DATE: November 2, 2000

FROM: Barry McVay, CPCM

SUBJECT: National Aeronautics and Space Administration (NASA); Procurement Information Circular (PIC) 00-23, Contractor Insurance/Pension Reviews (CIPRs)

SOURCE: PIC 00-23, October 31, 2000


ACTION: Notices

SYNOPSIS: PIC 00-23 provides guidance on the CIPR process to NASA contracting officers.

EDITOR'S NOTE: Department of Defense (DOD) Federal Acquisition Regulation (FAR) Supplement (DFARS) Subpart 242.73, Contractor Insurance/Pension Review, addresses the requirements for conducting CIPRs.

EFFECTIVE DATE: PIC 00-23 is effective October 31, 2000, and will remain in effect until cancelled or superseded.

FOR FURTHER INFORMATION CONTACT: Joe Le Cren, Code HK, 202-358-0444, e-mail: jlecren@hq.nasa.gov.

SUPPLEMENTAL INFORMATION: A CIPR is an in-depth evaluation of a contractor's insurance program, pension plans, other deferred compensation plans, and the related policies, procedures, practices, and costs to determine whether they are in compliance with the FAR. FAR 42.302, Contract Administration Functions, states that "the contracting officer normally delegates...to a CAO [contract administration office]...review (of) the contractor's compensation structure (and) review (of) the contractor's insurance plans..."

The CAO for most NASA contractors is the Defense Contract Management Agency (DCMA), which uses administrative contracting officers (ACOs). DFARS 242.7301, General, states that "the ACO is responsible for determining the allowability of insurance and pension costs for government contracts. DCMA insurance/pension specialists and Defense Contract Audit Agency (DCAA) auditors assist ACOs in making these determinations by conducting CIPRs."

DFARS 242.7302, Requirements, states that "a CIPR shall be conducted only when a contractor has $40 million of qualifying sales to the government during the contractor's preceding fiscal year, and the ACO, with the advice from DCMA insurance/pension specialists and DCAA auditors, determines a CIPR is needed based on a risk assessment of the contractor's past experience and current vulnerability." DFARS 242.7302 goes on to define "qualifying sales" as "sales for which cost or pricing data were required...or contracts priced on other than a firm-fixed-price or fixed-price with economic price adjustment basis. Sales include prime contracts, subcontracts, and modifications to such contracts and subcontracts."

Even though a contractor may not meet these guidelines, a special CIPR may be conducted if any of the following circumstances exist "but only if the circumstance(s) may result in a material impact on Government contract costs:"

            "1. Information reveals a deficiency in the contractor's insurance/pension program;
      "2. The contractor proposes or implements changes in its insurance, pension, or deferred compensation plans;
      "3. The contractor is involved in a merger, acquisition, or divestiture; or
      "4. The Government needs to follow up on contractor implementation of prior CIPR recommendations."

PIC 00-23 provides the following guidance to NASA contracting officers:

            "CIPRs are usually self-initiated by the ACO; however, if NASA or any other government agency believes that a review should be conducted, a recommendation to that effect should be provided to the ACO. If the ACO concurs, the review may be conducted as a special CIPR or as part of an already scheduled CIPR.

      "NASA contracting officers with major contracts should request that ACOs for those contractors provide them with a copy of any CIPR reports. In cases where issues are found that could have a significant financial impact on the agency, NASA should provide input to the ACO to assist in the resolution of the issues. The NASA input should be provided by the installation providing the preponderance of the NASA funding. This may entail that installation discussing the issues with contracting officers from other NASA installations providing significant contract funding to the particular contractor. The extent of NASA participation and the form of that participation should be dependent on the particular circumstances."

FOR FURTHER INFORMATION CONTACT: Barry McVay at 703-451-5953 or by e-mail to BarryMcVay@FedGovContracts.com.

Copyright 2000 by Panoptic Enterprises. All Rights Reserved.

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