[Federal Register Volume 60, Number 75 (Wednesday, April 19, 1995)]
[Rules and Regulations]
[Pages 19531-19534]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-9496]



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DEPARTMENT OF DEFENSE

48 CFR Parts 225 and 252


Defense Federal Acquisition Regulation Supplement; Restriction on 
Procurement of Goods

AGENCY: Department of Defense (DoD).

ACTION: Interim rule with request for comment.

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SUMMARY: The Director of Defense Procurement has issued an interim rule 
amending the Defense Federal Acquisition Regulation Supplement (DFARS) 
to revise the existing foreign source restrictions for machine tools 
and valves, buses, chemical weapons antidote, air circuit breakers, and 
antifriction bearings, by uniformly permitting acquisition of Canadian 
items, expanding and standardizing the waiver criteria, and exempting 
acquisitions below the simplified acquisition threshold from these 
restrictions.

DATES: Effective date: April 10, 1995.
    Comment date: Comments on the interim rule should be submitted in 
writing to the address below on or before June 19, 1995, to be 
considered in the formulation of the final rule.

ADDRESSES: Interested parties should submit written comments to: 
Defense Acquisition Regulations Council, Attn: Ms. Amy Williams, 
PDUSD(A&T)DP(DAR), IMD 3D139, 3062 Defense Pentagon, Washington, DC 
20301-3062. Telefax number (703) 602-0350. Please cite DFARS Case 94-
D314 in all correspondence related to this issue.

FOR FURTHER INFORMATION CONTACT:
Ms. Amy Williams, (703) 602-0131.

SUPPLEMENTARY INFORMATION: 

A. Background

    This interim DFARS rule implements 10 U.S.C. 2534 as amended by 
Section 814 of the Fiscal Year 1995 Defense Authorization Act (Pub. L. 
103-337) and Section 4102(i) of the Federal Acquisition Streamlining 
Act of 1994 (Pub. L. 103-355). Section 814 revises the existing foreign 
source restrictions for machine tools and valves, buses, chemical 
weapons, antidote, air circuit breakers, and antifriction bearings, by 
uniformly permitting acquisition of Canadian items, and by expanding 
and standardizing the waiver criteria. Section 4102(i) exempts 
acquisitions below the simplified acquisition threshold from these 
restrictions.

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 
expands the conditions under which non-U.S. products may be acquired. 
An Initial Regulatory Flexibility Analysis (IFRA) has been prepared and 
may be obtained from the address specified herein. A copy of the IRFA 
has been submitted to the Chief Counsel for Advocacy of the Small 
Business Administration. Comments are invited from small businesses and 
other interested parties. Comments from small entities concerning the 
affected subparts will be considered in accordance with Section 610 of 
the Act. Such comments must be submitted separately and cite DFARS Case 
94-D314 in correspondence.

C. Paperwork Reduction Act

    The Paperwork Reduction Act does not apply because the rule does 
not impose any additional information collection requirements which 
require the approval of the Office of [[Page 19532]] 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. Compelling reasons 
exist to promulgate this rule without prior opportunity for public 
comment because it is necessary to implement statutory changes to 10 
U.S.C. 2534. However, 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.
Michele P. Peterson,
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 48 CFR Chapter 1.

PART 225--FOREIGN ACQUISITION

    2. Sections 225.7004, 225.7004-1, 225.7004-2, 225.7004-3, 225.7004-
4, and 225.7004-5 are revised, and 225.7004-6 is added to read as 
follows:


225.7004  Restriction on machine tools and powered and non-powered 
valves.


225.7004-1  Restriction.

    In accordance with 10 U.S.C. 2534, through fiscal year 1996, do not 
acquire, either directly as end items or indirectly on behalf of the 
Government, the machine tools or powered and non-powered valves in 
225.7004-2 unless they are of U.S. or Canadian origin.


225.7004-2  Applicability.

    (a) Machine tools restricted under this section are those tools 
listed in Federal supply classes of metalworking machinery in the 
following categories--

------------------------------------------------------------------------
Federal Supply                                                          
Classification                            Name                          
     (FSC)                                                              
------------------------------------------------------------------------
3405..........  Saw and filing machines.                                
3408..........  Machine centers and way type machines.                  
3410..........  Electrical and ultrasonic erosion machines.             
3411..........  Boring machines.                                        
3412..........  Broaching machines.                                     
3413..........  Drilling and tapping machines.                          
3414..........  Gear cutting and finishing machines.                    
3415..........  Grinding machines.                                      
3416..........  Lathes.                                                 
3417..........  Milling machines.                                       
3418..........  Planers and shapers.                                    
3419..........  Miscellaneous machine tools.                            
3426..........  Metal finishing equipment.                              
3433..........  Gas welding, heat cutting, and metalizing equipment.    
3438..........  Miscellaneous welding equipment.                        
3441..........  Bending and forming machines.                           
3442..........  Hydraulic and pneumatic presses, power driven.          
3443..........  Mechanical presses, power driven.                       
3445..........  Punching and shearing machines.                         
3446..........  Forging machinery, and hammers.                         
3448..........  Riveting machines.                                      
3449..........  Miscellaneous secondary metal forming and cutting       
                 machines.                                              
3460..........  Machine tool accessories.                               
3461..........  Accessories for secondary metalworking machinery.       
------------------------------------------------------------------------

    (b) Machine tool accessories classified under FSC 3460 or 3461 are 
not components under 225.7004-5. Where a solicitation for machine tools 
includes machine tool accessories, list machine tool accessories 
separately. Each machine tool and each accessory must meet the 
requirements of this section individually.
    (c) Valves restricted under this section are those powered and non-
powered valves listed in Federal supply classes 4810 (valves, powered) 
and 4820 (valves, non-powered) used in piping for naval surface ships 
and submarines.


225.7004-3  Exception.

    This restriction does not apply if the acquisition is below the 
simplified acquisition threshold.


225.7004-4  Waiver.

    (a) The head of the contracting activity may waive the restriction 
on a case-by-case basis upon execution of a determination and findings 
that any of the following applies:
    (1) The restriction would cause unreasonable delays.
    (2) United States producers of the item would not be jeopardized by 
competition from a foreign country, and that country does not 
discriminate against defense items produced in the United States to a 
greater degree than the United States discriminates against defense 
items produced in that country.
    (3) Application of the restriction would impede cooperative 
programs entered into between DoD and a foreign country, and that 
country does not discriminate against defense items produced in the 
United States to a greater degree than the United States discriminates 
against defense items produced in that country.
    (4) Satisfactory quality items manufactured in the United States or 
Canada are not available.
    (5) Application of the restriction would result in the existence of 
only one source for the item in the United States or Canada.
    (6) Application of the restriction is not in the national security 
interests of the United States.
    (7) Application of the restriction would adversely affect a U.S. 
company.
    (b) The restriction is waived when it would cause unreasonable 
costs. The cost of a machine tool or valve of U.S. or Canadian origin 
is unreasonable if it exceeds 150 percent of the offered price, 
inclusive of duty, of items which are not of U.S. or Canadian origin.


225.7004-5  U.S. or Canadian origin.

    (a) A valve or machine tool shall be considered to be of U.S. or 
Canadian origin if--
    (1) It is manufactured in the United States or Canada; and
    (2) The cost of its components manufactured in the U.S. or Canada 
exceeds 50 percent of the cost of all its components.
    (b) The cost of components shall include transportation costs to 
the place of incorporation into the end product and duty (whether or 
not a duty-free certificate may be issued).


225.7004-6  Contract clauses.

    (a) Unless an exception applies or a waiver has been granted, use 
the clause at 252.225-7017, Preference for United States and Canadian 
Valves and Machine Tools, in all solicitations and contracts for valves 
and machine tools.
    (b) Consider using the clause at 252.225-7001, Buy American Act and 
Balance of Payments Program, and, if applicable, the clause at 252.225-
7007, Trade Agreements Act, whenever an exception or waiver is 
anticipated. Where these clauses are used, state in the solicitation 
that offers which do not conform to the restrictions of the more 
restrictive clause will only be considered if an exception applies or a 
waiver is granted.
    3. Section 225.7007 is revised to read as follows:


225.7007  Restriction on acquisition of foreign buses.

    4. Sections 225.7007-1, 225.7007-2, 225.7007-3, and 225.7007-4 are 
added to read as follows: [[Page 19533]] 


225.7007-1  Restriction.

    In accordance with 10 U.S.C. 2534, do not acquire a multipassenger 
motor vehicle (bus) unless it is manufactured in the United States or 
Canada.


225.7007-2  Applicability.

    Apply this restriction if the buses are purchased, leased, rented, 
or made available under contracts for transportation services.


225.7007-3  Exceptions.

    This restriction does not apply in any of the following 
circumstances:
    (a) Buses manufactured outside the United States and Canada are 
needed for temporary use because buses manufactured in the United 
States or Canada are not available to satisfy requirements that cannot 
be postponed. Such use may not, however, exceed the lead time required 
for acquisition and delivery of buses manufactured in the United States 
or Canada.
    (b) The requirement for buses is temporary in nature. For example, 
to meet a special, nonrecurring requirement or a sporadic and 
infrequent recurring requirement, buses manufactured outside the United 
States and Canada may be used for temporary periods of time. Such use 
may not, however, exceed the period of time needed to meet the special 
requirement.
    (c) Buses manufactured outside the United States and Canada are 
available at no cost to the U.S. Government.
    (d) The acquisition is below the simplified acquisition threshold.


225.7007-4  Waiver.

    (a) The head of the contracting activity may waive the restriction 
on a case-by-case basis upon execution of a determination and findings 
that any of the following applies:
    (1) The restriction would cause unreasonable delays.
    (2) United States producers of the item would not be jeopardized by 
competition from a foreign country, and that country does not 
discriminate against defense items produced in the United States to a 
greater degree than the United States discriminates against defense 
items produced in that country.
    (3) Application of the restriction would impede cooperative 
programs entered into between DoD and a foreign country, and that 
country does not discriminate against defense items produced in the 
United States to a greater degree that the United States discriminates 
against defense items produced in that country.
    (4) Satisfactory quality items manufactured in the United States or 
Canada are not available.
    (5) Application of the restriction would result in the existence of 
only one source for the item in the United States or Canada.
    (6) Application of the restriction is not in the national security 
interests of the United States.
    (7) Application of the restriction would adversely affect a U.S. 
company.
    (b) The restriction is waived when it would cause unreasonable 
costs. The cost of a bus manufactured in the United States or Canada is 
unreasonable if it exceeds 150 percent of the offered price, inclusive 
of duty, of items which are not manufactured in the United States or 
Canada.
    5. Section 225.7010 is revised to read as follows:


225.7010  Restriction on certain chemical weapons antidote.

    6. Sections 225.7010-1, 225.7010-2, and 225.7010-3 are added to 
read as follows:


225.7010-1  Restriction.

    In accordance with 10 U.S.C. 2534, do not acquire chemical weapons 
antidote contained in automatic injectors, or the components for such 
injectors, unless the injector or component is manufactured in the 
United States or Canada by a company that--
    (a) Is a producer under the Industrial Preparedness Program at the 
time of contract award;
    (b) Has received all required regulatory approvals; and
    (c) Has the plant, equipment, and personnel to perform the contract 
in the United States or Canada at the time of contract award.


225.7010-2  Exception.

    This restriction does not apply if the acquisition is below the 
simplified acquisition threshold.


225.7010-3.  Waiver.

    (a) The head of the contracting activity may waive the restriction 
on a case-by-case basis upon execution of a determination and findings 
that any of the following applies:
    (1) The restriction would cause unreasonable delays.
    (2) United States producers of the item would not be jeopardized by 
competition from a foreign country, and that country does not 
discriminate against defense items produced in the United States to a 
greater degree than the United States discriminates against defense 
items produced in that country.
    (3) Application of the restriction would impede cooperative 
programs entered into between DoD and a foreign country, and that 
country does not discriminate against defense items produced in the 
United States to a greater degree than the United States discriminates 
against defense items produced in that country.
    (4) Satisfactory quality items manufactured in the United States or 
Canada are not available.
    (5) Application of the restriction would result in the existence of 
only one source for the item in the United States or Canada.
    (6) Application of the restriction is not in the national security 
interests of the United States.
    (7) Application of the restriction would adversely affect a U.S. 
company.
    (b) The restriction is waived when it would cause unreasonable 
costs. The cost of the injector or component manufactured in the United 
States or Canada is unreasonable if it exceeds 150 percent of the 
offered price, inclusive of duty, of items which are not manufactured 
in the United States or Canada.
    7. Sections 225.7016-1, 225.7016-2, and 225.7016-3 are revised to 
read as follows:


225.7016-1  Restriction.

    In accordance with 10 U.S.C. 2534, do not acquire air circuit 
breakers for naval vessels unless they are manufactured in the United 
States or Canada.


225.7016-2  Exceptions.

    This restriction does not apply if--
    (a) The acquisition is below the simplified acquisition threshold; 
or
    (b) Spares and repair parts are needed to support air circuit 
breakers manufactured outside the United States or Canada. Support 
includes the purchase of spare air circuit breakers where those from 
alternate sources are not interchangeable.


225.7016-3  Waiver.

    (a) The head of the contracting activity may waive the restriction 
on a case-by-case basis upon execution of a determination and findings 
that any of the following applies:
    (1) The restriction would cause unreasonable delays.
    (2) United States producers of the item would not be jeopardized by 
competition from a foreign country, and that country does not 
discriminate against defense items produced in the Untied States to a 
greater degree than the United States discriminates against defense 
items produced in that country.
    (3) Application of the restriction would impede cooperative 
programs entered into between DoD and a foreign country, and that 
country does not discriminate against defense items produced in the 
United States to a [[Page 19534]] greater degree than the United States 
discriminates against defense items produced in that country.
    (4) Satisfactory quality items manufactured in the United States or 
Canada are not available.
    (5) Application of the restriction would result in the existence of 
only one source for the item in the United States or Canada.
    (6) Application of the restriction is not in the national security 
interest of the United States.
    (7) Application of the restriction would adversely affect a U.S. 
company.
    (b) The restriction is waived when it would cause unreasonable 
costs. The cost of the air circuit breaker manufactured in the United 
States or Canada is unreasonable if it exceeds 150 percent of the 
offered price, inclusive of duty, of items which are not manufactured 
in the United States or Canada.
    8. Section 225.7016-4 is removed and section 225.7016-5 is 
redesignated as section 225.7016-4 and revised to read as follows:


225.7016-4  Contract clause.

    Use the clause at 252.225-7029, Preference for United States or 
Canadian Air Circuit Breakers, in all solicitations and contracts 
requiring air circuit breakers for naval vessels, unless--
    (a) An exception under 225.7016-2 is known to apply; or
    (b) A waiver has been granted in accordance with 225.7016-3.
    9. Sections 225.7019-1, 225.7019-2, 225.7019-3, and 225.7019-4 are 
revised to read as follows:


225.7019-1  Restriction.

    In accordance with 10 U.S.C. 2534, through fiscal year 1995, do not 
acquire antifriction bearings or bearing components which are not 
manufactured in the United States or Canada.


225.7019-2  Exceptions.

    The restriction in 225.7019-1 does not apply to--
    (a) Acquisitions below the simplified acquisition threshold;
    (b) Purchases of commercial products incorporating antifriction 
bearings;
    (c) Miniature and instrument ball bearings restricted under 225.71;
    (d) Items acquired overseas for use overseas; or
    (e) Antifriction bearings or bearing components or items containing 
bearings for use in a cooperative or co-production project under an 
international agreement.


225.7019-3  Waiver.

    The head of the contracting activity may waive the restriction in 
225.7019-1--
    (a) Upon execution of a determination and findings that--
    (1) No domestic (U.S. or Canadian) bearing manufacturer meets the 
requirement;
    (2) It is not in the best interests of the United States to qualify 
a domestic bearing to replace a qualified nondomestic bearing. This 
determination must be based on a finding that the qualification of a 
domestically manufactured bearing would cause unreasonable costs or 
delay. A finding that a cost is unreasonable should take into 
consideration DoD policy to assist the domestic industrial mobilization 
base. Contracts should be awarded to domestic bearing manufacturers to 
increase their capability to reinvest and become more competitive;
    (3) United States producers of the item would not be jeopardized by 
competition from a foreign country, and that country does not 
discriminate against defense items produced in the United States to a 
greater degree than the United States discriminates against defense 
items produced in that country;
    (4) Application of the restriction would impede cooperative 
programs entered into between DoD and a foreign country, and that 
country does not discriminate against defense items produced in the 
United States to a greater a degree than the United States 
discriminates against defense items produced in that country;
    (5) Application of the restriction would result in the existence of 
only one source for the item in the United States or Canada;
    (6) Application of the restriction is not in the national security 
interests of the United States; or
    (7) Application of the restriction would adversely affect a U.S. 
company.
    (b) For multiyear contracts or contracts exceeding 12 months, only 
if--
    (1) The head of the contracting activity executes a determination 
and findings in accordance with paragraph (a) of this subsection;
    (2) The contractor submits a written plan for transitioning from 
the use of nondomestic to domestically manufactured bearings;
    (3) The plan--
    (i) States whether a domestically manufactured bearing can be 
qualified, at a reasonable cost, for use during the course of the 
contract period;
    (ii) Identifies any bearings that are not domestically 
manufactured, their application, and source of supply; and
    (iii) Describes, including cost and timetable, the transition to a 
domestically manufactured bearing. (The timetable for the transition 
should normally take no longer than 24 months from the date the waiver 
is granted); and
    (4) The contracting officer accepts the plan and incorporates it in 
the contract.


225.7019-4  Contract clause.

    Use the clause at 252.225-7016, Restriction on Acquisition of 
Antifriction Bearings, in all solicitations and contracts, unless--
    (a) An exception applies or a waiver has been granted; or
    (b) The contracting officer knows that the items being acquired do 
not contain antifriction bearings.

Subpart 252.2--Texts of Provisions and Clauses

    10. Section 252.225-7017 is amended by revising in the introductory 
text the reference ``225.7004-5(a)'' to read ``225.7004-6(a);'' by 
revising the clause date to read ``(APR 1995)'' in lieu of ``(APR 
1992);'' and by revising paragraph (c) to read as follows:


252.225-7017  Preference for United States and Canadian valves and 
machine tools.

* * * * *
    (c) Unless an exception applies or a waiver is granted under 
225.7004-4(a) of the Defense Federal Acquisition Regulation 
Supplement, preference will be given to valves and machine tools of 
United States or Canadian origin by adding 50 percent to the offered 
price of all other valves and machine tools for evaluation purposes.

(End of clause)

    11. Section 252.225-7029 is revised to read as follows:


252.225-7029  Preference for United States or Canadian air circuit 
breakers.

    As prescribed in 225.7016-4, use the following clause:

Preference for United States or Canadian Air Circuit Breakers (Apr 
1995)

    (a) Unless otherwise specified in its offer, the Contractor 
agrees that air circuit breakers for naval vessels provided under 
this contract shall be manufactured in the United States or Canada.
    (b) Unless an exception applies or a waiver is granted under 
225.7016-3(a) of the Defense Federal Acquisition Regulation 
Supplement, preference will be given to air circuit breakers 
manufactured in the United States or Canada by adding 50 percent to 
the offered price of all other air circuit breakers for evaluation 
purposes.

(End of clause)

[FR Doc. 95-9496 Filed 4-18-95; 8:45 am]
BILLING CODE 5000-04-M