Government Contracting: Reimbursement of Foreign Selling Costs
NSIAD-91-1
Published: Jun 07, 1991. Publicly Released: Jun 07, 1991.
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Highlights
Pursuant to a legislative requirement, GAO assessed the effect of legislation providing for the reimbursement of Department of Defense (DOD) contractors for costs they incurred in promoting the export of U.S. defense industry products, focusing on whether the implementing regulations provided appropriate: (1) incentives to stimulate exports and provide cost savings; and (2) criteria to ensure that allowable costs would provide future cost savings to the government.
Recommendations
Matter for Congressional Consideration
| Matter | Status | Comments |
|---|---|---|
| Congress should allow section 2324(f)(5) of title 10, United States Code, to cease to be effective in 1991 as provided in the legislation. |
Closed – Implemented
|
The recommendation was to let the legislation provision sunset, and for DOD to revise regulations accordingly. Congress followed the recommendation to let the legislative provision expire. DOD has indicated that regulations will not be revised. |
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Defense | If Congress does not extend the subject legislation, the Secretary of Defense should take appropriate steps to have the federal acquisition regulation (FAR) amended to make foreign selling costs unallowable on U.S. government contracts. The regulation should make it clear that foreign selling cost are allowable on foreign sales contracts to the extent that they meet the other FAR tests for allowability. |
Closed – Implemented
The recommendation was to let the legislation provision sunset, and for DOD to revise regulations accordingly. DOD has evaluated the recommendation and, at its own discretion, decided not to revise regulations.
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Topics
Advertising costsContract costsContractor paymentsCost effectiveness analysisDefense industryDepartment of Defense contractorsExportingFuture budget projectionsInternational tradeMarketing