[Federal Register Volume 71, Number 188 (Thursday, September 28, 2006)]
[Rules and Regulations]
[Pages 57378-57379]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-8217]





48 CFR Part 25

[FAC 2005-13; FAR Case 2005-022; Item VII;Docket 2006-0020, Sequence 
RIN 9000-AK34

Federal Acquisition Regulation; FAR Case 2005-022, Exception to 
the Buy American Act for Commercial Information Technology

AGENCIES: Department of Defense (DoD), General Services Administration 
(GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Final rule.


SUMMARY: The Civilian Agency Acquisition Council and the Defense 
Acquisition Regulations Council (Councils) have agreed to convert to a 
final rule without change, an interim rule amending the Federal 

[[Page 57379]]

Regulation (FAR) to implement Section 535(a) of Division F of the 
Consolidated Appropriations Act, 2004, and similar sections in 
subsequent appropriations acts. Section 535(a) authorizes an exception 
to the Buy American Act for acquisitions of information technology that 
are commercial items.

DATES: Effective Date: September 28, 2006.

FOR FURTHER INFORMATION CONTACT For clarification of content, contact 
Mr. Jeremy Olson, at (202) 501-3221. Please cite FAC 2005-13, FAR case 
2005-022. For information pertaining to status or publication 
schedules, contact the FAR Secretariat at (202) 501-4755.


A. Background

    This final rule amends the Federal Acquisition Regulation to 
implement annual appropriations act provisions that exempt acquisitions 
of information technology that are commercial items from the Buy 
American Act, including--
     Section 535(a) of Division F, Consolidated Appropriations 
Act, 2004 (Pub. L. 108-199);
     Section 517 of Division H, Title V of the Consolidated 
Appropriations Act, 2005 (Pub. L. 108-447); and
     Section 717 of Division A, Transportation, Treasury, 
Housing and Urban Development, the Judiciary, the District of Columbia, 
and Independent Agencies Appropriations Act, 2006 (Pub. L. 109-115).
    This exception was initially implemented through deviations by the 
individual agencies, until it became clear that it was not just for one 
year. The Councils now expect this exception to continue to appear in 
future appropriations acts. If the exception does not appear in a 
future appropriations act, the Councils will promptly change the FAR to 
limit applicability of the exception to the fiscal years to which it 
applies. DoD, GSA, and NASA published an interim rule in the Federal 
Register at 71 FR 223, January 3, 2006 and the public comment period 
closed on March 6, 2006.
    Public comments. The Councils addressed the two public comments as 

Agree with rule

    One respondent concurs with the rule as written. The respondent 
views this rule as a positive first step in recognizing the 
Government's need for quicker, cheaper access to commercial-off-the-
shelf information technology.
    Response: None required.

Rule should not apply to DoD

    The other respondent believes that the exception should not apply 
to DoD due to the security risk associated with foreign entities 
potentially gaining access to DoD information systems.
    Response: This rule implements statute. The statutes that the 
Councils are implementing do not exempt DoD. Each fiscal year statute 
states that the restrictions of the Buy American Act shall not apply to 
the acquisition by the Federal Government of information technology 
that is a commercial item.
     Although DoD uses DoD-unique Buy American Act/Free Trade Agreement 
provisions and clauses, this exception has already been implemented by 
DoD for Fiscal Years 2004 through 2006 by class deviations signed by 
the Director of Defense Procurement and Acquisition Policy (2004-O0003, 
2005-O0004, 2005-O0010).
    Regardless of the applicability of the Buy American Act, Defense 
FAR Supplement (DFARS) Subpart 239.71, Security and Privacy for 
Computer Systems, requires defense agencies to ensure that information 
assurance is provided for information technology in accordance with 
current policies, procedures, and statutes.
    This is not a significant regulatory action and, therefore, was not 
subject to review under Section 6(b) of Executive Order 12866, 
Regulatory Planning and Review, dated September 30, 1993. This rule is 
not a major rule under 5 U.S.C. 804.

B. Regulatory Flexibility Act

    The Regulatory Flexibility Act, 5 U.S.C. 601, et seq., applies to 
this final rule. The Councils prepared a Final Regulatory Flexibility 
Analysis (FRFA), and it is summarized as follows:
    The objective of this rule is to promote Government access to 
commercial information technology. As a result of this exception, 
the Buy American Act will no longer apply to acquisitions of 
commercial information technology. The Free Trade Agreement non-
discriminatory provisions are no longer necessary, since all 
products will be treated without the restrictions of the Buy 
American Act. The final rule applies to all offerors responding to 
solicitations for commercial information technology where the Buy 
American Act previously applied (generally, acquisitions between the 
micro-purchase threshold and $193,000). This impact analysis does 
not include the Department of Defense, which applies this exception 
to DoD-unique Buy American Act/Free Trade Agreement provisions and 
clauses under a separate case (DFARS Case 2005-D011). This exception 
will allow small entities to compete without meeting the Buy 
American Act domestic end product requirements.
    It is anticipated that small business concerns will continue to 
receive the same number of awards in the range of the micro-purchase 
threshold to $100,000, because these awards are generally set-aside 
for small business concerns. It is also expected that small business 
concerns will continue to receive awards in the range of $100,000 to 
$193,000, but in this range they will face competition from foreign 
end products.
    This rule will not have an effect on small businesses affected 
by the ``non-manufacturer rule,'' which means that a contractor 
under a small business set-aside or 8(a) contract shall be a small 
business under the applicable size standard and shall provide either 
its own product or that of another domestic small business 
manufacturing or processing concern. If there is a small business 
set-aside, and there is no SBA waiver of the nonmanufacturer rule, 
then FAR 52.219-6(c) and/or FAR 52.219-18(d) require that a domestic 
product must be furnished. In this case, the rule will have no 
effect on small businesses because the nonmanufacturer rule is not 
changed. If SBA did waive the nonmanufacturer rule, then there is no 
requirement to purchase a domestic product but an evaluation 
preference would apply. The rule could have an impact on small 
businesses when there is no small business set-aside because small 
businesses may lose the evaluation preference for acquisitions 
between $25,000 and $193,000.
    Interested parties may obtain a copy of the FRFA from the FAR 
Secretariat. The FAR Secretariat has submitted a copy of the FRFA to 
the Chief Counsel for Advocacy of the Small Business Administration.

C. Paperwork Reduction Act

    The Paperwork Reduction Act does apply because the changes to the 
FAR will slightly reduce the information collection requirements 
currently approved by the Office of Management and Budget OMB 
Clearances 9000-0024 and 9000-0130. We estimate a reduction of 
approximately 300 hours to OMB Clearance 9000-0024 and 50 hours to 

List of Subjects in 48 CFR Part 25

    Government procurement.

    Dated: September 19, 2006.
Ralph De Stefano,
Director, Contract Policy Division.

Interim Rule Adopted as Final Without Change

Accordingly, the interim rule amending 48 CFR part 25, which was 
published in the Federal Register at 71 FR 223, January 3, 2006, is 
adopted as a final rule without change.
[FR Doc. 06-8217 Filed 9-27-06; 8:45 am]