[Federal Register Volume 65, Number 52 (Thursday, March 16, 2000)]
[Rules and Regulations]
[Pages 14400-14402]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-6165]


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DEPARTMENT OF DEFENSE

48 CFR Parts 212, 244, 247, and 252

[DFARS Case 98-D014]


Defense Federal Acquisition Regulation Supplement; Cargo 
Preference--Subcontracts for Commercial Items

AGENCY:  Department of Defense (DoD).

ACTION:  Final rule.

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SUMMARY:  The Acting Director of Defense Procurement has issued a final 
rule amending Defense Federal Acquisition Regulation Supplement (DFARS) 
policy regarding the applicability of statutory requirements for use of 
U.S. vessels in the transportation of supplies by sea. The rule 
clarifies requirements for use of U.S. vessels under subcontractors for 
the acquisition of commercial items.

EFFECTIVE DATE:  March 16, 2000.

FOR FURTHER INFORMATION CONTACT:  Ms. Amy Williams, Defense Acquisition 
Regulations Council, PDUSD (AT&L) DP (DAR), IMD 3D139, 3062 Defense 
Pentagon, Washington, DC 20301-3062. Telephone (703) 602-0288; telefax 
(703) 602-0350. Please cite DFARS Case 98-D014.

SUPPLEMENTARY INFORMATION:  

A. Background

    10 U.S.C. 2631 provides a preference for the use of U.S. vessels 
for ocean transportation of supplies purchased under DoD contracts. 
DFARS Parts 212 and 247 waive the requirements of 10 U.S.C. 2631 for 
subcontracts for the acquisition of commercial items. This rule amends 
DFARS Parts 212 and 247 and corresponding clauses to limit the types of 
subcontracts to which the waiver of 10 U.S.C. 2631 is applicable. The 
rule is intended to ensure compliance with 10 U.S.C. 2631 for ocean 
cargoes clearly destined for DoD use, while avoiding disruption of 
commercial delivery systems.
    DoD published a proposed rule at 64 FR 33238 on June 22, 1999. Nine 
sources submitted comments in response to the proposed rule. DoD 
considered all comments in the development of the final rule.
    This rule was not subject to Office of Management and Budget review 
under Executive Order 12866, dated September 30, 1993.

B. Regulatory Flexibility Act

    DoD certifies that this final rule will not 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 most entities that provide ocean transportation of freight are 
not small business concerns.

C. Paperwork Reduction Act

    The Paperwork Reduction Act does not apply because the rule does 
not impose any information collection requirements that require the 
approval of the Office of Management and Budget under 44 U.S.C. 3501, 
et seq.

[[Page 14401]]

List of Subjects in 48 CFR Parts 212, 244, 247, and 252

    Government procurement.

Michele P. Peterson,
Executive Editor, Defense Acquisition Regulations Council.

    Therefore, 48 CFR Parts 212, 244, 247, and 252 are amended as 
follows:
    1. The authority citation for 48 CFR Parts 212, 244, 247, and 252 
continues to read as follows:

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

PART 212--ACQUISITION OF COMMERCIAL ITEMS

    2. Section 212.504 is amended by revising paragraph (a)(xxii) to 
read as follows:


212.504  Applicability of certain laws to subcontracts for the 
acquisition of commercial items.

    (a) * * *
    (xxii) 10 U.S.C. 2631, Transportation of Supplies by Sea (except as 
provided in the clause at 252.247-7023, Transportation of Supplies by 
Sea).
* * * * *

PART 244--SUBCONTRACTING POLICIES AND PROCEDURES

    3. Section 244.403 is revised to read as follows:


244.403  Contract clause.

    Use the clause at 252.244-7000, Subcontracts for Commercial Items 
and Commercial Components (DoD contracts), in solicitations and 
contracts for supplies or services other than commercial items, that 
contain any of the following clauses: 252.225-7014 Preference for 
Domestic Specialty Metals, Alternate I, 252.247-7023 Transportation of 
Supplies by Sea, and 252.247-7024 Notification of Transportation of 
Supplies by Sea.

PART 247--TRANSPORTATION


247.572-1  [Amended]

    4. Section 247.572-1 is amended in paragraph (a) by removing the 
last sentence.

    5. Section 247.573 is amended by revising paragraph (b) to read as 
follows:


247.573  Solicitation provision and contract clauses.

* * * * *
    (b)(1) Use the clause at 252.247-7023, Transportation of Supplies 
by Sea, in all solicitations and resultant contracts, except--
    (i) Those for direct purchase of ocean transportation services; or
    (ii) Those with an anticipated value at or below the simplified 
acquisition threshold.
    (2) Use the clause with its Alternate I in other than construction 
contracts, if any of the supplies to be transported are commercial 
items that are shipped in direct support of U.S. military contingency 
operations, exercises, or forces deployed in humanitarian or 
peacekeeping operations.
    (3) Use the clause with its Alternate II in other than construction 
contracts, if any of the supplies to be transported are commercial 
items that are commissary or exchange cargoes transported outside of 
the Defense Transportation System in accordance with 10 U.S.C. 2643.
* * * * *

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

    6. Section 252.212-7001 is amended as follows:
    a. By revising the clause date;
    b. By removing paragraph (a);
    c. By redesignating paragraphs (b) and (c) as paragraphs (a) and 
(b), respectively;
    d. In newly designated paragraph (a) by adding in numerical order 
the entry ``______252.247-7023 Transportation of Supplies by Sea 
(______Alternate I) (______Alternate II) (10 U.S.C. 2631).''; and
    e. By revising newly designated paragraph (b) to read as follows:


252.212-7001  Contract terms and conditions required to implement 
statutes or Executive Orders applicable to Defense Acquisitions of 
Commercial Items.

* * * * *

Contract Terms and Conditions Required to Implement statutes or 
Executive Orders Applicable to Defense Acquisitions of Commercial Items 
(Mar 2000)

* * * * *
    (b) In addition to the clauses listed in paragraph (e) of the 
Contract Terms and Conditions Required to Implement Statutes or 
Executive Orders--Commercial Items clause of this contract (Federal 
Acquisition Regulation 52.212-5), the Contractor shall include the 
terms of the following clauses, if applicable, in subcontracts for 
commercial items or commercial components, awarded at any tier under 
this contract:

252.225-7014  Preference for Domestic Specialty Metals, Alternate I 
(10 U.S.C. 2241 note).
252.247-7023  Transportation of Supplies by Sea (10 U.S.C. 2631).
252.247-7024  Notification of Transportation of Supplies by Sea (10 
U.S.C. 2631).

(End of clause)


    7. Section 252.244-7000 is revised to read as follows:


252.244-7000  Subcontracts for commercial items and commercial 
components (DoD contracts).

    As prescribed in 244.403, use the following clause:

Subcontracts for Commercial Items and Commercial Components (DOD 
Contracts) (Mar 2000)

    In addition to the clauses listed in paragraph (c) of the 
Subcontracts for Commercial Items and Commercial Components clause 
of this contract (Federal Acquisition Regulation 52.244-6), the 
Contractor shall include the terms of the following clauses, if 
applicable, in subcontracts for commercial items or commercial 
components, awarded at any tier under this contract:

252.225-7014  Preference for Domestic Specialty Metals, Alternate I 
(10 U.S.C. 2241 note).
252.247-7023  Transportation of Supplies by Sea (10 U.S.C. 2631).

252.247-7024  Notification of Transportation of Supplies by Sea (10 
U.S.C. 2631).

(End of clause)

    8. Section 252.247-7023 is amended as follows:
    a. By revising the introductory text and clause date;
    b. In paragraph (a)(5) by removing the last sentence;
    c. By redesignating paragraphs (b) through (g) as paragraphs (c) 
through (h), respectively;
    d. By adding a new paragraph (b);
    e. In newly designated paragraph (c) by removing the first sentence 
of the introductory text;
    f. By revising newly designated paragraph (h); and
    g. By adding Alternates I and II. The revised and added text reads 
as follows:


252.247-7023  Transportation of supplies by sea.

    As prescribed in 247.573(b)(1), use the following clause:

Transportation of Supplies by Sea (Mar. 2000)

* * * * *
    (b)(1) The Contractor shall use U.S.-flag vessels when 
transporting any supplies by sea under this contract.
    (2) A subcontractor transporting supplies by sea under this 
contract shall use U.S.-flag vessels if--
    (i) This contract is a construction contract; or
    (ii) The supplies being transported are--
    (A) Noncommercial items; or
    (B) Commercial items that--
    (1) The Contractor is reselling or distributing to the 
Government without adding value (generally, the Contractor does not 
add value to items that it contracts for f.o.b. destination 
shipment);

[[Page 14402]]

    (2) Are shipped in direct support of U.S. military contingency 
operations, exercises, or forces deployed in humanitarian or 
peacekeeping operations; or
    (3) Are commissary or exchange cargoes transported outside of 
the Defense Transportation System in accordance with 10 U.S.C. 2643.
* * * * *
    (h) The Contractor shall include this clause, including this 
paragraph (h), in all subcontractors under this contract that--
    (1) Exceed the simplified acquisition threshold in Part 2 of the 
Federal Acquisition Regulation; and
    (2) Are for a type of supplies described in paragraph (b)(3) of 
this clause.

(End of clause)

    Alternate I (MAR 2000).
    As prescribed in 247.573(b)(2), substitute the following 
paragraph (b) for paragraph (b) of the basic clause:
    (b)(1) The Contractor shall use U.S.-flag vessels when 
transporting any supplies by sea under this contract.
    (2) A subcontractor transporting supplies by sea under this 
contract shall use U.S.-flag vessels if the supplies being 
transported are--
    (i) Noncommercial items; or
    (ii) Commercial items that--
    (A) The Contractor is reselling or distributing to the 
Government without adding value (generally, the Contractor does not 
add value to items that it subcontracts for f.o.b. destination 
shipment);
    (B) Are shipped in direct support of U.S. military contingency 
operations, exercises, or forces deployed in humanitarian or 
peacekeeping operations (Note: This contract requires shipment of 
commercial items in direct support of U.S. military contingency 
operations, exercises, or forces deployed in humanitarian or 
peacekeeping operations); or
    (C) Are commissary or exchange cargoes transported outside of 
the Defense Transportation System in accordance with 10 U.S.C. 2643.
Alternate II (MAR 2000).
    As prescribed in 247.573(b)(3), substitute the following 
paragraph (b) for paragraph (b) of the basic clause:
    (b)(1) The Contractor shall use U.S.-flag vessels when 
transporting any supplies by sea under this contract.
    (2) A subcontractor transporting supplies by sea under this 
contract shall use U.S.-flag vessels if the supplies being 
transported are--
    (i) Noncommercial items; or
    (ii) Commercial items that--
    (A) The Contractor is reselling or distributing to the 
Government without adding value (generally, the Contractor does not 
add value to items that it subcontracts for f.o.b. destination 
shipment),
    (B) Are shipped in direct support of U.S. military contingency 
operations, exercises, or forces deployed in humanitarian or 
peacekeeping operations; or
    (C) Are commissary or exchange cargoes transported outside of 
the Defense Transportation System in accordance with 10 U.S.C. 2643 
(Note: This contract requires transportation of commissary or 
exchange cargoes outside of the Defense Transportation System in 
accordance with 10 U.S.C. 2643).


    9. Section 252.247-7024 is amended by revising the clause date and 
paragraph (b) to read as follows:


252.247-7024  Notification of Transportation of Supplies by Sea.

* * * * *

Notification of Transportation of Supplies by Sea (Mar 2000)

* * * * *
    (b) The Contractor shall include this clause; including this 
paragraph (b), revised as necessary to reflect the relationship of the 
contracting parties--
    (1) In all subcontracts under this contract, if this contract is a 
construction contract; or
    (2) If this contract is not a construction contract, in all 
subcontracts under this contract that are for--
    (i) Noncommercial items; or
    (ii) Commercial items that--
    (A) The Contractor is reselling or distributing to the Government 
without adding value (generally, the Contractor does not add value to 
items that it subcontracts for f.o.b. destination shipment);
    (B) Are shipped in direct support of U.S. military contingency 
operations, exercises, or forces deployed in humanitarian or 
peacekeeping operations; or
    (C) Are commissary or exchange cargoes transported outside of the 
Defense Transportation System in accordance with 10 U.S.C. 2643.

(End of clause)

[FR Doc. 00-6165 Filed 3-15-00; 8:45 am]
BILLING CODE 5000-04-M