1.1 General

This NPR provides basic requirements and instructions to assist in the preparation of the Contractor Financial Management Reports (NASA Form 533 reports).

1.2 Purpose of the NASA Form 533 Reports

1.2.1 The NASA Form 533 (NF 533) reports provide data necessary for:

a. Projecting costs and hours to ensure that dollar and labor resources realistically support project and program schedules.

b. Evaluating contractors' actual cost and fee data in relation to negotiated contract value, estimated costs, and budget forecast data.

c. Planning, monitoring, and controlling project and program resources.

d. Accruing cost in NASA's accounting system resulting in liabilities reflected on the financial statements and providing program and functional management information. Cost is a financial measurement of resources used in accomplishing a specified purpose, such as performing a service, carrying out an activity, acquiring an asset, or completing a unit of work or project. NASA is required by law to use accrual accounting, which requires cost to be reported in the period in which benefits are received, without regard to time of payment. To facilitate this process, NASA requires its contractors to report accrued costs on NF 533 reports on cost type, price redetermination, and fixed-price incentive contracts.

1.3 Policy and Related Requirements

1.3.1 Agencywide policy, responsibility, and procedures governing the Contractor Financial Management Reporting System are set forth in NPD 9501.1H, "NASA Contractor Financial Management Reporting System."

1.3.2 NASA contractors are expected to submit financial management reports in which cost information is compatible with the technical and schedule reporting structure. The exact level and detail of these data are based upon NASA management requirements and the contractors' management system. When performance measurement system (PMS) (earned value) and NF 533 reports are required under the contract, they shall reflect information that is consistent and generated from the same management information systems.

1.4 Contract Implementation

1.4.1 Contract implementation requirements are set forth in NPR 5100.4B, "Federal Acquisition Regulations Supplement (NASA/FAR Supplement (NFS)),"Subpart 1842.72, "NASA Contractor Financial Management Reporting." The standard contract clause for implementing NASA contractor financial management reporting is set forth in NFS 1852.242-73.

1.4.2 Deviations from financial management reporting provisions set forth in NFS 1842.72 require approval in accordance with NFS 1801.471.

1.4.3 Where a specific contractual requirement differs from the standard system set forth in this NPR, but is determined to be in the best interest 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 NASA Contracting Officer with the concurrence of the NASA Center Chief Financial Officer and cognizant Project Manager. Such approval shall be documented and retained, with the supporting rationale, in the NASA contract file. Examples of such exceptions include the following:

a. Addition of a column for Government fiscal year cumulative costs to the standard NF 533 M or NF 533 Q formats.

b. Substitution of reports generated by contractors' existing management systems or PMS reports for the NF 533 formats.

c. Due dates other than those stipulated in this NPR. Due dates earlier than the standard dates set forth in paragraph 3.3 are encouraged whenever feasible. No due date shall be permitted, however, which is later than the date by which the NASA Center Financial Management Office needs the data in order to enter an accurate monthly cost accrual in the accounting system.

1.4.4 Specific cost and labor hour reporting requirements, including the level of detail, shall be delineated in the contract. Reporting categories shall be stated in the contract and held as firm as practicable throughout its life to ensure continuity and consistency of information. Any changes in the reporting requirements will be accomplished by negotiated contractual modifications.

1.5 NASA Form 533 Reports

1.5.1 Applicability - The NF 533 reports are applicable to all cost type, price redetermination, and fixed-price incentive contracts when the following dollar and period of performance criteria are met:

Figure 1

1.5.2 NF 533 Q reporting may be waived by the NASA Contracting Officer, with concurrence by the Center Chief Financial Officer and cognizant Project Manager, for support service or task order contracts, when NF 533 M reports and other data are sufficient to ensure accurate monthly cost accruals, track the contractors' actual cost against plans, and forecast resource requirements.

1.5.3 The criteria in Figure 1 apply to the total contract, not solely to any particular performance period. Where it is probable that a contract will ultimately meet the criteria through the exercise of options, execution of change orders or supplemental agreements, or other circumstances, the reporting requirement will be implemented based on the estimated final contract value, inclusive of options. Action shall be promptly taken to include the appropriate reporting requirements in contracts not covered at award that subsequently meet the above criteria as a result of change orders or supplemental agreements. As applied to letter contracts, the reporting requirements will be identified therein, and determination of the applicability of the criteria will be based upon the mutually agreed upon scope of work to be accomplished under the definitized contract. If deemed appropriate by the NASA Contracting Officer or necessary to provide the data discussed in paragraph 1.2, NF 533 reporting requirements may be negotiated into other types of contracts and contracts not meeting the above criteria.

1.6 Reports From Subcontractors

Prime contractors are responsible for obtaining financial management data from subcontractors; data submitted by subcontractors should be structured similar to the prime contractors' NF 533 to enable the prime contractor to properly report to NASA. Prime contractors shall ensure that subcontract data are available in sufficient time for inclusion in the prime contractors' NF 533 report for the same reporting period. The prime contract may call for copies of subcontractor reports to be submitted to NASA. See paragraph 3.3.2.2 for specific subcontract cost reporting requirements.

1.7 Contractors' Privileged Financial and Business Information

To the maximum extent possible, financial management reports should be unclassified. NASA acquires information in financial management reports primarily for purposes of program and project planning and management, contract administration, and accounting. It recognizes that these reports may contain contractor-privileged information. NASA personnel shall ensure that contractors' financial and business information contained in the reports will not be disclosed outside the Government, except in accordance with procedures set forth in 14 CFR 1206, "Availability of Agency Records to Members of the Public," and disclosure of such information to other Government agencies will be made in accordance with 44 U.S.C. 3510(6). Where it is necessary to disclose a contractor's confidential financial information to NASA support services contractors (in areas such as information technology or financial services) NASA personnel should first obtain the informed consent to such disclosure of the contractor providing the information.

1.8 Security Classification

Reporting contractors will ensure that appropriate security markings, consistent with the assigned security classification, are applied to each classified report in accordance with provisions of NASA Management Instruction NPD 1600.2D, "NASA Security Policy," and NPR 1600.1, NASA Security Program Procedural Requirements." Security classification markings will not be used on documents containing information solely of a privileged financial and business nature.

CHAPTER 2. The Reporting Structure

2.1 General

2.1.1 The planning process for a project or contract should include consideration of the financial management reporting requirements necessary to meet the objectives described in paragraph 1.2. Development of the proposed NF 533 reporting structure must be a collaborative effort by NASA technical, program control, procurement, financial, and resources personnel who will have a role in monitoring contractor performance, perform contract administration, or otherwise use the report data upon contract award. NASA's proposed reporting structure, i.e., the specific reporting categories, shall be included in the solicitation to allow prospective contractors to address their ability to meet the anticipated requirements. The final reporting structure will be determined in concert with the contractor.

2.1.2 Both NASA and the contractor, to varying degrees, require the capability of providing an array of data from a single base, as illustrated in Figure 2, which can identify costs by organization or function, contract work breakdown structure (WBS), and type of element. The NF 533 reporting structure, therefore, shall be a matrix that provides adequate management visibility into the appropriate combination of these data.

REPORTING STRUCTURE DATA MATRIX

2.2 Work Breakdown Structure (WBS) Data

2.2.1 The WBS is a family tree subdivision of effort required to achieve an objective (e.g., program, project, and contract). It may be hardware, product, service, or process oriented. For a contract, the WBS is developed by starting with the end objective and successively subdividing it into manageable components in terms of size, duration, and responsibility (e.g., systems, subsystems, components, tasks, subtasks, and work packages) which include all steps necessary to achieve the objective. It provides a common framework for the natural development of the overall planning and control of a contract and is the basis for dividing work into definable increments from which the statement of work can be developed and technical, schedule, cost, and labor hour reporting can be established.

2.2.2 Reference should be made to NPR 7120.5D, "NASA Space Flight Program and Project Management Requirements," for further discussion of WBS policies and processes.

2.2.3 When NF 533 reporting will be required, the solicitation will identify the reporting categories considered necessary to meet NASA financial management information requirements. Specific contractual reporting requirements will be tailored to reflect the way work is to be performed as set forth in the contract and to the contractors' management or reporting systems.

2.3 Organizational/Functional Data

Organizational/Functional data provide information on groups of activities which have a common purpose. These types of data may be required in order to (a) track costs by the contractors' internal organizations, (b) provide cost data for NASA functional management purposes, (c) perform analysis-relating organizational/functional costs to end items, and (d) relate scheduled activities to responsible contractor organizational/functional elements. Examples of organizational/functional classifications are as follows:

The Center Chief Financial Officer should be consulted concerning any questions on functional classifications to be reported.

2.4 Element of Cost Data

2.4.1 Elements of cost are the various uses for which resources are expended in performance of the contract. This type of information provides insight for NASA and the contractor concerning the way resources are expended and aids in comparing actual to negotiated cost rates.

2.4.2 Elements of cost are typically classified as direct or indirect (burden). It may also be necessary to determine the recurring and nonrecurring nature of cost and the performing organization and place of performance.

2.4.3 Direct costs are those which can be specifically identified with a particular objective, such as a system, subsystem, task, or function. Direct costs are typically classified as follows:

a. Labor.

b. Materials.

c. Subcontracts.

d. Other Direct.

2.4.4 Indirect costs (burden) are those which, because of their incurrence for multiple or joint objectives, are not readily identifiable to a specific objective. They are allocated to benefiting cost objectives by a statistical technique. Indirect costs are typically classified as follows:

a. Overhead.

b. General and Administrative (G&A).

2.4.5 The distribution of indirect costs for reporting purposes in the same detail as direct costs are reported may be complex, especially where there are interrelated overhead pool structures. The distribution process can be simplified by restricting the distribution of overhead for reporting purposes to a logical series of group totals at a relatively high level, e.g., organization and system. Such gross treatment of burden usually does not detract from the usefulness of the reported data. It is generally desirable, however, to require a breakdown of the various types of burdens, e.g., engineering overhead, manufacturing overhead, material handling, and G&A, in order to provide visibility and track actual and provisional rates.

2.5 Contractor Reporting Considerations

2.5.1 The importance of selecting data elements for reporting which reflect the contractors' management philosophy and are a natural product of existing cost, budgeting, scheduling, and technical performance systems cannot be over emphasized. The contractors' internal management system shall be relied upon to the maximum extent possible, without requiring costly modifications, to furnish both detailed and summarized data for NF 533 reports. The data reported will be the basis for NASA contractor communication for financial planning and program control.

2.5.2 NASA shall ensure that the contractors' management system meets the following criteria:

a. The WBS can be directly related to a specific level depicted in the technical statement of work.

b. Resource requirements and actual expenditures will be displayed on the NF 533 reports with the reporting categories directly related to the WBS on a time-phased basis.

c. Schedule line items (milestones, activities, and events), developed at lower levels of detail, can be summarized to the cost reporting level of the WBS.

2.5.3 NF 533 reports will usually require reporting by various elements of cost and subdivisions or subordinate indentures of the scope of work that are contractually designated as meaningful portions of the contract effort (WBS). When a contract includes only one subdivision of work, the reporting of elements of cost (e.g., direct labor, materials, subcontracts, other direct costs, indirect costs, G&A, and fees) will generally be sufficient. When more than one subdivision of work is included in a contract, the NASA Project Manager will determine the level of reporting. To avoid unnecessary reporting cost and ensure that the appropriate level of visibility is achieved, it is important to be selective in specifying categories and levels of reporting. For example, where there is potential for high risk in a particular WBS item, more detailed visibility should be required, but it is not necessary to require the same reporting level across the WBS. Data on certain WBS items may be reported at the summary level, while others may be at the component, task, and subtask level. Careful consideration shall be given to the reporting requirements to ensure that they are limited to those items which are required and will be used in managing and monitoring the contract.

2.5.4 Reporting categories will be specified in the contract. Care will be exercised in developing reporting categories to ensure that they are consistent with the way work is to be performed on the contract and technical, schedule, and performance measurement system reports, at a management level determined adequate by NASA project management. NF 533 M and Q reports shall be structured to indicate corresponding reporting categories and levels of detail. Not all the reporting categories discussed herein are required on all contracts, nor are all categories which may be required discussed.

2.5.5 Where the contract effort is divided into separate "schedules" for each fiscal year or other period, or provides for the exercise of options to continue the contract, reporting should be structured in the manner most appropriate to the contract provisions. Each report shall, however, contain a summary of total contract cost, which may be broken out by the various cost elements, indicating cumulative actual costs for all "schedules" or exercised options from inception of the contract to date.

2.5.6 In addition to the summary, cost shall be reported at a detailed level by elements of the contract WBS. Totals on the summary report shall match the totals derived from all contract WBS elements. If the portion of the reports structured by WBS does not indicate each individual cost element as reported in the summary pages of the report, values reported for the various WBS items will still reflect all cost elements, so that the total cost of all WBS items agrees with the total by elements of cost (total cost at the contract summary level).

2.5.7 For service contracts, the NF 533 reports will be structured to provide cost data in the program/functional management classifications by which NASA managers relate in-house activity. Further detail may be required for items such as tasks, work orders, or other significant and identifiable phases of work or services being procured. Such detail may be supported by information on direct labor hours, direct labor costs, and other cost elements appropriate for monitoring the subdivisions of work.

2.5.8 NF 533 reporting structures shall be designed to facilitate accounting for costs in accordance with NASA's financial coding structure and to provide as direct linkage as practicable from the work performed by the contractor to the NASA appropriation funding that work, since this is the level prescribed by NASA management to maintain control and account for costs and subsequent disbursements in accordance with Congressional appropriations.

2.5.9 Research and development contracts with cost-sharing provisions require NF 533 reporting which provide summary data for total contract actual and projected costs, with a further breakdown indicating the NASA-funded portion of those costs.

CHAPTER 3. NASA Form 533 Financial Management Reports

3.1General

3.1.1 The NASA Contractor Financial Management Reporting System consists of the reports, accompanying remarks, and analyses discussed below. See Appendix A for the report formats and detailed instructions.

3.1.2 NASA Form 533 M - a report which provides monthly data on actual and planned costs and labor hours, short-term cost projections, estimates to complete, and contract values.

3.1.3 NASA Form 533 Q - a report which provides quarterly time-phased cost and labor hour estimates. It is also used to submit the initial baseline and subsequent revisions. The NF 533 Q may also be used by contractors to submit time-phased cost estimates in response to a Request for Proposal (RFP).

3.1.4 Detailed instructions for report preparation are provided on the reverse of the forms. Supplementary instructions are set forth below. Where the term "footnote(s)" is used, the information required may be submitted on the forms themselves or in the Narrative Remarks.

3.2 Initial Report

3.2.1 All contractors whose contracts contain an NF 533 M or NF 533 Q reporting requirement shall submit an initial report in the NF 533 Q format within 30 working days after authorization to proceed has been granted. The initial report shall reflect the original contract value detailed by negotiated reporting categories and shall be the original contract baseline plan. This plan, plus authorized changes, is subsequently used in columns 7b and 7d of the NF 533 M for comparison of actuals to plan. The NASA Contracting Officer may require additional detail, such as quarterly or semiannual phasing over the life of the contract, inclusion of unexercised options, or an initial report whenever options are exercised.

3.2.2 NF 533 M reporting must begin no later than 30 days after incurrence of cost. NF 533 Q reporting begins with the initial report. In instances where work begins under a letter contract, submission of monthly and quarterly reports may precede the initial report, since the baseline is not yet established through negotiations.

3.3 Completion of Reports

3.3.1 Submission. The value of contractor financial management information in meeting the objectives outlined in paragraph 1.2 is dependent upon timely submission of required NF 533 reports. NASA management cannot make fully informed decisions unless it has current data on contractor cost. NASA cannot ensure accurate cost accruals in its accounting system unless it has the necessary data prior to the close of its accounting month. The standard due dates set forth below are designed to ensure that the information will be available when it is needed. Contractors should submit the reports earlier than the required due dates whenever possible. Electronic methods of submitting NF 533 data should be used whenever possible to expedite availability of the information.

3.3.1.1 The NF 533 M (Appendix A) is due not later than 10 working days following the close of the contractors' monthly accounting period. An NF 533 M need not be submitted in months in which an NF 533 Q is submitted (unless the NASA Contracting Officer directs submission of both reports), so long as NF 533 Q reports are completed in accordance with the requirements in paragraph 3.4 to provide NASA with the proper monthly data to develop its cost accruals.

3.3.1.2 The NF 533 Q (Appendix A) is due not later than the 15th day of the month preceding the quarter being reported in columns 8a, 8b, and 8c (e.g., the report for the quarter beginning July is due not later than June 15).

3.3.2 NF 533 Supplementary Instructions

3.3.2.1 General.

(1) Costs and hours reported will be based upon the contractor's accounting periods and derived from actual cost and budget records maintained by the contractor. Costs incurred are amounts paid, payable, or otherwise accrued for materials consumed and services used through the reporting date. Costs incurred include direct and indirect costs and shall be reported on an accrual basis as resources are applied to performance of contract work, rather than on a cash disbursement basis or as orders are placed. Costs should be reported on the basis of the contractor's most current data for actual rates experienced at the time the report is prepared, rather than on the basis of Defense Contract Audit Agency (DCAA) approved provisional billing or bidding rates. Provisional rates may be reported in the footnotes. Where contracts contain negotiated ceilings, the NF 533 should only show costs incurred up to the ceilings and footnotes should be provided to discuss the amount of and reason for costs incurred in excess of the ceilings. A breakdown of excess costs by cost element may be required by the contracting officer.

(2) Costs incurred will be reported irrespective of whether they exceed the "Fund Limitation" (NF 533, block 4). Reporting of such excesses will not be construed as evidence of approval by the Government or satisfaction of the notifications to the NASA Contracting Officer required by the contract.

(3) Actual costs (and related hourly data) reported will include costs incurred in performing currently authorized work included in the most recently executed contract modification plus additional authorized work for which execution of modifications is pending, i.e., all work which NASA has directed, whether or not negotiated.

3.3.2.2 Elements of Cost, Fees, and Performance Incentives - Reporting requirements for commonly required elements of cost, fees, and performance incentives are discussed below. The reporting categories discussed do not represent all those which may be required on a particular contract, nor must all the items discussed be required.

(1) Costs

(i) Direct Labor. Direct labor can be directly identified to a particular subdivision of work. It is reported to NASA on the NF 533 as hours are incurred, with accruals for direct labor to the end of the contractors' accounting period.

(ii) Materials. Commercial, off-the-shelf items that are purchased for contract work are to be reported to NASA when accepted by the contractor. Material will not be reported as an element of cost under a subdivision of work until it is used on, consumed by, or applied to that subdivision of work.

(iii) Equipment. Costs for manufactured equipment, i.e.; equipment produced to specific requirements that make it useless to anyone else without rework shall be reported on the NF 533 as the equipment is manufactured. The straight-line method for estimating accrued costs or the use of supplemental information obtained from the vendor are acceptable to calculate the incurred cost.

(iv) Leases. Lease costs shall be reported on the NF 533, prorated over the life of the lease. In some cases, circumstances could warrant treatment of the cost of a lease as indirect.

(v) Travel. Travel is reported as costs are incurred, generally using the dates of travel to determine the period in which the cost will be reported.

(vi) Subcontracts

(vii) Overhead. Overhead is an accumulation of costs into various "pools," normally subdivided further by functional or departmental associations, such as engineering overhead, manufacturing overhead, and materials handling overhead. A variety of overhead pools may be used within a contractors' accounting system. These costs are normally distributed on the basis of direct labor dollars (or hours) or material dollars.

(viii) General and Administrative (G&A). G&A is an accumulation of indirect costs applicable to the direction and control of the contractors' activities as a whole. This category would not include costs classified as overhead. Commonly included under G&A are costs for officers' salaries, general and corporate offices, legal and auditing staffs, office supplies, insurance, and taxes. Total cost incurred, exclusive of G&A expenses, is usually used as the basis of distribution to the various cost objectives.

(2) Fees.

(i) The two types of fees discussed here are fixed and award fee. Fee is generally reported at the contract summary, rather than detailed, WBS level. If any of the following fee categories do not pertain, they should not be included in the NF 533. The reporting structure need not include all categories discussed, but where amounts involved are material, appropriate categories should be required to enable NASA to make an accurate monthly cost accrual.

(3) Performance Incentives

(i) Positive and negative Performance Incentives may be included in cost-plus award-fee contracts. Performance Incentives are separate from award fees. They measure performance after delivery and acceptance and are objective. When performance exceeds the standard, the contractor may request incentive payment.

(ii) Performance Incentives should be reported on the NF 533 as a separate line item, after award fee items. Normally, amounts reported for Performance Incentives should only be amounts the contractor has been paid. Dependent upon the performance incentive structure, estimated amounts may be shown for ensuing months, with agreement by the NASA Contracting Officer and footnotes explaining the rationale.

3.3.2.3 Hour or Workforce Data

(1) Reporting of hour or workforce data shall be on an accrual basis and may differ by individual contract requirements. General reporting guidelines are as follows:

(2) Direct labor hours are hours worked which are directly identifiable to a specific project, system, or task. Direct labor hours reported shall correspond with the functional categories or direct labor cost (at the total contract level and subordinate indentures of the work). All hourly data shall be so identified, either by the letter "H," treated as a separate line item in column 6, Reporting Category, or otherwise.

(3) Indirect Labor Hours are hours incurred for common objectives, such as payroll, maintenance, or computer support which cannot be charged to any single direct effort.

(i) Direct Labor Hours. Generally, hours worked should be charged as direct labor whenever legitimately possible. Prime and subcontractors' direct labor hours should be separately identified on the prime contractors' NF 533 summary page. Both should be identified to the proper contract WBS in the detailed portion of the NF 533.

(ii) Indirect Labor Hours. Generally, direct labor hours identified to the contract WBS need not include an allocation of indirect hours (such as leave taken) or hours for computer support services which benefit the entire contract. Usually the indirect costs associated with the indirect labor hours should be spread across the contract WBS at the required detail level.

(iii) Uncompensated Overtime. Reporting of uncompensated overtime, also known as "green time" or "volunteer time," may be required on NF 533 reports as a separate line item or in the footnotes. Reporting should be consistent throughout the life of the contract; any changes should be discussed in the contractors' Narrative Remarks when made.

3.3.2.4 Management Information. Reporting of management information items may be required by the contract. These items do not involve incurred cost but are used by NASA for managing, planning, and developing budgets. Prompt payment discounts taken, unfilled orders, and termination liability are examples of management information line items which should appear below the Total Cost and Fee line on the NF 533.

(i) Contractors are required to indicate full incurred costs on NF 533 reports submitted. They should also show the amount of discounts offered to and taken by NASA.

(ii) The actual cost the Government pays for a contract will be reduced by the amount of discounts taken. The cost NASA accrues in its accounts, therefore, should be the total cost reported on the NF 533, less discounts taken.

(iii) Contractors may report an estimate for prompt payment discounts expected to be taken in a time period column 8. Columns 7a and 7c should reflect only discounts actually taken by NASA.

(2) Unfilled Orders Outstanding

(i) Reporting of unfilled orders in column 10 of the NF 533 M or column 11 of the NF 533 Q is optional, as directed by the NASA Contracting Officer. Amounts of unfilled orders shall, however, always be included in the values shown in columns 8 and 9 of the reports, as appropriate.

(ii) The amount of unfilled orders outstanding is the difference between cumulative costs incurred to date and amounts obligated to suppliers and subcontractors. A prime or subcontractor's unfilled orders include open purchase orders (including negotiated changes), against which materials have not been received nor services rendered, and the difference between a subcontractor's actual costs reported by the prime and fund limitations for the subcontractor. A fund limitation is often less than the total estimated amount to be purchased, just as the amount reported in block 4, "Fund Limitation," may be less than that reported in block 3, "Contract Value," for the prime contract. The total unfilled orders outstanding, when added to the prime contractors' actual costs, normally should not exceed the prime contractor's fund limitation.

(iii) A separate reporting category for unfilled orders, below the "Total Cost" and "Fee" line, may be specified in the contract where time phasing of this element of data is considered essential.

(3) Potential termination liability refers to an estimate of costs incident to stopping work on the contract in the event of termination at a given point in time. Since such costs, in all likelihood, will never be incurred, they normally need not be reported and will not be accrued by NASA. If desired as management information, however, an estimate of costs to cover the contingency of termination may be reported if it is specifically identified on the NF 533 as a separate item below "Total Cost" and "Fee".

(3) Prior period adjustments may occur for a variety of reasons, such as changes in direct or indirect cost rates, corrections to prior charges, audit findings, or litigation. They should be reported in columns 7a and 7c of the NF 533 M and column 7a of the NF 533 Q with footnotes discussing the reasons for and amount of the adjustments.

3.4 NASA Form 533 Q Supplementary Instructions

3.4.1 Cost Incurred/Hours Worked - NASA needs to receive the NF 533 Q prior to the quarter being forecast in order for project management to obtain maximum benefit from cost forecasts. Column 7 of the report, therefore, shall include cumulative actual cost through the second month of the prior quarter plus an estimate for the last month of the quarter.

3.4.2 Estimated Cost/Hours to Complete - The appropriate period identification (months, quarters, and fiscal years) shall be inserted in columns 8a through 8h based upon the Government's fiscal year. Figure 3 depicts the appropriate column headings. NASA may require that the total of column 8i, "Balance of Contract", to be broken out by fiscal years in the Narrative Remarks.

NF 533 REPORTING PERIODS

Figure 3

3.5 Cost Estimates

3.5.1 Although NASA does not prescribe a system for contractor cost estimating, its management must have visibility as to how major program efforts will affect anticipated budget requests. Decisions on commencing, terminating, or changing long-range, large dollar value programs must be made far in advance. Such decisions must include consideration of anticipated dollar impact from budgetary and cost forecast standpoints. Well-planned and prepared cost estimates will provide NASA management with a valuable tool for comprehensive evaluation of the particular program or project by:

3.5.1.1 Assuring that all elements of cost are considered, whether performed by NASA or contractor personnel.

3.5.1.2 Providing an effective base for comparing competing approaches.

3.5.1.3 Portraying anticipated time phasing in order to plan for funding requirements.

(a) Short- and long-term cost estimates, which include all data entered in columns 8 and 9a on NF 533 M and NF 533 Q reports, shall be based on the most current and reliable information available. In all estimate columns, contractors shall include potential overruns or underruns as soon as they are recognized. These estimates are used for planning purposes only and are not binding on the contractor or NASA. Data entered will not be simply a restatement of negotiated baseline values. Procedures used by the contractor to develop cost estimates should be documented and provided to the NASA Contracting Officer upon request.

(b) Contractor estimates should be reported through each individual contractor's accounting period. This applies when a contractor's accounting period differs from the Government's accounting calendar month, as well as when prime and subcontractors' accounting periods are different.

(c) The "Estimated Final Cost/Hours" column (9a), enables NASA to compare contract value to the current estimate at completion and identify potential over or underruns. Estimates for the month following the month of the report (the month specified in block 2 and reported in column 7) are required in column 8a of the NF 533 M. Column 8b may be used for estimates for a period specified by the NASA Contracting Officer. Estimates for the balance of the contract are entered in column 8c. The amounts shown in column 9a, therefore, equal the sum of the amounts shown in columns 7c, 8a, 8b, and 8c. Amounts reported in these columns shall be based on the contractor's best estimate for completion, including all authorized work, whether or not negotiated. Reported amounts should be the latest current estimates. If the balance of the contract spans more than 1 fiscal year, a breakdown by fiscal year may be required.

(d) On both the NF 533 M and NF 533 Q, the "Estimated Final Cost/Hours - Contractor Estimate" (column 9a) is the total estimated cost/hours for completion of the contract, including outstanding undefinitized changes and any overruns or underruns. On the NF 533 M, this should equal the sum of columns 7c, 8a, 8b, and 8c. On the NF 533 Q, this should equal the sum of columns 7c and 8j.

(e) The NF 533 Q provides time-phased estimates for 4 monthly periods including a current month estimate (7b) and the 3 months in the quarter being reported (columns 8a, 8b, and 8c). It also provides estimates for 3 quarters (columns 8d, 8e, and 8f), by fiscal years (columns 8g and 8h) and for the balance of the contract (column 8i). The total to complete (column 8j) represents the sum of columns 8a through 8i.

(f) Column 7b ("Cost Incurred/Hours Worked During Month Planned") and 7d ("Cost Incurred/Hours Worked Cum. to Date Planned") of the NF 533 M represent the negotiated baseline plan plus authorized changes for the contract. There may not be a direct relationship between the estimates provided in section 8 ("Estimated Cost/Hours to Complete") of the NF 533 M and columns 7b and 7d. Columns 7b and 7d represent the negotiated baseline plan plus authorized changes, unlike the estimates provided in columns 8a, 8b, and 8c.

3.6 Narrative Remarks

3.6.1 Analytical remarks on items materially affecting historical or projected cost or performance shall accompany each NF 533 M and NF 533 Q. The remarks may be presented in the letter transmitting the report, as a section of the report, or in footnotes.

3.6.1.1 Analyses must be concise, timely, and factual and identify present causes of problems and their effect upon cost and schedule, as of the report date and projected as far into the future as is practicable. Analyses should pinpoint exact causes and effects, as well as corrective actions, rather than being a compilation of statistics.

3.6.1.2 The effect of technical problems, changes, breakthroughs, and deficiencies on current performance (technical, cost, and schedule) and projected resource requirements must be brought to NASA's attention. Analyses must be integrated to indicate the correlation and relative impact upon overall objectives by anomalies in time, labor application, cost, procurement, technical, and other variables.

3.6.1.3 Whenever a problem is foreseen by the contractor, the action proposed or taken to prevent its occurrence or recurrence must be explained.

3.6.2 The "Narrative Remarks" shall explain technical assumptions used in formulating the data, such as significant accelerations or slips in schedule or other items, technical in nature, that may affect cost in the reported or future financial periods.

3.6.3 Contracts shall specify the types of variances which will require narrative explanations, the criteria for determining when variances will require explanations, and the nature of the explanations. Reporting requirements may be established for monthly, cumulative to date, fiscal year, or estimate at completion variances and be expressed in terms such as percentages, dollars, and hours. Types of variances include the following:

a. Actual Cost or Hours versus Plan.

b. Lateral or vertical shift in planned resource utilization in support of performance between consecutive reports.

c. Anticipated overruns or underruns.

3.6.4 A Reconciliation of Changes from the original negotiated contract baseline (as reflected in the initial NF 533 Q) shall be included as part of the contractor's Narrative Remarks for the month in which the changes occur. Changes shall be reconciled first to the present contract value by including only negotiated changes (supplemental agreements) and then to the Contractor's Estimated Final Cost by including changes authorized but not finalized. If the Contractor's Estimated Final Cost includes any overruns or underruns, they should be fully identified and explained. In addition, the contractor may have proposed changes which have not been approved by NASA but for which tentative costs have been determined. These items should be reported as changes "Under Consideration but not Authorized." Figure 4 is a sample Reconciliation of Changes.

Reconciliation of Changes

Figure 4

3.6.5 New change order direction to the contract may require identification of the cost effect on subdivisions of work. This is accomplished through a matrix using estimates or quoted amounts as in the format illustrated in Figure 5 and on the reverse of the NF 533 M and NF 533 Q or in another format agreed upon with NASA. The subdivision of work level to be identified will be agreed upon by NASA and the contractor. Similar explanations may be required for transfers of amounts from one subdivision to another as a result of shifting work from one WBS item to another.

New Change Orders Identified to Subdivision of Work

Figure 5

3.6.6 There are many other factors that may influence the final cost on a contract. Significant items of this nature should also be included under this section of the report. The following examples are typical:

a. Pending union negotiations (e.g., changes in pay, fringe benefits).

b. Changes in the contractors' organizational structure.

c. Business backlog (e.g., changes in customer mix, products).

d. Changes in manufacturing processes.

e. Changes in policies affecting the following:

(l) Subcontracting (makes or buys decisions).

(2) Fixed asset improvement programs.

(3) Direct/indirect method of charging.

(4) Cost centers.

(5) Accounting or estimating methodologies.

3.7 Electronic Reporting

NASA strongly encourages the use of electronic contractor cost reporting, where it may benefit the Agency or the contractor, as long as the requirements of this NPR are met and NASA obtains the information it needs to manage its contracts. In particular, electronic reporting should permit the contractor to submit NF 533 reports earlier than the standard due dates. The use of currently available technologies and transmission capabilities to facilitate electronic reporting is also encouraged.

3.8 Reporting After Completion of Work

3.8.1 A significant amount of time may pass between completion of work on a contract and final closeout, due to final reporting, payment and acceptance requirements, property disposal considerations, and other administrative matters. If no significant additional costs are being incurred or are anticipated, summary NF 533 M reporting only, on a quarterly basis, reporting only when changes in actual cost occur, or suspension of NF 533 reporting altogether may be directed by the NASA Contracting Officer, with concurrence of the NASA Center Chief Financial Officer and cognizant Project Manager.

3.8.2 The final NF 533 M should be clearly identified as such and shall contain actual costs only. If the cost of a contract changes after submission of the "final" report, the contractor must submit a revised NF 533 M for the month in which the cost change is recognized.

3.9 Supplemental Management Information Reports

It is NASA policy that NF 533 reports be structured to eliminate the need for supplemental financial management reporting; the report formats are designed to facilitate presentation of a wide range of financial information. NASA and its contractors should work together to ensure that NF 533 reporting structures provide all the financial management information NASA needs and are compatible with contractors' accounting systems. Any contractual requirement for supplemental financial management information reports will be considered an exception under the provisions of paragraph 1.4.3. If such reports are required, they must reconcile with the NF 533's. The NF 533 or its authorized substitute (see paragraph 1.4) is always the official financial management-reporting document.

3.10 Noncompliance

If a contractor fails to comply with contractual financial management reporting requirements, the grade and amount of award fee may be reduced, where the contract provides for award fees. In the event that a contractor fails to submit required NF 533 reports on a timely basis or in an accurate manner, NASA is not required to make payment on cost and fee vouchers by contractual due dates and may withhold payment until compliance with NF 533 requirements is clearly demonstrated. In some cases, individual contract language may provide for return of vouchers or other action for noncompliance with financial management reporting requirements.

Appendix A. Sample NASA Contractor Financial Management Reports, NF 533M and NF 533Q

NASA Form 533M

NASA Form 533Q

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