Incorporated in the FAR and NFS

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Procurement Information Circular

(October 7, 1993)


PURPOSE: To transmit a class deviation for SBIR contract format, Advance Payments, Incremental Funding, Progress Payment rates, and Rights in Data change.

BACKGROUND: With Public Law 102-564, Small Business Research and Development Enhancement Act of 1992-as implemented by the Small Business Administration SBIR Policy Directive-the SBIR program was extended until October 1, 2000. The Associate Administrator for Procurement approved several procurement initiatives, in support of SBIR, on August 1,25, 1993. This Procurement Information Circular (PIC) transmits class deviations to accomplish these SBIR procurement initiatives and comply with the legislation. The Federal Acquisition Regulation (FAR) Circular 90-19 contains revisions to 52.227-20, Rights in Data-SBIR Program, but its publication is temporarily delayed. The deviation provides authority until the FAR is revised. Recently proposed regulations (Department of the Treasury, 31 CFR Part 206, Management of Federal Agency Receipts, Disbursements, and Operation of the Cash Management Improvements Fund; Proposed Rule) state that agencies will use Electronic Funds Transfer (EFT) for all collections and all payments and, if they do not, will be subject to the imposition of fines by the Treasury. As a result, instructions are provided for changing the Advance Payments clause. NFS 18-32.402-1, Small Business Innovation Research contracts, has been amended through a separate action to extend the authority through September 30, 2000. The class deviation under NFS 18-32.702 70(e), NASA policy, is being extended to September 30, 2000. Last, a progress payment rate of 100 percent of cost for SBIR contracts is authorized when advance payment procedures are not used.

GUIDANCE: Pursuant to FAR 1.404, Class deviations, The Associate Administrator for Procurement has approved class deviations to accomplish the NASA SBIR procurement initiatives. The class deviations are enclosed

EFFECTIVE DATE: This PIC is effective October 7, 1993, and shall remain in effect until canceled or superseded.

HEADQUARTERS CONTACT: James A. Pesnell, Code HP, (202) 358-0484.

Walker Lee Evey

Director, Procurement Policy Division


National Aeronautics and

Space Administration

Washington, D.C.


OCT 12, 1993


TO: Distribution

FROM: H/Associate Administrator for Procurement

SUBJECT: Small Business Innovation Research (SBIR) Deviations

With Public Law 102-564, Small Business Research and Development Enhancement Act of 1992 - as implemented by the Small Business Administration SBIR Policy Directive - several deviations are necessary to implement the NASA SBIR program, These deviations will be reflected as changes in the Federal Acquisition Regulation (FAR) or NASA FAR Supplement (NFS) after action by the FAR and NASA policy writers.

I approve the following deviations pursuant to my authority under FAR 1.404, Class deviations:

1. Deviation from FAR 15.406, Uniform contract format, Include all contract clauses and provisions by reference where appropriate to solicit, negotiate, and award Small - Business Innovation Research (SBIR) contracts. Use of locally generated forms are encouraged and authorized where they would contribute to the efficiency and econony of the process.

2. In accordance with FAR 27.409(l), when inserting 52.227-20,

Rights In Data-SBIR Program (Jun 1987), use 18-52.227-20, Rights

In Data-SBIR Program, NASA Deviation, as follows:

18-52.227-20 Rights In Data-SBIR Program, NASA Deviation

As prescribed in 18-27.4 (j), modify 52,227-20 as follows:

(a) In the definition "SBIR data" in paragraph (a), after "1982" insert ", as amended by Pub, L, 102-564, Small Business Research and Development Enhancement Act of 1992).

(b) In paragraph (d) (1) revise "SBIR Rights Notice (Jun 1987)," to read "SBIR Rights Notice (Jun 1987), NASA Deviation."

(c) In the third line paragraph (d) (1) "2 years" is revised to read "not 1ess than 4 years [unless a longer period is permitted writing by the Contracting Officer] ... ",

(d) In lines 10 and 11 of pa ragraph (d)(1) delete "2-year."

3, Deviation from 18-32.412, Contract clause. Whenever advance payments will be used for Small Business Innovation Research (SBIR) Phase I contracts, use the enclosed clause, Advance Payments Without Special Bank Account (FAR 52.232-12) (Apr 1984) Alternate IV (Apr 1984) and Alternate V (Jul 1990) (DEVIATION),

4, Use a progress payment rate of 100 percent for contract awards under the Small Business Innovation Research (SBIR) program instead of the rate in section 18-32.501-1. In 1852,232-70, redesignate the existing paragraph (d) as paragraph (e)f and add a new paragraph (d) to read as follows:

(d) If this contract is an award made under the Small Business Innovation Research (SBIR) program, the Progress Payment clause of this contract is modified to change each mention of the progress payment rate and the ordinary liquidation rate (excepting paragraph (k) , Limitation on Undefined Contract Actions) to 100 percent."

5, Authority to use incremental funding as described in section 18-32.702-70(e) is extended to September 30, 2000.

These deviations are effective immediately and shall remain in effect until cancelled or superseded by the FAR or NFS. The Headquarters contact for these matters is Mr. James A. Pesnell, Code HP, (202) 358-0484.

Deidre A. Lee

Associate Administrator

for Procurement



NASA Procurement officers

NASA Policy Officers

NASA SBIR Contracting Officers


CR/Director, SBIR







(a) The undersigned hereby finds that:

(1) The procurements contemplated by this document will consist of a class of contracts, each of which is expected to be approximately $70,000 for Fiscal Years 1993-1994, $85,000 for FY's 1995-1996, $100,000 for FY's 1997-2000, and will be entered into by NASA Field Installations and tho Headquarters Acquisition Division in accomplishing Phase I of the Small Business Innovation Research SBIR) Program mandated by Public Law 97-219 as amended( by Public Laws 99-443 and 102-564. The estimated lotal advance payments-are $24.5 million in each of.the seven years of this authorization (October 1, 1993 - September 30, 2000),

The Small Business Innovation Development Act of 1982, as amended, requires NASA, among other agencies, to establish a SBIR program by reserving a statutory percentage of its extramural research and devO.1opment budget (currently not. less than 1,5% for FY's 1993-1994, not less than 2,0% for FYI's 95-96, and not less than 2.5% for FY's 97-2000) to be awarded to small business concerns for research or research and development projects of interest to NASA with potential for commercial applications. Research or research and development topic areas will be established by NASA and published in its solicitations during the seven year period of this authorization, It is anticipated that approximately 350 Phase I awards, covering a wide range of different topics, will result each year, Phase I contracts will be firm fixed-price research and development contracts of approximately $70,000 for FY 1993-1994, $85,000 for FY's 95-96, and $100,000 for FY's 97-2000. The Phase I effort is designed to prove the feasibility of scientific and technical ideas which may be experimental, theoretical, or at a research and development stage. Contracts will normally be for a period of six months.

(2) Advance payments in the amount of one-third of each contract's total price at the time of award and one third three months after award are required by the contractors to perform under the contracts. The amount does not exceed the unpaid contract prices or the interim cash needs arising during the reimbursement cycle,

(3) The advance payments are necessary for prompt, efficient contract performance that will benefit the Government.

(4) The proposed advanced payment clause provides for security for the protection of the Government, The clause requires that tha Government will have a paramount lien on any supplies contracted for, and any material or other prope-ty a6quired for performance of the contracts. This security is considered adequate.

(5) Advance payments are th only adequate means of financing available to the contractors. It is anticipated that the small businesses responding to the solicitation will require financial assistance. Incremental payments on the basis of work accomplished or progress achieved toward completion are not practical due to the short period of performance, which will be approximately six months,

(6) The advance payments will be made in increments of one third of the contract price. This minimal level of funding is based, to the extent possible, on the use of the contractors' own working capital in performing the contracts,

(7) The following unusual facts and circumstances favor making advance payments without interest, except as provided in the advance payments clause, for contracts under the SBIR (Phase I) program:

(I) Public Law 97-219, as amended by Public Laws 99- 443 and 102-564, requires that the Federal Government provide for a simplified standardized funding process for SBIR contracts and that it minimize regulators burden associated with participation in the SBIR program.

(ii) The major purposes of Public Law 97-219 are to stimulate technological innovation, use small businesses to meet Federal research or research and development needs, increase the commercial application of Federally supported research results, and foster and encourage minority and disadvantaged participation in technological innovation. In addition, Public Law 102-564 provides for the expansion and improvement of the small business innovation research program, and the improvement of the Federal Government's dissemination of information concerning the small business innovation research program, particularly with regard to program participation by women-owned small business concerns and by socially and economically disadvantaged small business concerns The best way to meet these requirements with uniformity and consistency is to provide advance payments to each contractor.


(b) Based on the findings in a) above, the undersigned determines that the making of the proposed advance payments is in the public interest.


(c) The advance payments, of ne-third of the total contract price at the time of award and one-third three months after award, are hereby authorized under 10 U.S,C, 2307 on terms substantially as contained in the proposed advance payment clause, a copy of which is annexed to this authorization. The advance payments will not exceed an estimated $24.5 million total for the awards in each of the seven years of this authorization.

Deidre A. Lee

Associate Administrator

for Procurement


cc: HP