Cancelled by PIC
99-10
PIC 98-12
Procurement Information Circular
July 28, 1998
[Amended by PIC 98-15]
REQUIRED NF 1018 INFORMATION
PURPOSE: To provide: (1) a transmittal letter advising contractors of supplementary information required for the NF 1018, NASA Property in the Custody of Contractors, September 30, 1998, reporting period; and (2) a deviation authorizing minor modification of the NF 1018.
BACKGROUND: Office of Management and Budget Bulletin 97-01, Form and Content of Agency Financial Statements, requires implementation of Statement of Federal Financial Accounting Standard (SFFAS) number 6 with agencies' September 30, 1998, financial statements. This standard was developed by the Federal Accounting Standards Advisory Board (FASAB), and it requires agencies to depreciate their assets. Since 67 percent of NASA's assets are property in the custody of contractors, supplemental information will be required from contractors during the NF 1018 reporting process.
GUIDANCE: Contracting officers shall send a copy of the enclosed transmittal letter and attachment to all contractors required to submit NF 1018 reports for the period ending September 30, 1998. The transmittal letter requires insertion of information unique to each contract; its attachment should be sent without revision or addition.
The attachment indicates that the dollar threshold for reporting items on the SF 1018 is changed from $5,000 to $100,000. A modified NF 1018 is provided with the attachment and must be used for the 1998 report. To authorize the NF 1018 modification, this PIC provides the following two NFS deviations:
1. The three $5,000 references in 1845.7101-1(a) are changed to $100,000; and,
2. The NF 1018 included in this PIC shall be used instead of the version displayed in 1853.245-70.
Please note that use of the modified NF 1018 will be required only for the 1998 reporting period. For subsequent years, NASA hopes to adopt the standard Governmentwide reporting form to be included in the FAR 45 rewrite.
EFFECTIVE DATE: This PIC is effective as dated and shall remain in effect until canceled or superseded. Due to the FY 1998 financial reporting schedule constraints, expedited implementation is requested.
HEADQUARTERS CONTACTS: Tom O'Toole, Code HK, (202) 358-0478, email: thomas.otoole@hq.nasa.gov; and Phil Smith, Code BFZ, (202) 358-1022. email: psmith2@hq.nasa.gov
Deidre A. Lee
Associate Administrator for Procurement
Enclosure
PIC 98-12 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 1998
Additional supplemental information is required with the NF 1018 for the reporting period ending September 30, 1998. This information is necessary for Agency compliance with new Statements of Federal Financial Accounting Standards (SFFASs) recommended by the Federal Accounting Standards Advisory Board (FASAB) and approved by the Secretary of the Treasury, the Director of the Office of Management and Budget (OMB) and the Comptroller General. These standards are implemented through requirements promulgated in OMB Bulletin No. 97-01, Form and Content of Agency Financial Statements. NASA's implementation of the new standards will be closely scrutinized by its independent auditors.
In particular, these standards require new accounting treatment for Government-owned property, plant and equipment. We have tried to design an approach for complying with the new standards which will minimize additional reporting requirements for our contractors. We have also made minor changes to the NF 1018 (i.e., raising the capitalization criterion from $5,000 to $100,000) that we believe will simplify reporting.
Enclosed is a description of the specific reporting requirements and NF 1018 changes. The requirements in the enclosure are considered within the scope of the contract and shall be implemented at no change in contract terms and conditions or [insert appropriate contract type terminology: e.g., price, target cost or profit, estimated cost or fee]. If you disagree, take no action and notify me within seven days of receipt of this letter.
Signature
Enclosure
Enclosure
BACKGROUND: The Federal Accounting Standards Advisory Board (FASAB) develops and recommends accounting standards, in a fashion similar to the Cost Accounting Standards Board. Once these recommendations are adopted by the Office of Management and Budget, they become Statements of Federal Financial Accounting Standards (SFFASs) and must be followed by agencies in the preparation of their financial statements. There are a number of new SFFASs with which NASA must comply for fiscal year (FY) 1998, including SFFAS number 6, "Accounting for Property, Plant, and Equipment." It is essential that we comply with SFFAS number 6 and obtain the information necessary for us to prepare accurate and timely financial statements which will pass the test of independent audit. (Additional information on the FASAB and the various SFFASs is available through the Internet at http://www.financenet.gov/financenet/fed/fasab/fasab.htm.)
SFFAS NUMBER 6: Among other requirements, SFFAS number 6 requires us to depreciate our assets for the first time. Sixty-seven percent of NASA's total assets, as reported on our Statement of Financial Position as of September 30, 1997, was property (PP&E) in the custody of contractors. The records you maintain on our PP&E are the official Government records and we will be required to obtain additional information from those records regarding NASA-owned PP&E in your possession, beginning with the September 30, 1998 NASA Form 1018 report on "NASA Property in the Custody of Contractors." We have tried to ensure that additional reporting requirements will present minimal extra effort on your part and, to that end, have requested and received comments on our implementation approach from contractors who hold major dollar values of our PP&E.
REQUIRED FY 1998 FINANCIAL REPORTING INFORMATION: For the September 30, 1998 report, we will be using a revised NF 1018 and a supplemental information sheet to meet our information requirement needs for implementation of SFFAS number 6. All NASA property shall be valued at acquisition cost, as defined in SFFAS number 6. We will be depreciating NASA's PP&E on a straight-line, composite basis, i.e., we will be calculating depreciation for groups of assets, rather than individual items. To do so, we will need information from you on the value of our property you hold which is "under" and "over" useful (service) lives for the various NF 1018 reporting categories. You are not required to calculate depreciation.
1. Depreciation. Please provide depreciation information for contractor-held PP&E on the Attachment 1 chart format. In preparing this chart follow the useful life guidelines in Attachments 1 and 2. Attachment 1 lists a single useful life for each NF 1018 category except Equipment. Due to the variety of equipment involved, it would be inappropriate for us to establish a single useful life for this category. Instead, we determined that the only "common denominator" available for both Government and contractor-held NASA PP&E to further categorize equipment was the Federal Supply Classification group (FSC) code. These codes are maintained by the Department of Commerce and are standard throughout the Federal Government and part of the Federal Stock Number used in contractors' property control systems as discussed in FAR 45.505-1. Attachment 2 details the useful lives for equipment categories. Land, Construction in Progress, Material and Contract Work in Process will not be depreciated and no useful life information will be required for these categories.
2. Assets not in use. SFFAS number 6 also requires that we remove any assets not in use from our books. Since the NF 1018-reported balances are used to adjust our accounts, the value of assets in your possession but no longer in use will need to be excluded from the ending NF 1018 balances. Based on consultation with NASA contractor representatives, we have concluded that the most appropriate and definable point at which to consider contractor-held PP& E "not is use" is when it is in the plant clearance process, i.e., after agency screening. Accordingly, on NF 1018 please: include the value of such PP&E in column c., Deletions; and show these amounts on item 21, line i., identified as "Assets in Plant Clearance". Also, complete the chart in Attachment 3 by entering the value of property in each category which was excluded because it was in the plant clearance process as of September 30, 1998.
Other Minor NF 1018 Change: Please note that the NF 1018 has been
modified to change the asset capitalization criterion from the current $5,000
and over to $100,000 and over; this will not change any requirements you may
have for physical accountability of NASA property, only the financial data you
will report. In this respect, please note that the supplementary reporting
information required for compliance with SFFAS number 6 applies only to
PP&E valued at $100,000 and above given the capitalization criteria change.
In the case of Material, the value need only be reported if the total
NASA-owned Material held is equal to or greater than $100,000. [Sentence
removed by PIC
98-15.] A copy of the revised form is provided as Attachment 4.
Clarification of Current NF 1018 Reporting Requirement: As stated in the NF 1018 Reporting Instructions, amounts reported shall be acquisition cost. In accordance with SFFAS number 6, acquisition cost is defined as all costs incurred to bring the PP&E to a form and location suitable for its intended use. Since the acquisition cost of PP&E to NASA may include related fees paid by NASA to the contractor, the values shown on the NF 1018 for Special Test Equipment, Special Tooling, Agency-Peculiar (columns b.(2) and d.(1)) and Contract Work in Process (column d.(1)) shall include a pro rata portion of any such fees received by the contractor. Situations where inclusion of fees would be appropriate are those in which the contractor designs, develops, fabricates or purchases PP&E for NASA and part of the fees paid to the contractor are related to that effort. If fees received by the contractor cannot be directly related to the PP&E reported on the NF 1018, an estimated amount should be included in the value, based upon the percentage of fees earned to date to contract cost, applied to capitalized PP&E (Special Test Equipment, Special Tooling, Agency-Peculiar and Contract Work in Process).
POINT OF CONTACT: This enclosure, revised NF 1018 (in PerFORM Pro Filler format), and future information on this subject will be made available on the Internet at http://www.hq.nasa.gov/fmm/fmmsupp.htm. Questions regarding specific reporting requirements or NF 1018 completion and submission should be directed to the Deputy Chief Financial Officer (Finance) at the NASA Center which awarded the contract. General comments on NASA implementation of the SFFAS number 6 requirement are welcome and may be submitted to George Siebern at NASA HQ, Code BFZ, or at gsiebern@hq.nasa.gov.
Attachments:
1. Depreciation Data for September 30, 1998 Reporting
2. FSC Table
3. Assets not in Use (in Plant Clearance Process)
4. Revised NF 1018, NASA Property in the Custody of Contractors
ATTACHMENT 1
Depreciation Data for September 30, 1998 Reporting
Government-Owned Contractor-Held Property
|
NF 1018 Line Item
Number/Property |
a. |
b. |
c. |
|
5. Buildings |
40 |
- |
- |
|
6. Other Structures & Facilities |
15 |
- |
- |
|
7. Leasehold Improvements |
15 |
- |
- |
|
9. Equipment: |
- |
- |
- |
|
5 Year |
5 |
- |
- |
|
7 Year |
7 |
- |
- |
|
10 Year |
10 |
- |
- |
|
15 Year |
15 |
- |
- |
|
20 Year |
20 |
- |
- |
|
10. Special Test Equipment |
7 |
- |
- |
|
11. Special Tooling |
7 |
- |
- |
|
12. Agency-Peculiar |
15 |
- |
- |
|
Total |
- |
- |
- |
Instructions:
Completion of this chart will provide NASA with data it needs to calculate depreciation for its property, plant and equipment in the custody of contractors to comply with requirements of Statement of Federal Financial Accounting Standard Number 6, Accounting for Property, Plant and Equipment. The following instructions shall apply:
1. Report amounts for assets with acquisition values equal to or greater than $100,000 for the Property Classification Accounts shown above.
2. Use the useful lives indicated above for Buildings, Other Structures & Facilities, Leasehold Improvements, Special Test Equipment, Special Tooling and Agency-Peculiar property. (Land, Construction in Progress, Material and Contract Work in Process are not depreciated, so no depreciation data is required for those NF 1018 Property Classification Accounts.)
3. For Equipment, NF 1018 line item number 9:
a) Determine what Equipment included in the Balance End of Period, NF 1018 column d.(1), falls into each of the FSC groups shown on the enclosed Federal Supply Classification (FSC) Table.
b) Group the Equipment by Useful Life categories shown on the above chart.
c) Determine what amount of the Equipment in each Useful Life category is older than its FSC Table useful life and what amount is younger than its useful life and enter these amounts in columns b. and c., above, as appropriate, for each of the five Equipment useful life categories (5, 7, 10, 15 and 20 years).
4. Column b. will include the dollar value of all property older than the useful life indicated in column a. This amount represents property that is fully depreciated.
5. Column c. will include the dollar value of all property younger than the useful life indicated in column a. This amount represents property that is not fully depreciated.
6. The total of columns b. and c. for each Property Classification Account shall equal the total value shown for that Property Classification Account in column d.(1) of the NF 1018.
7. Enter totals for columns b. and c.
ATTACHMENT 2
FSC Table
(for developing depreciation data for
NF 1018 Line Item #9, Equipment)
|
FSC # |
FSC Group Title |
Useful Life |
|
10 |
Weapons |
15 |
|
11 |
Nuclear Ordinance |
10 |
|
12 |
Fire Control Equipment |
10 |
|
13 |
Ammunition and Explosives |
10 |
|
14 |
Guided Missiles |
15 |
|
15 |
Aircraft and Airframe Structural Components |
20 |
|
16 |
Aircraft Components and Accessories |
20 |
|
17 |
Aircraft Launching, Landing, and Ground Handling Equipment |
10 |
|
18 |
Space Vehicles |
15 |
|
19 |
Ships, Small Craft, Pontoons, and Floating Docks |
15 |
|
20 |
Ship and Marine Equipment |
15 |
|
22 |
Railway Equipment |
7 |
|
23 |
Ground Effects Vehicles, Motor Vehicles, Trailers, and Cycles |
10 |
|
24 |
Tractors |
10 |
|
25 |
Vehicular Equipment Components |
10 |
|
26 |
Tires and Tubes |
Material |
|
28 |
Engines, Turbines and Components |
15 |
|
29 |
Engine Accessories |
7 |
|
30 |
Mechanical Power Transmission Equipment |
15 |
|
31 |
Bearings |
Material |
|
32 |
Woodworking Machinery and Equipment |
7 |
|
34 |
Metalworking Machinery |
15 |
|
35 |
Service and Trade Equipment |
5 |
|
36 |
Special Industry Machinery |
10 |
|
37 |
Agricultural Machinery and Equipment |
7 |
|
38 |
Construction, Mining, Excavating, and Highway Maintenance Equipment |
10 |
|
39 |
Materials Handling Equipment |
10 |
|
40 |
Rope, Cable, Chain, and Fittings |
Material |
|
41 |
Refrigeration, Air-Conditioning, and Air Circulating Equipment |
7 |
|
42 |
Fire Fighting, Rescue and Safety Equipment |
10 |
|
43 |
Pumps and Compressors |
10 |
|
44 |
Furnace, Steam Plant, Drying Equipment; and Nuclear Reactors |
7 |
|
45 |
Plumbing, Heating, and Sanitation Equipment |
10 |
|
46 |
Water Purification and Sewage Treatment Equipment |
7 |
|
47 |
Pipe, Tubing, Hose and Fittings |
Material |
|
48 |
Valves |
Material |
|
49 |
Maintenance and Repair Shop Equipment |
10 |
|
51 |
Hand Tools |
5 |
|
FSC # |
FSC Title |
Useful Life |
|
52 |
Measuring Tools |
7 |
|
53 |
Hardware and Abrasives |
Material |
|
54 |
Prefabricated Structures and Scaffolding |
10 |
|
55 |
Lumber, Millwork, Plywood and Veneer |
Material |
|
56 |
Construction and Building Materials |
Material |
|
58 |
Communication, Detection and Coherent Radiation Equipment |
10 |
|
59 |
Electrical and Electronic Equipment Components |
10 |
|
60 |
Fiber Optics Materials, Components, Assemblies, Accessories |
Material |
|
61 |
Electric Wire and Power and Distribution Equipment |
7 |
|
62 |
Lighting Fixtures and Lamps |
10 |
|
63 |
Alarm, Signal and Security Detection Systems |
5 |
|
65 |
Medical, Dental, and Veterinary Equipment and Supplies |
7 |
|
66 |
Instruments and Laboratory Equipment |
10 |
|
67 |
Photographic Equipment |
10 |
|
68 |
Chemicals and Chemical Products |
Material |
|
69 |
Training Aids and Devices |
10 |
|
70 |
General Purpose Automatic Data Processing Equipment (Including Firmware), Software, Supplies and Support Equipment |
7 |
|
71 |
Furniture |
10 |
|
72 |
Household and Commercial Furnishings and Appliances |
5 |
|
73 |
Food Preparation and Serving Equipment |
7 |
|
74 |
Office Machines, Text Processing Systems, and Visible Record Equipment |
5 |
|
75 |
Office Supplies and Devices |
Material |
|
76 |
Books, Maps and Other Publications |
5 |
|
77 |
Musical Instruments, Phonographs, and Home-Type Radios |
10 |
|
78 |
Recreational and Athletic Equipment |
7 |
|
79 |
Cleaning Equipment and Supplies |
Material |
|
80 |
Brushes, Paints, Sealers and Adhesives |
Material |
|
81 |
Containers, Packaging, and Packing Supplies |
10 |
|
83 |
Textiles, Leathers, Furs, Apparel and Shoe Findings, Tents and Flags |
5 |
|
84 |
Clothing, Individual Equipment, and Insignia |
5 |
|
85 |
Toiletries |
Material |
|
87 |
Agricultural Supplies |
Material |
|
88 |
Live Animals |
7 |
|
89 |
Subsistence |
Material |
|
91 |
Fuels, Lubricants, Oils and Waxes |
Material |
|
93 |
Nonmetallic Fabricated Materials |
Material |
|
94 |
Nonmetallic Crude Materials |
Material |
|
95 |
Metal Bars, Sheets, and Shapes |
Material |
|
96 |
Ores, Minerals, and Their Primary Products |
Material |
|
99 |
Miscellaneous |
5 |
ATTACHMENT 3
Assets Not In Use (in Plant Clearance Process)
Government-Owned Contractor-Held Property
|
NF 1018 Line Item Number/Property Classification Account |
a. Amount in Plant Clearance Process |
|
4. Land |
- |
|
5. Buildings |
- |
|
6. Other Structures & Facilities |
- |
|
7. Leasehold Improvements |
- |
|
9. Equipment |
- |
|
10. Special Test Equipment |
- |
|
11. Special Tooling |
- |
|
12. Agency-Peculiar |
- |
|
Total |
- |
Instructions:
Completion of this chart will provide NASA with the data it needs to properly reflect PP&E not in use, but in the custody of contractors, in its financial statements, to comply with requirements of Statement of Federal Financial Accounting Standard Number 6, Accounting for Property, Plant and Equipment. The following instructions shall apply:
1. Include the value of PP&E in the plant clearance process, i.e., after agency screening, in column c., Deletions, and exclude that value from column d.(1), Balance End of Period, on the NF 1018.
2. Enter these amounts as "Assets in Plant Clearance Process" in item 21, line i. of the NF 1018 for the appropriate Property Classification Accounts.
3. Enter these amounts in column a., above, for each of the NF 1018 Property Classification Accounts on the chart.
4. Total column a.