In outlining Non-recurring engineering, statement was made that NRE is not the same as non-recurring recoupment and that NRE cost are for re-engineering services, activities required to return existing system to its baseline configuration and capability or for obsolescence or inservice componments, sub-assemblies or system, requiring modification.
QUESTION: Is NRE considered a subset of NC? Concensus here is no, because wouldn't that allow (if eligible) for a waiver? Should obsolescence had been a predetermined factor?
Thank you for your time.
NC is the E-SAMM term to denote non-recurring costs.
Nonrecurring Costs (NC). Those costs funded by a Research, Development, Testing and Evaluation (RDT&E) appropriation to develop or improve a product or technology either through contract or in-house effort. Also, those one-time costs incurred in support of previous production of a specified model and those costs incurred in support of a total projected production run.
Also Appendix 6 & Table C9.T4 shows NC as a, "Prorata recovery of RTD&E and production start-up costs."
Non-recurring recoupment (NRC) is the method used to obtain those NC funds from the applicable foreign government. A non-recurring recoupment may be granted a waiver in certain situations.
C9.4.5. Nonrecurring Cost (NC) Recoupment Charges. Title 32 Code of Federal Regulations (CFR) Part 165, DoD 7000.14.-R, Volume 15, Chapter 7, and DoD Directive 2140.02 provide detailed guidance on establishing NC charges and pricing these costs on LOA documents. These costs do not apply to cases that are fully financed with non-repayable Foreign Military Financing (FMF) or non-repayable Military Assistance Program (MAP) funds. See Section C9.6.3. on NC waiver requirements and processes. For questions regarding the NC charges contact DSCA (Directorate for Security Assistance (DSA)). See Appendix 6 for LOA notes relating to NC charges.
Non-recurring Engineering (NRE) is not spelled out in E-SAMM, so it's common meaning, is, "Non-recurring engineering (NRE) is a broad term referring to a one-time cost to develop, design, or manufacture a new product."
C4.4. - What May Be Purchased Using the FMS Program
The FMS program transfers defense articles and services to eligible countries and international organizations. AECA section 47 (22 U.S.C. 2794) defines the terms “defense article” and “defense service.” The U.S. Munitions List (22 CFR part 121) designates specific items that fall into these categories and includes an asterisk (*) by Significant Military Equipment (SME). Any item of SME that has a nonrecurring research and development cost of more than $50 million or a total production cost of more than $200 million is considered Major Defense Equipment (MDE). See Chapter 9 and Appendix 1 for the rules and charges regarding Nonrecurring Cost Recoupment (NCR) charges for MDE.
To answer your questions, 1) NRE would normally not be cosidered a sub-set of NC for modifications to existing designs. 2) Obsolescence should have been entered as a factor during the original procurement, but can't be made with any certainty to exactly when it would transpire.