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FMS Offsets/Industrial Participation


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Does anyone have experience in working with offsets in the FMS arena? Given the inadequate regulations and policy associated with offsets it seems almost impossible for COs to do their job. For example, DFARS 225.7303-2(a)(3) recognizes the cost of managing offsets as an allowable cost, “A U.S. defense contractor may recover all costs incurred for offset agreements with a foreign government or international organization if the LOA is financed wholly with customer cash or repayable foreign military finance credits”.

How does one deconflict the aforementioned regulation, given the fact very few contractors provide adequate date to allow for meaningful analysis and fair and reasonable determination, with the following: DFARS 225.7303(a), “Price FMS contracts using the same principles used in pricing other defense contracts. However, application of the pricing principles in FAR Parts 15 and 31 to an FMS contract may result in prices that differ from other defense contract prices for the same item due to the considerations in this section”. Any insight into this topic would be much appreciated.

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