[Federal Register Volume 71, Number 54 (Tuesday, March 21, 2006)]
[Rules and Regulations]
[Pages 14110-14112]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-2641]


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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 225 and 252

[DFARS Case 2003-D021]


Defense Federal Acquisition Regulation Supplement; Acquisition of 
Ball and Roller Bearings

AGENCY: Defense Acquisition Regulations System, Department of Defense 
(DoD).

ACTION: Final rule.

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SUMMARY: DoD has issued a final rule amending the Defense Federal 
Acquisition Regulation Supplement (DFARS) to update requirements 
pertaining to the acquisition of ball and roller bearings from domestic 
sources. This final rule addresses the requirements of annual DoD 
appropriations acts and eliminates text addressing obsolete statutory 
requirements.

DATES: Effective Date: March 21, 2006.

FOR FURTHER INFORMATION CONTACT: Ms. Amy Williams, Defense Acquisition 
Regulations System, OUSD (AT&L) DPAP (DARS), IMD 3C132, 3062 Defense 
Pentagon, Washington, DC 20301-3062. Telephone (703) 602-0328; 
facsimile (703) 602-0350. Please cite DFARS Case 2003-D021.

SUPPLEMENTARY INFORMATION:

A. Background

    DoD published a proposed rule at 70 FR 8560 on February 22, 2005. 
The rule proposed amendments to the restrictions on the acquisition of 
ball and roller bearings at DFARS 225.7009 and 252.225-7016 to (1) 
address only the exceptions, waivers, and waiver authority available to 
the contracting officer under current law; and (2) apply the exceptions 
to 10 U.S.C. 2534, authorized by Section 8003 of the Federal 
Acquisition Streamlining Act of 1994 (Pub. L. 103-355; 41 U.S.C. 430), 
as implemented at DFARS 212.504(a)(xviii), to bearings that are 
commercial components of non-commercial end items or components.
    The restriction of 10 U.S.C. 2534(a)(5) expired on October 1, 2005. 
This does not substantively change the DFARS rule, but provides further 
support for the rule.
    Eight respondents submitted comments on the proposed rule. A 
discussion of the comments, grouped by subject category, is provided 
below.
    1. Increased acquisition of nondomestic bearings. The proposed rule 
expanded the exception for acquisition of nondomestic bearings by 
allowing the purchase of nondomestic bearings that are commercial 
components of a noncommercial end product in acquisitions not using 
simplified acquisition procedures.
    a. Comment: One respondent supports the rule as long as small 
businesses are allowed to sell nondomestic bearings that are approved.
    DoD Response: The DFARS rule applies equally to all businesses, 
large and small.
    b. Comment: Another respondent is concerned that we are not 
supporting our troops, because it is still too difficult to purchase 
replacement ball and roller bearings for DoD weapon systems when those 
replacement bearings are of a nondomestic origin. This respondent 
states that few domestic companies can comply or produce a truly 
domestic bearing, and that the DFARS rule still prevents procuring 
activities from readily supporting the military as thousands of 
bearings are turning foreign.
    DoD Response: Although DoD acknowledges the identified problems, 
the rule cannot allow additional purchase of nondomestic bearings due 
to the restrictions of annual DoD appropriations acts.
    c. Comment: Three respondents are concerned that the rule will have 
a negative impact on the bearing industry and national security, by 
allowing Government contractors to incorporate nondomestic commercial 
ball and roller bearings into noncommercial end products. They fear 
loss of domestic capacity and are concerned that the supply of 
components critical to the national security of the United States may 
become dependent on manufacturers controlled by governments with 
interests that are opposed to those of the United States. They object 
that areas vital to our national security should not be compromised, 
despite the benefits of global trade.
    DoD Response: With the expiration of 10 U.S.C. 2534(a)(5), there is 
no longer a statutory basis for restricting the acquisition of bearings 
that are commercial components of noncommercial end products. DoD will 
continue to restrict the acquisition of nondomestic noncommercial ball 
and roller bearings and commercial ball and roller bearings that are 
purchased as end products, in accordance with the annual DoD 
appropriations acts.
    d. Comment: One respondent expresses concern that the acquisition 
of nondomestic bearings (most likely from China) will stretch the 
supply chain, introducing instability into the process and extending 
lead times.
    DoD Response: Acquiring bearings even from distant places probably 
adds only 2 or 3 days to the supply chain.
    2. Waiver process.
    Comment: Several respondents believe that the rule makes the waiver 
process more difficult and time-consuming and will cause delays in the 
acquisition of ball and roller bearings.
    DoD Response: The rule does not impose new or higher level waiver 
requirements, but clarifies existing requirements of annual DoD 
appropriations acts. Heads of agencies can redelegate the waiver 
authority as appropriate.
    3. Structure and clarity of the regulation.
    a. Comment: One respondent recommends maintaining the current 
distinctions between the restrictions, exceptions, and waiver authority 
of 10 U.S.C. 2534 and annual DoD appropriations acts, because of a 
legal distinction between the limit on contracting authority (10 U.S.C. 
2534) and the fiscal restrictions on expending funds (annual DoD 
appropriations acts). The respondent acknowledges that these 
restrictions largely overlap and have the same result, except for 
differences in the waiver process.
    DoD Response: This comment is no longer applicable, since the 
restriction on ball and roller bearings at 10 U.S.C. 2534(a)(5) has 
expired.
    b. Comment: One respondent states that the existing exception at 
DFARS 225.7009-2(a)(4) is necessary to acquire bearings for use 
overseas.
    DoD Response: This comment demonstrates the need for clarification 
of this section. DFARS 225.7009-2(a)(4) only provided an exception to 
the restrictions of 10 U.S.C. 2534. The annual DoD appropriations act 
restrictions still applied, unless the exception at 225.7009-2(b) 
applied, or a waiver was granted in accordance with 225.7009-3(c). Such 
confusion could result in acquisitions that are not in compliance with 
the DoD appropriations act restrictions. However, expiration of the 
restriction at

[[Page 14111]]

10 U.S.C. 2534(a)(5), as reflected in this final rule, should eliminate 
such confusion.
    c. Comment: One respondent believes that the language in the rule 
is unclear and, at times, seemingly contradictory. The respondent 
compares the commercial item exception at 225.7009-3 to the commercial 
item exception in the clause at 252.225-7016(c). The respondent 
considers that the clause may be interpreted many different ways and 
will add expense and time to those attempting to comply.
    DoD Response: Although DoD finds that, upon careful reading, the 
text and clause are compatible, DoD has added a definition of 
``component'' to the clause at DFARS 252.225-7016 and has revised 
paragraph (c) of the clause to more explicitly state the exceptions. 
This clause is used only in DoD solicitations and contracts in 
accordance with the prescription at DFARS 225.7009-5. It is not used if 
the items being acquired are commercial items other than ball or roller 
bearings. The exceptions to the clause apply only to ball or roller 
bearings that are acquired as components. Therefore, the clause 
requires compliance if the bearing is the end product (whether 
commercial or noncommercial) or the bearing is a noncommercial 
component of a noncommercial end product.
    4. Potential legislative changes.
    Comment: One respondent is concerned that, if Congress extends the 
restriction of 10 U.S.C. 2534 but does not impose the annual 
appropriations act restriction, the contracting officer would be left 
with an unnecessary requirement. The respondent also raises the issue 
that it might be better to introduce this change after there is 
confirmation that there are no Congressional efforts to extend the 
restriction at 10 U.S.C. 2534(a)(5) and the statutory limitation on 
contracting authority lapses in October 2005.
    DoD Response: The expiration of 10 U.S.C. 2534(a)(5) is reflected 
in 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 has prepared a final regulatory flexibility analysis consistent 
with 5 U.S.C. 604. A copy of the analysis may be obtained from the 
point of contact specified herein. The analysis is summarized as 
follows:
    This final rule amends the DFARS to update requirements relating to 
the acquisition of ball and roller bearings from domestic sources. The 
rule removes DFARS text relating to the requirements of 10 U.S.C. 
2534(a)(5), which expired on October 1, 2005. As a result, the 
exceptions to domestic source requirements are expanded to permit the 
purchase of nondomestic bearings that are commercial components of a 
noncommercial end product, regardless of the dollar value of the 
acquisition. The rule retains other restrictions on the acquisition of 
ball and roller bearings, as required by annual DoD appropriations 
acts. There were no significant issues raised by the public comments in 
response to the initial regulatory flexibility analysis. As a result of 
comments received on the proposed rule, the final rule contains 
additional changes to clarify the requirements of the rule. The rule 
applies to manufacturers of commercial bearings, and manufacturers of 
noncommercial products that incorporate commercial bearings. 
Manufacturers of domestic commercial bearings may face increased 
competition from foreign commercial bearing manufacturers, but 
manufacturers of noncommercial products incorporating bearings will be 
relieved of extensive administrative burdens in tracking the source of 
commercial bearings and requesting waivers from domestic source 
requirements. All entities will benefit from the increased simplicity 
and clarity of the regulations.

C. Paperwork Reduction Act

    The information collection and record keeping requirements of the 
clause at 252.225-7016, Restriction on Acquisition of Ball and Roller 
Bearings, are approved for use through March 31, 2007, under Office of 
Management and Budget Clearance 0704-0229. The final rule reduces the 
estimated annual burden for contractors under the clause by 301,600 
hours.

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 225.7001 is amended by revising paragraphs (a) and (b) to 
read as follows:


225.7001  Definitions.

* * * * *
    (a) Bearing components is defined in the clause at 252.225-7016, 
Restriction on Acquisition of Ball and Roller Bearings.
    (b) Component is defined in the clauses at 252.225-7012, Preference 
for Certain Domestic Commodities, and 252.225-7016, Restriction on 
Acquisition of Ball and Roller Bearings.
* * * * *

0
3. Section 225.7003 is amended by revising paragraph (b) introductory 
text to read as follows:


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

* * * * *
    (b) In accordance with the provisions of paragraphs (a)(1)(i) 
through (iii) of this section, the Under Secretary of Defense 
(Acquisition, Technology, and Logistics) has waived the restrictions of 
10 U.S.C. 2534(a) for certain items manufactured in the United Kingdom, 
including air circuit breakers for naval vessels (see 225.7006). This 
waiver applies to--
* * * * *

0
4. Sections 225.7009 through 225.7009-4 are revised to read as follows:


225.7009  Restriction on ball and roller bearings.


225.7009-1  Scope.

    This section implements Section 8065 of the Fiscal Year 2002 DoD 
Appropriations Act (Pub. L. 107-117) and the same restriction in 
subsequent DoD appropriations acts.


225.7009-2  Restriction.

    Do not acquire ball and roller bearings or bearing components 
unless the bearings and bearing components are manufactured in the 
United States or Canada.


225.7009-3  Exception.

    The restriction in 225.7009-2 does not apply to contracts or 
subcontracts for the acquisition of commercial items, except for 
commercial ball and roller bearings acquired as end items.


225.7009-4  Waiver.

    The Secretary of the department responsible for acquisition or, for 
the Defense Logistics Agency, the Component Acquisition Executive, may 
waive the restriction in 225.7009-2, on a case-by-case basis, by 
certifying to the House and Senate Committees on Appropriations that--
    (a) Adequate domestic supplies are not available to meet DoD 
requirements on a timely basis; and

[[Page 14112]]

    (b) The acquisition must be made in order to acquire capability for 
national security purposes.

0
5. Section 225.7009-5 is added to read as follows:


225.7009-5  Contract clause.

    Use the clause at 252.225-7016, Restriction on Acquisition of Ball 
and Roller Bearings, in solicitations and contracts, unless--
    (a) The items being acquired are commercial items other than ball 
or roller bearings acquired as end items;
    (b) The items being acquired do not contain ball and roller 
bearings; or
    (c) A waiver has been granted in accordance with 225.7009-4.

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
6. Section 252.212-7001 is amended by revising the clause date and, in 
paragraph (b), by revising entry ``252.225-7016'' 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 2006)
* * * * *
    (b) * * *
    ----252.225-7016 Restriction on Acquisition of Ball and
    Roller Bearings (MAR 2006) (Section 8065 of Public Law 107-117 and 
the same restriction in subsequent DoD appropriations acts).
* * * * *

0
7. Section 252.225-7016 is revised to read as follows:


252.225-7016  Restriction on Acquisition of Ball and Roller Bearings.

    As prescribed in 225.7009-5, use the following clause:
Restriction on Acquisition of Ball and Roller Bearings (Mar 2006)
    (a) Definitions. As used in this clause'
    (1) Bearing components means the bearing element, retainer, inner 
race, or outer race.
    (2) Component, other than bearing components, means any item 
supplied to the Government as part of an end product or of another 
component.
    (3) End product means supplies delivered under a line item of this 
contract.
    (b) Except as provided in paragraph (c) of this clause, all ball 
and roller bearings and ball and roller bearing components delivered 
under this contract, either as end items or components of end items, 
shall be wholly manufactured in the United States, its outlying areas, 
or Canada. Unless otherwise specified in this contract, raw materials, 
such as preformed bar, tube, or rod stock and lubricants, need not be 
mined or produced in the United States, its outlying areas, or Canada.
    (c) The restriction in paragraph (b) of this clause does not apply 
to ball or roller bearings that are acquired as--
    (1) Commercial components of a noncommercial end product; or
    (2) Commercial or noncommercial components of a commercial 
component of a noncommercial end product.
    (d) The restriction in paragraph (b) of this clause may be waived 
upon request from the Contractor in accordance with subsection 
225.7009-4 of the Defense Federal Acquisition Regulation Supplement.
    (e) The Contractor shall insert the substance of this clause, 
including this paragraph (e), in all subcontracts, except those for--
    (1) Commercial items; or
    (2) Items that do not contain ball or roller bearings. (End of 
clause)

[FR Doc. 06-2641 Filed 3-20-06; 8:45 am]
BILLING CODE 5001-08-P