03-18

Procurement Information Circular


September 4, 2003

INSTRUCTIONS FOR PREPARING NASA FORM 1018  AND A CLASS DEVIATION TO THE REQUIREMENTS OF NFS 1852.245-73(c)

 

PURPOSE:  (1) To provide a class deviation from the requirements of NFS 1852.245-73(c), (2) to provide a waiver to 1843.7003(a) and (b), (3) to provide clarifications of definitions, and (4) to provide a transmittal letter advising contractors of supplementary information required to be submitted with the NASA Form (NF) 1018, NASA Property in the Custody of Contractors, as of September 30, 2003.

 

BACKGROUND: 

(a)  NASA must account for and report assets in accordance with 31 U.S.C. 3512 and 31 U.S.C. 3515.  The Office of Management and Budget, in its requirements for the form and content of Agency financial statements, requires compliance with Statements of Federal Financial Accounting Standard (SFFAS) numbers 3, 6, 10 and 11.  Supplemental information regarding Contractor-held property is necessary for NASA to comply with these standards.

 

(b)  OMB has accelerated the submission date for agency financial statements to November 15th.  To comply with this revised date, contractor annual property reports must be received by October 15th instead of October 31st.

 

(c)  PIC 02-15 established NF 1018 reporting requirements for September 30, 2002.  The enclosed transmittal letter carries forward those reporting requirements for September 30, 2003.  This PIC provides the following NFS deviations and waiver:

 

      1.  A class deviation to the NFS is granted to revise paragraph (c) of the clause at 1852.245-73, Financial Reporting of NASA Property in the Custody of Contractors, to read as follows:

 

 

FINANCIAL REPORTING OF NASA PROPERTY IN THE

CUSTODY OF CONTRACTORS

(AUGUST 2001) (DEVIATION)

 

  (a)  The Contractor shall submit annually a NASA Form (NF) 1018, NASA Property in the Custody of Contractors, in accordance with the provisions of 1845.505-14, the instructions on the form, subpart 1845.71, and any supplemental instructions for the current reporting period issued by NASA.

 (b)(1) Subcontractor use of NF 1018 is not required by this clause; however, the Contractor shall include data on property in the possession of subcontractors in the annual NF 1018.

    (2) The Contractor shall mail the original signed NF 1018 directly to the cognizant NASA Center Deputy Chief Financial Officer, Finance, unless the Contractor uses the NF 1018 Electronic Submission System (NESS) for report preparation and submission.

     (3)  One copy shall be submitted (through the Department of Defense (DOD) Property Administrator if contract administration has been delegated to DOD) to the following address: [Insert name and address of appropriate NASA Center office.], unless the Contractor uses the NF 1018 Electronic Submission System (NESS) for report preparation and submission.

  (c)(1) The annual reporting period shall be from October 1 of each year through September 30 of the following year. The report shall be submitted in time to be received by October 15.  The information contained in these reports is entered into the NASA accounting system to reflect current asset values for agency financial statement purposes.  Therefore, it is essential that required reports be received no later than October 15.  Some activity may be estimated for the month of September, if necessary, to ensure the NF 1018 is received when due.  However, contractors procedures must document the process for developing these estimates based on planned activity such as planned purchases or NASA Form 533 (NF 533 Contractor Financial Management Report) cost estimates.  It should be supported and documented by historical experience or other corroborating evidence, and be retained in accordance with FAR Subpart 4.7, Contractor Records Retention.  Contractors shall validate the reasonableness of the estimates and associated methodology by comparing them to the actual activity once that data is available, and adjust them accordingly.  In addition, differences between the estimated cost and actual cost must be adjusted during the next reporting period.  Contractors shall have formal policies and procedures, which address the validation of NF 1018 data, including data from subcontractors, and the identification and timely reporting of errors.  The objective of this validation is to ensure that information reported is accurate and in compliance with the NASA FAR Supplement.  If errors are discovered on NF 1018 after submission, the contractor shall immediately contact the cognizant NASA Center Industrial Property Officer (IPO) to discuss corrective action.   

(2)    The Contracting Officer may, in NASA’s interest, withhold payment until a

reserve not exceeding $25,000 or 5 percent of the amount of the contract, whichever is less, has been set aside, if the Contractor fails to submit annual NF 1018 reports in accordance with 1845.505-14 and any supplemental instructions for the current reporting period issued by NASA.  Such reserve shall be withheld until the Contracting Officer has determined that NASA has received the required reports.  The withholding of any amount or the subsequent payment thereof shall not be construed as a waiver of any Government right.

  (d)  A final report shall be submitted within 30 days after disposition of all property subject to reporting when the contract performance period is complete in accordance with (b)(1) through (3) of this clause.

(End of clause)

 

  2.  For purposes of implementing this deviation to the above clause, the procedures for issuance of undefinitized contract actions (UCA) contained in NFS 1843.7003(a) and (b) are waived. 

 

  3. The NF 1018 dated August 2003 shall be used instead of the version displayed in 1853.245-70.

 

   4. The definition for software (reported as general purpose equipment) is clarified to capitalize only items with a useful life of 2 years or more and acquisition cost of $1,000,000.  In addition, enhancement costs for existing software should be capitalized if the enhancement results in significant additional capability beyond that which the software was originally intended (a capability that was not included in the original software specifications), the total cost of the enhancement is $1,000,000 or more, and the expected useful life of the enhanced software is 2 years or more.

 

  5. The definition of Contract Work In Process (WIP) is clarified to consist of property items under development (i.e. not complete) and includes the costs of all WIP regardless of value for all categories of property, all types of equipment and material as well as WIP for International Space Station and Space Shuttle components.  In addition, it notes that the costs of WIP for other assets destined for permanent operation in space such as satellites and space probes and their components should NOT be reported.

 

  6. Guidance for computation of WIP is clarified to incorporate the requirements for unit acquisition cost as outlined in 1845.7101-3(a) through (e) and should be inception to date until such time as the WIP is completed and does not include future costs.  In addition, acquisition cost of property furnished by the Government, which has been incorporated in the property item under construction or in process should be included.  Lastly, costs for operating or repairing existing completed property items should not be included as WIP.

 

  7. Reporting requirement for Agency-Peculiar Property has been clarified to exclude completed end items destined for permanent operation in space such as satellites and space probes not related to the International Space Station, the Space Shuttle program, or their other payloads.

 

  8. The guidance for unit acquisition cost is clarified to require that it be developed using actual costs to the greatest extent possible, including all indirect cost as well as costs directly related to fabrication such as labor and materials.  Any estimates used should be developed using on a documented process based on planned activity.

 

  9. A definition of obsolete property is added as property for which there are no current plans for use in its intended purpose.  Obsolete property should be reported along with items in plant clearance and heritage assets, on the “Depreciation and Assets Not in Use Data for NF 1018 Reporting”.

 

(d) The NFS will be revised to reflect the above requirements.

 

GUIDANCE: 

 

(a)  Contracting Officers must modify all existing contracts that require property reporting to incorporate the deviation to 1852.245-73.  Additionally, contracting officers must include this deviation in all new solicitations and awards when property reporting will be required.  For those contracts identified in PIC 03-14, submittal of the annual 1018 property report is November 30th.  All other contracts must submit their annual 1018 property reports by October 15, 2003.

 

(b)  Items (c)(3) through (c)(9) noted under Background apply to all contracts that require property reporting, including those listed in PIC 03-14.

 

(c)  Not later than September 15, 2003, contracting officers shall send a copy of the enclosed transmittal letter and attachments to all contractors required to submit NF 1018 reports for the period ending September 30, 2003.  The transmittal letter requires insertion of information unique to each contract, its attachments, a blank copy of the NF 1018 supplemental data form, and a blank copy of the NF 1018 Electronic Submission System (NESS) access request, which should be sent without revision or addition.  NOTE:  The second sentence of the first paragraph of the attached letter should be deleted for contracts included in PIC 03-14.

 

 (d)  The information contained in the NF 1018 report is entered into the NASA accounting system to reflect current asset values for agency financial statement purposes.  Therefore, it is essential that required reports be received no later than October 15, 2003.  Contracting officers should work with Center Deputy Chief Financial Officers (Finance) as appropriate to withhold payment when contractors do not submit NF 1018 reports in accordance with the provisions of 1845.505-14.

 

EFFECTIVE DATE:  This PIC is effective as dated and shall remain in effect until canceled or superseded.

 

CANCELATION:  PIC 02-15 is hereby canceled.

 

HEADQUARTERS CONTACTS:  Louis Becker, Code HK, (202) 358-4593, email: lou.becker@hq.nasa.gov; and Elaine Slaugh, BFE, (202) 358-2599, email: elaine.m.slaugh@nasa.gov.

 

 

Tom Luedtke

Assistant Administrator for Procurement

 

Enclosures



PIC 03-18 Enclosure

 

 

 

TO:                  [insert contractor name and address]

 

FROM:            Contracting Officer

 

SUBJECT:      NASA Form (NF) 1018, NASA Property in the Custody of Contractors, Reporting Requirements for FY 2003

 

There are no significant changes to the NF 1018 reporting format.  However, the reporting due date has been revised to October 15, 2003 in order to enable NASA to meet its financial statement deadlines. (Contracting Officer should substitute the due date of November 30, 2003 if the contractor is identified in PIC 03-14) In addition, the NF 1018 dated August 2003 shall be used instead of the version displayed in 1853.245-70.

 

Also, several property classification definitions are clarified or amended.  The definition for software (reported as general purpose equipment) was clarified to include only items with a useful life of 2 years or more and acquisition cost of $1,000,000.  In addition, enhancement costs for existing software should be reported if the enhancement results in significant additional capability beyond that which the software was originally intended (a capability that was not included in the original software specifications), the total cost of the enhancement is $1,000,000 or more, and the expected useful life of the enhanced software is 2 years or more.

 

The definition of Contract Work In Process (WIP) is clarified to consist of property items under development (i.e. not complete) and includes the costs of all WIP regardless of value for all categories of property, all types of equipment and material as well as WIP for International Space Station and Space Shuttle components.  In addition, it notes that the costs of WIP for other assets destined for permanent operation in space such as satellites and space probes and their components should NOT be reported.

 

Guidance for computation of WIP is clarified to incorporate the requirements for unit acquisition cost as outlined in 1845.7101-3(a) through (e) and should be inception to date until such time as the WIP is completed and does not include future costs.  In addition, acquisition cost of property furnished by the Government, which has been incorporated in the property item under construction or in process should be included.  Lastly, costs for operating or repairing existing completed property items should not be included as WIP. 

 

The definition of Agency-Peculiar Property has been clarified to exclude completed end items destined for permanent operation in space such as satellites and space probes not related to the International Space Station or the Space Shuttle program.

 

The guidance for unit acquisition cost is clarified to require that it be developed using actual costs to the greatest extent possible, including all indirect cost as well as costs directly related to fabrication such as labor and materials.  Any estimates used should be developed using a supportable, documented process based on planned activity.

 

Supplemental information is required with the NF 1018 for the reporting period ending September 30, 2003.  This information is necessary for Agency compliance with 31 U.S.C. 3512 and 31 U.S.C. 3515, and with Statements of Federal Financial Accounting Standards (SFFASs).  These standards are considered generally accepted accounting principles and as such are required for agency financial statements.  NASA's implementation of these standards is closely scrutinized by its independent auditors.  For the NF 1018 report as of September 30, 2003, contractors shall provide supplemental information in accordance with the enclosed schedule.  Contractors shall continue to include the value of assets not in use, i.e., Obsolete items, those in the Plant Clearance Process, and heritage assets in their custody in the ending balances shown on the NF 1018, and report their values in the supplemental schedule "Depreciation and Assets Not in Use Data for NF 1018 Reporting." Heritage assets shall also be individually described in block 21, Comments.  The description shall include the title of the item, its value and brief comments on why it is considered a heritage asset.  Where heritage assets are reported which were not identified on a previous NF 1018, the cognizant NASA Center Financial Management Office will contact the contractor to discuss the item.  If the Center concludes that the item is not a heritage asset, it will instruct the contractor not to separately identify the item in future NF 1018 reports (but continue to include its acquisition costs in the appropriate classification).

 

Heritage assets are property, plant and equipment that possess one or more of the following characteristics: historical or natural significance; cultural, educational or aesthetic value; or significant architectural characteristics.  Examples of NASA heritage assets include buildings and structures designated as National Historic Landmarks, as well as aircraft, spacecraft and related components on display to enhance public understanding of NASA programs.

 

Heritage assets used to serve both a heritage and government operations function are considered multi-use if the predominant use is in general government operations.  Multi-use heritage assets are considered active property and must remain on NASA's balance sheet and are depreciated.  Contractors should not, therefore, report multi-use heritage assets on the supplemental schedule.

 

Obsolete property is property for which there are no current plans for use in its intended purpose.  Examples of obsolete property are items in configurations which are no longer required or used by NASA or items held for engineering evaluation purposes only.  NASA may have approved the retention of these items for programmatic reasons even though there are no current plans to be used.

 

Additional guidance on NF 1018 reporting (including a link to the NESS) can be found at: http://ifmp.nasa.gov/codeb/library/contractor_info.htm.  Questions regarding reporting requirements should be directed to the Deputy Chief Financial Officer (Finance) of the cognizant NASA Center.

 

 

Signature

 

Attachment 1 – NF 1018 Form dated August 2003

Attachment 2 - NF 1018 Supplemental Data Form

Attachment 3 - FSC Table