[Federal Register Volume 63, Number 23 (Wednesday, February 4, 1998)]
[Rules and Regulations]
[Pages 5744-5746]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-2649]


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DEPARTMENT OF DEFENSE

48 CFR Parts 225 and 252

[DFARS Case 97-D321]


Defense Federal Acquisition Regulation Supplement; Waiver of 
Domestic Source Restrictions

AGENCY: Department of Defense (DoD).

ACTION: Interim rule with request for comments.

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SUMMARY: The Director of Defense Procurement has issued an interim rule 
amending the Defense Federal Acquisition Regulation Supplement (DFARS) 
to implement Section 811 of the National Defense Authorization Act for 
Fiscal Year 1998. Section 811 limits the authority for waiver of the 
domestic source restrictions of 10 U.S.C. 2534(a).

DATES: Effective date:  February 4, 1998.
    Comment date: Comments on the interim rule should be submitted in 
writing to the address shown below on or before April 6, 1998, 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.
    E-mail comments submitted over the Internet should be addressed to: 
[email protected]
    Please cite DFARS Case 97-D321 in all correspondence related to 
this issue. E-mail comments should cite DFARS Case 97-D321 in the 
subject line.

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

SUPPLEMENTARY INFORMATION:

A. Background

    10 U.S.C. 2534(a) contains domestic source restrictions applicable 
to procurement of the following items: buses, chemical weapons 
antidote, components for naval vessels (including air circuit breakers, 
anchor and mooring chain, and totally enclosed lifeboats), and ball and 
roller bearings. Section 810 of the National Defense Authorization Act 
for Fiscal Year 1997 (Public Law 104-201) added authority at 10 U.S.C. 
2534(d) to permit DoD to waive the restrictions of 10 U.S.C. 2534(a), 
if application of the restrictions would impede the reciprocal 
procurement of defense items under a memorandum of understanding with a 
foreign country. On April 7, 1997, the Under Secretary of Defense 
(Acquisition and Technology) exercised this authority by waiving the 
restrictions of 10 U.S.C. 2534(a) for items procured from qualifying 
countries, i.e., the countries listed in DFARS 225.872-1. The 
provisions of the waiver were incorporated in an interim DFARS rule 
published in the Federal Register on June 24, 1997 (62 FR 34114) (DAC 
91-12, Item XVIII, DFARS Case 96-319).
    Section 811 of the National Defense Authorization Act for Fiscal 
Year 1998 (Public Law 105-85) amended 10 U.S.C. 2534 to provide that 
DoD may exercise the waiver authority of 10 U.S.C. 2534(d) only if the 
waiver is made for a particular item and for a particular foreign 
country. Therefore, the blanket waiver signed by the Under Secretary of 
Defense (Acquisition and Technology) on April 1, 1997, is no longer 
applicable. This interim rule amends DFARS Parts 225 and 252 to 
implement Section 811 of Public Law 105-85. DFARS Case 96-D319 has been 
closed into this new DFARS Case 97-D321.

B. Regulatory Flexibility Act

    This interim rule is not expected 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 seq., because there 
are no known small business manufacturers of buses, air circuit 
breakers, or the restricted chemical weapons antidote; the acquisition 
of anchor and mooring chain, totally enclosed lifeboat survival 
systems, and noncommercial ball and roller bearings is presently 
restricted to domestic sources by defense appropriations acts; and the 
restrictions of 10 U.S.C. 2534(a) do not apply to purchases of 
commercial items incorporating ball or roller bearings. An initial 
regulatory flexibility analysis has therefore not been prepared. 
Comments are invited from small businesses and other interested 
parties. Comments from small entities concerning the affected DFARS 
subparts also will be considered in accordance with 5 U.S.C. 610. Such 
comments should be submitted separately and should cite DFARS Case 97-
D321 in correspondence.

C. Paperwork Reduction Act

    The Paperwork Reduction Act does not apply, because this interim 
rule does not impose any information

[[Page 5745]]

collection requirements that require the approval of 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 that urgent and compelling reasons exist to publish this 
interim rule prior to affording the public an opportunity to comment. 
This interim rule implements Section 811 of the National Defense 
Authorization Act for Fiscal Year 1998 (Public Law 105-85). Section 811 
limits the waiver authority provided in 10 U.S.C. 2534(d). Therefore, 
the waiver of the restrictions of 10 U.S.C. 2534(a), that was signed by 
the Under Secretary of Defense (Acquisition and Technology) on April 7, 
1997, under the prior authority of 10 U.S.C. 2534(d), is no longer 
applicable. Section 811 was effective upon enactment on November 18, 
1997. Comments received in response to the publication of 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 525 continues to 
read as follows:

    Authority: 41 U.S.C. 421 and 48 CFR Chapter 1.

PART 225--FOREIGN ACQUISITION


225.872-1  [Amended]

    2. Section 225.872-1 is amended by removing paragraph (d).
    3. Section 225.7005 is revised to read as follows:


225.7005  Waiver of certain restrictions.

    Where provided for elsewhere in this subpart, the restrictions on 
certain foreign purchases under 10 U.S.C. 2534(a) may be waived as 
follows:
    (a)(1) The Under Secretary of Defense (Acquisition and Technology), 
without power of delegation, may waive the restriction for a particular 
item for a particular foreign country upon determination that--
    (i) 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; or
    (ii) Application of the restriction would impede cooperative 
programs entered into between DoD and a foreign country, or would 
impede the reciprocal procurement of defense items under a memorandum 
of understanding providing for reciprocal procurement of defense items 
under 225.872, 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.
    (2) A notice of determination to exercise the waiver authority must 
be published in the Federal Register and submitted to the congressional 
defense committees at least 15 days before the effective date of the 
waiver.
    (3) Such waiver shall be in effect for a period not greater than 1 
year.
    (b) 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) Satisfactory quality items manufactured in the United States or 
Canada are not available.
    (3) Application of the restriction would result in the existence of 
only one source for the item in the United States or Canada.
    (4) Application of the restriction is not in the national security 
interests of the United States.
    (5) Application of the restriction would adversely affect a U.S. 
company.
    (c) The restriction is waived when it would cause unreasonable 
costs. The cost of the item 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.
    4. Section 225.7007-1 is revised to read as follows:


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.
    5. Section 225.7007-3 is revised to read as follows:


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 for an amount that does not exceed the 
simplified acquisition threshold.
    6. Section 225.7007-4 is revised to read as follows:


225.7007-4  Waiver.

    The waiver criteria at 225.7005 apply to this restriction.
    7. Section 225.7010-1 is amended by revising the introductory text 
to read as follows:


225.7010-1  Restriction.

    In accordance with 10 U.S.C. 2534 and defense industrial 
mobilization requirements (see subpart 208.72), do not acquire chemical 
weapons antidote contained in automatic injectors, or the components 
for such injectors, unless the chemical weapons antidote or component 
is manufactured in the United States or Canada by a company that--
* * * * *
    8. Section 225.7010-2 is revised to read as follows:


225.7010-2  Exception.

    The restriction of 225.7010-1 does not apply if--the acquisition is 
for an amount that does not exceed the simplified acquisition 
threshold.
    9. Section 227.7010-3 is revised to read as follows:


225.7010-3  Waiver.

    The waiver criteria at 225.7005 apply to this restriction.
    10. Section 225.7016-1 is 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.
    11. Section 225.7016-2 is amended in paragraph (b) by revising the 
first sentence to read as follows:

[[Page 5746]]

225.7016-2  Exceptions.

* * * * *
    (b) Spare or repair parts are needed to support air circuit 
breakers manufactured outside the United States and Canada.* * *
    12. Section 225.7016-3 is revised to read as follows:


225.7016-3  Waiver.

    The waiver criteria at 225.7005 apply to this restriction.
    13. Section 225.7019-1 is amended by revising paragraph (a) to read 
as follows:


225.7019-1  Restrictions.

    (a) In accordance with 10 U.S.C. 2534, through fiscal year 2000, do 
not acquire ball and roller bearings or bearing components that are not 
manufactured in the United States or Canada.
* * * * *
    14. Section 225.7019-3 is amended by removing paragraphs 
(a)(1)(iii) and (iv); redesignating paragraphs (a)(1)(v), (vi), and 
(vii) as paragraphs (a)(1)(iii), (iv), and (v), respectively; 
redesignating paragraph (b) as paragraph (c), and adding a new 
paragraph (b) to read as follows:


225.7019-3  Waiver.

* * * * *
    (b)(1) The Under Secretary of Defense (Acquisition and Technology), 
without power of delegation, may waive the restriction in 225.7019-1(a) 
for a particular foreign country upon determination that--
    (i) 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; or
    (ii) Application of the restriction would impede cooperative 
programs entered into between DoD and a foreign country, or would 
impede the reciprocal procurement of defense items under a memorandum 
of understanding providing for reciprocal procurement of defense items 
under 225.872, 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.
    (2) A notice of the determination to exercise the waiver authority 
must be published in the Federal Register and submitted to the 
congressional defense committees at least 15 days before the effective 
date of the waiver.
    (3) Such waiver shall be in effect for a period not greater than 1 
year.
* * * * *
    15. Section 225.7022-1 is amended in paragraph (b) by revising the 
first sentence to read as follows:


225.7022-1  Restrictions.

* * * * *
    (b) In accordance with 10 U.S.C. 2534(a)(3)(B), do not purchase a 
totally enclosed lifeboat that is a component of a naval vessel, unless 
it is manufactured in the United States or Canada. * * *
    16. Section 225.7022-2 is amended by revising paragraph (b) to read 
as follows:


225.7022-2  Exceptions.

* * * * *
    (b) Spare or repair parts are needed to support totally enclosed 
lifeboats manufactured outside the United States and Canada.
    17. Section 225.7022-3 is revised to read as follows:


225.7022-3  Waiver.

    The waiver criteria at 225.7005 apply only to the restriction of 
225.7022-1(b).

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

    18. Section 252.225-7016 is amended by revising the clause date and 
paragraph (c)(1) to read as follows:


252.225-7016  Restriction on Acquisition of Ball and Roller Bearings.

* * * * *

RESTRICTION ON ACQUISITION OF BALL AND ROLLER BEARINGS (FEB 1998)

* * * * *
    (c)(1) The restriction in paragraph (b) of this clause does not 
apply to the extent that the end items or components containing ball 
or roller bearings are commercial items.
* * * * *
    19. 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 (FEB 
1998)

    (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 
225.7005 (a) or (b) 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 for 
evaluation purposes to the offered price of all other air circuit 
breakers.

[End of clause]

[FR Doc. 98-2649 Filed 2-3-98; 8:45 am]
BILLING CODE 5000-04-M