[Federal Register Volume 76, Number 108 (Monday, June 6, 2011)]
[Rules and Regulations]
[Pages 32841-32843]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-13797]


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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 225 and 252

RIN 0750-AH16


Defense Federal Acquisition Regulation Supplement; Foreign 
Acquisition Amendments (DFARS Case 2011-D017)

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

ACTION: Final rule.

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SUMMARY: DoD is amending the Defense Federal Acquisition Regulation 
Supplement (DFARS) to correct several anomalies resulting from recent 
changes relating to source of ball and roller bearing components, 
eligibility of Peruvian end products under trade agreements, and 
participation of foreign contractors in acquisitions in support of 
operations in Afghanistan.

DATES: Effective Date: June 6, 2011.

FOR FURTHER INFORMATION CONTACT: Ms. Amy G. Williams, Defense 
Acquisition Regulations System, OUSD (AT&L) DPAP/DARS, Room 3B855, 3060 
Defense Pentagon, Washington, DC 20301-3060. Telephone 703-602-0328; 
facsimile 703-602-0350.

SUPPLEMENTARY INFORMATION:

I. Background

    DoD is amending the DFARS to correct several anomalies resulting 
from recent changes relating to source of ball and roller bearing 
components, participation of foreign contractors in acquisitions in 
support of operations in Afghanistan, and eligibility of Peruvian end 
products under trade agreements.

A. Restriction on Ball and Roller Bearings

    DoD published a proposed rule, Restrictions on Ball and Roller 
Bearings (DFARS Case 2006-D029), in the Federal Register (75 FR 25167) 
on May 7, 2010 with request for comments. DoD received comments from 
three respondents and addressed the comments in the publication of the 
final rule (75 FR 76297) on December 8, 2010. DFARS Case 2006-D029 
retained the existing definition of ``bearing component''. As used in 
DFARS part 225 and the DFARS clause 252.225-7016, ``bearing component'' 
means the bearing element, retainer, inner race, or outer race (see 
252.225-7016(a)). However, that rule added a new requirement at 
225.7009-2(a)(2) and 252.225-7016(b)(2) that for each ball or roller 
bearing, the cost of the bearing components ``mined, produced, or 
manufactured'' in the United States or Canada must exceed 50 percent of 
the total cost of the bearing components of that ball or roller 
bearing.
    The phrase ``mined, produced, or manufactured'' was adopted from 
the Buy American Act, which applies broadly to many types of items. 
This rule applies only to bearing components, which are manufactured 
items and not mined or produced. As used in the DFARS, the term 
``bearing component'' does not refer to the materials that are utilized 
in the manufacture of the bearing components. There is no restriction 
with regard to where the iron ore is mined or where the resultant steel 
in a bearing component is produced. The requirement at 225.7009-2(a)(2) 
and 252.225-7016(b)(2) that for each ball or roller bearing, the cost 
of the bearing components ``mined, produced, or manufactured'' in the 
United States or Canada must exceed 50 percent of the total cost of the 
bearing components of that ball or roller bearing, has the same meaning 
as a requirement that for each ball or roller bearing, the cost of the 
bearing components ``manufactured'' in the United States or Canada must 
exceed 50 percent of the total cost of the bearing components of that 
ball or roller bearing. The words ``mined'' and ``produced'' are 
extraneous because they are inapplicable, since a ball or roller 
bearing is manufactured and not mined or produced. Therefore, this 
final rule under DFARS Case 2011-D017 removes the words ``mined, 
produced, or'' and

[[Page 32842]]

retains only the term ``manufactured'', to clarify the definition and 
alleviate any confusion these extraneous words may cause industry or 
Government personnel.
    This final rule also makes a conforming change to the clause date 
for 252.225-7016, Restriction on the Acquisition of Ball and Roller 
Bearings, in the clause at 252.212-7001, Contract Terms and Conditions 
Required to Implement Statutes or Executive Orders Applicable to 
Defense Acquisitions of Commercial Items.

B. Foreign Participation in Acquisitions in Support of Operations in 
Afghanistan

    DoD published a proposed rule, ``Foreign Participation in 
Acquisitions in Support of Operations in Afghanistan'' on January 6, 
2010 (DFARS Case 2009-D012)(75 FR 832), with request for public 
comments. DoD did not receive any public comments on the proposed rule. 
DoD published the final rule in the Federal Register (75 FR 81915) on 
December 29, 2010.
    Although no public comments were received, DoD realized that the 
requirement for a contractor to inform its government of its 
participation in the acquisition should only apply if the contractor is 
from a South Caucasus/Central and South Asian (SC/CASA) state. The 
United States Trade Representative, when providing authority to the 
Secretary of Defense to waive the procurement prohibition in section 
302(a) of the Trade Agreements Act of 1979 (USTR letter of June 2, 
2009), included the provision that contractors from the SC/CASA states, 
which would not have been eligible to participate in the acquisition 
absent the waiver, advise their governments that they will generally 
not have such opportunities in the future unless their governments 
provide reciprocal procurement opportunities to U.S. products and 
services.
    This requirement has meaning only when applied to a contractor from 
an SC/CASA state, to which the waiver applies. The required statement 
that the contractor would not have been eligible to participate in the 
acquisition absent the waiver would not be true for a contractor from 
other than an SC/CASA state. It would also be meaningless to ask a U.S. 
contractor to notify its government (the U.S. Government) that it 
should provide reciprocal procurement opportunities to U.S. products 
and services. However, the proposed rule did not explicitly limit the 
application of this requirement to contractors from an SC/CASA state.
    The final rule under DFARS Case 2009-D012 revised paragraph (d) of 
Alternate II of DFARS clause 252.225-7021, Trade Agreements, to limit 
applicability to contractors from an SC/CASA state. The final rule 
inadvertently omitted similar amendment of the same requirement in 
paragraphs (d) of Alternates II and III of DFARS clause 252.225-7045, 
Balance of Payments Program--Construction Material Under Trade 
Agreements.
    This final rule under DFARS Case 2011-D017 remedies that oversight, 
adding ``If the Contractor is from an SC/CASA state'' to paragraph (d) 
in Alternates II and III of DFARS clause 252.225-7045, Buy American 
Act--Free Trade Agreements--Balance of Payments Program Certificate, to 
conform to the same revision made under DFARS Case 2009-D012 to 
paragraph (d) of Alternate I of DFARS clause 252.225-7021.

C. Trade Agreements--Peru

    The Peruvian Free Trade Agreement was initially implemented by 
DFARS Case 2008-D046, Trade Agreement--Costa Rica and Peru, that was 
published as an interim rule with a request for public comment (74 FR 
37650). No public comments were received and the interim rule was 
converted to a final rule without change on July 29, 2009 (75 FR 179). 
This final rule added Peru to the definition of ``Free Trade Agreement 
country'' in DFARS clauses 252.225-7021, 252.225-7036, and 252.225-
7045.
    In order to make some further implementation of the Peru Free Trade 
Agreement in the trade agreements clauses, DoD utilized the final rule 
issued under DFARS Case 2009-D012, although the issue of the Peru Free 
Trade Agreement was peripheral to the main purpose of that case. DoD 
added a definition of Peruvian end products and added Peruvian end 
products to the Free Trade Agreement country end products that are not 
eligible products in the provision and clause at DFARS 252.225-7035 and 
252.225-7036. This is consistent with the Peru Free Trade Agreement and 
the FAR, and ensures that Peruvian end products are not erroneously 
treated as eligible products in acquisitions that do not exceed the 
World Trade Organization Government Procurement Agreement threshold.
    This change, however, created an inconsistency between Alternate I 
and the basic clause 252.225-7035. The basic clause now includes in 
paragraph (b)(2) the phrase ``Free Trade Agreement country end products 
other than Bahrainian end products or Moroccan end products, or 
Peruvian end products.'' The Alternate I, which limits the applicable 
Free Trade Agreements to just Canada, misquotes the phrase that is to 
be removed and replaced with the phrase ``Canadian end products.'' 
Alternate I still quotes the old unrevised phrase as ``Free Trade 
Agreement country end products other than Bahrainian end products or 
Moroccan end products'' and leaves off ``or Peruvian end products'' 
that was added by 2009-D012 final rule. Even though this phrase is 
being removed by Alternate I, the misquote creates an inconsistency, 
which might cause some confusion, although all of the corresponding 
regulations make it clear that the Peruvian Trade Agreement does not 
apply below the threshold of $70,079, when Alternate I is used (see 
threshold at FAR 25.402(b), clause prescription at DFARS 
225.1101(10)(i), and comparable FAR clause 52.225-3 Alternate I).
    These DFARS changes are characterized as clarifications and 
corrections to DFARS language that do not constitute significant 
revisions, as defined in FAR 1.501-1, because they do not alter the 
substantive meaning of the coverage.

II. Executive Orders 12866 and 13563

    Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess 
all costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). E.O. 
13563 emphasizes the importance of quantifying both costs and benefits, 
of reducing costs, of harmonizing rules, and of promoting flexibility. 
This is not a significant regulatory action and, therefore, was not 
subject to review under Section 6(b) of E.O. 12866, Regulatory Planning 
and Review, dated September 30, 1993. This rule is not a major rule 
under 5 U.S.C. 804.

III. Regulatory Flexibility Act

    The Regulatory Flexibility Act does not apply to this rule because 
an initial regulatory flexibility analysis is only required for 
proposed or interim rules that require publication for public comment 
(5 U.S.C. 603) and a final regulatory flexibility analysis is only 
required for final rules that were previously published for public 
comment, and for which an initial regulatory flexibility analysis was 
prepared (5 U.S.C. 604).
    This final rule does not constitute a significant DFARS revision as 
defined at FAR 1.501-1 because this rule will not have a significant 
cost or administrative impact on contractors or offerors, or a

[[Page 32843]]

significant effect beyond the internal operating procedures of the 
Government. Therefore, publication for public comment under 41 U.S.C. 
1707 is not required.

IV. Paperwork Reduction Act

    The final rule does not contain any information collection 
requirements that require the approval of the Office of Management and 
Budget under the Paperwork Reduction Act (44 U.S.C. chapter 35).

List of Subjects in 48 CFR Parts 225 and 252

    Government procurement.

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

    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. 1303 and 48 CFR chapter 1.

PART 225--FOREIGN ACQUISITION


225.7009-2   [Amended]

0
2. Amend section 225.7009-2 by removing from paragraph (a)(2) the words 
``mined, produced, or''.

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES


252.212-7001  [Amended]

0
3. Amend section 252.212-7001 by revising the clause date in paragraph 
(b)(11) by removing ``(DEC 2010)'' and adding in its place ``(JUN 
2011)''.


252.225-7016  [Amended]

0
4. Amend section 252.225-7016 as follows:
0
a. Revise the clause date by removing ``(DEC 2010)'' and adding in its 
place ``(JUN 2011)''.
0
b. Amend paragraph (b)(2) by removing the words ``mined, produced, 
or''.

0
5. Amend section 252.225-7035 by revising Alternate I to read as 
follows:


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

ALTERNATE I (JUN 2011)

    As prescribed in 225.1101(10)(ii), substitute the phrase 
``Canadian end product'' for the phrases ``Bahrainian end product,'' 
``Free Trade Agreement country,'' ``Free Trade Agreement country end 
product,'' ``Moroccan end product,'' and ``Peruvian end product'' in 
paragraph (a) of the basic provision; substitute the phrase 
``Canadian end products'' for the phrase ``Free Trade Agreement 
country end products other than Bahrainian end products, Moroccan 
end products, or Peruvian end products'' in paragraphs (b)(2) and 
(c)(2)(ii) of the basic provision; and delete the phrase 
``Australian or'' from paragraph (c)(2)(i) of the basic provision.


252.225-7045  [Amended]

0
6. Amend section 252.225-7045 as follows:
0
a. Revise the clause date of Alternate II by removing ``(DEC 2010)'' 
and adding in its place ``(JUN 2011)''.
0
b. Amend paragraph (d) of Alternate II by removing ``The'' and adding 
in its place ``If the Contractor is from an SC/CASA state, the''.
0
c. Revise the clause date of Alternate III by removing ``(DEC 2010)'' 
and adding in its place ``(JUN 2011)''.
0
d. Amend paragraph (d) of Alternate III by removing ``The'' and adding 
in its place ``If the Contractor is from an SC/CASA state, the''.

[FR Doc. 2011-13797 Filed 6-3-11; 8:45 am]
BILLING CODE 5001-08-P