[Federal Register Volume 71, Number 36 (Thursday, February 23, 2006)]
[Rules and Regulations]
[Pages 9269-9271]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-1635]


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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 225 and 252

RIN 0750-AF29


Defense Federal Acquisition Regulation Supplement; Trade 
Agreements Thresholds and Morocco Free Trade Agreement (DFARS Case 
2005-D017)

AGENCY: Defense Acquisition Regulations System, 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 (DFARS) to incorporate increased 
thresholds for application of the World Trade Organization Government 
Procurement Agreement and the Free Trade Agreements, as determined by 
the United States Trade Representative. The rule also implements a new 
Free Trade Agreement with Morocco and amends the list of end products 
that are subject to trade agreements.

DATES: Effective Date: February 23, 2006.
    Comment date: Comments on the interim rule should be submitted in 
writing to the address shown below on or before April 24, 2006, to be 
considered in the formation of the final rule.

ADDRESSES: You may submit comments, identified by DFARS Case 2005-D017, 
using any of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     E-mail: dfars@osd.mil. Include DFARS Case 2005-D017 in the 
subject line of the message.
     Fax: (703) 602-0350.
     Mail: Defense Acquisition Regulations System, Attn: Ms. 
Amy Williams, OUSD (AT&L) DPAP (DARS), IMD 3C132, 3062 Defense 
Pentagon, Washington, DC 20301-3062.
     Hand Delivery/Courier: Defense Acquisition Regulations 
System, Crystal Square 4, Suite 200A, 241 18th Street, Arlington, VA 
22202-3402.

[[Page 9270]]

    Comments received generally will be posted without change to http://www.regulations.gov, including any personal information provided.

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

SUPPLEMENTARY INFORMATION:

A. Background

    This interim rule amends the clause prescriptions at DFARS 225.1101 
and 225.7503 to reflect increased thresholds for application of the 
trade agreements. Every 2 years, the trade agreements thresholds are 
escalated according to a pre-determined formula set forth in the 
agreements. The United States Trade Representative has specified the 
following thresholds (70 FR 73510, December 12, 2005):

----------------------------------------------------------------------------------------------------------------
                                                                      Supply          Service      Construction
                                                                     contract        contract        contract
                         Trade agreement                           (equal to or    (equal to or    (equal to or
                                                                    exceeding)      exceeding)      exceeding)
----------------------------------------------------------------------------------------------------------------
World Trade Organization Government Procurement Agreement.......        $193,000        $193,000      $7,407,000
Free Trade Agreements (FTA):
    Australia FTA...............................................          64,786          64,786       7,407,000
    Chile FTA...................................................          64,786          64,786       7,407,000
    Morocco FTA.................................................         193,000         193,000       7,407,000
    Singapore FTA...............................................          64,786          64,786       7,407,000
NAFTA:
    --Canada....................................................          25,000          64,786       8,422,165
    --Mexico....................................................          64,786          64,786       8,422,165
----------------------------------------------------------------------------------------------------------------

    In addition, this interim rule implements a new Free Trade 
Agreement with Morocco as approved by Congress (Pub. L. 108-302). The 
Morocco Free Trade Agreement waives the applicability of the Buy 
American Act for some foreign supplies and construction materials from 
Morocco, and specifies procurement procedures designed to ensure 
fairness.
    The World Trade Organization Government Procurement Agreement and 
the other free trade agreements each list the items to which the trade 
agreements do not apply when acquired by DoD. DFARS 225.401-70 lists 
the end products that are subject to trade agreements if the value of 
the acquisition is at or above the applicable dollar threshold. The 
following items are not excluded for DoD from coverage by the trade 
agreements and, therefore, have been added to the list at DFARS 
225.401-70: Pins, needles, sewing kits, flag staffs, flagpoles, 
flagstaff trucks, and tobacco products.
    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 dollar 
threshold changes are designed to keep pace with inflation and thus 
maintain the status quo. Although the rule opens up DoD procurement to 
the products of 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, and procurements that are set aside for small businesses 
are exempt from application of the trade agreements. 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 2005-D017.

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. However, there is no impact on the estimated 
burden hours. The dollar threshold changes are in line with inflation 
and maintain the status quo. Reporting of products from Morocco as Free 
Trade Agreement end products rather than other foreign end products has 
no impact on paperwork burden.

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 incorporates increased dollar thresholds for 
application of the World Trade Organization Government Procurement 
Agreement and the Free Trade Agreements, as determined by the United 
States Trade Representative. In addition, the rule implements a new 
Free Trade Agreement with Morocco, as approved by Congress (Pub. L. 
108-302). The Morocco Free Trade Agreement waives the applicability of 
the Buy American Act for some foreign supplies and construction 
materials from Morocco and specifies procurement procedures designed to 
ensure fairness. The increased dollar thresholds and the Morocco Free 
Trade Agreement became effective on January 1, 2006. 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 225.401-70 is amended in the table by adding, in numerical 
order, two new entries to read as follows:


Sec.  225.401-70  End products subject to trade agreements.

* * * * *
    83 Pins, needles, and sewing kits (only part of 8315) and flag 
staffs, flagpoles, and flagstaff trucks (only part of 8345)
* * * * *

[[Page 9271]]

    89 Tobacco products (only 8975)
* * * * *

0
3. Section 225.1101 is amended by revising paragraph (10)(i) to read as 
follows:


Sec.  225.1101  Acquisition of supplies.

* * * * *
    (10)(i) Use the clause at 252.225-7036, Buy American Act--Free 
Trade Agreements--Balance of Payments Program, instead of the clause at 
FAR 52.225-3, Buy American Act--Free Trade Agreements--Israeli Trade 
Act, in solicitations and contracts for the items listed at 225.401-70, 
when the estimated value equals or exceeds $25,000, but is less than 
$193,000, and a Free Trade Agreement applies to the acquisition.
    (A) Use the basic clause when the estimated value equals or exceeds 
$64,786.
    (B) Use the clause with its Alternate I when the estimated value 
equals or exceeds $25,000 but is less than $64,786.
* * * * *

0
4. Section 225.7503 is revised to read as follows:


Sec.  225.7503  Contract clauses.

    Unless the entire acquisition is exempt from the Balance of 
Payments Program--
    (a) Use the clause at 252.225-7044, Balance of Payments Program--
Construction Material, in solicitations and contracts for construction 
to be performed outside the United States with a value greater than the 
simplified acquisition threshold but less than $7,407,000.
    (b) Use the clause at 252.225-7045, Balance of Payments Program--
Construction Material Under Trade Agreements, in solicitations and 
contracts for construction to be performed outside the United States 
with a value of $7,407,000 or more. For acquisitions with a value of 
$7,407,000 or more, but less than $8,422,165, use the clause with its 
Alternate I.

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES


252.212-7001  [Amended]

0
5. Section 252.212-7001 is amended as follows:
0
a. By revising the clause date to read ``(FEB 2006)''; and
0
b. In paragraph (b), in entry ``252.225-7021'', by removing ``(DEC 
2005)'' and adding in its place ``(FEB 2006)''.

0
6. Section 252.225-7021 is amended by revising the clause date and 
paragraph (a)(3)(ii) to read as follows:


Sec.  252.225-7021  Trade agreements.

* * * * *

Trade Agreements (FEB 2006)

    (a) * * *
    (3) * * *
    (ii) A Free Trade Agreement country (Australia, Canada, Chile, 
Mexico, Morocco, or Singapore);
* * * * *

0
7. Section 252.225-7045 is amended as follows:
0
a. By revising the clause date;
0
b. In paragraph (a), by revising paragraph (2) of the definition of 
``Designated country''; and
0
c. By revising Alternate I to read as follows:


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

* * * * *

Balance of Payments Program--Construction Material Under Trade 
Agreements (Feb 2006)

    (a) * * *
    Designated country means--
* * * * *
    (2) A Free Trade Agreement country (Australia, Canada, Chile, 
Mexico, Morocco, or Singapore);
* * * * *
    Alternate I (Feb 2006). 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. 06-1635 Filed 2-22-06; 8:45 am]
BILLING CODE 5001-08-P