[Federal Register Volume 75, Number 118 (Monday, June 21, 2010)]
[Rules and Regulations]
[Pages 34943-34946]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-14937]


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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 225 and 252

[DFARS Case 2008-D024]
RIN 0750-AG13


Defense Federal Acquisition Regulation Supplement; Para-Aramid 
Fibers and Yarns Manufactured in a Qualifying Country

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

ACTION: Final rule.

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SUMMARY: DoD is adopting as final, with changes, the interim rule 
amending the Defense Federal Acquisition Regulation Supplement (DFARS) 
to implement determinations made by the Under Secretary of Defense for 
Acquisition, Technology, and Logistics with regard to the acquisition 
of items containing para-aramid fibers and yarns manufactured in 
foreign countries that have entered into a reciprocal defense 
procurement memorandum of understanding with the United States.

DATES: Effective Date: June 21, 2010.

FOR FURTHER INFORMATION CONTACT: Ms. Amy Williams, 703-602-0310.

SUPPLEMENTARY INFORMATION:

A. Background

    DoD published an interim rule in the Federal Register on December 
18, 2008 (73 FR 76970). The comment period closed on February 17, 2009.
    10 U.S.C. 2533a restricts DoD procurement of foreign synthetic 
fabric or coated synthetic fabric, including textiles, fibers, and 
yarns for use in such fabrics. Section 807 of the National Defense 
Authorization Act for Fiscal Year 1999 (Pub. L. 105-261) provides 
authority for DoD to waive the restriction at 10 U.S.C. 2533a with 
regard to para-aramid fibers and yarns. On February 12, 1999, the Under 
Secretary of Defense for Acquisition and Technology (USD(AT&L)) waived 
the restriction at 10 U.S.C. 2533a for para-aramid fibers and yarns 
manufactured in the Netherlands. On August 15, 2008, the USD(AT&L) 
expanded the existing waiver to permit the acquisition of para-aramid 
fibers and yarns manufactured in any qualifying country listed in DFARS 
225.003(10).
    The interim rule also clarified the definition of ``qualifying 
countries'' at DFARS 225.003 and 252.225-7012 by including a list of 
the qualifying countries within the definition instead of referring to 
the list at DFARS 225.872-1.
    DoD received comments on the interim rule from nine respondents. 
Based on public comments, changes were made to the interim rule. The 
differences between the interim rule and this final rule include--
     Restricting the authority to acquire para-aramid fibers 
and yarns manufactured in a qualifying country to apply to para-aramid 
fibers (both staple and continuous) and continuous filament para-aramid 
yarns, based on a new USD(AT&L) determination and findings, dated 
November 9, 2009, which contains a five year review requirement.
     Amplifying the definition of ``qualifying country'' to 
make clear that these are countries with which DoD has negotiated 
reciprocal defense procurement memoranda of understanding.

B. Public Comments

    The following is a discussion of the comments and the changes 
included in this final rule as a result of those comments:

[[Page 34944]]

1. Limit the Rule to Staple Para-Aramid Fibers and Continuous Filament 
Para-Aramid Yarns

    Two respondents opposed the interim rule acceptance of para-aramid 
yarns other than continuous filament yarns from any qualifying country 
(not just the Netherlands) because they believe it will increase 
competition from yarn producers outside the United States. They do not 
want the interim rule to apply to ``yarns spun from staple para-aramid 
fibers.'' They believe the rule should only apply to staple para-aramid 
fibers and continuous filament para-aramid yarns.
    Response: The respondents' rationale is that section 807 says that 
DoD may only procure articles containing para-aramid fibers and yarns 
manufactured in a qualifying country if--
     Procuring articles containing para-aramid fibers and yarns 
manufactured from suppliers in the national technology industrial base 
(U.S. & Canada) would result in sole source contracts or subcontracts; 
and
     To do so would not be in the best interests of the 
Government.
    DoD's 1999 Findings of Fact stated that DuPont is the sole 
manufacturer of para-aramid (continuous and staple) fiber in the United 
States and Canada. This is a correct statement. Therefore, the request 
by the respondents to limit this rule to staple para-aramid fiber is 
unfounded.
    However, the Findings also stated that DuPont is the sole producer 
of para-aramid yarn. DuPont is the sole producer of continuous filament 
para-aramid yarn, but it does not produce within the U.S. yarns made 
from staple para-aramid fiber. DoD has now identified 72 yarn producers 
in the U.S. and Canada, and three of these advertise that they produce 
yarn products made from DuPont Kevlar. DuPont supplies its Kevlar 
staple fiber to four major and six minor yarn producers in the U.S. and 
Canada, and it believes that there are several dozen more companies in 
Europe who produce yarn of this type.
    Therefore, the Under Secretary of Defense (AT&L) issued on November 
9, 2009, a revised determination and findings that limits the findings 
to staple and continuous para-aramid fibers and continuous filament 
para-aramid yarn. The final rule has been revised accordingly.

2. Review in Five Years To Establish Continued National Defense Need

    One respondent commented that this exception should be reviewed in 
five years and extended only if needed for national defense purposes. 
Another respondent notes that DuPont is in the process of building a 
new plant in South Carolina and that this would boost the availability 
of these products in the U.S.
    Response: DoD concurs. The request from industry that precipitated 
the USD (AT&L)'s determination to waive the restriction for all 
qualifying countries was based on DoD's immediate and increasing need 
for ballistic strength fiber in support of MRAP, ballistic armor, and 
other defense requirements in support of the Global War on Terror. It 
is reasonable to assume that this need will continue for at least five 
years, but a review at that time is a good idea. This requirement has 
been included in the new determination and findings.

3. Detrimental to U.S. Manufacturing Base

    Several respondents opposed this rule on the basis that it would be 
detrimental to the U.S. textile manufacturing base.
    One respondent was concerned about negative impact on spinners, 
knitters, weavers, finishers, and garment makers in the supply chain. 
Another respondent expressed concern over more foreign imports, when 
the jobs are so desperately needed in our own country (see also 
discussion of Regulatory Flexibility at paragraph 6). A third 
respondent referred to detrimental impact on the textile manufacturing 
base. He cited the exodus of textile manufacturing from the United 
States for decades and stated that the textile manufacturing that 
remains has moved into high performance and niche specialty areas. This 
respondent stated that by allowing items containing these fibers and 
the importation of yarns to move forward will continue to erode the 
U.S. textile manufacturing base.
    Response: There are only two companies in the United States or a 
qualifying country that make para-aramid fibers and continuous filament 
para-aramid yarns: DuPontTM which makes Kevlar[supreg], and 
the Teijin Group which makes Twaron. DuPontTM is the sole 
producer of these items in the United States. Therefore, this rule, 
when amended to exclude yarn produced from staple para-aramid fibers, 
will not deprive any U.S. companies of business.
    The concern for the well-being of the textile industry, including 
knitters, weavers, finishers, and garment makers, is misplaced. This 
rule does not allow acquisition of items containing para-aramid fibers 
and continuous filament yarns from qualifying countries, but only the 
fibers and yarns (see DFARS 225.7002-2(m)).

4. Domestic Para-Aramid Sewing Thread May Be of Lower Quality

    One respondent fully supported the interim rule and recommended 
that it should be made permanent. The respondent cited an experience 
with the specification to use para-aramid thread that was heavier and 
weaker than the commercial thread that was used in the commercial 
marketplace, in order to comply with the domestic source restriction.
    Response: The Berry Amendment does not require the use of domestic 
fibers at the expense of satisfactory quality. There is an exception 
that can be applied if domestic products of a satisfactory quality are 
not available.

5. Need To Expand the Nations From Which Fiber Can Be Procured

    One respondent proposed we add other friendly nations of quality 
ballistic fiber, such as Japan and India, to the list of nations from 
which these fibers can be procured.
    Response: The authority provided to DoD in section 807 of the 
National Defense Authorization Act for Fiscal Year 1999 (Pub. L. 105-
261) specifically applies only to foreign countries that are a party to 
a reciprocal defense procurement memorandum of understanding (MOU) 
entered into under section 2531 of title 10 of the United States Code 
and that permits United States firms that manufacture para-aramid 
fibers and yarns to compete with foreign firms for the sale of para-
aramid fibers and yarns in that country, as determined by the Secretary 
of Defense. Section 2531 begins as follows:
    (a) Considerations in Making and Implementing MOUs and Related 
Agreements. In the negotiation, renegotiation, and implementation of 
any existing or proposed memorandum of understanding, or any existing 
or proposed agreement related to a memorandum of understanding, between 
the Secretary of Defense, acting on behalf of the United States, and 
one or more foreign countries (or any instrumentality of a foreign 
country) relating to research, development, or production of defense 
equipment, or to the reciprocal procurement of defense items, the 
Secretary of Defense shall--
    (1) Consider the effects of such existing or proposed memorandum of 
understanding or related agreement on the defense technology and 
industrial base of the United States; and
    (2) Regularly solicit and consider comments and recommendations 
from the Secretary of Commerce with respect to the commercial 
implications of such memorandum of understanding or

[[Page 34945]]

related agreement and the potential effects of such memorandum of 
understanding or related agreement on the international competitive 
position of United States industry.
    Under the authority of 10 U.S.C. 2531, DoD has negotiated 
reciprocal defense procurement (RDP) MOUs with ``qualifying'' 
countries. These RDP MOU partners have committed to remove barriers to 
purchases of supplies produced in the other country or services 
performed by sources in the other country. The qualifying countries 
listed at DFARS 225.003(10) are the countries with which DoD has 
reciprocal defense procurement MOUs. DoD has not negotiated reciprocal 
defense procurement MOUs with Japan or India.

6. Regulatory Flexibility Analysis

    One respondent commented on the statement with regard to regulatory 
flexibility analysis that small entities normally are not involved in 
the production of para-aramid fibers and yarns. The respondent stated 
that there are many small entities involved in the weaving and 
production of para-aramid fabrics and that it would be devastating to 
the textile industry to expand the rule to cover the import of woven 
fabric or finished products.
    Response: Since the rule does not cover the import of woven fabric 
or finished products, but addresses only fibers and yarns, this 
statement does not affect the requirement for a regulatory flexibility 
analysis. The reinstated requirement for domestic manufacture of yarn 
from staple para-aramid fiber removes any possible impact on domestic 
small entities.

7. Clarify the Definition of ``Qualifying Country''

    One respondent stated that the interim rule insufficiently defined 
``qualifying country.'' Alternate language was provided to expand this 
definition:
    ``Qualifying country'' means a country with a memorandum of 
understanding or international agreement with the United States in 
which both agree to remove barriers to purchases of supplies produced 
in the other country or services performed by sources of the other 
country, and the memorandum or agreement complies, where applicable, 
with the requirements of section 36 of the Arms Export Control Act (22 
U.S.C. 2776) and with 10 U.S.C. 2457.
    Response: DoD has adopted the expanded definition.

8. Outside Scope of Case

    a. One respondent recommends that DoD should also exempt meta-
aramid fibers from qualifying countries.
    Response: This comment is outside the scope of this case. The law 
which DoD is implementing only authorizes the exceptions for para-
aramid fibers.
    b. One respondent has comments regarding other changes to the 
clause at DFARS 252.212-7001.
    Response: These comments relate to DFARS Case 2008-D002 and have 
been considered under that case.
    This rule was subject to Office of Management and Budget review 
under Executive Order 12866, dated September 30, 1993. This rule is not 
a major rule under 5 U.S.C. 804.

C. Regulatory Flexibility Act

    DoD certifies that this rule will not 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 there 
are no small entities in the United States that can produce para-aramid 
fibers or continuous filament para-aramid yarns. The impact on spinners 
of para-aramid yarn other than continuous filament yarn has been 
removed by the change to the final rule.

D. 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

Ynette R. Shelkin,
Editor, Defense Acquisition Regulations System.

0
Accordingly, the interim rule amending 48 CFR parts 225 and 252, which 
was published at 73 FR 76970 on December 18, 2008, is adopted as a 
final rule with the following changes:
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 225.003 is amended by revising the introductory text of 
paragraph (10) to read as follows:


225.003  Definitions.

* * * * *
    (10) Qualifying country means a country with a reciprocal defense 
procurement memorandum of understanding or international agreement with 
the United States in which both countries agree to remove barriers to 
purchases of supplies produced in the other country or services 
performed by sources of the other country, and the memorandum or 
agreement complies, where applicable, with the requirements of section 
36 of the Arms Export Control Act (22 U.S.C. 2776) and with 10 U.S.C. 
2457. Accordingly, the following are qualifying countries:
* * * * *

0
3. Section 225.7002-2 is amended by revising paragraph (m)(2) to read 
as follows:


225.7002-2  Exceptions.

* * * * *
    (m) * * *
    (2) The fibers and yarns are para-aramid fibers and continuous 
filament para-aramid yarns manufactured in a qualifying country.
* * * * *

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
4. Section 252.212-7001 is amended by revising the clause date and 
revising paragraph (b)(8) 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 
(JUN 2010)

* * * * *
    (b) * * *
    (8) ------------ 252.225-7012, Preference for Certain Domestic 
Commodities (JUN 2010) (10 U.S.C. 2533a).
* * * * *


0
5. Section 252.225-7012 is amended by revising the clause date; 
revising the introductory text of paragraph (a)(3); and revising 
paragraph (c)(6)(ii) to read as follows:


252.225-7012  Preference for certain domestic commodities.

* * * * *

PREFERENCE FOR CERTAIN DOMESTIC COMMODITIES (JUN 2010)

    (a) * * *

[[Page 34946]]

    (3) Qualifying country means a country with a reciprocal defense 
procurement memorandum of understanding or international agreement with 
the United States in which both countries agree to remove barriers to 
purchases of supplies produced in the other country or services 
performed by sources of the other country, and the memorandum or 
agreement complies, where applicable, with the requirements of section 
36 of the Arms Export Control Act (22 U.S.C. 2776) and with 10 U.S.C. 
2457. Accordingly, the following are qualifying countries:
* * * * *
    (c) * * *
    (6) * * *
    (ii) The fibers and yarns are para-aramid fibers and continuous 
filament para-aramid yarns manufactured in a qualifying country.
* * * * *
[FR Doc. 2010-14937 Filed 6-18-10; 8:45 am]
BILLING CODE 5001-08-P