DoD Seal DoD 50 Year Seal

OFFICE OF THE SECRETARY OF DEFENSE

1000 DEFENSE PENTAGON
WASHINGTON, DC 20301-1000
January 17, 1997

 
ACQUISITION AND
 TECHNOLOGY

DP(DAR)

                                                          In reply refer to
                                                          DFARS Case: 96-D021
                                                          D. L. 97-007



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:    Contingent Fees-Foreign Military Sales (FMS)


     We have amended the Defense Federal Acquisition Regulation
Supplement (DFARS) Subpart 225.73 and related clauses at 252.212-
7001 and 252.225-7027, to conform to changes adopted in the
Federal Acquisition Regulation (FAR).  Federal Acquisition
Circular 90-40 (FAR Case 93-009) eliminated the clause at
52.203-4, Contingent Fee Representation and Agreement; the
Standard Form 119, Statement of Contingent or Other Fees; and the
associated requirements in FAR Subpart 3.4 relating to review and
evaluation of contingent fees.  This interim rule makes the
associated DFARS changes related to contingent fees for FMS.


     The attached interim rule is effective immediately and will
be included in a future Defense Acquisition Circular.








                                                    /s/

                                             Eleanor R. Spector
                                             Director, Defense Procurement

DFARS CASE 96-D021
Contingent Fees-FMS
Interim Rule

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PART 225--FOREIGN ACQUISITION

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SUBPART 225.73-ACQUISITIONS FOR FOREIGN MILITARY SALES

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225.7302 Procedures.
On FMS programs that will require an acquisition, the contracting officer assists the departmental/agency activity responsible for preparing the DoD Offer and Acceptance by-

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225.7303-4 [C]ontingent fees.

[(a)] [C]ontingent fees are allowable under defense contracts provided that the or fees are paid to a bona fide employee or a bona fide established commercial or selling agency maintained by the prospective contractor for the purpose of securing business (see FAR Part 31 and FAR Subpart 3.4). For FMS, it is extremely difficult for DoD to verify the services, or the value of the services. Therefore, the cost of allowable contingent fees (as defined in FAR Subpart 3.4) is limited to $50,000.

([b]) Under DoD 5105.38-M, Security Assistance Management Manual, Letters of Offer and Acceptance for requirements for the governments of Australia, Taiwan, Egypt, Greece, Israel, Japan, Jordan, Republic of Korea, Kuwait, Pakistan, Philippines, Saudi Arabia, Turkey, Thailand, or Venezuela (Air Force) must provide that all U.S. Government contracts resulting from the Letters of Offer prohibit the payment of [contingent] fee[s] unless the payments have been identified and payment approved in writing by the foreign customer before contract award. (See 225.7308(a).)

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225.7308 Contract clauses.

(a) Use the clause at 252.225-7027, [Restriction] on [Contingent] Fees [for Foreign Military Sales], in all solicitations and contracts for foreign military sales.

(b) Use the clause at 252.225-7028, Exclusionary Policies and Practices of Foreign Governments, in all solicitations and contracts for the purchase of goods and services for international military education training and foreign military sales.

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PART 252-SOLICITATION PROVISIONS AND CONTRACT CLAUSES

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252.212-7001 Contract Terms and Conditions Required to Implement Statutes or Executive Orders Applicable to Defense Acquisitions of Commercial Items.
As prescribed in 212.301(f)(iii), use the following clause:

CONTRACT TERMS AND CONDITIONS REQUIRED TO IMPLEMENT STATUTES OR
EXECUTIVE ORDERS APPLICABLE TO DEFENSE ACQUISITIONS OF COMMERCIAL
ITEMS ([JAN 1997])

(a) * * *

(b) The Contractor agrees to comply with any clause that is checked on the following list of DFARS clauses which, if checked, is included in this contract by reference to implement provisions of law or Executive Orders applicable to acquisitions of commercial items or components.

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252.225-7027 [Restriction] on [Contingent] Fees [for Foreign Military Sales].
As prescribed in 225.7308(a), use the following clause[. Insert in paragraph (b) of the clause the name(s) of any foreign country customer(s) listed in 225.7303-4(b).]

[RESTRICTION] ON [CONTINGENT] FEES
[FOR FOREIGN MILITARY SALES] ([JAN 1997]])

[Contingent fees, as defined in the Covenant Against Contingent Fees clause of this contract, are not an allowable cost, and the contract price (including any subcontracts) shall not include] any direct or indirect cost of [contingent] fees for Contractor (or subcontractor) sales representatives for solicitation or promotion or otherwise to secure the conclusion of the sale of any of the supplies or services called for by this contract [, unless-

(End of clause)

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