[Federal Register Volume 77, Number 99 (Tuesday, May 22, 2012)]
[Rules and Regulations]
[Pages 30368-30369]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-11564]


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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 212, 225, and 252

RIN 0750-AH43


Defense Federal Acquisition Regulation Supplement; Utilization of 
Domestic Photovoltaic Devices (DFARS Case 2011-D046)

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

ACTION: Final rule.

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SUMMARY: DoD is adopting as final, with change, an interim rule 
amending the Defense Federal Acquisition Regulation Supplement (DFARS) 
to implement a section of the National Defense Authorization Act for 
Fiscal Year 2011. The section provides that photovoltaic devices to be 
utilized in performance of any covered contract shall comply with the 
Buy American statute, subject to the exceptions provided in the Trade 
Agreements Act of 1979 or otherwise provided by law.

DATES: Effective date: May 22, 2012.

FOR FURTHER INFORMATION CONTACT: Amy G. Williams, telephone 571-372-
6106.

SUPPLEMENTARY INFORMATION:

I. Background

    DoD published an interim rule in the Federal Register at 76 FR 
78858 on December 20, 2011 and also issued technical amendments to the 
interim rule in the Federal Register at 77 FR 13013 on March 5, 2012. 
One respondent submitted a comment in response to the interim rule.

II. Discussion and analysis

    Only one response was received. The respondent provided an 
editorial comment which has been incorporated in the final rule (see 
DFARS 225.7017-3(c)(1)).
    There have also been some baseline changes since the publication of 
the interim rule.

III. 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.

IV. Regulatory Flexibility Act

    DoD expects that this interim rule may 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. Therefore, a final 
regulatory flexibility analysis has been prepared and is summarized as 
follows:
    This final rule implements section 846 of the National Defense 
Authorization Act for Fiscal Year 2011 (Pub. L. 111-383) by providing 
regulatory coverage on utilization of domestic photovoltaic devices 
under certain covered contracts.
    The objective of the rule is to promote utilization of domestic 
photovoltaic devices under energy savings contracts, utility service 
contracts, or private housing contracts awarded by DoD, if such 
contract does not include DoD purchase of photovoltaic devices as end 
products, but will nevertheless result in ownership of photovoltaic 
devices by DoD. According to the statute, DoD is deemed to own a 
photovoltaic device if the device is--
    (1) Installed on DoD property or in a facility owned by DoD; and
    (2) Reserved for the exclusive use of DoD for the full economic 
life of the device.
    The legal basis for the rule is section 846 of the National Defense 
Authorization Act for Fiscal Year 2011.
    No significant issues were raised by the public comments.
    No comments were filed by the Chief Counsel for Advocacy of the 
Small Business Administration.
    This rule generally applies to other than small entities. When 
purchasing renewable power generated via on-site photovoltaic devices, 
DoD can either purchase the photovoltaic devices and thereby own, 
operate, and maintain the devices for their full economic life (already 
covered in DFARS part 225) or can do variations of the following:

[[Page 30369]]

    a. Enter into an energy savings performance contract, which is a 
contracting method in which the contractor provides capital to 
facilitate energy savings projects and maintains them in exchange for a 
portion of the energy savings generated. Under this arrangement, the 
Government would take title to the devices during contract performance 
or at the conclusion of the contract.
    DLA Energy uses the master Department of Energy IDIQ contract and 
awards task orders off those contracts. Of the 16 contractors, all are 
large businesses. There are subcontracting goals that each contractor 
has to meet, but the ultimate task order award is made to a large 
business.
    b. Enter into a power purchase agreement, also referred to as a 
utility service contract, for the purchase of the power output of 
photovoltaic devices that are installed on DoD land or buildings, but 
owned, operated, and maintained by the contractor. At the conclusion of 
the contract, DoD would either require the contractor to dismantle and 
remove the photovoltaic equipment, abandon the equipment in place, or 
would recompete the requirement and if the incumbent contractor is the 
successful offeror, the follow-on contract would allow for continued 
power purchase from the existing devices. If the incumbent contractor 
is not the successful offeror, the contractor would be required to 
dismantle and remove the devices. While DLA has issued and received 
offers, none have been awarded, due to lack of economical feasibility. 
All offers received have been from large businesses, based on the 
capital costs involved in these projects. However, they tend to 
subcontract out the majority of work to smaller companies.
    We do not currently have data available on whether any of the 
manufacturers of photovoltaic devices are small entities. This rule 
will promote utilization of domestic photovoltaic devices, even when 
the Government does not take title to the devices.
    The requirements of the rule will not apply below the simplified 
acquisition threshold.
    Since the prime contractors subject to this rule are large 
businesses, the reporting requirements will not impact small entities. 
Since the photovoltaic devices are commercially available off-the-shelf 
items, there will be no requirement to track to the origin of the 
components, but just to inform the prime contractor of the place of 
manufacture.
    DoD did not identify any significant alternatives that would 
accomplish the objectives of the statute. There is no anticipated 
significant impact on small entities.

V. Paperwork Reduction Act

    The rule imposes an information collection requirement that 
requires the approval of the Office of Management and Budget under the 
Paperwork Reduction Act, 44 U.S.C. chapter 35, et seq. However, the new 
DFARS provision at 252.225-7018, Photovoltaic Devices--Certificate, 
does not impose additional information collection requirements to the 
paperwork burden previously approved under OMB Control Number 0704-
0229, entitled ``Defense Federal Acquisition Regulation Supplement part 
225, Foreign Acquisition, and related clauses,'' currently approved 
through November 30, 2013, in the amount of 147,944 hours. The proposed 
provision is a variant of the Buy American-trade agreements provisions 
that are already cleared.

List of Subjects in 48 CFR Parts 212, 225, and 252

    Government procurement.

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

    Accordingly, the interim rule amending 48 CFR parts 212, 225, and 
252, which was published at 76 FR 78858 on December 20, 2011, and 
amended by technical amendment published in the Federal Register at 77 
FR 13013 on March 5, 2012, is adopted as a final rule with the 
following change:

0
1. The authority citation for 48 CFR part 225 continues to read as 
follows:

    Authority:  41 U.S.C. 1303 and 48 CFR chapter 1.

PART 225--FOREIGN ACQUISITION


225.7017-3  [Amended]

0
2. Section 225.7017-3 is amended in paragraph (c)(1) by removing ``see 
FAR 25.4'' and adding ``see FAR subpart 25.4'' in its place.

[FR Doc. 2012-11564 Filed 5-21-12; 8:45 am]
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