[Federal Register: September 14, 1999 (Volume 64, Number 177)] [Rules and Regulations] [Page 49683-49684] From the Federal Register Online via GPO Access [wais.access.gpo.gov] [DOCID:fr14se99-21] ======================================================================= ----------------------------------------------------------------------- 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