accomplished:
(a) Send a copy of the protest file index to Code GK within 10 days
of receipt of the request.
(b) Send a copy of the protest file to Code GK within 15 days of
receipt of the request.
(c) With Code GK concurrence, send the protest file and index to
the requesting party to ensure delivery within 20 days after receipt of
the request.
(iii) Code GK shall submit the protest file to GAO.
(4)(i) Code GK shall provide copies of the report to the
protestor(s), any intervenors, and the installation Chief Counsel.
(b)(1) The Associate Administrator for Procurement (Code HS) is the
approval authority for contract award.
(c)(1) The contracting officer shall consult Code HS before
terminating a protested contract.
(2) See 1833.104(b)(1).
(f) The Agency may request GAO reconsideration of its decision
within 10 days of issuance. If reconsideration is appropriate, the
installation Chief Counsel shall forward a draft request for
reconsideration, with any additional supporting documentation, to Code
GK within 6 days of issuance of the GAO decision.
1833.106 Solicitation provision and contract clause. (NASA supplements
paragraph (a))
(a) The contracting officer shall be the designated recipient of
Agency protests in paragraph (a) of the provision at FAR 52.233-2.
Subpart 1833.2--Disputes and Appeals
1833.209 Suspected fraudulent claims.
The contracting officer shall report suspected fraudulent claims to
the Headquarters Officers of Inspector General (Code W) and the General
Counsel (Code G).
1833.211 Contracting officer's decision. (NASA supplements paragraph
(a))
(a)(4)(v) The Armed Services Board of Contract Appeals is the NASA
Administrator's authorized representative for hearing appeals of
contracting officer final decisions. Accordingly, contracting officers
shall cite that fact in the final decision letter, provide the Board's
mailing address (Armed Services Board of Contract Appeals, Skyline Six,
5109 Leesburg Pike, Falls Church, VA 22041-3208), and include a
notification that the Board's operating procedures appear in Title 48,
Code of Federal Regulations, Chapter 2, Appendix A.
1833.215 Contract clause.
The contracting officer shall use the clause at FAR 52.233-1,
Disputes, with its Alternate I whenever continued performance is vital
to national security, the public health and welfare, important agency
programs, or other essential supplies or services whose timely
reprocurement from other sources would be impracticable.
PART 1852--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
1852.228-70 [Amended]
8-9. Section 1852.228-70 is revised to read as follows:
1852.228-70 Aircraft Ground and Flight Risk.
As prescribed in 1828.370(a), insert the following clause. The
purpose of this clause is to have the Government assume risks that
generally entail unusually high insurance premiums and are not covered
by the contractor's contents, work-in-process, and similar insurance.
Since the definitions in the clause may not cover every situation that
should be covered to achieve this purpose, the clause may be modified
as follows: If the contract covers helicopters, vertical take-off
aircraft, lighter-than-air airships, or other nonconventional types of
aircraft, the definition of ``aircraft'' should be modified to specify
that the aircraft has reached a point of manufacture comparable to that
specified in the standard definition, which is written for conventional
winged aircraft. The definition of ``in the open'' may be modified to
include ``hush houses,'' test hangars, comparable structures, and other
designated areas. In addition, clause paragraph (d)(3) may be modified
to provide for Government assumption of risk of transportation by
conveyance on streets or highways if the contracting officer determines
that this transportation is limited to the vicinity of the contractor's
premises and is merely incident to work being performed under the
contract.
Aircraft Ground and Flight Risk October 1996
(a) Notwithstanding any other provisions of this contract,
except as may be specifically provided in the Schedule as an
exception to this clause, the Government, subject to the definitions
and limitations of this clause, assumes the risk of damage to, or
loss or destruction of, aircraft in the open, during operation, or
in flight and agrees that the Contractor shall not be liable to the
Government for any such damage, loss, or destruction.
(b) For the purposes of this clause, the following definitions
apply:
(1) Unless otherwise specifically provided in the Schedule,
``aircraft'' includes--
(i) Aircraft (including both complete aircraft and aircraft in
the course of being manufactured, disassembled, or reassembled;
provided that an engine, wing, or a portion of a wing is attached to
the fuselage) to be furnished to the Government under this contract
(whether before or after Government acceptance); and
(ii) Aircraft (regardless of whether in a state of disassembly
or reassembly) furnished by the Government to the Contractor under
this contract, including all property installed in, being installed
in, or temporarily removed from them, unless the aircraft and
property are covered by a separate bailment agreement.
(2) ``In the open'' means located wholly outside of buildings on
the Contractor's premises, or at such other places as may be
described in the Schedule as being in the open for the purposes of
this clause, except that aircraft furnished by the Government are
considered to be in the open at all times while in the Contractor's
possession, care, custody, or control.
(3) ``Flight'' includes any flight demonstration, flight test,
taxi test, or other flight made in the performance of this contract,
or for the purpose of safeguarding the aircraft, or previously
approved in writing by the Contracting Officer.
(i) With respect to land-based aircraft, flight commences with
the taxi roll from a flight line on the Contractor's premises and
continues until the aircraft has completed the taxi roll in
returning to a flight line on the Contractor's premises.
(ii) With respect to seaplanes, flight commences with the
launching from a ramp on the Contractor's premises and continues
until the aircraft has completed its landing run upon return and is
beached at a ramp on the Contractor's premises.
(iii) With respect to helicopters, flight commences upon
engagement of the rotors for the purpose of take-off from the
Contractor's premises and continues until the aircraft has returned
to the ground on the Contractor's premises and the rotors are
disengaged.
[[Page 55773]]
(iv) With respect to vertical take-off aircraft, flight
commences upon disengagement from any launching platform or device
on the Contractor's premises and continues until the aircraft has
been re-engaged to any launching platform or device on the
Contractor's premises; provided, however, that aircraft off the
Contractor's premises shall be deemed to be in flight when on the
ground or water only during periods of reasonable duration following
emergency landing, other landings made in the performance of this
contract, or landings approved by the Contracting Officer in
writing.
(4) ``Contractor's premises'' means those premises designated as
such in the Schedule or in writing by the Contracting Officer, and
any other place to which aircraft are moved for the purpose of
safeguarding the aircraft.
(5) ``Operation'' means operations and tests, other than on any
production line, of aircraft not in flight, whether or not the
aircraft is in the open or in motion. It includes operations and
tests of equipment, accessories, and power plants only when
installed in aircraft.
(6) ``Flight crew members'' means the pilot, copilot, and,
unless otherwise specifically provided in the Schedule, the flight
engineer and navigator when requirement or assigned to their
respective crew positions to conduct any flight on behalf of the
Contractor.
(7) ``Contractor's managerial personnel'' means the Contractor's
directors, officers, and any managers, superintendents, or
equivalent representatives who have supervision or direction of all
or substantially all of the Contractor's business or of the
Contractor's operations at any one plant, a separate location at
which this contract is performed, or a separate and complete major
industrial operation in connection with the performance of this
contract.
(c)(1) The Government's assumption of risk under this clause, as
to aircraft in the open, shall continue in effect unless terminated
pursuant to paragraph (c)(3) of this clause. If the Contracting
Officer finds that an aircraft is in the open under unreasonable
conditions, the Contracting Officer shall notify the Contractor in
writing of the conditions found to be unreasonable and require the
Contractor to correct them within a reasonable time.
(2) Upon receipt of this notice, the Contractor shall act
promptly to correct these conditions, regardless of whether it
agrees that they are in fact unreasonable. To the extent that the
Contracting Officer may later determine that they were not in fact
unreasonable, an equitable adjustment shall be made in the contract
price to compensate the Contractor for any additional costs incurred
in correcting them, and the contract shall be modified in writing
accordingly.
(3)(i) If the Contracting Officer finds that the Contractor has
failed to act promptly to correct unreasonable conditions or has
failed to correct them within a reasonable time, the Contracting
Officer may by written notice terminate the Government's assumption
of risk under this clause for any aircraft which is in the open
under those conditions. This termination shall be effective at 12:01
A.M. on the 15th day following the day of receipt by the Contractor
of the notice.
(ii) If the Contracting Officer later determines that the
Contractor acted promptly to correct the conditions or that the time
taken by the Contractor was not in fact unreasonable, an equitable
adjustment shall, notwithstanding paragraph (g) of this clause, be
made to compensate the Contractor for any additional costs incurred
as a result of the termination, and the contract shall be modified
in writing accordingly.
(4) If the Government's assumption of risk under this clause is
terminated in accordance with paragraph (c)(3) of this clause, the
risk of loss with respect to Government-furnished property shall be
determined in accordance with the Government property clause of this
contract, if any, until the Government's assumption of risk is
reinstated in accordance with paragraph (c)(5) of this clause.
(5)(i) When unreasonable conditions have been corrected, the
Contractor shall promptly notify the Government. The Government may
or may not elect to reassume the risks and relieve the Contractor of
liabilities as provided in this clause, and the Contracting Officer
shall notify the Contractor of the Government's election.
(ii) If, after correction of the conditions, the Government
elects to reassume the risks and relieve the Contractor of
liabilities, the Contractor shall be entitled to an equitable
adjustment for any costs of insurance extending from the end of the
third working day after the Contractor notifies the Government of
the correction until the Government notifies the Contractor of that
election.
(iii) If the Government elects not to reassume the risks and the
conditions have in fact been corrected, the Contractor shall be
entitled to an equitable adjustment for any costs of insurance
extending after the third working day referred to in paragraph
(c)(5)(ii) of this clause.
(d) The Government's assumption of risk shall not extend to
damage to, or loss or destruction of aircraft--
(1) Resulting from failure of the Contractor, due to willful
misconduct or lack of good faith of any of the Contractor's
managerial personnel, to maintain and administer a program for
protecting and preserving aircraft in the open and during operation,
in accordance with sound industrial practice;
(2) Sustained during flight if the flight crew members
conducting the flight have not been approved in writing by the
Contracting Officer;
(3) While in the course of transportation by rail or by
conveyance on public streets, highways, or waterways, except for
Government-furnished property;
(4) The extent that the damage, loss, or destruction is in fact
covered by insurance;
(5) Consisting of wear and tear, deterioration (including rust
and corrosion), freezing, or mechanical, structural, or electrical
breakdown or failure, unless this damage is the result of other
loss, damage, or destruction covered by this clause (except that, in
the case of Government-furnished property, if the damage consists of
reasonable wear and tear or deterioration or results from an
inherent defect in such property, this exclusion shall not apply);
or
(6) Sustained while the aircraft is being worked upon and
directly resulting from the work, including but not limited to any
repairing, adjusting, servicing, or maintenance operation, unless
the damage, loss, or destruction is of a type that would be covered
by insurance that would customarily have been maintained by the
Contractor at the time of the damage, loss, or destruction, but for
the Government's assumption of risk under this clause.
(e)(1) With the exception of damage to, or loss or destruction
of, aircraft in flight, the Government's assumption of risk under
this clause shall not extend to the first $1,000 of loss or damage
resulting from each separately occurring event. The Contractor
assumes the risk of and shall be responsible for the first $1,000 of
loss of or damage to aircraft in the open or during operation
resulting from each separately occurring event, except for
reasonable wear and tear and except to the extent the loss or damage
is caused by negligence of Government personnel.
(2) If the Government elects to require that the aircraft be
replaced or restored by the Contractor to its condition immediately
prior to the damage, the equitable adjustment in the price
authorized by paragraph (i) of this clause shall not include the
dollar amount of the risk assumed by the Contractor under this
paragraph (e). If the Government does not elect repair or
replacement, the Contractor agrees to credit the contract price or
pay the Government $1,000 (or the amount of the loss if smaller) as
directed by the Contracting Officer.
(f) No subcontractor may be relieved from liability for damage
to, or loss or destruction of, aircraft while in its possession or
control, except to the extent that the subcontract, with the
Contracting Officer's prior written approval, provides for relief of
the subcontractor from that liability. In the absence of such
approval, the subcontract shall require the return of the aircraft
in as good condition as when received, except for reasonable wear
and tear or for the utilization of the property in accordance with
the provisions of this contract. If a subcontractor has not been
relieved from liability and any damage, loss, or destruction occurs,
the Contractor shall enforce the liability of the subcontractor for
that damage to, or loss or destruction of, the aircraft for the
benefit of the Government.
(g) The Contractor warrants that the contract price does not and
will not include, except as this clause may otherwise authorize, any
charge or contingency reserve for insurance (including self-
insurance funds or reserves) covering any damage to, or loss or
destruction of, aircraft while in the open, during operation, or in
flight, the risk of which has been assumed by the Government under
this clause, whether or not such assumption may be terminated as to
aircraft in the open.
(h)(1) In the event of damage to, or loss or destruction of,
aircraft in the open, during operation, or in flight, the Contractor
shall take all reasonable steps to protect the aircraft from further
damage, separate damaged and undamaged aircraft, and put all
[[Page 55774]]
aircraft in the best possible order. Further, except in cases
covered by paragraph (e) of this clause, the Contractor should
furnish to the Contracting Officer a statement of--
(i) The damaged, lost, or destroyed aircraft;
(ii) The time and origin of the damage, loss, or destruction;
(iii) All known interests in commingled property of which
aircraft are a part; and
(iv) Any insurance covering any part of the interest in the
commingled property.
(2) Except in cases covered by paragraph (e) of this clause, an
equitable adjustment shall be made in the amount due under this
contract for expenditures made by the Contractor in performing its
obligations under this paragraph (h), and this contract shall be
modified in writing accordingly.
(i)(1) If, before delivery and acceptance by the Government, any
aircraft is damaged, lost, or destroyed and the Government has under
this clause assumed the risk of that damage, loss, or destruction,
the Government shall either
(i) Require that the aircraft be replaced or restored by the
Contractor to its condition immediately prior to the damage or
(ii) Terminate this contract with respect to that aircraft.
(2) If the Government requires that the aircraft be replaced or
restored, an equitable adjustment shall be made in the amount due
under this contract and in the time required for its performance,
and the contract shall be modified in writing accordingly.
(3) If this contract is terminated under this paragraph
(i)(1)(ii) with respect to the aircraft, and under this clause the
Government has assumed the risk of the damage, loss, or destruction,
the Contractor shall be paid the contract price for the aircraft
(or, if applicable, any work to be performed on the aircraft) less
any amounts the Contracting Officer determines (i) that it would
have cost the Contractor to complete the aircraft (or any work to be
performed on it), together with any anticipated profit on the
uncompleted work and (ii) to be the value, if any, of the damaged
aircraft or any remaining portion of it retained by the Contractor.
The Contracting Officer shall have the right to prescribe the manner
of disposition of the damaged, lost, or destroyed aircraft or any
remaining parts of it, and, if the Contractor incurs additional
costs as a result of such disposition, a further equitable
adjustment shall be made in the amount due to the Contractor.
(j)(1) If the Contractor is at any time reimbursed or
compensated by any third person for any damage, loss, or destruction
of any aircraft, the risk of which has been assumed by the
Government under this clause and for which the Contractor has been
compensated by the Government, it shall equitably reimburse the
Government.
(2) The Contractor shall do nothing to prejudice the
Government's rights to recover against third parties for any such
damage, loss, or destruction and, upon the request of the
Contracting Officer, shall at the Government's expense furnish to
the Government all reasonable assistance and cooperation (including
the prosecution of suits and the execution of instruments of
assignment or subrogation in favor of the Government) in obtaining
recovery.
1852.228-71 [Amended]
10. In the introductory text to section 1852.228-71, the citation
``1828.311-270'' is revised to read ``1828.311-2''.
1852.228-74, 1852.228-77 [Removed]
11. Sections 1852.228-74 and 1852.228-77 are removed.
1852.231-71 [Removed]
12. Section 1852.231-71 is removed.
1852.232-12, 1852.232-70, 1852.232-83, 1852.232-84 [Removed]
13. Sections 1852.232-12, 1852.232-70, 1852.232-83, and 1852.232-84
are removed.
[FR Doc. 96-26338 Filed 10-28-96; 8:45 am]
BILLING CODE 7510-01-M
