[Federal Register Volume 65, Number 114 (Tuesday, June 13, 2000)]
[Rules and Regulations]
[Pages 37057-37061]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-14752]
=======================================================================
-----------------------------------------------------------------------
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Parts 1807, 1811, 1812, 1815, 1816, 1823, 1842, 1846, and
1852
Risk Management
AGENCY: National Aeronautics and Space Administration (NASA).
ACTION: Interim rule and request for comments.
-----------------------------------------------------------------------
SUMMARY: This interim rule changes the NASA FAR Supplement (NFS) to
emphasize considerations of risk management, including safety, security
(including information technology security), health, export control,
and damage to the environment, within the acquisition process. The
interim rule addresses risk management within the context of
acquisition planning, selecting sources, choosing contract type,
structuring award fee incentives, administering contracts, and
conducting contractor surveillance. Also, this interim rule provides
that contractors not be paid award fee for any evaluation period in
which there is a major breach of safety or security.
DATES: Effective Date: This rule is effective July 13, 2000.
Applicability Date: This rule applies to solicitations issued on or
after July 13, 2000.
Comment Date: Comments should be submitted to NASA at the address
below on or before August 14, 2000.
ADDRESSES: Interested parties should submit written comments to James
H. Dolvin, NASA Headquarters Office of Procurement, Contract Management
Division (Code HK), Washington, DC 20546. Comments may also be
submitted by e-mail to [email protected].
FOR FURTHER INFORMATION CONTACT: James H. Dolvin, (202) 358-1279.
SUPPLEMENTARY INFORMATION:
A. Background
It is critically important for NASA to achieve mission success
without
[[Page 37058]]
compromising safety. However, given that many of NASA's activities
involve advanced research, aeronautics, and space flight, NASA cannot
completely avoid risk. Therefore, risk must be managed, i.e.,
comprehensively identified, analyzed, planned, tracked, controlled,
communicated, and documented. While risk management is not a new
acquisition concept, NASA has initiated a risk-based acquisition
management initiative to re-focus on risk as a core acquisition
concern. That initiative will be implemented by providing training to
NASA and contractor personnel, consultation to NASA projects and
programs, and updated policy and guidance through revisions to several
of NASA's internal processes and guidelines. This interim rule
implements that part of the initiative pertaining directly to the
procurement process. Since NASA's activities often include contractor
efforts, NASA's focus on safety and mission success must be conveyed in
NASA contracts.
A proposed rule was published in the Federal Register at 64 FR
38880-84 on June 20, 1999. Comments were received from the Council of
Defense and Space Industry Associations, the United Space Alliance, and
the Jet Propulsion Laboratory. All comments were considered in the
development of the interim rule. After reviewing the public comments,
revisions were made to sections 1807.105, 1812.301, 1815.203-72,
1815.304.70, 1815.305, 1816.405-274, 1823.7001, 1852.223-73, and
1852.223-76. Proposed section 1852.223-75 was deleted. The most
important of these revisions were (1) changes in requirements for
written acquisition plans, (2) elimination of the requirement for a
separate risk management plan in proposals, (3) changes in award fee
evaluation factors, and (4) revisions to requirements for the Safety
and Health Plan.
B. Regulatory Flexibility Act
NASA certifies that this regulation will not have a significant
economic impact on a substantial number of small business entities
under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) because
this rule simply focuses attention on risk management, an existing
business practice, and does not impose any significant new requirements
which might have an economic impact.
C. Paperwork Reduction Act
The Paperwork Reduction Act does not apply because the changes to
the NFS do not impose recordkeeping or information collection
requirements, or collection of information from offerors, contractors,
or members of the public which require the approval of the Office of
Management and Budget under 41 U.S.C. 3501, et seq.
D. Determination To Issue an Interim Rule
In accordance with 41 U.S.C. 418(d), NASA has determined that
urgent and compelling reasons exist to promulgate this interim rule.
The basis of this determination is that many ongoing NASA activities
involve significant risk factors, and that immediate implementation of
the procedures described in this interim rule is necessary for
identification and management of these risks. Also, the substance of
this material was previously published for public comment in the
Federal Register (64 FR 38880-84) on June 29, 1999. Public comments
received in response to this interim rule will be considered in the
formation of the final rule.
List of Subjects in 48 CFR Parts 1807, 1811, 1812, 1815, 1816,
1823, 1842, 1846, and 1852
Government procurement.
Tom Luedtke,
Associate Administrator for Procurement.
Accordingly, 48 CFR Parts 1807, 1811, 1812, 1815, 1816, 1823, 1842,
1846, and 1852 are amended as follows:
1. The authority citation for 48 CFR Parts 1807, 1811, 1812, 1815,
1816, 1823, 1842, 1846, and 1852 continues to read as follows:
Authority: 42 U.S.C. 2473(c)(1).
PART 1807--ACQUISITION PLANNING
2. Add section 1807.104 to read as follows:
1807.104 General procedures. (NASA supplements paragraph (a)).
(a) The acquisition planning team shall obtain input from the
center offices responsible for matters of safety and mission assurance,
occupational health, environmental protection, information technology,
export control, and security. Their presence on the team shall help to
ensure that all NASA acquisitions are structured in accordance with
NASA safety, occupational health, environmental, export control, and
security policy. As part of this process, the team shall recommend any
appropriate solicitation or contract requirements for implementation of
safety, occupational health, environmental, information technology,
export control, and security concerns (See NPG 8715.3, NASA Safety
Manual; NPG 7120.5, NASA Program and Project Management Processes and
Requirements; NPG 2810.1, Security of Information Technology, and NPG
1620.1, Security Procedures and Guidelines, all available at
www.nodis.hq.nasa.gov).
3. In section 1807.105, add paragraph (a)(7) to read as follows:
1807.105 Contents of written acquisition plans.
* * * * *
(a) * * *
(7) Discuss project/program risks (see NPG 7120.5, NASA Program and
Project Management Processes and Requirements). In addition to
technical, schedule, and cost risks, the discussion shall include such
considerations as: safety and security (including personnel,
information technology, and facilities/property); the need to involve
foreign sources (contractor and/or governmental), and risks of
unauthorized technology transfer (see NPG 2190, NASA Export Control
Program); and resource risk, including the necessary level and
expertise of NASA personnel resources available to manage the project/
program. For each area of risk identified, the discussion shall include
a quantification of the relative magnitude (e.g., high, medium, low)
together with the specific actions taken to structure the acquisition
approach to manage the risks throughout the acquisition process. For
example, this discussion would identify those areas that have safety
risk, discuss how safety is addressed in contract requirements and
evaluated in the source selection, and how it will be managed and
incentivized during contract performance. Decisions to accept,
mitigate, track, and/or research risk factors shall be identified and
documented as part of acquisition planning.
* * * * *
PART 1811--DESCRIBING AGENCY NEEDS
4. Add section 1811.101 to read as follows:
1811.101 Order of precedence for requirements documents. (NASA
supplements paragraph (b))
(b) When establishing product descriptions in either a solicitation
or contract, contracting officers shall include safeguards, as
applicable, to ensure safety, security, and environmental protection.
PART 1812--ACQUISITION OF COMMERCIAL ITEMS
5. In section 1812.301, redesignate paragraph (f)(i)(F) as (G);
redesignate paragraphs (f)(i)(G) through (J) as (f)(i)(J) through (M),
add new paragraphs (f)(i)(F), (H), and (I), and redesignate paragraph
(f)(i)(F) as (G) to read as follows:
[[Page 37059]]
1812.301 Solicitation provisions and contract clauses for the
acquisition of commercial items.
(f)(i) * * *
(F) 1852.223-70, Safety and Health.
* * * * *
(H) 1852.223-73, Safety and Health Plan.
(I) 1852.223-75, Major Breach of Safety and Security.
* * * * *
PART 1815--CONTRACTING BY NEGOTIATION
6. In section 1815.201, amend paragraph (c)(6)(A) by adding the
following sentence immediately before the last sentence to read as
follows:
1815.201 Exchanges with industry before receipt of proposals.
(c)(6)(A) * * * Comments should also be requested on any perceived
safety, occupational health, security (including information technology
security), environmental, export control, and/or other programmatic
risk issues associated with performance of the work. * * *
* * * * *
7. Add section 1815.203-72 to read as follows:
1815.203-72 Risk Management.
In all RFPs for supplies or services for which a technical proposal
is required, proposal instructions shall require offerors to identify
and discuss risk factors and issues throughout the proposal where they
are relevant, and describe their approach to managing these risks.
8. In section 1815.304-70, paragraphs (b)(4) and (d)(4) are added
to read as follows:
1815.304-70 NASA evaluation factors.
* * * * *
(b) * * *
(4) If the solicitation requires the submission of a Safety and
Health Plan (see 1823.7001(c) and NPG 8715.3, NASA Safety Manual,
Appendix H), safety and health must be a consideration in the
evaluation. For acquisitions valued at $10 million or more, or $25
million or more for commercial items, then the Mission Suitability
factor, if used, shall include a subfactor for safety and health.
Otherwise, use of that subfactor is optional.
* * * * *
(d) * * *
(4) The contracting officer shall evaluate the offeror's past
performance in occupational health, security, safety, and mission
success (e.g., mishap rates and problems in delivered hardware and
software that resulted in mishaps or failures) when these areas are
germane to the requirement.
9. In section 1815.305, revise paragraph (a)(vi) to read as
follows:
1815.305 Proposal evaluation.
(a) * * *
(vi) Any programmatic risk to mission success, e.g., technical,
schedule, cost, safety, occupational health, security, export control,
or environmental. Risks may result from the offeror's technical
approach, manufacturing plan, selection of materials, processes,
equipment, or as a result of the cost, schedule, and performance
impacts associated with its approach. Risk evaluations must consider
the probability of the risk occurring, the impact and severity of the
risk, the timeframe when the risk should be addressed, and the
alternatives available to meet the requirements. Risk assessments shall
be considered in determining Mission Suitability strengths, weaknesses,
deficiencies, and numerical or adjectival ratings. Identified risks and
the potential for cost impact shall be considered in the cost or price
evaluation.
* * * * *
10. In section 1815.406-170, delete the ``and'' at the end of
paragraph (c)(5); remove the period at the end of paragraph (c)(6) and
add ``; and'' in its place; and add paragraph (c)(7) to read as
follows:
1815.406-170 Content of the prenegotiation position memorandum.
* * * * *
(c) * * *
(7) Any risk management issues, e.g., mission success, safety,
occupational health, information technology, export control, security,
and environmental risks.
* * * * *
PART 1816--TYPES OF CONTRACTS
11. In section 1816.405-274, paragraphs (c) through (h) are
redesignated as paragraphs (d) through (i), and a new paragraph (c) is
added to read as follows:
1816.405-274 Award fee evaluation factors.
* * * * *
(c)(1) The technical factor, if used, must include consideration of
risk management (including mission success, safety, security, health,
export control, and damage to the environment, as appropriate) unless
waived at a level above the contracting officer, with the concurrence
of the project manager. The rationale for any waiver shall be
documented in the contract file. When safety, export control, or
security are considered under the technical factor, the award fee plan
shall allow the following fee determinations, regardless of contractor
performance in other evaluation factors, when there is a major breach
of safety or security.
(i) For evaluation of service contracts under 1816.405-273(a), an
overall fee determination of zero for any evaluation period in which
there is a major breach of safety or security.
(ii) For evaluation of end item contracts under 1816.405-273(b), an
overall fee determination of zero for any interim evaluation period in
which there is a major breach of safety or security. To ensure that the
final award fee evaluation at contract completion reflects any major
breach of safety or security, in an interim period, the overall award
fee pool shall be reduced by the amount of the fee available for the
period in which the major breach occurred if a zero fee determination
was made because of a major breach of safety or security.
(2) A major breach of safety consists of an accident, incident, or
exposure resulting in a fatality or mission failure; or in damage to
equipment or property equal to or greater than $1 million; or in any
``willful'' or ``repeat'' violation cited by the Occupational Health
and Safety Administration (OSHA) or by a state agency operating under
an OSHA approved plan.
(3) Security is the condition of safeguarding against espionage,
sabotage, crime (including computer crime), or attack. A major breach
of security may arise from any of the following: compromise of
classified information; illegal technology transfer; workplace violence
resulting in criminal conviction; sabotage; compromise or denial of
information technology services; damage or loss greater than $250,000
to the Government; or theft.
* * * * *
PART 1823--ENVIRONMENT, CONSERVATION, OCCUPATIONAL SAFETY, AND
DRUG-FREE WORKPLACE
12. Revise section 1823.7001 to read as follows:
1823.7001 NASA solicitation provisions and contract clauses.
(a) Except as provided in paragraph (b) of this section, the clause
at 1852.223-70, Safety and Health, shall be included in all
solicitations and contracts for--
[[Page 37060]]
(1) Negotiated acquisitions of $1,000,000 or more;
(2) Construction, repair, or alteration in excess of the simplified
acquisition threshold;
(3) Acquisitions having, within their total requirement,
construction, repair, or alteration tasks in excess of the simplified
acquisition threshold; and
(4) Acquisitions regardless of dollar amount when--
(i) Any deliverable contract end item is of a hazardous nature; or
(ii) It can reasonably be expected that hazards will be generated
and controlled within the operational environment during the life of
the contract and the contracting officer determines that they warrant
inclusion of the clause.
(b) The clause prescribed in paragraph (a) of this section may be
excluded--
(1) From any contract subject to the Walsh-Healey Public Contracts
Act (see FAR subpart 22.6) or the Service Contract Act of 1965 (see FAR
Subpart 22.10) in which the application of either act and its
implementing regulations constitute adequate safety and occupational
health protection; or
(2) When the contracting officer, with the concurrence of the
installation official(s) responsible for matters of safety and
occupational health, makes a written determination that the clause is
not necessary under the circumstances of the acquisition.
(c) The contracting officer shall insert the provision at 1852.223-
73, Safety and Health Plan, in solicitations containing the clause at
1852.223-70. This clause may be modified to identify specific
information that is to be included in the plan. After receiving the
concurrence of the center safety and occupational health official(s),
the contracting officer shall include the plan in any resulting
contract.
(d) The contracting officer shall insert the clause at 1852.223-75,
Major Breach of Safety or Security, in all solicitations and contracts
with estimated values of $500,000 or more, unless waived at a level
above the contracting officer with the concurrence of the project
manager and the installation official(s) responsible for matters of
security, export control, safety, and occupational health. For other
contracts, use of the clause is optional.
PART 1842--CONTRACT ADMINISTRATION AND AUDIT SERVICES
13. In section 1842.503, revise paragraph (1)(iv) to read as
follows:
1842.503 Postaward conferences.
(1) * * *
(iv) Complex contract management issues are expected, particularly
risk management areas identified during program and acquisition
planning, e.g., significant or unusual mission success, technical,
cost, schedule, safety, security, occupational health, environmental
protection, and export control risks.
* * * * *
PART 1846--QUALITY ASSURANCE
14. Add section 1846.000 to read as follows:
1846.000 Scope of part.
The Government has a duty to assure that appropriated funds are
spent wisely. That duty is fulfilled in part through surveillance.
Surveillance may be conducted through ``insight'' (i.e., monitoring of
selected metrics and/or milestones) or ``oversight'' (i.e., Government
review and concurrence with contractor decisions). The decision to use
insight or oversight is based on an assessment of the risk inherent in
the activity being surveilled. Surveillance must be conducted whether
or not the contract effort has been structured as performance-based.
15. Add section 1846.401 to read as follows:
1846.401 General. (NASA supplements paragraph (a))
(a) The quality assurance surveillance plan (QASP) which the
project office prepares in conjunction with the statement of work is
preliminary. It reflects the Government's surveillance approach
relative to the perceived programmatic risk, and is written at a
general rather than specific level because the risks will not be
completely identified at that time. After contract award, contracting
officers shall ensure that the QASP is revised to reflect the risks
associated with the successful proposal. This final QASP shall not be
included in the contract, but should be periodically reviewed to ensure
its currency.
PART 1852--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
16. The clause in section 1852.223-70 is revised to read as
follows:
1852.223-70 Safety and Health.
* * * * *
Safety and Health (July 2000)
(a) The Contractor shall take all reasonable safety and
occupational health measures in performing this contract. The
Contractor shall comply with all Federal, State, and local laws
applicable to safety and occupational health and with the safety and
occupational health standards, specifications, reporting
requirements, and any other relevant requirements of this contract.
(b) The Contractor shall take, or cause to be taken, any other
safety, and occupational health measures the Contracting Officer may
reasonably direct. To the extent that the Contractor may be entitled
to an equitable adjustment for those measures under the terms and
conditions of this contract, the equitable adjustment shall be
determined pursuant to the procedures of the changes clause of this
contract; provided, that no adjustment shall be made under this
Safety and Health clause for any change for which an equitable
adjustment is expressly provided under any other clause of the
contract.
(c) The Contractor shall immediately notify and promptly report
to the Contracting Officer or a designee any accident, incident, or
exposure resulting in fatality, lost-time occupational injury,
occupational disease, contamination of property beyond any stated
acceptable limits set forth in the contract Schedule; or property
loss of $25,000 or more, or Close Call (a situation or occurrence
with no injury, no damage, or only minor damage (less than $1,000)
but possesses the potential to cause any category of mishap, or any
injury, damage, or negative mission impact) that may be of immediate
interest to NASA, arising out of work performed under this contract.
The Contractor is not required to include in any report an
expression of opinion as to the fault or negligence of any employee.
In addition, service contractors (excluding construction contracts)
shall provide quarterly reports specifying lost-time frequency rate,
number of lost-time injuries, exposure, and accident/incident dollar
losses as specified in the contract Schedule.
(d) The Contractor shall investigate all work-related incidents,
accidents, and Close Calls, to the extent necessary to determine
their causes and furnish the Contracting Officer a report, in such
form as the Contracting Officer may require, of the investigative
findings and proposed or completed corrective actions.
(e)(1) The Contracting Officer may notify the Contractor in
writing of any noncompliance with this clause and specify corrective
actions to be taken. The Contractor shall promptly take and report
any necessary corrective action.
(2) If the Contractor fails or refuses to institute prompt
corrective action in accordance with subparagraph (e)(1) of this
clause, the Contracting Officer may invoke the stop-work order
clause in this contract or any other remedy available to the
Government in the event of such failure or refusal.
(f) The Contractor (or subcontractor or supplier) shall insert
the substance of this clause, including this paragraph (f) and any
applicable Schedule provisions, with appropriate changes of
designations of the parties, in subcontracts of every tier that--
(1) Amount to $1,000,000 or more (unless the Contracting Officer
makes a written determination, after consultation with installation
safety and health representatives, that this is not required);
[[Page 37061]]
(2) Require construction, repair, or alteration in excess of
$25,000; or
(3) Regardless of dollar amount, involve the use of hazardous
materials or operations.
(g) Authorized Government representatives of the Contracting
Officer shall have access to and the right to examine the sites or
areas where work under this contract is being performed in order to
determine the adequacy of the Contractor's safety and occupational
health measures under this clause.
(h) The contractor shall continually update the safety and
health plan when necessary. In particular, the Contractor shall
furnish a list of all hazardous operations to be performed, and a
list of other major or key operations required or planned in the
performance of the contract, even though not deemed hazardous by the
Contractor. NASA and the Contractor shall jointly decide which
operations are to be considered hazardous, with NASA as the final
authority. Before hazardous operations commence, the Contractor
shall submit for NASA concurrence--
(1) Written hazardous operating procedures for all hazardous
operations; and/or
(2) Qualification standards for personnel involved in hazardous
operations.
(End of clause)
17. In section 1852.223-73, remove Alternate I and revise the
clause to read as follows:
1852.223-73 Safety and health plan.
* * * * *
Safety and Health Plan (July 2000)
The offeror shall submit a detailed safety and occupational
health plan as part of its proposal (see NPG 8715.3, NASA Safety
Manual, Appendix H). The plan must include a detailed discussion of
the policies, procedures, and techniques that will be used to ensure
the safety and occupational health of contractor employees and to
ensure the safety of all working conditions throughout the
performance of the contract. The plan must similarly address safety
and occupational health for subcontractor employees for any proposed
subcontract whose value is expected to exceed $500,000, including
commercial services and services provided in support of a commercial
item. Also, when applicable, the plan must address the policies,
procedures, and techniques that will be used to ensure the safety
and occupational health of NASA employees and the public. This plan,
as approved by the Contracting Officer, will be included in any
resulting contract.
(End of provision)
18. Add section 1852.223-75 to read as follows:
1852.223-75 Major breach of safety or security.
As prescribed in 1823.7001(d), insert the following clause:
Major Breach of Safety or Security (July 2000)
(a) Safety is the freedom from those conditions that can cause
death, injury, occupational illness, damage to or loss of equipment
or property, or damage to the environment. Safety is essential to
NASA and is a material part of this contract. A major breach of
safety may constitute a breach of contract that entitles the
Government to exercise any of its rights and remedies applicable to
material parts of this contract, including termination for default.
A major breach of safety must be related directly to the work on the
contract. A major breach of safety is an act or omission of the
contractor that consists of an accident, incident, or exposure
resulting in a fatality; or in damage to equipment or property equal
to or greater than $1 million; or in any ``willful'' or ``repeat''
violation cited by the Occupational Health and Safety Administration
(OSHA) or by a state agency operating under an OSHA approved plan.
(b) Security is the condition of safeguarding against espionage,
sabotage, crime (including computer crime), or attack. A major
breach of security may constitute a breach of contract that entitles
the Government to exercise any of its rights and remedies applicable
to material parts of this contract, including termination for
default. A major breach of security may occur on or off Government
installations, but must be related directly to the work on the
contract. A major breach of security may arise from any of the
following: compromise of classified information; illegal technology
transfer; workplace violence resulting in criminal conviction;
sabotage; compromise or denial of information technology services;
damage or loss greater than $250,000 to the Government; or theft.
(c) In the event of a major breach of safety or security, the
Contractor shall report the breach to the Contracting Officer. If
directed by the Contracting Officer, the Contractor shall conduct
its own investigation and report the results to the Government. The
Contractor shall cooperate with the Government investigation, if
conducted.
(End of clause)
[FR Doc. 00-14752 Filed 6-12-00; 8:45 am]
BILLING CODE 7501-01-P