scope:

Purpose

A. The purpose of this chapter is to establish policies and procedures to ensure the Department of Defense (DoD) Components uniformly and consistently apply pricing principles and methodologies that recoup current period costs and a reasonable contribution to sunk investment costs. Sunk investment costs represent historical decisions to expend research and development (R&D) funds to develop new equipment or to purchase assets or facilities. Although the original investment decision was based entirely on DoD requirements, Foreign Military Sales (FMS) purchasers benefit from the investment decision when they purchase related equipment, or use of the assets and facilities is necessary in order to provide ordered services or to deliver ordered materiel.

B. This chapter applies to the sale of defense articles or services under the authority of the Arms Export Control Act (AECA), Public Law 90-629, as amended, codified as Title 22 United States Code (U.S.C.) 2751 et seq., and the Foreign Assistance Act (FAA), Public Law 87-195, as amended, codified as Title 22 U.S.C. 2151 et seq.

C. For pricing guidance from authorities other than the AECA and FAA that sell or transfer defense articles or services (such as annual defense appropriation acts or supplemental appropriation acts), consult the authorizing legislation and relevant financial management policy.