Duty-Free Entry
FAR 52.225-8 requires contractors to follow strict notification, documentation, and shipping procedures to secure duty-free entry for eligible foreign supplies, ensuring duty costs are not included in government contract prices.
Overview
FAR 52.225-8, Duty-Free Entry, establishes the requirements and procedures for contractors to obtain duty-free entry for certain foreign supplies imported into the customs territory of the United States for government contracts. The clause defines the customs territory, outlines when contractors must notify the Contracting Officer about foreign purchases, and details the process for claiming duty-free entry. It also specifies documentation, shipping, and notification requirements, and mandates the inclusion of this clause in applicable subcontracts. The regulation aims to ensure that contractors do not include duty costs in contract prices for supplies eligible for duty-free entry and that proper procedures are followed to secure this benefit.
Key Rules
- No Duty Costs in Price
- Contractors must not include duty costs in the contract price for supplies identified as eligible for duty-free entry unless approved by the Contracting Officer.
- Notification Requirement
- For foreign supplies over $15,000 not listed for duty-free entry, contractors must notify the Contracting Officer at least 20 days before importation, providing details on the supplies, estimated duty, and country of origin.
- Government Assistance
- The Government will execute necessary certificates and assist in obtaining duty-free entry for eligible supplies.
- Shipping and Documentation
- Specific shipping instructions and documentation must be followed for duty-free shipments, including consignment, labeling, and required notations.
- Subcontract Flowdown
- The clause must be included in subcontracts involving eligible foreign supplies.
Responsibilities
- Contracting Officers: Review notifications, determine eligibility for duty-free entry, provide timely responses, and assist with documentation.
- Contractors: Notify the Contracting Officer as required, follow shipping and documentation procedures, claim duty-free entry only for eligible supplies, and flow down the clause to applicable subcontracts.
- Agencies: Execute certificates and assist contractors in securing duty-free entry.
Practical Implications
- This clause prevents unnecessary duty costs in government contracts and ensures compliance with customs regulations. Contractors must carefully track and document foreign purchases, coordinate with the Contracting Officer, and ensure all shipping and notification requirements are met. Failure to comply can result in unallowable costs or delays in customs clearance.