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Limited Allowability of Demonstration Costs for Leased Equipment

The Department of Defense has issued a rule (DFARS 2007-D004), which adopts a proposed rule (70,020.246) as final without change, amending the Defense Federal Acquisition Regulation Supplement to address the allowability of costs associated with leasing government equipment for display or demonstration. DoD Instruction 7230.8, Leases and Demonstrations of DoD Equipment, contains policy on leasing government equipment for demonstration to foreign governments or for display or demonstration at international trade shows and exhibitions, and provides a contractor may not directly or indirectly recover DoD equipment lease charges through any government contract, except to the extent chargeable to contracts for foreign military sales. The revised DFARS 225.7303-2 and newly added DFARS 231.205-1 make the DFARS consistent with the Instruction by specifying that monies paid to the government for the leasing of government equipment are unallowable, except in the case of foreign military sales contracts. For the text of the final rule, which carries a December 24, 2009, effective date, see 70,016.549.




(The news featured above is a selection from the news covered in the Government Contracts Report Letter, which is published weekly and distributed to subscribers of the Government Contracts Reporter. )


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