FAR 25.901—Policy.
Plain-English Summary
FAR 25.901 states the basic policy for using customs-duty exemptions on foreign supplies imported into the customs territory of the United States. It explains that U.S. laws impose duties on imported foreign supplies, but that certain exemptions are available to Government agencies. The section’s purpose is to ensure agencies do not pay customs duties unnecessarily when an exemption can be used. At the same time, it recognizes that claiming an exemption is not free: agencies must consider the administrative burden and documentation required to process the exemption. In practice, this means contracting and logistics personnel must weigh the expected duty savings against the cost and effort of compliance before deciding whether to use an exemption. The section is a cost-saving rule, but it also creates a documentation and process-management obligation for agencies.
Key Rules
Duties Apply to Imports
Foreign supplies imported into the customs territory of the United States are subject to duties under U.S. law. The starting point is that imported foreign goods may incur customs charges unless an exemption applies.
Agency Exemptions Exist
Government agencies may be eligible for exemptions from those duties. FAR 25.901 recognizes these exemptions as available tools for reducing the cost of imported supplies.
Use Exemptions When Economical
Agencies must use available exemptions when the anticipated savings to appropriated funds will outweigh the administrative costs of processing the required documentation. The decision is therefore a cost-benefit determination, not an automatic entitlement to claim every exemption.
Documentation Has a Cost
The policy specifically requires agencies to account for the administrative burden of preparing and processing the paperwork needed to obtain the exemption. If the paperwork cost exceeds the likely duty savings, the exemption should not be used.
Responsibilities
Agency
Evaluate whether a customs-duty exemption is available for imported foreign supplies and determine whether the expected savings to appropriated funds exceed the administrative costs of processing the required documentation. Use the exemption when it is cost-effective.
Contracting Officer
Ensure acquisition planning and contract administration account for customs-duty exemption opportunities, and coordinate with program, logistics, and import personnel so the Government uses exemptions when required by the policy.
Contractor
Provide accurate information and support needed to process customs documentation when the contract or shipment involves imported foreign supplies, and cooperate with the agency’s exemption process as required by the contract.
Import/Logistics Personnel
Prepare, submit, and track the customs documentation needed to claim an exemption, and help the agency assess the administrative effort associated with using the exemption.
Practical Implications
This section is mainly a cost-control rule: agencies should not pay customs duties if an exemption will save more money than it costs to administer.
The key day-to-day task is documenting the savings-versus-administrative-cost comparison before deciding whether to claim an exemption.
A common pitfall is assuming every available exemption should always be used; FAR 25.901 requires a practical economic judgment.
Another risk is underestimating the paperwork burden, which can erase the value of small duty savings.
Contracting and logistics teams should coordinate early so import documentation is ready if the exemption is worth pursuing.
Official Regulatory Text
United States laws impose duties on foreign supplies imported into the customs territory of the United States. Certain exemptions from these duties are available to Government agencies. Agencies must use these exemptions when the anticipated savings to appropriated funds will outweigh the administrative costs associated with processing required documentation.