[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 
<a href="/cdn-cgi/l/email-protection#97f4f6e4f5a5d7f8faf5b9f2f8e7b9f0f8e1"><span class="__cf_email__" data-cfemail="355654465707755a58571b505a451b525a43">[email protected]</span></a>. 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]
BILLING CODE 3110-01-P


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