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Barry McVay's FEDERAL CONTRACTS DISPATCH

DATE: June 27, 2000

FROM: Barry McVay, CPCM

SUBJECT: Defense Federal Acquisition Regulation Supplement (DFARS); Progress Payments for Foreign Military Sales Contracts

SOURCE: Federal Register, June 27, 2000, Vol. 65, No. 124, page 39722

AGENCIES: Department of Defense (DOD)

ACTION: Final Rule

SYNOPSIS: DOD is amending DFARS Subpart 232.5, Progress Payments Based on Costs, to clarify that progress payments on contracts containing foreign military sales (FMS) requirements are applied in the same manner as progress payments on contracts containing DOD requirements.

EFFECTIVE DATE: June 27, 2000.

FOR FURTHER INFORMATION CONTACT: Ms. Sandra Haberlin, Defense Acquisition Regulations Council, OUSD (AT&L) DP (DAR), IMD 3D139, 3062 Defense Pentagon, Washington, DC 20301-3062; 703-602-0289; fax: 703-602-0350. Cite DFARS Case 2000-D009.

SUPPLEMENTAL INFORMATION: To clarify that contracts with FMS requirements receive the same progress payment rates as contracts with DOD requirements, the following changes are being made:

• DFARS 232.501-1, Customary Progress Payment Rates, used to have two subparagraphs dealing with customary progress payment rates: one explaining the rates for DOD contracts, and the other stating that the rates for FMS requirements are the same. The two have been combined into the following paragraph: "The customary uniform progress payment rates for DOD contracts, including contracts that contain foreign military sales (FMS) requirements, are 75 percent for large businesses, 90 percent for small businesses, and 95 percent for small disadvantaged businesses."
  
  
• DFARS 232.502-1-70, Customary Foreign Military Sale Progress Payments, is removed. It merely provided the circumstances under which progress payments would not be provided for FMS (for replenishing U.S. inventories or stocks, or acquisitions made under DOD cooperative logistic support arrangements).
  
  
• Paragraph (a) of DFARS 232.502-4-70, Additional Clauses, is revised to require the use of DFARS 252.232-7002, Progress Payments for Foreign Military Sales Acquisitions, in solicitations and contracts that "(i) contain FMS requirements; and (ii) provide for progress payments." Previously, it required that DFARS 252.232-7002 be used in any contract that provides "for progress payments and contains foreign military sales requirements."

FOR FURTHER INFORMATION CONTACT: Barry McVay at 703-451-5953 or by e-mail to BarryMcVay@FedGovContracts.com.

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