[Federal Register Volume 70, Number 9 (Thursday, January 13, 2005)]
[Rules and Regulations]
[Pages 2361-2366]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-759]


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DEPARTMENT OF DEFENSE

48 CFR Parts 225 and 252

[DFARS Case 2004-D013]


Defense Federal Acquisition Regulation Supplement; Free Trade 
Agreements--Australia and Morocco

AGENCY: Department of Defense (DoD).

ACTION: Interim rule with request for comments.

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SUMMARY: DoD has issued an interim rule amending the Defense Federal 
Acquisition Regulation Supplement

[[Page 2362]]

(DFARS) to implement new Free Trade Agreements with Australia and 
Morocco. In addition, the rule revises terminology relating to 
international trade agreements and the Trade Agreements Act, updates 
the list of ``least developed countries,'' and extends 
nondiscriminatory treatment to Caribbean Basin country construction 
material.

DATES: Effective Date: January 13, 2005.
    Comment date: Comments on the interim rule should be submitted to 
the address shown below on or before March 14, 2005, to be considered 
in the formation of the final rule.

ADDRESSES: You may submit comments, identified by DFARS Case 2004-D013, 
using any of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Defense Acquisition Regulations Web site: http://emissary.acq.osd.mil/dar/dfars.nsf/pubcomm. Follow the instructions for 
submitting comments.
     E-mail: [email protected]. Include DFARS Case 2004-D013 in the 
subject line of the message.
     Fax: (703) 602-0350.
     Mail: Defense Acquisition Regulations Council, Attn: Ms. 
Amy Williams, OUSD(AT&L)DPAP(DAR), IMD 3C132, 3062 Defense Pentagon, 
Washington, DC 20301-3062.
     Hand Delivery/Courier: Defense Acquisition Regulations 
Council, Crystal Square 4, Suite 200A, 241 18th Street, Arlington, VA 
22202-3402.
    All comments received will be posted to http://emissary.acq.osd.mil/dar/dfars.nsf.

FOR FURTHER INFORMATION CONTACT: Ms. Amy Williams, (703) 602-0328.

SUPPLEMENTARY INFORMATION:

A. Background

    This interim rule amends DFARS part 225 and corresponding 
provisions and clauses to implement new Free Trade Agreements with 
Australia and Morocco, as approved by Congress in the United States-
Australia Free Trade Agreement Implementation Act (Pub. L. 108-286) and 
the United States-Morocco Free Trade Agreement Implementation Act (Pub. 
L. 108-302). The new Free Trade Agreements waive the applicability of 
the Buy American Act for some foreign supplies and construction 
materials from Australia and Morocco, and specify procurement 
procedures designed to ensure fairness. In addition, at the request of 
the United States Trade Representative and for consistency with the 
interim FAR rule published at 69 FR 77870 on December 28, 2004, this 
DFARS rule makes the following changes in terminology relating to trade 
agreements:
     Substitution of the term ``World Trade Organization 
Government Procurement Agreement'' in all places where the term ``Trade 
Agreements Act'' was used to mean the World Trade Organization 
Government Procurement Agreement.
     Redefinition of ``designated country'' to include World 
Trade Organization Government Procurement Agreement countries, Free 
Trade Agreement countries, least developed countries, and Caribbean 
Basin countries. Free Trade Agreement countries and Caribbean Basin 
countries are now also designated countries. Each of these terms will 
retain a separate definition because, in some instances, the regulation 
does not apply to all designated countries, but only to some of the 
specific subsets.
     A revised list of least developed countries that are 
designated as eligible countries under the Trade Agreements Act.
     Amendment of the clause at DFARS 252.225-7045, Balance of 
Payments Program--Construction Material Under Trade Agreements, to 
extend nondiscriminatory treatment to all designated country 
construction material, including Caribbean Basin country construction 
material. Federal Register notices issued by the United States Trade 
Representative under the Caribbean Basin Trade Initiative state that 
products of the listed Caribbean Basin countries shall continue to be 
treated as eligible products (unless excluded from duty-free treatment 
under 19 U.S.C. 2703(b)). This change is consistent with the definition 
of ``eligible product'' at 19 U.S.C. 2518(4).
    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 does not expect this 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. Although the rule 
opens up Government procurement to the products of Australia and 
Morocco, DoD does not believe there will be a significant economic 
impact on U.S. small businesses. DoD applies the trade agreements to 
only those non-defense items listed at DFARS 225.401-70. Acquisitions 
below $100,000 that are set aside for small businesses are exempt. 
Therefore, DoD has not performed an initial regulatory flexibility 
analysis. DoD invites comments from small businesses and other 
interested parties. DoD also will consider comments from small entities 
concerning the affected DFARS subparts in accordance with 5 U.S.C. 610. 
Such comments should be submitted separately and should cite DFARS Case 
2004-D013.

C. Paperwork Reduction Act

    This interim rule affects the certification and information 
collection requirements in the provisions at DFARS 252.225-7020 and 
252.225-7035, currently approved under Office of Management and Budget 
Control Number 0704-0229. The impact, however, is negligible.

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 an 
interim rule prior to affording the public an opportunity to comment. 
This interim rule implements new Free Trade Agreements with Australia 
and Morocco, as approved by Congress in the United States-Australia 
Free Trade Agreement Implementation Act (Pub. L. 108-286) and the 
United States-Morocco Free Trade Agreement Implementation Act (Pub. L. 
108-302). These agreements waive the applicability of the Buy American 
Act for some foreign supplies and construction materials from Australia 
and Morocco, and specify procurement procedures designed to ensure 
fairness. The new Free Trade Agreements became effective on January 1, 
2005. Comments received in response to this interim rule will be 
considered in the formation of the final rule.

List of Subjects in 48 CFR Parts 225 and 252

    Government procurement.

Michele P. Peterson,
Editor, Defense Acquisition Regulations System.


0
Therefore, 48 CFR parts 225 and 252 are amended as follows:
0
1. The authority citation for 48 CFR parts 225 and 252 continues to 
read as follows:

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

PART 225--FOREIGN ACQUISITION

0
2. Section 225.103 is amended by revising paragraph (a)(i)(B) to read 
as follows:


225.103  Exceptions.

    (a)(i) * * *
    (B) For procurements covered by the World Trade Organization 
Government

[[Page 2363]]

Procurement Agreement, the Under Secretary of Defense (Acquisition, 
Technology, and Logistics) has determined that it is inconsistent with 
the public interest to apply the Buy American Act to end products that 
are substantially transformed in the United States.
* * * * *

0
3. Section 225.401-70 is amended by revising the first sentence to read 
as follows:


225.401-70  Products subject to trade agreements.

    Acquisitions of end products in the following Federal supply groups 
(FSG) are covered by trade agreements if the value of the acquisition 
is at or above the applicable trade agreement threshold and no 
exception applies. * * *
* * * * *

0
4. Section 225.402 is revised to read as follows:


225.402  General.

    To estimate the value of the acquisition, use the total estimated 
value of end products covered by trade agreements (see 225.401-70).
0
5. Section 225.403 is amended by revising the section heading, 
paragraph (c) introductory text, and paragraph (c)(i) introductory text 
to read as follows:


225.403  World Trade Organization Government Procurement Agreement and 
Free Trade Agreements.

    (c) For acquisitions of supplies covered by the World Trade 
Organization Government Procurement Agreement, acquire only U.S.-made, 
qualifying country, or designated country end products unless--
    (i) The contracting officer determines that offers of U.S.-made, 
qualifying country, or designated country end products from responsive, 
responsible offerors are either--
* * * * *

0
6. Section 225.502 is amended by revising paragraph (b) introductory 
text, paragraph (b)(i), and paragraph (c)(ii)(C) in the parenthetical 
to read as follows:


225.502  Application.

    (b) Use the following procedures instead of the procedures in FAR 
25.502(b) for acquisitions subject to the World Trade Organization 
Government Procurement Agreement:
    (i) Consider only offers of U.S.-made, qualifying country, or 
designated country end products, except as permitted by 225.403.
* * * * *
    (c) * * *
    (ii) * * *
    (C) * * * (If the low offer is a qualifying country offer from a 
country listed at 225.872-1(b), execute a determination in accordance 
with 225.872-4.)
* * * * *

0
7. Section 225.901 is amended by revising paragraph (2) to read as 
follows:


225.901  Policy.

* * * * *
    (2) Eligible products (end products but not components) under 
contracts covered by the World Trade Organization Government 
Procurement Agreement or a Free Trade Agreement; and
* * * * *

0
8. Section 225.7501 is amended as follows:
0
a. By redesignating paragraphs (a)(3) through (a)(5) as paragraphs 
(a)(4) through (a)(6), respectively;
0
b. By adding a new paragraph (a)(3); and
0
c. By revising paragraph (b) to read as follows:


225.7501  Policy.

* * * * *
    (a) * * *
    (3) The acquisition is covered by the World Trade Organization 
Government Procurement Agreement;
* * * * *
    (b) After receipt of offers--
    (1) The evaluated low offer (see Subpart 225.5) is an offer of an 
end product that--
    (i) Is a qualifying country end product;
    (ii) Is an eligible product; or
    (iii) Is a nonqualifying country end product, but application of 
the Balance of Payments Program evaluation factor would not result in 
award on a domestic offer; or
    (2) The construction material is an eligible product; or
* * * * *

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES


252.212-7001  [Amended]

0
9. Section 252.212-7001 is amended as follows:
0
a. By revising the clause date to read ``(JAN 2005)'';
0
b. In paragraph (b), in entry 252.225-7021, by removing ``(DEC 2004)'' 
and adding in its place ``(JAN 2005)''; and
0
c. In paragraph (b), in entry 252.225-7036, by removing ``(DEC 2004)'' 
and ``(JAN 2004)'' and adding in both places ``(JAN 2005)''.

0
10. Section 252.225-7013 is amended by revising the clause date, 
paragraph (a)(2), paragraph (h) introductory text, paragraph (h)(11), 
and paragraph (i) introductory text to read as follows:


252.225-7013  Duty-Free Entry.

* * * * *

Duty-Free Entry (Jan 2005)

    (a) * * *
    (2) Eligible product means--
    (i) Designated country end product as defined in the Trade 
Agreements clause of this contract;
    (ii) Free Trade Agreement country end product as defined in the 
Trade Agreements clause of this contract;
    (iii) End product of Australia, Canada, Chile, Mexico, or 
Singapore as defined in the Buy American Act--Free Trade 
Agreements--Balance of Payments Program clause of this contract; or
    (iv) Canadian end product as defined in Alternate I of the Buy 
American Act--Free Trade Agreements--Balance of Payments Program 
clause of this contract.
* * * * *
    (h) The Contractor shall notify the Administrative Contracting 
Officer (ACO) in writing of any purchase of eligible products or 
qualifying country supplies to be accorded duty-free entry, that are 
to be imported into the United States for delivery to the Government 
or for incorporation in end items to be delivered to the Government. 
The Contractor shall furnish the notice to the ACO immediately upon 
award to the supplier and shall include in the notice--
* * * * *
    (11) Country of origin; and
* * * * *
    (i) This clause does not apply to purchases of eligible products 
or qualifying country supplies in connection with this contract if--

* * * * *

0
11. Section 252.225-7020 is revised to read as follows:


252.225-7020  Trade Agreements Certificate.

    As prescribed in 225.1101(5), use the following provision:

Trade Agreements Certificate (Jan 2005)

    (a) Definitions. Designated country end product, nondesignated 
country end product, qualifying country end product, and U.S.-made 
end product have the meanings given in the Trade Agreements clause 
of this solicitation.
    (b) Evaluation. The Government--
    (1) Will evaluate offers in accordance with the policies and 
procedures of part 225 of the Defense Federal Acquisition Regulation 
Supplement; and
    (2) Will consider only offers of end products that are U.S.-
made, qualifying country, or designated country end products 
unless--
    (i) There are no offers of such end products;

[[Page 2364]]

    (ii) The offers of such end products are insufficient to fulfill 
the Government's requirements; or
    (iii) A national interest waiver has been granted.
    (c) Certification and identification of country of origin.
    (1) For all line items subject to the Trade Agreements clause of 
this solicitation, the offeror certifies that each end product to be 
delivered under this contract, except those listed in paragraph 
(c)(2) of this provision, is a U.S.-made, qualifying country, or 
designated country end product.
    (2) The following supplies are other nondesignated country end 
products:

(Line Item Number) (Country of Origin)

    (End of provision)

0
12. Section 252.225-7021 is amended by revising the clause date and 
paragraphs (a) through (c) to read as follows:


252.225-7021  Trade Agreements.

* * * * *

Trade Agreements (Jan 2005)

    (a) Definitions. As used in this clause--
    (1) Caribbean Basin country end product--
    (i) Means an article that--
    (A) Is wholly the growth, product, or manufacture of a Caribbean 
Basin country; or
    (B) In the case of an article that consists in whole or in part 
of materials from another country or instrumentality, has been 
substantially transformed in a Caribbean Basin country into a new 
and different article of commerce with a name, character, or use 
distinct from that of the article or articles from which it was 
transformed. The term refers to a product offered for purchase under 
a supply contract, but for purposes of calculating the value of the 
end product includes services (except transportation services) 
incidental to its supply, provided that the value of those 
incidental services does not exceed the value of the product itself; 
and
    (ii) Excludes products, other than petroleum and any product 
derived from petroleum, that are not granted duty-free treatment 
under the Caribbean Basin Economic Recovery Act (19 U.S.C. 2703(b)). 
These exclusions presently consist of--
    (A) Textiles, apparel articles, footwear, handbags, luggage, 
flat goods, work gloves, leather wearing apparel, and handloomed, 
handmade, or folklore articles that are not granted duty-free status 
in the Harmonized Tariff Schedule of the United States (HTSUS);
    (B) Tuna, prepared or preserved in any manner in airtight 
containers; and
    (C) Watches and watch parts (including cases, bracelets, and 
straps) of whatever type, including, but not limited to, mechanical, 
quartz digital, or quartz analog, if such watches or watch parts 
contain any material that is the product of any country to which the 
HTSUS column 2 rates of duty (HTSUS General Note 3(b)) apply.
    (2) Component means an article, material, or supply incorporated 
directly into an end product.
    (3) Designated country means--
    (i) A World Trade Organization Government Procurement Agreement 
(WTO GPA) country (Aruba, Austria, Belgium, Canada, Cyprus, Czech 
Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hong 
Kong, Hungary, Iceland, Ireland, Israel, Italy, Japan, Korea 
(Republic of), Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, 
Netherlands, Norway, Poland, Portugal, Singapore, Slovak Republic, 
Slovenia, Spain, Sweden, Switzerland, or the United Kingdom);
    (ii) A Free Trade Agreement country (Australia, Canada, Chile, 
Mexico, Morocco, or Singapore);
    (iii) A least developed country (Afghanistan, Angola, 
Bangladesh, Benin, Bhutan, Burkina Faso, Burundi, Cambodia, Cape 
Verde, Central African Republic, Chad, Comoros, Democratic Republic 
of Congo, Djibouti, East Timor, Equatorial Guinea, Eritrea, 
Ethiopia, Gambia, Guinea, Guinea-Bissau, Haiti, Kiribati, Laos, 
Lesotho, Madagascar, Malawi, Maldives, Mali, Mauritania, Mozambique, 
Nepal, Niger, Rwanda, Samoa, Sao Tome and Principe, Senegal, Sierra 
Leone, Solomon Islands, Somalia, Tanzania, Togo, Tuvalu, Uganda, 
Vanuatu, Yemen, or Zambia); or
    (iv) A Caribbean Basin country (Antigua and Barbuda, Aruba, 
Bahamas, Barbados, Belize, British Virgin Islands, Costa Rica, 
Dominica, Dominican Republic, El Salvador, Grenada, Guatemala, 
Guyana, Haiti, Honduras, Jamaica, Montserrat, Netherlands Antilles, 
Nicaragua, St. Kitts and Nevis, St. Lucia, St. Vincent and the 
Grenadines, or Trinidad and Tobago).
    (4) Designated country end product means a WTO GPA country end 
product, a Free Trade Agreement country end product, a least 
developed country end product, or a Caribbean Basin country end 
product.
    (5) End product means those articles, materials, and supplies to 
be acquired under this contract for public use.
    (6) Free Trade Agreement country end product means an article 
that--
    (i) Is wholly the growth, product, or manufacture of a Free 
Trade Agreement country; or
    (ii) In the case of an article that consists in whole or in part 
of materials from another country or instrumentality, has been 
substantially transformed in a Free Trade Agreement country into a 
new and different article of commerce with a name, character, or use 
distinct from that of the article or articles from which it was 
transformed. The term refers to a product offered for purchase under 
a supply contract, but for purposes of calculating the value of the 
end product includes services (except transportation services) 
incidental to its supply, provided that the value of those 
incidental services does not exceed the value of the product itself.
    (7) Least developed country end product means an article that--
    (i) Is wholly the growth, product, or manufacture of a least 
developed country; or
    (ii) In the case of an article that consists in whole or in part 
of materials from another country or instrumentality, has been 
substantially transformed in a least developed country into a new 
and different article of commerce with a name, character, or use 
distinct from that of the article or articles from which it was 
transformed. The term refers to a product offered for purchase under 
a supply contract, but for purposes of calculating the value of the 
end product includes services (except transportation services) 
incidental to its supply, provided that the value of those 
incidental services does not exceed the value of the product itself.
    (8) Nondesignated country end product means any end product that 
is not a U.S.-made end product or a designated country end product.
    (9) Qualifying country means any country set forth in subsection 
225.872-1 of the Defense Federal Acquisition Regulation Supplement.
    (10) Qualifying country end product means--
    (i) An unmanufactured end product mined or produced in a 
qualifying country; or
    (ii) An end product manufactured in a qualifying country if the 
cost of the following types of components exceeds 50 percent of the 
cost of all its components:
    (A) Components mined, produced, or manufactured in a qualifying 
country.
    (B) Components mined, produced, or manufactured in the United 
States.
    (C) Components of foreign origin of a class or kind for which 
the Government has determined that sufficient and reasonably 
available commercial quantities of a satisfactory quality are not 
mined, produced, or manufactured in the United States.
    (11) United States means the United States, its possessions, 
Puerto Rico, and any other place subject to its jurisdiction, but 
does not include leased bases or trust territories.
    (12) U.S.-made end product means an article that--
    (i) Is mined, produced, or manufactured in the United States; or
    (ii) Is substantially transformed in the United States into a 
new and different article of commerce with a name, character, or use 
distinct from that of the article or articles from which it was 
transformed.
    (b) Unless otherwise specified, this clause applies to all items 
in the Schedule.
    (c) The Contractor shall deliver under this contract only U.S.-
made, qualifying country, or designated country end products 
unless--
    (1) In its offer, the Contractor specified delivery of other 
nondesignated country end products in the Trade Agreements 
Certificate provision of the solicitation; and
    (2)(i) Offers of U.S.-made end products or qualifying, 
designated, Caribbean Basin, or Free Trade Agreement country end 
products from responsive, responsible offerors are either not 
received or are insufficient to fill the Government's requirements; 
or
    (ii) A national interest waiver has been granted.
* * * * *


0
13. Section 252.225-7035 is revised to read as follows:


252.225-7035  Buy American Act--Free Trade Agreements--Balance of 
Payments Program Certificate.

    As prescribed in 225.1101(9), use the following provision:


[[Page 2365]]



Buy American Act--Free Trade Agreements--Balance of Payments Program 
Certificate (Jan 2005)

    (a) Definitions. Domestic end product, end product of Australia, 
Canada, Chile, Mexico, or Singapore, foreign end product, qualifying 
country end product, and United States have the meanings given in 
the Buy American Act--Free Trade Agreements--Balance of Payments 
Program clause of this solicitation.
    (b) Evaluation. The Government--
    (1) Will evaluate offers in accordance with the policies and 
procedures of part 225 of the Defense Federal Acquisition Regulation 
Supplement; and
    (2) For line items subject to Free Trade Agreements, will 
evaluate offers of qualifying country end products or end products 
of Australia, Canada, Chile, Mexico, or Singapore without regard to 
the restrictions of the Buy American Act or the Balance of Payments 
Program.
    (c) Certifications and identification of country of origin.
    (1) For all line items subject to the Buy American Act--Free 
Trade Agreements--Balance of Payments Program clause of this 
solicitation, the offeror certifies that--
    (i) Each end product, except the end products listed in 
paragraph (c)(2) of this provision, is a domestic end product; and
    (ii) Components of unknown origin are considered to have been 
mined, produced, or manufactured outside the United States or a 
qualifying country.
    (2) The offeror shall identify all end products that are not 
domestic end products.
    (i) The offeror certifies that the following supplies are 
qualifying country (except Australian or Canadian) end products:

(Line Item Number) (Country of Origin)

    (ii) The offeror certifies that the following supplies are end 
products of Australia, Canada, Chile, Mexico, or Singapore:

(Line Item Number) (Country of Origin)

    (iii) The following supplies are other foreign end products, 
including end products manufactured in the United States that do not 
qualify as domestic end products.

(Line Item Number) (Country of Origin (If known))

    (End of provision)

Alternate I (Jan 2005)

    As prescribed in 225.1101(9), substitute the phrase ``Canadian 
end product'' for the phrase ``end product of Australia, Canada, 
Chile, Mexico, or Singapore'' in paragraph (a) of the basic 
provision; and substitute the phrase ``Canadian end products'' for 
the phrase ``end products of Australia, Canada, Chile, Mexico, or 
Singapore'' in paragraphs (b) and (c)(2)(ii) of the basic provision.


0
14. Section 252.225-7036 is amended as follows:
0
a. By revising the clause date and paragraphs (a) and (c);
0
b. In Alternate I by removing ``(JAN 2004)'' and adding in its place 
``(JAN 2005)'';
0
c. In Alternate I introductory text by removing ``(a)(6)'' both places 
it appears and adding in its place ``(a)(4)''; and
0
d. In Alternate I by redesignating paragraph (a)(6) as paragraph 
(a)(4). The revised text reads as follows:


252.225-7036  Buy American Act--Free Trade Agreements--Balance of 
Payments Program.

* * * * *

Buy American Act--Free Trade Agreements--Balance of Payments Program 
(Jan 2005)

    (a) Definitions. As used in this clause--
    (1) Component means an article, material, or supply incorporated 
directly into an end product.
    (2) Domestic end product means--
    (i) An unmanufactured end product that has been mined or 
produced in the United States; or
    (ii) An end product manufactured in the United States if the 
cost of its qualifying country components and its components that 
are mined, produced, or manufactured in the United States exceeds 50 
percent of the cost of all its components. The cost of components 
includes transportation costs to the place of incorporation into the 
end product and U.S. duty (whether or not a duty-free entry 
certificate is issued). Scrap generated, collected, and prepared for 
processing in the United States is considered domestic. A component 
is considered to have been mined, produced, or manufactured in the 
United States (regardless of its source in fact) if the end product 
in which it is incorporated is manufactured in the United States and 
the component is of a class or kind for which the Government has 
determined that--
    (A) Sufficient and reasonably available commercial quantities of 
a satisfactory quality are not mined, produced, or manufactured in 
the United States; or
    (B) It is inconsistent with the public interest to apply the 
restrictions of the Buy American Act.
    (3) End product means those articles, materials, and supplies to 
be acquired under this contract for public use.
    (4) End product of Australia, Canada, Chile, Mexico, or 
Singapore means an article that--
    (i) Is wholly the growth, product, or manufacture of Australia, 
Canada, Chile, Mexico, or Singapore; or
    (ii) In the case of an article that consists in whole or in part 
of materials from another country or instrumentality, has been 
substantially transformed in Australia, Canada, Chile, Mexico, or 
Singapore into a new and different article of commerce with a name, 
character, or use distinct from that of the article or articles from 
which it was transformed. The term refers to a product offered for 
purchase under a supply contract, but for purposes of calculating 
the value of the end product includes services (except 
transportation services) incidental to its supply, provided that the 
value of those incidental services does not exceed the value of the 
product itself.
    (5) Foreign end product means an end product other than a 
domestic end product.
    (6) Qualifying country means any country set forth in subsection 
225.872-1 of the Defense Federal Acquisition Regulation Supplement.
    (7) Qualifying country component means a component mined, 
produced, or manufactured in a qualifying country.
    (8) Qualifying country end product means--
    (i) An unmanufactured end product mined or produced in a 
qualifying country; or
    (ii) An end product manufactured in a qualifying country if the 
cost of the following types of components exceeds 50 percent of the 
cost of all its components:
    (A) Components mined, produced, or manufactured in a qualifying 
country.
    (B) Components mined, produced, or manufactured in the United 
States.
    (C) Components of foreign origin of a class or kind for which 
the Government has determined that sufficient and reasonably 
available commercial quantities of a satisfactory quality are not 
mined, produced, or manufactured in the United States.
    (9) United States means the United States, its possessions, 
Puerto Rico, and any other place subject to its jurisdiction, but 
does not include leased bases or trust territories.
* * * * *
    (c) The Contractor shall deliver under this contract only 
domestic end products unless, in its offer, it specified delivery of 
qualifying country end products, end products of Australia, Canada, 
Chile, Mexico, or Singapore, or other foreign end products in the 
Buy American Act--Free Trade Agreements--Balance of Payments Program 
Certificate provision of the solicitation. If the Contractor 
certified in its offer that it will deliver a qualifying country end 
product or an end product of Australia, Canada, Chile, Mexico, or 
Singapore, the Contractor shall deliver a qualifying country end 
product, an end product of Australia, Canada, Chile, Mexico, or 
Singapore, or, at the Contractor's option, a domestic end product.
* * * * *


252.225-7044  [Amended]

0
15. Section 252.225-7044 is amended as follows:
0
a. By revising the clause date to read ``(JAN 2005)''; and
0
b. In paragraph (a), in the definition of ``Cost of components'', in 
the second sentence of paragraph (2), by removing ``end product'' and 
adding in its place ``construction material''.

0
16. Section 252.225-7045 is revised to read as follows:


252.225-7045  Balance of Payments Program--Construction Material Under 
Trade Agreements.

    As prescribed in 225.7503(b), use the following clause:

Balance of Payments Program--Consturction Material Under Trade 
Agreements (Jan 2005)

    (a) Definitions. As used in this clause--
    Caribbean Basin country construction material means a 
construction material that---
    (1) Is wholly the growth, product, or manufacture of a Caribbean 
Basin country; or

[[Page 2366]]

    (2) In the case of a construction material that consists in 
whole or in part of materials from another country, has been 
substantially transformed in a Caribbean Basin country into a new 
and different construction material distinct from the materials from 
which it was transformed.
    Component means any article, material, or supply incorporated 
directly into construction material.
    Construction material means an article, material, or supply 
brought to the construction site by the Contractor or a 
subcontractor for incorporation into the building or work. The term 
also includes an item brought to the site preassembled from 
articles, materials, or supplies. However, emergency life safety 
systems, such as emergency lighting, fire alarm, and audio 
evacuation systems, that are discrete systems incorporated into a 
public building or work and that are produced as complete systems, 
are evaluated as a single and distinct construction material 
regardless of when or how the individual parts or components of 
those systems are delivered to the construction site. Materials 
purchased directly by the Government are supplies, not construction 
material.
    Cost of components means--
    (1) For components purchased by the Contractor, the acquisition 
cost, including transportation costs to the place of incorporation 
into the end product (whether or not such costs are paid to a 
domestic firm), and any applicable duty (whether or not a duty-free 
entry certificate is issued); or
    (2) For components manufactured by the Contractor, all costs 
associated with the manufacture of the component, including 
transportation costs as described in paragraph (1) of this 
definition, plus allocable overhead costs, but excluding profit. 
Cost of components does not include any costs associated with the 
manufacture of the construction material.
    Designated country means--
    (1) A World Trade Organization Government Procurement Agreement 
(WTO GPA) country (Aruba, Austria, Belgium, Canada, Cyprus, Czech 
Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hong 
Kong, Hungary, Iceland, Ireland, Israel, Italy, Japan, Korea 
(Republic of), Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, 
Netherlands, Norway, Poland, Portugal, Singapore, Slovak Republic, 
Slovenia, Spain, Sweden, Switzerland, or the United Kingdom);
    (2) A Free Trade Agreement country (Australia, Canada, Chile, 
Mexico, Morocco, or Singapore);
    (3) A least developed country (Afghanistan, Angola, Bangladesh, 
Benin, Bhutan, Burkina Faso, Burundi, Cambodia, Cape Verde, Central 
African Republic, Chad, Comoros, Democratic Republic of Congo, 
Djibouti, East Timor, Equatorial Guinea, Eritrea, Ethiopia, Gambia, 
Guinea, Guinea-Bissau, Haiti, Kiribati, Laos, Lesotho, Madagascar, 
Malawi, Maldives, Mali, Mauritania, Mozambique, Nepal, Niger, 
Rwanda, Samoa, Sao Tome and Principe, Senegal, Sierra Leone, Solomon 
Islands, Somalia, Tanzania, Togo, Tuvalu, Uganda, Vanuatu, Yemen, or 
Zambia); or
    (4) A Caribbean Basin country (Antigua and Barbuda, Aruba, 
Bahamas, Barbados, Belize, British Virgin Islands, Costa Rica, 
Dominica, Dominican Republic, El Salvador, Grenada, Guatemala, 
Guyana, Haiti, Honduras, Jamaica, Montserrat, Netherlands Antilles, 
Nicaragua, St. Kitts and Nevis, St. Lucia, St. Vincent and the 
Grenadines, or Trinidad and Tobago).
    Designated country construction material means a construction 
material that is a WTO GPA country construction material, a Free 
Trade Agreement country construction material, a least developed 
country construction material, or a Caribbean Basin country 
construction material.
    Domestic construction material means--
    (1) An unmanufactured construction material mined or produced in 
the United States; or
    (2) A construction material manufactured in the United States, 
if the cost of its components mined, produced, or manufactured in 
the United States exceeds 50 percent of the cost of all its 
components. Components of foreign origin of the same class or kind 
for which nonavailability determinations have been made are treated 
as domestic.
    Free Trade Agreement country construction material means a 
construction material that--
    (1) Is wholly the growth, product, or manufacture of a Free 
Trade Agreement country; or
    (2) In the case of a construction material that consists in 
whole or in part of materials from another country, has been 
substantially transformed in a Free Trade Agreement country into a 
new and different construction material distinct from the material 
from which it was transformed.
    Least developed country construction material means a 
construction material that--
    (1) Is wholly the growth, product, or manufacture of a least 
developed country; or
    (2) In the case of a construction material that consists in 
whole or in part of materials from another country has been 
substantially transformed in a least developed country into a new 
and different construction material distinct from the materials from 
which it was transformed.
    United States means the 50 States and the District of Columbia, 
U.S. territories and possessions, Puerto Rico, the Northern Mariana 
Islands, and any other place subject to U.S. jurisdiction, but does 
not include leased bases.
    WTO GPA country construction material means a construction 
material that--
    (1) Is wholly the growth, product, or manufacture of a WTO GPA 
country; or
    (2) In the case of a construction material that consists in 
whole or in part of materials from another country, has been 
substantially transformed in a WTO GPA country into a new and 
different construction material distinct from the materials from 
which it was transformed.
    (b) This clause implements the Balance of Payments Program by 
providing a preference for domestic construction material. In 
addition, the Contracting Officer has determined that the WTO GPA 
and Free Trade Agreements apply to this acquisition. Therefore, the 
Balance of Payments Program restrictions are waived for designated 
country construction materials.
    (c) The Contractor shall use only domestic or designated country 
construction material in performing this contract, except for--
    (1) Construction material valued at or below the simplified 
acquisition threshold in part 2 of the Federal Acquisition 
Regulation; or
    (2) The construction material or components listed by the 
Government as follows:
    [Contracting Officer to list applicable excepted materials or 
indicate ``none'']
    (End of clause)

Alternate I (Jan 2005)

    As prescribed in 225.7503(b), delete the definitions of 
``designated country'' and ``designated country construction 
material'' from the definitions in paragraph (a) of the basic 
clause, add the following definition of ``Australian, Chilean, or 
Moroccan construction material'' to paragraph (a) of the basic 
clause, and substitute the following paragraphs (b) and (c) for 
paragraphs (b) and (c) of the basic clause:
    Australian, Chilean, or Moroccan construction material means a 
construction material that--
    (1) Is wholly the growth, product, or manufacture of Australia, 
Chile, or Morocco; or
    (2) In the case of a construction material that consists in 
whole or in part of materials from another country, has been 
substantially transformed in Australia, Chile, or Morocco into a new 
and different construction material distinct from the materials from 
which it was transformed.
    (b) This clause implements the Balance of Payments Program by 
providing a preference for domestic construction material. In 
addition, the Contracting Officer has determined that the WTO GPA 
and all Free Trade Agreements except NAFTA apply to this 
acquisition. Therefore, the Balance of Payments Program restrictions 
are waived for WTO GPA country, Australian, Chilean, or Moroccan, 
least developed country, or Caribbean Basin country construction 
material.
    (c) The Contractor shall use only domestic, WTO GPA country, 
Australian, Chilean, or Moroccan, least developed country, or 
Caribbean Basin country construction material in performing this 
contract, except for--
    (1) Construction material valued at or below the simplified 
acquisition threshold in part 2 of the Federal Acquisition 
Regulation; or
    (2) The construction material or components listed by the 
Government as follows:
    [Contracting Officer to list applicable excepted materials or 
indicate ``none'']
[FR Doc. 05-759 Filed 1-12-05; 8:45 am]
BILLING CODE 5001-08-P