[Federal Register Volume 62, Number 51 (Monday, March 17, 1997)]
[Rules and Regulations]
[Pages 12703-12704]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-6317]


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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Part 31

[FAC 90-46; FAR Case 95-021; Item VIII]
RIN 9000-AH04


Federal Acquisition Regulation; Allowability of Foreign Selling 
Costs

AGENCIES: Department of Defense (DOD), General Services Administration 
(GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Final rule.

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SUMMARY: The Civilian Agency Acquisition Council and the Defense 
Acquisition Regulations Council have agreed on a final rule amending 
the Federal Acquisition Regulation (FAR) to remove the ceiling on 
allowable foreign selling costs. This regulatory action was not subject 
to Office of Management and Budget review under Executive Order 12866, 
dated September 30, 1993. This is not a major rule under 5 U.S.C. 804.

DATES: Effective May 16, 1997.

FOR FURTHER INFORMATION CONTACT: Mr. Ralph DeStefano at (202) 501-1758 
in reference to this FAR case. For general information, contact the FAR 
Secretariat, Room 4037, GS Building, Washington, DC 20405, (202) 501-
4755.

[[Page 12704]]

Please cite FAC 90-46, FAR case 95-021.

SUPPLEMENTARY INFORMATION:

A. Background

    This final rule revises FAR 31.205-38(c)(2) by removing the ceiling 
on allowable foreign selling costs. The rule also revises FAR 31.205-1, 
Public relations and advertising costs, by deleting reference to the 
ceiling limitation, and further revises FAR 31.205-38(c)(2) by deleting 
obsolete language. A proposed rule was published in the Federal 
Register at 61 FR 31800, June 20, 1996. The proposed rule retained an 
allowability ceiling but increased the threshold for its application 
from $2.5 million to $5.0 million.
    Two sources submitted public comments in response to the proposed 
rule. All comments were considered in developing the final rule. The 
final rule removes the ceiling on allowable foreign selling costs in 
lieu of the proposed rule's doubling of the present threshold for its 
application, i.e., $2.5 million to $5.0 million. The final rule 
achieves a greater reduction in the administrative burden of 
contractors than would result from retaining a ceiling but doubling the 
threshold for its applicability. In addition, elimination of the 
allowability ceiling further promotes the Government's policy of 
stimulating the export of U.S. products.

B. Regulatory Flexibility Act

    The Department of Defense, the General Services Administration, and 
the National Aeronautics and Space Administration certify that this 
final rule will not have a significant economic impact on a substantial 
number of small entities within the meaning of the Regulatory 
Flexibility Act, 5 U.S.C. 601, et seq., because most contracts awarded 
to small entities use simplified acquisition procedures or are awarded 
on a competitive, fixed-price basis, and do not require application of 
the FAR cost principles. In addition, this rule applies to only those 
entities that incur foreign selling costs.

C. Paperwork Reduction Act

    The Paperwork Reduction Act does not apply because the changes to 
the FAR do not impose recordkeeping or information collection 
requirements, or collections of information from offerors, contractors, 
or members of the public which require the approval of the Office of 
Management and Budget under 44 U.S.C. 3501, et seq.

List of Subjects in 48 CFR Part 31

    Government procurement.

    Dated: March 7, 1997.
Edward C. Loeb,
Director, Federal Acquisition Policy Division.

    Therefore, 48 CFR Part 31 is amended as set forth below:

PART 31--CONTRACT COST PRINCIPLES AND PROCEDURES

    1. The authority citation for 48 CFR Part 31 continues to read as 
follows:

    Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42 
U.S.C. 2473(c).

    2. Section 31.205-1 is amended in paragraph (d)(2) by revising the 
second sentence to read as follows:


31.205-1  Public relations and advertising costs.

* * * * *
    (d) * * *
    (2) * * * Such costs are allowable, notwithstanding paragraphs 
(f)(1), (f)(3), (f)(4)(ii), and (f)(5) of this subsection. * * *
* * * * *
    3. Section 31.205-38 is amended by revising paragraph (c)(2) to 
read as follows:


31.205-38  Selling costs.

* * * * *
    (c) * * *
    (2) The costs of broadly targeted and direct selling efforts and 
market planning other than long-range, that are incurred in connection 
with a significant effort to promote export sales of products normally 
sold to the U.S. Government, including the costs of exhibiting and 
demonstrating such products, are allowable on contracts with the U.S. 
Government provided the costs are allocable, reasonable, and otherwise 
allowable under this subpart 31.2.
* * * * *
[FR Doc. 97-6317 Filed 3-14-97; 8:45 am]
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