[Federal Register: December 7, 2007 (Volume 72, Number 235)]
[Proposed Rules]               
[Page 69176-69177]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]



Defense Acquisition Regulations System

48 CFR Parts 225 and 231

RIN 0750-AF85

Defense Federal Acquisition Regulation Supplement; Allowability 
of Costs To Lease Government Equipment for Display or Demonstration 
(DFARS Case 2007-D004)

AGENCY: Defense Acquisition Regulations System, Department of Defense 

ACTION: Proposed rule with request for comments.


SUMMARY: DoD is proposing to amend the Defense Federal Acquisition 
Regulation Supplement (DFARS) to address limitations on the 
allowability of contractor costs associated with the leasing of 
Government equipment for display or demonstration. The proposed rule 
specifies that monies paid to the Government for the leasing of 
Government equipment are unallowable, except in the case of foreign 
military sales contracts.

DATES: Comments on the proposed rule should be submitted in writing to 
the address shown below on or before February 5, 2008, to be considered 
in the formation of the final rule.

ADDRESSES: You may submit comments, identified by DFARS Case 2007-D004, 
using any of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 

Follow the instructions for submitting comments.
     E-mail: dfars@osd.mil. Include DFARS Case 2007-D004 in the 
subject line of the message.
     Fax: 703-602-7887.
     Mail: Defense Acquisition Regulations System, Attn: Mr. 
John McPherson, OUSD (AT&L) DPAP (CPF), IMD 3D139, 3062 Defense 
Pentagon, Washington, DC 20301-3062.
     Hand Delivery/Courier: Defense Acquisition Regulations 
System, Crystal Square 4, Suite 200A, 241 18th Street, Arlington, VA 
    Comments received generally will be posted without change to http://www.regulations.gov
, including any personal information provided.

FOR FURTHER INFORMATION CONTACT: Mr. John McPherson, 703-602-0296.


A. Background

    DoD Directive 7230.8, Leases and Demonstrations of DoD Equipment,

[[Page 69177]]

contains policy on the leasing of DoD equipment to defense contractors 
for demonstration to foreign governments or for display or 
demonstration at international trade shows and exhibitions. In addition 
to the leasing of equipment, contractors may obtain related support 
services from DoD. The Directive provides that the contractor leasing 
the equipment may not recover the DoD charges associated with the 
lease, directly or indirectly through any U.S. Government contract, 
except to the extent chargeable to contracts for foreign military 
sales. For consistency with the policy in DoD Directive 7230.8, this 
proposed rule adds DFARS text to address the limitations on the 
allowability of costs associated with the leasing of Government 
    This rule was not subject to Office of Management and Budget review 
under Executive Order 12866, dated September 30, 1993.

B. Regulatory Flexibility Act

    DoD does not expect this rule to have a significant economic impact 
on a substantial number of small entities within the meaning of the 
Regulatory Flexibility Act, 5 U.S.C. 601, et seq., because the rule is 
consistent with existing DoD policy, and applies only in those 
situations where a contractor chooses to lease military equipment for 
display or demonstration purposes. Therefore, DoD has not performed an 
initial regulatory flexibility analysis. DoD invites comments from 
small businesses and other interested parties. DoD also will consider 
comments from small entities concerning the affected DFARS subparts in 
accordance with 5 U.S.C. 610. Such comments should be submitted 
separately and should cite DFARS Case 2007-D004.

C. Paperwork Reduction Act

    The Paperwork Reduction Act does not apply, because the rule does 
not impose any information collection requirements that require the 
approval of the Office of Management and Budget under 44 U.S.C. 3501, 
et seq.

List of Subjects in 48 CFR Parts 225 and 231

    Government procurement.

Michele P. Peterson,
Editor, Defense Acquisition Regulations System.

    Therefore, DoD proposes to amend 48 CFR parts 225 and 231 as 
    1. The authority citation for 48 CFR parts 225 and 231 continues to 
read as follows:

    Authority: 41 U.S.C. 421 and 48 CFR Chapter 1.


    2. Section 225.7303-2 is amended by revising paragraph (b) and 
adding paragraph (e) to read as follows:

225.7303-2  Cost of doing business with a foreign government or an 
international organization.

* * * * *
    (b) Costs not allowable under FAR Part 31 are not allowable in 
pricing FMS contracts, except as noted in paragraphs (c) and (e) of 
this subsection.
* * * * *
    (e) The limitations on allowability of costs associated with 
leasing Government equipment, in 231.205-1, do not apply to FMS 


    3. Section 231.205-1 is added to read as follows:

231.205-1  Public relations and advertising costs.

    (e) See 225.7303-2(e) for allowability provisions affecting foreign 
military sales contracts.
    (f) Unallowable public relations and advertising costs also include 
monies paid to the Government associated with the leasing of Government 
equipment, including lease payments and reimbursement for support 
services, except for foreign military sales contracts as provided for 
at 225.7303-2.
 [FR Doc. E7-23654 Filed 12-6-07; 8:45 am]