[Federal Register Volume 63, Number 112 (Thursday, June 11, 1998)]
[Rules and Regulations]
[Pages 31918-31931]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-15410]
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DEPARTMENT OF COMMERCE
Bureau of Export Administration
15 CFR Part 700
[Docket No. 970827205-8126-02]
RIN 0694-AA02
Defense Priorities and Allocations System
AGENCY: Bureau of Export Administration, Commerce.
ACTION: Final rule.
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SUMMARY: The Department of Commerce is issuing this rule to amend the
Defense Priorities and Allocations System (DPAS) regulation by
updating, modifying and clarifying a number of its provisions.
In reviewing the current DPAS and in issuing this rule, the
objective has been to improve DPAS administration and implementation
and make it more effective and efficient in the post-Cold War era.
EFFECTIVE DATE: This rule is effective July 13, 1998.
FOR FURTHER INFORMATION CONTACT: Richard V. Meyers, DPAS Program
Manager, Office of Strategic Industries and Economic Security, Room
3876, U.S. Department of Commerce, 14th Street and Constitution Avenue,
N.W., Washington, D.C. 20230; telephone: (202) 482-3634, FAX: (202)
482-5650, and E-Mail: [email protected].
SUPPLEMENTARY INFORMATION:
Background
On October 1, 1997, the Department of Commerce published in the
Federal Register (62 FR 51389) a request for comments on a proposed
rule that would amend the Defense Priorities and Allocations System
(DPAS) regulation by updating, modifying, and clarifying a number of
its provisions.
Interested parties were requested to submit comments on the
proposed rule by October 31, 1997. Interested parties were also
requested to provide comments on any other provision of the DPAS that
may be hindering effective and efficient administration or
implementation. Of the seven comments received, only two were from
private sector firms. Based on these comments and an editorial review
of the proposed rule, several provisions of the proposed rule are
further revised and clarified, and various editorial changes are made.
Analysis of Comments
No commenters objected to the proposed rule. Accordingly, the
Department is proceeding with publication of this final rule with the
changes discussed below.
Public comments were particularly sought concerning the proposed
revision of three provisions that directly affect industry operations
under the DPAS. These provisions pertain to: (1) the time period within
which a supplier must accept or reject a rated order
[Sec. 700.13(d)(1)]; (2) the order of precedence to be given by
contractors and suppliers to conflicting rated orders of equal priority
status (Sec. 700.14); and (3) the combining by a contractor of defense
rated requirements with commercial (unrated) requirements on one
purchase order to a supplier [Sec. 700.17(d)].
Comments were also sought concerning (1) a proposal to remove the
controlled materials provisions from Secs. 700.30-700.31 and all other
provisions, references, and supporting schedules to the program from
throughout the regulation; and (2) proposals to make various other
jurisdictional, technical, administrative, and miscellaneous revisions
to a number of DPAS provisions. These revisions are needed to address
changes to delegated authority, to update and clarify the text, and to
improve generally the administration, effectiveness, and efficiency of
the DPAS in support of our nation's post-Cold War defense requirements
and its ability to respond fully to a national security emergency or
domestic emergency preparedness situation.
1. Customer Notification of Acceptance or Rejection of Rated Orders
Industry has complained about the difficulty of complying with the
customer notification requirements of Sec. 700.13(d)(1). These rules
required a supplier to accept or reject a rated order in writing within
ten (10) working days after receipt of a DO rated order and within five
(5) working days after receipt of a DX rated order. Accordingly,
Sec. 700.13(d)(1) is revised to extend the time within which a person
must accept or reject a rated order by five (5) working days to fifteen
(15) working days after receipt of a DO rated order, and ten (10)
working days after receipt of a DX rated order. No commenter on the
proposed rule objected to this change.
Also, because of the increasing use by industry of electronic data
interchange to place contracts and purchase orders, Sec. 700.13(d) is
revised to reference specifically the electronic placement, acceptance,
and rejection of rated orders. However, if the rated order is
[[Page 31919]]
rejected, the rule requires that the reasons for rejection be provided
in writing (not electronically).
One commenter objected to the requirement that a person must
acknowledge acceptance of a rated order. The primary goal of the DPAS
is to ensure timely delivery of defense items. Thus, it is most
important that customers receive written or electronic proof from their
suppliers that their rated orders were accepted for delivery as
required by the order. It should be noted that this requirement to
acknowledge acceptance of the receipt of a rated order is an obligation
placed on the recipient of the order, not on the person placing the
order.
2. Precedence of Rated Orders of Equal Priority Status
Many companies have requested clarification of the DPAS rules on
the preference to be given to rated orders which have equal priority
status (DX or DO) when production, delivery or performance scheduling
conflicts or other problems arise following acceptance of the rated
orders. Accordingly, Sec. 700.14(c) (Preferential scheduling) is
revised to provide that if a person finds that delivery or performance
against any accepted rated orders conflicts with the delivery or
performance against any other accepted rated orders of equal priority
status, preference shall be given to the conflicting rated orders in
the sequence in which they are to be delivered or performed (not to the
receipt dates). However, if the conflicting rated orders are scheduled
to be delivered or performed on the same day, the person shall give
preference to those orders which have the earliest receipt dates. If
under these rules, the delivery or performance conflicts cannot be
resolved, or if the customer objects to the rescheduling of the rated
order, special priorities assistance should be requested promptly under
Secs. 700.50-700.54.
It should be noted that the proposed rule specified the receipt
dates of the conflicting rated orders as the criteria for precedence.
Because Department of Defense (DOD) and an industry commenter
objections, and to emphasize the importance of timely delivery against
rated orders, the final rule establishes the delivery or performance
schedule as the criteria for precedence.
3. Combining Defense Rated Requirements With Commercial (Unrated)
Requirements
The final rule revises Sec. 700.17(d) (Use of rated orders) to
eliminate the requirement for a contractor who combines rated and
unrated order quantities on a purchase order to a supplier, to attach
to the combined order a separate rated order with the rated quantities.
Many companies have objected to this separate rated order requirement
and the industry commenters on the proposed rule expressed support for
its elimination.
The final rule also provides that the rated quantities in the
combined purchase order must be clearly and separately identified and
that a special statement must be included on the combined purchase
order to notify the supplier that the order contains rated quantities
certified for national defense use and that the provisions of the DPAS
apply only to the rated quantities.
4. National Security Emergency Preparedness and Removal of the
Controlled Materials Provisions
No commenter objected to removal from the DPAS of all provisions
and references pertaining to the controlled materials program.
Therefore, the final rule removes all such provisions and references,
including Schedules II, III, and IV to part 700.
The final rule also further revises the text of Sec. 700.30 to
clearly state how the DPAS may be expanded in a national security
emergency to ensure rapid industrial response and the timely
availability of critical industrial items and facilities to meet the
urgent national defense or domestic emergency preparedness requirements
of approved programs.
5. New Approved Programs
Except as discussed below, no commenter objected to the proposed
addition of two new approved programs, ``Designated Programs'' and
``Food Resources (combat rations)'', and changing the ``N1'' Federal
Emergency Management Agency program name to ``Emergency Preparedness
Activities''. Accordingly, the final rule revises Schedule 1 to part
700 to title the Schedule ``Approved Programs and Delegate Agencies'';
assign the ``Designated Programs'' program to the Department of
Commerce as Delegate Agency and identify the program with the ``H8''
Program Identification Symbol; and assign the ``Food Resources (combat
rations)'' program to the Department of Defense (DOD) as Delegate
Agency and identify the program with the ``C1'' Program Identification
Symbol. At the request of DOD, the program name ``Designated Programs''
is used in this final rule instead of the name ``Special Projects'' to
avoid confusion over use of this term for other purposes.
6. Minimum Rated Order Amount
Under the proposed rule, the minimum rated order amount in
Sec. 700.17(f) would have increased from $5000 to $100,000 to conform
to the current simplified Federal Acquisition Regulation (FAR) small
order threshold of $100,000 (see FAR Sec. 2.101). Although the private
sector commenters supported this change, DOD objected on the grounds
that too many lower cost critical defense orders, especially at the
lower-tier levels of the industrial base, would no longer be priority
rated, this impacting DPAS effectiveness.
However, recognizing the need to increase the minimum rated order
amount, DOD recommended that this amount be established at $50,000, or
one half of the FAR Simplified Acquisition Threshold, which ever amount
is larger, provided that delivery can be obtained in a timely fashion
without the use of a priority rating. We have decided to adopt the DOD
recommendation and increase the minimum rated order amount accordingly.
During the next several years, we will review the impact of this
revision on the timeliness of defense procurement and public comment is
invited. If warranted, a further adjustment of the minimum rated order
amount will be proposed.
7. Other Revisions and Non-Substantive and Editorial Changes
Several commenters provided comment on various technical issues
such as the correctness of citations and definitions; the use of terms
such as ``national security emergency'', ``domestic emergency
preparedness'', and ``requirements contract'' and ``calls''; and the
need for a definition of the term ``industrial resources''. To further
improve the clarity and effectiveness of the DPAS, this rule
incorporates these revisions. An editorial review of the proposed rule
also suggested the need for further editorial and technical corrections
and these revisions are made in this rule.
8. DPAS Schedule I and the Other DPAS Schedules
This rule revises DPAS Schedule 1 to part 700, which lists all
Approved Programs for DPAS support. All other DPAS Schedules (II
through V), which pertained to the controlled materials program, are
removed.
DPAS Schedule 1 is revised by changing the term ``Authorized
Program'' to ``Approved Program'' wherever it appears in the Schedule
and
[[Page 31920]]
by making appropriate changes to the first paragraph of the two
paragraph explanation of the Schedule. This rule also removes from the
Schedule (1) all program identification symbols and associated
authorized program names from the Schedule that pertained to the
controlled materials program [``C8--Controlled materials for Defense
Industrial Supply Center (DISC)'', ``H2--Controlled materials
producers'', ``H3--Further converters (controlled materials)'', and
``H4--Distributors of controlled materials'']; and (2) the term
``Federal Aviation Administration'' from the list of Associated
Agencies of the Department of Defense contained in footnote 1.
Added to Schedule 1 by this rule are two new program identification
symbols and associated approved program names, as follows: ``C1--Food
resources (combat rations)'' under the ``Defense Programs'' heading;
and ``H8--Designated Programs'', under the ``Other Defense, Energy and
Related Programs'' heading.
Finally, this rule revises (1) the ``Other Energy Programs''
heading in Schedule 1 to read: ``Domestic Energy Programs''; (2) the
``F3'' program name ``Construction and Maintenance'' to read:
``Construction, repair, and maintenance''; and (3) the ``N1'' program
name ``Approved civil defense programs'' to read ``Emergency
Preparedness Activities''.
9. Appendices
There are a number of documents required to support the effective
and efficient implementation and administration of the DPAS regulation.
These documents include (1) Delegations of Authority from the
Department of Commerce to the Departments of Defense and Energy,
General Services Administration, and the Federal Emergency Management
Agency (Delegate Agencies) who use the DPAS to support their national
defense related procurement; (2) Interagency Memoranda of Understanding
between the Department of Commerce and Departments of Agriculture,
Energy, and the Interior pertaining to resource jurisdiction issues and
delegated authority; (3) Form BXA-999 (formerly Form ITA-999), used to
request Special Priorities Assistance; (4) Memorandum of Understanding
on Priorities and Allocations Support Between the Department of
Commerce and the Canadian Public Works and Government Services Canada
(formerly the Canadian Department of Supply and Services); and (5) DPAS
Emergency Delegation 1. These documents, except for DPAS Emergency
Delegation 1, were previously included in the Code of Federal
Regulations (CFR) as Appendices I through IV. DPAS Emergency Delegation
1 would be implemented if in a catastrophic national security
emergency, communications with Department of Commerce headquarters in
Washington, D.C. are severed. All of these documents have been updated
and revised.
Because it is used by the public and therefore of significant
public interest, Form BXA-999 is redesignated as Appendix I to part 700
and published with this rule. Because they are of limited public
interest, the Delegations of Authority, Interagency Memoranda of
Understanding, Memorandum of Understanding on Priorities and
Allocations Support Between the Department of Commerce and the Canadian
Public Works and Government Services Canada, and DPAS Emergency
Delegation 1, will not be published with this rule. However, copies of
Appendix I and these other DPAS documents, designated as Appendices II
through V, respectively, may be obtained by contacting the DPAS Program
Manager at the Department of Commerce (see FOR FURTHER INFORMATION
CONTACT section above). Copies of Appendix I may also be obtained from
any Department of Defense, Defense Contract Management Command field
office.
Public Rulemaking Docket
The public rulemaking docket concerning this regulation is
maintained in the Bureau of Export Administration Freedom of
Information Records Inspection Facility, Room 4525, U.S. Department of
Commerce, 14th Street and Pennsylvania Avenue, N.W., Washington, D.C.
20230. Records in this facility may be inspected and copied in
accordance with regulations published in 15 CFR part 4. Information
pertaining to the inspection and copying of records may be obtained
from Ms. Margaret Cornejo, Freedom of Information Officer, at the
Records Inspection Facility, or by calling (202) 482-5653.
Rulemaking Requirements
The Department made certain determinations with respect to the
following rulemaking requirements:
1. Classification under E.O. 12866: This amendment of the DPAS
regulation has been determined to be ``not significant'' for the
purpose of Executive Order 12866.
2. Regulatory Flexibility Act: The Assistant General Counsel for
Legislation and Regulation certified to the Chief Counsel for Advocacy,
Small Business Administration, that this amendment of the DPAS
regulation will not have a significant economic impact on a substantial
number of small entities. This amendment of the DPAS merely updates,
modifies, or clarifies a number of provisions to make the DPAS more
effective and efficient in the post Cold War era. Many of the changes
are made in response to comments and recommendations received from the
business community, thus ensuring that the updated DPAS conforms to
current business practices and enabling all business entities subject
to its requirements to increase the efficiency of their operations and
realize certain cost savings. In addition, some DPAS provisions are
revised to conform the regulation to recent statutory and
organizational changes while other provisions are deleted because they
are obsolete.
Because of the self-administered nature of the DPAS, there is no
way to accurately estimate the number of business entities throughout
the U.S. industrial base to whom the DPAS is applicable. However, it
has been roughly estimated that there are at least 18,000 business
entities during any one year that on at least one or more occasions
must respond to its requirements. It is also estimated that given the
nature of defense production, relatively few of these entities are
small entities.
The DPAS regulation has been in effect since 1984 and is the
successor to priorities and allocations regulations that were first
promulgated in the mid-1950s. Thus, most business entities engaged in
defense production under the DPAS, including small entities, can and do
respond to applicable DPAS requirements in the ordinary course of their
business with very little, if any, economic impact. These DPAS
revisions, in and of themselves, impose no economic impact on any
business entity, including small entities, and will further reduce
whatever minimal economic impact is associated with DPAS compliance.
3. Paperwork Reduction Act: The information collection requirements
imposed by the DPAS regulation were approved by the Office of
Management and Budget (OMB) under the provisions of Section 3507 of the
Paperwork Reduction Act of 1980, amended (44 U.S.C. 3501 et seq.) (OMB
Control Number 0694-0053).
Notwithstanding any other provision of law, no person is required
to respond to nor shall a person be subject to a penalty for failure to
comply with any DPAS information collection requirements unless the
information
[[Page 31921]]
collection displays a currently valid OMB Control Number.
The collection of information requirements in the DPAS apply to all
persons who receive priority rated orders under the DPAS. These
requirements are necessary to support proper administration of the DPAS
and ensure its effectiveness and efficiency. The total annual public
burden per respondent for this collection of information is estimated
at 14,477 hours. This estimate includes (a) 11,667 total extra record
keeping hours to create a record of the receipt of a priority rated
order (700,000 priority rated orders annually x 1 minute per order);
(b) 972 total hours to provide notice of acceptance of a priority rated
order (699,650 priority rated orders accepted annually x 5 seconds
per order); (c) 88 total hours to provide notice of rejection of a
priority rated order (350 priority rated orders rejected annually x
15 minutes per order); and (d) 1,750 total hours to provide notice of
delayed delivery against a priority rated order (7000 total priority
rated orders annually against which delivery will be delayed x 15
minutes per order).
Send comments regarding this burden estimate or any other aspect of
the data requirements, including suggestions for reducing this burden,
to Richard V. Meyers at the address given in the FOR FURTHER
INFORMATION CONTACT section above, or to the Office of Information and
Regulatory Affairs, Office of Management and Budget, New Executive
Office Building, 725 17th Street, N.W., Room 10235, Washington, D.C.
20503; Attn.: Desk Officer for the Bureau of Export Administration
4. E.O. 12612: This amendment of the DPAS regulation does not
contain policies with Federalism implications sufficient to warrant
preparation of a Federalism assessment under E.O. 12612.
List of Subjects in 15 CFR Part 700
Administrative practice and procedure, Business and industry,
Government contracts, National defense, Reporting and recordkeeping
requirements, Strategic and critical materials.
For the reasons stated in the preamble, part 700 of Subchapter A,
National Security Industrial Base Regulations (15 CFR part 700), is
amended as follows:
PART 700--[AMENDED]
1. The authority citation for 15 CFR part 700 is revised to read as
follows:
Authority: Titles I and VII of the Defense Production Act of
1950, as amended (50 U.S.C. app. 2061 et seq.), Title VI of the
Robert T. Stafford Disaster Relief and Emergency Assistance Act (42
U.S.C. 5195 et seq.), and Executive Order 12919, 59 FR 29525, 3 CFR,
1994 Comp., p. 901; Section 18 of the Selective Service Act of 1948
(50 U.S.C. App. 468), 10 U.S.C. 2538, 50 U.S.C. 82, and Executive
Order 12742, 56 FR 1079, 3 CFR, 1991 Comp., p. 309; and Executive
Order 12656, 53 FR 226, 3 CFR, 1988 Comp., p. 585.
2. Section 700.1 is amended:
a. By revising the phrase ``materials and facilities'' to read
``materials, services, and facilities'', and revising the phrase
``materials and equipment'' to read ``materials, equipment, and
services'', in paragraph (a);
b. By revising paragraph (b);
c. By redesignating paragraph (c) as paragraph (e); and
d. By adding new paragraphs (c) and (d); as follows:
Sec. 700.1 Purpose of this regulation.
* * * * *
(b) Section 18 of the Selective Service Act of 1948 (50 U.S.C. app.
468) (Selective Service Act) authorizes the President to place an order
with a supplier for any articles or materials required for the
exclusive use of the U.S. armed forces whenever the President
determines that in the interest of national security, prompt delivery
of the articles and materials is required. The supplier must give
precedence to the order so as to deliver the articles or materials in a
required time period. 10 U.S.C. 2538, and 50 U.S.C. 82, provide similar
authority specifically for Department of Defense procurement, but only
in time of war or when war is imminent.
(c) Section 602(b) of the Robert T. Stafford Disaster Relief and
Emergency Assistance Act (42 U.S.C. 5195a(b)) provides that the terms
``national defense'' and ``defense'' as used in the Defense Production
Act includes ``emergency preparedness activities'' conducted pursuant
to Title VI of the Stafford Act. The definition of ``national defense''
in Section 702(13) of the Defense Production Act provides that this
term includes ``emergency preparedness activities'' conducted pursuant
to Title VI of the Stafford Act.
(d) The Defense Priorities and Allocations System (DPAS) regulation
implements the priorities and allocations authority of the Defense
Production Act and as this authority pertains to Title VI of the
Stafford Act, and the priorities authority of the Selective Service Act
and related statutes, all with respect to industrial resources. The
DPAS ensures the timely availability of industrial resources for
approved programs and provides an operating system to support rapid
industrial response to a national emergency.
* * * * *
3. Section 700.2 is amended by revising paragraphs (a) and (b), and
by revising the phrase ``Appendix I'' to read ``Appendix II'' in
paragraph (c); as follows:
Sec. 700.2 Introduction.
(a) Certain national defense and energy programs (including
emergency preparedness activities) are approved for priorities and
allocations support. For example, military aircraft production,
ammunition, and certain programs which maximize domestic energy
supplies are ``approved programs.'' A complete list of currently
approved programs is provided at Schedule 1 to this part.
(b) The Department of Commerce administers the DPAS to ensure the
timely delivery of industrial items to meet approved program
requirements.
* * * * *
Sec. 700.3 [Amended]
4. Section 700.3(a) is amended by revising the term ``authorized
program'' to read ``approved program''.
5. Section 700.4 is revised to read as follows:
Sec. 700.4 Priorities and allocations in a national emergency.
(a) In the event of a national emergency, special rules may be
established as needed to supplement this part, thus ensuring rapid
industrial response and the timely availability of critical industrial
items and facilities to meet the urgent national defense requirements,
including domestic emergency preparedness requirements, of approved
programs.
(b) The special rules established in response to the emergency may
include provisions for the taking of certain emergency official actions
and the allocation of critical and scarce materials and facilities.
Sec. 700.7 [Amended]
6. Section 700.7(a) is amended by adding the phrase ``and the
Selective Service Act and related statutes'' following the phrase ``the
Defense Production Act''.
7. Section 700.8 is amended:
a. By removing the following definitions: ``Authorized program'',
``Controlled materials'', ``Controlled materials suppliers'',
``Distributors of controlled materials'', ``Further conversion'',
``Lead time'', and ``Minimum mill quantity'';
b. By amending the definition of ``Delegate Agency'', by revising
the term
[[Page 31922]]
``authorized programs'' to read ``approved programs'';
c. By amending the definition of ``Official action'', by adding the
phrase ``, the Selective Service Act and related statutes,'' following
the phrase ``the Defense Production Act'';
d. By amending the definition of ``Rated order'', by revising the
term ``authorized program'' to read ``approved program''; and
e. By revising the introductory sentence after the section heading,
revising the definition of ``person'', and adding new definitions of
``approved program'', ``industrial resources'', and ``Selective Service
Act and related statutes'' to read as follows:
Sec. 700.8 Definitions.
In addition to the definitions provided in Section 702 of the
Defense Production Act (excepting the definition of ``industrial
resources'') and Section 602(a) of the Stafford Act, the following
definitions pertain to all sections of this part:
Approved program--a program determined as necessary or appropriate
for priorities and allocations support to promote the national defense
by the Secretary of Defense, the Secretary of Energy, or the Director,
Federal Emergency Management Agency, under the authority of the Defense
Production Act, the Stafford Act, and Executive Order 12919, or the
Selective Service Act and related statutes and Executive Order 12742.
* * * * *
Industrial resources--all materials, services, and facilities,
including construction materials, the authority for which has not been
delegated to other agencies under Executive Order 12919. This term also
includes the term ``item'' as defined and used in this part.
* * * * *
Person--any individual, corporation, partnership, association, or
any other organized group of persons, or legal successor or
representative thereof; or any authorized State or local government or
agency thereof; and for purposes of administration of this part,
includes the United States Government and any authorized foreign
government or agency thereof, delegated authority as provided in this
part.
* * * * *
Selective Service Act and related statutes--Section 18 of the
Selective Service Act of 1948 (50 U.S.C. app. 468), 10 U.S.C. 2538, and
50 U.S.C. 82.
* * * * *
Stafford Act--Title VI (Emergency Preparedness) of the Robert T.
Stafford Disaster Relief and Emergency Assistance Act, as amended (42
U.S.C. 5195 et seq.).
8. Section 700.10 is amended:
a. By revising paragraph (a); and
b. By revising the phrase ``Office of Industrial Resource
Administration'' to read ``Office of Strategic Industries and Economic
Security'', by revising the phrase ``authorized programs'' to read
``approved programs'', and by revising the phrase ``Appendix I'' to
read ``Appendix II'', in paragraph (b); as follows:
Sec. 700.10 Delegation of authority.
(a) The priorities and allocations authorities of the President
under Title I of the Defense Production Act with respect to industrial
resources have been delegated to the Secretary of Commerce under
Executive Order 12919 of June 3, 1994 (59 FR 29525). The priorities
authorities of the President under the Selective Service Act and
related statutes with respect to industrial resources have also been
delegated to the Secretary of Commerce under Executive Order 12742 of
January 8, 1991 (56 FR 1079).
* * * * *
Sec. 700.11 [Amended]
9. Section 700.11(b) is amended by revising the term ``authorized
program'' to read ``approved program'', and revising the term
``authorized programs'' to read ``approved programs''.
10. Section 700.12 is amended by revising paragraphs (b) and (c) to
read as follows:
Sec. 700.12 Elements of a rated order.
* * * * *
(b) A required delivery date or dates. The words ``immediately'' or
``as soon as possible'' do not constitute a delivery date. A
``requirements contract'', ``basic ordering agreement'', ``prime vendor
contract'', or similar procurement document bearing a priority rating
may contain no specific delivery date or dates and may provide for the
furnishing of items from time-to-time or within a stated period against
specific purchase orders, such as ``calls'', ``requisitions'', and
``delivery orders''. These purchase orders must specify a required
delivery date or dates and are to be considered as rated as of the date
of their receipt by the supplier and not as of the date of the original
procurement document;
(c) The written signature on a manually placed order, or the
digital signature or name on an electronically placed order, of an
individual authorized to sign rated orders for the person placing the
order. The signature or use of the name certifies that the rated order
is authorized under this part and that the requirements of this part
are being followed; and
* * * * *
11. Section 700.13 is amended:
a. By adding a new paragraph (b)(4);
b. By removing paragraphs (c)(5), (c)(6), and (c)(7);
c. By redesignating paragraph (c)(8) as paragraph (c)(5) and
amending redesignated paragraph (c)(5) by adding the phrase ``or the
Selective Service Act and related statutes'' following the phrase ``the
Defense Production Act'';
d. By revising paragraph (d); and
e. By adding an OMB control number; as follows:
Sec. 700.13 Acceptance and rejection of rated orders.
* * * * *
(b) Mandatory rejection. * * *
(4) If a person is unable to fill all the rated orders of equal
priority status received on the same day, the person must accept, based
upon the earliest delivery dates, only those orders which can be
filled, and reject the other orders. For example, a person must accept
order A requiring delivery on December 15 before accepting order B
requiring delivery on December 31. However, the person must offer to
accept the rejected orders based on the earliest delivery dates
otherwise possible.
* * * * *
(d) Customer notification requirements. (1) A person must accept or
reject a rated order in writing or electronically within fifteen (15)
working days after receipt of a DO rated order and within ten (10)
working days after receipt of a DX rated order. If the order is
rejected, the person must give reasons in writing (not electronically)
for the rejection.
(2) If a person has accepted a rated order and subsequently finds
that shipment or performance will be delayed, the person must notify
the customer immediately, give the reasons for the delay, and advise of
a new shipment or performance date. If notification is given verbally,
written or electronic confirmation must be provided within five (5)
working days.
(The information collection requirements in paragraphs (d)(1) and
(d)(2) are approved by the Office of Management and Budget under OMB
control number 0694-0053.)
12. Section 700.14 is amended by revising paragraph (c) to read as
follows:
Sec. 700.14 Preferential scheduling.
* * * * *
(c) Conflicting rated orders. (1) If a person finds that delivery
or performance against any accepted rated
[[Page 31923]]
orders conflicts with the delivery or performance against other
accepted rated orders of equal priority status, the person shall give
preference to the conflicting orders in the sequence in which they are
to be delivered or performed (not to the receipt dates). If the
conflicting rated orders are scheduled to be delivered or performed on
the same day, the person shall give preference to those orders which
have the earliest receipt dates.
(2) If a person is unable to resolve rated order delivery or
performance conflicts under this section, the person should promptly
seek special priorities assistance as provided in Secs. 700.50 through
700.54. If the person's customer objects to the rescheduling of
delivery or performance of a rated order, the customer should promptly
seek special priorities assistance as provided in Secs. 700.50 through
700.54. For any rated order against which delivery or performance will
be delayed, the person must notify the customer as provided in
Sec. 700.13(d)(2).
* * * * *
13. Section 700.17 is amended:
a. By removing the parenthetical phrase ``(except as provided in
Sec. 700.31(d)--Controlled materials program identification symbols)''
in paragraph (b)(2);
b. By removing the parenthetical phrase ``(not applicable to
controlled materials producers)'' in paragraph (b)(3);
c. By removing the phrase found at the end of the paragraph, ``,
except as provided in Sec. 700.31(d) (Controlled materials program
identification symbols)'', in paragraph (c).
d. By revising paragraph (d)(1);
e. By redesignating paragraph (d)(2) as (d)(3);
f. By adding a new paragraph (d)(2); and
g. By revising paragraph (f); as follows:
Sec. 700.17 Use of rated orders.
* * * * *
(d) Combining rated and unrated orders. (1) A person may combine
rated and unrated order quantities on one purchase order provided that:
(i) The rated quantities are separately and clearly identified; and
(ii) The four elements of a rated order, as required by
Sec. 700.12, are included on the order with the statement required in
Sec. 700.12(d) modified to read in substance:
This purchase order contains rated order quantities certified
for national defense use, and you are required to follow all the
provisions of the Defense Priorities and Allocations System
regulation (15 CFR part 700) only as it pertains to the rated
quantities.
(2) A supplier must accept or reject the rated portion of the
purchase order as provided in Sec. 700.13 and give preferential
treatment only to the rated quantities as required by this part. This
part may not be used to give preferential treatment to the unrated
portion of the order.
* * * * *
(f) A person is not required to place a priority rating on an order
for less than $50,000, or one half of the Federal Acquisition
Regulation (FAR) Simplified Acquisition Threshold (see FAR 2.101),
whichever amount is larger, provided that delivery can be obtained in a
timely fashion without the use of the priority rating.
14. Section 700.18 is amended:
a. By adding a new paragraph (a)(2)(v);
b. By revising paragraph (b)(1);
c. By revising the phrase ``Appendix II'' to read ``Appendix III''
in paragraph (b)(2); and
d. By removing the first item listed, ``communication services'',
and the parenthetical phrase, ``(as defined in Schedule III)'' which
follows the item, ``Copper raw materials'', in paragraph (b)(3); as
follows:
Sec. 700.18 Limitations on placing rated orders.
(a) * * *
(2) * * *
(v) Any items related to the development of chemical or biological
warfare capabilities or the production of chemical or biological
weapons, unless such development or production has been authorized by
the President or the Secretary of Defense.
(b) Jurisdictional limitations. (1) The priorities and allocations
authority for certain items has been delegated under Executive Orders
12919 and 12742, other executive order, or Interagency Memoranda of
Understanding to other agencies. Unless otherwise agreed to by the
concerned agencies, the provisions of this part are not applicable to
these items which include:
(i) Food resources, food resource facilities, and the domestic
distribution of farm equipment and commercial fertilizer (Department of
Agriculture--see Attachment A to DPAS Delegation 1 in Appendix II to
part 700 concerning combat rations);
(ii) All forms of energy, including radioisotopes, stable isotopes,
source material, and special nuclear material produced in Government-
owned plants or facilities operated by or for the Department of Energy
(Department of Energy);
(iii) Health resources (Department of Health and Human Services);
(iv) All forms of civil transportation (Department of
Transportation);
(v) Water resources (Department of Defense/U.S. Army Corps of
Engineers);
(vi) Communications services (National Communications System under
Executive Order 12472 of April 3, 1984); and
(vii) Mineral resources and mineral processing facilities
(Department of the Interior/U.S. Geological Survey--see Memorandum of
Understanding Between Interior and Commerce in DPAS Appendix III to
part 700).
* * * * *
15. Section 700.21 is amended:
a. By revising paragraph (a);
b. By revising the phrases ``materials or equipment'' and
``material or equipment'' to read ``materials, equipment, or services''
in paragraphs (b)(2), (c) introductory text, (c)(1) introductory text,
and (d); and
c. By revising the term ``authorized programs'' to read ``approved
programs'' in paragraph (f); as follows:
Sec. 700.21 Application for priority rating authority.
(a) For projects believed to maximize domestic energy supplies, a
person may request priority rating authority for scarce, critical, and
essential supplies of materials, equipment, and services (related to
the production of materials or equipment, or the installation, repair,
or maintenance of equipment) by submitting DOE Form PR 437 to the
Department of Energy. Blank applications and further information may be
obtained from the U.S. Department of Energy, Office of Clearance and
Support, Field/Headquarters Support Division, Forrestal Building, 1000
Independence Avenue, S.W., Washington, D.C. 20585; Attn.: PR-132.
* * * * *
16. Subpart F is revisied to read as follows:
Subpart F--National Emergency Preparedness and Critical Items
Sec. 700.30 Priorities and allocations in a national emergency.
(a) In the event of a national emergency, special rules may be
established as needed to supplement this part, thus ensuring rapid
industrial response and the timely availability of critical industrial
items and facilities to meet the urgent national defense requirements,
including domestic emergency preparedness requirements, of approved
programs.
(1) Emergency official actions. (i) As needed, this part may be
supplemented
[[Page 31924]]
to include additional definitions to cover civilian emergency
preparedness industrial items, support for essential civilian programs,
and provisions for the taking of certain emergency official actions
under sections Secs. 700.60 through 700.63.
(ii) Emergency official actions may include:
(A) Controlling inventories of critical and scarce defense and/or
emergency preparedness items;
(B) Restricting the purchase, use, or distribution of critical and
scarce defense and/or emergency preparedness items, or the use of
production or distribution facilities, for non-essential purposes; and
(C) Converting the production or distribution of non-essential
items to the production or distribution of critical and scarce defense
and/or emergency preparedness items.
(2) Allocation of critical and scarce items and facilities. (i) As
needed, this part may be supplemented to establish special rules for
the allocation of scarce and critical items and facilities to ensure
the timely availability of these items and facilities for approved
programs, and to provide for an equitable and orderly distribution of
requirements for such items among all suppliers of the items. These
rules may provide for the allocation of individual items or they may be
broad enough to direct general industrial activity as required in
support of emergency requirements.
(ii) Allocation rules (i.e., controlled materials programs) were
established in response to previous periods of national security
emergency such as World War II and the Korean Conflict. The basic
elements of the controlled materials programs were the set-aside (the
amount of an item for which a producer or supplier must reserve order
book space in anticipation of the receipt of rated orders), the
production directive (requires a producer to supply a specific
quantity, size, shape, and type of an item within a specific time
period), and the allotment (the maximum quantity of an item authorized
for use in a specific program or application). These elements can be
used to assure the availability of any scarce and critical item for
approved programs. Currently, a set-aside applies only to metalworking
machines (see Sec. 700.31).
(3) In the event that certain critical items become scarce, and
approved program requirements for these items cannot be met without
creating a significant dislocation in the civilian market place so as
to create appreciable hardship, Commerce may establish special rules
under section 101(b) of the Defense Production Act to control the
general distribution of such items in the civilian market.
(b) Regional Emergency Coordinators. (1) If due to a catastrophic
national security emergency event, communications with Commerce
headquarters in Washington, D.C. are severed, DPAS Emergency Delegation
1 will provide authority to the Regional Emergency Coordinators (REC)
located in the Standard Federal Region Council cities (Boston, New
York, Philadelphia, Atlanta, Dallas, Kansas City, Chicago, Denver, San
Francisco, and Seattle) to represent the Secretary of Commerce, and as
necessary, act for the Secretary to carry out the emergency industrial
production and distribution control functions of Commerce as set forth
in this part, in any supplement thereto, or other applicable authority.
See DPAS Emergency Delegation 1 for further information about the
authority and duties of the RECs, and the effective date of the
Delegation.
(2) If DPAS Emergency Delegation 1 is implemented due to a
catastrophic national security emergency event, requests for special
priorities assistance under Secs. 700.50 through 700.55 should be filed
with the nearest Regional Emergency Coordinator located in one of the
Standard Federal Region Council cities as provided in DPAS Delegation
1.
Sec. 700.41 [Redesignated as Sec. 700.31]
Subpart G--[Removed and Reserved]
17. Section 700.41 is redesignated as Sec. 700.31 in Subpart F; and
Subpart G is removed and reserved.
Sec. 700.50 [Amended]
18. Section 700.50(c) is amended by revising the term ``ITA-999''
to read ``BXA-999'' each of the three times it appears in the
paragraph; by revising the term ``(OMB control number 0625-0015)'' to
read ``(OMB control number 0694-0057)''; by removing the phrase ``, any
Commerce District Office''; and by revising the phrase ``Appendix III''
to read ``Appendix I''.
19. Section 700.54 is amended by revising the section heading and
the second sentence of the introductory text, as follows:
Sec. 700.54 Instances where assistance may not be provided.
* * * * *
Examples where assistance may not be provided include situations
when a person is attempting to:
* * * * *
Sec. 700.55 [Amended]
20. Section 700.55 is amended:
a. By revising the term ``authorized programs'' to read ``approved
programs'' in paragraph (a);
b. By revising the term ``Canadian Department of Supply and
Services'' to read ``Canadian Public Works and Government Services
Canada'' in paragraphs (b)(2), (b)(3), (b)(4), (b)(5), and (b)(6); and
by revising the phrase ``The Department of Supply and Services'' to
``Public Works and Government Services Canada'' in paragraph (b)(5).
c. By revising the term ``ITA-999'' to read ``BXA-999'' in
paragraph (b)(6).
21. The phrase ``the Selective Service Act and related statutes,''
is added following the phrase ``the Defense Production Act,'' wherever
it appears in the following places:
Sec.
700.70(a)
700.71(a)
700.71(c)(1)
700.71(c)(2)
700.71(c)(3)
700.72(a)
700.73(a)
700.73(b)
700.75
700.80(a)(2)
700.91(d)
Sec. 700.72 [Amended]
22. Section 700.72(b) is amended by revising the term ``Assistant
General Counsel for International Trade'' to read ``Chief Counsel for
Export Administration''.
23. Section 700.74 is amended:
a. By revising paragraph (a);
b. By removing paragraph (b);
c. By redesignating paragraph (c) as paragraph (b), and paragraph
(d) as paragraph (c); as follows:
Sec. 700.74 Violations, penalties, and remedies.
(a) Willful violation of the provisions of Title I or Sections 705
or 707 of the Defense Production Act, the priorities provisions of the
Selective Service Act and related statutes, this part, or an official
action, is a crime and upon conviction, a person may be punished by
fine or imprisonment, or both. The maximum penalty provided by the
Defense Production Act is a $10,000 fine, or one year in prison, or
both. The maximum penalty provided by the Selective Service Act and
related statutes is a $50,000 fine, or three years in prison, or both.
* * * * *
24. The term ``Office of Industrial Resource Administration'' is
revised to read ``Office of Strategic Industries and Economic
Security'' in the following places:
[[Page 31925]]
Sec.
700.80(a)
700.80(c)
700.80(d)
700.81(a)
700.81(b)
700.93
25. The phrase ``Assistant Secretary for Trade Administration'' is
revised to read ``Assistant Secretary for Export Administration'' in
the following places:
Sec.
700.80(d)
700.81(a)
700.81(b)
700.81(d)
700.81(e)
700.81(f)
700.81(g)
700.81(h)
Sec. 700.81 [Amended]
26. Section 700.81(b) is amended by revising the term
``International Trade Administration'' to read ``Bureau of Export
Administration''.
Sec. 700.91 [Amended]
27. Section 700.91(a) is amended by revising the term ``(OMB
control number 0625-0107)'' to read ``(OMB control number 0694-0053)''.
Sec. 700.93 [Amended]
28. Section 700.93 is amended by revising the phrase ``telephone:
(202) 377-4506'' to read ``telephone: (202) 482-3634, or FAX: (202)
482-5650''.
29. Schedule 1 to part 700 is revised, as follows:
Defense Priorities and Allocations System
SCHEDULE 1 TO PART 700
Approved Programs and Delegate Agencies
The programs listed in this schedule have been approved for
priorities and allocations support under this part. They have equal
preferential status. The Department of Commerce has authorized the
Delegate Agencies to use this part in support of those programs
assigned to them, as indicated below.
----------------------------------------------------------------------------------------------------------------
Program identification symbol Approved program Delegate agency
----------------------------------------------------------------------------------------------------------------
Defense programs:
A1.................................... Aircraft................ Department of Defense.\1\
A2.................................... Missiles................ Do.
A3.................................... Ships................... Do.
A4.................................... Tank--Automotive........ Do.
A5.................................... Weapons................. Do.
A6.................................... Ammunition.............. Do.
A7.................................... Electronic and Do.
communications
equipment.
B1.................................... Military building Do.
supplies.
B8.................................... Production equipment Do.
(for defense
contractor's account).
B9.................................... Production equipment Do.
(Government owned).
C1.................................... Food resources (combat Do.
rations).
C2.................................... Department of Defense Do.
construction.
C3.................................... Maintenance, repair, and Do.
operating supplies
(MRO) for Department of
Defense facilities.
C9.................................... Miscellaneous........... Do.
International defense programs:
Canada:
D1................................ Canadian military Department of Commerce.
programs.
D2................................ Canadian production and Do.
construction.
D3................................ Canadian atomic energy Do.
program.
Other Foreign Nations:
G1................................ Certain munitions items Department of Commerce.
purchased by foreign
governments through
domestic commercial
channels for export.
G2................................ Certain direct defense Do.
needs of foreign
governments other than
Canada.
G3................................ Foreign nations (other Do.
than Canada) production
and construction.
Co-Production:
J1................................ F-16 Co-Production Departments of Commerce and Defense.
Program.
Atomic energy programs:
E1.................................... Construction............ Department of Energy.
E2.................................... Operations--including Do.
maintenance, repair,
and operating supplies
(MRO).
E3.................................... Privately owned Do.
facilities.
Domestic energy programs:
F1.................................... Exploration, production, Department of Energy.
refining, and
transportation.
F2.................................... Conservation............ Do.
F3.................................... Construction, repair, Do.
and maintenance.
Other defense, energy, and related
programs:
H1.................................... Certain combined orders Department of Commerce.
(see section 700.17(c)).
H5.................................... Private domestic Do.
production.
H6.................................... Private domestic Do.
construction.
H7.................................... Maintenance, repair, and Do.
operating supplies
(MRO).
H8.................................... Designated Programs..... Do.
K1.................................... Federal supply items.... General Services Administration.
N1.................................... Emergency preparedness Federal Emergency Management Agency.
activities.
----------------------------------------------------------------------------------------------------------------
\1\ Department of Defense includes: Armed Services--Army, Navy (including Marines and Coast Guard), and Air
Force; Component Agencies, including Defense Logistics Agency, National Security Agency, Defense Advanced
Research Projects Agency, Defense Information Systems Agency, Defense Nuclear Agency, Defense Mapping Agency,
and On-Site Inspection Agency; and Associated Agencies, including Central Intelligence Agency and National
Aeronautics and Space Administration.
[[Page 31926]]
30. Schedule II to part 700 (Controlled Materials), Schedule III to
part 700 (Technical Definitions of Controlled Materials Products),
Schedule IV to part 700 (Copper Controlled Materials Producers' Set-
aside Base and Percentages), and Schedule V to part 700 (Nickel Alloys
Controlled Materials Producers' Set-aside Base and Percentages) are
removed.
31. Appendix I to part 700 is revised, as follows:
Defense Priorities and Allocations System
Appendix 1 to Part 700
Form BXA-999--Request for Special Priorities Assistance
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[[Page 31927]]
[GRAPHIC] [TIFF OMITTED] TR11JN98.008
[[Page 31928]]
[GRAPHIC] [TIFF OMITTED] TR11JN98.009
[[Page 31929]]
[GRAPHIC] [TIFF OMITTED] TR11JN98.010
[[Page 31930]]
[GRAPHIC] [TIFF OMITTED] TR11JN98.011
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32. Appendix II to part 700: Interagency Memoranda of
Understanding; Appendix III to part 700: Form ITA-999--Request for
[[Page 31931]]
Special Priorities Assistance; and Appendix IV to part 700: Memorandum
of Understanding on Priorities and Allocations Support Between the
Department of Commerce and the Canadian Department of Supply and
Services, are removed.
Issued: June 5, 1998.
Iain S. Baird,
Deputy Assistant Secretary for Export Administration.
[FR Doc. 98-15410 Filed 6-10-98; 8:45 am]
BILLING CODE 3510-JT-P