[Federal Register Volume 59, Number 6 (Monday, January 10, 1994)]
[Rules and Regulations]
[Pages 1288-1292]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-447]


[[Page Unknown]]

[Federal Register: January 10, 1994]


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DEPARTMENT OF DEFENSE

48 CFR Parts 225 and 252

 

Defense Federal Acquisition Regulation Supplement; North American 
Free Trade Agreement Implementation Act

AGENCY: Department of Defense (DoD).

ACTION: Interim rule with request for public comments.

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SUMMARY: The Director of Defense Procurement is issuing an interim rule 
amending the Defense Federal Acquisition Regulation Supplement (DFARS) 
to integrate Buy American Act and Balance of Payments Program waivers 
necessitated by the North American Free Trade Agreement Implementation 
Act with similar existing Department of Defense waivers for countries 
with memoranda of understanding or other international agreements.

DATES: Effective Date: January 1, 1994. This rule applies to 
solicitations issued on or after January 1, 1994.
    Comment Date: Comments on the interim DFARS rule should be 
submitted in writing to the address shown below on or before February 
9, 1994, to be considered in the formulation of a final rule. Please 
cite DFARS Case 93-D310 in all correspondence related to this issue.

ADDRESSES: Interested parties should submit written comments to The 
Defense Acquisition Regulations Council, ATTN: Mrs. Alyce Sullivan, 
OUSD (A&T)DP(DAR), IMD 3D139, 3062 Defense Pentagon, Washington, DC 
20301-3062. Telefax number (703) 697-9845.

FOR FURTHER INFORMATION CONTACT: Mrs. Alyce Sullivan, (703) 697-7266.

SUPPLEMENTARY INFORMATION:

A. Background

    Chapter Ten of the North American Free Trade Agreement (NAFTA) 
Implementation Act of 1993 requires the United States, Canada, and 
Mexico to eliminate ``buy national'' restrictions on non-defense 
related purchases by the federal governments. NAFTA is being 
implemented in the Federal Acquisition Regulation but also requires 
revision of the DFARS to integrate Buy American Act and Balance of 
Payments Program waivers necessitated by NAFTA with similar existing 
Department of Defense waivers for countries with memoranda of 
understanding or other international agreements.

B. Regulatory Flexibility Act

    The interim rule may have a significant economic impact on a 
substantial number of small entities within the meaning of the 
Regulatory Flexibility Act, 5 U.S.C. 601 et seq., because the rule 
waives the Buy American Act for certain Mexican and Canadian products. 
An Initial Regulatory Flexibility Analysis (IRFA) has been prepared and 
will be provided to the Chief Counsel for Advocacy for the Small 
Business Administration. Comments are invited. Comments from small 
entities concerning the affected DFARS subpart will be considered in 
accordance with 5 U.S.C. 610. Such comments must be submitted 
separately and cite DFARS Case 93-610 in correspondence.

C. Paperwork Reduction Act

    The Paperwork Reduction Act applies because the provisions at 
252.225-7006, Buy American Act-Trade Agreements-Balance of Payments 
Program Certificate, and 252.225-7035, Buy American Act-North American 
Free Trade Agreement Implementation Act-Balance of Payments Program 
Certificate, require offerors to list the line item number and country 
of origin for any end product other than a domestic end product. 
Accordingly, a request for clearance of a new information collection 
requirement concerning the North American Free Trade Agreement Act is 
being submitted to the Office of Management and Budget under 44 U.S.C. 
3501, et seq.

D. Determination To Issue an Interim Rule

    A determination has been made under the authority of the Secretary 
of Defense to issue this rule as an interim rule. Urgent and compelling 
reasons exist to promulgate this rule before affording the public an 
opportunity to comment. This action is necessary because the North 
American Free Trade Agreement Implementation Act, signed into law on 
December 8, 1993, becomes effective on January 1, 1994. However, 
pursuant to Public Law 98-577 and Federal Acquisition Regulation 1.501, 
public comments received in response to this interim rule will be 
considered in formulating the final rule.

List of Subjects in 48 CFR Parts 225 and 252

    Government procurement.
Claudia L. Naugle,
Executive Editor, Defense Acquisition Regulations Council.

    Therefore, 48 CFR parts 225 and 252 are amended as follows:
    1. The authority citation for 48 CFR parts 225 and 252 continues to 
read as follows:

    Authority: 41 U.S.C. 421 and FAR subpart 1.3.

PART 225--FOREIGN ACQUISITION

    2. Section 225.000-70 is amended by revising paragraph (m) to read 
as follows:


225.000-70  Definitions.

    As used in this part--
* * * * *
    (m) U.S. made end product is defined in the clause at 252.225-7007, 
Trade Agreements.
    3. Section 225.000-71 is amended by revising paragraphs (a)(2) and 
(c)(1) to read as follows:


225.000-71  General guidelines.

* * * * *
    (a) Statutory or policy restrictions.
* * * * *
    (2) Where an exception to or waiver of a restriction would result 
in award of a foreign end product, apply the policies and procedures of 
the Buy American Act or the Balance of Payments Program, and, if 
applicable, the trade agreements.
* * * * *
    (c) Trade agreements. (1) Determine whether the product is covered 
by the Trade Agreements Act or the North American Free Trade Agreement 
Implementation Act (see subpart 225.4).
* * * * *
    4. Section 225.105 (3) and (5)(ii)(A) are revised to read as 
follows:


225.105  Evaluating offers.

* * * * *
    (3) Treat offers of eligible products under acquisitions subject to 
the Trade Agreements Act or NAFTA as if they were qualifying country 
offers. (See Example 4 of Table 25-1, Evaluation.)
* * * * *
    (5) * * *
    (ii) * * *
    (A) ``U.S. made end product'' under trade agreements;
* * * * *
    5. Section 225.109(a) is revised to read as follows:


225.109  Solicitation provisions and contract clauses.

    (a) Use the provision at 252.225-7000, Buy American Act--Balance of 
Payments Program Certificate, instead of the provisions at FAR 52.225-
1, Buy American Certificate, and FAR 52.225-6, Balance of Payments 
Program Certificate. Use the provision in any solicitation which 
includes the clause at 252.225-7001, Buy American Act and Balance of 
Payments Program, unless the solicitation includes either the clause at 
252.225-7007, Trade Agreements Act, or the clause at 252.225-7036, 
North American Free Trade Agreements Implementation Act.
* * * * *
    6. Section 225.401 is revised to read as follows:


225.401  Definitions.

    Eligible product means, instead of the definition at FAR 25.401, a 
designated, NAFTA, or Caribbean Basin country end product in the 
categories listed in 225.403.70.
    7. Section 225.402 is amended by revising paragraphs (c) (i) and 
(ii) to read as follows:


225.402  Policy.

* * * * *
    (c)(i) Except as provided in paragraph (c)(ii) of this section, do 
not purchase nondesignated country end products subject to the Trade 
Agreements Act unless they are NAFTA, Caribbean Basin or qualifying 
country end products (see 225.872-1).
    (ii) National interest waivers under section 302(b)(2) of the Trade 
Agreements Act are approved on a case-by-case basis. Except as 
delegated in paragraphs (c)(ii) (A), (B), and (C) of this section, a 
request for a national interest waiver shall include supporting 
rationale and be submitted under department/agency procedures to the 
Director of Defense Procurement.
* * * * *
    8. Section 225.403-70 is amended by revising the introductory 
paragraph and by removing Federal Supply Group (FSG) 52, and the 
Category/Description of Measuring tools, to read as follows:


225.403-70  Products subject to trade agreement acts.

    Foreign end products subject to the Trade Agreements Act and NAFTA 
are those in the following Federal supply groups (FSG). If a product is 
not in one of the listed groups, the Trade Agreements Act and NAFTA do 
not apply. As noted in FAR 25.401, Caribbean Basin country end products 
are limited to those end products which are eligible for duty-free 
treatment under 19 U.S.C. 2703(b). The list of products has been 
annotated to indicate those products which, due to this limitation, are 
eligible for designated and NAFTA countries, but are not presently 
eligible for Caribbean Basin countries.
* * * * *


225.407  [Amended]

    9. Section 225.407 is redesignated as 225.408; paragraphs (a)(1) 
and (a)(2)(A) of newly designated section 225.408 are amended by 
removing the word ``Act'' wherever it appears after ``Trade 
Agreements''; and new paragraphs (a) (3) and (4) are added, to read as 
follows:


225.408  Solicitation provision and contract clause.

    (a) * * *
    (3) Use the provision at 252.225-7035, Buy American Act--North 
American Free Trade Agreement Implementation Act--Balance of Payments 
Program Certificate, instead of the provision at FAR 52.225-20, Buy 
American Act--North American Free Trade Agreement Implementation Act--
Balance of Payments Program Certificate, in all solicitations that 
include the clause at 252.225-7036, North American Free Trade Agreement 
Implementation Act.
    (4) (A) Use the clause at 252.225-7036, North American Free Trade 
Agreement Implementation Act, instead of the clause at FAR 52.225-21, 
Buy American Act--North American Free Trade Agreement Implementation 
Act--Balance of Payments Program. The clause need not be used where 
purchase from foreign sources is restricted (see 225.403(d)(1)(B)). The 
clause may be used where the contracting officer anticipates a waiver 
of the restriction.
    (B) Use the clause in all solicitations and contracts for the items 
listed at 225.403-70, when the estimated value is $50,000 or more and 
the Trade Agreements Act does not apply. Include the clause in 
solicitations for multiple line items if any line item is subject to 
NAFTA.
    (C) Application of the procedures in 225.402(a) and the acquisition 
of noneligible and eligible products under the same solicitation may 
result in the application of the North American Free Trade Agreement 
Implementation Act to only some of the items solicited. In such case, 
indicate in the schedule those items covered by the Act.
    10. Section 225.602(3)(ii) is revised to read as follows:

Subpart 225.6--Customs and Duties


225.602  Policy.

* * * * *
    (3) * * *
    (ii) Eligible products (end products but not components) on defense 
contracts subject to the Trade Agreements Act or NAFTA; and
* * * * *
    11. Section 225.603 is amended to add new paragraph (1)(ii)(C), and 
to revise paragraph (1)(iii)(C)(3) to read as follows:


225.603  Procedures.

* * * * *
    (1) * * *
    (ii) * * *
    (C) 252.225-7037, Duty-Free Entry--NAFTA Country End Products and 
Supplies; or
* * * * *
    (iii) * * *
    (C) * * *
    (3) Such acquisition abroad is authorized by the terms of the 
contract, the subcontract, or by the contracting officer. In any case, 
follow the procedures required by the clauses in FAR 52.225-10, Duty-
Free Entry, and 252.225-7009, Duty-Free Entry--Qualifying Country End 
Products and Supples, and 252.225-7037, Duty-Free Entry--NAFTA Country 
End Products and Supplies, to the extent practicable.
* * * * *
    12. Section 225.605-70 is amended by redesignating paragraph (c) as 
paragraph (d), and adding new paragraph (c) to read as follows:


225.605-70  Additional solicitation provisions and contract clauses.

* * * * *
    (c) Use the clause at 252.225-7037, Duty-Free Entry--NAFTA Country 
End Products and Supplies, in all solicitations and contracts for 
supplies and services when the clause at FAR 52.225-10, Duty-Free 
Entry, is not used and NAFTA applies (see 225.403-70).
* * * * *

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

    13. Section 252.225-7001 is amended by revising the clause heading 
and paragraph (c) to read as follows:


252.225-7001  Buy American Act and Balance of Payments Program.

    As prescribed in 225.109(d), use the following clause:

Buy American Act and Balance of Payments Program (January 1994)

* * * * *
    (c) The Contractor agrees that it will deliver only domestic end 
products unless, in its offer, it specified delivery of other end 
products in the Buy American Act and Balance of Payments Certificate 
or the Buy American Act--Trade Agreements--Balance of Payments 
Program Certificate. An offer certifying that a qualifying country 
end product will be supplied requires the Contractor to deliver a 
qualifying country end product or a domestic end product.
* * * * *
(End of clause)

    14. Section 252.225-7006 is amended by revising the section 
heading, the clause title, and paragraph (a); paragraph (b) is revised; 
paragraph (c)(2)(v) is redesignated as paragraph (vi) and reprinted for 
the convenience of the reader; and a new paragraph (c)(2)(v) is added, 
to read as follows:


252.225-7006  Buy American Act--Trade Agreements--Balance of Payments 
Program Certificate.

    As prescribed in 225.408(a)(1), use the following provision:

Buy American Act--Trade Agreements--Balance of Payments Program 
Certificate (Jan. 1994)

    (a) Definitions.
    Caribbean Basin country end product, designated country end 
product, domestic end product, NAFTA country end product, 
nondesignated country end product, qualifying country end product, 
and U.S. made end product have the meanings given in the Trade 
Agreements or Buy American Act and Balance of Payments Program 
clauses of this solicitation.
    (b) Evaluation.
    Offers will be evaluated by giving preference to U.S. made end 
products, qualifying country end products, designated country end 
products, NAFTA country end products, and Caribbean Basin country 
end products over other end products.
    (c) Certifications. * * *
    (v) The Offeror certifies that the following supplies qualify as 
NAFTA country end products: (insert line item number) (insert 
country of origin).
    (vi) The Offeror certifies that the following supplies are other 
nondesignated country end products. (insert line item number) 
(insert country of origin). (End of provision)

    15. Section 252.225-7007 is amended by revising the section heading 
and clause title; to revise the introductory language; to redesignate 
current paragraphs (a)(5), (6), and (7) as (a)(7), (8), and (9) 
respectively and add new paragraphs (a)(5) and (6); to revise newly 
designated paragraph (a)(9)(ii); and to revise paragraphs (b), (c), and 
(d), to read as follows:


252.225-7007  Trade Agreements.

    As prescribed in 225.408(a)(2), use the following clause:

Trade Agreements (Jan. 1994)

    (a) * * *
    (5) NAFTA country end product means an article that--
    (i) Is wholly the growth, product, or manufacture of the NAFTA 
country; or
    (ii) Has, in the case of an article which consists in whole or 
in part of materials from another country or instrumentality, been 
substantially transformed in a NAFTA country into a new and 
different article of commerce with a name, character, or use 
distinct from that of the article or articles from which it was so 
transformed. The term includes services (except transportation 
services) incidental to its supply, provided that the value of those 
incidental services does not exceed the value of the product itself. 
It does not include service contracts as such.
    (6) North American Free Trade Agreement (NAFTA) country means 
Canada or Mexico.
* * * * *
    (9) * * *
* * * * *
    (ii) In the case of an article which consists in whole or in 
part of materials from another country or instrumentality, has been 
substantially transformed in the United States into a new and 
distinct article of commerce with a name, character, or use distinct 
from that of the article or articles from which it was so 
transformed.
    (b) This clause implements the Trade Agreements Act of 1979 (19 
U.S.C. 2501 et seq.), the North American Free Trade Agreement 
Implementation Act of 1993, and the Caribbean Basin Initiative by 
providing a preference for U.S. made end products and designated 
country end products over nondesignated country end products, except 
nondesignated country end products which are qualifying country end 
products, NAFTA country end products, or Caribbean Basin end 
products.
    (c) The Contractor agrees to deliver under this contract only 
U.S. made end products unless, in its offer, it specified delivery 
of qualifying country, NAFTA country, or nondesignated country end 
products in the Buy American Act--Trade Agreements--Balance of 
Payments Program Certificate provision.
    (1) Offerors may not supply a nondesignated country end product 
unless it is a qualifying country end product, NAFTA country end 
product, or Caribbean Basin country end product, or a national 
interest waiver has been granted under section 302 of the Trade 
Agreements Act of 1979 (see FAR 25.402(c)).
    (2) An offer certifying that a qualifying country end product, a 
designated country end product, a NAFTA country end product, or a 
Caribbean Basin country end product will be supplied, requires the 
Contractor to supply a qualifying country end product, a designated 
country end product, a NAFTA country end product, or a Caribbean 
Basin country end product, whichever is certified, or, at the 
Contractor's option, a U.S. made end product.
    (d) The offered price of end products listed and certified under 
paragraphs (c)(2)(i) and (vi) of the Buy American Act--Trade 
Agreements--Balance of Payments Program Certificate provision of the 
solicitation must include all applicable duty. The offered price of 
qualifying country end products, designated country end products, 
NAFTA country end products, and Caribbean Basin country end products 
for line items subject to the Trade Agreements Act or the North 
American Free Trade Agreement Implementation Act, should not include 
customer fees or duty. (End of clause)

    16. Section 252.225-7010 is amended by revising the introductory 
text to read as follows:


252.225-7010  Duty Free Entry--Additional Provisions.

    As prescribed in 225.605-70(d), use the following clause:
* * * * *
    17. A new section 252.225-7035 is added to read as follows:


252.225-7035  Buy American Act--North American Free Trade Agreement 
Implementation Act--Balance of Payments Program Certificate.

    As prescribed in 225.408(a)(3), use the following provision:

Buy American Act--North American Free Trade Agreement Implementation 
Act--Balance of Payments Program Certificate (Jan. 1994)

    (a) Definitions.
    Domestic end product, qualifying country end product, and U.S. 
made end product have the meanings given in the North American Free 
Trade Agreement Implementation Act or Buy American Act and Balance 
of Payments Program clauses of this solicitation.
    (b) Evaluation.
    Offers will be evaluated by giving preference to U.S. made end 
products, qualifying country end products, or NAFTA country end 
products over other end products.
    (c) Certifications.
    (1) The Offeror certifies that--
    (i) Each end product, except the end products listed in 
paragraph (c)(2) of this provision, is a domestic end product (as 
defined in the Buy American Act and Balance of Payments Program 
clause of this solicitation); and
    (ii) Components of unknown origin are considered to have been 
mined, produced, or manufactured outside the United States or a 
qualifying country.
    (2) The Offeror must identify and certify all end products that 
are not domestic end products.
    (i) The Offeror certifies that the following supplies qualify as 
``U.S. made end products'' but do not meet the definition of 
``domestic end product'': (insert line item number).
    (ii) The Offeror certifies that the following supplies are 
qualifying country end products: (insert line item number) (insert 
country of origin).
    (iii) The Offeror certifies that the following supplies qualify 
as NAFTA country end products: (insert line item number (insert 
country of origin).
    (iv) The Offeror certifies that the following supplies are other 
non-NAFTA country end products: (insert line item number) (insert 
country of origin). (End of provision)

    18. A new section 252.225-7036 is added to read as follows:


252.225-7036  North American Free Trade Agreement Implementation Act.

    As prescribed in 225.408(a)(4), use the following clause:

North American Free Trade Agreement Implementation Act (Jan. 1994)

    (a) Definitions.
    (1) Components, domestic end product, end product, nonqualifying 
country, qualifying country, and qualifying country end product have 
the meanings given in the Buy American Act and Balance of Payments 
Program clause of this contract.
    (2) North American Free Trade Agreement (NAFTA) country means 
Canada or Mexico.
    (3) NAFTA country end product means an article that--
    (i) Is wholly the growth, product, or manufacture of a NAFTA 
country; or
    (ii) Has, in the case of an article which consists in whole or 
in part of materials from another country or instrumentality, been 
substantially transformed in a NAFTA country into a new and 
different article of commerce with a name, character, or use 
distinct from that of the article or articles from which it was so 
transformed. The term includes services (except transportation 
services) incidental to its supply, provided that the value of those 
incidental services does not exceed the value of the product itself. 
It does not include service contracts as such.
    (4) Non-NAFTA country end product means any end product which is 
not a U.S. made end product or a NAFTA country end product.
    (5) United States means the United States, its designated 
possessions, Puerto Rico, and any other place subject to its 
jurisdiction, but does not include leased bases or trust 
territories.
    (6) U.S. made end product means an article which is--
    (i) Wholly the growth, product or manufacture of the United 
States, or
    (ii) In the case of an article which consists in whole or in 
part of materials from another country or instrumentality, has been 
substantially transformed in the United States into a new and 
distinct article of commerce with a name, character, or use distinct 
from that of the article or articles from which it was so 
transformed.
    (b) This clause implements the North American Free Trade 
Agreement Implementation Act of 1993 by providing a preference for 
U.S. made end products and NAFTA country end products over non-NAFTA 
country end products, except non-NAFTA country end products which 
are qualifying country end products.
    (c) The Contractor agrees to deliver under this contract only 
U.S. made end products unless, in its offer, it specified delivery 
of qualifying country, NAFTA country, or non-NAFTA country end 
products in the Buy American Act--North American Free Trade 
Agreement Implementation Act--Balance of Payments Program 
Certificate provision. An offer certifying that a qualifying country 
end product or a NAFTA country end product will be supplied requires 
the Contractor to supply a qualifying country end product or a NAFTA 
country end product, whichever is certified, or, at the Contractor's 
option, a U.S. made end produce.
    (d) The offered price of end products listed and certified under 
paragraphs (c)(2)(i) and (iv) of the Buy American Act--North 
American Free Trade Agreement Implementation Act-Balance of Payments 
Program Certificate provision of the solicitation must include all 
applicable duty. The offered price of qualifying country end 
products or NAFTA country end products for line items subject to the 
North American Free Trade Agreement Implementation Act, should not 
include custom fees or duty. (End of clause)

    19. A new section 252.225-7037 is added to read as follows:


252.225-7037  Duty-Free Entry--NAFTA Country End Products and Supplies.

    As prescribed in 225.605-70(c), use the following clause:

Duty-Free Entry--NAFTA Country End Products and Supplies (Jan. 1994)

    (a) Definitions.
    NAFTA country and NAFTA country end products have the meaning 
given in the North American Free Trade Agreement Implementation Act 
clause of this contract.
    (b) The requirements of this clause apply to this contract and 
subcontracts, including purchase orders, that involve supplies to be 
accorded duty-free entry whether--
    (1) Placed directly with a foreign concern as a prime contract; 
or
    (2) As a subcontract or purchase order under a contract placed 
with a domestic concern.
    (c) Except as otherwise approved by the Contracting Officer, no 
amount is or will be included in the contract price for duty for 
NAFTA country end products.
    (d) The Contractor warrants that--
    (1) All NAFTA country supplies, for which duty-free entry is to 
be claimed, are intended to be delivered to the Government; and
    (2) The Contractor will pay duty to the extent that such 
supplies, or any portion thereof (if not scrap or salvage) are 
diverted to nongovernmental use, other than as a result of a 
competitive sale made, directed, or authorized by the Contracting 
Officer.
    (e) The Government agrees to execute duty-free entry 
certificates and to afford such assistance as appropriate to obtain 
the duty-free entry of NAFTA country supplies for which the shipping 
documents bear the notation specified in paragraph (f) of this 
clause, except as the Contractor may otherwise agree.
    (f) All shipping documents submitted to Customs, covering 
foreign end products or supplies for which duty-free entry 
certificates are to be issued under this clause, 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 delivery order if applicable;
    (ii) Number of the subcontract/purchase order for foreign 
supplies if applicable;
    (iii) Identification of carrier;
    (iv) 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 Area Operations (DCMAO) New York, ATTN: 
Customs Division, International Logistics Office, 201 Varick Street, 
New York, NY 10014, for execution of Customs Forms 7501, 7501A, or 
7506 and any required duty-free entry certificates. (Note: This 
notation shall be used only for direct shipments to a U.S. military 
installation. In cases where the shipment will be consigned to other 
than a military installation, e.g., a domestic contractor's plan, 
the shipping document notation shall be altered to insert the name 
and address of the contractor, agent or broker who will notify 
Commander, DCMAO, NY, for execution of the duty-free certificate.)
    (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; and
    (vii) Activity Address Number of the contract administration 
office actually administering the prime contract, e.g., for DCMAO 
Dayton, DLA8DP.
    (g) Prepartion of customs forms.
    (1) Except for shipments consigned to a military installation, 
the contractor shall prepare, or authorize an agent to prepare, any 
customs forms required for the entry of foreign supplies in 
connection with DoD contracts into the United States, its 
possessions, or Puerto Rico, Submit the completed customs forms to 
the District Director of Customs with a copy to DCMAO NY for 
execution of any required duty-free entry certificates. Shipments 
consigned directly to a military installation will be released in 
accordance with 10.101 and 10.102 of the U.S. Customs regulations.
    (2) For shipments containing both supplies which are to be 
accorded duty-free entry and supplies which are not, the Contractor 
shall identify on the customs forms those items that are eligible 
for duty-free entry.
    (h) The Contractor agrees--
    (1) To prepare (if this contract is placed directly with a 
foreign supplier), or to 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) To consign the shipment as specified in paragraph (f) of 
this clause; and
    (3) To mark the exterior of all packages as follows:
    (i) ``United States Government, Department of Defense;'' and
    (ii) The activity address number of the contract administration 
office actually administering the prime contract.
    (i) The Contractor agrees to notify the Contracting Officer 
administering the prime contract in writing of any purchase under 
the contract of NAFTA country supplies to be accorded duty-free 
entry that are to be imported into the United States for delivery to 
the Government or for incorporation in end items to be delivered to 
the Government. The notice shall be furnished to the contract 
administration office immediately upon award to the qualifying 
country supplier. The notice shall contain--
    (1) Prime contractor's name, address, and CAGE code;
    (2) Prime contract number, and delivery order number if 
applicable;
    (3) Total dollar value of the prime contract or delivery order;
    (4) Expiration date of the prime contract or delivery order;
    (5) Foreign supplier's name and address;
    (6) Number of the subcontract/purchase order for NAFTA supplies;
    (7) Total dollar value of the subcontract for NAFTA supplies;
    (8) Expiration date of the subcontract for NAFTA supplies;
    (9) List of items purchased; and
    (10) Certification by the purchaser of NAFTA supplies as 
follows: I certify that all supplies for which duty-free entry is to 
be claimed are intended to be delivered to the Government or 
incorporated in the end items to be delivered under this contract, 
and that duty shall be paid by the Contractor to the extent that 
such supplies, or any portion (if not scrap or salvage) are diverted 
to nongovernmental use other than as a result of a competitive sale 
made, directed or authorized by the Contracting Officer; and
    (11) The scheduled delivery date(s).
    (j) This clause does not apply to purchases of NAFTA country 
supplies in connection with this contract if--
    (1) The NAFTA country supplies are identical in nature to 
supplies purchased by the Contractor or any subcontractor in 
connection with its commercial business; and
    (2) It is not economical or feasible to account for such 
supplies so as to ensure that the amount of the supplies for which 
duty-free entry is claimed does not exceed the amount purchased in 
connection with this contract.
    (k) The Contractor agrees to insert the substance of this 
clause, including this paragraph (k) in all subcontracts for 
supplies. Each subcontract shall require the subcontractor to 
identify this contract by including its contract number on any 
shipping documents submitted to Customs covering supplies for which 
duty-free entry is to be claimed pursuant to this clause. The 
Contractor also agrees that the name and address of the Contracting 
Officer administering the prime contract (name and address of the 
contract administration office cognizant of the prime contract), and 
its activity address number (Appendix G of the Defense FAR 
Supplement), and the information required by paragraphs (i) (1), 
(2), and (3) of this clause will be included in applicable 
subcontracts. (End of clause)

[FR Doc. 94-447 Filed 1-7-94; 8:45 am]
BILLING CODE 3810-01-M