TNAG-2404-FCO40-3491-Hong-Kong-defence-and-public-order-1992 — Page 48

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recoupment fees on all products other than major defense equipment exported for military uses. This action will eliminate recoupment fees on all non- military products, including spinoffs and derivatives of military products. It will also eliminate recoupment on military products that are either not classified as major defense equipment or not exported for military uses. The Department's action will eliminate recoupment under all new non-major defens equipment contracts as well.

A Major Defense Equipment is any item of significant military equipment on the United States Munitions List having a nonrecurring research, development test and evaluation cost of more than $50 million or a total production cost of more than $200 million. The definition of Major Defense Equipment is included in the Arms Export Control Act.

In addition to the changes being effected by this interim rule, in a proposed rule published elsewhere in this issue, the Department of Defense proposes to eliminate recoupment charges on items of Major Defense Equipment sold via direct commercial sales, in a subsequent final rule to be issued within 120 days. Public comment is being solicited on this proposal during the 30 day period following the date of this interim rule. During the 120 days between the interim and final rules, the President's Export Council will monitor progress under the interim rule and provide recommendations on the subsequent final rule.

In addition, the Administration will work with Congress to achieve the elimination of recoupment fees on major defense equipment exported for military uses. The Arms Export Control Act currently requires the Department of Defense to collect recoupment fees on sales of major defense equipment through the Foreign Military Sales programs, which accounts for most major defense equipment sales. The Administration will work with Congress to lift this requirement. Any lifting of that requirement would be likely to result in a final rule which would eliminate recoupment in its entirety.

EFFECTIVE DATE: June 26, 1992.

FOR FURTHER INFORMATION CONTACT:

Mr. R. Florence, 703-697-0585.

SUPPLEMENTARY INFORMATION: On October 25, 1991, the Department of Defense published a proposed rule, for public comments, of 32 CFR part 165. Numerous

comments were received and considered. The DoD contractual language to implement the nonrecurring cost recoupment policies are incorporated into acquisition regulations, which are also published in the Federal Register for public comment. The term, "acquisition regulation," refers to the Defense Acquisition Regulation, the Federal Acquisition Regulation (FAR) and the DOD FAR Supplement. The interim rule for DoD recoupment policy is to be incorporated into the DoD FAR Supplement and will be published in the Federal Register 48 CFR parts 215, 252, and 270.

Executive Order 12291

On November 26, 1991, the office of Management and Budget advised that this rule was considered to be a major rule under Executive Order 12291. The information set forth below constitutes the regulatory impact analysis for purposes of Executive Order 12291 and regulatory flexibility analysis for