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Panoptic Enterprises' FEDERAL CONTRACTS DISPATCH

DATE: November 22, 2002

SUBJECT: Defense Federal Acquisition Regulation Supplement (DFARS); Foreign Military Sales Customer Involvement

SOURCE: Federal Register, November 22, 2002, Vol. 67, No. 226, page 70323

AGENCIES: Department of Defense (DOD)

ACTION: Final Rule

SYNOPSIS: DOD is finalizing, with changes, the proposed rule published April 26, 2002, to amend DFARS 225.7304, FMS Customer Involvement, to add policy regarding the participation of foreign military sales (FMS) customers in the contract award process while protecting against unauthorized disclosure of contractor proprietary data.

EDITOR'S NOTE: For more on the proposed rule, see the April 26, 2002, FEDERAL CONTRACTS DISPATCH "Defense Federal Acquisition Regulation Supplement (DFARS); Foreign Military Sales Customer Involvement."

EFFECTIVE DATE: November 22, 2002.

FOR FURTHER INFORMATION CONTACT: Amy Williams, OUSD(AT&L)DPAP(DAR), IMD 3C132, 3062 Defense Pentagon, Washington, DC 20301-3062; 703-602-0328; fax: 703-602-0350.

SUPPLEMENTAL INFORMATION: FMS customers have requested more visibility into the preparation and pricing of contracts that DOD awards on their behalf. Therefore, on April 26, 2002, a proposed rule was published that would amend DFARS 225.7304 to "encourage" FMS customers to "participate with U.S. government acquisition personnel in discussions with industry to develop technical specifications; establish delivery schedules; identify any special warranty provisions or other requirements unique to the FMS customer; and review prices on varying alternatives, quantities, and options needed to make price-performance tradeoffs" (paragraph (b) of proposed DFARS 225.7304). In addition, "the degree of FMS customer participation in contract negotiations (would be) left to the discretion of the contracting officer" (paragraph (d)). Furthermore, "if an FMS customer requests additional information concerning FMS contract prices, the contracting officer shall, after consultation with the contractor, provide sufficient information to demonstrate the reasonableness of the price and reasonable responses to relevant questions concerning contract price" (paragraph (h)).

Seven respondents submitted comments on the proposed rule, and the final rule is different from the proposed rule with the addition of language in paragraph (d) that "the degree of FMS customer participation in contract negotiations is left to the discretion of the contracting officer after consultation with the contractor. The contracting officer shall provide an explanation to the FMS customer if its participation in negotiations will be limited."

FOR FURTHER INFORMATION CONTACT: Panoptic Enterprises at 703-451-5953 or by e-mail to Panoptic@FedGovContracts.com.

Copyright 2002 by Panoptic Enterprises. All Rights Reserved.

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