Procurement Information Circular

September 27, 2011





PURPOSE:  To align NASA FAR Supplement thresholds with revised FAR acquisition-related thresholds which went into effect on October 1, 2010.  As a result of the changes to some FAR acquisition-related thresholds, the NASA FAR supplement, on October 1, 2010, became inconsistent with the FAR.  PIC 10-18 and 11-02 were issued and addressed several of these changes. This PIC addresses an additional threshold change to 1815.404-4. This deviation is issued to eliminate the inconsistencies until permanent changes can be made to the NFS.


BACKGROUND:  The FAR Council issued a final rule on August 30, 2010, which adjusts various FAR thresholds, as required by Section 807 of the Ronald W. Reagan National Defense Authorization Act for Fiscal Year 2005.  Section 807 requires an adjustment, every five (5) years, of acquisition-related thresholds for inflation using the Consumer Price Index (CPI) in a complex formula.  All thresholds are evaluated for adjustment, but not every threshold is changed every five (5) years, as application of the adjustment formula may indicate that a change is not required.  The Davis-Bacon Act, Service Contract Act, and trade agreements thresholds are exempt from adjustment.  Likewise, non-acquisition thresholds are not adjusted as part of this process.  They include, but are not limited to, small business size standards, claims, penalties, and required levels of insurance.  PIC 10-18 dated November 15, 2010 and PIC 11-02 dated May 18, 2011, were issued addressing several threshold changes. This PIC addresses an additional threshold change to 1815.404-4.


GUIDANCE:  This deviation authorizes contacting officers to utilize the enclosed, deviated version of NFS1815.404-4 which includes the new threshold.  


EFFECTIVE DATE:  This PIC is effective as dated and shall remain in effect until implemented in the NFS. 


HEADQUARTERS CONTACT:  William Roets, Contract Management Division, (202) 358-4483, e-mail:



William P. McNally

Assistant Administrator for Procurement







1815.404-4 Profit.

(b)(1)(i)(a) The NASA structured approach for determining profit or fee objectives, described in 1815.404-471 shall be used to determine profit or fee objectives in the negotiation of contracts greater than or equal to $100,000 the simplified acquisition threshold that use cost analysis and are:
(1) Awarded on the basis of other than full and open competition (see FAR 6.3);
(2) Awarded under NASA Research Announcements (NRAs) and Announcements of Opportunity (AO's); or
(3) Awarded under the Small Business Innovative Research (SBIR) or the Small Business Technology Transfer Research (STTR) programs.
(b) The rate calculated for the basic contract may only be used on actions under a negotiated contract when the conditions affecting profit or fee do not change.
(c) Although specific agreement on the applied weights or values for individual profit or fee factors shall not be attempted, the contracting officer may encourage the contractor to -
(1) Present the details of its proposed profit amounts in the structured
approach format or similar structured approach; and
(2) Use the structured approach method in developing profit or fee objectives for negotiated subcontracts.
(ii) The use of the NASA structured approach for profit or fee is not required for:
(a) Architect-engineer contracts;
(b) Management contracts for operation and/or maintenance of Government facilities;
(c) Construction contracts;
(d) Contracts primarily requiring delivery of materials supplied by subcontractors;
(e) Termination settlements; and
(f) Contracts having unusual pricing situations when the procurement officer determines in writing that the structured approach is unsuitable.

(c)(2) Contracting officers shall document the profit or fee analysis in the contract file.