[Federal Register Volume 63, Number 158 (Monday, August 17, 1998)]
[Rules and Regulations]
[Pages 43889-43890]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-21907]


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DEPARTMENT OF DEFENSE

48 CFR Parts 225 and 253

[DFARS Case 98-D015]


Defense Federal Acquisition Regulation Supplement; Letter of 
Offer and Acceptance

AGENCY: Department of Defense (DoD).

ACTION: Final rule.

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SUMMARY: The Director of Defense Procurement has issued a final rule 
amending the Defense Federal Acquisition Regulation Supplement (DFARS) 
to remove references to an obsolete form pertaining to offer and 
acceptance of foreign military sales (FMS) agreements, and to make 
other editorial changes pertaining to FMS acquisitions.

EFFECTIVE DATE: August 17, 1998.

FOR FURTHER INFORMATION CONTACT:
Ms. Amy Williams, Defense Acquisition Regulations Council, PDUSD (AT&T) 
DP (DAR), IMD 3D139, 3062 Defense Pentagon, Washington, DC 20301-3062. 
Telephone (703) 602-0131; telefax (703) 602-0350. Please cite DFARS 
Case 98-D015.

SUPPLEMENTARY INFORMATION:

A. Background

    This final rule amends DFARS Subpart 225.73 and Part 253 to remove 
references to DD Form 1513, United States Department of Defense Offer 
and Acceptance, which is no longer used to document FMS agreements. 
Such agreements are documented in a Letter of Offer and Acceptance.

B. Regulatory Flexibility Act

    The final rule does not constitute a significant revision within 
the meaning of FAR 1.501 and Public Law 98-577 and publication for 
public comment is not required. However, comments from small entities 
concerning the affected DFARS subpart will be considered in accordance 
with 5 U.S.C. 610. Such comments should cite DFARS Case 98-D015.

C. Paperwork Reduction Act

    The Paperwork Reduction Act does not apply because the final rule 
does not impose any information collection requirements that require 
the approval of the Office of Management and Budget under 44 U.S.C. 
3501, et seq.

List of Subjects in 48 CFR Parts 225 and 253

    Government procurement.
Michele P. Peterson,
Executive Editor, Defense Acquisition Regulations Council.

    Therefore, 48 CFR Parts 225 and 253 are amended as follows:
    1. The authority citation for 48 CFR Parts 225 and 253 continues to 
read as follows:

    Authority: 41 U.S.C. 421 and 48 CFR Chapter 1.

PART 225--FOREIGN ACQUISITION

    2. Section 225.7300 is revised to read as follows:


225.7300  Scope of subpart.

    (a) This subpart contains policies and procedures for acquisitions 
for foreign military sales (FMS) under the Arms Export Control Act (22 
U.S.C. Chapter 39). Section 22 of the Arms Export Control Act (22 
U.S.C. 2762) authorizes DoD to enter into contracts for resale to 
foreign countries or international organizations.
    (b) This subpart does not apply to--
    (1) FMS made from inventories or stocks;
    (2) Acquisitions for replenishment of inventories or stocks; or
    (3) Acquisitions made under DoD cooperative logistic supply support 
arrangements.
    3. Section 225.7301 is amended by revising paragraph (a) 
introductory text to read as follows:


225.7301  General.

    (a) The U.S. Government sells defense articles and services to 
foreign governments or international organizations through FMS 
agreements. The agreement is documented in a Letter of Offer and 
Acceptance (LOA) (see DoD 5105.38-M, Security Assistance Management 
Manual). The LOA--
* * * * *


225.7302   [Amended]

    4. Section 225.7302 is amended in the introductory text, in 
paragraph (a)(1), and in paragraph (b) introductory text by removing 
``DoD Offer and Acceptance'' and inserting in its place ``LOA''; and in 
paragraph (b)(1) by removing ``DD Form 1513'' and inserting in its 
place ``LOA''.


225.7303   Pricing acquisitions for FMS.

    5. The heading of section 225.7303 is revised to read as set forth 
above.
    6. Section 225.7303-2 is amended in paragraph (a)(3)(i) by removing 
``foreign military sale Letter of Offer and Acceptance'' and inserting 
in its place ``LOA''; in paragraph (b) by removing ``foreign military 
sale'' and inserting in its place ``FMS''; and by revising paragraph 
(c) introductory text and paragraph (d) to read as follows:


225.7303-2   Cost of doing business with a foreign government or an 
international organization.

* * * * *
    (c) The provisions of 10 U.S.C. 2372 do not apply to contracts for 
FMS. Therefore, the cost limitations on independent research and 
development and bid and proposal (IR&D/B&P) costs in FAR 31.205-18 do 
not apply to such contracts, except as provided in 225.7303-5. The 
allowability of IR&D/B&P costs on contracts for FMS not wholly paid for 
from funds made available on a nonrepayable basis shall be limited to 
the contract's allocable share of the contractor's total IR&D/B&P 
expenditures. In pricing contracts for such FMS--
* * * * *
    (d) Under paragraph (e)(1)(A) of Section 21 of the Arms Export 
Control Act (22 U.S.C. 2761), the United States must charge for 
administrative services to recover the estimated cost of administration 
of sales made under the Army Export Control Act.

[[Page 43890]]

    7. Section 225.7303-4 is amended by revising paragraph (b)(1) to 
read as follows:


225.7303-4  Contingent fees.

* * * * *
    (b)(1) Under DoD 5105.38-M, LOAs for requirements for the 
governments of Australia, Taiwan, Egypt, Greece, Israel, Japan, Jordan, 
Republic of Korea, Kuwait, Pakistan, Philippines, Saudi Arabia, Turkey, 
Thailand, or Venezuela (Air Force) must provide that all U.S. 
Government contacts resulting from the LOAs prohibit the reimbursement 
of contingent fees as an allowable cost under the contract, unless the 
payments have been identified and approved in writing by the foreign 
customer before contract award (see 225.7308(a)).
* * * * *


225.7303-5  [Amended]

    8. Section 225.7303-5 is amended in paragraph (a) by removing 
``foreign military sales'' and inserting in its place ``FMS''; and in 
paragraph (c) by removing ``foreign military sale Letter of Offer and 
Acceptance'' and inserting in its place ``LOA''.
    9. Section 225.7304 is amended by revising the last sentence of 
paragraph (a); in paragraph (b)(1) by removing ``A-E'' and inserting in 
its place ``architect-engineer''; and by revising paragraph (c) to read 
as follows:


225.7304  Source selection.

    (a) * * * The contracting officer shall honor such requests from 
the FMS customer only if the LOA or other written direction 
sufficiently fulfills the requirements of FAR subpart 6.3.
* * * * *
    (c) Do not accept directions from the FMS customer on source 
selection decisions or contract terms (except that, upon timely notice, 
the contracting officer may attempt to obtain any special contract 
provisions and warranties requested by the FMS customer).
* * * * *


225.7306  Exercise of options for FMS.

    10. The heading of section 225.7306 is revised to read as set forth 
above.


225.7308  [Amended]

    11. Section 225.7308 is amended in paragraphs (a) and (b) by 
removing ``foreign military sales'' and inserting in its place ``FMS''.

PART 253--FORMS

    12. The note at the end of Part 253 is amended to remove the entry 
``253.303-1513 United States Department of Defense Offer and 
Acceptance''.

[FR Doc. 98-21907 Filed 8-14-98; 8:45 am]
BILLING CODE 5000-04-M