[Federal Register Volume 67, Number 81 (Friday, April 26, 2002)]
[Proposed Rules]
[Pages 20713-20714]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-10093]



48 CFR Part 225

[DFARS Case 2002-D005]

Defense Federal Acquisition Regulation Supplement; Foreign 
Military Sales Customer Involvement

AGENCY: Department of Defense (DoD).

ACTION: Proposed rule with request for comments.


SUMMARY: DoD is proposing to amend the Defense Federal Acquisition 
Regulation Supplement (DFARS) to add policy regarding the participation 
of foreign military sales (FMS) customers in the development of 
contracts that DoD awards on their behalf. The objective is to provide 
FMS customers with more visibility into the contract pricing and award 

DATES: Comments on the proposed rule should be submitted in writing to 
the address shown below on or before June 25, 2002, to be considered in 
the formation of the final rule.

ADDRESSES: Respondents may submit comments directly on the World Wide 
Web at http://emissary.acq.osd.mil/dar/dfars.nsf/pubcomm. As an 
alternative, respondents may e-mail comments to: [email protected]. 
Please cite DFARS Case 2002-D005 in the subject line of e-mailed 
    Respondents that cannot submit comments using either of the above 
methods may submit comments to: Defense Acquisition Regulations 
Council, Attn: Ms. Amy Williams, OUSD(AT&L)DP(DAR), IMD 3C132, 3062 
Defense Pentagon, Washington, DC 20301-3062; facsimile (703) 602-0350. 
Please cite DFARS Case 2002-D005.
    At the end of the comment period, interested parties may view 
public comments on the World Wide Web at http://emissary.acq.osd.mil/dar/dfars.nsf.

[[Page 20714]]

FOR FURTHER INFORMATION CONTACT: Ms. Amy Williams, (703) 602-0328.


A. Background

    FMS customers have requested more visibility into the preparation 
and pricing of contracts that DoD awards on their behalf. This proposed 
rule revises DFARS 225.7304 to provide for greater involvement of FMS 
customers in the contract award process, while protecting against 
unauthorized disclosure of contractor proprietary data.
    This rule was not subject to Office of Management and Budget review 
under Executive Order 12866, dated September 30, 1993.

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 the 
involvement of FMS customers in contract development should have no 
significant effect on offerors or contractors. The rule provides for 
the protection of contractor proprietary data. Therefore, DoD has not 
performed an initial regulatory flexibility analysis. DoD invites 
comments from small businesses and other interested parties. DoD also 
will consider comments from small entities concerning the affected 
DFARS subpart in accordance with 5 U.S.C. 610. Such comments should be 
submitted separately and should cite DFARS Case 2002-D005.

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, DoD proposes to amend 48 CFR Part 225 as follows:
    1. The authority citation for 48 CFR Part 225 continues to read as 

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


    2. Section 225.7304 is revised to read as follows:

225.7304  FMS customer involvement.

    (a) FMS customers may request that a defense article or defense 
service be obtained from a particular contractor. In such cases, FAR 
6.302-4 provides authority to contract without full and open 
competition. The FMS customer may also request that a subcontract be 
placed with a particular firm. 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.
    (b) FMS customers should be encouraged to participate with U.S. 
Government acquisition personnel in discussions with industry to--
    (1) Develop technical specifications;
    (2) Establish delivery schedules;
    (3) Identify any special warranty provisions or other requirements 
unique to the FMS customer; and
    (4) Review prices on varying alternatives, quantities, and options 
needed to make price-performance tradeoffs.
    (c) Do not disclose to the FMS customer any data, including cost or 
pricing data, that is contractor proprietary unless the contractor 
authorizes its release.
    (d) Except as provided in paragraph (e)(3) of this section, the 
degree of FMS customer participation in contract negotiations is left 
to the discretion of the contracting officer. Factors that may limit 
FMS customer participation include situations where--
    (1) The contract includes requirements for more than one FMS 
    (2) The contract includes unique U.S. requirements; or
    (3) Contractor proprietary data is a subject of negotiations.
    (e) Do not allow representatives of the FMS customer to--
    (1) Direct the exclusion of certain firms from the solicitation 
process (They may suggest the inclusion of certain firms);
    (2) Interfere with a contractor's placement of subcontracts; or
    (3) Observe or participate in negotiations between the U.S. 
Government and the contractor involving cost or pricing data, unless a 
deviation is granted in accordance with subpart 201.4.
    (f) 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, warranties, or other unique requirements requested by the 
FMS customer).
    (g) Do not honor any requests by the FMS customer to reject any bid 
or proposal.
    (h) If an FMS customer requests additional information concerning 
FMS contract prices, the contracting officer shall, after consultation 
with the contractor, provide sufficient information to demonstrate the 
reasonableness of the price and reasonable responses to relevant 
questions concerning contract price. This information--
    (1) May include tailored responses, top-level pricing summaries, 
historical prices, or an explanation of any significant differences 
between the actual contract price and the estimated contract price 
included in the initial LOA; and
    (2) May be provided orally, in writing, or by any other method 
acceptable to the contracting officer.

[FR Doc. 02-10093 Filed 4-25-02; 8:45 am]