DATE: March 14, 2002

SUBJECT: Defense Federal Acquisition Regulation Supplement (DFARS); Restriction on Contingent Fees for Foreign Military Sales -- Commercial Items

SOURCE: Federal Register, March 14, 2002, Vol. 67, No. 50, page 11455

AGENCIES: Department of Defense (DOD)

ACTION: Proposed Rule

SYNOPSIS: DOD is proposing to amend DFARS 252.212-7001, Contract Terms and Conditions Required to Implement Statutes or Executive Orders Applicable to Defense Acquisitions of Commercial Items, to remove DFARS 252.225-7027, Restriction on Contingent Fees for Foreign Military Sales, from the list of clauses included in contracts for commercial items because it implements DOD policy, not law.

DATES: Comments on the proposed rule must be submitted on or before May 13, 2002.

ADDRESSES: Respondents may submit comments directly on the web site at http://emissary.acq.osd.mil/dar/dfars.nsf/pubcomm. As an alternative, respondents may e-mail comments to: dfars@acq.osd.mil. Also,respondents who cannot submit comments through the web site or by e-mail may submit comments to Defense Acquisition Regulations Council, Attn: Amy Williams, OUSD(AT&L)DP(DAR), IMD 3C132, 3062 Defense Pentagon, Washington, DC 20301-3062, or by fax to 703-602-0350. Cite DFARS Case 2000-D029 when making comments on this proposed rule.

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

SUPPLEMENTAL INFORMATION: DFARS 252.212-7001 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 DFARS 252.225-7027, which cites "22 U.S.C. 2779" (Title 22 of the U.S. Code, Section 2779) as its statutory basis. Subsection (c) of 22 U.S.C. 2779 provides 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.

However, DFARS 252.225-7027 does not actually implement 22 U.S.C. 2779, but rather DOD policy. DFARS 252.225-7027 requires the government to identify the costs of certain contingent fees and the foreign military sales customer to approve payment of the fees in writing before contract award for those fees to be allowable. Since DFARS 252.225-7027 is based on DOD policy, and not law, it should not be included in DFARS 252.212-7001, so this proposed rule would remove it.

The requirement in DFARS 252.225-7027 has little effect on commercial contracts because the price the government pays is generally a fixed price, and not based on cost analysis.

FOR FURTHER INFORMATION CONTACT: Panoptic Enterprises at 703-451-5953 or by e-mail to Panoptic@FedGovContracts.com.

Copyright 2002 by Panoptic Enterprises. All Rights Reserved.

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