Acquisition regulations: Foreign military sales customer observation of negotiations,

[Federal Register: April 28, 1999 (Volume 64, Number 81)]

[Proposed Rules]

[Page 22825-22826]

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

[DOCID:fr28ap99-21]

DEPARTMENT OF DEFENSE

48 CFR Part 225

[DFARS Case 99-D005]

Defense Federal Acquisition Regulation Supplement; Foreign Military Sales Customer Observation of Negotiations

AGENCY: Department of Defense (DoD).

ACTION: Proposed rule with request for comments.

SUMMARY: The Director of Defense Procurement is proposing to amend the Defense Federal Acquisitions Regulations Supplement (DFARS) to specify that, if requested by a foreign military sales (FMS) customer, the contracting officer should permit the FMS customer to observe contract price negotiations and should provide the FMS customer with information regarding price reasonableness.

DATES: Comments on the proposed rule should be submitted in writing to the address specified below on or before June 28, 1999, to be considered in the formation of the final rule.

ADDRESSES: Interested parties should submit written comments on the proposed rule to: Defense Acquisition Regulations Council, Attn: Ms. Amy Williams, PDUSD (A&T) DP (DAR), IMD 3D139, 3062 Defense Pentagon, Washington, DC 20301-3061. Telefax (703) 602-0350. Please cite DFARS Case 99-D005.

E-mail comments submitted over the Internet should be addressed to: dfars@acq.osd.mil

Please cite DFARS Case 99-D005 in all correspondence related to this issue. E-mail correspondence should cite DFARS Case 98-D005 in the subject line.

FOR FURTHER INFORMATION CONTACT: Ms. Amy Williams, (703) 602-0131. Please cite DFARS Case 99-D005.

SUPPLEMENTARY INFORMATION:

1. Background

   FMS customers have expressed an interest in becoming more involved in the preparation of contracts that DoD awards on their behalf. They have requested the opportunity to observe price negotiations and to receive assurances that their contract prices are reasonable. This rule proposes revisions to DFARS 225.7304 to specify that, if requested by an FMS customer, the contracting officer should provide the FMS customer with an explanation of the reasonableness of the negotiated price of its contract; and should permit thee FMS customer to observe price negotiations if the prospective contractor consents and the FMS customer provides certain written assurances.

2. 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 involvement of FMS customers in the contracting process should have no significant effect on offerors or contractors. The contracting officer must obtain permission from a prospective contractor before permitting an FMS customer to observe price negotiations. In addition, the FMS customer must provide written assurance that it will not disclose any proprietary or other contract or data except as specifically authorized by the contractor. An initial regulatory flexibility analysis has, therefore, not been performed. Comments are invited from small businesses and other interested parties. Comments from small entities

   [[Page 22826]]

   concerning the affected DFARS subpart also will be considered in accordance with 5 U.S.C. 610. Such comments should be submitted separately and should cite DFARS Case 99-D005 in correspondence.

3. 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 225

   Government procurement. Michele P. Peterson, Executive Editor, Defense Acquisition Regulations Council.

   Therefore, 48 CFR Part 225 is proposed to be amended as follows:

   1. The authority citation for 48 CFR Part 225 continues to read as follows:

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

      PART 225--FOREIGN ACQUISITION

   2. Section 225.7304 is revised to read as follows:

      225.7304 Source selection and contract pricing.

      (a) FMS customers may request that a defense article or defense service by obtained from a particular contractor. In such cases, FAR 6.302-4 provides authority to contract without full and open competition. the FMS customer also may request that a subcontract be placed with a particular firm. The contracting officer shall honor such requests from the FMS customer only is the LOA or other written direction sufficiently fulfills the requirements of FAR Subpart 6.3.

      (b) Do not allow representatives of the FMS customer to--

      (1) Direct the deletion of names of firms from bidders mailing lists or slates of proposed architect-engineer firms. (They may suggest the inclusion of certain firms); or

      (2) Interfere with a contractor's placement of subcontracts.

      (c) Do not accept directions from the FMS customer on source selection decisions or contract terms (except that, upon timely notice, the contracting officer may attempt to obtain any special contract provisions and warranties requested by the FMS customer).

      (d) Do not honor any request by the FMS customer to reject any bid or proposal.

      (e) If requested by the FMS customer--

      (1) The contracting officer should provide the FMS customer with an explanation of the reasonableness of the negotiated price of its contract. This may include briefings or tailored reports, such as top- level pricing summaries, historical pricing trends, or an explanation of any price differential between DoD and FMS contracts; and

      (2) Representatives of the FMS customer may observe price negotiations between the U.S. Government and the prospective contractor if--

      (i) The contractor provides written permission consenting to the observation of price negotiations by the FMS customer. The contractor's written permission must include any restrictions on the disclosure of proprietary or other data; and

      (ii) The FMS customer provides written assurances that it will not--

      (A) Disclose any proprietary or other contractor data except as specifically authorized by the contractor; or

      (B) Discuss with the contractor any issue related to the negotiation of price, either during or separate from negotiations.

      [FR Doc. 99-10546Filed4-27-99; 8:45 am]

      BILLING CODE 5000-04-M