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NASA
Procedural
Requirements

NPR 9250.1C
Effective Date: October 29, 2015
Expiration Date: May 18, 2024

COMPLIANCE IS MANDATORY FOR NASA EMPLOYEES

Subject: Property, Plant, and Equipment and Operating Materials and Supplies

Responsible Office: Office of the Chief Financial Officer

Chapter 1 Overview of Capitalized Property, Plant, and Equipment

1.1 Overview

1.1.1 The National Aeronautics and Space Administration's programs and projects are substantially research and development (R&D) initiatives that use Property, Plant, and Equipment (PP&E) to support NASA's missions, goals, and objectives.

1.1.2 The identification, valuation, recognition, and reporting of PP&E are integral parts of NASA's ability to generate accurate and reliable financial statements and management reporting while ensuring compliance with accounting standards and Federal financial reporting requirements. This NPR prescribes the accounting standards and policy for recognizing and reporting PP&E and OM&S, including the application of NASA's capitalization criteria. NASA utilizes the Asset Accounting module within SAP, NASA's enterprise resource management system, to financially account for and report capitalized PP&E.

1.2 Categories of PP&E

1.2.1 PP&E is defined as tangible assets that (1) have an estimated useful life of two or more years, (2) are not intended for sale in the ordinary course of business, and (3) are intended to be used or available for use by the entity.

1.2.2 Two categories of PP&E, General PP&E and Stewardship PP&E, have been defined for accounting and reporting purposes.

a. General PP&E. General PP&E consists of tangible assets that meet NASA's capitalization criteria. General PP&E includes the following categories:

(1) Real Property. Land, land rights, buildings, other structures and facilities, construction in process, and capital improvements/modifications.

(2) Personal Property. General equipment, Work-in-Process (WIP), and capital improvements/modifications.

(3) Capital Leases. Leases and leasehold improvements.

(4) Internal Use Software.

b. Stewardship PP&E. Stewardship PP&E consists of tangible items of PP&E that are not capitalized because their value may be indeterminable or it is meaningless to capitalize them due to its unique nature. Stewardship PP&E includes the following categories:

(1) Heritage Assets. Heritage Assets are PP&E of historical, natural, cultural, educational significance, artistic importance, or significant architectural characteristics. Heritage Assets are not capitalized.

(2) Stewardship Land. Stewardship Land is land and land rights other than that acquired for or in connection with General PP&E. Stewardship land is not capitalized.

1.3 Capitalization of PP&E

1.3.1 Capitalization Criteria. The following capitalization criteria apply to general PP&E. NASA shall capitalize individual items of PP&E acquired by construction, purchase, transfer, donation, or exchange, which meet all of the following criteria:

a. Have a total cost (see Section 2.2) of $500,000 or more for personal and real property (except internal use software with a total cost of $1,000,000 or more).

b. Have an estimated useful life of two years or more.

c. Are not intended for sale in the ordinary course of operations.

d. Have been acquired or constructed with the intention of being used, or being available for use, by NASA.

e. If acquired for an R&D project, there is a reasonable expectation (e.g., slightly greater than 50 percent likelihood) that the item will be used on another program/project(s) that has not yet commenced.

1.3.2 Items not classified as General PP&E on NASA's financial statements:

a. Items in which NASA has a reversionary interest. For example, NASA sometimes retains an interest in PP&E acquired with grant money in the event that the recipient no longer uses the PP&E in the activity for which the grant was originally provided and the PP&E reverts to NASA.

b. Items classified as Heritage Assets or Stewardship Land.

c. Items that should be expensed as R&D costs.

d. Items classified as Other Assets. Property surplus to the needs of NASA are removed from capital accounts, and no additional depreciation is taken while assets await final disposition.

1.3.3 Items not meeting the above capitalization criteria, or those specifically identified as prototypes or test articles, are considered R&D as defined by Accounting Standards Codification (ASC) 730, Research and Development, and FASAB Technical Release 7, which provide the standards for accounting for R&D costs versus capital costs. ASC 730 states that the costs of materials and equipment or facilities that are acquired or constructed for R&D activities and that have an alternative future use should be capitalized as tangible assets when acquired or constructed. However, the costs of materials, equipment, or facilities that are acquired or constructed for a particular research and development project that are not reasonably expected to have alternative future use and, therefore, provide no separate economic values are defined as R&D costs.

1.3.4 The costs of items identified as R&D will be expensed as incurred at the time the items are acquired, fabricated, or constructed.

1.3.5 Capitalization Determination Form (CDF), NF 1739.

1.3.5.1 The CDF, NF 1739 will be completed by the program/project manager or designee prior to acquiring, fabricating, or modifying any PP&E items that meet the thresholds identified in paragraph 1.3.1 above, including pieces that will be assembled into an end item whose total cost will equal or exceed one of the thresholds listed above. The Center Office of the Chief Financial Officer (OCFO) representative shall identify on the NF 1739 each item as capital or non-capital in accordance with the capitalization criteria outlined above.

1.3.5.2 NASA's programs and projects are primarily R&D. However, some PP&E may be used to support other projects commencing after the PP&E item is acquired. Identification of these items and their capitalization determination will be accomplished through completion of the CDF, NF 1739.

1.3.6 Identification and Tracking of Capital PP&E.

1.3.6.1 Assets identified as capital on the CDF, NF 1739, will be segregated for identification and tracking through the establishment of unique WBS elements with capital asset indicators. This will allow for the separate identification, funding, and accumulation of capital costs within NASA's official accounting system associated with each acquired, fabricated, or modified PP&E item.

1.3.6.2 Joint costs that are commonly used to support the production of multiple assets within a single project that cannot be directly traced to each final asset should be directly traced to the project via the establishment of unique WBS element(s) with a capital asset indicator(s) at the project level. Joint or common project costs, as well as other indirect costs that cannot be directly traced to the project or capital asset in an economically feasible manner, will be allocated to the final asset(s) based on a reasonably supportable allocation methodology. For example, inspection or survey costs that cannot be traced to a specific end item may be allocated to the final asset based upon percentage of total inspections or surveys, square footage, or project size.

1.3.6.3 Assets or projects identified as capital, but where a unique WBS was not previously established, should be capitalized only with the prior approval of NASA-Agency OCFO, Director of Financial Management, and supporting documentation as required in Section 2.8.

1.4 PP&E Life Cycle

1.4.1 Purpose. This section describes the PP&E life cycle from a financial accounting perspective. The descriptions in the following paragraphs provide a summary of the major PP&E life cycles and financial requirements for capital PP&E identification, cost accumulation, reporting, receiving, and disposal.

1.4.2 PP&E Life Cycle Phases. The following sections describe the major phases of the PP&E life cycle:

1.4.2.1 Planning. PP&E items NASA plans to acquire, fabricate, or modify should be identified and evaluated through the completion of the CDF, NF 1739 by the program/project manager or designee and the Center Office of the Chief Financial Officer (OCFO) representative to determine if the PP&E meets NASA's capitalization criteria. Those PP&E items that meet established capitalization criteria will be capitalized as General PP&E and segregated for identification and tracking through the establishment of unique WBS elements with capital asset indicators.

(i) The unique WBS element(s) will be established with a capital asset indicator in NASA's Metadata Manager (MdM). The four asset indicator attributes in MdM, which are based on the nature of and information provided on the CDF, NF 1739, are:

a. PP&E - Fabricated equipment.

b. PP&E - Purchased equipment.

c. Real property.

d. Software (Internal use software $1M and over).

1.4.2.2 Acquiring, Fabricating, or Modifying. Acquiring, fabricating, or modifying General PP&E may occur through a variety of methods. These may include simplified acquisitions, vendor acquisitions, fabrication, construction, and/or modifications. General PP&E may also be transferred between contractors and NASA, donated, transferred from other Federal Agencies, or acquired through Capital Lease.

(i) Costs incurred by NASA or its contractors, grantees, and cooperative agreement partners for an asset meeting the capitalization criteria will be identified and tracked using a separate unique WBS element with a capital asset indicator.

(ii) Identified capital costs will be accumulated against the unique WBS element as an Asset Under Construction (AUC) and recorded as WIP. These capital costs will be transferred from WIP at the time of delivery or completion and settled against a final asset or sub-asset(s) as General PP&E in the general ledger.

1.4.2.3 Disposition. General PP&E identified as excess (permanently not in use) to the needs of NASA and/or identified as no longer in operation will be removed from the General PP&E general ledger accounts and recognized as other assets in accordance with SFFAS No. 6 until the asset is sold, scrapped, or decommissioned.

1.5 Reconciliation and Reporting

1.5.1 Reconciliations and validations will be performed, documented, and reviewed in accordance with the Continuous Monitoring Program (CMP) requirements per NPR 9010.2, Continuous Monitoring Program and Financial Management Operating Procedures.

1.5.2 CMP activities and supporting work papers should be maintained by the Center Chief Financial Officer (CFO)/Deputy Chief Financial Officer (Finance) (DCFO(F)) and will be available for review upon request or as required in the CMP.

1.6 Roles and Responsibilities

1.6.1 The Center Program/Project Managers or Designees shall:

a. Inform the NASA-Agency OCFO, Property Branch, of acquisition strategy meetings.

b. Submit to the Center OCFO the completed CDF, NF 1739 for each PP&E item the program/project is planning to acquire, fabricate, or modify that has been identified per the requirements set forth in NPR 7120.5, NASA Space Flight Program and Project Management Requirements, NPR 7120.7, NASA Information Technology and Institutional Infrastructure Program and Project Management Requirements, NPR 7120.8, NASA Research and Technology Program and Project Management Requirements, and NPR 8800.15, Real Estate Management Program.

c. Ensure a unique WBS element is created within the project WBS structure for assets meeting the capitalization criteria as identified through the use of CDF, NF 1739.

d. After Center CFO approval, ensure that the completed and approved CDF, NF 1739 is attached to the MdM request using the attachment feature in MdM. e. Create Purchase Requisitions (PRs) to fund identified PP&E items meeting the capitalization criteria ensuring that the PRs are funded by the unique WBS element and the applicable capital asset indicator.

1.6.2 The NASA-Agency OCFO shall:

a. Review and approve the MdM requests for unique WBS elements with a capital asset indicator for assets identified as meeting the capitalization criteria through the review of the attached CDF, NF 1739.

b. Develop, in conjunction with procurement, project management personnel, and Center finance personnel, the financial policies and procedures and standard financial management reporting requirements to be included in solicitations and contracts to support separate cost reporting of each identified capital asset.

1.6.3 The Center OCFO shall:

a. Ensure that adequate financial controls are in place and financial records and reports accurately reflect the status and value of capital PP&E.

b. Ensure that adequate supporting documentation is maintained and is readily available to support audit requests and other quality control reviews. (See Section 2.8 of this NPR.)

c. Ensure that the CMP activities are completed in accordance with NPR 9010.2, Continuous Monitoring Program and Financial Management Operating Procedures.

d. Work with project managers, procurement officers, resource managers, real property officers, and logistics personnel to review project work that will acquire, fabricate, construct, or modify/improve capital assets to ensure all General PP&E is properly identified and unique WBS elements are created so that the assets can be accurately valued and reported.

e. Review and approve all submitted CDFs, NF 1739s for PP&E acquired or fabricated beginning October 1, 2014, to ensure that all identified, planned PP&E comply with CDF and NASA capitalization requirements and that unique WBS elements have been identified for PP&E that meet capitalization requirements.

f. Provide the final capitalization determination for all identified PP&E based upon review and approval of the CDF, NF 1739.

g. Maintain the original completed and approved CDF, NF 1739.

h. Ensure that each identified asset meeting the capitalization criteria has a unique WBS and that the correct capital asset indicator attribute has been assigned to the MdM record.

i. Work in close liaison with NASA-Agency OCFO, procurement, and project management personnel to develop the financial management reporting requirements and instructions to be included in solicitations and contracts that support the separate reporting of each item of General PP&E.

j. Review identified capital assets recorded as AUCs and ensure that the AUCs are settled to a final asset or sub-asset(s) upon delivery or completion and the value of the final asset or sub- asset(s) is properly supported.

k. Review contractor, grantee, and cooperative agreement partner requests to purchase PP&E in order to ensure that a unique WBS element(s) and separate reporting of individual PP&E has been established.

l. Identify costs to be capitalized and maintain financial records for each capital facility project in progress. These records are the source for entries to the general ledger WIP.

m. Review the assessment of impairment losses of General PP&E provided by their respective Logistics and Facilities offices and submit to the Agency OCFO, Property Branch for concurrence in determining if the decline in service of the asset meets NASA criteria for impairment loss recognition.

1.6.4 Center Procurement Officers shall support the Center OCFO in identifying and reporting identified capital PP&E through implementation of the Federal Acquisition Regulation (FAR), 48 C.F.R. Chapter 1 and the NASA FAR Supplement (NFS), 48 C.F.R. pts. 1801-1854, the Uniform Guidance at 2 CFR Parts 200 and 1800, and NASA regulations for Cooperative Agreements to Commercial Firms at 14 CFR 1274, in the following areas:

a. Prior to Contract Award.

(1) Ensure that the types and approximate quantities of Government-furnished property and contactor acquired property are identified in solicitations and are discussed in procurement plans and procurement strategy meetings, whereby Center OCFO representatives are included in the procurement planning process (Acquisition Planning, 48 C.F.R. pt. 7 and NFS, Acquisition Planning, 48 C.F.R. pt. 1807) where applicable.

(2) Ensure that NASA technical, program control, procurement, financial, and resource personnel have taken part in developing the reporting structures as defined in NPD 9501.1 for solicitations that include acquiring, fabricating, constructing, or modifying Government property.

(3) Ensure that the appropriate solicitation instructions, provisions, and contract clauses are included in solicitations and contracts, in order that (per FAR Government Property, 48 C.F.R. pt. 45 and NFS Government Property, 48 C.F.R. pt. 1845):

(a) The solicitation identifies all Government property that may be made available for performance of the contract.

(b) Contractors are required to identify any Government property desired and required for performance of the effort.

(d) Contractors are required to obtain approval for the purchase or fabrication of property for which the Government will have title, unless the property is a deliverable itemized under the contract or a component of or material for that deliverable or property approved as part of the contract award or specifically required within the statement of work.

(e) Support the cognizant financial management and project management personnel in the development of contractor cost reporting requirements (where cost reporting is required) that include a separate reporting category for each identified capital asset (NFS, NASA Contractor Financial Management Reporting, 48 C.F.R. subpt. 1842.72 and NPR 9501.2, NASA Contractor Financial Management Reporting).

(4) For contracts that do not require cost reporting, as defined in NPD 9501.1, NASA Contractor Financial Management Reporting System, create a separate contract line item or unique task/delivery order for each capital asset for which the Government will have title.

(5) Require that invoices/vouchers or other supplemental cost reports or task orders/delivery orders are submitted by contract line item, clearly identifying each item of PP&E.

b. Prior to Grant or Cooperative Agreement Award:

(1) Ensure that the types and approximate quantities of Government-furnished property and grantee-acquired property are identified in solicitations and are discussed in grants planning and strategy meetings, whereby Center OCFO representatives are included in the planning process, where applicable.

(2) Ensure that the appropriate solicitation instructions and terms and conditions are included in solicitations and grant/cooperative agreement awards (per 2 CFR Parts 200 and 1800):

(3) For grantee-acquired property, ensure all pre-award requirements identified in 2 CFR Parts 200 and 1800 and the Grant and Cooperative Agreement Manual are met.

c. After Contract Award.

(1) Review for approval all contractor requests to purchase and/or fabricate PP&E which the Government will have title to in accordance with the FAR Government property clause. Forward approved requests with an expected total cost (see Section 2.2) equal to or greater than the thresholds identified in paragraph 1.3.1.a. above to the Center DCFO in accordance with NFS Government Property, 48 C.F.R. pt. 1845.

(2) For contracts requiring financial management and cost reporting, ensure that contractors report approved PP&E purchases and/or fabrications that have been determined to meet the capitalization criteria as separate line items (as initially established in the contract).

(3) For firm fixed price contracts, ensure that the invoice, and/or progress payment requests, or other interim payment requests contain the contract line item level detail to allow proper costing of each item of PP&E.

d. After Grant or Cooperative Agreement Award:

(1) For grants and cooperative agreements to commercial firms, ensure that the invoice or payment request contains the line item level detail to allow proper costing of each item of PP&E.

1.6.5 The Center Real Property Accountable Officer shall:

a. In consultation with the Center Facility Utilization Officer or Facility Utilization Board, notify the Center CFO/Center DCFO(F) when there is a change in the status of real property for which the Center is accountable (including NASA property held by contractors), including new construction, capital improvements, or changes in operational status such as standby, mothballed, or abandoned.

b. Assist the Center CFO/DCFO(F) as requested, with the reconciliation of real property reports to the accounting system.

1.6.6 The Center Supply and Equipment Management Officer and the Center Real Property Accountable Officer shall:

(a) Document permanent impairments identified during the course of regular surveys and inspections. The documentation will include a description of the impairment and the calculations used to determine the impairment loss.

(b) Forward impairment documentation to the Center CFO for review and a determination whether recognition of the loss is required.