[Federal Register Volume 64, Number 81 (Wednesday, April 28, 1999)]
[Proposed Rules]
[Pages 22825-22826]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-10546]


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DEPARTMENT OF DEFENSE

48 CFR Part 225

[DFARS Case 99-D005]


Defense Federal Acquisition Regulation Supplement; Foreign 
Military Sales Customer Observation of Negotiations

AGENCY: Department of Defense (DoD).

ACTION: Proposed rule with request for comments.

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SUMMARY: The Director of Defense Procurement is proposing to amend the 
Defense Federal Acquisitions Regulations Supplement (DFARS) to specify 
that, if requested by a foreign military sales (FMS) customer, the 
contracting officer should permit the FMS customer to observe contract 
price negotiations and should provide the FMS customer with information 
regarding price reasonableness.

DATES: Comments on the proposed rule should be submitted in writing to 
the address specified below on or before June 28, 1999, to be 
considered in the formation of the final rule.

ADDRESSES: Interested parties should submit written comments on the 
proposed rule to: Defense Acquisition Regulations Council, Attn: Ms. 
Amy Williams, PDUSD (A&T) DP (DAR), IMD 3D139, 3062 Defense Pentagon, 
Washington, DC 20301-3061. Telefax (703) 602-0350. Please cite DFARS 
Case 99-D005.
    E-mail comments submitted over the Internet should be addressed to: 
[email protected]
    Please cite DFARS Case 99-D005 in all correspondence related to 
this issue. E-mail correspondence should cite DFARS Case 98-D005 in the 
subject line.

FOR FURTHER INFORMATION CONTACT: Ms. Amy Williams, (703) 602-0131. 
Please cite DFARS Case 99-D005.

SUPPLEMENTARY INFORMATION: 

A. Background

    FMS customers have expressed an interest in becoming more involved 
in the preparation of contracts that DoD awards on their behalf. They 
have requested the opportunity to observe price negotiations and to 
receive assurances that their contract prices are reasonable. This rule 
proposes revisions to DFARS 225.7304 to specify that, if requested by 
an FMS customer, the contracting officer should provide the FMS 
customer with an explanation of the reasonableness of the negotiated 
price of its contract; and should permit thee FMS customer to observe 
price negotiations if the prospective contractor consents and the FMS 
customer provides certain written assurances.

B. Regulatory Flexibility Act

    The proposed rule is not expected to 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 
involvement of FMS customers in the contracting process should have no 
significant effect on offerors or contractors. The contracting officer 
must obtain permission from a prospective contractor before permitting 
an FMS customer to observe price negotiations. In addition, the FMS 
customer must provide written assurance that it will not disclose any 
proprietary or other contract or data except as specifically authorized 
by the contractor. An initial regulatory flexibility analysis has, 
therefore, not been performed. Comments are invited from small 
businesses and other interested parties. Comments from small entities

[[Page 22826]]

concerning the affected DFARS subpart also will be considered in 
accordance with 5 U.S.C. 610. Such comments should be submitted 
separately and should cite DFARS Case 99-D005 in correspondence.

C. Paperwork Reduction Act

    The Paperwork Reduction Act does not apply because the 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 Part 225

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

    Therefore, 48 CFR Part 225 is proposed to be amended as follows:
    1. The authority citation for 48 CFR Part 225 continues to read as 
follows:

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

PART 225--FOREIGN ACQUISITION

    2. Section 225.7304 is revised to read as follows:


225.7304  Source selection and contract pricing.

    (a) FMS customers may request that a defense article or defense 
service by obtained from a particular contractor. In such cases, FAR 
6.302-4 provides authority to contract without full and open 
competition. the FMS customer also may request that a subcontract be 
placed with a particular firm. The contracting officer shall honor such 
requests from the FMS customer only is the LOA or other written 
direction sufficiently fulfills the requirements of FAR Subpart 6.3.
    (b) Do not allow representatives of the FMS customer to--
    (1) Direct the deletion of names of firms from bidders mailing 
lists or slates of proposed architect-engineer firms. (They may suggest 
the inclusion of certain firms); or
    (2) Interfere with a contractor's placement of subcontracts.
    (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).
    (d) Do not honor any request by the FMS customer to reject any bid 
or proposal.
    (e) If requested by the FMS customer--
    (1) The contracting officer should provide the FMS customer with an 
explanation of the reasonableness of the negotiated price of its 
contract. This may include briefings or tailored reports, such as top-
level pricing summaries, historical pricing trends, or an explanation 
of any price differential between DoD and FMS contracts; and
    (2) Representatives of the FMS customer may observe price 
negotiations between the U.S. Government and the prospective contractor 
if--
    (i) The contractor provides written permission consenting to the 
observation of price negotiations by the FMS customer. The contractor's 
written permission must include any restrictions on the disclosure of 
proprietary or other data; and
    (ii) The FMS customer provides written assurances that it will 
not--
    (A) Disclose any proprietary or other contractor data except as 
specifically authorized by the contractor; or
    (B) Discuss with the contractor any issue related to the 
negotiation of price, either during or separate from negotiations.

[FR Doc. 99-10546 Filed 4-27-99; 8:45 am]
BILLING CODE 5000-04-M