[Federal Register Volume 73, Number 30 (Wednesday, February 13, 2008)]
[Proposed Rules]
[Pages 8259-8260]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-2668]
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OFFICE OF MANAGEMENT AND BUDGET
Office of Federal Procurement Policy
48 CFR Parts 9901 and 9903
Cost Accounting Standards Board (CAS) Exemption for Contracts
Executed and Performed Outside the United States, Its Territories, and
Possessions
AGENCY: Cost Accounting Standards Board, Office of Federal Procurement
Policy, OMB.
[[Page 8260]]
ACTION: Notice of Discontinuation of Case.
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SUMMARY: The Office of Federal Procurement Policy (OFPP), Cost
Accounting Standards (CAS) Board, is providing public notification of
the decision to discontinue its review of the exemption for contracts
that are executed and performed outside the United States, its
territories, and possessions.
FOR FURTHER INFORMATION CONTACT: Laura Auletta, Manager, Cost
Accounting Standards Board, 725 17th Street, NW., Room 9013,
Washington, DC 20503 (telephone: 202-395-3256).
SUPPLEMENTARY INFORMATION:
A. Regulatory Process
The Cost Accounting Standards Board's rules, regulations and
Standards are codified at 48 CFR Chapter 99. The Office of Federal
Procurement Policy Act, 41 U.S.C. 422(g)(1), requires the Board, prior
to the establishment of any new or revised Cost Accounting Standard, to
complete a prescribed rulemaking process. The process generally
consists of the following four steps:
1. Consult with interested persons concerning the advantages,
disadvantages, and improvements anticipated in the pricing and
administration of government contracts as a result of the adoption of a
proposed Standard.
2. Promulgate an Advance Notice of Proposed Rulemaking (ANPRM).
3. Promulgate a Notice of Proposed Rulemaking (NPRM).
4. Promulgate a Final Rule.
This notice announces the discontinuation of a case after
completing step one of the four-step process.
B. Background and Summary
On September 15, 2005, the CAS Board issued a Staff Discussion
Paper inviting comments regarding whether the exemption at 48 CFR
9903.201-1(b)(14) should be revised or eliminated (70 FR 53977). The
SDP discussed the history of the exemption. In summary, this discussion
stated that the original CAS Board was established by Section 2168 of
the Defense Production Act of 1950 (DPA). Section 2163 of the DPA,
entitled ``Territorial Application of Act,'' provided that Sections
2061 through 2170 of the Act ``shall be applicable to the United
States, its territories and possessions, and the District of Columbia''
(United States). Therefore, because the provisions of the DPA were
applicable only within the United States, the CAS Board rules,
regulations and standards were also applicable only within the United
States. In 1980, the original CAS Board ceased to exist under the DPA
and administration of the standards was undertaken by the Department of
Defense until the CAS Board was re-established in 1988 under the Office
of Federal Procurement Policy (OFPP) Act. In 1991, the new CAS Board
retained the exemption when it recodified its rules and regulations at
48 CFR 9902.201-1(b)(14) on April 17, 1992 (57 FR 14148). The SDP
published on September 15, 2005 invited public comments on whether the
Board should revisit the exemption.
C. Public Comments
The Board received three sets of public comments in response to the
staff discussion paper (available at http://www.whitehouse.gov/omb/procurement/casb/index_public_comments.html). None of the comments
supported the Board revising or eliminating the exemption. In fact, all
three of the comments offered arguments for why the CAS Board should
retain the exemption.
One commented that while the OFPP Act, unlike the DPA, does not
specifically limit CAS to contracts and subcontracts executed and
performed within the United States, when Congress intends for laws to
have extra-territorial effect, it would expressly state that intention.
Additionally, the commenter notes that given the dynamic nature of
international relations and bilateral agreements, the CAS Board would
find it difficult to insure consistency of its regulations with
international law and trade agreements. This commenter also questioned
the material impact of the exemption, stating that, based on anecdotal
evidence, contractors do not invoke the exception frequently. The value
of the exemption, noted the commenter, includes putting foreign and
U.S. companies on an equal footing by applying the same local
accounting requirements; facilitating government procurements in the
context of war readiness, other military action or disaster relief.
Another commenter discussed the impracticality of applying CAS to
contracts and subcontracts performed entirely outside the United
States, noting, in part, that a contractor would be expected to follow
the accounting conventions (rules and regulations) of the country where
the contract is being performed. Requiring contractors and those in
their supply chain to follow CAS instead would likely make
participation in the U.S. Government procurement process prohibitive.
Another commenter expressed concern that eliminating the exemption
would result in applying CAS to foreign contractors that would
otherwise be small businesses, since the CAS small business exemption
applies only to firms that have a place of business located in the
United States.
While the CAS Board does not necessarily share each of the views
expressed in these comments, the Board agrees with the conclusion not
to delete or revise the exemption, especially with the absence of any
commenter support for any such revision or elimination.
D. Conclusion
Based on the public input and Board discussions of this issue, the
Board finds that the exemption should be retained without change.
Paul A. Denett,
Administrator, Office of Federal Procurement Policy.
[FR Doc. E8-2668 Filed 2-12-08; 8:45 am]
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