GOVERMENT CONTRACTING: Reimbursement of Foreign Selling Costs
Abstract
Cost reimbursement under DOD contracts is governed by the cost principles set forth in the Federal Acquisition Regulation (FAR) and related agency guidance. Under cost principles in effect before March 1979, contractors' costs for marketing products and services were considered allowable for reimbursement on U.S. government contracts if reasonable, allocable, and not otherwise unallowable. After March 1979, the cost principles provided that selling costs incurred in connection with the sale of a military product or service to a foreign customer were not allocable to and therefore, not allowable on, U.S. government contracts for U.S. government requirements. The costs were, however, allocable to and allowable on foreign contracts. Representatives of the defense and aerospace industries objected to the unallowability of foreign selling costs on government contracts. Industry officials believed that the sale of defense products to foreign customers provided cost savings through lower contract prices on products purchased by DoD. Defense industry representatives contended that because DOD shared in the benefits of foreign sales, DOD should pay a share of the foreign selling costs. The legislation, as enacted in 1988, resulted in a change of DOD policy and regulation that had previously prohibited the reimbursement of foreign selling costs on DOD contracts.
Document Details
- Document Type
- Technical Report
- Publication Date
- Jun 01, 1991
- Accession Number
- AD1176946
Entities
People
- Bobby L. Cooper
- Carol S. Markson
- Charles A. Murray
- Clark G. Adams
- Evert A. Stevens
- Frank Conahan
- Harold G. Dighton
- Joyce L. Akins
- Kenneth H. Roberts
- Lena G. Bartoli
- Leroy H. Zenk
- M. Lisa Manning
- Ronald A. Bononi
Organizations
- United States Government Accountability Office