[Federal Register Volume 77, Number 178 (Thursday, September 13, 2012)]
[Rules and Regulations]
[Pages 56739-56740]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-22574]



[[Page 56739]]

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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 4, 25 and 52

[FAC 2005-61; FAR Case 2012-004; Item I; Docket 2012-0004, Sequence 1]
RIN 9000-AM18


Federal Acquisition Regulation; United States-Korea Free Trade 
Agreement

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

ACTION: Final rule.

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SUMMARY: DoD, GSA, and NASA are adopting as final, without change, an 
interim rule amending the Federal Acquisition Regulation (FAR) to 
implement the United States-Korea Free Trade Agreement. The Republic of 
Korea is already party to the World Trade Organization Government 
Procurement Agreement, but this trade agreement implements a lower 
procurement threshold.

DATES: Effective Date: September 13, 2012.

FOR FURTHER INFORMATION CONTACT: Ms. Cecelia L. Davis, Procurement 
Analyst, at 202-219-0202 for clarification of content. For information 
pertaining to status or publication schedules, contact the Regulatory 
Secretariat at 202-501-4755. Please cite FAC 2005-61, FAR Case 2012-
004.

SUPPLEMENTARY INFORMATION: 

I. Background

    DoD, GSA, and NASA published an interim rule in the Federal 
Register on March 7, 2012 (77 FR 13952), to implement the Free Trade 
Agreement with the Republic of Korea, which took effect on March 15, 
2012. The comment period closed on May 7, 2012. Three respondents 
submitted comments on the interim rule.
    The interim rule added the Republic of Korea to the definition of 
``Free Trade Agreement country'' in multiple locations in the FAR. The 
Republic of Korea was already listed as a designated country because it 
is party to the WTO GPA. The excluded services for the Korea FTA are 
the same as for the WTO GPA. By implementation of this Korea FTA, 
eligible goods and services from Korea are now covered when valued at 
or above $100,000, rather than at or above the WTO GPA threshold of 
$202,000. The threshold for the Korea FTA for construction is the same 
as the threshold for the WTO GPA for construction.

II. Discussion and Analysis

    The Civilian Agency Acquisition Council and the Defense Acquisition 
Regulations Council (the Councils) reviewed the comments in the 
development of the final rule. A discussion of the comments is provided 
as follows:

A. Summary of Significant Changes

    The Councils have adopted the interim rule as final without change.

 B. Analysis of Public Comments

1. Impact on U.S. Businesses and Economy
    Comment: One respondent expressed agreement that the United States 
has the responsibility to do business with Free Trade Agreement 
countries, but was concerned that lowering the trade agreements 
threshold from $202,000 to $100,000 for goods and services from the 
Republic of Korea will damage the small American business owners' 
chances to compete, because of lower minimum wage in Korea. The 
respondent was also concerned that lowering the threshold will increase 
the national deficit. This respondent also stated that the rule will 
benefit U.S. big business owners to the detriment of small American 
business owners.
    Response: DoD, GSA, and NASA issued this final rule because it 
implements a statute (United States-Korea Free Trade Agreement 
Implementation Act, Pub. L. 112-41, enacted on October 21, 2011). The 
Councils do not have discretion to set trade agreement thresholds.
    However, as discussed in the section on Regulatory Flexibility, the 
lowering of the threshold from $202,000 to $100,0000 only applies to 
the supplies and services covered by the Korea Free Trade Agreement. 
For DoD, it only covers the non-defense items listed at Defense Federal 
Acquisition Regulations System (DFARS) 225.401-70. Acquisitions that 
are set aside or provide other form of preference for small businesses 
are exempt from the Korea Free Trade Agreement. FAR 19.502-2 states 
that acquisitions that do not exceed $150,000 (except as described in 
paragraph (1) of the definition of ``simplified acquisition threshold'' 
at 2.101) are automatically reserved exclusively for small business 
concerns, unless the contracting officer determines that there is not a 
reasonable expectation of obtaining offers from two or more responsible 
small business concerns.
2. Implementation in Contracts for Services
    Comment: One respondent questioned how agencies will implement the 
Korea Free Trade Agreement for services.
    Response: This question is not unique to the Korea Free Trade 
Agreement. The FAR does not provide provisions or clauses for the 
specific implementation of any trade agreements. The FAR provisions and 
clauses address only end products, because the provisions and clauses 
are necessary to--
     Waive the Buy American Act, which only applies to 
supplies; and
     Implement the purchase restriction at 25.403(c) for 
acquisitions that exceed the World Trade Organization Government 
Procurement Agreement (WTO GPA) threshold of $202,000. Below that 
threshold, there is no purchase restriction on acquisition of services 
from nondesignated countries.
    The requirements of the Free Trade Agreements relate primarily to 
acquisition procedures that are already specified in the FAR, e.g., FAR 
5.203, Publicizing and response time; FAR 5.207, Preparation and 
transmittal of synopses; and FAR 15.503, Notifications to unsuccessful 
offerors (see FAR 25.408 for other applicable procedures).
3. Procuring Entities of the Central Level of the U.S. Government
    Comment: One respondent requested that the final rule should 
include the list of the entities of the U.S. central level of 
Government, which have certain obligations with respect to Government 
procurement of goods and services.
    Response: The FAR has not included the list of Federal entities 
subject to any other free trade agreement or the WTO GPA. Therefore, 
the Councils do not consider inclusion of such a list in the FAR for 
the Korea Free Trade Agreement to be necessary or appropriate.
4. Past Performance
    Comment: One respondent expressed appreciation of the specific 
reference to Article 17.5.2(b) of the Korea Free Trade Agreement in the 
Federal Register preamble to the interim rule. Article 17.5.2.(b) 
stipulates that an agency shall not impose a condition that, in order 
for an offeror to be allowed to submit an offer or be awarded a 
contract, the offeror has been previously awarded one or more contracts 
by an agency of the United States Government or that the offeror has 
prior work experience in the United States. The respondent suggested 
that Office of Management and Budget

[[Page 56740]]

guidance on ``best practices for collecting and using current and past 
performance information'' be updated by adding best practices related 
to Articles 17.5.2(b) of the Korea Free Trade Agreement.
    Response: Changes to the Office of Management and Budget guidance 
are outside the scope of this rule. The Councils note, however, that 
FAR 15.305(a)(2)(iv) already requires that, in the case of an offeror 
without a record of relevant past performance or for whom information 
on past performance is not available, the offeror may not be evaluated 
favorably or unfavorably on past performance.

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 a significant regulatory action and, therefore, was 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

    The Department of Defense, the General Services Administration, and 
the National Aeronautics and Space Administration certify that this 
final 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 Korea is already a 
designated country under the WTO GPA. Although the rule opens up 
Government procurement to the goods and services of Korea at or above 
the threshold of $100,000, the Department of Defense only applies the 
trade agreements to the non-defense items listed at DFARS 225.401-70, 
and acquisitions that are set aside or provide other form of preference 
for small businesses are exempt from coverage of the agreement. FAR 
19.502-2 states that acquisitions that do not exceed $150,000 (except 
as described in paragraph (1) of the definition of ``simplified 
acquisition threshold'' at 2.101) are automatically reserved 
exclusively for small business concerns, unless the contracting officer 
determines that there is not a reasonable expectation of obtaining 
offers from two or more responsible small business concerns.

V. Paperwork Reduction Act

    The rule affects the certification and information collection 
requirements in the provisions at FAR 52.212-3 and 52.225-4, 52.225-6, 
and 52.225-11 currently approved under the Office of Management and 
Budget Control Numbers 9000-0136, 9000-0130, 9000-0025, and 9000-0141 
respectively, in accordance with the Paperwork Reduction Act (44 U.S.C. 
chapter 35). The impact, however, is negligible because it is just a 
question of which category offered goods from the Republic of Korea 
would be listed under.

List of Subjects in 48 CFR Parts 4, 25, and 52

    Government procurement.

    Dated: September 7, 2012.
Laura Auletta,
Director, Office of Governmentwide Acquisition Policy, Office of 
Acquisition Policy, Office of Governmentwide Policy.

Interim Rule Adopted as Final Without Changes

0
Accordingly, the interim rule amending 48 CFR parts 4, 25, and 52, 
which was published in the Federal Register at 77 FR 13952 on March 7, 
2012, is adopted as a final rule without changes.
[FR Doc. 2012-22574 Filed 9-12-12; 8:45 am]
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