[Federal Register Volume 59, Number 241 (Friday, December 16, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-30817]


[[Page Unknown]]

[Federal Register: December 16, 1994]


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GENERAL SERVICES ADMINISTRATION

48 CFR Parts 525 and 552

[APD 2800.12A, CHGE 59]
RIN 3090-AF12

 

General Services Administration Acquisition Regulation; 
Implementation of the Memorandum of Understanding Between the United 
States of America and the European Economic Community (EC) on 
Government Procurement and the North American Free Trade Agreement 
(NAFTA)

AGENCY: Office of Acquisition Policy, GSA.

ACTION: Final rule.

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SUMMARY: This rule amends the General Services Administration 
Acquisition Regulation to incorporate the temporary change made by 
Acquisition Circular (AC-93-1) which implemented the Memorandum of 
Understanding between the United States and the European Economic 
Community (EC) on Government Procurement and the North American Free 
Trade Agreement (NAFTA). The rule is essentially the same as the 
Circular that appeared in the Federal Register on December 30, 1993 (58 
FR 69243), except for minor modifications.

EFFECTIVE DATE: December 17, 1994.

FOR FURTHER INFORMATION CONTACT:
Edward J. McAndrew, Office of GSA Acquisition Policy, (202) 501-1224.

SUPPLEMENTARY INFORMATION: 

A. Public Comments

    A temporary rule was published in the Federal Register on December 
30, 1993 (58 FR 69243) in order to meet the January 1, 1994, effective 
date for implementation of NAFTA. The temporary rule invited public 
comments. No public comments were received.

B. Executive Order 12866

    This rule was not submitted to the Office of Management and Budget 
because it is not a significant rule as defined in Executive Order 
12866, Regulatory Planning and Review.

C. Regulatory Flexibility Act

    The changes do not appear to 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 sequentia because they 
permit offerors to use EC and NAFTA country end products or 
construction materials above certain thresholds without application of 
Buy American Act preference. For this reason, a regulatory flexibility 
analysis was not prepared. No comments from small entities were 
received.

D. Paperwork Reduction Act

    The provision at 552.225-75, Buy American Act Notice-Construction 
Materials, which is being modified by this rule, does contain an 
information collection requirement. However, the revision does not 
affect the information collection requirements that have previously 
been approved by OMB and assigned Control Number 3090-0198.

List of Subjects in 48 CFR Parts 525 and 552

    Government procurement.

    Accordingly, 48 CFR parts 525 and 552 are amended as follows:
    1. The authority citation for 48 CFR Parts 525 and 552 continues to 
read as follows:

    Authority: 40 U.S.C. 486(c).

PART 525--FOREIGN ACQUISITION

    2. Section 525.203 is revised to read as follows:


525.203  Evaluation of offers.

    (a) The HCA or a designee may authorize the use of a particular 
foreign construction material when the use of a comparable domestic 
construction material would unreasonably increase the cost of the 
contract. The cost of a particular domestic construction material shall 
be determined to be unreasonable when the cost of such material exceeds 
the cost of foreign material by more than 6 percent. The cost of 
construction material includes all delivery costs to the construction 
site and any applicable duty (whether or not a duty-free entry 
certificate is issued).
    (b) The evaluation process described in paragraph (a) of this 
section does not apply to:
    (1) Excepted materials listed in the solicitation; or
    (2) European Community (EC) and North American Free Trade Agreement 
(NAFTA) country construction materials offered in response to 
solicitations for construction contracts with an estimated value of 
$6,500,000 or more.
    (c) Offerors proposing to use foreign construction materials (other 
than EC or NAFTA country construction materials on contracts with an 
estimated value of $6,500,000 or more) are required to provide adequate 
information for Government evaluation under paragraph (a) of this 
section. Offerors may submit alternate offers for comparable domestic 
construction materials at stated prices. When foreign construction 
material (other than EC or NAFTA country construction materials on 
contracts with an estimated value of $6,500,000 or more) is not 
authorized under paragraph (a), evaluation of the offer must be based 
on the stated price, if any, for comparable domestic material. If an 
offeror proposing to use foreign construction materials (other than EC 
or NAFTA country construction materials on contracts with an estimated 
value of $6,500,000 or more) does not furnish data on the cost of 
comparable domestic construction material, and the use of foreign 
construction material is not authorized, such offer must be rejected, 
unless the contracting officer is able to obtain prices on comparable 
domestic material which verifies that domestic prices are unreasonable.
    (d) The contracting officer shall add 6 percent to the cost of 
foreign construction materials (other than EC or NAFTA country 
construction materials on contracts with an estimated value of 
$6,500,000 or more) authorized for use in accordance with paragraph (a) 
of this section, to the prices offered, if applicable, for evaluation 
purposes only.
    3. Section 525.205 is revised to read as follows:


525.205  Solicitation provision and contract clause.

    The contracting officer shall insert the provision at 552.225-75, 
Buy American Act Notice--Construction Materials in solicitations for 
construction that include the Buy American Act--Construction Materials 
clause at (FAR) 48 CFR 52.225-5 and have an estimated value less than 
$6,500,000. Alternate I shall be used for construction contracts with 
an estimated value of $6,500,000 or more that include the Buy American 
Act--Construction Materials Under European Community Agreement and 
NAFTA clause at (FAR) 48 CFR 52.225-15.
    4. Section 525.402 is amended by revising paragraph (a) to read as 
follows:
525.402  Policy.

    (a) Under (FAR) 48 CFR 25.402(a), when the estimated value of all 
items or products (exclusive of any item or product within any of the 
exceptions described in (FAR) 48 CFR 25.403) listed in the solicitation 
exceeds the Trade Agreements Act threshold, contracting officers shall 
evaluate offers without regard to the restrictions of the Buy American 
Act or the Balance of Payments Program.
* * * * *
PART 552--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
    5. Section 552.225-8 is revised to read as follows:


552.225-8  Trade Agreements Act Certificate.

    As prescribed in 525.407(a), insert the following provision:

TRADE AGREEMENTS ACT CERTIFICATE (DEC 1994)

(DEVIATION FAR 52.225-8)

    (a) The Offeror, by signing this offer, certifies that each end 
product to be delivered under this contract is a U.S. made end 
product, a designated country end product, a Caribbean Basin country 
end product, a Canadian end product or a Mexican end product as 
defined in the clause entitled ``Trade Agreements Act'' at 48 CFR 
552.225-9.
    (b) Offers will be evaluated in accordance with subpart 25.4 of 
the Federal Acquisition Regulation except that offers of U.S. made 
end products, designated country end products, Caribbean Basin end 
products, Canadian end products, or Mexican end products shall be 
evaluated without the restrictions of the Buy American Act or the 
Balance of Payments Program.

(End of Provision)

    6. Section 552.225-9 is revised to read as follows:


552.225-9  Trade Agreements Act.

    As prescribed in 525.407(a), insert the following clause.

TRADE AGREEMENTS ACT (DEC 1994)

(DEVIATION FAR 52.225-9)

    (a) This clause implements the Trade Agreements Act of 1979 (19 
U.S.C. 2501-2582) by providing a preference for U.S. made end 
products, designated country end products, Caribbean Basin country 
end products, Canadian end products or Mexican end products over 
other products.
    ``Caribbean Basin country end products,'' as used in this 
clause, means an article that: (1) is wholly the growth, product, or 
manufacture of a Caribbean Basin country (as defined in section 
25.401 of the Federal Acquisition Regulation (FAR)), or (2) in the 
case of an article which consists in whole or in part of materials 
from another country or instrumentality, has been substantially 
transformed 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 
that of the product itself. It does not include service contracts as 
such. The term excludes products that are excluded from duty free 
treatment from Caribbean countries under the Caribbean Basin 
Economic Recovery Act (19 U.S.C. 2703(b)). These exclusions 
presently consist of (i) textiles and apparel articles that are 
subject to textile agreements; (ii) footwear, handbags, luggage, 
flat goods, work gloves, and leather wearing apparel not designated 
as eligible articles for the purpose of the Generalized System of 
Preference under title V of the Trade Act of 1974; (iii) tuna, 
prepared or preserved in any manner in airtight containers, (iv) 
petroleum, or any product derived from petroleum; and (v) watches 
and watch parts (including cases, bracelets and straps) of whatever 
type including, but not limited to, mechanical, quartz digital or 
quartz analog, if such watches or watch parts contain any material 
that is the product of any country to which the Tariff Schedule of 
the United States (TSUS) column 2 rates of duty apply.
    ``Designated country end product,'' as used in this clause, 
means an article that (1) is wholly the growth, product, or 
manufacture of the designated country (as defined in section 25.401 
of the Federal Acquisition Regulation (FAR)), or (2) in the case of 
an article which consists in whole or in part of materials from 
another country or instrumentality, has been substantially 
transformed 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 
that of the product itself. It does not include service contracts as 
such.
    ``Canadian end product,'' as used in this clause, means an 
article that (1) is wholly the growth, product, or manufacture of 
Canada, or (2) 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 Canada 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 transformed. The 
term includes services (except transportation services) incidental 
to its supply; provided, that the value of those incidental services 
does not exceed that of the product itself. It does not include 
service contracts as such.
    ``Mexican end product,'' as used in this clause, means an 
article that (1) is wholly the growth, product, or manufacture of 
Mexico, or (2) 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 Mexico 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 that of the product itself. It 
does not include service contracts as such.
    ``End products,'' as used in this clause, means those articles, 
materials, and supplies to be acquired under this contract for 
public use.
    ``U.S. made end product,'' as used in this clause, means an 
article which (1) is wholly the growth, product, or manufacture of 
the United States, or (2) 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 different article of commerce with a name, 
character, or use distinct from that of the article or articles from 
which it was so transformed.
    ``Nondesignated country end products,'' as used in this clause, 
means any end product which is not a U.S. made end product, 
designated country end product, Caribbean Basin Country end product, 
Canadian end product or Mexican end product.
    ``United States,'' as used in this clause, means the United 
States, its possessions, Puerto Rico, and any other place which is 
subject to its jurisdiction, but does not include leased bases or 
trust territories.
    (b) The Contractor agrees to deliver under this contract only 
U.S. made end products, designated country end products, Caribbean 
Basin country end products, Canadian end products or Mexican end 
products or, if a national interest waiver is granted under section 
302 of the Trade Agreements Act of 1979, nondesignated country end 
products. Only if such waiver is granted may a nondesignated country 
end product be delivered under this contract(s).
    (c) Offers will be evaluated in accordance with the policies and 
procedures of Part 25 of the FAR except that offers of U.S. made end 
products, designated country end products, Caribbean Basin end 
products, Canadian end products or Mexican end products shall be 
evaluated without the restrictions of the Buy American Act or the 
Balance of Payments Program.

(End of Clause)

    7. Section 552.225-72 is amended by revising paragraphs (a) 
introductory text, (a)(1) and (c) [the chart is unchanged] to read as 
follows:


552.225-72  Eligible Products From Nondesignated Countries--Waiver.

    As prescribed in 525.407(b), insert the following clause:

ELIGIBLE PRODUCTS FROM NONDESIGNATED COUNTRIES--WAIVER (DEC 1994)

    (a) In accordance with the Trade Agreements Act of 1979 and 48 
CFR 25.402(b), no eligible product that originates in a 
nondesignated country may be purchased by a Federal agency. However, 
this restriction may be waived before award when it is determined to 
be in the national interest. Accordingly, offers to furnish products 
originating in a nondesignated country identified in paragraph (c) 
below, may be submitted in response to this solicitation and will be 
considered for award if a waiver is obtained from the U.S. Trade 
Representative or a designee (19 U.S.C. 2512) on the basis that:
    (1) No responsive bid or technically acceptable offer from a 
responsible offeror is received offering U.S. or designated country 
end products Caribbean end products, Canadian or Mexican end 
products as defined in the clause entitled ``Trade Agreements Act'' 
in this solicitation; or
* * * * *
    (c) The Offeror certifies that the following product(s) is an 
end product other than an end product of the United States, a 
designated country or a Caribbean Basin country Canadian or Mexican 
end products, as such end products are defined in the clause 
entitled ``Trade Agreements Act'' in this solicitation:
* * * * *
    8. Section 552.225-75 is revised to read as follows:


552.225-75  Buy American Act Notice--Construction Materials.

    As prescribed in 525.205, insert the following provision:

BUY AMERICAN ACT NOTICE--CONSTRUCTION MATERIALS (JAN 1994)

    (a) The Buy American Act (41 U.S.C. 10) generally requires that 
only domestic construction material be used in performing this 
contract (See the clause entitled ``Buy American Act--Construction 
Materials''). This requirement does not apply to the excepted 
construction material or components listed below:

(List applicable excepted materials or indicate ``none.'')

    (b) Offers based on the use of other foreign construction 
material may be acceptable for award if the Government determines 
that--
    (1) Comparable domestic construction material in sufficient and 
reasonably available quantities, of a satisfactory quality, is 
unavailable; or
    (2) Use of comparable domestic construction material is 
impracticable or would unreasonably increase the cost of this 
contract.
    (c) Any offer based on the use of one or more other foreign 
construction materials shall include current data, based on a 
reasonable canvass of suppliers, in the format listed in paragraph 
(g) below, clearly demonstrating that the cost of each other foreign 
construction material, plus 6 percent, is less than the cost of each 
comparable domestic construction material. The cost of construction 
material shall include all delivery costs to the construction site 
and any applicable duty (whether or not a duty-free entry 
certificate may be issued).
    (d) For evaluation purposes, the Government will add to the 
offer 6 percent of the cost of other foreign construction material 
that qualifies for acceptance under paragraph (c) above.
    (e) When offering other foreign construction material, offerors 
may also offer, at stated prices, any available comparable domestic 
construction material to avoid the possibility that the entire offer 
will be rejected if the other foreign construction material is not 
accepted under (c) above. If any other foreign construction material 
does not qualify for acceptance under paragraph (c) above, the 
Government will evaluate the offer on the basis of the stated price 
for comparable domestic construction material, and the Offeror shall 
be required to furnish such domestic construction material at that 
price. If the Offeror does not state a price for a comparable 
domestic construction material, and the other foreign construction 
material does not qualify for acceptance under paragraph (c) above, 
the offer will be rejected in sealed bid procurements and may be 
rejected in negotiated procurements.
    (f) If the foregoing procedure results in a tie between a 
foreign offer as evaluated and a domestic offer, award shall be made 
on the domestic offer. In such case, offers proposing to use any 
foreign construction material will be considered to be foreign 
offers.
    (g) For evaluation purposes under paragraph (c) above, the 
following information and any applicable supporting data based on 
the canvass of suppliers shall be included in the offer for the use 
of one or more other foreign construction materials:

                           Foreign and Domestic Construction Materials Cost Comparison                          
----------------------------------------------------------------------------------------------------------------
                                                                                 Unit of                Cost    
                       Construction material description                         measure  Quantity  (dollars)\1\
----------------------------------------------------------------------------------------------------------------
Item 1:                                                                                                         
    Foreign construction material.............................................  ........  ........  $           
    Comparable domestic construction material.................................  ........  ........  $           
Item 2:                                                                                                         
    Foreign construction material.............................................  ........  ........  $           
    Comparable domestic construction material.................................  ........  ........  $           
----------------------------------------------------------------------------------------------------------------
\1\Include all delivery costs to the construction site and any applicable duty.                                 

(End of Provision)

    Alternate I (JAN 1994). If Alternate I is used, paragraphs (a) 
and (f) of the basic clause should be deleted and the following 
paragraphs (a) and (f) substituted. In addition, two asterisks 
should be inserted after the phrase ``Foreign construction 
material'' each time it appears in the chart in paragraph (g) and 
the following explanation added at the bottom of the chart ``* * * 
Do not include EC or NAFTA country construction materials.''
    (a) The Buy American Act (41 U.S.C. 10) generally requires that 
only domestic construction material be used in performing this 
contract. However, the Memorandum of Understanding between the 
United States of America and the European Community (EC) on 
Government procurement and the North American Free Trade Agreement 
(NAFTA) exempt EC and NAFTA country construction material from 
application of the Buy American Act. (See FAR 52.225-15 
``Construction Materials under European Community and NAFTA 
Agreements''). Therefore, the Contractor shall use only domestic 
construction material, EC construction materials, or NAFTA country 
construction materials in the performance of this contract except 
for other foreign construction materials, if any, listed below. 
``Other foreign construction material,'' as used in this provision, 
means construction material that is not EC or NAFTA country 
construction material as defined in FAR 52.225-15.

(List applicable excepted materials or indicate ``none.'')

    (f) If the foregoing procedure results in a tie between an offer 
that includes other foreign construction material as evaluated and 
an offer that includes domestic, EC or NAFTA construction material, 
award shall be made on the offer providing domestic, EC or NAFTA 
construction material.

    Dated: November 30, 1994.
Ida M. Ustad,
Associate Administrator for Acquisition Policy.
[FR Doc. 94-30817 Filed 12-15-94; 8:45 am]
BILLING CODE 6820-61-M