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04-52

Procurement Notice


September 29, 2010

INDIRECT RATE CEILING APPROVAL PROCEDURES

 

PURPOSE:  To add a new NFS section, 1842.707, that delineates the contracting officer’s responsibilities and approval procedures relative to the use of indirect rate ceilings.   

 

BACKGROUND:  Indirect rate ceilings are used in cost reimbursement type contracts when (a) a contractors past or recent record of indirect costs demonstrates significant upward instability, (b) the contractor is a new or recently reorganized company (where the recent record of incurred indirect costs is insufficient to predict future performance), or (c) the company may be seeking to gain a competitive advantage by proposing unsupported and unreasonably low indirect rates.  Indirect rate ceilings are typically used on general and administrative (G&A) rates and should never be utilized on fringe benefit rates.  While indirect rate ceilings can be beneficial under the appropriate circumstances, they should not be utilized on all cost reimbursement contracts regardless of the situation because they can have unintended consequences.  Some of these unintended consequences include: contractors changing accounting systems to allocate costs as direct in lieu of indirect; contractors creating new business segments or profit centers to limit their exposure relative to indirect ceiling on an acquisition; contractors developing new rate structures in an attempt to re-coup potential lost costs due to an indirect rate ceiling; and,  imposing an additional cost risk on small businesses and 8(a) firms that may be severely harmed by future, unanticipated rate growth to the point of  being unable to perform on the contract.  Indirect rate ceilings also increase contract administration costs for both the contractor and the Government.

 

GUIDANCE: Contracting officers should use indirect rate ceilings judiciously and only in those specific circumstances highlighted in FAR 42.707(b)(1)(i) through (iii).

 

It is noted that indirect rate ceilings are different from rate reopener provisions.  Indirect rate ceilings limit or cap specific indirect rates on a cost reimbursement type contract.  With an indirect rate ceiling, a contractor cannot charge the Government for indirect costs in excess of the ceiling for the life of the contract.  In contrast, a rate reopener provision can be used on fixed price or cost type contracts when a negotiated agreement cannot be reached on specific direct and/or indirect rates due to the uncertainty of the indirect rates and associated costs.  Under a rate reopener provision, the parties establish direct and/or indirect rates that are generally subject to a downward only re-negotiation at a future date during contract performance and may include, if the rates are allowed to be adjusted either downward or upward, an overall cost/price ceiling to bind each party’s liabilities until the rates are re-negotiated.  At a future point during contract performance, the rates are re-assessed and potentially re-negotiated in accordance with the specific terms of the reopener clause when hopefully better data is available to negotiate fair and reasonable indirect costs for the procurement. The key distinction to be made between an indirect rate ceilings and a rate reopener is that the ceiling rate establishes an upper limit above which the contractor will not be reimbursed for its indirect rate expense; a rate reopener establishes agreed-to conditions under which the previously negotiated value(s) associated with direct and/or indirect rates can be re-negotiated in order to establish price reasonableness.

 

The approval process described in this PN pertains to the use of indirect rate ceilings.

 

ACQUISITIONS AFFECTED BY CHANGES:  This requirement is applicable to all acquisitions issued after the effective date of this PN.

 

ACTION REQUIRED BY CONTRACTING OFFICERS:  Ensure compliance with this new NFS section as set forth in this PN.

 

CLAUSE CHANGES:  None.

 

PARTS AFFECTED:  Part 1842.

  

REPLACEMENT PAGES:  You may use the enclosed pages to replace 42:1, 42:2, and 42-7 through 42-17 of the NFS.

 

TYPE OF RULE AND PUBLICATION DATE:  These changes do not have a significant affect beyond the internal operating procedures of NASA and do not have a significant cost or administrative impact on contractors or offerors, and therefore do not require codification in the Code of Federal Regulations (CFR) or publication for public comment.
 

HEADQUARTERS CONTACT:  Bill Roets, Contract Management Division; 202-358-4483, email: william.roets-1@nasa.gov.

 

       /s/

William P. McNally

Assistant Administrator for Procurement

 

Enclosures

 

 DISTRIBUTION LIST:

  PN List 


 


PART 1842

CONTRACT ADMINISTRATION AND AUDIT SERVICES

 

TABLE OF CONTENTS

 

SUBPART     1842.1             CONTRACT AUDIT SERVICES

1842.101                                 Contract audit responsibilities.

1842.102                                 Assignment of contract audit services.

1842.102-70                            Review of administration and audit services.

1842.170                                 Assignment of NASA personnel at contractor plants.

 

SUBPART     1842.2             CONTRACT ADMINISTRATION SERVICES

1842.202                                 Assignment of contract administration.

1842.202-70                            Retention of contract administration.

1842.270                                 Contracting officer technical representative (COTR) delegations.

1842.271                                 NASA clause.

 

SUBPART     1842.3             CONTRACT ADMINISTRATION OFFICE FUNCTIONS

1842.302                                 Contract administration functions.

 

SUBPART     1842.5             POSTAWARD ORIENTATION

1842.503                                 Postaward conferences.

 

SUBPART                             1842.7 INDIRECT COST RATES

1842.705                                 Final indirect cost rates.

1842.705-1                              Contracting officer determination procedure.

1842.707                                 Indirect rate ceiling approval procedures.

1842.708                                 Quick-closeout procedure.

1842.708-70                            NASA Quick-closeout procedure.

 

SUBPART     1842.8             DISALLOWANCE OF COSTS

1842.803                                 Disallowing costs after incurrence.

 

SUBPART     1842.12           NOVATION AND CHANGE-OF-NAME AGREEMENTS

1842.1203                               Processing agreements.

1842.1203-70                          DOD processing of novation and change-of-name agreements on

                                                  behalf of NASA.

 

SUBPART     1842.13           SUSPENSION OF WORK, STOP-WORK ORDERS, AND GOVERNMENT DELAY OF WORK

1842.1305                               Contract clauses.

 

SUBPART     1842.15           CONTRACTOR PERFORMANCE INFORMATION

1842.1501                               General.

1842.1502                               Policy.

1842.1503                               Procedures.

 

SUBPART     1842.70           ADDITIONAL NASA CONTRACT CLAUSES

1842.7001                               Observance of legal holidays.

1842.7002                               Travel outside of the United States.

1842.7003                               Emergency medical services and evacuation.

 

SUBPART     1842.71           SUBMISSION OF VOUCHERS

1842.7101                               Submission of vouchers.

 

SUBPART     1842.72           NASA CONTRACTOR FINANCIAL MANAGEMENT REPORTING

1842.7201                               General.

1842.7202                               Contract clause.

 

SUBPART     1842.73           AUDIT TRACKING AND RESOLUTION

1842.7301                               NASA external audit follow-up system.

1842.7302                               Reportable audit disposition documentation.

 

 

PART 1842

CONTRACT ADMINISTRATION AND AUDIT SERVICES

 

      Subpart 1842.1--Contract Audit Services

 

1842.101 Contract audit responsibilities. 

   (a)(i)  The Defense Contract Audit Agency (DCAA) has been designated as the DOD agency responsible for the performance of audit functions for NASA contracts, except those awarded to educational institutions for which other agencies have audit cognizance under OMB Circular No. A-133, those with Canadian contractors, and those for which NASA will perform audits.

       (ii) Cross-servicing arrangements are the responsibility of the Headquarters Office of External Relations (Code ID).  Contracting officers should direct questions to the Headquarters Office of Procurement (Code HK).

 

1842.102 Assignment of contract audit services.

 

1842.102-70 Review of administration and audit services. 

   NASA contracting activities shall assess their delegations to DOD semiannually to determine changes in delegation patterns that could result in significant changes in DOD manpower requirements or have other important impacts on DOD contract administration activities.  Events such as major program cutbacks or expansions, changes in locations of major programs, and sizable new acquisitions should be considered in the assessment.  Contracting activities shall advise the Headquarters Office of Procurement Contract Management Division when an assessment indicates a significant change in required DOD support.

 

1842.170 Assignment of NASA personnel at contractor plants. 

   (a)(1) NASA personnel normally shall not be assigned at or near a contractor's facility to perform any contract administration functions listed in FAR 42.302(a). Before such an assignment is made,



Subpart 1842.7--Indirect Cost Rates

 

1842.705 Final indirect cost rates.

 

1842.705-1 Contracting officer determination procedure.

   (b)     Procedures

       (3)(i) When NASA is not the cognizant Federal agency, NASA should participate with the  cognizant contracting officer (or cognizant Federal agency official) in the final indirect cost rate determination procedure where the issues involved would have a significant financial impact on the agency.  The NASA participant should be a representative from that installation providing the preponderance of NASA funding.  If a determination is made that NASA’s participation is not warranted, that decision must be communicated to the cognizant contracting officer (or cognizant Federal agency official).

            (ii) When NASA is the cognizant Federal agency, settlement of indirect costs should be conducted by the cognizant NASA contracting officer (normally from the installation providing the preponderance of NASA funding).

 

1842.707 Indirect rate ceiling approval procedures.

   (a)  The AA for Procurement is the approval authority for use of an indirect rate ceiling provision in a solicitation or contract.  Requests for approval shall be submitted through the Headquarters Office of Procurement, Program Operations Division.  Such requests shall be constructed in the form of a Determination & Finding (D&F) which shall, at a minimum, contain a copy of the proposed indirect rate ceiling provision, a justification as to why such a provision is necessary, and the associated benefits to the Government.  The Program Operations Division analyst shall coordinate all indirect rate ceiling approval requests with Headquarters Legal, the Cognizant Administrative Contracting Officer, and the cognizant Contract Management Division analyst.

   (b)(1)  Indirect rate ceilings should only be used in those situations described in FAR 42.707(b)(1)(i) and (ii).  On competitive procurements, if the situation cited in FAR 42.707(b)(1)(iii) arises during the cost realism evaluation, use of an indirect rate ceiling provision should be proposed as part of the SEB presentation and the above approval procedures initiated at that time.

   (c)  All indirect rate ceiling provisions must address, at a minimum, the indirect rates being capped; the procedures for possible adjustment of ceiling rates if certain circumstances warrant such adjustment; and the elements identified in FAR 42.707(c).

 

1842.708 Quick-closeout procedure.   

   (a)(2)(ii) The 15 percent parameter does not apply to NASA contracts.  Instead, perform a risk analysis that takes into consideration the contractor systems identified in FAR 42.708(a)(2)(ii), as well as the concerns of the cognizant contract auditor, and any other pertinent information. 

 

1842.708-70 NASA Quick-closeout procedures.

   After a decision is made that the use of quick closeout is appropriate, the contracting officer shall:

   (a) Obtain a written agreement from the contractor to participate in the quick-closeout process under FAR 42.708 for the selected contract(s).

   (b)     Require the contractor to submit a final voucher and a summary of all costs by cost element and fiscal year for the contract(s) in question, as well as a copy of the contractor's final indirect cost rate proposal for each fiscal year quick closeout is involved.

   (c) Notify the cognizant audit activity in writing, identify the contract(s), and request:  (1) the contractor's indirect cost history covering a sufficient number of fiscal years to see the trend of claimed, audit questioned, and disallowed costs; and (2) any other information that could impact the decision to use quick-closeout procedures.  Indirect cost histories should be requested from the contractor only when the cognizant audit activity is unable to provide the information.

   (d)     Review the contract(s) for indirect cost rate ceilings and any other contract limitations, as well as the rate history information.

   (e) Establish final indirect cost rates using one of the following rates:

       (1) The contract's ceiling indirect cost rates, if applicable, and if less than paragraphs (e)(2) through (6) of this section.

       (2) The contractor's claimed actual rates adjusted based on the contractor's indirect cost history, if less than paragraphs (e)(3) through (6) of this section.

       (3) Recommended rates from the cognizant audit agency, the local pricing office, another installation pricing office, or other recognized knowledgeable source.

       (4) The contractor's negotiated billing rates, if less than paragraphs (e)(5) or (6) of this section.

       (5) The previous year's final rates.

       (6) Final rates for another fiscal year closest to the period for which quick-closeout rates are being established.

   (f) If an agreement is reached with the contractor, obtain a release of all claims and other applicable closing documents.

   (g) For those contracts where the indirect cost rate negotiation function was delegated or falls under the cognizance of another agency, send a copy of the agreement to that office.

 

Subpart 1842.8--Disallowance of Costs

 

1842.803 Disallowing costs after incurrence. 

(b)  Auditor receipt of vouchers.

       (1) NASA has designated the contract auditor as the contracting officer's representative for --

            (A)  Reviewing vouchers received directly from contractors;

            (B)  Approving vouchers for provisional payment and sending them to the disbursing office;

            (C)  Reviewing completion/final vouchers and sending them to the designated contracting officer for approval.

            (D)  Authorizing direct submission of interim vouchers for provisional payment to disbursing offices for contractors with approved billing systems.

       (2)(A)  When contract costs are questioned, the auditor shall prepare and send to the cognizant  contracting officer NASA Form 456, Notice of Contract Costs Suspended and/or Disapproved.

            (B)  After coordination with other NASA and federal agency contracting officers administering contracts with the same contractor under which a NASA Form 456 or a DCAA Form 1 has been issued for the same items of cost, the NASA contracting officer shall take one of the following actions:

                   (a) Assign a notice number and sign the NASA Form 456.

                   (b) Issue a new NASA Form 456 suspending the costs rather than disapproving them pending resolution of the issues.

                   (c) Return the unsigned NASA Form 456 to the auditor with a detailed explanation of why the suspension or disapproval is not being signed, and process the contractor's claim for payment.

            (C)  When more than one NASA contract is affected by a notice, the NASA contracting officer with the largest amount of contract dollars affected is responsible for coordination of the NASA Form 456 with the other contracting officers, including those of other federal agencies, listed in the notice.

            (D)  An original and three copies (which includes two acknowledgment copies, one each for return to the contracting officer and the auditor) of the NASA Form 456 shall be sent to the contractor by certified mail, return receipt requested; one copy shall be attached to the Standard Form 1034 and each copy of the Standard Form 1034A on which the deduction for the suspension/disapproval is made.

            (E)(a)  If the amount of the deduction is more than the amount of the public voucher, the installment method of deduction shall be applied to the current and subsequent public vouchers until the amount is fully liquidated.  The deductions on any voucher may not exceed the voucher amount to avoid processing of a voucher in a credit amount.  Public voucher(s) with zero amounts must be forwarded to the fiscal or financial management office for appropriate action.

                   (b) If deductions are in excess of contractor claims, recovery may be made through a direct refund from the contractor, in the form of a check payable to NASA, or by a set-off deduction from the voucher(s) submitted by the contractor under any other contract, unless those contracts contain a "no set-off" provision.  If a set-off is affected, the voucher(s) from which the deduction is made should be annotated to identify the contract and appropriation affected and the applicable NASA Form 456.

 

Subpart 1842.12--Novation and Change-of-Name Agreements

 

1842.1203 Processing agreements. 

   (b)     The installation shall immediately notify the Headquarters Office of Procurement (Code HS) of the request to execute a novation (successor-in-interest) or change-of-name agreement.

   (h)     The contracting officer shall forward one copy of the agreement to Code HS.

 

1842.1203-70 DOD processing of novation and change-of-name agreements on behalf of  NASA. 

   (a) Copies of novation and change-of-name agreements executed by DOD on behalf of NASA are maintained by the Headquarters Office of Procurement (Code HS).

   (b)     Code HS is the Agency point of contact for issues related to proposed novation agreements.  With the concurrence of Code HS, an installation may execute a separate agreement with the contractor.

 

Subpart 1842.13--Suspension of Work, Stop-Work Orders, and Government Delay

of Work

 

1842.1305 Contract clauses.

   (b)     FAR 52.242-15, Stop-Work Order, shall not be used in solicitations or contracts for research performed by educational or other nonprofit institutions.

 

 

Subpart 1842.14--Traffic and Transportation Management

 

1842.1405 Discrepancies incident to shipment of supplies. 

   (a) NASA personnel shall also report discrepancies and adjust claims for loss of and damage to Government property in transit in accordance with NPR 6200.1, NASA Transportation and General Traffic Management.

 

Subpart 1842.15--Contractor Performance Information

 

1842.1501 General.

   Communications with contractors are vital to improved performance and this is NASA’s primary objective in evaluating past performance. Other objectives include providing data for future source selections. While the evaluations must reflect both shortcomings and achievements during performance, they should also elicit from the contractors their views on impediments to improved performance emanating from the Government or other sources.

 

1842.1502 Policy.   

   (a) Within 60 days of every anniversary of the award of a contract having a term exceeding one year, contracting officers must conduct interim evaluations of performance on contracts subject to FAR Subpart 42.15 and this subpart.  Interim evaluations are not required on contracts whose award anniversary is within 3 months of the end of the contract period of performance.  The final evaluation will include an evaluation of the period between the last interim evaluation and the end of the contract period of performance.  Interim performance evaluations are optional for SBIR/STTR Phase II contracts.  A final evaluation summarizing all performance must be conducted on all contracts.

 

1842.1503 Procedures.    

   (a) The contracting officer shall determine who (e.g., the technical office or end users of the products or services) evaluates appropriate portions of the contractor’s performance.  The evaluations are subjective in nature.  Nonetheless, the contracting officer, who has responsibility

for the evaluations, shall ensure that they are reasonable.

   (b)     NASA Form 1680, entitled, "Evaluation of Performance," shall be used to document evaluations.  This provides for a five-tiered rating (using the definitions for award fee evaluation scoring found in 1816.405-275) covering the following attributes: quality, timeliness, price or control of costs (not required for firm-fixed-price contracts or firm-fixed-price contracts with economic price adjustment), and other considerations.  Evaluations used in determining award fee payments satisfy the requirements of this subpart and do not require completion of NASA Form 1680.  In addition, hybrid contracts containing both award fee and non-award fee portions do not require completion of NASA Form 1680.  Contracting Officers shall ensure that the Government discusses all evaluations with contractors and shall record the date and the participants on the evaluation form.  Contracting officers shall sign and date the evaluation after considering any comments received from the contractor within 30 days of the contractor’s receipt of the evaluation.  If a contractor in its timely comments disagrees with an evaluation and requests a review at a level above the contracting officer, it shall be provided within 30 days.  While the FAR forbids use of the evaluations for source selections more than three years after contract completion, they shall nevertheless be retained in the contract file as provided in FAR 4.8, Government Contract Files.

Subpart 1842.70--Additional NASA Contract Clauses

 

1842.700 Observance of legal holidays.      

   (a) The contracting officer shall insert the clause at 1852.242-72, Observance of Legal Holidays, in contracts when work will be performed at a NASA installation.

   (b)     The clause shall be used with its Alternate I in cost-reimbursement contracts when it is desired that contractor employees not have access to the installation during Government holidays.  This alternate may be appropriately modified for fixed-price contracts.

   (c) The clause may be used with its Alternate II in cost-reimbursement contracts when it is desired that administrative leave be granted contractor personnel in special circumstances, such as inclement weather or potentially hazardous conditions.  This alternate may be appropriately modified for fixed-price contracts.

 

1842.7002 Travel outside of the United States.

   The contracting officer shall insert the clause at 1852.242-71, Travel Outside of the United States, in cost-reimbursement solicitations and contracts where a contractor may travel outside of the United States and it is appropriate to require Government approval of the travel.

 

1842.7003 Emergency medical services and evacuation.

   The contracting officer must insert the clause at 1852.242-78, Emergency Medical Services and Evacuation, in all solicitations and contracts when employees of the contractor are required to travel outside the United States or to remote locations in the United States.

 

Subpart 1842.71--Submission of Vouchers

 

1842.7101 Submission of vouchers. 

   (a) Vouchers shall be submitted in accordance with the clause at 1852.216-87, Submission of Vouchers for Payment.

   (b)     The auditor shall retain an unpaid copy of the voucher.

   (c) When a voucher submitted in accordance with the clause at 1852.216-87 contains one or more individual direct freight charges of $100 or more, an additional copy of Standard Form 1034A and Standard Form 1035A shall be submitted and marked for return to the contractor after payment.  This copy shall be transmitted quarterly by the contractor with the freight bills to the General Services Administration. When a voucher is identified as the "Completion Voucher," an additional copy shall be submitted for transmittal to the NASA contracting officer.

 

Subpart 1842.72--NASA Contractor Financial Management Reporting

 

1842.7201 General. 

   (a) Contracting officer responsibilities.

       (1)        Contracting officers must ensure contracts require cost reporting consistent with both policy requirements and project needs.  Contracting Officers shall monitor contractor cost reports on a regular basis to ensure cost data reported is accurate and timely.  Adverse trends or discrepancies discovered in cost reports should be pursued through discussions with financial and project team members.

       (2)        Whenever cost performance threatens contract performance, contracting officers shall require corrective action plans from the contractors.

   (b)     Reporting requirements.

       (1) Use of the NASA Contractor Financial Management Reports, the NASA Form 533 series, is required on cost-type, price redetermination, and fixed-price incentive contracts when the following dollar, period of performance, and scope criteria are met:

 

 

Contract value/scope

Period of Performance

  533M

  533Q

$500K to $999K

1 year or more

Required  

Optional

$1,000,000 and over

Less than 1 year

Required

Optional

$1,000,000 and over

1 year or more

Required  

Required

 

       (2) When it is probable that a contract will ultimately meet the criteria in paragraph (b)(1) of this section through change orders, supplemental agreements, etc., the reporting requirement must be implemented in the contract based on the estimated final contract value at the time of award.

       (3) NF 533Q reporting may be waived by the contracting officer, with the concurrence of the center chief financial officer and cognizant project manager, for support service or task order contracts, when NF 533M reports and other data are sufficient to ensure accurate monthly cost accruals, evaluation of the contractor’s cost performance, and forecasting of resource requirements.

       (4) Where a specific contractual requirement differs from the standard system set forth in NPR 9501.2, NASA Contractor Financial Management Reporting, but is determined to be in the best interests of the Government and does not eliminate any of the data elements required by the standard NF 533 formats, it may be approved by the contracting officer with the concurrence of the center chief financial officer and the project manager.  Such approval shall be documented and retained, with the supporting rationale, in the contract file.

       (5) The contractor's internal automated printout reports may be substituted for the 533 reporting formats only if the substitute reports contain all the data elements that would be provided by the corresponding 533's.  The contracting officer shall coordinate any proposed substitute with the installation financial management office.

   (c) Contract requirements.

       (1) Reporting requirements, including a description of reporting categories, shall be detailed in the procurement request, and reports shall be required by inclusion of the clause prescribed in 1842.7202.  The contract schedule shall include report addressees and numbers of copies.  Reporting categories shall be coordinated with the center financial management office to ensure that data required for agency cost accounting will be provided by the reports.  Reporting dates shall be in accordance with NPR 9501.2, except that earlier submission is encouraged whenever feasible. No due date shall be permitted which is later than the date by which the center financial management office needs the data to enter an accurate monthly cost accrual in the accounting system.

       (2) The contractor shall be required to submit an initial report in the NF 533Q format, time phased for the expected life of the contract, within 30 days after authorization to proceed has been granted.  NF 533M reporting will begin no later than 30 days after incurrence of cost.  NF 533Q reporting begins with the initial report.      

 

1842.7202  Contract clause.

   The contracting officer shall insert the clause at 1852.242-73, NASA Contractor Financial Management Reporting, in solicitations and contracts when any of the NASA Form 533 series of reports is required from the contractor.

 

Subpart 1842.73--Audit Tracking and Resolution

 

1842.7301 NASA external audit follow-up system.

   (a) This section implements OMB Circular No. A-50 and NASA Policy Directive (NPD)  9910.1, “Government Accountability Office/NASA Office of Inspector General Audit Liaison, Resolution, and Followup”, which provides more detailed guidance.  Recommendations from  external audits (OMB Circular No. A-133, Audits of States, Local Governments, and Non-Profit Institutions) shall be resolved by formal review and approval procedures analogous to those at 1815.406-171.

   (b) The external audit followup system tracks all contract and OMB Circular No. A-133 audits where NASA has resolution and disposition authority.  The objective of the tracking system is to ensure that audit recommendations are resolved within 6 months after receipt of the audit report and corrected as expeditiously as possible.

   (c)(1) The identification and tracking of contract audit reports under NASA cognizance are accomplished in cooperation with the DCAA.

       (2) Identification and tracking of OMB Circular No. A-133 audit reports are accomplished in cooperation with the NASA Office of the Inspector General (OIG).

   (d)(1)        All reportable contract audit reports as defined by Chapter 15, Section 6, of the DCAA Contract Audit Manual (CAM) for which NASA has resolution and disposition responsibility shall be entered into NASA’s Corrective Action Tracking System (CATS), with the information updated at least quarterly until the audit recommendations are all resolved and dispositioned (see paragraph (e) (1) of this section).  Reportable audits issued to DCMA on actions for which contract administration has been delegated are not subject to this requirement because DOD is required to track and maintain these audit reports; and

       (2) Only OMB Circular No. A-133 audit reports involving the following shall be reported quarterly to the Headquarters Office of Procurement Analysis Division:

            (i)    A significant management control issue; or

            (ii)   Questioned costs of $10,000 or more due to an audit finding (see Subpart E-Auditor, paragraph 510 of OMB Circular No. A-133).

       (3) NASA contracting officers will maintain a dialogue with DOD Administrative Contracting Officers (ACO) who have been delegated activities on NASA contracts.  A review will be conducted no less frequently than semiannually, and the status and disposition of significant audit findings will be documented in the contract file.  During this review, NASA contracting officers should discuss with the ACO both prime and subcontract audit reports that have been delegated to DOD.  Should these reports contain any findings or recommendations, the NASA contracting officer should obtain their status and document the contract file accordingly.

   (e)(1) The terms “resolution” and “corrective action/disposition” are defined as follows:

            (i)    Resolution - The point at which the IG and Management agree on the action to be taken on audit report findings and recommendations.

            (ii)   Corrective action/disposition - Management action responsive to an agreed upon audit recommendation.

       (2) The resolution and disposition of DCAA audit reports issued to NASA contracting officers are handled as follows:

            (i) Audit findings pertaining to an individual NASA contract are the responsibility of the NASA contracting officer.

            (ii) Audit findings impacting more than one NASA contract are the responsibility of the NASA contracting officer providing the preponderance of funding to the particular contractor for the contractor fiscal year covered by the audit report (lead contracting officer).  The lead contracting officer should furnish a copy of the audit report to all NASA contracting officers with contracts impacted by the audit report.  Those contracting officers should be provided the opportunity to participate in the negotiations or provide input into the negotiation strategy.  At the conclusion of the negotiations, the lead contracting officer is to provide a copy of the negotiation memorandum to the DCAA office that issued the audit report, as well as to the contracting officers for the other impacted NASA contracts.

       (3) The resolution and disposition of OMB Circular No. A-133 audits are handled as follows:

            (i)    Audit findings pertaining to an individual NASA award are the responsibility of the procurement officer for the Center that awarded the contract.

            (ii)   Audit findings having a Governmentwide impact are the responsibility of the cognizant Federal agency responsible for oversight.  For organizations subject to OMB Circular No. A-133, there is either a cognizant agency or an oversight agency.  The cognizant agency is the Federal agency that provides the predominant amount of direct funding to the recipient organization unless OMB makes a specific cognizant agency for audit assignment.  To provide for the continuity of cognizance, the determination of the predominant amount of direct funding will be based on the direct Federal awards expended in the recipient’s fiscal years ending in 1995, 2000, 2005, and every fifth year thereafter.  When there is no direct funding, the Federal agency with the predominant indirect funding is to assume the oversight responsibilities.  In cases where NASA is the cognizant or oversight Federal agency, audit resolution and disposition is the responsibility of the procurement officer for the Center having the largest amount of direct funding, or, if there is no direct funding, the largest amount of indirect funding for the audited

 period.  A copy of the memorandum dispositioning the findings shall be provided by each Center having resolution responsibility for the particular report to the Headquarters OIG office, the Headquarters Office of Procurement Analysis Division, and each Center procurement office that has awards impacted by the dispositioned findings.

 

1842.7302 Reportable audit disposition documentation.

   For each reportable audit provided by DCAA, the contracting officer shall submit disposition documentation to the office that provided the report.