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Barry McVay's FEDERAL CONTRACTS DISPATCH

DATE: September 11, 2000

FROM: Barry McVay, CPCM

SUBJECT: Federal Acquisition Regulation (FAR); Balance of Payments Program

SOURCE: Federal Register, September 11, 2000, Vol. 65, No. 176, page 54935

AGENCIES: Department of Defense (DOD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA)

ACTION: Proposed Rule

SYNOPSIS: It is proposed that FAR Subpart 25.3, Balance of Payments Program, be removed because it applies to very few acquisitions made by civilian agencies. The Department of Defense complies with Defense FAR Supplement (DFARS) Subpart 225.3, Balance of Payments Program.

DATES: Submit comments on or before November 13, 2000.

ADDRESSES: Submit comments to General Services Administration, FAR Secretariat (MVRS), 1800 F Street, NW, Room 4035, ATTN: Laurie Duarte, Washington, DC 20405, e-mail: farcase.1999-616@gsa.gov. Cite FAR case 1999-616 in all correspondence related to this proposed rule.

FOR FURTHER INFORMATION CONTACT: Paul Linfield 202-501-1757.

SUPPLEMENTAL INFORMATION: The Balance of Payments Program originated with a directive issued by President Eisenhower on November 16, 1960. The directive, which was intended to be an interim measure, outlined steps the Secretaries of Defense and the Treasury would take to alleviate balance of payment deficits resulting from efforts to restore economies devastated during World War II and to bolster the military security of the U.S. and its allies. This temporary restriction on overseas expenditure of appropriated funds by DOD and a few other agencies was subsequently expanded as a matter of policy to apply to overseas acquisitions by all agencies subject to the FAR and has remained in effect ever since.

The Balance of Payments Program (which is like a foreign version of the Buy American Act) applies to purchases of supplies for use outside the U.S. and to construction materials for construction contracts performed outside the U.S. However, few civilian agencies make purchases for use outside the U.S., and even fewer civilian agencies award construction contracts that are performed outside the U.S. Furthermore, the Balance of Payments Program does not apply to purchases below the $100,000 simplified acquisition threshold, nor to contracts subject to the Trade Agreements Act (generally, contracts over $177,000 for supplies and $6,808,000 for construction).

Therefore, because (1) there is no statutory requirement for the Balance of Payments Program, (2) the program only applies to a very few contracts awarded by civilian agencies, and (3) the time and effort invested by civilian agencies in applying the Balance of Payments Program is disproportionate to the exceedingly limited affect the program has on he international balance of payments, it is proposed that FAR Subpart 25.3 be removed, and that all references to the Balance of Payments Program be removed from the FAR.

The Balance of Payments Program coverage in DFARS Subpart 225.3 would not be affected by this change, and DOD would still comply with the program.

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

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