[Federal Register: August 29, 2002 (Volume 67, Number 168)]
[Proposed Rules]
[Page 55681-55683]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr29au02-27]
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Part IX
Department of Defense
General Services Administration
National Aeronautics and Space Administration
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48 Part 31
Federal Acquisition Regulation; Selling Cost Principle; Proposed Rule
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DEPARTMENT OF DEFENSE
GENERAL SERVICES ADMINISTRATION
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Part 31
[FAR Case 2001-024]
RIN 9000-AJ42
Federal Acquisition Regulation; Selling Cost Principle
AGENCIES: Department of Defense (DoD), General Services Administration
(GSA), and National Aeronautics and Space Administration (NASA).
ACTION: Proposed rule.
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SUMMARY: The Civilian Agency Acquisition Council and the Defense
Acquisition Regulations Council (Councils) are proposing to amend the
Federal Acquisition Regulation (FAR) to revise the ``selling costs''
cost principle to increase clarity and to remove excessive wording and
details.
DATES: Interested parties should submit comments in writing on or
before October 28, 2002 to be considered in the formulation of a final
rule.
ADDRESSES: Submit written comments to--General Services Administration,
FAR Secretariat (MVA), 1800 F Street, NW., Room 4035, ATTN: Laurie
Duarte, Washington, DC 20405.
Submit electronic comments via the Internet to: farcase.2001-
024@gsa.gov. Please submit comments only and cite FAR case 2001-024 in
all correspondence related to this case.
FOR FURTHER INFORMATION CONTACT: The FAR Secretariat, Room 4035, GS
Building, Washington, DC, 20405, at (202) 501-4755 for information
pertaining to status or publication schedules. For clarification of
content, contact Mr. Jeremy Olson, at (202) 501-3221. Please cite FAR
case 2001-024.
SUPPLEMENTARY INFORMATION:
A. Background
The proposed rule revises FAR 31.205-38, Selling costs, to increase
clarity and to remove excessive wording and details. Among the changes
are the following:
1. In a revised FAR 31.205-38(b), combining the list of selling
activities from existing FAR 31.205-38(a) with the more detailed
guidance about the allowability of these costs in existing FAR 31.205-
38(b) and (c)(1).
2. Eliminating references to reasonableness currently found in FAR
31.205-38(b) and (c)(1) because this general allowability standard is
already addressed at FAR 31.201-2, Determining allowability, and FAR
31.201-3, Determining reasonableness.
3. Removing as unnecessary existing FAR 31.205-38(c)(2) and the
cross-reference in existing FAR 31.205-38(b) to FAR 31.205-14,
Entertainment costs. The Councils believe there is no longer a reason
to distinguish between the allowability of foreign and domestic selling
costs involving direct selling and other market planning efforts. This
would eliminate the current requirement that in order to be allowable,
these export sales costs must be related to products normally sold to
the U.S. Government. However, the public policy reasons for
distinguishing between foreign and domestic broadly targeted sales
efforts are still valid. The allowability of these costs is adequately
covered at FAR 31.205-1 and does not need to be restated in FAR 31.205-
38.
4. Removing existing FAR 31.205-38(e) as it is duplicative of the
guidance at FAR 31.201-6, Accounting for unallowable costs, and
paragraph (c) of FAR 31.204, Application of principles and procedures.
5. Making related editorial changes.
This is not a significant regulatory action and, therefore, was not
subject to review under Section 6(b) of Executive Order 12866,
Regulatory Planning and Review, dated September 30, 1993. This rule is
not a major rule under 5 U.S.C. 804.
B. Regulatory Flexibility Act
The Councils do not expect this proposed 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 most contracts awarded to small entities use simplified
acquisition procedures or are awarded on a competitive, fixed-price
basis and do not require application of the cost principles discussed
in this rule. An Initial Regulatory Flexibility Analysis has,
therefore, not been performed. We invite comments from small businesses
and other interested parties. The Councils will consider comments from
small entities concerning the affected FAR Part 31 in accordance with 5
U.S.C. 610. Interested parties must submit such comments separately and
should cite 5 U.S.C. 601, et seq. (FAR case 2001-024), in
correspondence.
C. Paperwork Reduction Act
The Paperwork Reduction Act does not apply because the proposed
changes to the FAR do not impose 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 Part 31
Government procurement.
Dated: August 20, 2002.
Al Matera,
Director, Acquisition Policy Division.
Therefore, DoD, GSA, and NASA propose amending 48 CFR part 31 as
set forth below:
PART 31--CONTRACT COST PRINCIPLES AND PROCEDURES
1. The authority citation for 48 CFR part 31 continues to read as
follows:
Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42
U.S.C. 2473(c).
2. Amend section 31.205-1 in paragraph (f)(1) by removing from the
parenthetical ``31.205-38(c)'' and adding ``31.205-38(b)(5)'' in its
place.
31.205-12 [Amended]
3. Amend section 31.205-12 in paragraph (a) by removing the word
``generalized'' and adding ``general'' in its place.
4. Amend section 31.205-33 by revising the first sentence of the
introductory text of paragraph (f); and removing the parenthetical
sentence. The revised text reads as follows:
31.205-33 Professional and consultant service costs.
* * * * *
(f) Fees for services rendered are allowable only when supported by
evidence of the nature and scope of the service furnished (see also
31.205-38(c)). * * *
5. Revise section 31.205-38 to read as follows:
31.205-38 Selling costs.
(a) ``Selling'' is a generic term encompassing all efforts to
market the contractor's products or services, some of which are covered
specifically in other subsections of 31.205. The costs of any selling
efforts other than those addressed in this cost principle are
unallowable. Costs of activities that are correctly classified and
disallowed under cost principles referenced in paragraph (b) are not to
be reconsidered for reimbursement under any other provision of this
subsection.
(b) Selling includes the following broad categories:
(1) Advertising. Advertising is defined at 31.205-1(b), and
advertising costs are subject to the allowability provisions of 31.205-
1(d) and (f).
(2) Corporate image enhancements. Corporate image enhancements
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including broadly targeted sales efforts, other than advertising, are
included within the definition of public relations at 31.205-1(a), and
the costs of such efforts are subject to the allowability provisions at
31.205-1(e) and (f).
(3) Bid and proposal costs. Bid and proposal costs are defined at
31.205-18 and are subject to the allowability provisions of that
subsection.
(4) Market planning. Market planning involves market research and
analysis and general management planning concerned with development of
the contractor's business. Long-range market planning costs are subject
to the allowability provisions of 31.205-12. Other market planning
costs are allowable.
(5) Direct selling. Direct selling efforts are those acts or
actions to induce particular customers to purchase particular products
or services of the contractor. Direct selling is characterized by
person-to-person contact and includes such efforts as familiarizing a
potential customer with the contractor's products or services,
conditions of sale, service capabilities, etc. It also includes
negotiation, liaison between customer and contractor personnel,
technical and consulting efforts, individual demonstrations, and any
other efforts having as their purpose the application or adaptation of
the contractor's products or services for a particular customer's use.
The cost of direct selling efforts is allowable.
(c) Notwithstanding any other provision of this subsection,
sellers' or agents' compensation, fees, commissions, percentages,
retainer or brokerage fees, whether or not contingent upon the award of
contracts, are allowable only when paid to bona fide employees or
established commercial or selling agencies maintained by the contractor
for the purpose of securing business.
[FR Doc. 02-21619 Filed 8-28-02; 8:45 am]
BILLING CODE 6820-EP-P