02-5954. Defense Federal Acquisition Regulation Supplement; Restriction on Contingent Fees for Foreign Military Sales-Commercial Items

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 remove a clause from the list of clauses included in contracts for commercial items to implement provisions of law or Executive orders. The clause proposed for removal pertains to restrictions on contingent fees for foreign military sales.

DATES:

Comments on the proposed rule should be submitted in writing to the address shown below on or before May 13, 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: [e-mail]. Please cite DFARS Case 2000-D029 in the subject line of e-mailed comments.

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 [phone]. Please cite DFARS Case 2000-D029.

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.

FOR FURTHER INFORMATION CONTACT:

Ms. Amy Williams, [phone].

SUPPLEMENTARY INFORMATION:

A. Background

The clause at DFARS 252.212-7001, Contract Terms and Conditions Required to Implement Statutes or Executive Orders Applicable to Defense Acquisitions of Commercial Items, includes a list of clauses that may be included in a contract for commercial items to implement provisions of law or Executive orders. Included on the list is the clause at DFARS 252.225-7027, Restriction on Contingent Fees for Foreign Military Sales, which cites 22 U.S.C. 2779 as its statutory basis. However, the clause at DFARS 252.225-7027 does not implement 22 U.S.C. 2779, which requires in subsection (c) that no fee may be included in the amount paid under a contract unless the amount is reasonable, allocable, and not made to a person who has used improper influence. The clause at DFARS 252.225-7027 implements DoD policy only, requiring that, in order for the costs of certain contingent fees to be allowable, the Government must identify the fees and the foreign military sales customer must approve payment of the fees in writing before contract award. This requirement has little effect in commercial contracts where the price the Government pays is generally a fixed price, not based on cost analysis.

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 most firms that pay or receive contingent fees for foreign military sales are not small business concerns. 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 2000-D029.

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 252

• Government procurement

Michele P. Peterson,

Executive Editor, Defense Acquisition Regulations Council.

Therefore, DoD proposes to amend 48 CFR part 252 as follows:

1. The authority citation for 48 CFR part 252 continues to read as follows:

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

PART 252—SOLICITATION PROVISIONS AND CONTRACT CLAUSES

252.212-7001

[Amended]

2. Section 252.212-7001 is amended as follows:

a. By revising the clause date to read “(XXX 2002)”, and

b. In paragraph (b), by removing the entry “__ 252.225-7027 Restriction on Contingent Fees for Foreign Military Sales (MAR 1998) (22 U.S.C. 2779).”.