[Federal Register Volume 74, Number 77 (Thursday, April 23, 2009)]
[Proposed Rules]
[Pages 18491-18492]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-9359]
[[Page 18491]]
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OFFICE OF MANAGEMENT AND BUDGET
Office of Federal Procurement Policy
48 CFR Part 9903
Cost Accounting Standards: Exemption From Cost Accounting
Standards for Contracts Executed and Performed Entirely Outside the
United States, Its Territories, and Possessions
AGENCY: Office of Management and Budget (OMB), Office of Federal
Procurement Policy.
ACTION: Notice of request for information.
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SUMMARY: The Office of Federal Procurement Policy (OFPP), Cost
Accounting Standards (CAS) Board (CASB), invites public comments and
information on a provision that provides an exemption from CAS for
contracts and subcontracts that are executed and performed entirely
outside the United States, its territories, and possessions (overseas
exemption).
DATES: Responses must be in writing and must be received by May 26,
2009.
ADDRESSES: Due to delays in OMB's receipt and processing of mail,
respondents are strongly encouraged to submit their responses
electronically to ensure timely receipt. Submit your responses,
identified by: CAS 2009 Overseas Exemption, by one of the following
methods:
--Federal eRulemaking Portal: http://www.regulations.gov. Simply type
``CAS 2009 Overseas Exemption'' (without the quotes) in the Comment or
Submission search box, click Go, and follow the online instructions for
submitting responses.
--E-mail: Electronic responses may also be submitted to
[email protected]. Be sure to include your identifying information:
Your name, title, organization, and reference case ``CAS 2009 Overseas
Exemption.''
--Facsimile: Responses may also be submitted via facsimile to 202-395-
5105. Be sure to include your identifying information.
--Mail: If you must submit your responses via regular mail, please mail
them to: Office of Federal Procurement Policy, 725 17th Street, NW.,
Room 9013, Washington, DC 20503, ATTN: Raymond J. M. Wong. Be sure to
include your identifying information. Be aware that due to the
screening of U.S. mail to this office, there will be several weeks'
delay in the receipt of mail. Respondents are strongly encouraged to
submit responses electronically to ensure timely receipt.
Please note that all public responses received will be posted in
their entirety, including any personal and/or business confidential
information provided, after the close of the public comment period at
http://www.whitehouse.gov/omb/procurement_index_casb/ and http://www.regulations.gov.
FOR FURTHER INFORMATION CONTACT: Raymond J. M. Wong, Director, Cost
Accounting Standards Board (telephone: 202-395-6805).
SUPPLEMENTARY INFORMATION:
A. Regulatory Process
Rules, Regulations and Standards issued by the Cost Accounting
Standards Board (Board, CAS Board, or CASB) are codified at 48 CFR
Chapter 99. The OFPP Act, at 41 U.S.C. 422(g), requires that the Board,
prior to the establishment of any new or revised Cost Accounting
Standards (CAS or Standards), 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 (e.g., promulgation of a Staff Discussion Paper
(SDP)).
2. Promulgate an Advance Notice of Proposed Rulemaking (ANPRM).
3. Promulgate a Notice of Proposed Rulemaking (NPRM).
4. Promulgate a Final Rule.
The CASB notes that the overseas exemption at 48 CFR 9903.201-
1(b)(14) is not subject to the four-step process required by 41 U.S.C.
422(g)(1) because it is not a cost accounting standard. Thus, there is
no requirement for the CASB to follow the four-step process for this
promulgation. The CASB is soliciting public responses, comments and
information in a process that may lead to a change in the CAS
regulations with respect to the overseas exemption.
B. Background and Summary
The Office of Federal Procurement Policy (OFPP), Cost Accounting
Standards Board, is today publishing a request for information with
respect to the exemption from CAS at 48 CFR 9903.201-1(b)(14). That
exemption (the overseas exemption) provides that ``contracts and
subcontracts to be executed and performed entirely outside the United
States, its territories, and possessions'' are exempt from all CAS
requirements. The OFPP Act, at 41 U.S.C. 422(g)(1), requires the Board
to 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 rule prior to the promulgation of any new or revised CAS or
rule.
Section 823 of the Duncan Hunter National Defense Authorization Act
for Fiscal Year 2009 requires the CASB to: (1) Review the applicability
of CAS to contracts and subcontracts which would be subject to CAS, but
for the fact that they are executed and performed entirely outside the
United States, and (2) determine whether the Government would benefit
from the application of CAS to such contracts and subcontracts. A
report is due to Congress 270 days (by mid-July 2009) after the date of
enactment (October 14, 2008) explaining what, if anything, will be done
to revise the overseas exemption.
The purpose of this request for information is to solicit public
comments and information with respect to the CASB's review of whether
the overseas exemption from CAS at 48 CFR 9903.201-1(b)(14) should be
retained, eliminated, or revised, and if revised, how should it be
revised. ``Contracts and subcontracts to be executed and performed
entirely outside the United States * * *'' can be executed and
performed by a variety of entities with different legal statuses
including, but not limited to: A U.S. concern, a foreign concern
authorized to do business in the United States, a foreign concern (not
authorized to do business in the United States) which is a related
party to a U.S. concern, and foreign concerns with various other
attributes that could affect their legal status. The focus of this
request for information is with respect to contracts that would
otherwise be subject to CAS, but for the fact that the contract is
exempted because it is executed and performed entirely overseas. Thus,
the affected contractors are likely to be U.S. concerns and other
concerns authorized to do business in the United States.
Respondents are encouraged to identify, comment and provide
information on any issues that they believe are important to the
subject.
C. Public Comments
Interested persons are invited to participate by providing their
input, data, views or arguments with respect to this request for
information, including, but not limited to, the questions listed in the
request for information. All responses must be in writing, and
[[Page 18492]]
submitted as instructed in the ADDRESSES section.
Lesley A. Field,
Acting Chair, Cost Accounting Standards Board.
Cost Accounting Standards Board Request for Information
48 CFR 9903.201-1(b)(14)
Exemption From Cost Accounting Standards for Contracts Executed and
Performed Entirely Outside the United States
Background
Purpose
48 CFR 9903.201-1(b) is a list of categories of contracts and
subcontracts that are exempt from CAS requirements (CAS exemptions).
Paragraph (14) of this provision provides an exemption for
``[c]ontracts and subcontracts to be executed and performed entirely
outside the United States, its territories, and possessions'' (overseas
exemption). The purpose of this request for information is to explore
whether this CAS exemption should be retained, eliminated or revised.
The History of the Exemption
The original CAS Board (CASB) was established by Section 2168 of
the Defense Production Act of 1950 (DPA). Section 2163, ``Territorial
application of Act,'' of the DPA provided that Sections 2061 through
2171 (which includes the authority for the CASB) ``shall be applicable
to the United States, its Territories and possessions, and the District
of Columbia'' (United States). Since the applicable DPA provisions were
applicable only within the United States as defined, the CASB's rules,
regulations and CAS were only applicable within the United States, as
specifically defined, and thus, they were not applicable overseas.
On September 24, 1973, Defense Procurement Circular No. 115 amended
ASPR (Armed Services Procurement Regulation) 3-1204 to provide for this
CAS exemption in contracts as follows:
3-1204 Contract Clause. The Cost Accounting Standards clause set
forth in 7-104.83 shall be inserted in all negotiated contracts
exceeding $100,000, except when the price is based on established
catalog or market prices of commercial items sold in substantial
quantities to the general public or is set by law or regulation. In
addition to the foregoing exceptions, the clause shall not be inserted
in the following contacts:
* * * * *
(vi) contracts which are executed and performed in their entirety
outside the United States, its territories and possessions [(overseas
exemption)].
Additional historical background is provided in the SDP published at 70
FR 53977 (September 13, 2005) which previously invited public comments
on whether the overseas exemption should be revised or eliminated.
In 1980, the CASB ceased to exist under the DPA. In the absence of
the CASB, the Department of Defense (DOD) took over the responsibility
for the administration of CAS. DOD administered CAS until the CASB was
re-established in 1988 under the authority of the OFPP Act.
In 1991, the re-established CASB reviewed the rules and regulations
applicable to the administration of CAS. FAR 30.201-1(14), the
exemption from CAS for contracts and subcontracts executed and
performed entirely outside the United States, its territories and
possessions, was part of that review. The re-established CASB retained
the overseas exemption and incorporated it into its current recodified
rules and regulations at 48 CFR 9903.201-1 on April 17, 1992 (57 FR
14148.)
More recently, in response to the 2005 SDP regarding the overseas
exemption, the CASB received three public comments in response. All the
comments offered arguments for why the CASB should retain the
exemption; none of the comments supported any revision to, or an
elimination of, the overseas exemption. After reviewing and discussing
the comments to the SDP, the CASB discontinued its review of the
overseas exemption. (73 FR 8259, February 13, 2008.) While the CASB did
not agree with all of the views expressed, it did agree with the
conclusion not to delete or revise the overseas exemption.
Questions for Consideration
The CASB is soliciting information and comments on the overseas
exemption from interested parties. In framing your responses, be aware
that contracts and subcontracts that are executed and performed
entirely outside of the United States can be executed and performed by
entities with a variety of legal statuses. The focus of this request
for information is with respect to contracts that would be otherwise
subject to CAS, but for the exemption because the contract is executed
and performed entirely overseas. Thus, the class of affected
contractors is likely to be U.S. concerns and other concerns authorized
to do business in the United States.
More specifically, the CASB is particularly interested in
information and comments related to the following questions:
1. What is your experience with the overseas exemption:
a. As a procuring entity (e.g., procurement office, higher tier
contractor) awarding contracts/subcontracts; or
b. As the contractor/subcontractor claiming the applicability of
the overseas exemption?
2. How often (number of actions, dollar amounts, by fiscal year)
has the overseas exemption been claimed?
3. If the overseas exemption is eliminated, what problems will that
cause you:
a. As a procuring entity (e.g., procurement office, higher tier
contractor) awarding contracts/subcontracts; or
b. As the contractor/subcontractor claiming the applicability of
the overseas exemption?
4. How does the overseas exemption help, or not help, to implement
the CASB's mandate ``to achieve uniformity and consistency in the cost
accounting standards governing measurement, assignment, and allocation
of costs to contracts with the United States''?
5. What are the arguments for, and against, the requirement in the
overseas exemption to require execution of the contract overseas?
6. What are the arguments for, and against, the requirement in the
overseas exemption to require performance of the contract overseas?
[FR Doc. E9-9359 Filed 4-22-09; 8:45 am]
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