[Federal Register: July 20, 1999 (Volume 64, Number 138)]
[Proposed Rules]               
[Page 38880-38884]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr20jy99-33]                         

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NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 1807, 1811, 1812, 1815, 1816, 1823, 1842, 1846, and 
1852

 
Risk Management

AGENCY: National Aeronautics and Space Administration (NASA).

ACTION: Proposed rule.

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SUMMARY: This proposed rule would change the NASA FAR Supplement (NFS) 
to emphasize considerations of risk management, including safety, 
security (including information technology security), health, export 
control, and damage to the environment, within the acquisition process. 
The proposed rule addresses risk management within the context of 
acquisition planning, selecting sources, choosing contract type, 
structuring award fee incentives, administering contracts, and 
conducting contractor surveillance. Additionally, this proposed rule 
would require offeror proposals to include a risk management plan 
whenever the value of the resulting contract is expected to exceed 
$5,000,000, or whenever the contracting officer determines that it 
would be appropriate. Furthermore, this proposed rule would allow that 
contractors not be paid award fee for any evaluation period in which 
there is a major breach of safety or security.

DATES: Comments should be submitted on or before September 20, 1999.

ADDRESSES: Interested parties should submit written comments to Kenneth 
A. Sateriale, NASA Headquarters Office of Procurement, Contract 
Management Division (Code HK), Washington, DC 20546. Comments may also 
be submitted by e-mail to kenneth.sateriale@hq.nasa.gov

FOR FURTHER INFORMATION CONTACT: Kenneth A. Sateriale, (202) 358-0491.

SUPPLEMENTARY INFORMATION:

A. Background

    The NASA Administrator, in a January 11, 1999 message, called upon 
NASA to become an agency of informed risk takers. Furthermore, he 
emphasized that it is critically important for NASA to achieve mission 
success without compromising safety. On February 26, 1999, the 
Administrator emphasized the need for NASA contractors, both on-site 
and others, to be supportive of, and accountable for safety. Safety, in 
this context, is freedom from those conditions that can cause death, 
injury, occupational illness, damage to or loss of equipment or 
property (including intellectual property), or damage to the 
environment. However, given the fact that many of NASA's activities 
involve advanced research, aeronautics, and space flight, NASA cannot 
completely avoid risk. Therefore, risk must be managed, i.e., 
comprehensively identified, analyzed, planned, tracked, and controlled. 
While risk management is not a new acquisition concept, NASA has 
initiated a risk-based acquisition management initiative to re-focus on 
risk as a core acquisition concern. That initiative will be implemented 
through training as well as through revisions to several of NASA's 
internal processes and guidelines. This proposed rule only implements 
that part of the initiative pertaining directly to the procurement 
process. Since NASA's activities often include contractor efforts, 
NASA's focus

[[Page 38881]]

on safety and mission success must be conveyed in NASA contracts. (Risk 
issues will also be addressed in a separate NFS revision to the NASA 
structured approach for developing a fee/profit negotiation objective.)
    Sections 1816.405-274(c) and 1852.223-76(a)(1) in this proposed 
rule reference definitions in NASA Procedures and Guidelines (NPG) 
8621.1, NASA Procedures and Guidelines for Mishap Reporting, 
Investigating, and Recordkeeping. NPG 8621.1 is currently in draft and 
will soon be published. Until such time, it will not be easy for the 
public to obtain access to the definitions. Therefore, draft 
definitions are provided below:
    Mishap--Any unplanned occurrence or event resulting from any NASA 
operation or equipment anomaly, involving injury to or death of any 
persons (including the general public, astronauts and pilots, and NASA 
employees and contractors), damage to or loss of property or equipment, 
or mission failure.
    Type A Mishap--A mishap causing death and/or damage to equipment or 
property equal to or greater than $1 million. Mishaps resulting in 
damage to aircraft, space hardware, or ground support equipment that 
meet these criteria are included, as are test failures in which the 
damage was unexpected or unanticipated.
    Type B Mishap--A mishap resulting in permanent disability to one or 
more persons, hospitalization (within a 30-day period from the same 
mishap) of three or more persons, and/or damage to equipment, or 
property equal to or greater than $250,000, but less than $1 million. 
Mishaps resulting in damage to aircraft, space hardware, or ground 
support equipment that meet these criteria are included, as are test 
failures in which the damage was unexpected or unanticipated.
    Mission Failure--A mishap of whatever intrinsic severity that, in 
the judgment of the Enterprise Associate Administrator/Institutional 
Program Officer, in coordination with the Associate Administrator for 
Safety and Mission Assurance, prevents the achievement of primary NASA 
mission objectives as described in the Mission Operations Report or 
equivalent document.

B. Regulatory Flexibility Act

    NASA certifies that this regulation will not have a significant 
economic impact on a substantial number of small business entities 
under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) because few 
small businesses are awarded contracts valued in excess of the 
$5,000,000 threshold established in the proposed rule for submission of 
a risk management plan and inclusion of the safety clause.

C. Paperwork Reduction Act

    The Paperwork Reduction Act does not apply because the changes to 
the NFS do not impose recordkeeping or information collection 
requirements, or collections of information from offerors, contractors, 
or members of the public which require the approval of the Office of 
Management and Budget under 41 U.S.C. 3501, et seq.

List of Subjects in 48 CFR Parts 1807, 1811, 1812, 1815, 1816, 
1823, 1842, 1846, and 1852

    Government procurement.
Tom Luedtke,
Associate Administrator for Procurement.

    Accordingly, 48 CFR Parts 1807, 1811, 1812, 1815, 1816, 1823, 1842, 
1846, and 1852 are proposed to be amended as follows:
    1. The authority citation for 48 CFR Parts 1807, 1811, 1812, 1815, 
1816, 1823, 1842, 1846, and 1852 continues to read as follows:

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

PART 1807--ACQUISITION PLANNING

    2. Section 1807.104 is added to read as follows:


1807.104  General procedures. (NASA supplements paragraph (a))

    (a) Safety is NASA's highest core value. The acquisition planning 
team shall include representatives from the center offices responsible 
for matters of safety and mission assurance, occupational health, 
environmental protection, information technology, export control, and 
security. Their presence on the team shall help to ensure that all NASA 
acquisitions are structured in accordance with NASA safety, 
occupational health, environmental, export control, and security 
policy. As part of this process, the team shall recommend any 
appropriate solicitation or contract requirements for implementation of 
safety, occupational health, environmental, information technology, 
export control, and security concerns. (See NPG 8705.X, Risk Management 
Procedures and Guidelines.)
    3. In section 1807.105, paragraph (a)(7) is added to read as 
follows:


1807.105  Contents of written acquisition plans.

    (a)* * *
    (7) Discuss project/program risks (see NPG 7120.5, NASA Program and 
Project Management Processes and Requirements, and NPG 8705.X, Risk 
Management Procedures and Guidelines). These risks include such 
considerations as: the security of personnel, information technology, 
and property; the NASA Export Control Program and risks of unauthorized 
technology transfer; damage to the environment; program test conduct 
and schedules; performance incentives and contract management concerns; 
and the necessary level of NASA personnel resources required to manage 
the project/program, including whether current staffing limitations 
require a special plan for surveillance. This discussion should also 
identify those areas that have safety risk, and how safety will be 
addressed in contract requirements and evaluated in the source 
selection, and how safety will be managed and incentivized, where 
appropriate. Appropriate planning, i.e., decisions to research, accept, 
watch, or mitigate, shall be identified for each risk.
* * * * *

PART 1811--DESCRIBING AGENCY NEEDS

    4. Section 1811.101(b) is added to read as follows:


1811.101  Order of precedence for requirements documents. (NASA 
supplements paragraph (b))

    (b) When establishing product descriptions in either a solicitation 
or contract, contracting officers shall include safeguards, as 
applicable, to ensure safety and security, and preclude environmental 
damage.

PART 1812--ACQUISITION OF COMMERCIAL ITEMS

    5. Section 1812.301, paragraph (f)(i) is revised to read as 
follows:


1812.301  Solicitation provisions and contract clauses for the 
acquisition of commercial items.

    (f)(i) The following clauses are authorized for use in acquisitions 
of commercial items when required by the clause prescription:
    (A) 1852.214-71, Grouping for Aggregate Award.
    (B) 1852.214-72, Full Quantities.
    (C) 1852.215-84, Ombudsman.
    (D) 1852.219-75, Small Business Subcontracting Reporting.
    (E) 1852.219-76, NASA Small Disadvantaged Business Goal.
    (F) 1852.223-71, Frequency Authorization.
    (G) 1852.223-75, Risk Management Plan.

[[Page 38882]]

    (H) 1852.228-72, Cross-Waiver of Liability for Space Shuttle 
Services.
    (I) 1852.228-76, Cross-Waiver of Liability for Space Station 
Activities.
    (J) 1852.228-78, Cross-Waiver of Liability for NASA Expendable 
Launch Vehicles.
    (K) 1852.232-70, NASA Progress Payment Rates.
    (L) 1852.246-72, Material Inspection and Receiving Report.

PART 1815--CONTRACTING BY NEGOTIATION

    6. In section 1815.201, paragraph (c)(6)(A) is revised to read as 
follows:


1815.201  Exchanges with industry before receipt of proposals.

    (c)(6)(A) Except for acquisitions described in 1815.300-70(b), 
contracting officers shall issue draft requests for proposals (DRFPs) 
for all competitive negotiated acquisitions expected to exceed 
$1,000,000 (including all options or later phases of the same project). 
DRFPs shall invite comments from potential offerors on all aspects of 
the draft solicitation, including the requirements, schedules, proposal 
instructions, and evaluation approaches. Potential offerors should be 
specifically requested to identify unnecessary or inefficient 
requirements, and whether the requirements of any Government-unique 
standards may be satisfied by voluntary consensus standards or industry 
standards. Comments should also be requested on any perceived safety, 
occupational health, security (including information technology 
security), environmental, export control, and/or other programmatic 
risk issues associated with performance of the work. When considered 
appropriate, the statement of work or the specifications may be issued 
in advance of other solicitation sections.
* * * * *
    7. In section 1815.304-70, paragraphs (b)(5) and (d)(4) are added 
to read as follows:


1815.304-70  NASA evaluation factors.

* * * * *
    (b) * * *
    (5) If the solicitation requires either the submission of a Safety 
and Health Plan (see 1823.7001(c)), or a Risk Management Plan (see 
1823.7001(d)), then the Mission Suitability factor shall include a 
subfactor for safety, occupational health, and mission success. 
Otherwise use of that subfactor is optional. (For discussion of risk 
management, see NPG 7120.5, NASA Program and Project Management 
Processes and Requirements, and NPG 8705.X, Risk Management Procedures 
and Guidelines.)
* * * * *
    (d) * * *
    (4) The contracting officer shall evaluate the offeror's past 
performance in occupational health, security, environmental protection, 
and safety and mission success (e.g., mishap rates and problems in 
delivered hardware and software that resulted in mishaps or failures) 
when these areas are germane to the requirement.
    8. In section 1815.305, paragraph (a)(vi) is revised to read as 
follows:


1815.305  Proposal evaluation.

    (a) * * *
    (vi) Any programmatic risk, e.g., technical, schedule, cost, 
safety, occupational health, security, export control, environmental. 
Risks may result from the offeror's technical approach, manufacturing 
plan, selection of materials, processes, equipment, or as a result of 
the cost, schedule, and performance impacts associated with its 
approach. Risk evaluations must consider the probability of success, 
the impact of failure, and the alternatives available to meet the 
requirements. Risk assessments shall be considered in determining 
Mission Suitability strengths, weaknesses, deficiencies, and numerical/
adjectival ratings. Identified risks and the potential for cost impact 
shall be considered in the cost or price evaluation. The offeror's Risk 
Management Plan, if required, shall be used to support this evaluation.
* * * * *
    9. In section 1815.406-170, paragraphs (c)(5) and (c)(6) are 
revised and paragraph (c)(7) is added to read as follows:


1815.406-170  Content of the prenegotiation position memorandum.

* * * * *
    (c)* * *
    (5) Contractor/Government investment in facilities and equipment 
(and any modernization to be provided by the contractor/Government);
    (6) Any deviations, special clauses, or unusual conditions 
anticipated, for example, unusual financing, warranties, EPA clauses 
and when approvals were obtained, if required; and
    (7) Any risk management issues, e.g., safety, occupational health, 
security.
* * * * *

PART 1816--TYPES OF CONTRACTS

    10. In section 1816.405-274, paragraphs (c), (d), (e), (f), (g), 
and (h) are redesignated as paragraphs (d), (e), (f), (g), (h), and 
(i), respectively; and new paragraph (c) is added to read as follows:


1816.405-274  Award fee evaluation factors.

* * * * *
    (c) The technical factor, if used, must include consideration of 
risk management (including safety, security, health, export control, 
and damage to the environment, as appropriate) unless waived at a level 
above the contracting officer, with the concurrence of the project 
manager. The rationale for any waiver shall be documented in the 
contract file. When safety, export control, or security is considered 
under the technical factor, the award fee plan shall allow the 
following fee determinations, regardless of contractor performance in 
other evaluation factors, when there is a major breach of safety or 
security. A major breach of safety consists of either any Type A or 
Type B mishap, or Mission Failure, as defined in NPG 8621.1, NASA 
Procedures and Guidelines for Mishap Reporting, Investigating, and 
Recordkeeping, or any violation cited by the Occupational Safety and 
Health Administration that results in either a final order of the 
Review Commission assessing a civil penalty, or a criminal conviction. 
Security is the condition of safeguarding against espionage, sabotage, 
crime (including computer crime), or attack. A major breach of security 
results in damage or loss greater than $250,000 to the Government. A 
major breach of security may arise from any of the following: 
compromise of classified information; illegal technology transfer; 
workplace violence resulting in criminal conviction; sabotage; 
compromise or denial of information technology services; or theft.
    (1) For evaluation of service contracts under 1816.405-273(a), an 
overall fee determination of zero for any evaluation period in which 
there is a major breach of safety or security; or
    (2) For evaluation of end item contracts under 1816.405-273(b), an 
overall fee determination of zero for any interim evaluation period in 
which there is a major breach of safety or security. To ensure that the 
final award fee evaluation at contract completion reflects any major 
breach of safety or security in an interim period, the overall award 
fee pool shall be reduced by the amount of the fee available for the 
period in which the major breach occurred if a zero fee determination 
was made because of a major breach of safety or security.
* * * * *

[[Page 38883]]

PART 1823--ENVIRONMENT, CONSERVATION, OCCUPATIONAL SAFETY, AND 
DRUG-FREE WORKPLACE

    11. 1823.7001 is revised to read as follows:


1823.7001  NASA solicitation provisions and contract clauses.

    (a) Except as provided in paragraph (b) of this section, the clause 
at 1852.223-70, Safety and Health, shall be included in all 
solicitations and contracts for--
    (1) Negotiated acquisitions of $1,000,000 or more;
    (2) Construction, repair, or alteration in excess of the simplified 
acquisition threshold;
    (3) Acquisitions having, within their total requirement, 
construction, repair, or alteration tasks in excess of the simplified 
acquisition threshold; and
    (4) Acquisitions regardless of dollar amount when--
    (i) Any deliverable contract end item is of a hazardous nature; or
    (ii) It can reasonably be expected that hazards will be generated 
and controlled within the operational environment during the life of 
the contract and the contracting officer determines that they warrant 
inclusion of the clause.
    (b) The clause prescribed in paragraph (a) of this section may be 
excluded--
    (1) From any contract subject to the Walsh-Healey Public Contracts 
Act (see FAR subpart 22.6) or the Service Contract Act of 1965 (see FAR 
subpart 22.10) in which the application of either act and its 
implementing regulations constitute adequate safety and occupational 
health protection; or
    (2) When the contracting officer, with the concurrence of the 
installation official(s) responsible for matters of safety and 
occupational health, makes a written determination that the clause is 
not necessary under the circumstances of the acquisition.
    (c) The contracting officer shall insert the provision at 1852.223-
73, Safety and Health Plan, in solicitations containing the clause at 
1852.223-70, when a Safety and Health Plan is to be submitted with the 
offeror's proposal. This clause may be modified to identify specific 
information that is to be included in the plan. After receiving the 
concurrence of the center safety and occupational health official(s), 
the contracting officer shall include the plan in any resulting 
contract.
    (d) The contracting officer shall insert the provision at 1852.223-
75, Risk Management Plan, in all solicitations for negotiated 
acquisitions of $5,000,000 or more, unless waived at a level above the 
contracting officer with the concurrence of the project/program office 
and the center safety and occupational health official(s). For other 
solicitations, use of the provision is optional. After receiving the 
concurrence of the project/program office and the center safety and 
occupational health official(s), the contracting officer shall include 
the plan in any resulting contract.
    (e) The contracting officer shall insert the clause at 1852.223-76, 
Major Breach of Safety or Security, in all solicitations and contracts 
with estimated values of $500,000 or more, unless waived at a level 
above the contracting officer with the concurrence of the project 
manager and the installation official(s) responsible for matters of 
security, export control, safety and occupational health. For other 
contracts, use of the clause is optional.

PART 1842--CONTRACT ADMINISTRATION AND AUDIT SERVICES

    12. In section 1842.503, paragraph (1)(iv) is revised to read as 
follows:


1842.503  Postaward conferences.

    (1) * * *
    (iv) Complex contract management issues are expected, e.g., safety, 
security, occupational health, environmental protection, export 
control, and/or risk management.
* * * * *

PART 1846--QUALITY ASSURANCE

    13. Section 1846.000 is added to read as follows:


1846.000  Scope of part.

    The Government has a duty to assure that appropriated funds are 
spent wisely. That duty is fulfilled in part through surveillance. 
Surveillance may be conducted through ``insight'' (i.e., monitoring of 
selected metrics and/or milestones) or ``oversight'' (i.e., Government 
review and concurrence with contractor decisions). The decision to use 
insight or oversight is based on an assessment of the risk inherent in 
the activity being surveilled. Surveillance must be conducted whether 
or not the contract effort has been structured as performance-based.
    14. Section 1846.401 is added to read as follows:


1846.401  General. (NASA supplements paragraph (a)).

    (a) The quality assurance surveillance plan (QASP) which the 
project office prepares in conjunction with the statement of work is 
preliminary. It reflects the Government's surveillance approach 
relative to the perceived programmatic risk, and is written at a 
general rather than specific level because the risks will not be 
completely identified at that time. After contract award, contracting 
officers shall ensure that the QASP is revised to reflect the risks 
associated with the successful proposal. This final QASP shall not be 
included in the contract, but should be periodically reviewed to ensure 
its currency.

PART 1852--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

    15. Section 1852.223-70 is revised to read as follows:


1852.223-70  Safety and Health.

    As prescribed in 1823.7004(c), insert the following clause:

Safety and Health

(Date)

    (a) The Contractor shall take all reasonable safety and 
occupational health measures in performing this contract. The 
Contractor shall comply with all Federal, State, and local laws 
applicable to safety and occupational health and with the safety and 
occupational health standards, specifications, reporting 
requirements, and any other relevant requirements of this contract.
    (b) The Contractor shall take, or cause to be taken, any other 
safety and occupational health measures the Contracting Officer may 
reasonably direct. To the extent that the Contractor may be entitled 
to an equitable adjustment for those measures under the terms and 
conditions of this contract, the equitable adjustment shall be 
determined pursuant to the procedures of the changes clause of this 
contract; provided, that no adjustment shall be made under this 
Safety and Health clause for any change for which an equitable 
adjustment is expressly provided under any other provision of the 
contract.
    (c) The Contractor shall immediately notify and promptly report 
to the Contracting Officer or a designee any accident, incident, or 
exposure resulting in fatality, lost-time occupational injury, 
occupational disease, contamination of property beyond any stated 
acceptable limits set forth in the contract Schedule, or property 
loss of $25,000 or more arising out of work performed under this 
contract. The Contractor is not required to include in any report an 
expression of opinion as to the fault or negligence of any employee.
    (d) Service contractors (excluding construction contracts) shall 
provide quarterly reports specifying lost-time frequency rate, 
number of lost-time injuries, exposure, and accident/incident dollar 
losses as specified in the contract Schedule. The Contractor shall 
investigate all work-related incidents or accidents to the extent 
necessary to determine their causes and furnish the Contracting 
Officer a report, in such form as

[[Page 38884]]

the Contracting Officer may require, of the investigative findings 
and proposed or completed corrective actions.
    (e)(1) The Contracting Officer may notify the Contractor in 
writing of any noncompliance with this clause and specify corrective 
actions to be taken. The Contractor shall promptly take and report 
any necessary corrective action.
    (2) If the Contractor fails or refuses to institute prompt 
corrective action in accordance with subparagraph (e)(1) of this 
clause, the Contracting Officer may invoke the stop-work order 
clause in this contract or any other remedy available to the 
Government in the event of such failure or refusal.
    (f) The Contractor (or subcontractor or supplier) shall insert 
the substance of this clause, including this paragraph (f) and any 
applicable Schedule provisions, with appropriate changes of 
designations of the parties, in subcontracts of every tier that--
    (1) Amount to $1,000,000 or more (unless the Contracting Officer 
makes a written determination that this is not required);
    (2) Require construction, repair, or alteration in excess of 
$25,000; or
    (3) Regardless of dollar amount, involve the use of hazardous 
materials or operations.
    (g) Authorized Government representatives of the Contracting 
Officer shall have access to and the right to examine the sites or 
areas where work under this contract is being performed in order to 
determine the adequacy of the Contractor's safety and occupational 
health measures under this clause.
    (h) The contractor shall continually update the safety and 
health plan when necessary. In particular, the Contractor shall 
furnish a list of all hazardous operations to be performed, and a 
list of other major or key operations required or planned in the 
performance of the contract, even though not deemed hazardous by the 
Contractor. NASA and the Contractor shall jointly decide which 
operations are to be considered hazardous, with NASA as the final 
authority. Before hazardous operations commence, the Contractor 
shall submit for NASA concurrence--
    (1) Written hazardous operating procedures for all hazardous 
operations; and/or
    (2) Qualification Standards for personnel involved in hazardous 
operations.

(End of clause)

    16. In section 1852.223-73, Alternate I is removed and the basic 
clause is revised to read as follows:


1852.223-73  Safety and health plan.

* * * * *

Safety and Health Plan

(Date)

    NASA requires that the contractor furnish supplies and services 
in a safe and healthful manner and develops, produces, and/or 
delivers products to NASA that will be safe and successful for their 
intended use. The offeror shall submit a detailed safety and 
occupational health plan, as part of its proposal. The plan must 
include a detailed discussion of the policies, procedures, and 
techniques that will be used to ensure the safety and occupational 
health of contractor employees and to ensure the safety of all 
working conditions throughout the performance of the contract. The 
plan must similarly address safety and occupational health for 
subcontractor employees for any proposed subcontract whose value is 
expected to exceed $500,000, including commercial services and 
services provided in support of a commercial item. Also, when 
applicable, the plan must address the policies, procedures, and 
techniques that will be used to ensure the safety and occupational 
health of NASA employees and the public. This plan, as approved by 
the Contracting Officer, will be included in any resulting contract. 
(For additional detail on content for the Safety and Health Plan, 
see NPG 8715.1, NASA Safety Manual Procedures and Guidelines, 
Appendix H.)

(End of provision)

    17. Section 1852.223-75 is added to read as follows:


1852.223-75  Risk Management Plan.

    As prescribed in 1823.7001(d), insert the following provision:

Risk Management Plan

(Date)

    The offeror shall submit a detailed Risk Management Plan, as 
part of the offeror's proposal. The plan must include a detailed 
description of the offeror's plan to use risk management techniques 
to manage programmatic risks (e.g., safety, technical, cost, 
schedule, security, export control, and damage to the environment) 
throughout the performance of the contract. The plan must conform to 
NASA's guidance on risk as described in NASA Procedures and 
Guidelines 8705.X, Risk Management Procedures and Guidelines. The 
plan must similarly address risk management for subcontracted effort 
whose value is expected to exceed $500,000. Costs solely 
attributable to risk management must be clearly identifiable in the 
offeror's proposal. This plan, as approved by the Contracting 
Officer, will be included in any resulting contract.

(End of provision)

    18. Section 1852.223-76 is added to read as follows:


1852.223-76  Safety.

    As prescribed in 1823.7001(e), insert the following clause:

Major Breach of Safety or Security

(Date)

    (a) Safety is the freedom from those conditions that can cause 
death, injury, occupational illness, damage to or loss of equipment 
or property, or damage to the environment. Safety is essential to 
NASA and is a material part of this contract. A major breach of 
safety may constitute a breach of contract that entitles the 
Government to exercise any of its rights and remedies applicable to 
material parts of this contract, including termination for default. 
A major breach of safety may occur on or off Government 
installations, but must be related directly to the work on the 
contract. A major breach of safety is an act or omission of the 
contractor that results in either--
    (1) Any Type A or Type B mishap, or Mission Failure as defined 
in NPG 8621.1, NASA Procedures and Guidelines for Mishap Reporting, 
Investigating, and Recordkeeping; or
    (2) Any violation cited by the Occupational Safety and Health 
Administration that results in a final order of the Review 
Commission assessing a civil penalty, or a criminal conviction.
    (b) Security is the condition of safeguarding against espionage, 
sabotage, crime (including computer crime), or attack. A major 
breach of security may constitute a breach of contract that entitles 
the Government to exercise any of its rights and remedies applicable 
to material parts of this contract, including termination for 
default. A major breach of security may occur on or off Government 
installations, but must be related directly to the work on the 
contract. A major breach of security results in damage or loss 
greater than $250,000 to the Government. A major breach of security 
may arise from any of the following: compromise of classified 
information; illegal technology transfer; workplace violence 
resulting in criminal conviction; sabotage; compromise or denial of 
information technology services; or theft.
    (c) In the event of a major breach of safety or security, the 
Contractor shall, if directed by the Contracting Officer, conduct 
its own investigation and report the results to the Government, and 
the Contractor shall cooperate with the Government investigation, if 
conducted.

(End of clause)
[FR Doc. 99-18414 Filed 7-19-99; 8:45 am]
BILLING CODE 7510-01-P