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purposes of the Regulatory Flexibility Act (5 U.S.C. 601).

Accordingly, and in response to the Office of Management and Budget's determination, the purpose of this rule is to limit the categories of equipment for which a recoupment charge is applicable and to eliminate recoupment on items sold for non-military purposes. Previously, a recoupment charge was applicable to "major defense equipment," "non-major defense equipment," and to all commercial derivatives of such equipment. Now, a recoupment charge shall be applicable only to "major defense equipment."

The Comptroller, and Chief Financial Officer, Department of Defense has determined that this rule does not impose paperwork requirements or other regulatory burdens of the type Executive Order 12291 and the Regulatory Flexibility Act were intended to minimize. In fact, the economic impact of this rule is a reduction of amounts due to the U.S. Government and a reduction in work load--both paperwork and accounting efforts--to both the Department of Defense and defense contractors. The reductions would occur due

a lessening of payment requirements and reduced administrative burden costs. These reductions will not have an unreasonable impact on defense contractors or the Department of Defense. The Comptroller, and Chief Financial Officer, Department of Defense has determined that this rule is not expected 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. Such entities generally make commercial sales for only small defense articles to foreign or domestic customers and the Department of Defense will recoup on only major defense equipment.

At this point, specific data is not available to quantify the economic impact on the Federal receipts due to the reductions as a result of this rule. However, this rule would have a favorable impact on a substantial number of defense contractors who pay recoupment charges since this rule would (a) eliminate recoupment charges on lower dollar value investment items (non-major defense equipment) and eliminate recoupment on items used for non- military purposes; (b) decrease the number of contracts involved (a recoupment clause would be inserted only in contracts exceeding $10 million versus in the current policy of being included in contracts over $1 million); and (c) eliminate recoupment on derivative items.

Paperwork Reduction Act Information

The rule contains no new information collection requirements requiring the approval of OMB under 44 U.S.C. 3501 et seq.

List of Subjects in 32 CFR Part 165

Armed Forces, Commercial Sales, Foreign Military Sales, Foreign trade.

Accordingly, title 32 of the Code of Federal Regulations, chapter I, subchapter E, is amended by adding a new part 165, to read as follows:

PART 165--RECOUPMENT OF NONRECURRING COSTS ON SALES OR LICENSING OF U.S. ITEMS

Sec.

165.1 Purpose.