This section furnishes guidance as to what constitutes "emergency purchases of war material abroad," prescribes the conditions under which duty-free entry certificates may be issued in connection with the importation of such purchases and sets forth the form of certificate to be utilized. The procedures to be followed in the issuance of such certificates shall be as prescribed by the respective Departments.

§ 6.602-2 War materials.

As used in this section the term "war material" includes the following:

(a) Weapons, munitions, aircraft, vessels, or boats;

(b) Agricultural, industrial, or other supplies used in the prosecution of war or for the national defense;

(c) Supplies, including components or equipment, necessary for the manufacture, production, processing, repair, servicing, or operation of the supplies set forth in paragraphs (a) and (b) of this section above.

§ 6.602-3 Emergency purchases.

As used in this section, the term "emergency purchases" includes the following:

(a) War material purchased by any Department in time of war or a national emergency, including any war material received in exchange for anything of value obtained under reciprocal aid or other statutory authority;

(b) War material purchased because of a shortage of domestic supply, pursuant to a decision that the supplies are necessary for the adequate maintenance of the Armed Services;

(c) Captured enemy war material;

(d) Materials requisitioned by United States Forces abroad;

(e) Materials rebuilt from other materials owned by, captured by, or turned over to United States Forces; and

(f) War materials procured for the use of United States Forces abroad or United States vessels in foreign waters. § 6.602-4 Use of duty-free entry certificates.

The issuance of duty-free entry certificates in appropriate situations will result

in important savings for military appropriations. At the same time, any procedure established for the issuance of such certificates must recognize that anything other than a careful selection of the proper situations where such certificates are to be issued may fail to save funds and may result in unanticipated advantages to contractors, especially in situations involving fixed-price contracts. Considerations which are pertinent to the selection of those cases where such certificates should be issued include (a) the savings to be accomplished by the issuance of the certificate; (b) the administrative burden and cost of processing the certificate; and (c) the degree of supervision which can be exercised by the Government over the supplies or materials to be imported to verify that the full benefit of the certificate inures to the Government. The latter consideration is particularly significant in the case of fixed-price contracts since title to the importation does not generally vest in the Government until delivery of the end product.

Subject to the considerations set forth in §§ 6.602-4 and 6.605, a duty-free entry certificate may be issued in accordance with Departmental procedures when an "emergency purchase of war material" is made under the following circumstances:

(a) Direct purchases abroad regardless of whether title passes at point of origin or at destination in the United States: Providing, The contract states that the final price is exclusive of duty;

(b) Purchases abroad by a Government prime contractor under a costreimbursement type contract or by a cost-reimbursement type subcontractor (where no fixed-price prime or fixedprice subcontract intervenes between the purchaser and the Government), regardless of whether title passes at point of origin or at destination in the United States. If a fixed-price prime or fixedprice subcontract intervenes, the criteria stated in paragraph (c) of this section should be followed; and

(c) Purchases abroad by a fixed-price contractor, fixed-price subcontractor, or cost-type subcontractor where a fixedprice prime or fixed-price subcontract intervenes: Provided, (1) The fixedprice prime and, where applicable, fixedprice subcontract prices are, or are

amended to be, exclusive of duty; (2) the prime contractor and, where applicable, the subcontractors concerned certify that the supplies so purchased are to be delivered to the Government or incorporated in Government-owned property or in an end product to be furnished to the Government, and that duty will be paid if such supplies or any portion thereof are utilized for other than the performance of the Government contract or disposed of other than for the benefit of the Government in accordance with the contract terms; and (3) such procurement abroad is authorized by the terms of the prime contract, the applicable subcontract, or by the contracting officer.

§ 6.602-6 Duty-free entry certificate.

The duty-free entry certificate referred to in this section will be printed, stamped, or typed on the face of Customs Form 7501 or attached thereto, and will be executed by a duly designated officer or civilian official of the appropriate Department in the following form:

I certify that the procurement of this material constituted an emergency purchase of war material abroad by the Department of the (indicate Army, Navy, or Air Force) and it is accordingly requested that such material be admitted free of duty pursuant to 10 U.S.C. 2383.

(Name)

(Title), who has been designated to execute free entry certificates for the above-named Department

(Grade)

(Organization)

§ 6.603 Supplies for vessels or aircraft operated by the United States.

(a) Subject to the considerations set forth in § 6.602-4, a duty-free entry certificate may be issued when "certain supplies (not including equipment)" are purchased for vessels or aircraft operated by the United States. As used in this section. the term "certain supplies (not including equipment)" includes articles known as "stores", such as food, medicines and toiletries, and, in addition, all consumable articles necessary and appropriate for the propulsion, operation and maintenance of the vessel or aircraft, such as fuel oil, gasoline, grease, paint, cleansing compounds, solvents, wiping

rags and polishes. It does not include portable articles necessary and appropriate for the navigation, operation or maintenance of the vessel or aircraft and for the comfort and safety of the persons on board, such as rope, bolts and nuts, bedding, china and cutlery, which are included in the term "equipment". The procedures to be followed in the issuance of such certificates shall be as prescribed by the respective Departments.

(b) The duty-free entry certificate referred to in this section will be printed, stamped, or typed on the face of Customs Form 7501, or attached thereto, and will be executed by a duly designated officer or civilian official of the appropriate Department in the following form:

I certify that the procurement of this material constituted a purchase of supplies by the United States for vessels or aircraft operated by the United States, and is admissible free of duty pursuant to 19 U.S.C. 1309.

(Name)
(Title)

(Organization)

§ 6.604 Customs duties and drawbacks.

Whenever any Department purchases supplies with respect to which there might arise a claim to a refund or drawback of customs duties paid thereon (to the extent such drawback is authorized pursuant to the Tariff Act of 1930, 19 U.S. Code, Chapter 4), the price to be paid shall ordinarily include the customs duties, and accordingly the supplier will have no claim to a drawback. On the other hand, when the price to be paid for any such purpose does not include the cusoms duties, then the supplier will have the right to claim any drawback with respect to duties paid by the supplier: Provided, (a) He has reserved such right in connection with such sale or consignment and (b) he produces evidence that such reservation was made with the knowledge and consent of the exporter.

§ 6.605 Duty-free entry of listed Canadian supplies.

that constitute, or that are directly or indirectly incorporated in, end items included in the Departmental lists of supplies maintained pursuant to § 6.103-5(a). (These Departmental lists include supplies of a military character or which are involved in programs of mutual interest to the United States and Canada. Parts and equipment for listed supplies, even though not separately listed, are considered to be included in the lists when they are procured under a contract that also calls for listed supplies.) Duty-free entry should be accorded such supplies by the issuance of duty-free entry certificates in accordance with §§ 6.605 through 6.605-3 and, in particular, as provided in the contract clause prescribed in § 6.605-2.

(b) In connection with contracts with United States prime contractors for the procurement of end items that are not included in the Departmental lists maintained pursuant to § 6.103-5(a) of this part, Canadian supplies that are themselves listed and are specifically identified in the contract as supplies that will be directly or indirectly incorporated in such unlisted end items, should be accorded duty-free entry as provided in § 6.605-3.

§ 6.605-2 Contract clause.

Every contract in excess of $10,000, except construction contracts, that includes the procurement of end items contained in the list maintained by the Department concerned pursuant to § 6.103-5(a) of this part shall include the following clause unless it is reasonably certain that no supplies will be imported from Canada by the contractor or any first- or lower-tier subcontractor in connection with the performance of the contract. The clause will be included in invitations for bids or requests for proposals that are expected to lead to such a contract.

DUTY-FREE ENTRY-CANADIAN SUPPLIES
(JULY 1960)

(a) Except as otherwise approved by the Contracting Officer and except with respect to individual shipments on which the duty is $50 or less, no amount is or will be included in the contract price on account of duty with respect to-

(1) all end items which constitute "Canadian end products" (as defined in paragraph 6-101 of the Armed Services Procurement Regulation) to be delivered under this contract; and

(ii) all supplies (including, without limitation, raw materials, components and inter

mediate assemblies) produced or made in Canada which are to be incorporated in the end items to be delivered under this contract; provided, that such end items are made in the United States or Canada; except supplies imported into the United States prior to the date of this contract, or, in the case of supplies imported by a first- or lower-tier subcontractor hereunder, prior to the date of its subcontract.

(b) All shipping documents submitted to Customs, covering such Canadian end products or supplies for which duty-free entry is to be claimed, shall bear the notation "UNITED STATES (insert name of Military Department)-DUTY FREE ENTRY TO BE CLAIMED under 10 U.S.C. 2383. Collector of Customs kindly notify (insert name and address of Government official and office) upon arrival of shipment at port of entry." The notation will also identify this contract by its contract number.

(c) The Contractor warrants that all such Canadian supplies, for which such duty-free entry is to be claimed, are to be delivered to the Government or incorporated in the end items to be delivered under this contract, and that duty shall be paid by the Contractor to the extent that such supplies, or any portion thereof, are not delivered to the Government or incorporated in such end items or disposed of pursuant to the provisions of this contract.

(d) The Government agrees to execute duty-free entry certificates and to afford such assistance as appropriate in order to obtain the duty-free entry of Canadian end products or supplies as to which the shipping documents bear the notation specified in paragraph (b) above, except as the Contractor may otherwise agree and except with respect to individual shipments on which the duty is $50 or less.

(e) The Contractor agrees to insert the substance of this clause, including this paragraph (e), in all subcontracts for supplies hereunder that exceed $5,000. Each such subcontract shall require the subcontractor to identify this contract by its contract number on any shipping documents submitted to Customs covering supplies for which duty-free entry is to be claimed pursuant to this clause. If the procurement covers both listed and unlisted end items, the foregoing clause should be modified so as to limit its application to the listed end items. § 6.605-3 Listed supplies for unlisted

end items.

In connection with negotiated contracts in excess of $10,000 with United States prime contractors for the procurement of end items that are not included in the Departmental lists maintained pursuant to § 6.103-5(a), if the prospective contractor specifically identifies listed Canadian supplies that will be directly or indirectly incorporated in such unlisted end items and if the con

tract price does not include any amount on account of duty with respect to such supplies, the contract should provide for the duty-free entry of such supplies by including provisions substantially as follows. The Schedule should identify the particular listed Canadian supplies that are to be accorded duty-free entry. The contract should include a clause like that in § 6.605-2, but modified so as to cover only the particular Canadian supplies that are specifically identified in the Schedule. Thus, the clause may be modified by:

(a) In paragraph (a), deleting (i) and (ii) and substituting the words "those supplies that are specifically identified in the Schedule as Canadian supplies to be accorded duty-free entry."

(b) In paragraph (b) of the clause, deleting the words "end products or," (c) In paragraph (d) of the clause, deleting the words "Canadian end products or supplies" and substituting a reference to the particular Canadian listed supplies, as in paragraph (a) of this section, and

(d) As to paragraph (e) of the clause, limiting the "flowdown" provision to subcontracts for supplies specifically identified in the Schedule, or, if appropriate, deleting the provision.

§ 6.605-4 Amending existing contracts.

Any existing contract may be amended so as to be made consistent with § 6.6052 or § 6.605-3; provided that, in the case of a fixed-price type contract, the contract price is reduced by the amount of the applicable duty. Under any costreimbursement type contract that has not been so amended, duty-free entry shall be accorded Canadian supplies to the extent permitted by § 6.602 except with respect to individual shipments on which the duty is $50 or less.

Subpart G-Mutual Security Act
Procurements

§ 6.701 Exemption from examination of records requirement.

§ 6.701-1 General.

With respect to purchases authorized to be made outside the United States under the Mutual Security Act of 1954, as amended, Executive Order No. 10784, dated October 1, 1958, as amended by Executive Order No. 10845, dated October 12, 1959, exempts:

(a) Contracts with foreign contractors to be performed outside the United States from the examination of records requirements of 10 U.S.C. 2313(b); and

(b) Contracts, and amendments and modifications thereof, entered into pursuant to Public Law 85-804 (§ 17.501 of this chapter), from the examination of records requirements of section 3(b) of that law: Provided, That, with respect to such contracts and amendments and modifications thereof, inclusion of the "Examination of Records" clause or compliance therewith is determined by the Department concerned to be impracticable. Such determinations may be made by any officer or official authorized to approve contracts, and amendments and modifications thereof, pursuant to § 17.201 of this chapter. § 6.701-2

Contracts with foreign gov

ernments.

(a) Fixed-price contracts. The Examination of Records clause set forth in § 7.104-15 of this chapter shall be omitted from government-to-government contracts within the scope of § 6.701-1(a).

(b) Cost-reimbursement type contracts. In government-to-government contracts within the scope of § 6.7011(a), the Records clause set forth in § 7.203-7(a) of this chapter shall be modified as follows. Subparagraph (3) of the clause shall be deleted; the references in subparagraphs (4) and (5) to "documentary evidence delivered pursuant to subparagraph (3)" shall be deleted; the references to "the Comptroller General" and "his authorized representatives" shall be deleted from subparagraphs (2), (4), (5), and paragraph (b), and the word "Department" shall be inserted in lieu of the reference to Comptroller General in the proviso in subparagraph (4). In such cases, where the Records clause required by § 7.203-7 of this chapter is to be modified as provided in § 7.203-7(b) of this chapter, subparagraph (4) as set forth therein shall be modified to correspond with the modifications prescribed above. § 6.701-3

Contracts with other foreign

contractors.

In any particular contract within the scope of § 6.701-1(a) which is made with a foreign contractor other than a foreign government, the Examination of Records clause set forth in § 7.104-15 of this chapter may be omitted (in the case of a