ACQUISITION AND TECHNOLOGY
DP(DAR) In reply refer to DFARS Case: 96-D309 D. L. 96-010 MEMORANDUM FOR DIRECTORS OF DEFENSE AGENCIES DEPUTY FOR ACQUISITION AND BUSINESS MANAGEMENT, ASN(RD&A)/ABM DEPUTY ASSISTANT SECRETARY OF THE AIR FORCE (CONTRACTING), SAF/AQC DIRECTOR, PROCUREMENT POLICY, ASA(RD&A)/SARD-PP DEPUTY DIRECTOR (ACQUISITION), DEFENSE LOGISTICS AGENCY SUBJECT: Pricing for Sales of Defense Articles We have amended the Defense Federal Acquisition Regulation Supplement (DFARS) to implement Section 531A of the FY 1996 Foreign Operations, Export Financing, and Related Programs Appropriations Act (Pub. L. 104-107), which requires that sales of defense articles and defense services wholly paid for from funds made available on a nonrepayable basis shall be priced on the same costing basis as is applicable to like items purchased by the Department of Defense for its own use. The attached interim DFARS rule is effective immediately and will be included in a future Defense Acquisition Circular. /s/ Eleanor R. Spector Director, Defense Procurement
Attachment
cc: DSMC, Ft. Belvoir
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DFARS CASE 96-D309
Interim Rule
PART 225--FOREIGN ACQUISITION
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SUBPART 225.73--ACQUISITIONS FOR FOREIGN MILITARY SALES
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225.7303 Pricing acquisitions for foreign military sales [(FMS)].
Price foreign military sale 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 a foreign military sale contract, however, may result in prices that differ from other defense contract prices for the same item due to the considerations in this section.
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225.7303-2 Cost of doing business with a foreign government or an international organization.
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[225.7303-5 Acquisitions wholly paid for from nonrepayable funds.
(a) In accordance with 22 U.S.C. 2762(d), foreign military sales wholly paid for from funds made available on a nonrepayable basis shall be priced on the same costing basis with regard to profit, overhead, IR&D/B&P, and other costing elements, as is applicable to acquisitions of like items purchased by DoD for its own use.
(b) Direct costs associated with meeting a foreign customer’s additional or unique requirements will be allowable under such contracts. Indirect burden rates applicable to such direct costs
shall be permitted at the same rates applicable to acquisitions of like items purchased by DoD for its own use.
(c) A U.S. defense contractor may not recover costs incurred to implement its offset agreement with a foreign government or international organization if the foreign military sale Letter of Offer and Acceptance is financed with funds made available on a nonrepayable basis. ]