Government Contract Tariff Exemptions

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Jay Blindauer

It is the Federal Government’s policy that, when available and practicable, a Government contractor should obtain a tariff duty exemption.   This is common sense.   A tariff duty makes a contract more expensive for the Government.   And it is counter-productive for the Government to charge a tariff duty on itself.  

The primary rules for Government contract tariff exemptions are found at FAR Subpart 25.9, 19 C.F.R. §§ 10.100-10.104, and the Harmonized Tariff Schedule of the United States (“HTSUS”) Chapter 98 (which is codified at 19 U.S.C. § 1202).  

Generally speaking, for a contractor to obtain duty-free entry (“DFE”):

(1) the imported article must be for Government contract performance;[1]

(2) the duty on the article, if unremitted, should be significant enough to make the DFE paperwork worthwhile;[2] and

(3) the imported article must be classifiable under an HTSUS heading or subheading that grants DFE—or at least qualify for a statutory or regulatory tariff exemption.[3]

In the HTSUS, particularly pertinent are import subheadings 9808.00.30 (articles for DoD), 9808.00.40 (materials under the Strategic and Critical Materials Stock Piling Act),[4] 9808.00.50 (articles for the Energy Dep’t), 9808.00.60 (plants, seeds, and other planting materials for the Agriculture Dep’t or the U.S. Botanic Garden), and 9808.00.80 (articles for NASA).  

Further, HTSUS subheading 9810.00.60 provides, under certain conditions, DFE for a scientific instrument or apparatus being acquired for non-commercial research by a public institution.   See HTSUS, Rev. 11, at 98-X-5 (2025).

Furthermore, upon declaration of a national emergency, 19 U.S.C. § 1318 provides DFE for “food, clothing, and medical, surgical, and other supplies for use in emergency relief work.”   19 U.S.C. § 1318(a).   This exception was relied upon during the COVID-19 pandemic.[5]

Also, 19 U.S.C. §§ 1309 and 1317(b) allow DFE for supplies to a Government-operated vessel or aircraft.   See FAR 25.903(b).[6]

Additionally, FAR 25.903 points to all of the exceptions provided in “Subchapters VIII and X of Chapter 98 of the Harmonized Tariff Schedule[.]”   FAR 25.903(a).  

Hence, there are multiple instances where a contractor may obtain DFE for an imported article that ultimately will go to the Government.   Arguably, DFE should also apply to a consumable material needed to produce a deliverable—assuming that the material is solely for use under the Government contract.

Despite the preceding opportunities for DFE, surprisingly, there currently is not an HTSUS subheading that generally offers DFE to Government contractors.   So, in these times of Government fiscal constraint, the Government’s patchy offering of DFE is making many contracts unnecessarily more expensive.

Process Overview

For a procuring agency and its contractor to get DFE, typically, it is a multi-step process involving, at a minimum, the Contracting Officer (“KO”), the contractor, the contractor’s foreign supplier, the contractor’s customs broker,[7] and U.S. Customs and Border Protection (“CBP”).  

Generally speaking (with variations), the KO provides the DFE certificate.   The contractor coordinates with everyone.   The foreign supplier must adequately mark and annotate the packaging and the freight paperwork, and initiate freight.   The customs broker handles the entry packet and coordination with CBP, including ultimately filing the DFE certificate.[8]   And CBP inspects the entry and releases it.   If all goes as it should, CBP eventually liquidates the entry with no tariff applied (a.k.a., 0% ad valorem).[9], [10]  

Unfortunately, the FAR and FAR Supplements do not meaningfully explain the relevant processes.   Even the DFARS fails in this regard.   Consequently, because of the confusion, many KOs and contractors do not attempt DFE.   Which is lamentable.   Because, if an imported article is worth millions, the failure to obtain DFE can be quite costly for the contractor and the Government.

Accordingly, this discussion addresses procurement DFE for: (1) DoD; (2) the Department of Energy; (3) NASA; (4) for a procuring agency that does not have a tailored process; and (5) when obtaining a scientific instrument/apparatus for public research.

General Exemptions Without Procuring Agency Involvement

An important point before getting into procurement DFE certificates.   If a contractor can obtain DFE without the procuring agency, likely there is no need to involve the procuring agency.   This is because there are plenty of instances where there is no tariff on an import—much less one going to the Government under a Government contract.  

The primary example is the de minimis exception.   Specifically, the Tariff Act of 1930 at 19 U.S.C. § 1321(a)(2)(C) (amended by the Trade Facilitation and Trade Enforcement Act of 2015) generally provides a tariff duty exception for imports valued under $800—called the de minimis exception.[11]   So, for an import under $800, there should be no need to seek a DFE certificate from the procuring agency.   But see 19 C.F.R. § 10.151 (uses the language “not exceeding $800”).

However, keep in mind, the current Administration has been modifying the applicability of the de minimis exception—particularly for imports coming from China and Hong Kong.[12]   So, it is important for a contractor to stay apprised of new Executive Orders and CBP bulletins (e.g., the Cargo Systems Messaging Service).    

The second example is American Goods Returned (“AGR”).   Particularly, for a U.S. article returning to the customs territory of the United States,[13] HTSUS subheading 9801.00.10 offers DFE if the article is “returned within 3 years after having been exported, without having been advanced in value or improved in condition by any process of manufacture or other means while abroad[.]”   HTSUS, Rev. 11, at 98-I-2 (2025).  

To obtain AGR DFE, the importer must substantiate that the article is actually AGR.   Which, inter alia, generally requires a completed CBP Form 3311 (Declaration for Free Entry of Returned American Products), and possibly one or more affidavits (e.g., from the manufacturer, importer, and/or the foreign shipper).[14], [15]  

A third example is if DFE is already available because of the nature of the article, or an applicable trade agreement.  

Since April 2, 2025, when the President imposed a nearly universal tariff of 10%, this category of exemptions has become considerably smaller.[16]  

Yet, the sands keep shifting.   Specifically, the U.S. Court of International Trade (“CIT”) decision in VOS Selections, Inc., et al., and the U.S. District Court for D.C. decision in Learning Resources, Inc., et al., both found that some of the recent tariffs likely exceeded statutory authority.[17]   However, on May 29, 2025, the U.S. Court of Appeals for the Federal Circuit stayed CIT’s permanent injunction against the universal 10% tariff.[18]   So, stay tuned.

Regardless, even under the worldwide 10% tariff, there are still some general imports that obtain DFE.   E.g., the United States-Mexico-Canada Agreement (“USMCA”) still provides DFE for many qualifying products coming from Mexico or Canada.   As another example, based on the President’s April 11, 2025 memorandum, some semiconductor devices (HTSUS heading 8541) can obtain DFE.[19]

Thus, as stated, if a contractor can obtain DFE without the procuring agency, likely there is no need to involve the procuring agency.  

That said, these are unpredictable times.   So, if a supposedly available non-procurement exemption is unreliable, a cautious contractor may still seek a procurement DFE certificate.   And if a KO wants to make a contract less expensive, generally, the KO should be receptive.     

The DoD DFE Process

Starting with DFE for a DoD procurement, arguably, DoD has the best developed process.   And it sets an instructive example for other agencies.

Crucial in the DoD DFE process is the Defense Contract Management Agency (“DCMA”) DFE Team.   The DCMA DFE Team is a model of Government efficiency.   The Team only has four DFE Specialists—not counting the Team Supervisor and the DCMA Transportation Performance Advocate.[20]   Yet, the four DFE Specialists review and approve at least 30,000 DFE certificates per year.[21]   So, with 250 federal workdays in 2025, that amounts to each Specialist reviewing, approving, and issuing at least 30 certificates a day.   It is an appreciable effort for such a small team.   More below on the DFE Team’s role in the process.

Looking at DFARS Subpart 225.9, it states a broad prescription for the use of DFE certificates.

“Unless the supplies are entitled to duty-free treatment under a special category in the Harmonized Tariff Schedule of the United States (e.g., the Caribbean Basin Economic Recovery Act or a Free Trade Agreement), or unless the supplies already have entered into the customs territory of the United States and the contractor already has paid the duty, DoD will issue duty-free entry certificates for—

(1) Qualifying country supplies (end products and components);

(2) Eligible products (end products but not components) under contracts covered by the World Trade Organization Government Procurement Agreement or a Free Trade Agreement; and

(3) Other foreign supplies for which the contractor estimates that duty will exceed $300 per shipment into the customs territory of the United States.”

DFARS 225.901 (emphasis added).[22], [23]   Thus—unless the import is already accorded DFE without the need for a DoD DFE certificate—generally, the contractor is supposed to seek, and DoD is supposed to provide, a DFE certificate.   Further, DFARS 225.901 establishes that—apart from the contract-specific importance of an item—the administrative effort is worthwhile if the anticipated import duty will exceed $300.

Of note, FAR Subpart 25.900 covers duty-free treatment for “supplies purchased under Government contracts.”[24]   In comparison, the first two parts of DFARS 225.901 only offers DFE for end products and components, and defines a component as an “item supplied to the Government as part of an end product or of another component.”[25]   Meanwhile, the third part of DFARS 225.901 refers simply to “[o]ther foreign supplies”—which is more consistent with FAR 25.900.[26]  

Taken altogether, as long as the import will ultimately be part of a contract deliverable, or is needed for producing a deliverable and will not be used outside the contract, it should be eligible for DFE.[27]   Indeed, since the overall objective is to lessen the Government’s liability, that objective favors a broad application.       

The Process According to the DFARS

The DFARS hardly explains the actual DoD DFE process.   Because, in reality, the process involves multiple steps making use of the online Procurement Integrated Enterprise Environment (“PIEE”) DFE module.   Therefore, a contractor first applies for credentials to use the PIEE DFE module.   More below on the actual procedure for obtaining DFE through the PIEE.

Nevertheless, for context, it is helpful to look at the DFARS, and particularly DFARS 252.225-7013 (Duty-Free Entry).  

Under paragraph (h) of the clause, to start the process, the contractor is supposed to provide the following information to the Administrative Contracting Officer (“ACO”).

“(1) The Contractor’s name, address, and Commercial and Government Entity (CAGE) code; (2) Prime contract number and, if applicable, delivery order number; (3) Total dollar value of the prime contract or delivery order; (4) Date of the last scheduled delivery under the prime contract or delivery order; (5) Foreign supplier’s name and address; (6) Number of the subcontract for foreign supplies; (7) Total dollar value of the subcontract for foreign supplies; (8) Date of the last scheduled delivery under the subcontract for foreign supplies; (9) List of items purchased; (10) An agreement that the Contractor will pay duty on supplies, or any portion thereof, that are diverted to nongovernmental use other than—(i) Scrap or salvage; or (ii) Competitive sale made, directed, or authorized by the Contracting Officer; (11) Country of origin; and (12) Scheduled delivery date(s).”

DFARS 252.225-7013(h) (emphasis added).   In reality, the contractor provides information by completing and submitting the data fields in the PIEE DFE module.

DFARS 252.225-7013 also states the following.

“(d) Except as the Contractor may otherwise agree, the Government will execute duty-free entry certificates and will afford such assistance as appropriate to obtain the duty-free entry of supplies—(1) For which no duty is included in the contract price in accordance with paragraph (b) of this clause; and (2) For which shipping documents bear the notation specified in paragraph (e) of this clause.

(e) For foreign supplies for which the Government will issue duty-free entry certificates in accordance with this clause, shipping documents submitted to Customs shall—(1) Consign the shipments to the appropriate—(i) Military department in care of the Contractor, including the Contractor’s delivery address; or (ii) Military installation; and (2) Include the following information: (i) Prime contract number and, if applicable, delivery order number.   (ii) Number of the subcontract for foreign supplies, if applicable.   (iii) Identification of the carrier.

(iv) (A) For direct shipments to a U.S. military installation, the notation: ‘UNITED STATES GOVERNMENT, DEPARTMENT OF DEFENSE Duty-Free Entry to be claimed pursuant to Section XXII, Chapter 98, Subchapter VIII, Item 9808.00.30 of the Harmonized Tariff Schedule of the United States.   Upon arrival of shipment at the appropriate port of entry, District Director of Customs, please release shipment under 19 CFR Part 142 and notify Commander, Defense Contract Management Agency (DCMA), St. Louis, MO, ATTN: Duty Free Entry Team, 1222 Spruce Street, Room 9.300, St. Louis, MO 63103-2812, for execution of Customs Form 7501, 7501A, or 7506 and any required duty-free entry certificates.’

(B) If the shipment will be consigned to other than a military installation, e.g., a domestic contractor’s plant, the shipping document notation shall be altered to include the name and address of the contractor, agent, or broker who will notify Commander, DCMA New York, for execution of the duty-free entry certificate.   (If the shipment will be consigned to a contractor’s plant and no duty-free entry certificate is required due to a trade agreement, the Contractor shall claim duty-free entry under the applicable trade agreement and shall comply with the U.S. Customs Service requirements.   No notification to Commander, DCMA New York, is required.)

(v) Gross weight in pounds (if freight is based on space tonnage, state cubic feet in addition to gross shipping weight).   (vi) Estimated value in U.S. dollars.   (vii) Activity address number of the contract administration office administering the prime contract, e.g., for DCMA Dayton, S3605A.”

DFARS 252.225-7013(d) and (e) (emphasis added).

Paragraphs (f) and (g) also state the following.

“(f) (1) (i) Except for shipments consigned to a military installation, the Contractor shall—[ ] Prepare any customs forms required . . . [and] [s]ubmit the completed customs forms to the District Director of Customs, with a copy to DCMA NY for execution of any required duty-free entry certificates.   (ii) Shipments consigned directly to a military installation will be released in accordance with sections 10.101 and 10.102 of the [19 C.F.R.] U.S. Customs regulations.

(g) The Contractor shall—(1) . . . instruct the foreign supplier to prepare, a sufficient number of copies of the bill of lading (or other shipping document) so that at least two of the copies accompanying the shipment will be available for use by the District Director of Customs at the port of entry; (2) Consign the shipment as specified in paragraph (e) of this clause; and (3) Mark on the exterior of all packages—(i) ‘UNITED STATES GOVERNMENT, DEPARTMENT OF DEFENSE’; and (ii) The activity address number of the contract administration office administering the prime contract.”

DFARS 252.225-7013(f) and (g) (emphasis added).

Importantly, DFARS 252.225-7013 contemplates different processes depending on whether an imported article is travelling to a commercial or a Government facility.   The PIEE DFE process reflects this distinction—calling importation to a commercial facility a Type 01 entry, and to a Government facility a Type 51 entry.

Also, for a DoD contract, the import is primarily entered as HTSUS subheading 9808.00.30 (“Materials certified to the Commissioner of Customs by the authorized procuring agencies to be emergency war material purchased abroad”).   HTSUS, Rev. 11, at 98-VIII-2 (2025); DFARS 252.225-7013(e).[28]  

This is the proper subheading even though much of the DoD DFE certificates are granted with no actual emergency.   Because DFARS Subpart 225.9 does not require an actual emergency.   And the DFARS does not even use the term “war material.”[29]  

Here, the interaction between procurement law and the HTSUS is imperfect.   Nonetheless, again, the intent is to reduce the Government’s contract liability—which favors broad application of DFE certificates.

There should also be a secondary HTSUS classification which, in accordance with 19 C.F.R. § 152.11, accurately describes the merchandise.   So, for example, if the contractor is importing a diesel engine piston, the primary subheading is 9808.00.30 (war material).   The secondary subheading could be 8409.99.91 (diesel engine part).   This way a CBP officer reviewing the paperwork can readily see that the import is subject to DFE, but can also see how the import would otherwise be categorized.

Last, DFARS Procedures, Guidance, and Information (“PGI”) 225.902 offers additional guidance for the process.   Generally speaking, PGI 225.902 is not particularly helpful because it fails to reasonably describe what actually occurs.   However, the PGI does establish that DoD can issue a DFE certificate for a “contractor or any tier subcontractor[.]”[30]

The DoD Process as Described by DCMA’s FAQs

The actual DoD process is better explained through DCMA’s DFE Process: Frequently Asked Questions (“FAQs”)—May 6, 2025 update.

Particularly germane from the FAQs is the following.

“Regardless of the destination, the materials must be procured by a contract issued by the U.S. Government.   The contract does NOT need to be administered by DCMA.   The DCMA DFE team processes DFE certificates regardless of the administering agency.   The contract must, however, include DFARS 252.225.7013, and the shipping paperwork must include the appropriate information required by the clause.  

a. Materials going to a U.S. DoD location imported under HTSUS 9808.00.30; known as a Type 51 entry:   For contract materials destined for a U.S. DoD location:

  • The carrier will provide all of the shipping documents to the U.S. Customs and Border Protection (CBP) agent at the port of importation;
  • If the shipping documents have the DCMA DFE statement and a clear DoD Military address, the CBP agent will assign a P99 entry number and allow the materials to be released immediately for delivery;
  • CBP will forward the shipping documents and P99 number to the DCMA DFE Team;
  • The DCMA DFE Team will review the documents and ensure the materials are eligible;
  • If not eligible, DCMA will provide a written reason to CBP as to why the materials are not eligible.   CBP may attempt to correct the discrepancy and resubmit the documents to DCMA;
  • Common Reasons for DCMA to determine that materials are not eligible (but not limited to): [ ] The materials are AGR [American Goods Returned]; [ ] There are no commercial invoices or shipping documents; [ ] The DoD Contract Number is missing from the shipping documents; [ ] The P99 entry number is missing from the documents; [ ] A request has been certified under a different DoD contract number; or [ ] The entry is not a DCMA ‘Type 51’ and should follow the ‘Type 01’ process.
  • If materials are deemed eligible, DCMA will forward the CF7501 to CBP to liquidate the applicable duties and taxes.
  • NOTE: only duties/taxes/tariffs authorized pursuant to HTSUS 9808.00.30 will be liquidated.   If duties/taxes/tariffs are applied under a different HTSUS code that falls outside the scope of DCMA’s DFE process, CBP will apply the required duties/taxes/tariffs.   For information/questions on the application of those duties/taxes/tariffs, consult [U.S. International Trade Commission] USITC or the cognizant contracting office.”

DCMA Duty Free Entry Process: Frequently Asked Questions (“FAQs”) at 2-3 (May 6, 2025 update).

“b. Materials going to a commercial facility imported under HTSUS 9808.00.30; known as a Type 01 entry:   For contract materials consigned to a commercial facility:

  • Type 01 entries require the use of the Procurement Integrated Enterprise Environment (PIEE)-DFE module.   Please reference the Web Based Training Module for DFE within PIEE for questions on how to operate this system.
  • The commercial contractor or vendor must request a DFE entitlement via the PIEE-DFE module in accordance with the contract;
  • The [Procuring Contracting Officer] PCO or Administrative Contracting Officer (ACO) will review, approve, or deny the entitlement;
  • Once approved, the customs broker listed in the approved entitlement will receive a tokenized email permitting them to request a DFE certificate from DCMA;
  • The commercial vendor is responsible for identifying and providing the contact information of the customs broker[;]
  • After materials have been imported into the U.S. (immediate release at the port by CBP still applies), the customs broker will use the tokenized email to request a DFE certificate and the applicable entry documents, to include the CF7501, from DCMA;
  • The DCMA DFE Team reviews the certificate request to determine whether the materials are eligible;
  • If not authorized or if the paperwork is questionable, DCMA DFE will return or deny the request in the PIEE-DFE module;
  • Common reasons for a return or denial include, but are not limited to: Submitted under wrong entitlement[;] [ ] Did not include the correct paperwork, such as the commercial invoice[;] [ ] Did not include the DFE clause in the shipping paperwork[;] [ ] The commercial vendor requested an incorrect entitlement amount[.]
  • If authorized, DCMA DFE will approve the certification request and send a tokenized email to the customs broker, which will permit the broker to send the certification to CBP to liquidate the duties/taxes/tariffs.
  • NOTE: only duties/taxes/tariffs authorized pursuant to HTSUS 9808.00.30 will be liquidated.   If duties/taxes/tariffs are applied under a different HTSUS code that falls outside of the scope of DCMA’s DFE process, CBP will apply the required duties/taxes/tariffs.   For information/questions on the application of those duties/taxes/tariffs, consult USITC or the cognizant contracting office.”

DCMA FAQs at 3-4 (May 6, 2025 update).

Thus—whether the import is Type a 01 or a Type 51 entry—the DCMA FAQs offer more practical guidance as to how the process unfolds using the PIEE DFE module.   Still, more can be said.

The Actual DoD Process

With the preceding regulatory and policy background, here is, generally speaking, the actual DoD process.

One

If the at-issue contract does not already include DFARS 252.225-7013 (Duty-Free Entry), the PCO and the contractor should modify the contract to include DFARS 252.225-7013.   Although applicable statute and regulation is the law regardless of whether the contract actually has FAR 52.225-8, DFARS 252.225-7013, or another DFE clause, DCMA insists on DFARS 252.225-7013 being in the contract.[31], [32]    And, in deference to DCMA, it does give everyone additional assurance that the contractor is actually entitled to DFE.[33]  

As part of this, where DFE is going to occur, the contract price is not supposed to include the cost of the corresponding tariff duty.   See DFARS 252.225-7013(d)(1).   If the contract price presently does include part or all of the cost of the tariff duty, the Government should still want the modification because of the savings opportunity.   However, in such a case, the mod. should not be a zero-dollar mod.   Instead, it should include a downward price adjustment so that the Government can take full advantage of DFE.[34]  

Two

A contractor must have access to PIEE, and particularly the DFE module.   Registration for PIEE is available here.[35]   To register for PIEE, a contractor must already be registered in the System for Award Management (“SAM”), and must have a Commercial and Government Entity (“CAGE”) code.[36]   Additionally, the contractor must appoint a Contractor Administrator (“CAM”) to manage the contractor’s PIEE access.   According to the PIEE website, “[i]t’s recommended that the [SAM Electronic Business] EB POC also serves as the CAM for simplicity.”[37]  

Once the contractor’s CAM obtains an active account, the CAM can then request access to specific applications—such as the DFE module.[38]  

If the contractor already has a PIEE CAM—because the contractor is already using PIEE for Wide Area Workflow (“WAWF”), Supplier Performance Risk System (“SPRS”), etc.—then the CAM should be able to request additional access for the DFE module.  

Because of the preceding, generally, outside legal counsel, accountants, consultants, and customs brokers are not permitted to obtain PIEE credentials.

Three

The contractor must obtain a customs broker for the import.   The customs broker rules are found at 19 U.S.C. § 1641.   Importantly, a licensed and permitted customs broker will have a CBP-assigned three-digit alpha-numeric filer code.   See 19 C.F.R. § 142.3a(b)(1).   Of note, the DFE module does have a Look Up Customs Broker button.

Four

For a Type 01 entry (going to a private facility)—which is the majority of GovCon entries—the contractor must submit an entitlement request through the PIEE DFE module.   An entitlement request is the request to the pertinent ACO to approve that the contractor is entitled to DFE.   For the contract, the ACO should be listed in Block 24 of an SF-33, Block 7 of an SF-30, or Block 16 of an SF-1449.  

The types of data fields included in the request are based, at least in part, on DFARS 252.225-7013(h).   Importantly, the request must identify the foreign supplier of the import, and the contractor’s chosen customs broker.   This is why the contractor should first obtain a customs broker.  

The entitlement request also seeks detailed description of the imported item(s) so that the ACO can identify which contract CLIN(s) the item(s) will be delivered under.  

Overall, the contractor should submit the entitlement request as early as is practicable prior to import.   This gives the contractor maximum time to re-submit if the entitlement request is initially denied.

Five

The ACO will receive an entitlement request through the DFE module, and, according to the PIEE system, the ACO is supposed to approve or deny the request within (20) days.[39]  

For DFE, a DoD ACO’s entire function is to verify that the contractor is entitled to DFE.   This involves checking that: (1) the imported items are actually needed for the contract; (2) that the items are actually foreign supplier items that will be imported into the customs territory of the United States (even if the foreign supplier advanced production of what was, earlier in the production process, a U.S. export); and (3) that the import did not already occur.[40]    If the ACO denies entitlement because of insufficient information, the ACO should communicate to the contractor the nature of the insufficiency.   In turn, the contractor may re-submit the entitlement request.   Once an entitlement request is approved, the contractor is ready to import.

Six

Upon the ACO’s approval of the entitlement request, the customs broker will receive an email with a link to the PIEE system (a.k.a., a tokenized email).   See DCMA FAQs at 3-4 (May 6, 2025 update).   The customs broker should be careful not to delete the email.  

Seven

The foreign supplier ships the import.   The exterior of the packaging should be marked “UNITED STATES GOVERNMENT, DEPARTMENT OF DEFENSE[,]” and should have “[t]he activity address number of the contract administration office administering the prime contract.”   DFARS 252.225-7013(g)(3).   Hence, the ACO’s Department of Defense Activity Address Code (“DoDAAC”) should be visible.   For example, “[F]or DCMA Dayton, S3605A[.]”   DFARS 252.225-7013(e).

Additionally, the shipping documents should—

“(1) Consign the shipments to the appropriate—(i) Military department in care of the Contractor, including the Contractor’s delivery address; or (ii) Military installation; and (2) Include the following information: (i) Prime contract number and, if applicable, delivery order number.   (ii) Number of the subcontract for foreign supplies, if applicable.   (iii) Identification of the carrier.”

DFARS 252.225-7013(e) (emphasis added).   The need to have a visible contract number is reiterated at DFARS 252.225-7013(j)(2).   And, to facilitate CBP, multiple copies of the waybill/bill of lading should accompany the shipment.   See DFARS 252.225-7013(g)(1).

Eight

After the import arrives at the port of entry, the entry process occurs, and the customs broker gathers the entry packet.   See 19 C.F.R. § 141.4(a).  

As stated in the CBP Automated Commercial Environment (“ACE”) Entry Summary (Version 12.0)—

“The importation of goods into the United States[ ] is generally a two-part process consisting of: 1.) Filing the cargo release documents necessary to determine whether merchandise may be released from U.S. Customs and Border Protection (CBP) custody, and 2.) Filing the entry summary documents that pertain to merchandise classification, duty, taxes, and fees.”[41]

Accordingly, per 19 C.F.R. § 142.2, “[m]erchandise for which entry is required will be entered within 15 calendar days after landing from a vessel, aircraft[,] or vehicle, or after arrival at the port of destination in the case of merchandise transported in bond.”   19 C.F.R. § 142.2(a).

The entry packet generally includes, at a minimum, the entry summary (CBP Form 7501), the commercial invoice,[42] the waybill (air or sea)/bill of lading (ground), and the packing list.   See 19 C.F.R. § 142.3.  

While coordinating entry, the customs broker will use the PIEE email link that the broker received in order to, as needed, upload documents from the entry packet, and to request from DCMA the actual DFE certificate.   See, e.g., DCMA FAQs at 3-4 (May 6, 2025 update).

Generally, imported items do not have to sit in a bonded warehouse/yard, or a freight station, waiting for the paperwork to catch up.   Rather, for a Type 51 entry (going directly to a Government facility), CBP should immediately release the import.[43]   For a Type 01 entry (going directly to a commercial facility), generally, CBP will inspect the import, and as long as the documents are consistent with the import and are otherwise in order, CBP should immediately release the import.[44]   Submission of a completed CBP Form 3461 (Entry/Immediate Delivery) may not be required, but the possibility cannot be foreclosed.[45]

Nine

The DCMA DFE Team reviews the broker-submitted PIEE request for the DFE certificate.   In turn, the request will be reviewed and validated by a DCMA DFE Specialist.  

On this point, the CBP permits six months following the date of entry for the broker to present to CBP a DFE certificate.[46]   So, generally, there is plenty of time for the broker to submit or re-submit to DCMA documents and information in order to obtain the DFE certificate.   And it can all occur after an item is imported and released.

To reiterate, DCMA only has four DFE Specialists.   Needless to say, a broker and its contractor may have to wait several weeks before a DFE certificate is issued. 

When conducting a review, the Specialist may, among other things: (1) verify that the origin of the item(s) is actually foreign; (2) review the waybill/bill of lading to understand how the item(s) moved, and that the item(s) left the place where the commercial invoice was issued; (3) ensure that a DoD contract number is provided; (4) ensure that the HTSUS codes match in the paperwork (including checking for one or more secondary HTSUS codes that actually describe(s) the item(s)); and (5) ensure that any commercial invoice is consistent with the CBP Form 7501.[47]

If the Specialist identifies a material error, omission, or inconsistency, there is a good chance the request will be returned to the broker for correction.

If a broker or contractor has a question for the DCMA DFE Team, it can be emailed to dcma.stlouis-mo.hq.mbx.duty-free-entry@mail.mil.   See DCMA Q&As at 4 (May 6, 2025 update).

Once DCMA approves a DFE certificate, DCMA will email a link to the broker for a printable certificate.   In turn, the broker is responsible for uploading the certificate into CBP’s ACE system.   Once CBP has the certificate, it should liquidate the entry at 0% ad valorem.   Yet, once again, if CBP does not obtain a certificate within six months following the date of entry, CBP will liquidate the entry with a tariff duty owed on the entry.

Ten

In accordance with 19 C.F.R. §§ 163.2 and 163.4, the contractor and customs broker should keep the entry records for a period of five years following the date of entry.

Therefore, based on the preceding, as stated, DCMA is coordinating and issuing over 30,000 DFE certificates per year.

The Department of Energy DFE Process

The Department of Energy (“DOE”) approach to DFE is basically the process contemplated by FAR 52.225-8 (Duty-Free Entry).[48]  

Hence, if the DOE KO and the contractor did not include FAR 52.225-8 in the contract, the contract should be modified to include it.   Again, if a contract price presently includes part or all of the cost of the tariff duty, the modification should include a downward price adjustment so that the Government can take full advantage of DFE.[49]  

Additionally, since FAR 52.225-8 is a flowdown clause, the prime contractor can request DFE on behalf of a subcontractor.   See FAR 52.225-8(j).   So, the prime contract should include FAR 52.225-8 even if the need for DFE only applies to a subcontractor.

Under the clause, the contractor “shall notify the Contracting Officer in writing of any purchase of foreign supplies (including, without limitation, raw materials, components, and intermediate assemblies) in excess of $15,000 that are to be imported into the customs territory of the United States for delivery to the Government under this contract, either as end products or for incorporation into end products.”   FAR 52.225-8(c)(1).  

Further, “[t]he Contractor shall furnish the [written] notice to the Contracting Officer at least 20 calendar days before the importation.”   Id.   The written notice should detail the “(i) Foreign supplies; (ii) Estimated amount of duty; and (iii) Country of origin.”   Id.

Because DOE does not have a DFE Team (such as exists at DCMA), the DOE KO is responsible for both approving the contractor’s entitlement for DFE, and issuing a DFE certificate.   Consequently, the KO is supposed to approve or disapprove DFE entitlement within ten calendar days following the contractor’s notice.   See FAR 52.225-8(c)(2).  

Once the contractor has the KO’s written entitlement approval (an email ought to suffice), importation can commence.  

Also, if DFE entitlement is approved, subsequently, “[t]he Government will execute any required duty-free entry certificates for supplies to be accorded duty-free entry and will assist the Contractor in obtaining duty-free entry for these supplies.”   FAR 52.225-8(f).

Generally speaking, the Tariff Act permits one year to liquidate an entry—liquidation being the final computation of a tariff duty.   See 19 U.S.C. § 1504(a)(1).[50]   Yet, as discussed above, CBP will liquidate a Government entry in six months—at least for DoD.   And, for a Government entry claiming a tariff exemption, CBP should release the entry before liquidation.[51]  

With the preceding in mind, the FAR 52.225-8 process does not require that a DFE certificate is issued prior to import.   And often, it is useful for the KO to refrain from issuing the certificate until after import because: (1) it allows the KO to see the details of what is actually imported—not merely what is anticipated; and (2) it gives everyone more time to do the paperwork.     

For a DOE contract import, the primary HTSUS subheading should be HTSUS 9808.00.50 (articles for the Energy Dep’t).   Additionally, there should be a secondary HTSUS code (or more than one) that accurately describes the merchandise.   See 19 C.F.R. § 152.11.

The DOE contractor’s foreign supplier should ensure that the shipping paperwork consigns the shipment to the procuring agency (in this case DOE), care of the contractor, and should include the following (properly filled in).

“(1) Delivery address of the Contractor (or contracting agency, if appropriate); (2) Government prime contract number; (3) Identification of carrier; (4) Notation ‘UNITED STATES GOVERNMENT, _____ [agency] _____, Duty-free entry to be claimed pursuant to Item No(s) _____ [from Tariff Schedules] _____, Harmonized Tariff Schedules of the United States.   Upon arrival of shipment at port of entry, District Director of Customs, please release shipment under 19 CFR Part 142 and notify [cognizant contract administration office] for execution of Customs Forms 7501 and 7501-A and any required duty-free entry certificates.’; (5) Gross weight in pounds (if freight is based on space tonnage, state cubic feet in addition to gross shipping weight); and (6) Estimated value in United States dollars.”

FAR 52.225-8(g) (emphasis added).   Furthermore—

“The Contractor shall instruct the foreign supplier to- (1) Consign the shipment as specified in paragraph (g) of this clause; (2) Mark all packages with the words ‘UNITED STATES GOVERNMENT’ and the title of the contracting agency; and (3) Include with the shipment at least two copies of the [waybill/]bill of lading (or other shipping document) for use by the District Director of Customs at the port of entry.”

FAR 52.225-8(h) (emphasis added).

As above, after the import arrives at the port of entry, the entry process occurs and the contractor’s chosen customs broker gathers the entry packet.   See 19 C.F.R. § 141.4(a).   CBP should promptly inspect and release the entry.   See, e.g., 19 C.F.R. § 10.101(a).   If there is any problem with that, coordination with the KO may be required, including, if needed, the KO quickly providing the DFE certificate.  

To obtain the DFE certificate—assuming that the KO did not issue the certificate prior to importation—the customs broker should provide to the contractor a copy of entry packet docs showing the details of the import (e.g., the completed CBP Form 7501, waybill/bill of lading, packing list, and/or commercial invoice).   In turn, the contractor will convey the docs to the KO.

The procuring agency will issue the DFE certificate in accordance with 19 C.F.R. § 10.102(b).   Unless the agency delegates certificate authority to someone else, FAR 25.903(a) and FAR 52.225-8(f) gives the KO the authority to issue the DFE certificate.

The actual certificate need only be a signed piece of paper stating the following.

“Articles for the Department of Energy, subheading 9808.00.50, HTSUS.   I certify to the Secretary of the Treasury that the above-described materials are source materials purchased abroad, the admittance of which is necessary in the interest of the common defense and security, in accordance with subheading 9808.00.50, HTSUS.   (Name)   (Title), who has been authorized to execute free-entry certificates for the Department of Energy.”

19 C.F.R. § 10.102(b)(3).  

Assuming that the DFE certificate is issued, the customs broker will upload the certificate into the ACE system (again assuming this occurs after import).   Shortly thereafter, CBP should liquidate the entry at 0% ad valorem.  

If the KO ultimately refuses to issue the certificate, CBP will eventually liquidate the entry with a tariff duty being owed.   In which case, the procuring agency and the contractor may be in a dispute as to whether the agency is ultimately liable for the tariff duty.   If there is a dispute, it may be wise for the contractor to seek from CBP a time extension on the liquidation of the entry.   See 19 C.F.R. § 159.12.

In sum, the DOE DFE process (which is basically the FAR 52.225-8 process) is comparable to what occurs at DoD.   However, the DOE DFE process lacks the assistance and scalability provided by a dedicated DFE Team (as exists at DCMA).

One final point on DOE DFE.   10 C.F.R. Part 110 provides additional regulations for the import of materials under the control of the NRC, including obtaining a license to import those materials.   The 10 C.F.R. Part 110 procedures are not part of this note.

The NASA DFE Process

NASA’s approach to DFE also follows FAR 52.225-8—with some NASA-specific adaptations.

As part of this, NASA prioritizes DFE treatment for space articles.   Which are “articles that will be launched into space, spare parts for such articles, ground support equipment, or uniquely associated equipment for use in connection with a NASA international program or launch service agreement.”   14 C.F.R. § 1217.100.  

To advance the focus on space articles, NASA FAR Supplement (“NFS”) 1825.1101 adds a paragraph (k) to FAR 52.225-8.   See NFS 1825.1101(e); see also NFS 1852.225-8 (Duty-free entry of space articles).

Paragraph (k) simply states—“(k) The following supplies will be given duty-free entry: [Insert the supplies that are to be accorded duty-free entry.]”   NFS 1852.225-8.

Despite that the NFS prioritizes space articles, it should be noted, typically, civil aircraft/aircraft parts are already accorded broad access to DFE.   Particularly, pursuant to the World Trade Organization (“WTO”) Agreement on Trade in Civil Aircraft (“CAA”), there are sweeping tariff exemptions for aircraft, aircraft engines, assemblies/components/parts, and simulators.   See 19 C.F.R. § 10.183.   These exemptions are in HTSUS Chapter 88—and apply regardless of whether a Government procurement is involved.   Although, I also note, under HTSUS heading 8802, there is some opportunity for non-procurement DFE for spacecraft and launch vehicles.

So, in normal tariff times, a NASA contractor can obtain DFE for aircraft/aircraft parts without the need to obtain a NASA DFE certificate.   That said, these are not normal tariff times.   And a NASA contractor can obtain a DFE certificate for more than space articles.   This is because the HTSUS subheading for NASA articles, 9808.00.80, is expansively defined.

“Goods certified by it to the Commissioner of Customs to be imported for the use of the National Aeronautics and Space Administration or for the implementation of an international program of the National Aeronautics and Space Administration, including articles to be launched into space and parts thereof, ground support equipment and uniquely associated equipment for use in connection with an international program of the National Aeronautics and Space Administration, including launch services agreements.”     

HTSUS, Rev. 11, at 98-VIII-2 (2025) (emphasis added).   Thus, the subheading permits DFE for anything “imported for the use of the National Aeronautics and Space Administration”—not just space articles.   Id.

Turning to the actual process for obtaining a NASA DFE certificate, it is basically the same as discussed above for DOE.   Yet, 14 C.F.R. Part 1217 adds some important refinements.  

If the import is a space article, generally, the NASA Associate Administrator for Human Exploration and Operations, or that person’s designee, must provide the DFE certificate.   See 14 C.F.R. § 1217.103(a)(3).

If the import is for the implementation of an international program, generally, the NASA Associate Administrator for International and Interagency Relations, or that person’s designee, must provide the DFE certificate.   See id. at § 1217.103(a)(2).

And, if the import is for a NASA procurement unrelated to the preceding, generally, the NASA Assistant Administrator for Procurement, or that person’s designee, must provide the DFE certificate.   See id. at § 1217.103(a)(1).

The actual language of the certificate will be one of three certificates provided at 14 C.F.R. § 1217.104.   As part of this, NASA also offers a blanket certificate to cover multiple imports—which is a smart efficiency.   See id. at § 1217.104(c).

Consistent with FAR 52.225-8(c)(2), a NASA KO will review and approve a contractor request for DFE entitlement.  

14 C.F.R. § 1217.105 is written in a way that contemplates NASA issuing the DFE certificate before importation.   Although, it does not have to be that way.   See 14 C.F.R. § 1217.105(d).  

Regardless of when the DFE certificate is actually requested, the regulation requires that the NASA KO forward the certificate request to the appropriate NASA official.   Accordingly—

“Each request for certification shall be accompanied by: (1) A proposed certificate as provided for in § 1217.104 of this part; (2) The information and documentation required by 19 CFR 10.102(a), including invoice documentation or a description of covered articles; and (3) The anticipated date of entry of entry and port of entry for each article.   If the article is to be transported in bond from the port of arrival to another port of entry in the United States, identify both ports.”

14 C.F.R. § 1217.105(b) (emphasis added).   Assuming that the cognizant NASA official issues the DFE certificate, the customs broker can present it to CBP, as applicable, for the entry process or after.   In turn, CBP should liquidate the entry at 0% ad valorem.  

As above, if the cognizant NASA official refuses to issue the certificate, depending on the circumstances, it may result in a contract dispute.

One final point for NASA DFE.   The regulation makes clear that “articles brought into the customs territory of the United States by NASA from space shall not be considered an importation, and no certification or entry of such materials through U.S. Customs shall be required.”   14 C.F.R. § 1217.106.   This is why none of us have ever seen a video of a customs inspector opening the hatch on a spacecraft that has just returned to earth.   Which, arguably, would be funny.  

DFE for a Procuring Agency Lacking a Tailored Process

Most agencies do not have their own procedures for DFE.   In which case, the process is the FAR 52.225-8 process—as best described above for DOE.   Even if the agency is not a FAR-based agency, FAR 52.225-8 provides a good model.

However—key point—before attempting DFE for an agency lacking a tailored process (particularly referring to a civilian agency), an applicable tariff exemption must first be identified.  

That exemption must either be present in the HTSUS (which, again, is codified at 19 U.S.C. § 1202), or other statute or regulation.  

So, for example, if the import is for emergency/disaster response pursuant to 19 U.S.C. § 1318, that statute provides the basis for DFE.  

Or, if the import is plants, seeds, and/or other planting materials for the Department of Agriculture or the U.S. Botanic Garden, HTSUS subheading 9808.00.60 provides procurement DFE.   See HTSUS, Rev. 11, at 98-VIII-2 (2025).  

Or, maybe the import is a scientific instrument or apparatus that qualifies under HTSUS subheading 9810.00.60.   See HTSUS, Rev. 11, at 98-X-5 (2025).   This exemption is further addressed below.

A fourth example is if an agency is performing an assisted acquisition on behalf of another agency, and the customer agency has an available tariff exemption.   In which case, while providing procurement support to the customer agency, the service-providing agency ought to be able to use the customer agency’s tariff exemption.

Assuming that an applicable tariff exemption can be identified, as stated, the FAR 52.225-8 process applies.   And the DFE certificate issued by the KO should be similar to the certificates provided at 19 C.F.R. § 10.102(b).

DFE for a Scientific Instrument Under 15 C.F.R. Part 301

Pursuant to the Educational, Scientific, and Cultural Materials Importation Act of 1966, 15 C.F.R. Part 301 provides, under certain circumstances, duty-free importation of a scientific instrument or apparatus by a public or private nonprofit institution.[52]   As stated, the exemption is in the HTSUS under subheading 9810.00.60.   See HTSUS, Rev. 11, at 98-X-5 (2025).

Specifically, the exemption is available to “a public or private nonprofit institution which is established for educational or scientific purposes[.]”   15 C.F.R. § 301.3(a).   The Act and 15 C.F.R. Part 301 do not define a public institution.[53]    However, the most logical definition is an institution owned, operated, and/or controlled by a government authority.[54]   So, a government or quasi-governmental entity that has an educational and/or scientific purpose—such as a Smithsonian Institution research center, the National Science Foundation, or the Veterans Health Administration Office of Research and Development (“ORD”)—ought to qualify as a public institution.   In turn, where applicable, a Government contractor obtaining a qualifying scientific instrument/apparatus on behalf of the public institution should be accorded DFE.

Nonetheless, DFE for the device is only possible “if instruments or apparatus of equivalent scientific value are not being manufactured in the country of importation [the United States].”   15 C.F.R. § 301.1(b)(2).[55]   For the purpose of the regulation, “United States includes only the several States, the District of Columbia and the Commonwealth of Puerto Rico.”   Id. at § 301.1(e).   Also, the procured device “must be exclusively for the use of the institution[ ] involved and not for distribution, sale, or other commercial use within five years after entry.”    Id. at § 301.1(c)(1).   Yet, “articles may be transferred to another qualified nonprofit institution[.]”   Id.  

To summarize, if another country has a scientific device for which there is not an equivalent manufactured in the United States, in order to help researchers access the technology, a public institution like a research arm of a Government agency can obtain DFE for the device.   In turn, a contractor procuring the device for the agency can apply the DFE.

Turning to the actual process, “[a]n institution wishing to enter an instrument or apparatus under tariff subheading 9810.00.60, HTSUS, must file an application with the Customs and Border Protection in accordance with the regulations in this section.”   15 C.F.R. § 301.1(c)(2).   Therefore, the procuring agency must complete and file a Form ITA-338P, which is available here.[56]

The procuring agency will send the completed application to the CBP Office of Trade, Commercial and Trade Facilitation Division, Entry Process and Duty Refunds Branch, in Washington, D.C.[57]   “Five copies of the form, including relevant supporting documents, must be submitted.”[58]

Importantly—

“A single application (in the requisite number of copies) may be submitted for any quantity of the same type or model of foreign instrument provided that the entire quantity is intended to be used for the same purposes and provided that all units are included on a single purchase order.   A separate application shall be submitted for each different type or model or variation in the type or model of instrument for which duty-free entry is sought even if covered by a single purchase order.”[59]

Also, “[a]n application for components of an instrument to be assembled in the United States as described in [15 C.F.R.] § 301.2(f) may be filed provided that all of the components for the complete, assembled instrument are covered by, and fully described in, the application.”[60]

Upon receipt of a completed ITA-338P with supporting documents, CBP will date the application and review it in accordance with 15 C.F.R. § 301.4.   If it passes muster, CBP will assign an application number, provide a stamped copy to the applicant, and forward copies to the Director of the Statutory Import Programs Staff at the International Trade Administration (“ITA”), U.S. Department of Commerce—and to the Office of the Secretary for Health & Human Services.[61]

ITA also reviews the application, and if no obvious deficiencies are identified, ITA “shall publish in the Federal Register a notice of the receipt of the application to afford all interested persons a reasonable opportunity to present their views with respect to the question ‘whether an instrument or apparatus of equivalent scientific value for the purpose for which the article is intended to be used is being manufactured in the United States.’ ”[62]

Public “[c]omments must be postmarked no later than 20 days from the date on which the notice of application is published in the Federal Register.”[63]   However, the ITA “Director [of the Statutory Import Programs Staff], at his discretion, may take into account factual information contained in untimely comments.”[64]   The Director may also consult with technical experts—both inside and outside the Government.[65]

Ultimately—

“If the Director finds that a domestic instrument possesses all of the pertinent specifications of the foreign instrument, he shall find that there is being manufactured in the United States an instrument of equivalent scientific value for such purposes as the foreign instrument is intended to be used.   If the Director finds that the foreign instrument possesses one or more pertinent specifications not possessed by the comparable domestic instrument, the Director shall find that there is not being manufactured in the United States an instrument of equivalent scientific value to the foreign instrument for such purposes as the foreign instrument is intended to be used.”[66]

Accordingly, “[t]he Director shall prepare a written decision granting or denying each application[,]” which shall be posted in the Federal Register.[67]

Assuming that the public institution procuring agency obtains ITA approval, naturally, the agency will provide a copy of the approval to the contractor.  

Whether the procuring agency begins the acquisition process before obtaining ITA approval, or after—perhaps because the agency wants the awarded contractor’s help with the application—that is up to the agency.   However, for the ITA-338P application, the procuring agency must assert that it “has placed a bona fide order or has a firm intention to place a bona fide order for a foreign instrument within 60 days following a favorable decision on the institution’s application.”[68]

In any event, the contractor should have a copy of ITA’s approval in-hand before importation.   This is because a deposit on the estimated tariff duty will only be waived if the contractor’s broker presents the ITA approval at the time of entry.[69]   If the ITA approval is not presented during the entry process, the contractor and the agency will have to pay a deposit on the estimated tariff duty.[70]   Although, the deposit can be recovered if the ITA approval is presented before liquidation of the entry.[71]   15 C.F.R. § 301.5(a)(5) also addresses what to do if there is a delay in importation.

Beyond the foregoing, because it is still a procurement matter, the process should loosely follow FAR 52.225-8.   Hence, the contractor’s foreign supplier should mark the packaging and shipping paperwork in accordance with FAR 52.225-8(g) and (h).   Again, the primary HTSUS subheading for the entry will be 9810.00.60 (scientific instrument or apparatus).   And, as discussed in the preceding sections, there should be one or more secondary HTSUS subheadings that accurately describe(s) the merchandise.

Final point.   After the public institution/procuring agency has its special device, it will need to maintain it.   Accordingly, “[t]ools specifically designed to be used for the maintenance, checking, gauging[,] or repair of instruments or apparatus [are] admitted under [HTSUS] subheadings 9810.00.65 and 9810.00.67” and “require no application and may be entered duty-free in accordance with the procedures prescribed in [15 C.F.R.] § 301.10.”[72]

DFE Disputes

If DFE is available, and a procuring agency fails to facilitate, it can be the basis of a Contract Disputes Act (“CDA”) claim.   This is particularly true if the agency fails to provide support for an available exemption while simultaneously refusing to pay for the tariff duty.[73]  

In which case, the contractor may file a claim based on the contract changes clause (premised on agency inaction and/or a failure to cooperate), a Government delay clause (e.g., FAR 52.242-17 (Government Delay of Work)), or, possibly as an after-imposed duty under the applicable taxes clause (e.g., FAR 52.229-3 (Federal, State, and Local Taxes)).   This is not intended as an exhaustive list of possible remedies.

However, a contractor claim may fail if the primary reason for no DFE was due to a lapse of the contractor’s own diligence.[74]

A more interesting scenario arises if the procuring agency does what it is supposed to do, the contractor does what it is supposed to do, and CBP still refuses to liquidate the entry at 0% ad valorem.   In such a case, does the procuring agency and the contractor team up to file a 19 U.S.C. § 1514 customs protest?   Does the procuring agency only agree to pay the tariff duty contingent on the contractor filing a customs protest—with the understanding that any subsequent refund will be passed back to the agency, either directly or as an offset?   Or does the procuring agency raise the issue to the DoJ Office of Legal Counsel (“OLC”)—which can be a referee between Executive Branch agencies?  

With these questions in mind, plainly, things are better when the process works as it should.

DFE Process Improvements    

To reiterate, Government contract tariff exemptions are common sense.   Because it is an easy way to lower the price of a contract.   And, at this juncture, there is an imperative for the Government to reduce its costs.

The major flaw in the current DFE regime is that it is not more widely used.   As stated, part of the reason for this is many KOs and contractors do not adequately understand the process.  

Even so, the main impediment is that Chapter 98 of the HTSUS only provides a handful of narrow Government contract DFE subheadings—which are mostly agency-specific.

Nonetheless, the law—particularly FAR Subpart 25.9 and 19 C.F.R. §§ 10.100-10.104—already contemplates Government contract DFE.   And, under 19 U.S.C. § 2483, the President has the authority to lawfully modify the HTSUS.   So, arguably, enabling wider usage of procurement DFE may merely be a matter of adding more HTSUS Chapter 98 subheadings.   Alternatively, it is an itsy-bitsy amount of statutory work for Congress.

There is also a need to make Government contract DFE scalable—the way the DCMA DFE Team does for DoD.   This is because a KO only has so much time in a day, and cannot expend it all on DFE certificates.   Accordingly, GSA would seem an appropriate place to create a DFE Team that supports non-DoD agencies.   Indeed, if four Specialists at DCMA can issue over 30,000 DFE certificates each year—providing tremendous savings to the Government—one wonders what a similar team could do at GSA.

Final Word

To recap, there are multiple instances where a contractor may obtain DFE for articles needed under a Government contract.   Typically, it is a multi-step process involving, at a minimum, the KO, the contractor, the contractor’s foreign supplier, the contractor’s customs broker, and CBP.   And, although it may require a few bureaucratic steps, the savings can be significant—for both the contractor and the Government.

Thank you for reading.     

[1] See FAR 25.900; see also DFAR 225.901.

[2] See FAR 25.901 and 25.1101(e)(2).

[3] See FAR 25.903; 19 U.S.C. § 1318(a).

[4] The Strategic and Critical Materials Stock Piling Act of 1939 (50 U.S.C. §§ 98-98h) authorizes the acquisition of strategic and critical materials for the National Defense Stockpile (“NDS”).  The NDS is currently overseen by DLA Strategic Materials.  See DLA, About Strategic Materials, www.dla.mil, available at https://www.dla.mil/Strategic-Materials/About/.  GSA used to manage the NDS until 1988.  See Nat’l Def. Stockpile Manager, Exec. Order No. 12,626 (Feb. 25, 1988).  Accordingly, even though HTSUS subheading 9808.00.40 refers to GSA, it should be interpreted and applied as any Government agency contractor importing for the purpose of the NDS.

[5] See, e.g., U.S. Customs and Border Protection (“CBP”), Cargo Systems Messaging Service (“CSMS”) No. 42320854 – Processing International Donations for COVID-19 Response (Apr. 9, 2020), available at https://content.govdelivery.com/bulletins/gd/USDHSCBP-285c3d6?wgt_ref=USDHSCBP_WIDGET_2.

[6] See also 19 U.S.C. § 1401(a) (“The word ‘vessel’ includes every description of water craft or other contrivance used, or capable of being used, as a means of transportation in water, but does not include aircraft.”); DFARS Procedures, Guidance, and Information (“PGI”) 225.903.

[7] “The term ‘customs broker’ means any person granted a customs broker’s license by the Secretary [of Treasury.]”  19 U.S.C. § 1641(a)(1).

[8] See 19 C.F.R. § 142.3 (Entry documentation required).

[9] “Liquidation means the final computation or ascertainment of duties on entries for consumption or drawback entries.”  19 C.F.R. § 159.1. 

[10] An ad valorem tax is “[a] tax imposed proportionally on the value of something (esp. real property), rather than on its quantity or some other measure.”  Black’s Law Dictionary, 3d Pocket Ed., at 701 (2006).  “In the computation of duty on entries, ad valorem rates shall be applied to the values in even dollars, fractional parts of a dollar less than 50 cents being disregarded and 50 cents or more being considered as $1, with all merchandise in the same invoice subject to the same rate of duty to be treated as a unit.”  19 C.F.R. § 159.3.

[11] See also 19 C.F.R. § 145.31.

[12] See, e.g., Exec. Order No. 14,256 § 2(b)(i) (Apr. 2, 2025).

[13] See 19 C.F.R. § 10.902(t)(2)(i) (“The customs territory of the United States, which includes the 50 states, the District of Columbia, and Puerto Rico[.]”).

[14] See, e.g., 19 C.F.R. § 10.1; see also Application for Further Review of Protest No. 3901-22-126450; Subheading 9801.00.10, HTSUS, HQ H325452, 2024 WL 5146606 (Apr. 15, 2024) (import not entitled to DFE as AGR because the importer could not substantiate that the article was an American product).

[15] However, I note that 19 C.F.R. § 10.103 does contemplate a certificate from a Government agency if the AGR is being imported for the use of that agency.

[16] See Regulating Imports with a Reciprocal Tariff to Rectify Trade Practices that Contribute to Large and Persistent Annual United States Goods Trade Deficits, Exec. Order No. 14,257 § 2 (Apr. 2, 2025), available at https://www.whitehouse.gov/presidential-actions/2025/04/regulating-imports-with-a-reciprocal-tariff-to-rectify-trade-practices-that-contribute-to-large-and-persistent-annual-united-states-goods-trade-deficits/.

[17] See VOS Selections, Inc., et al. v. United States, et al., Nos. 25-00066 & 25-00077, Slip Op. 25-66 (Ct. Int’l Trade May 28, 2025) (imposing permanent injunction); Learning Resources, Inc., et al., No. 25-1248 (D.D.C. May 29, 2025) (granting preliminary injunction motion).

[18] See VOS Selections, Inc., et al. v. United States, et al., No. 2025-1812 (Fed. Cir. May 29, 2025).

[19] See Clarification of Exceptions Under Executive Order 14257 of April 2, 2025, as Amended, Presidential Memo., www.whitehouse.gov (Apr. 11, 2025), available at https://www.whitehouse.gov/presidential-actions/2025/04/clarification-of-exceptions-under-executive-order-14257-of-april-2-2025-as-amended/.

[20] The DCMA Transportation Group, including the DFE Team Supervisor, is located at DCMA St. Louis.  Three of the DFE Specialists are in the DCMA New York City office.  One DFE specialist is at DCMA Jacksonville, FL. 

[21] See Defense Federal Acquisition Regulation Supplement: Duty-Free Entry Threshold, 81 Fed. Reg. 28,732 (May 10, 2016) (“Current data indicates, on average, approximately 31,500 duty-free entry certificates on foreign supplies for DoD per year.”).

[22] See DFARS 225.003 (“ ‘Qualifying country’ means a country with a reciprocal defense procurement memorandum of understanding or international agreement with the United States in which both countries agree to remove barriers to purchases of supplies produced in the other country or services performed by sources of the other country, and the memorandum or agreement complies, where applicable, with the requirements of section 36 of the Arms Export Control Act (22 U.S.C. 2776) and with 10 U.S.C. 2457.  Accordingly, the following are qualifying countries: Australia[;] Austria[;] Belgium[;] Canada[;] Czech Republic[;] Denmark[;] Egypt[;] Estonia[;] Finland[;] France[;] Germany[;] Greece[;] Israel[;] Italy[;] Japan[;] Latvia[;] Lithuania[;] Luxembourg[;] Netherlands[;] Norway[;] Poland[;] Portugal[;] Slovenia[;] Spain[;] Sweden[;] Switzerland[;] Turkey[; and/or the] United Kingdom of Great Britain and Northern Ireland.”).

[23] “ ‘Eligible product’ means, instead of the definition in FAR 25.003—(1) A foreign end product that—(i) Is in a category listed in 225.401-70 ; and (ii) Is not subject to discriminatory treatment, due to the applicability of a trade agreement to a particular acquisition; (2) A foreign construction material that is not subject to discriminatory treatment, due to the applicability of a trade agreement to a particular acquisition; or (3) A foreign service that is not subject to discriminatory treatment, due to the applicability of a trade agreement to a particular acquisition.”  DFARS 225.003.  “Designated country means any of the following countries: (1) A World Trade Organization Government Procurement Agreement (WTO GPA) country (Armenia, Aruba, Australia, Austria,, Belgium, Bulgaria, Canada, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hong Kong, Hungary, Iceland, Ireland, Israel, Italy, Japan, Korea (Republic of), Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Moldova, Montenegro, Netherlands, New Zealand, North Macedonia, Norway, Poland, Portugal, Romania, Singapore, Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Taiwan (known in the World Trade Organization as ‘the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu (Chinese Taipei)’), Ukraine, or United Kingdom); (2) A Free Trade Agreement (FTA) country (Australia, Bahrain, Chile, Colombia, Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Korea (Republic of), Mexico, Morocco, Nicaragua, Oman, Panama, Peru, or Singapore); . . . .”  FAR 25.003.  However, “ ‘[f]ree Trade Agreement country’ does not include Oman.”  DFARS 225.003.

[24] FAR 25.900.

[25] DFARS 225.900-70 and 225.901(1) and (2).

[26] DFAR 225.901(3).  

[27] See, e.g., DFAR PGI 225.902(1)(i)(B)(2) (”Review the prime contract to ensure that performance of the contract requires the foreign supplies (quantity and price) identified in the [contractor’s] notice.”).

[28] See also 19 C.F.R. § 10.102(b)(1).  

[29] See DFARS Subpart 225.9; DFARS 252.225-7013; DFARS PGI 225.902.

[30] DFARS PGI 225.902(1)(i)(B).

[31] See, e.g., Packaging and Transp. Mgmt., DCMA Manual 2101-03, ¶ 4.11(c)(3) (Nov. 9, 2023), available at https://www.dcma.mil/Portals/31/Documents/Policy/DCMA_MAN_2101-03.pdf.

[32] FAR 25.1101(e) and DFARS 225.1101(4) generally address when a duty-free entry clause should be in the contract.

[33] See, e.g., White Plains Electr. Supply Co., Inc., ASBCA No. 10011, 1964 BCA ¶ 4,460 (Sept. 17, 1964) (appeal of the KO’s refusal to issue a DFE certificate was denied where the contract did not have a DFE clause, and the applicable DFE clause was not a mandatory clause).

[34] See, e.g., Muncie Gear Works, Inc., ASBCA No. 16153, 72-1 BCA ¶ 9,429 (Apr. 26, 1972) (it was reasonable for a KO to refuse to add a non-mandatory DFE clause unless the contractor provided consideration for the applicable duty).

[35] PIEE 7.3.1, piee.eb.mil, available at https://piee.eb.mil/xhtml/unauth/registration/notice.xhtml.

[36] Vendors – Getting Started Help, PIEE 7.3.1, piee.eb.mil, available at https://piee.eb.mil/xhtml/unauth/web/homepage/vendorGettingStartedHelp.xhtml.

[37] Id.

[38] See id.

[39] However, I note that FAR 52.225-8(c)(2) contemplates that the ACO will approve or deny in (10) days, and DCMA Manual 2101-03 contemplates that the ACO will approve or deny in (15) days.  See DCMA Manual 2101-03, ¶ 4.11(c)(4), available at https://www.dcma.mil/Portals/31/Documents/Policy/DCMA_MAN_2101-03.pdf.

[40] See, e.g., DCMA FAQs at 2-4 (May 6, 2025 update).  To be clear, generally, a previous U.S. export that was improved while abroad does not constitute American Goods Returned (“AGR”).  As contemplated by 19 C.F.R. § 10.103 and HTSUS 9801.00.10, AGR comprises “[p]roducts of the United States when returned after having been exported, or any other products when returned within 3 years after having been exported, without having been advanced in value or improved in condition by any process of manufacture or other means while abroad[.]”  HTSUS, Rev. 11, Ch. 98, at 98-I-3 (2025).

[41] CBP, Automated Commercial Environment (ACE) Entry Summary (Version 12.0), CBP Publication No. 3499-1223, at 11 (Dec. 14, 2023), available at https://www.cbp.gov/sites/default/files/assets/documents/2023-Dec/CBP%20Publication%20No.%203499-1223%20-%20ACE%20ESBP%20Document%20External%20Version%2012.0.pdf (emphasis added).

[42] But see 19 C.F.R. § 141.83(d)(8).

[43] See, e.g., 19 U.S.C. § 1448(b); 19 C.F.R. § 10.102(c) and (d); see also 19 C.F.R. §§ 10.101(a), 141.102(d), and 142.21(c).

[44] See 19 C.F.R. § 10.102(c).

[45] See DCMA Manual 2101-03, ¶ 4.11(b)(2)(b), available at https://www.dcma.mil/Portals/31/Documents/Policy/DCMA_MAN_2101-03.pdf; 19 C.F.R. § 142.22; but see 19 C.F.R. 142.3(b)(1).

[46] See CBP, CSMS No. 46189077 – Required Submission of Duty Free Certificate for Commercial Shipments under Subheading 9808.00.30 (Feb. 11, 2021), available at https://content.govdelivery.com/bulletins/gd/USDHSCBP-2c0ca15?wgt_ref=USDHSCBP_WIDGET_2.

[47] See, e.g., DCMA FAQs at 2-4 (May 6, 2025 update).

[48] See, e.g., Fermi National Accelerator Laboratory (“Fermilab”), FFDG Prime Contract – Clause I.75, www.fnal.gov, available at https://generalcounsel.fnal.gov/ffdg-prime-section-i/i75/.

[49] See FAR 52.225-8(b) (“Except as otherwise approved by the Contracting Officer, the Contractor shall not include in the contract price any amount for duties on supplies specifically identified in the Schedule to be accorded duty-free entry.”); see also FAR 52.225-8(c)(3) (“Except as otherwise approved by the Contracting Officer, the contract price shall be reduced by (or the allowable cost shall not include) the amount of duty that would be payable if the supplies were not entered duty-free.”).

[50] See also 19 C.F.R. § 159.1. 

[51] See 19 C.F.R. §§ 10.101(a), 10.102(c) and (d), and 141.0a(i).

[52] See Changes in Procedures for Florence Agreement Program, 74 Fed. Reg. 30,462 (June 26, 2009) (“The Act implements U.S. treaty obligations under Annex D of the Florence Agreement, relating to the import of scientific instruments and apparatus.”). 

[53] See Pub. L No. 89-651, 80 Stat. 897-902 (Oct. 14, 1966); 15 C.F.R. Part 301.

[54] See, e.g., 20 C.F.R. § 416.201 (“Public institution means an institution that is operated by or controlled by the Federal government, a State, or a political subdivision of a State such as a city or county.”); 42 C.F.R. § 435.1010 (“Public institution means an institution that is the responsibility of a governmental unit or over which a governmental unit exercises administrative control.”).

[55] “A domestic instrument need not be made exclusively of domestic components or accessories.”  15 C.F.R. § 301.2(g).  “An instrument shall be considered as being manufactured in the United States if it is customarily ‘produced for stock,’ ‘produced on order’ or ‘custom-made’ within the United States.  In determining whether a U.S. manufacturer is able and willing to produce an instrument, and have it available without unreasonable delay, the normal commercial practices applicable to the production and delivery of instruments of the same general category shall be taken into account, as well as other factors which in the [ITA] Director’s judgment are reasonable to take into account under the circumstances of a particular case.  For example, in determining whether a domestic manufacturer is able to produce a custom-made instrument, the [ITA] Director may take into account the production experience of the domestic manufacturer . . . .”  15 C.F.R. § 301.3(d)(2).

[56] See Int’l Trade Administration, Form ITA-338P, Rev. 8-23, www.trade.gov, available at https://www.trade.gov/sites/default/files/2024-09/ita-338p.pdf.

[57] See 15 C.F.R. § 301.3(c); ITA-338P, Rev. 8-23.

[58] 15 C.F.R. § 301.3(d).

[59] 15 C.F.R. § 301.3(e).

[60] 15 C.F.R. § 301.3(f).

[61] See 15 C.F.R. § 301.4(b).

[62] See 15 C.F.R. § 301.5(a)(1).

[63] 15 C.F.R. § 301.5(a)(3).

[64] 15 C.F.R. § 301.5(a)(5).

[65] See 15 C.F.R. § 301.5(b) and (c).

[66] 15 C.F.R. § 301.3(d)(1)(i).

[67] 15 C.F.R. § 301.5(f).

[68] 15 C.F.R. § 301.3(a).

[69] See 15 C.F.R. § 301.8(a).

[70] See id.

[71] See id.

[72] 15 C.F.R. § 301.1(c)(4).

[73] But see Tekkon Eng’g Co., Ltd., ASBCA No. 56831, 11-2 BCA ¶ 34,872 (Nov. 1, 2011) (assertion that “the government breached its duty to facilitate duty-free entry of import products” was immaterial because the at-issue source of the contractor’s cost increase was an Iraqi embargo).

[74] See, e.g., Encorp, ASBCA No. 51293, 01-1 BCA ¶ 31,165 (Nov. 7, 2000) (appeal of reimbursement claim denied because, in part, the “appellant shirked its duties under the ‘Foreign Taxes’ clause”); but see Consaco-Carpac, ASBCA No. 18061, 74-2 BCA ¶ 10716 (July 19, 1974) (even though the contractor failed to request a DFE certificate, the U.S. Government was still liable for Thai customs duties because the contractor’s equipment was imported into Thailand aboard U.S. military vessels, making the U.S. Government primarily responsible for the customs treatment).