FAR 29.402—Foreign contracts.

Foreign fixed-price contracts.

FAR 29.402-1 tells contracting officers which tax clauses must be included in solicitations and contracts for fixed-price work performed in foreign countries or with foreign governments. It covers two specific clauses: FAR 52.229-6, Taxes-Foreign Fixed-Price Contracts, for fixed-price contracts expected to exceed the simplified acquisition threshold when performance will occur wholly or partly in a foreign country; and FAR 52.229-7, Taxes-Fixed-Price Contracts with Foreign Governments, for fixed-price contracts expected to exceed the simplified acquisition threshold when the contemplated contract is with a foreign government. The section exists to allocate responsibility for foreign taxes and to make sure the contract language addresses how those taxes will be handled in pricing and administration. In practice, this means the contracting officer must identify whether the work will be performed overseas, whether a foreign government is the counterparty, and whether the acquisition exceeds the simplified acquisition threshold before selecting the correct clause. The rule is important because foreign tax exposure can materially affect contract price, contractor risk, and post-award administration.

Foreign cost-reimbursement contracts.

FAR 29.402-2 tells contracting officers which tax clause to include when the Government is using a cost-reimbursement contract in a foreign setting. It covers two related situations: (1) a cost-reimbursement contract performed wholly or partly in a foreign country, and (2) a cost-reimbursement contract with a foreign government. The section requires use of clause 52.229-8, Taxes-Foreign Cost-Reimbursement Contracts, for the first situation, unless the contract is expected to be with a foreign government; and use of clause 52.229-9, Taxes-Cost-Reimbursement Contracts with Foreign Governments, for the second. Its purpose is to make sure the contract allocates responsibility for foreign taxes correctly and gives the Government the right contractual language to address tax treatment in overseas performance. In practice, this section is a drafting rule: if the contract type and place of performance fit the rule, the contracting officer must put the right clause in the solicitation and contract so tax costs, reimbursement, and foreign-government tax issues are handled consistently from the start.

Tax on certain foreign procurements.

FAR 29.402-3 tells contracting officers when to include the solicitation provision at 52.229-11, Tax on Certain Foreign Procurements—Notice and Representation, and when to include the contract clause at 52.229-12, Tax on Certain Foreign Procurements. The section is aimed at identifying whether a contractor is a foreign person so the Government can address potential tax consequences tied to certain foreign procurements. It applies broadly to solicitations, including commercial item and commercial service acquisitions using part 12 procedures, but it also lists specific exceptions where the notice-and-representation provision is not required. Those exceptions include simplified acquisitions below the simplified acquisition threshold, emergency acquisitions under part 18, unusual and compelling urgency acquisitions under 6.303-2, certain personal services contracts with a single individual, and certain foreign humanitarian assistance contracts identified by the requiring activity. In practice, this section matters because it determines when the Government must collect the contractor’s foreign-person status and when the resulting contract must carry the tax clause, which can affect pricing, compliance, and post-award administration.

Taxes—Foreign Contracts in Afghanistan.

FAR 29.402-4 tells contracting personnel which tax clause to include when a solicitation or contract will be performed in Afghanistan. It covers two related but distinct situations: contracts awarded by or on behalf of U.S. Forces, and contracts awarded on behalf of or in support of NATO that are governed by the NATO Status of Forces Agreement (SOFA). The section exists to ensure the correct foreign-tax treatment is built into the contract from the start, so the parties know how Afghan taxes are handled and which clause controls. In practice, this is a clause-selection rule: the contracting officer must choose between FAR 52.229-13, Taxes—Foreign Contracts in Afghanistan, and FAR 52.229-14, Taxes—Foreign Contracts in Afghanistan (North Atlantic Treaty Organization Status of Forces Agreement). Using the wrong clause can create compliance problems, payment disputes, or inconsistent treatment of taxes under the applicable international agreement. The section is narrow, but it is important because Afghanistan performance and NATO-related work may be subject to different legal frameworks.