[Federal Register Volume 59, Number 191 (Tuesday, October 4, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-24461]
[[Page Unknown]]
[Federal Register: October 4, 1994]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF DEFENSE
48 CFR Part 225
Defense Federal Acquisition Regulation Supplement; Offset
Administrative Costs
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 change the criteria for contractor recovery of offset administrative
costs under foreign military sales.
EFFECTIVE DATE: September 28, 1994.
FOR FURTHER INFORMATION CONTACT:
LTC Ed King, (703) 604-5929.
SUPPLEMENTARY INFORMATION:
A. Background
This revision originated based on a Defense Security Assistance
Agency (DSAA) procedural change on offset administrative costs. A
proposed rule was published at 59 FR 17756 on April 14, 1994. The
proposed rule is adopted as final without change. DSAA will issue a
corresponding revision to the Security Assistance Manual.
B. Regulatory Flexibility Act
The Department of Defense certifies that this final rule will not
have a significant economic impact on a substantial number of small
entities under the Regulatory Flexibility Act, 5 U.S.C. 601, et seq.,
because it is unlikely that a substantial number of small entities have
foreign military sales contracts. No comments were received on the
impact of this rule on small entities during the public comment period.
C. Paperwork Reduction Act
The final rule does not impose any reporting or recordkeeping
requirements which require the approval of OMB under 44 U.S.C. 3501, et
seq.
List of Subjects in 48 CFR Part 225
Government procurement.
Claudia L. Naugle,
Deputy Director, Defense Acquisition Regulations Council.
Accordingly, 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 225.7303-2(a) is revised to read as follows:
Sec. 225.7303-2 Cost of doing business with a foreign government or an
international organization.
(a) In pricing FMS contracts where non-U.S. Government prices as
described in Sec. 225.7303-1 do not exist, recognize the reasonable and
allocable costs of doing business with a foreign government or
international organization, even though such costs might not be
recognized in the same amounts in pricing other defense contracts.
Examples of such costs include, but are not limited to--
(1) Selling expenses (not otherwise limited by FAR part 31), e.g.--
(i) Maintaining international sales and service organizations;
(ii) Sales commissions and fees in accordance with FAR subpart 3.4;
(iii) Sales promotions, demonstrations, and related travel for
sales to foreign governments. Paragraph 126.8 of the International
Traffic in Arms Regulations (ITAR) (22 CFR part 121) may require
Government approval for these costs to be allowable. If Government
approval is required for promotion or demonstration costs to be
allowable, the approval must be obtained.
(iv) Configuration studies and related technical services
undertaken as a direct selling effort to a foreign country.
(2) Product support and post-delivery service expenses, such as--
(i) Operations or maintenance training, training or tactics films,
manuals, or other related data; and
(ii) Technical field services provided in a foreign country related
to accident investigations, weapon system problems, operations/tactics
enhancement, and related travel to foreign countries.
(3) Offset administrative costs.
(i) A U.S. defense contractor may recover costs incurred to
administer specific requirements of its offset agreement with a foreign
government or international organization if the foreign military sale
Letter of Offer and Acceptance is financed wholly with customer cash or
repayable foreign military finance credits.
(ii) The U.S. Government assumes no obligation to satisfy or
administer the offset requirement or to bear any of the associated
costs.
(iii) Some examples of offset administrative costs are--
((A) In-house and/or purchased: organizational, administrative and
technical support, including offset staffing; quality assurance,
manufacturing, purchasing support; data acquisition; proposal,
transaction and report preparation; broker/trading services; legal
support; and similar support activities;
(B) Off-shore operations for technical representative and
consultant activities, office operations, customer and industry
interface, capability surveys;
(C) Marketing assistance and related technical assistance, transfer
of technical information and related training;
(D) Employee travel and subsistence costs; and
(E) Taxes and duties.
(4) Costs that are the subject of advance agreement under the
appropriate provisions of FAR part 31; or where the advance
understanding places a limit on the amounts of cost that will be
recognized as allowable in defense contract pricing, and the agreement
contemplated that it will apply only to DoD contracts for the U.S.
Government's own requirement (as distinguished from contracts for FMS).
* * * * *
[FR Doc. 94-24461 Filed 10-3-94; 8:45 am]
BILLING CODE 5000-04-M
