32 C.F.R. PART 268—COLLECTING AND REPORTING OF FOREIGN INDEBTEDNESS WITHIN THE DEPARTMENT OF DEFENSE
Title 32 - National Defense
Authority: Federal Claims Collection Act of 1966 (31 U.S.C. 951–953); Arms Export Control Act, sec. 23.
Source: 43 FR 11196, Mar. 17, 1978, unless otherwise noted.
This part establishes standard procedures to be used for the collecting and reporting of foreign indebtedness. Such indebtedness may arise through the (a) sale of Defense articles and services pursuant to the Arms Export Control Act; (b) operation of military missions; and (c) logistical support provided under country-to-country agreements. The provisions of this part apply to the Office of the Secretary of Defense, the Military Departments, and the Defense Agencies (hereafter referred to as “DoD Components”). It is the policy of the Department of Defense that timely and aggressive collection efforts will be conducted to assure that foreign arrearages to DoD Components are held to the absolute minimum. Foreign indebtedness will be uniformly and accurately reported to the Department of the Treasury on forms prescribed by the Treasury Fiscal Requirements Manual. The information system on the status of collection actions will support the information requirements of the National Advisory Council on International Monetary and Financial Policies (NAC). (a) The assistant Secretary of Defense (Comptroller) is the DoD point of contact for matters concerning foreign indebtedness requirements imposed on DoD from outside the Department, such as by the Congress, Treasury Department, and NAC. (b) The Defense Security Assistance Agency (DSAA) is responsible for consolidation of feeder arrearage reports and submission of a single consolidated DoD arrearage report to the Treasury Department. The DSAA shall (1) monitor collection actions; (2) follow up when initial collection actions have been unsuccessful; and (3) serve as the focal point within DoD for responding to NAC information requests. (c) Unless otherwise directed, the DoD Component which makes the sale, or is otherwise assigned responsibility, is responsible for taking initial collection action, accounting for indebtedness, preparation of feeder arrearage reports, and providing copies of arrearage reports to the DSAA. Each DoD Component is responsible for taking timely and aggressive billing and followup collection actions for each category of indebtedness incurred by official and private obligors pursuant to authorized programs. (a) General. (1) Amounts payable to DoD Components for sales of Defense articles and services on terms which require payment of cash in advance of delivery/performance or within 60 days thereof will be classified as accounts receivable. Military Departments shall submit reports to the DSAA of foreign indebtedness related to those sales. (2) Sales made by DoD Components under existing cases which provide for 120-day payment terms shall be classified as short-term credit sales. Similarly, those sales made after September 30, 1976, under special emergency appropriations which provide for payments 120 days after delivery of articles or services will also be classified as short-term credit sales. DoD Components shall submit reports to the DSAA of these short-term credit sales. (3) Foreign indebtedness to DoD Components for logistical support, mission support costs, and other programs is payable upon presentation of the appropriate billing documents. Reports of foreign indebtedness related to these programs will be submitted to the DSAA. (b) Basis for reporting. Amounts to be reported will be determined by analyzing unpaid bills using the criteria and definitions contained in §268.9. The DSAA is responsible for administering FMS long-term loans and credit programs authorized by Section 23 of the Arms Export Control Act, and likewise is responsible for determining foreign indebtedness against these programs. Debts remaining uncollected 90 days after the due date will be referred to the State Department for diplomatic assistance to effect settlement. Major foreign debt arrearages are monitored by the NAC. Therefore, periodically DSAA will request flash reports from the DoD Components to satisfy NAC requirements for information on major foreign debt arrearages. For this purpose, a “major” foreign debt arrearage is any country program arrearage which involves the sum of $250,000 or more. Flash reports will be submitted directly to DSAA by the local command in message form with information copies to the next higher command. The report will reflect any significant changes in major foreign debt arrearages from the quarterly foreign indebtedness reports submitted in accordance with §268.6. Collections, information on increased indebtedness, problems encountered in unsuccessful collection attempts, or country circumstances which may adversely affect collections are examples of the information which should be included in the flash reports. (a) Accounts receivable. “Accounts receivable” consist of those amounts due in which the original payment time required full payment within 90 days of delivery or performance. It excludes principal payments or interest on short-term and long-term loans and credits. (b) Arrearage delinquency determination. Obligations generated by formal agreements, as in the case of Foreign Military Sales contracts, are due on the dates specified in the contract or on the date specified in billings rendered in accordance with these contracts. Obligations incurred under Military Mission Support (Program 142) Logistical Support (Program 143) and any other authorized programs are due on the date billings are made to the customer country unless otherwise stated in the bill. Followup and reporting actions required by this part will be taken based on these dates. (See §268.5.) (c) Country designations. For reporting purposes, grants and contingent liabilities will be identified with the country which receives the benefit. Loans and credits will be identified generally with the country of the obligor or, in the instance of official multinational organizations, with the institution name. When the project is located in, or goods are destined for another country or area, the latter country or area should be stated in the description of purpose. If a government credit intermediary is the obligor, the transaction should be identified with the country where the project is located or the goods are destined. (1) United States. “United States” shall mean the states of the United States, the District of Columbia, the Commonwealth of Puerto Rico, American Samoa, the Canal Zone, Guam, Midway Island, U.S. Virgin Islands, and Wake Island. (2) Foreign country designations. Country designations other than the “United States” shall be consistent with the standardized names and codes contained in the Military Assistance and Sales Manual (MASM). (3) Official Multinational Organization. For reporting purposes, “Official Multinational Organization” shall mean any international or regional organization (or affiliated agency thereof) created by treaty or convention between sovereign states. (d) Dollar equivalents of foreign currency. Represents dollar equivalent of all foreign currency amounts disbursed and still outstanding, undisbursed balances, and arrearages of principal and interest. They shall be computed at the reporting rate prescribed by Treasury Department Circular No. 930 for balances as of the end of the reporting period. The dollar equivalents of all other reportable amounts shall be the summation of individual transactions computed at the reporting rate prescribed for the period in which the transactions occurred. (e) Foreign indebtedness. “Foreign indebtedness” means financial obligations owed to the U.S. Government by the following entities in connection with DoD activities. (1) Any individual, including a citizen of the United States (excluding U.S. military members and U.S. Government employees) domiciled outside the United States. (2) Any partnership, association, corporation, or other organization created or organized under the laws of a foreign country, excepting branches or agencies thereof located in the United States. (3) Any branch, subsidiary, or allied organization within a foreign country of a partnership, association, corporation, or other organization created or organized under the laws of a foreign country or the United States. (4) Any government of a foreign country and any subdivision, agency, or instrumentality thereof, including all foreign “Official” institutions, even though located in the United States. (5) Any private relief, philanthropic, or other organization of a multinational or regional character with headquarters abroad. (6) Any official multinational organization, defined as any international or regional organization (or affiliated agency thereof) created by treaty or convention between sovereign states. (f) Indebtedness. “Indebtedness” within the context of this part refers to financial obligations to make payment(s) to the U.S. Government in accordance with contractual or other arrangements. Such obligations generally arise from (1) The disbursements of cash to be repaid at a future time (with or without interest), (2) The extension of credit (by formal agreement or an open book account) in connection with the sale of products, property, or services, (3) The formal deferral of interest collection, (4) The purchase or repurchase of obligations that have been insured or guaranteed by the U.S. Government, and (5) Payments by the U.S. Government in cases of default on insured or guaranteed loans and other investments when the U.S. Government acquires a debt instrument from the insured. (g) Long-term loans and credits. “Long-term loans and credits” include any indebtedness under which the original payment terms provided for payment within a period of time exceeding one year after delivery or performance. (h) Official obligor. “Official obligors” are debtors or guarantors who are: (1) Central governments or their departments (ministries) or components, whether administrative or commercial. (2) Political subdivisions such as states, provinces, departments, and municipalities. (3) Foreign central banks. (4) Other institutions (such as corporations, development banks, railways, and utilities) when (i) the budget of the institution is subject to the approval of the government, or (ii) the government owns more than 50 percent of the voting stock or more than half of the members of the board of directors are government representatives, or (iii) in the case of default the government or central bank would become liable for the debt of the institution. (5) Any official multinational organization. (i) Private obligor. “Private obligors” are all debtors or guarantors who are not defined as “official obligors.” (j) Program. “Program” is the law, international treaty, appropriation, or other authority under which the loans or credits are extended, or the accounts receivable arise. When a narrative program designation is required, commonly used terms should be used, e.g., Arms Export Control Act, Logistical Support, and Military Assistance Advisory Groups. (k) Short-term loans and credits. “Short-term loans and credits” include any indebtedness under which the original payment terms provided for payment within a period from 90 days to and including one year after delivery or performance. (l) Time conventions. The terms 30, 60 and 90 days should be interpreted to mean 1, 2, and 3 calendar months, respectively. That is, the period February 6 through May 5 would be considered to be 90 days. For example, in calculating amounts “due and unpaid” 90 days or more as of December 31 the amounts due before October 1 and remaining unpaid as of December 31 would be reportable. However, amounts due as of October 1 but remaining unpaid at December 31 would not be reportable.
Title 32: National Defense
PART 268—COLLECTING AND REPORTING OF FOREIGN INDEBTEDNESS WITHIN THE DEPARTMENT OF DEFENSE
Section Contents
§ 268.1 Purpose.
§ 268.2 Applicability.
§ 268.3 Policy.
§ 268.4 Responsibilities.
§ 268.5 Collection and followup procedures.
§ 268.6 Reporting of accounts receivable and sales under 120 days delayed payment terms (short-term credit).
§ 268.7 Collecting and reporting of foreign debts under long-term loans and debts.
§ 268.8 Flash report of major foreign debt arrearages.
§ 268.9 Discussion of terms.
§ 268.1 Purpose.
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§ 268.2 Applicability.
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§ 268.3 Policy.
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§ 268.4 Responsibilities.
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§ 268.5 Collection and followup procedures.
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§ 268.6 Reporting of accounts receivable and sales under 120 days delayed payment terms (short-term credit).
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§ 268.7 Collecting and reporting of foreign debts under long-term loans and debts.
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§ 268.8 Flash report of major foreign debt arrearages.
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§ 268.9 Discussion of terms.
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