25.901
Policy
Government agencies must use customs duty exemptions for imported supplies only when the savings outweigh the administrative costs of processing the exemption.
Overview
FAR 25.901 establishes the policy regarding the imposition of U.S. customs duties on foreign supplies imported into the customs territory of the United States for government contracts. While U.S. law generally requires duties to be paid on such imports, certain exemptions are available specifically for government agencies. Agencies are required to utilize these exemptions only when the anticipated cost savings to appropriated funds exceed the administrative costs of processing the necessary documentation. This policy ensures that government resources are used efficiently and that exemptions are not pursued when the administrative burden outweighs the financial benefit.
Key Rules
- Duties on Foreign Supplies
- U.S. law imposes customs duties on foreign supplies imported into the U.S. customs territory.
- Exemptions for Government Agencies
- Government agencies may access certain duty exemptions for imported supplies.
- Cost-Benefit Requirement
- Agencies must use exemptions only when the savings to appropriated funds are greater than the administrative costs of processing the exemption documentation.
Responsibilities
- Contracting Officers: Must evaluate whether using a duty exemption will result in net savings and ensure proper documentation is processed if an exemption is used.
- Contractors: Should coordinate with agencies regarding the use of exemptions and provide necessary documentation as required.
- Agencies: Must assess the cost-effectiveness of using duty exemptions and maintain records of their determinations.
Practical Implications
- This policy ensures government funds are not wasted on unnecessary administrative processes for duty exemptions.
- Contracting professionals must carefully analyze the cost-benefit of pursuing duty exemptions for imported supplies.
- Common pitfalls include failing to account for administrative costs or neglecting to document the exemption decision process.