09-02

Procurement Information Circular


January 14, 2009

 

DEVIATION AND SPECIAL PROPERTY DISPOSITION INSTRUCTIONS FOR SPACE SHUTTLE RELATED CONTRACTS

 

PURPOSE:  This PIC provides Deviations to Federal Acquisition Regulation (FAR) property clauses and instructions, and provides special delegation of property administration instructions (see enclosure) for use on Space Shuttle related contracts holding Government Property.  In addition, this PIC provides instructions to NASA Contracting Officers (COs) and Property Administrators (PAs) for implementing these deviations and delegation instructions.  These deviations and special instructions are provided to control the costs associated with disposition of Space Shuttle property, and should be employed using individual judgment and discretion to minimize costs to the Government while preserving sound property management and control processes currently and during the closeout process.

 

BACKGROUND:   NASA expects to process hundreds of thousands of individual items through the disposition process as a result of the phase-out of the Space Shuttle Program (SSP).  With the significant numbers of assets to be dispositioned as a result of that phase-out, there is a risk that property disposition costs could become excessive and those costs could have a deleterious effect on ongoing NASA programs. As a result, Space Shuttle Transition Teams at Headquarters and at the affected centers have been considering alternative methods which could be employed to avoid cost, when appropriate, during the process. Several of those methods require action by Contracting Officers in consultation with Property Administrators and SSP personnel.

   The FAR and NFS rules associated with property have recently changed to provide the Government and contractors with greater flexibility in the management and disposition of Government property.  The current FAR language, from Federal Acquisition Circular (FAC) 2005-17, allows contractors and property administrators to determine whether or not particular activities may be locally waived when such waivers may provide best value to the Government.  This new flexibility would allow many cost saving measures that have been suggested by Space Shuttle Transition Teams to be readily implemented.  However, most Space Shuttle related contracts currently contain FAR and NFS clauses and instructions in effect prior to FAC 2005-17 (July 2007), and therefore do not provide the greater flexibility of the new rule.  To remedy this situation, this PIC will provide CO’s with several options and requirements to utilize this new greater flexibility to minimize property disposition and closeout costs on Shuttle contracts.

   One costly process required by the FAR and NFS property rules involves the requirement to remove all Government markings from property being dispositioned.  The removal of NASA markings from individual items of NASA property undergoing disposition has been identified as a task that is likely to result in increased cost during the disposition process.  This action increases cost because it requires that disposal activities or contractors process items on an individual item basis and precludes processing like items in quantity or in bulk.

   In addition, it is likely that the removal of identification markings from NASA property may lower the reutilization potential and the value of the property.  Removal of NASA identification makes it more difficult for museums or collectors to identify specific items of property that had been used for significant agency activities.  Removal of NASA identification also makes it more difficult to determine whether or not the items were appropriately dispositioned, since removal often severs the link to the property records. Further, removal of decals that are deliberately designed and manufactured to be difficult to remove can damage the property, further reducing its value at disposition.

   Because it is not always possible or cost effective to remove Government applied markings from property, the Federal Management Regulations guiding property disposition provide agencies with the option to retain markings on property.  GSA’s Office of Government-wide Policy concurs with our assessment. Federal Acquisition Regulations are being revised to provide Contracting Officers and Plant Clearance Officers with the latitude to determine when retention of markings may be in the Government’s best interest; however in the interim, and for those contracts which do not contain the updated FAR property clause, this PIC provides a deviation to alter the language of the FAR Government Property clause contained in Space Shuttle related contracts.  The deviation language allows and encourages the Plant Clearance Officer or, in the absence of a Plant Clearance Officer, the Contracting Officer to relieve the contractor of the responsibility to remove Government markings from property during disposition.

   Another potential cost saving measure identified by Space Shuttle Transition Teams relates to an efficient process of dispositioning shuttle property.  Inasmuch as the Defense Contract Management Agency (DCMA) provides property administration support on most of NASA’s major contracts, changing property administration delegation instructions to authorize and encourage streamlined procedures will facilitate prompt plant clearance action. NASA Headquarters has developed modifications for DCMA property administration and plant clearance delegation instructions, specifically related to the disposition of property on Space Shuttle related contracts.  These delegation instruction modifications are provided in the enclosure and provide the following:

   1.   direction to property administration personnel instructing them to encourage contractors to report similar bulk materials in lots and identical description, non-capital equipment items (valued under $100,000) in quantity; To exempt contractors from the final physical inventory requirement unless the records, physical inventory, or property disposition portions of a contractor’s property management system have been determined to be unsatisfactory.

   2.   instruction to  the Plant Clearance Officer to accept inventory schedules when contractors report similar, bulk material in lots and identical-description, non-capital (valued under $100,000) equipment is reported in multiple quantities to the greatest degree possible.

 

GUIDANCE:

   1.   Contracting officers should strongly consider modification of existing Shuttle related contracts to replace old, standard, FAR property clauses with the clause from FAC 2005-17. In particular, the clause at 52.245-5, Government Property, Cost Type, Time and Material, and Labor Hour Contracts (this clause was replaced in FAC 2005-17) should be replaced with the new standard clause at 52.245-1, Government Property, if this can be done at no cost or as a credit to the Government.

         a.   Contract modifications to incorporate the new FAR clause 52.245-1, must also mark the clause as a “Deviation” and modify paragraph (j)(8)(ii) to read:  “The Contractor shall prepare for shipment, deliver f.o.b. origin, or dispose of Contractor inventory as directed by the Plant Clearance Officer.  The Contractor shall remove and destroy any markings identifying the property as U.S. Government-owned property only when instructed by the Contracting Officer or Plant Clearance Officer.

   2.   If the Contracting Officer does not modify the contract to include the newer FAR property clause and deviation as above, and retains an earlier FAR property clause, the following applies:

         a.   For contracts containing the FAR clause at 52.245-5 “Government Property (Cost-Reimbursement, Time-and-Material, or Labor-Hour Contracts)” dated on or before June 2003, Contracting Officers shall modify the contract to instruct the contractor that the requirement imposed by the clause’s reference to FAR 45.506(d) (the FAR version in effect prior to FAC 2005-17) regarding the removal of Government markings, is no longer applicable unless otherwise instructed by the Plant Clearance Officer.  In addition, the requirement for performance of a final physical inventory, as also required by the clause’s reference to FAR 45.508-1, may be waived by the Property Administrator.

         b.   For contracts containing the FAR clause at 52.245-5 “Government Property (Cost-Reimbursement, Time-and-Material, or Labor-Hour Contracts)” dated May 2004, Contracting Officers shall modify the contract to instruct the contractor that the requirement imposed by paragraph (i)(8)(ii) of the clause, regarding  the removal of Government markings, is no longer applicable unless otherwise instructed by the Plant Clearance Officer.  In addition, the requirement for performance of a final physical inventory, as also required by the clause’s reference to FAR 45.508-1, may be waived by the Property Administrator.

         c.   For contracts containing the FAR clause at 52.245-7 “Government Property (Facilities Acquisition)” dated on or before March 1996, Contracting Officers shall modify the contract to instruct the contractor that the requirement imposed by the clause’s reference to FAR 45.506(d) (the FAR version in effect prior to FAC 2005-17) regarding the removal of Government markings, is no longer applicable unless otherwise instructed by the Plant Clearance Officer.  In addition, the requirement for performance of a final physical inventory, as also required by the clause’s reference to FAR 45.508-1, may be waived by the Property Administrator.

         d.   For contracts containing the FAR clause at 52.245-10 “Government Property (Consolidated Facilities)” dated April 1984, Contracting Officers shall modify the contract to instruct the contractor that the requirement imposed by the clause’s reference to FAR 45.506(d) (the FAR version in effect prior to FAC 2005-17) regarding the removal of Government markings, is no longer applicable unless otherwise instructed by the Plant Clearance Officer.  In addition, the requirement for performance of a final physical inventory, as also required by the clause’s reference to FAR 45.508-1, may be waived by the Property Administrator.

         e.   For contracts containing the FAR clause at 52.245-11 “Government Property (Facilities Use)” dated on or before March 1996, Contracting Officers shall modify the contract to instruct the contractor that the requirement imposed by the clause’s reference to FAR 45.506(d) (the FAR version in effect prior to FAC 2005-17) regarding the removal of Government markings, is no longer applicable unless otherwise instructed by the Plant Clearance Officer.  In addition, the requirement for performance of a final physical inventory, as also required by the clause’s reference to FAR 45.508-1, may be waived by the Property Administrator.

   3.   For contracts containing the current FAR clause at 52.245-1 “Government Property” dated June 2007, Contracting Officers shall  mark the clause as a “Deviation” and modify paragraph (j)(8)(ii) to read:  “The Contractor shall prepare for shipment, deliver f.o.b. origin, or dispose of Contractor inventory as directed by the Plant Clearance Officer.  Costs incurred by the Contractor to transport or store the property shall not increase the price or fee of any Government contract.  The Contractor shall only remove and destroy any markings identifying the property as U.S. Government-owned property when instructed by the Contracting Officer or Plant Clearance Officer.”

   4.   Contracting Officers shall modify existing delegation instructions on Space Shuttle related contracts as provided for in the enclosure.   Approval from HQ Logistics Management Division to make these specific modifications is not required; however, copies of revised delegation instructions must be provided to the Center Industrial Property officer.

 

CANCELLATION:  PIC 08-13 is hereby cancelled.

 

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

 

HEADQUARTERS CONTACT:  Carl C. Weber, Office of Procurement, Contract Management Division, (202)358-1784, email: carl.c.weber@nasa.gov; or Michael Showers, Office of Infrastructure, Logistics management Division, (202)358-0272, email: Michael.showers-1@nasa.gov.

 

 

 

William P. McNally

Assistant Administrator for Procurement

 

 

Enclosure

 

 

DISTRIBUTION:

   PIC List


ENCLOSURE

 

GLOBAL PROPERTY ADMINISTRATION & PLANT CLEARANCE DELEGATION INSTRUCTIONS FOR SPACE SHUTTLE CONTRACTS

 

 

1.   Special Property Administration Delegation Instructions for Space Shuttle Contracts

 

When doing so will not incur additional cost, property administrators will encourage contractors to report similar bulk materials in lots and identical description, non-capital equipment items (valued under $100,000) in quantity when the property is no longer required for performance of their contract. Individual serial number identification is not required for non-capital equipment. For this purpose, material items are considered to be similar when they are comprised of the same basic material such as aluminum, steel, wood, etc. and have the same basic description, for example, bolt, sheet metal, screw.

 

When the most recent physical inventory was performed and reconciled as scheduled, Property Administrators will exempt contractors from the final physical inventory requirement, unless the records, physical inventory, or property disposition portions of a contractor’s property management system have been determined to be unsatisfactory or partially satisfactory.

 

2.   Special Plant Clearance Delegation Instructions for Space Shuttle Contracts

 

To the greatest degree possible, Plant Clearance Officers shall accept inventory schedules when contractors report similar, bulk material  in lots and when identical description, non-capital (valued under $100,000) equipment is reported in multiple quantities. Individual serial number identification is not required for non-capital equipment. For this purpose, material items are considered to be similar when they are comprised of the same basic material such as aluminum, steel, wood, etc. and have the same basic description, for example, bolt, sheet metal, screw.

 

Plant Clearance Officers shall not require contractors to remove NASA specific markings from Government property during the disposition process. If removal of identification is considered essential, plant clearance officers shall require the purchaser of the property to remove the markings. If property is transferred within the Government, Plant Clearance Officers shall require the receiving agency to remove markings when required by their own regulations. When property is donated, markings should only be removed if they have no impact on the historic nature of the property and there is a national security requirement.