DoD Seal DoD 50 Year Seal

OFFICE OF THE SECRETARY OF DEFENSE

1000 DEFENSE PENTAGON
WASHINGTON, DC 20301-1000
May 13,1996

 
ACQUISITION AND
 TECHNOLOGY

DP(DAR)

                                                                  In reply refer to
                                                                  DFARS Case: 96-D303
                                                                  D. L. 96-011



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:        Cost Reimbursement Rules for Indirect Costs - Private
                Sector
                
       We have amended Part 231 of the Defense Federal Acquisition Regulation 
Supplement (DFARS) to implement Section 808 of the FY 1996 Defense Authorization
Act (Pub. L. 104-106).  Section 808 permits the DoD to enter into a defense 
capability preservation agreement with a defense contractor where it would facilitate
the achievement of the policy objectives relating to defense reinvestment, 
diversification, and conversion set forth in 10 U.S.C. 2501(b).  Such an agreement 
would permit the contractor to claim certain indirect costs, attributable to its 
private sector work, on its defense contracts.

       This interim DFARS rule is effective immediately and will be published in a 
future Defense Acquisition Circular.





                                                    /s/

                                             Eleanor R. Spector
                                             Director, Defense Procurement

Attachment

cc: DSMC, Ft. Belvoir


DFARS CASE 96-D303, COST REIMBURSEMENT RULES FOR INDIRECT COSTS - PRIVATE SECTOR

Part 231--Contract Cost Principles and Procedures

* * * * *

SUBPART 231.2--CONTRACTS WITH COMMERCIAL ORGANIZATIONS

* * * * *

[231.205-71 Defense capability preservation agreements.

(a) Scope and authority.
Where it would facilitate the achievement of the policy objectives relating to defense reinvestment, diversification, and conversion set forth in 10 U.S.C. 2501(b), DoD may enter into a “defense capability preservation agreement” with a contractor. As authorized by Section 808 of the National Defense Authorization Act for Fiscal Year 1996 (Pub. L. 104-106), such an agreement would permit the contractor to claim certain indirect costs attributable to its private sector work as allowable costs on its defense contracts.

(b) Procedure.
A contractor may submit a request for such an agreement, together with appropriate justification, through the Assistant Secretary of Defense for Economic Security, to the Under Secretary of Defense for Acquisition and Technology, who has exclusive approval or disapproval authority. The contractor should also provide an informational copy of any such request to the cognizant administrative contracting officer.]