Procurement Notice 89-93 NASA logo

89-93

Procurement Notice


(May 5, 1997 )

DELETE CLASS DEVIATION

PURPOSE: To delete the class deviation from the cost principle at 1831.205-18 on independent research and development (IR&D).

BACKGROUND: NASA published a class deviation as a final rule in the Federal Register (59 FR 46359-46360) September 8, 1994. The class deviation eliminated the provision at FAR 31.205-18(e) against the treatment of contractor IR&D contributions under NASA cooperative arrangements as allowable indirect costs. A FAR case was initiated to revise the IR&D cost principle to remove that provision at 31.205-18(e). A final FAR rule was published in the Federal Register (62 FR 12704-12705) March 17, 1997, making that revision. The publication of the revised FAR cost principle eliminates the need for the NASA class deviation. The revised FAR cost principle is effective May 16, 1997.

REGULATION: Subpart 1831.2 is revised as set forth in the enclosed replacement pages.

REPLACEMENT PAGES: You may use the enclosed pages to replace TOC 31:1, 31:1, and 31:2.

REGULATORY COMPLIANCE: This PN was published as a final rule in the Federal Register (62 FR 24345, May 5, 1997).

EFFECTIVE DATE: This PN is effective May 16, 1997, and shall remain in effect until canceled or superseded.

HEADQUARTERS CONTACT: Joe Le Cren, Code HK, 202-358-0444.

Laura Layton
Director, Contract Management
Division

Enclosures

DISTRIBUTION:
NFSD List


PART 1831

CONTRACT COST PRINCIPLES AND PROCEDURES

TABLE OF CONTENTS

SUBPART 1831.2 CONTRACTS WITH COMMERCIAL ORGANIZATIONS

1831.205 Selected costs.

1831.205-6 Compensation for personal services.

1831.205-670 Evaluation of contractor and subcontractor compensation for service contracts.

1831.205-671 Solicitation provision.

1831.205-32 Precontract costs.

1831.205-70 Contract clause.


PART 1831

CONTRACT COST PRINCIPLES AND PROCEDURES

Subpart 1831.2--Contracts with Commercial Organizations

1831.205 Selected costs.

1831.205-6 Compensation for personal services.

1831.205-670 Evaluation of contractor and subcontractor compensation for service contracts.

(a) The contracting officer shall evaluate the reasonableness of compensation for service contracts:

(1) Prior to the award of a cost reimbursement or non-competitive fixed-price type contract which has a total potential value in excess of $500,000, and

(2) Periodically after award for cost reimbursement contracts, but at least every three years.

(b) The contracting officer shall ensure the reasonableness of compensation is evaluated for cost reimbursement or non-competitive fixed-price type service subcontracts under a prime contract meeting the criteria in paragraph (a)(1) of this section where:

(1) The subcontract has a total potential value in excess of $500,000; and

(2) The cumulative value of all of a subcontractor's service subcontracts under the prime contract is in excess of 10 percent of the prime contract's total potential value.

(c)(1) Offerors shall be required to submit as part of their proposals a compensation plan addressing all proposed labor categories. Offerors also shall demonstrate in writing that their proposed compensation is reasonable.

(2) Subcontractors meeting the criteria in paragraph (b) of this section shall be required to comply with paragraph (c)(1).

(d) The contracting officer's preaward evaluation of each offeror's and their subcontractors' compensation should be done as part of, or in addition to DCAA audits, price analyses, or any other means deemed to be necessary.

(e) The results of the contracting officer's evaluation, including any excessive compensation found and its planned resolution, shall be addressed in the prenegotiation position memorandum, with the final resolution discussed in the price negotiation memorandum.

(f) The contracting officer shall ensure that the reasonableness of compensation for cost reimbursement subcontracts meeting the criteria in paragraphs (b)(1) and (2) of this section is periodically reviewed after award, but at least every three years.

(g) The results of the periodic evaluations of contractor and subcontractor compensation after contract award shall be documented in the contract file.

1831.205-671 Solicitation provision.

The contracting officer shall insert a provision substantially the same as the provision at 1852.231-71, Determination of Compensation, in solicitations for services which contemplate the award of a cost reimbursement or non-competitive fixed-price type service contract having a total potential value in excess of $500,000.

1831.205-32 Precontract costs.

(1) Precontract costs are applicable only to sole source awards, except those resulting in firm-fixed price or fixed-price with economic price adjustment contracts.

(2) The procurement officer is the approval authority for the use of precontract costs. Authorization shall be in writing and shall address the following:

(i) the necessity for the contractor to initiate work prior to contract award;

(ii) the start date of such contractor effort;

(iii) the total estimated time of the advanced effort; and

(iv) the cost limitation.

(3) Authorization to incur precontract costs shall be provided to the contractor in writing and shall include the following:

(i) the start date for incurrence of such costs;

(ii) the limitation on the total amount of precontract costs which may be incurred;

(iii) a statement that the costs are allowable only to the extent they would have been if incurred after formal contract award; and

(iv) a statement that the Government is under no obligation to reimburse the contractor for any costs unless a contract is awarded.

1831.205-70 Contract clause.

The contracting officer shall insert the clause at 1852.231-70, Precontract Costs, in contracts for which specific coverage of precontract costs is authorized under 1831.205-32.