against the Government involving the contracts in question, other than those stated in response to subparagraph (3) of this paragraph;

(5) An estimate of the contractor's total profit or loss under the contracts involved if enabled to complete at the final contract price (see subparagraph (3) of this paragraph) broken down between profit or loss to date and run-out profit or loss;

(6) An estimate of the total profits from other Government business and all other sources during the period from the date of the first contract involved to the estimated date of completion of all the contracts involved;

(7) A statement of the amount of any tax refunds and an estimate of those anticipated during or for the period from the date of the first contract involved through the estimated completion date of all the contracts involved;

(8) A statement in detail as to efforts the contractor has made to obtain funds from commercial sources to enable him to complete performance of the contracts involved;

(9) A statement of the minimum amount necessary as an amendment without consideration to enable the contractor to complete performance of the contracts involved, and the detailed basis for that amount;

(10) An estimate of the time required to complete each contract if the request is granted;

(11) A statement of the factors which have caused the loss under the contracts involved;

(12) A statement as to the course of events anticipated if the request is denied;

(13) Balance sheets, preferably certified by a certified public accountant, as of the end of the contractor's fiscal year first preceding the date of the first contract, as of the end of each subsequent fiscal year, as of the date of the request, and projected as of the date of completion of all the contracts involved, assuming the contractor is enabled to complete the contracts at the final prices estimated pursuant to subparagraph (3) of this paragraph, together with income statements for annual periods subsequent to the date of the first balance sheet. Balance sheets and income statements should be both consolidated, and by affiliates, and should show all transactions between the contractor and his affiliates, stockholders, and partners including

loans to the contractor guaranteed by any stockholder or partner; and

(14) A list of all salaries, bonuses, and all other forms of compensation of the principal officers or partners and of all dividends and other withdrawals, and all payments to stockholders in any form since the date of the first contract involved.

(c) Amendments without consideration under § 18-17.103-2(b). In addition to the facts and evidence enumerated in paragraph (a) above, where a request involves possible amendment without consideration because of Government action, and "essentiality” is not a factor, the contractor may be asked to furnish:

(1) A detailed statement of the precise Government action which the contractor considers caused a loss under the contract, with evidence to support each essential fact;

(2) A statement and evidence of the contractor's original breakdown of estimated costs, including contingency allowances and profit;

(3) The estimated total loss suffered under the contract, with detailed supporting analysis; and

(4) The estimated loss resulting from the Government action, with detailed supporting analysis.

(d) Correction of mistakes under § 1817.103-3. In addition to the facts and evidence enumerated in paragraph (a) of this section, where a request involves possible correction of a mistake, the contractor may be asked to furnish:

(1) A statement and evidence of the precise mistake or error that was made, the ambiguity that exists, or the misunderstanding that arose, showing of what it consisted and how it occurred, and the intention of the parties;

(2) A statement explaining when the mistake was discovered, when notice of mistake was given to the contracting officer, and whether given before completion of work under, or the effective date of termination of, the contract;

(3) An estimate of loss or profit under the contract with detailed supporting analysis; and

(4) An estimate of the increase in cost to the Government resulting from the adjustment requested, with detailed supporting analysis.

(e) Formalization of informal commitments under § 18-17.103-4. In addition to the facts and evidence enumerated in paragraph (a) of this section, where a request involves possible for

malization of an informal commitment, the contractor may be asked to furnish:

(1) Copies of any written instructions or assurances, or a statement under oath of any oral instructions or assurances made to the contractor, with identification of the Government officer or official making such statement;

(2) A statement as to when the property or services were furnished or arranged to be furnished, and to whom;

(3) Evidence that the contractor relied upon the instructions or assurances, with a full description of the circumstances which led him so to rely, and that the contractor intended, at the time of performing the work, to be compensated directly for it by the Government and did not anticipate recovery of the costs in some other way;

(4) A cost breakdown supporting the amount claimed as a fair compensation for the work performed; and

(5) A statement and evidence of why it was impracticable to provide for the work performed in an appropriate contractual instrument.

Upon receipt of a contractor's request for an extraordinary contractual adjustment, the cognizant contracting offcer shall be responsible for making a thorough investigation of all facts and issues relevant to the request. Facts and evidence shall be obtained from contractor and Government personnel, including signed statements of material facts within the knowledge of individuals where documentary evidence is lacking, and audits where considered necessary to establish financial or cost facts. The investigation shall establish the facts essential to meeting the standards required for a decision on the request. § 18-17.106-2 Submission of request to the Contract Adjustment Board.

(a) Statements and information to board. (1) After completing the investigation of the facts and issues relevant to the contractor's request, the cognizant contracting officer shall forward the request to the Chairman, Contract Adjustment Board, NASA Headquarters, and shall state the following in his forwarding letter:

(i) The nature of the case; and

(ii) The disposition recommended for the request, and, if contractual action is

recommended, the opinion of the contracting officer that such action will facilitate the national defense.

(2) The forwarding letter shall enclose the contractor's request, and all material submitted by the contractor in support of such request, together with such additional material as the contracting officer has obtained from Government sources or personnel in the course of his investigation of the facts and issues relevant to the request. The contracting officer's forwarding letter and all enclosures shall be submitted in duplicate. Any classified information included in the material forwarded shall be identified as such.

(b) Amendments without consideration under § 18-17.103-2(a). Where an amendment without consideration under the standards of § 18-17.103-2(a) is recommended by the cognizant contracting officer, the forwarding letter shall include, in addition to the statements and information described in paragraph (a) (1) and (2) of this section, a statement of the contracting officer's findings as to:

(1) The contractor's performance record, including the quality of product, rate of production, and promptness of deliveries;

(2) The importance to the Government of the performance of the contract by the contractor and the importance of the contractor to the national defense;

(3) The forecast of future contracts with the contractor; and

(4) Other available sources of supply for the supplies or services covered by the contract, and the time and cost of having contract performance completed by such other sources.

(c) Formalization of informal commitments under § 18-17.103-4. Where the formalization of an informal commitment under the standards of § 18-17.103-4 is recommended by the cognizant contracting officer, the forwarding letter shall include, in addition to the statements and information described in paragraph (a) (1) and (2) of this section, a statement that the contracting officer has determined that at the time the informal commitments was made, it was impracticable to use normal procurement procedures.

§ 18-17.106-3 Action by Contract Adjustment Board.

(a) Investigation: Upon receipt of a request which is forwarded by the cognizant contracting officer, the Board, acting through its Counsel, may make such

further investigation of the facts and issues involved in the request, and obtain such additional facts and evidence relating to the request, either from the contractor or the contracting officer, or others, as is necessary to make a determination as to the contractor's entitlement to the relief requested, or to other equitable relief.

(b) Decision: The Board, acting in accordance with its own procedures, will render its decision on a request as expeditiously as practicable. A Memorandum of Decision disposing of the case shall be prepared for the signature of the Chairman of the Board, and shall be dated and contain the following information.

(1) The name and address of the contractor, the contract identification, and the nature of the request;

(2) The decision reached and the actual cost or estimated potential cost, if any, of the decision;

(3) A concise description of the property or services involved;

(4) A statement of the circumstances justifying the decision; and

(5) If some adjustment action is approved, a statement in substantially the following form: "The Board finds that the action authorized herein will facilitate the national defense."

(c) The Memorandum of Decision shall omit any of the foregoing information classified "Confidential" or higher. § 18-17.107 Implementation of Board's

decision.

(a) Copies of the Board's decision will be transmitted to the cognizant contracting officer, who will take such action as is authorized by the decision. Where the Board's decision is to reject the contractor's request for relief, the cognizant contracting officer will advise the contractor of such decision.

(b) Except as provided in paragraph (c) of this section, immediately upon execution of a contract or contract amendment which implements the decision of the Board, the contracting officer shall forward two copies of the contractual document to the Chairman, Contract Adjustment Board, marked for the attention of the Counsel to the Board, for retention with the Board's permanent files.

(c) Contracts or contract amendments for which approval of NASA Headquarters is otherwise required under the provisions of this chapter shall be forwarded

97-030-73-50

for such approval. After approval has been received, the provisions of paragraph (b) of this section will be complied with.

§ 18-17.108 Contractual requirements.

Every contract entered into or amended or modified pursuant to this part shall contain:

(a) A citation of the Act and Executive order;

(b) A brief statement of the circumstances justifying the action;

(c) A recital of the finding that the action will facilitate the national defense;

(d) The contract clause entitled "Covenant Against Contingent Fees" as set forth in § 18-1.503;

(e) The contract clause entitled "Examination of Records" as set forth in 818-7.104-15.

(f) The contract clause entitled "Equal Opportunity" as set forth in § 1812.804, whenever required under Subpart 18-128;

(g) The contract clause entitled "Assignment of Claims" as set forth in § 18-7.103-8;

(h) If otherwise applicable, the contract clauses entitled "Walsh-Healey Public Contracts Act," "Davis-Bacon Act," "Copeland ('Anti-Kickback') ActNonrebate of Wages," and "Contract Work Hours Standards Act-Overtime Compensation" as set forth respectively in §§ 18-12.605 and 18-12.403; and

(i) Any other clauses set forth in this chapter which are appropriate to the particular procurement.

[37 FR 14976, July 26, 1972]

§ 18-17.109 Records and reports.

(a) The following documents shall be maintained in the permanent files of the Board:

(1) The original copy of the Memorandum of Decision; and

(2) Copies of the contractual document implementing the Board's decision.

(b) The Board shall prepare reports for submission to Congress in accordance with the Act.

§ 18-17.110 Interdepartmental coordi nation.

(a) General. Where a case involves matters of interest to more than one Department or agency, the Board may take such joint action as may be proper under the circumstances, including holding joint meetings or hearings. Liaison

with the Military Departments and other Departments and agencies of the Government in connection with all such cases shall be the responsibility of the Board.

(b) Amendments under § 18-17.103-2 (a). Requests for amendments without consideration under § 18-17.103-2(a) where "essentiality" is an issue, involving another Department or agency, shall not be finally determined by NASA until advice on the "essentiality" issue is requested and received from such other Department or agency. When such advice is received, the responsibility for taking the appropriate action, if any, shall be with NASA.

(c) Funds of other departments or agencies. Requests for adjustment within any category, where the funds of other than NASA may be required, shall not be approved by NASA until advice is requested and received from the other department or agency involved that additional funds will be made available. The request for such advice shall disclose the following data:

(1) Contractor's name;
(2) Contract number;

(3) Amount of proposed relief;

(4) Brief description of the procurement; and

(5) Account classification-fund citation.

(a) This Part 18-23 sets forth policies and procedures for the evaluation, review, and consent to or approval of contractors' procurement systems and proposed subcontracts. These techniques are required only where the work is complex, the dollar value is substantial, and there is not adequate price competition. Reliance upon a contractor's approved procurement system will usually obviate the need for reviewing and consenting to individual subcontracts.

(b) Although there is a relationship among the review and approval of procurement systems, consent to subcontracts, and the evaluation of and agreement upon contractors' proposed make-or-buy programs (Subpart 183.9), each is a separate and distinct action, and the factors to be considered in each vary.

Subpart 18-23.1-Review of Contractors' Procurement Systems

§ 18-23.100 Scope of subpart.

(a) This subpart sets forth the requirements for conducting a contractor

procurement system review (CPSR). The objectives of the review are to provide:

(1) A means for evaluating the efficiency and effectiveness with which the contractor spends Government funds;

(2) The basis for the contracting officer to grant, withhold, or withdraw approval of the contractor's procurement system;

(3) Reliable current information to the contracting officer on the contractor's procurement system for use in source selection, determining the appropriate type of contract, and establishing profit and fee objectives;

(4) An independent review of the contractor's procurement system to optimize its effectiveness in complying with Government policy, and

(5) Current procurement system information for appropriate NASA activities in areas of Government interest.

(b) CPSR's will normally be conducted by the Department of Defense and the provisions therefore are set forth in §§ 18-23.106 (a), and (c) and 18-23.150. The remainder of this subpart deals with CPSR's conducted by NASA personnel at NASA cognizant contractor facilities.

(c) Prior to initiating a NASA conducted CPSR, the procurement office shall notify the Director of Procurement, NASA Headquarters (Code KDP-3) who will provide instructions and procedures to be followed in conducting the CPSR and in preparing the CPSR report. [36 FR 25130, Dec. 29, 1971]

§ 18-23.101 Review criteria.

(a) The term "contractor," as used in this subpart, means a separate entity of a contractor, such as an affiliate, division, or plant, which performs its own purchasing.

(b) Generally, a CPSR shall not be performed for a specific contract. Except as provided in paragraph (c) of this section, an initial or annual review shall be made of all contractors who are expected to have sales to the Government during the next 12-month period in excess of $5 million on other than firm fixed-price contracts or fixed-price contracts with escalation.

(c) A review shall not be made of the procurement systems of contractors meeting the criteria in paragraph (b) of this section where the contracting officer determines, in writing, that the extent or nature of the subcontracting

by the contractor will not justify the cost of the CPSR. In exceptional cases, a CPSR may be conducted of the procurement system of a contractor not meeting the criteria in paragraph (b) of this section if the contracting officer determines, in writing, that the extent or nature of the subcontracting is such that a CPSR is warranted.

§ 18-23.102-1 Initial review.

An initial review shall be conducted when the contractor meets the criteria in § 18-23.101. It shall be a complete evaluation as described in § 18-23.103.

§ 18-23.102-2 Annual review.

An annual review shall be conducted of all contractors who have had an initial review and still meet the criteria in § 1823.101. The annual review may be curtailed to cover areas of interest and weaknesses but shall include sufficient consideration of each of the factors listed in § 18-23.103 (a) to establish the current adequacy or inadequacy of the entire system. Such review shall generally be conducted in order to:

(a) Examine any substantive changes instituted since the previous review;

(b) Ascertain the status of prior recommendations upon which action has not been completed; and

(c) Determine whether the contractor's procurement system, especially the significant cost impact areas, warrants continued approval.

§ 18-23.102-3 Special reviews of approved systems.

After approval of the contractor's procurement system, the contracting officer may initiate special reviews in connection with weaknesses revealed as a result of:

(a) The initial or annual review;

(b) The review of subcontracts submitted under the notification requirement of contract clauses;

(c) Major changes in the contractor's procurement policies, procedures, or key personnel;

(d) Changes in plant workload or type of work; or

(e) Information provided by Government personnel.

In conducting such reviews, the same effectiveness criteria used in previous re