[Federal Register Volume 71, Number 116 (Friday, June 16, 2006)]
[Rules and Regulations]
[Pages 34834-34836]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-9500]


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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Part 252

RIN 0750-AF43


Defense Federal Acquisition Regulation Supplement; Free Trade 
Agreement--El Salvador, Honduras, and Nicaragua (DFARS Case 2006-D019)

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 implement the Dominican 
Republic-Central America-United States Free Trade Agreement with 
respect to El Salvador, Honduras, and Nicaragua. The Free Trade 
Agreement waives the applicability of the Buy American Act for some 
foreign supplies and construction materials and specifies procurement 
procedures designed to ensure fairness.

DATES: Effective date: June 16, 2006.
    Comment date: Comments on the interim rule should be submitted in 
writing to the address shown below on or before August 15, 2006, to be 
considered in the formation of the final rule.

ADDRESSES: You may submit comments, identified by DFARS Case 2006-D019, 
using any of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     E-mail: [email protected]. Include DFARS Case 2006-D019 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.
    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 DFARS provisions and clauses to implement 
the Dominican Republic-Central America-United States Free Trade 
Agreement (CAFTA-DR) with respect to El Salvador, Honduras, and 
Nicaragua. Congress approved the CAFTA-DR in the Dominican Republic-
Central America-United States Free Trade Agreement Implementation Act 
(Pub. L. 109-53). Other signatory countries to the CAFTA-DR are Costa 
Rica, the Dominican Republic, and Guatemala. The DFARS will be further 
amended when the CAFTA-DR takes effect for these countries. The CAFTA-
DR waives the applicability of the Buy American Act for some foreign 
supplies and construction materials and specifies procurement 
procedures designed to ensure fairness.
    For supply and service contracts, the CAFTA-DR has the same dollar 
threshold as the other Free Trade Agreements ($64,786), except that the 
Morocco Free Trade Agreement has a higher threshold that is equal to 
the threshold for the World Trade Organization Government Procurement 
Agreement ($193,000); and the North American Free Trade Agreement 
(NAFTA) has a lower threshold with respect to supply contracts 
involving Canada ($25,000). For construction contracts, the CAFTA-DR 
and the Morocco Free Trade Agreement have the same threshold as the 
Australia Free Trade Agreement, the Chile Free Trade Agreement, the 
Singapore Free Trade Agreement, and the World Trade Organization 
Government Procurement Agreement ($7,407,000), which is lower than the 
NAFTA threshold of $8,422,165 for construction contracts. Therefore, 
the DFARS provision and clause that implement the Free Trade Agreements 
below the World Trade Organization Government Procurement Agreement 
threshold (DFARS 252.225-7035 and 252.225-7036) apply to end products 
from all Free Trade Agreement countries except Morocco. The 
construction contract clause that implements trade agreements (DFARS 
252.225-7045) applies to all designated country construction material 
except Mexican construction material, because Canada, the other NAFTA 
country, is a member of the World Trade Organization Government 
Procurement Agreement.
    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 DoD procurement to the products of El Salvador, Honduras, and 
Nicaragua, 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 2006-D019.

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 the Dominican Republic-Central America-
United States Free Trade Agreement with respect to El Salvador, 
Honduras, and Nicaragua, as approved by Congress in Public Law 109-53. 
The Free Trade Agreement waives the applicability of the Buy American 
Act for some foreign supplies and construction materials from El 
Salvador, Honduras, and Nicaragua, and specifies procurement procedures 
designed to ensure fairness. The Free Trade

[[Page 34835]]

Agreement became effective for El Salvador on March 1, 2006, and for 
Honduras and Nicaragua on April 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 Part 252

    Government procurement.

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

0
Therefore, 48 CFR part 252 is amended as follows:

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
1. The authority citation for 48 CFR part 252 continues to read as 
follows:

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


252.212-7001  [Amended]

0
2. Section 252.212-7001 is amended as follows:
0
a. By revising the clause date to read ``(JUN 2006)'';
0
b. In paragraph (b), in entry ``252.225-7021'', by removing ``(FEB 
2006)'' and adding in its place ``(JUN 2006)''; and
0
c. In paragraph (b), in entry ``252.225-7036'', by removing ``(JUN 
2005)'' and adding in its place ``(JUN 2006)''.

0
3. Section 252.225-7013 is amended by revising the clause date and 
paragraph (a)(2) to read as follows:


252.225-7013  Duty-Free Entry.

* * * * *
Duty-Free Entry (JUN 2006)
    (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, other than a 
Moroccan end product, as defined in the Buy American Act-Free Trade 
Agreements-Balance of Payments Program clause of this contract; or
    (iii) Canadian end product as defined in Alternate I of the Buy 
American Act-Free Trade Agreements-Balance of Payments Program clause 
of this contract.
* * * * *

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


252.225-7021  Trade agreements.

* * * * *
Trade Agreements (JUN 2006)
    (a) * * *
    (3) * * *
    (ii) A Free Trade Agreement country (Australia, Canada, Chile, El 
Salvador, Honduras, Mexico, Morocco, Nicaragua, or Singapore);
* * * * *
    (iv) A Caribbean Basin country (Antigua and Barbuda, Aruba, 
Bahamas, Barbados, Belize, British Virgin Islands, Costa Rica, 
Dominica, Dominican Republic, Grenada, Guatemala, Guyana, Haiti, 
Jamaica, Montserrat, Netherlands Antilles, St. Kitts and Nevis, St. 
Lucia, St. Vincent and the Grenadines, or Trinidad and Tobago).
* * * * *

0
5. Section 252.225-7035 is amended by revising the clause date and 
paragraphs (a), (b)(2), (c)(2)(ii), and Alternate I to read as follows:


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

* * * * *
Buy American Act-Free Trade Agreements-Balance of Payments Program 
Certificate (JUN 2006)
    (a) Definitions. Domestic end product, Free Trade Agreement 
country, Free Trade Agreement country end product, foreign end product, 
Moroccan 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) * * *
    (2) For line items subject to Free Trade Agreements, will evaluate 
offers of qualifying country end products or Free Trade Agreement 
country end products other than Moroccan end products without regard to 
the restrictions of the Buy American Act or the Balance of Payments 
Program.
    (c) * * *
    (2) * * *
    (ii) The offeror certifies that the following supplies are Free 
Trade Agreement country end products other than Moroccan end products:

(Line Item Number) (Country of Origin)

* * * * *
Alternate I (JUN 2006)
    As prescribed in 225.1101(9), substitute the phrase ``Canadian end 
product'' for the phrases ``Free Trade Agreement country'', ``Free 
Trade Agreement country end product'', and ``Moroccan end product'' in 
paragraph (a) of the basic provision; and substitute the phrase 
``Canadian end products'' for the phrase ``Free Trade Agreement country 
end products other than Moroccan end products'' in paragraphs (b)(2) 
and (c)(2)(ii) of the basic provision.

0
6. Section 252.225-7036 is amended as follows:
0
a. By revising the clause date;
0
b. By removing paragraph (a)(4);
0
c. By redesignating paragraph (a)(5) as paragraph (a)(4), and 
paragraphs (a)(6) through (9) as paragraphs (a)(8) through (11) 
respectively;
0
d. By adding new paragraphs (a)(5) through (7); and
0
e. By revising paragraph (c) to read 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 (JUN 
2006)
    (a) * * *
    (5) Free Trade Agreement country means Australia, Canada, Chile, El 
Salvador, Honduras, Mexico, Morocco, Nicaragua, or Singapore;
    (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) Moroccan end product means an article that--
    (i) Is wholly the growth, product, or manufacture of Morocco; 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 Morocco 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

[[Page 34836]]

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.
* * * * *
    (c) The Contractor shall deliver under this contract only domestic 
end products unless, in its offer, it specified delivery of qualifying 
country end products, Free Trade Agreement country end products other 
than Moroccan end products, 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 a 
Free Trade Agreement country end product other than a Moroccan end 
product, the Contractor shall deliver a qualifying country end product, 
a Free Trade Agreement country end product other than a Moroccan end 
product, or, at the Contractor's option, a domestic end product.
* * * * *
    7. Section 252.225-7045 is amended by revising the clause date, the 
definition of ``Designated country'' in paragraph (a), and Alternate I 
to read as follows:


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

* * * * *
    Balance of Payments Program--Construction Material Under Trade 
Agreements (JUN 2006)
    (a) * * *
    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, El 
Salvador, Honduras, Mexico, Morocco, Nicaragua, 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, Grenada, Guatemala, Guyana, Haiti, Jamaica, 
Montserrat, Netherlands Antilles, St. Kitts and Nevis, St. Lucia, St. 
Vincent and the Grenadines, or Trinidad and Tobago).
* * * * *
    Alternate I (JUN 2006). As prescribed in 225.7503(b), add the 
following definition of ``Mexican 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:
    Mexican construction material means a construction material that--
    (1) Is wholly the growth, product, or manufacture of Mexico; 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 Mexico 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 designated 
country construction material other than Mexican construction material.
    (c) The Contractor shall use only domestic or designated country 
construction material other than Mexican 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. E6-9500 Filed 6-15-06; 8:45 am]
BILLING CODE 5001-08-P