[Federal Register: December 24, 2009 (Volume 74, Number 246)]
[Rules and Regulations]               
[Page 68382]
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: Final rule.


SUMMARY: DoD has issued a final rule amending 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 rule specifies 
that monies paid to the Government for the leasing of Government 
equipment are unallowable, except in the case of foreign military sales 

DATES: Effective Date: December 24, 2009.

FOR FURTHER INFORMATION CONTACT: Mr. Julian Thrash, Defense Acquisition 
Regulations System, OUSD(AT&L)DPAP(DARS), IMD 3D139, 3062 Defense 
Pentagon, Washington, DC 20301-3062. Telephone 703-602-0310; facsimile 
703-602-0350. Please cite DFARS Case 2007-D004.


A. Background

    DoD Instruction 7230.08, Leases and Demonstrations of DoD 
Equipment, 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 Instruction 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 Instruction 7230.08, this 
final rule adds DFARS text to address the limitations on the 
allowability of costs associated with the leasing of Government 
    DoD published a proposed rule at 72 FR 69176 on December 7, 2007. 
DoD received no comments on the proposed rule. Therefore, DoD has 
adopted the proposed rule as a final rule without change.
    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 certifies that this final rule will not 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.

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.

Amy G. Williams,
Editor, Defense Acquisition Regulations System.

Therefore, 48 CFR Parts 225 and 231 are amended as follows:

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 in 231.205-1 on allowability of costs 
associated with leasing Government equipment 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. E9-30295 Filed 12-23-09; 8:45 am]