[Federal Register Volume 70, Number 55 (Wednesday, March 23, 2005)]
[Proposed Rules]
[Pages 14625-14628]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-5625]


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DEPARTMENT OF DEFENSE

48 CFR Parts 225 and 252

[DFARS Case 2003-D008]


Defense Federal Acquisition Regulation Supplement; Foreign 
Acquisition

AGENCY: Department of Defense (DoD).

ACTION: Proposed rule with request for comments.

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SUMMARY: DoD is proposing to amend the Defense Federal Acquisition 
Regulation Supplement (DFARS) to update text pertaining to the 
acquisition of supplies and services from foreign sources. This 
proposed rule is a result of a transformation initiative undertaken by 
DoD to dramatically change the purpose and content of the DFARS.

DATES: Comments on the proposed rule should be submitted in writing to 
the address shown below on or before May 23, 2005, to be considered in 
the formation of the final rule.

ADDRESSES: You may submit comments, identified by DFARS Case 2003-D008, 
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 2003-D008 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

    DFARS Transformation is a major DoD initiative to dramatically 
change the purpose and content of the DFARS. The objective is to 
improve the

[[Page 14626]]

efficiency and effectiveness of the acquisition process, while allowing 
the acquisition workforce the flexibility to innovate. The transformed 
DFARS will contain only requirements of law, DoD-wide policies, 
delegations of FAR authorities, deviations from FAR requirements, and 
policies/procedures that have a significant effect beyond the internal 
operating procedures of DoD or a significant cost or administrative 
impact on contractors or offerors. Additional information on the DFARS 
Transformation initiative is available at http://www.acq.osd.mil/dpap/dfars/transf.htm.
    This proposed rule is a result of the DFARS Transformation 
Initiative. The proposed changes include--
     Deletion of redundant or unnecessary text at DFARS 
225.000, 225.171, 225.871-1(b), 225.7301(a)(1) through (3), and 
225.7306.
     Deletion of text at DFARS 225.001, 225.504, 225.802, 
225.870-1(d), 225.870-5, 225.870-7, 225.871-5, 225.872-4, 225.872-5(b) 
and (c), 225.872-6(c), 225.873-2, 225.902, 225.903, 225.7301(c) and 
(d), and 225.7302 containing internal DoD procedures, guidance, or 
information. This text will be relocated to the new DFARS companion 
resource, Procedures, Guidance, and Information (PGI), available at 
http://www.acq.osd.mil/dpap/dars/pgi.
     Clarification of DFARS text as follows:
     225.401-70--Addition of a statutory reference.
     225.408--Clarification that the exception from FAR 
25.408(a)(4) for overseas acquisitions applies only to the requirement 
for submission of offers in U.S. dollars.
     225.701--Expansion of cross-reference to restrictions on 
contracting with firms owned or controlled by foreign governments that 
support terrorism (from 209.104-1(g)(i) to 209.104-1(g)).
     225.802-70--Addition of a reference to the Army in Europe 
Regulation 715-9, for procedures for work performed in Germany.
     225.871-6--Clarification that property that is jointly 
acquired by the members of a NATO cooperative project may be disposed 
of in accordance with the terms of the cooperative project agreement, 
without regard to any laws of the United States applicable to the 
disposal of property owned by the United States.
     225.7003--Clarification that the waiver procedures in 
225.7003 apply only if specifically authorized by reference elsewhere 
in subpart 225.70.
     225.7303-2(a)(3) and 225.7307--Addition of cross-
references.
     225.7501(a)(2)(iii)--Deletion of a reference to DoD 
Directive, 4120.3, Defense Standardization and Specification Program, 
which was cancelled in 1991.
    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., because the rule 
makes no significant change to DoD contracting policy. 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 2003-D008.

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.

List of Subjects in 48 CFR Parts 225 and 252

    Government procurement.

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

    Therefore, DoD proposes to amend 48 CFR parts 225 and 252 as 
follows:

    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


225.000  [Removed]

    2. Section 225.000 is removed.
    3. Section 225.001 is revised to read as follows:


225.001  General.

    For guidance on evaluating offers of foreign end products, see PGI 
225.001.


225.171  [Removed]

    4. Section 225.171 is removed.
    5. Section 225.401-70 is amended in the introductory text by 
revising the last sentence to read as follows:


225.401-70  Products subject to trade agreements.

    * * * However, 225.003 expands the definition of Caribbean Basin 
country end products to include petroleum and any product derived from 
petroleum, in accordance with Section 8094 of Public Law 103-139.
    6. Section 225.408 is revised to read as follows:


225.408  Procedures.

    (a)(4) The requirements of FAR 25.408(a)(4), on submission of 
offers in U.S. dollars, do not apply to overseas acquisitions or to 
Defense Energy Support Center post, camp, or station overseas 
requirements.
    7. Section 225.504 is revised to read as follows:


225.504  Evaluation examples.

    For examples that illustrate the evaluation procedures in 
225.502(c)(ii), see PGI 225.504.
    8. Section 225.701 is revised to read as follows:


225.701  Restrictions.

    See 209.104-1(g) for restrictions on contracting with firms owned 
or controlled by foreign governments.
    9. Section 225.802 is revised to read as follows:


225.802  Procedures.

    (b) Information on memoranda of understanding and other 
international agreements is available at PGI 225.802(b).
    10. Section 225.802-70 is amended by adding paragraph (c) to read 
as follows:


225.802-70  Contracts for performance outside the United States and 
Canada.

* * * * *
    (c) For work performed in Germany, eligibility for logistics 
support and base privileges of contractor employees is governed by 
U.S.-German bilateral agreements. Follow the procedures in Army in 
Europe Regulation 715-9, available at http://www.chrma.hqusareur.army.mil/docper.
    11. Section 225.870-1 is amended by revising paragraph (d) and 
removing paragraph (e). The revised text reads as follows:


225.870-1  General.

* * * * *
    (d) For additional information on production rights, data, and 
information; services provided by Canadian Commercial Corporation; 
audit; and inspection, see PGI 225.870-1(d).
    12. Section 225.870-5 is revised to read as follows:

[[Page 14627]]

225.870-5  Contract administration.

    Follow the contract administration procedures at PGI 225.870-5.
    13. Section 225.870-7 is revised to read as follows:


225.870-7  Acceptance of Canadian supplies.

    For information on the acceptance of Canadian supplies, see PGI 
225.870-7.
    14. Section 225.871 is revised to read as follows:


225.871  North Atlantic Treaty Organization (NATO) cooperative 
projects.

    15. Section 225.871-1 is revised to read as follows:


225.871-1  Scope.

    This section implements 22 U.S.C. 2767 and 10 U.S.C. 2350b.
    16. Section 225.871-5 is amended by revising paragraph (b) and 
removing paragraph (c). The revised text reads as follows:


225.871-5  Directed subcontracting.

* * * * *
    (b) In some instances, it may not be feasible to name specific 
subcontractors at the time the agreement is concluded. However, the 
agreement shall clearly state the general provisions for work sharing 
at the prime and subcontract level. For additional information on 
cooperative project agreements, see PGI 225.871-5.
    17. Section 225.871-6 is revised to read as follows:


225.871-6  Disposal of property.

    Dispose of property that is jointly acquired by the members of a 
cooperative project under the procedures established in the agreement 
or in a manner consistent with the terms of the agreement, without 
regard to any laws of the United States applicable to the disposal of 
property owned by the United States.
    18. Section 225.872-4 is revised to read as follows:


225.872-4  Individual determinations.

    If the offer of an end product from a qualifying country source 
listed in 225.872-1(b), as evaluated, is low or otherwise eligible for 
award, prepare a determination and findings exempting the acquisition 
from the Buy American Act and the Balance of Payments Program as 
inconsistent with the public interest, unless another exception such as 
the Trade Agreements Act applies. Follow the procedures at PGI 225.872-
4.
    19. Section 225.872-5 is amended by revising paragraphs (b) and (c) 
and by removing paragraph (d). The revised text reads as follows:


225.872-5  Contract administration.

* * * * *
    (b) Follow the contract administration procedures at PGI 225.872-
5(b).
    (c) Information on quality assurance delegations to foreign 
governments is in subpart 246.4, Government Contract Quality Assurance.
    20. Section 225.872-6 is amended by revising paragraph (c) to read 
as follows:


225.872-6  Audit.

* * * * *
    (c) Handle requests for audits in qualifying countries in 
accordance with 215.404-2(c), but follow the additional procedures at 
PGI 225.872-6(c).
    21. Section 225.873-2 is revised to read as follows:


225.873-2  Procedures.

    When an offeror or a contractor identifies a levy included in an 
offered or contract price, follow the procedures at PGI 225.873-2.
    22. Sections 225.902 and 225.903 are revised to read as follows:


225.902  Procedures.

    Follow the entry and release procedures at PGI 225.902.


225.903  Exempted supplies.

    (b)(i) For an explanation of the term ``supplies,'' see PGI 
225.903(b)(i).
    (ii) The duty-free certificate shall be printed, stamped, or typed 
on the face of, or attached to, Customs Form 7501. A duly designated 
officer or civilian official of the appropriate department or agency 
shall execute the certificate in the format provided at PGI 
225.903(a)(ii).
    23. Section 225.7003 is amended in paragraph (a) by revising the 
introductory text to read as follows:


225.7003  Waiver of restrictions of 10 U.S.C. 2534.

    (a) The waiver procedures of this section apply only if 
specifically authorized by reference elsewhere in this subpart. The 
restrictions on certain foreign purchases under 10 U.S.C. 2534(a) may 
be waived as follows:
* * * * *
    24. Sections 225.7301 and 225.7302 are revised to read as follows:


225.7301  General.

    (a) The U.S. Government sells defense articles and services to 
foreign governments or international organizations through FMS 
agreements. The agreement is documented in a Letter of Offer and 
Acceptance (LOA) (see DoD 5105.38-M, Security Assistance Management 
Manual).
    (b) Conduct FMS acquisitions under the same acquisition and 
contract management procedures used for other defense acquisitions.
    (c) Follow the additional procedures at PGI 225.7301(c) for 
preparation of solicitations and contracts that include FMS 
requirements.


225.7302  Guidance.

    For guidance on the role of the contracting officer in FMS programs 
that will require an acquisition, see PGI 225.7302.
    25. Section 225.7303-2 is amended in paragraph (a)(3) by revising 
the introductory text to read as follows:


225.7303-2  Cost of doing business with a foreign government or an 
international organization.

    (a) * * *
    (3) Offset costs (also see 225.7307).
* * * * *


225.7303-4  [Amended]

    26. Section 225.7303-4 is amended in paragraph (b)(1) by revising 
the last parenthetical to read ``(see 225.7307(a))'.


225.7306  [Removed]

    27. Section 225.7306 is removed.


225.7307 and 225.7308  [Redesignated]

    28. Sections 225.7307 and 225.7308 are redesignated as sections 
225.7306 and 225.7307, respectively.
    29. Newly designated section 225.7306 is revised to read as 
follows:


225.7306  Offset arrangements.

    In accordance with the Presidential policy statement of April 16, 
1990, DoD does not encourage, enter into, or commit U.S. firms to FMS 
offset arrangements. The decision whether to engage in offsets, and the 
responsibility for negotiating and implementing offset arrangements, 
resides with the companies involved. (Also see 225.7303-2(a)(3)).
    30. Section 225.7501 is amended by revising paragraph (a)(2)(iii) 
to read as follows:


225.7501  Policy.

* * * * *
    (a) * * *
    (2) * * *
    (iii) A spare part for foreign-manufactured vehicles, equipment, 
machinery, or systems, provided the acquisition is restricted to the 
original manufacturer or its supplier;
* * * * *

[[Page 14628]]

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES


252.225-7027 and 252.225-7028  [Amended]

    31. Sections 252.225-7027 and 252.225-7028 are amended in the 
introductory text by removing ``225.7308'' and adding in its place 
``225.7307''.
[FR Doc. 05-5625 Filed 3-22-05; 8:45 am]
BILLING CODE 5001-08-P