[Federal Register Volume 65, Number 216 (Tuesday, November 7, 2000)]
[Proposed Rules]
[Pages 66920-66922]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-28562]



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Part V





Department of Defense

General Services Administration

National Aeronautics and Space Administration





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48 CFR Part 2 et al.



Federal Acquisition Regulation; Preference for U.S.-Flag Vessels; 
Proposed Rule

  Federal Register / Vol. 65, No. 216 / Tuesday, November 7, 2000 / 
Proposed Rules  

[[Page 66920]]


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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 2, 12, 32, 47, and 52

[FAR Case 1999-024]
RIN 9000-AI97


Federal Acquisition Regulation; Preference for U.S.-Flag Vessels

AGENCIES: Department of Defense (DoD), General Services Administration 
(GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Proposed rule.

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SUMMARY: The Civilian Agency Acquisition Council and the Defense 
Acquisition Regulations Council (Councils) are proposing to amend the 
Federal Acquisition Regulation (FAR) regarding the applicability of 
statutory requirements for use of U.S.-flag vessels in the 
transportation of supplies by sea. The FAR presently waives these 
requirements for subcontracts for the acquisition of commercial items.

DATES: Interested parties should submit comments in writing on or 
before January 8, 2001 to be considered in the formulation of a final 
rule.

ADDRESSES: Submit written comments to: General Services Administration, 
FAR Secretariat (MVRS), 1800 F Street, NW, Room 4035, ATTN: Laurie 
Duarte, Washington, DC 20405. Submit electronic comments via the 
Internet to: [email protected].
    Please submit comments only and cite FAR case 1999-024 in all 
correspondence related to this case.

FOR FURTHER INFORMATION CONTACT: The FAR Secretariat, Room 4035, GS 
Building, Washington, DC, 20405, at (202) 501-4755 for information 
pertaining to status or publication schedules. For clarification of 
content, contact Ms. Linda Klein, Procurement Analyst, at (202) 501-
3775. Please cite FAR case 1999-024.

SUPPLEMENTARY INFORMATION:

A. Background

    10 U.S.C. 2631 and 46 U.S.C. 1241(b) provide a preference for use 
of U.S.-flag vessels for ocean transportation of supplies purchased 
under Government contracts. FAR Part 12 presently waives the 
requirements of 46 U.S.C. 1241(b) for subcontracts for the acquisition 
of commercial items. This rule proposes to amend FAR Part 12 by adding 
10 U.S.C. 2631 to the list of laws inapplicable to subcontracts for the 
acquisition of commercial items, since civilian agencies may buy 
supplies for use of military departments. However, this rule modifies 
FAR Parts 12, 47, and associated clauses, to limit the types of 
subcontracts for which the waiver of cargo preference statutes is 
applicable. The rule is intended to ensure compliance with cargo 
preference statutes if ocean cargoes are clearly destined for 
Government use, while avoiding disruption of commercial delivery 
systems.
    This rule also deletes the existing Alternate II of the clause, 
52.247-64, as unnecessary and replaces it with a new Alternate II. The 
rule adds two definitions, i.e., ``contingency operation'' and 
``humanitarian or peacekeeping operation'' to define terms used in the 
definition of ``simplified acquisition threshold'', Part 32, Subpart 
47.5, and the clause at 52.247-64. These changes are consistent with 
previously issued guidance from OFPP.
    This is not a significant regulatory action and, therefore, was not 
subject to review under Section 6(b) of Executive Order 12866, 
Regulatory Planning and Review, dated September 30, 1993. This rule is 
not a major rule under 5 U.S.C. 804.

B. Regulatory Flexibility Act

    The Councils do not expect this proposed rule 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 most entities providing ocean transportation are not small 
business concerns. An Initial Regulatory Flexibility Analysis has, 
therefore, not been performed. We invite comments from small businesses 
and other interested parties. The Councils will consider comments from 
small entities concerning the affected FAR Parts in accordance with 5 
U.S.C. 610. Interested parties must submit such comments separately and 
should cite 5 U.S.C. 601, et seq. (FAR case 1999-024), in 
correspondence.

C. Paperwork Reduction Act

    The Paperwork Reduction Act (Pub. L. 104-13) applies because the 
proposed rule will increase the flowdown of FAR clause 52.247-64, 
Preference for Privately Owned U.S.-Flag Commercial Vessels, to certain 
commercial subcontracts. This information collection requirement is 
currently approved by the Office of Management and Budget under OMB 
Control Number 9000-0061, which also covers other transportation 
related information collection requirements. We anticipate an increase 
of 9,000 responses per year as a result of this proposed rule, and a 
corresponding increase of 900 burden hours per year.

Annual Reporting Burden

    Public reporting burden for this collection of information is 
estimated to average .05 hours per response, including the time for 
reviewing instructions, searching existing data sources, gathering and 
maintaining the data needed, and completing and reviewing the 
collection of information.
    The annual reporting burden is estimated as follows:
    Respondents: 65,000.
    Responses per respondent: 21.
    Total annual responses: 1,385,990.
    Preparation hours per response: .05 hours.
    Total response burden hours: 65,870.

D. Request for Comments Regarding Paperwork Burden

    Submit comments, including suggestions for reducing this burden, 
not later than January 8, 2001 to: FAR Desk Officer, OMB, Room 10102, 
NEOB, Washington, DC 20503, and a copy to the General Services 
Administration, FAR Secretariat (MVR), 1800 F Street, NW, Room 4035, 
Washington, DC 20405.
    Public comments are particularly invited on: whether this 
collection of information is necessary for the proper performance of 
functions of the FAR, and will have practical utility; whether our 
estimate of the public burden of this collection of information is 
accurate, and based on valid assumptions and methodology; ways to 
enhance the quality, utility, and clarity of the information to be 
collected; and ways in which we can minimize the burden of the 
collection of information on those who are to respond, through the use 
of appropriate technological collection techniques or other forms of 
information technology.
    Requester may obtain a copy of the justification from the General 
Services Administration, FAR Secretariat (MVR), Room 4035, Washington, 
DC 20405, telephone (202) 208-7312. Please cite OMB Control Number 
9000-0061, FAR Case 1999-024, Preference for U.S.-Flag Vessels, in all 
correspondence.

List of Subjects in 48 CFR Parts 2, 12, 32, 47, and 52

    Government procurement.


[[Page 66921]]


    Dated: November 2, 2000.
Al Matera,
Acting Director, Federal Acquisition Policy Division.
    Therefore, DoD, GSA, and NASA propose that 48 CFR parts 2, 12, 32, 
47, and 52 be amended as set forth below:
    1. The authority citation for 48 CFR parts 2, 12, 32, 47, and 52 
continues to read as follows:

    Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42 
U.S.C. 2473(c).

PART 2--DEFINITIONS OF WORDS AND TERMS

    2. Amend section 2.101 by adding the definitions ``Contingency 
operation'' and ``Humanitarian or peacekeeping operation'', and by 
revising the definition ``Simplified acquisition threshold'' to read as 
follows:


2.101  Definitions.

* * * * *
    Contingency operation means a military operation that--
    (1) Is designated by the Secretary of Defense as an operation in 
which members of the armed forces are or may become involved in 
military actions, operations, or hostilities against an enemy of the 
United States or against an opposing military force; or
    (2) Results in the call or order to, or retention on, active duty 
of members of the uniformed services under 10 U.S.C. 688, 12301(a), 
12302, 12304, 12305, or 12406; chapter 15 of 10 U.S.C.; or any other 
provision of law during a war or during a national emergency declared 
by the President or Congress (10 U.S.C. 101(a)(13)).
* * * * *
    Humanitarian or peacekeeping operation means a military operation 
in support of the provision of humanitarian or foreign disaster 
assistance or in support of a peacekeeping operation under chapter VI 
or VII of the Charter of the United Nations. The term does not include 
routine training, force rotation, or stationing (10 U.S.C. 2302(8) and 
41 U.S.C. 259(d)(2)(B)).
* * * * *
    Simplified acquisition threshold means $100,000, except that in the 
case of any contract to be awarded and performed, or purchase to be 
made, outside the United States in support of a contingency operation 
or a humanitarian or peacekeeping operation, the term means $200,000.
* * * * *

PART 12--ACQUISITION OF COMMERCIAL ITEMS

    3. Amend section 12.504 by redesignating paragraphs (a)(1) through 
(a)(11) as (a)(2) through (a)(12), respectively; by adding a new 
paragraph (a)(1); and by revising newly designated paragraph (a)(11) to 
read as follows:


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

    (a) * * *
    (1) 10 U.S.C. 2631, Transportation of Supplies by Sea (except for 
the types of subcontracts listed at 47.504(d)).
* * * * *
    (11) 46 U.S.C. 1241(b), Transportation in American Vessels of 
Government Personnel and Certain Cargo (see subpart 47.5) (except for 
the types of subcontracts listed at 47.504(d)).
* * * * *

PART 32--CONTRACT FINANCING


32.1103  [Amended]

    4. Amend section 32.1103 in paragraph (e) by removing ``10 U.S.C. 
101(a)(13)'' and adding ``2.101'' in its place.

PART 47--TRANSPORTATION

    5. Amend section 47.504 by revising paragraph (d) to read as 
follows:


47.504  Exceptions.

* * * * *
    (d) Subcontracts for the acquisition of commercial items or 
commercial components (see 12.504(a)(1) and (a)(11)). This exception 
does not apply to--
    (1) Grants-in-aid shipments, such as agricultural and food-aid 
shipments;
    (2) Shipments covered under 46 App. U.S.C. 1241-1, such as those 
generated by Export-Import Bank loans or guarantees;
    (3) Subcontracts under--
    (i) Government contracts or agreements for ocean transportation 
services; or
    (ii) Construction contracts; or
    (4) Shipments of commercial items that are--
    (i) Items the contractor is reselling or distributing to the 
Government without adding value (see FAR 12.501(b)). Generally, the 
contractor does not add value to the items when it subcontracts items 
for f.o.b. destination shipment; or
    (ii) Shipped in direct support of U.S. military--
    (A) Contingency operations;
    (B) Exercises; or
    (C) Forces deployed in connection with United Nations or North 
Atlantic Treaty Organization humanitarian or peacekeeping operations.
    6. Revise section 47.507 to read as follows:


47.507  Contract clauses.

    (a)(1) Insert the clause at 52.247-64, Preference for Privately 
Owned U.S.-Flag Commercial Vessels, in solicitations and contracts that 
may involve ocean transportation of supplies subject to the Cargo 
Preference Act of 1954. (For application of the Cargo Preference Act of 
1954, see 47.502(a)(3), 47.503(a), and 47.504.)
    (2) If an applicable statute requires, or if it has been determined 
under agency procedures, that the supplies to be furnished under the 
contract must be transported exclusively in privately owned U.S.-flag 
commercial vessels (see 47.502(a)(1) and 47.503(b)), use the clause 
with its Alternate I.
    (3) Except for contracts or agreements for ocean transportation 
services or construction contracts, use the clause with its Alternate 
II if any of the supplies to be transported are commercial items that 
are shipped in direct support of U.S. military--
    (i) Contingency operations;
    (ii) Exercises; or
    (iii) Forces deployed in connection with United Nations or North 
Atlantic Treaty Organization humanitarian or peacekeeping operations.
    (b) The contracting officer may insert in solicitations and 
contracts, under agency procedures, additional appropriate clauses 
concerning the vessels to be used.

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

    7. Amend section 52.212-5 by revising the date of the clause, the 
introductory text of paragraph (e), and paragraph (e)(4) to read as 
follows:


52.212-5  Contract Terms and Conditions Required to Implement Statutes 
or Executive Orders--Commercial Items.

* * * * *

Contract Terms and Conditions Required to Implement Statutes or 
Executive Orders--Commercial Items (Date)

* * * * *
    (e) Notwithstanding the requirements of the clauses in 
paragraphs (a), (b), (c), and (d) of this clause, the Contractor is 
not required to include any FAR clause, other than those listed 
below (and as may be required by addenda to this paragraph to 
establish the reasonableness of prices under part 15), in a 
subcontract for commercial items or commercial components--
* * * * *
    (4) 52.247-64, Preference for Privately Owned U.S.-Flag 
Commercial Vessels (46 U.S.C. 1241 and 10 U.S.C. 2631). (Flowdown

[[Page 66922]]

required in accordance with paragraph (d) of the clause in the 
contract entitled ``Preference for Privately Owned U.S.-Flag 
Commercial Vessels'' (FAR 52.247-64)); and
* * * * *
(End of clause)

    8. Amend section 52.244-6 by revising the date of the clause and 
paragraph (c)(4) to read as follows:


52.244-6  Subcontracts for Commercial Items and Commercial Components.

* * * * *

Subcontracts for Commercial Items and Commercial Components (Date)

* * * * *
    (c) * * *
    (4) 52.247-64, Preference for Privately Owned U.S.-Flag 
Commercial Vessels (46 U.S.C. 1241 and 10 U.S.C. 2631). (Flowdown 
required in accordance with paragraph (d) of the clause in this 
contract entitled ``Preference for Privately Owned U.S.-Flag 
Commercial Vessels'' (FAR 52.247-64).)
* * * * *
(End of clause)

    9. Amend section 52.247-64 by--
    a. Revising the date of the clause;
    b. Removing ``The'' from the beginning of the introductory text of 
paragraph (a) and adding ``Except as provided in paragraph (e) of this 
clause, the'' in its place;
    c. Removing the period at the end of paragraph (d) and adding ``, 
except those described in paragraph (e)(4).'' in its place;
    d. Removing ``and'' at the end of paragraph (e)(2);
    e. Removing the period at the end of paragraph (e)(3) and adding 
``; and'' in its place;
    f. Adding paragraph (e)(4); and
    g. Revising Alternates I and II to read as follows:


52.247-64  Preference for Privately Owned U.S.-Flag Commercial Vessels.

* * * * *

Preference for Privately Owned U.S.-Flag Commercial Vessels (Date)

* * * * *
    (e) * * *
    (4) Subcontracts or purchase orders for the acquisition of 
commercial items unless--
    (i) This contract is--
    (A) A contract or agreement for ocean transportation services; 
or
    (B) A construction contract; or
    (ii) The supplies being transported are--
    (A) Items the Contractor is reselling or distributing to the 
Government without adding value. (Generally, the Contractor does not 
add value to the items when it subcontracts items for f.o.b. 
destination shipment); or
    (B) Shipped in direct support of U.S. military--
    (1) Contingency operations;
    (2) Exercises; or
    (3) Forces deployed in connection with United Nations or North 
Atlantic Treaty Organization humanitarian or peacekeeping 
operations.
* * * * *
    Alternate I (Date). As prescribed in 47.507(a)(2), substitute 
the following paragraphs (a) and (b) for paragraphs (a) and (b) of 
the basic clause:
    (a) Except as provided in paragraphs (b) and (e) of this clause, 
the Contractor shall use privately owned U.S.-flag commercial 
vessels, and no others, in the ocean transportation of any supplies 
to be furnished under this contract.
    (b) If such vessels are not available for timely shipment at 
rates that are fair and reasonable for privately owned U.S.-flag 
commercial vessels, the Contractor shall notify the Contracting 
Officer and request (1) authorization to ship in foreign-flag 
vessels, or (2) designation of available U.S.-flag vessels. If the 
Contractor is authorized in writing by the Contracting Officer to 
ship the supplies in foreign-flag vessels, the contract price shall 
be equitably adjusted to reflect the difference in costs of shipping 
the supplies in privately owned U.S.-flag commercial vessels and in 
foreign-flag vessels.
    Alternate II (Date). As prescribed in 47.507(a)(3), substitute 
the following paragraph (e) for paragraph (e) of the basic clause:
    (e) The requirement in paragraph (a) does not apply to--
    (1) Cargoes carried in vessels of the Panama Canal Commission or 
as required or authorized by law or treaty;
    (2) Ocean transportation between foreign countries of supplies 
purchased with foreign currencies made available, or derived from 
funds that are made available, under the Foreign Assistance Act of 
1961 (22 U.S.C. 2353);
    (3) Shipments of classified supplies when the classification 
prohibits the use of non-Government vessels; and
    (4) Subcontracts or purchase orders under this contract for the 
acquisition of commercial items unless the supplies being 
transported are--
    (i) Items the Contractor is reselling or distributing to the 
Government without adding value. (Generally, the Contractor does not 
add value to the items when it subcontracts items for f.o.b. 
destination shipment); or
    (ii) Shipments in direct support of U.S. military--
    (A) Contingency operations;
    (B) Exercises; or
    (C) Forces deployed in connection with United Nations or North 
Atlantic Treaty Organization 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 connection with United Nations or 
North Atlantic Treaty Organization humanitarian or peacekeeping 
operations.)

[FR Doc. 00-28562 Filed 11-6-00; 8:45 am]
BILLING CODE 6820-EP-P