[Code of Federal Regulations]
[Title 32, Volume 1, Parts 1 to 190]
[Revised as of July 1, 1998]
From the U.S. Government Printing Office via GPO Access
[CITE: 32CFR165.6]

[Page 880]
 
                       TITLE 32--NATIONAL DEFENSE
 
              CHAPTER I--OFFICE OF THE SECRETARY OF DEFENSE
 
PART 165--RECOUPMENT OF NONRECURRING COSTS ON SALES OF U.S. ITEMS--Table of Contents
 
Sec. 165.6  Procedures.

    (a) The nonrecurring cost recoupment charge to be reimbursed shall 
be a pro rata recovery of nonrecurring cost for the applicable major 
defense equipment. Recovery of nonrecurring cost recoupment charges 
shall cease upon the recovery of total DoD costs. Such charges shall be 
based on a cost pool as defined in Sec. 165.3. For a system that 
includes more than one component, a ``building block'' approach (i.e., 
the sum of nonrecurring cost recoupment charges for individual 
components) shall be used to determine the nonrecurring cost recoupment 
charge for the sale of the entire system.
    (b) A nonrecurring cost recoupment charge shall not apply when a 
waiver has been approved by the Under Secretary of Defense for Policy in 
accordance with Sec. 165.7 or when sales are financed with U.S. 
Government funds made available on a nonrepayable basis. Approved 
revised nonrecurring cost recoupment charges shall not be applied 
retroactively to accepted foreign military sales agreements.
    (c) When major defense equipment are sold at a reduced price due to 
age or condition, the nonrecurring cost recoupment charge shall be 
reduced by the same percentage reduction.
    (d) The full amount of ``special'' research, development, test, and 
evaluation and nonrecurring production costs incurred for the benefit of 
particular customers shall be paid by those customers. However, when a 
subsequent purchaser requests the same specialized features that 
resulted from the added ``special'' research, development, test, and 
evaluation and nonrecurring production costs, a pro rata share of those 
costs may be paid by the subsequent purchaser and transferred to the 
original customer if those special nonrecurring costs exceed 50 million 
dollars. The pro rata share may be a unit charge determined by the DoD 
Component as a result of distribution of the total costs divided by the 
total production. Such reimbursements shall not be collected after 10 
years have elapsed since acceptance of DD Form 1513, ``U.S. DoD Offer 
and Acceptance,'' by the original customer, unless otherwise authorized 
by the Under Secretary of Defense for Policy. The U.S. Government shall 
not be charged any nonrecurring costs recoupment charge if it adopts the 
features for its own use or provides equipment with such features under 
a U.S. Grant Aid or similar program.
    (e) For coproduction, codevelopment and cooperative development, or 
cooperative production DoD agreements, the policy set forth in this part 
shall determine the allocation basis for recouping from the third party 
purchasers the investment costs of the participants. Such DoD agreements 
shall provide for the application of the policies in this part to sales 
to third parties by any of the parties to the agreement and for the 
distribution of recoupments among the parties to the agreement.