[Federal Register Volume 64, Number 177 (Tuesday, September 14, 1999)]
[Rules and Regulations]
[Pages 49683-49684]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-23730]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF DEFENSE

48 CFR Part 225

[DFARS Case 99-D020]


Defense Federal Acquisition Regulation Supplement; Acquisitions 
for Foreign Military Sales

AGENCY: Department of Defense (DoD).

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The Director of Defense Procurement has issued a final rule 
amending the Defense Federal Acquisition Regulation Supplement (DFARS) 
to clarify that the contracting officer must not require the submission 
of cost or pricing data for a foreign military sales acquisition if the 
foreign government has conducted a competition resulting in adequate 
price competition. The rule also clarifies that all costs incurred for 
offset agreements with a foreign government or international 
organization are allowable if financed wholly with customer cash or 
repayable foreign military finance credits.

EFFECTIVE DATE: September 14, 1999.

FOR FURTHER INFORMATION CONTACT: Ms. Amy Williams, Defense Acquisition 
Regulations Council, PDUSD (A&T) DP (DAR), IMD 3D139, 3062 Defense 
Pentagon, Washington, DC 20301-3062. Telephone (703) 602-0288; telefax 
(703) 602-0350. Please cite DFARS Case 99-D020.

SUPPLEMENTARY INFORMATION: 

A. Background

    This final rule amends DFARS 225.7303 to clarify that the 
contracting officer must not require the submission of cost or pricing 
data for a foreign military sales acquisition if the foreign government 
has conducted a competition resulting in adequate price competition. 
Such competition meets the requirement of FAR 15.403-1(b)(1), which 
states that the contracting officer must not require the submission of 
cost or pricing data when prices are based on adequate price 
competition.
    This rule also amends DFARS 225.7303-2 and 225.7303-5 to clarify 
that all costs incurred for offset agreements with a foreign government 
or international organization are allowable if financed wholly with 
customer cash or repayable foreign military finance credits. In 1996, 
DoD amended the language at DFARS 225.7303-2 to clarify that U.S. 
contractors may recover the full cost necessary to implement such 
agreements (61 FR 7739, February 29, 1996; 60 FR 49358, September 25, 
1995). Since there appear to be differences in the way the language is 
being interpreted and implemented, this rule makes further 
clarifications.
    This rule was not subject to Office of Management and Budget review 
under Executive Order 12866, dated September 30, 1993.

B. Regulatory Flexibility Act

    This 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, DoD will consider comments 
form small entities concerning the affected DFARS subpart in accordance 
with 5 U.S.C. 610. Such comments should cite DFARS Case 99-D020.

C. Paperwork Reduction Act

    The Paperwork Reduction Act does not apply because this 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 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 225.7303 is revised to read as follows:


225.7303  Pricing acquisitions for FMS.

    (a) Price FMS contracts using the same principles as are used in 
pricing other defense contracts. Application of the pricing principles 
in FAR parts 15 and 31 to an FMS contract may result in prices that 
differ from other defense contract prices for the same item due to the 
considerations in this section.
    (b) If the foreign government has conducted a competition resulting 
in adequate price competition (see FAR 15.403-1(b)(1)), the contracting 
officer must not require the submission of cost or pricing data. The 
contracting officer should consult with the foreign government through 
security assistance personnel to determine if adequate price 
competition has occurred.
    3. Section 225.7303-2 is amended by revising paragraph (a)(3) 
introductory text and paragraph (a)(3)(i) to read as follows:

[[Page 49684]]

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

    (a) * * *
    (3) Offset costs.
    (i) A U.S. defense contractor may recover all costs incurred for 
offset agreements with a foreign government or international 
organization if the LOA is financed wholly with customer cash or 
repayable foreign military finance credits.
* * * * *
    4. Section 225.7303-5 is amended by revising paragraph (c) to read 
as follows:


225.7303-5  Acquisitions wholly paid for from nonrepayable funds.

* * * * *
    (c) A U.S. defense contractor may not recover costs incurred for 
offset agreements with a foreign government or international 
organization if the LOA is financed with funds made available on a 
nonrepayable basis.

[FR Doc. 99-23730 Filed 9-13-99; 8:45 am]
BILLING CODE 5000-04-M