[Federal Register Volume 79, Number 120 (Monday, June 23, 2014)]
[Proposed Rules]
[Pages 35507-35509]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-14590]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Part 252

RIN 0750-AI30


Defense Federal Acquisition Regulation Supplement: Flowdown of 
Specialty Metals Restrictions (DFARS Case 2014-D011)

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

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: DoD is proposing to amend the Defense Federal Acquisition 
Regulation Supplement (DFARS) to clarify the flowdown requirements for 
the DFARS clause entitled ``Restriction on Acquisition of Certain 
Articles Containing Specialty Metals.''

DATES: Comment date: Comments on the proposed rule should be submitted 
in writing to the address shown below on or before August 22, 2014, to 
be considered in the formation of a final rule.

ADDRESSES: Submit comments identified by DFARS Case 2014-D011, using 
any of the following methods:
    [cir] Regulations.gov: http://www.regulations.gov. Submit comments 
via the Federal eRulemaking portal by entering ``DFARS Case 2014-D011'' 
under the heading ``Enter keyword or ID'' and selecting ``Search.'' 
Select the link ``Submit a Comment'' that corresponds with ``DFARS Case 
2014-D011.'' Follow the instructions provided at the ``Submit a 
Comment'' screen. Please include your name, company name (if any), and 
``DFARS Case 2014-D011'' on your attached document.
    [cir] Email: osd.dfars@mail.mil. Include DFARS Case 2014-D011 in 
the subject line of the message.
    [cir] Fax: 571-372-6094.
    [cir] Mail: Defense Acquisition Regulations System, Attn: Ms. Amy 
G. Williams, OUSD(AT&L)DPAP/DARS, Room 3B941, 3060 Defense Pentagon, 
Washington, DC 20301-3060.
    Comments received generally will be posted without change to http://www.regulations.gov, including any personal information provided. To 
confirm receipt of your comment(s), please check www.regulations.gov, 
approximately two to three days after submission to verify posting 
(except allow 30 days for posting of comments submitted by mail).

FOR FURTHER INFORMATION CONTACT: Ms. Amy G. Williams, Defense 
Acquisition Regulations System, OUSD(AT&L)DPAP/DARS, Room 3B941, 3060 
Defense Pentagon, Washington, DC 20301-3060. Telephone 571-372-6106.

SUPPLEMENTARY INFORMATION:

I. Background

    The clause at DFARS 252.225-7009, Restriction on Acquisition of 
Certain Articles Containing Specialty Metals, as prescribed at DFARS 
225.7003-5(a)(2), implements 10 U.S.C. 2533b. This clause is used in 
solicitations and contracts, including solicitations and contracts 
using FAR part 12 procedures for the acquisition of commercial items, 
that exceed the simplified acquisition threshold and require the 
delivery of the following items, if such items contain specialty 
metals: Aircraft, missile or space systems, ships, tank or automotive 
systems, weapon systems, or ammunition, and components thereof. Except 
as provided in paragraph (c) of the clause, any specialty metals 
incorporated in items delivered under the contract shall be melted or 
produced

[[Page 35508]]

in the United States, its outlying areas, or a qualifying country.
    DoD is proposing to revise paragraph (e) of this clause to clarify 
the requirement to flow this clause down to subcontracts.

II. Discussion and Analysis

    In order to prevent misinterpretation of the current flowdown 
requirement to insert the ``substance of the clause'' in subcontracts, 
the flowdown requirement has been rewritten to specify that the only 
modifications allowed when flowing down the clause are as follows:
     Exclude and reserve paragraph (d) of the clause.
     Modify paragraph (c)(6) of the clause only as necessary to 
facilitate management of the allowance for up to 2 percent otherwise 
noncompliant specialty metal content in the end product, while 
recognizing that the minimal content exception does not apply to 
specialty metals contained in high-performance magnets.
     Not further alter the clause, other than to identify the 
appropriate parties.

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 does not expect this rule to 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 it is a 
clarification of an existing requirement. However, an initial 
regulatory flexibility analysis has been performed and is summarized as 
follows:
    The reason for issuance of this proposed rule is to clarify the 
flowdown requirements for DFARS clause 252.225-7009, Restriction on 
Acquisition of Certain Articles Containing Specialty Metals.
    The objective of the rule is to more fully implement the 
requirements of 10 U.S.C. 2533b, which restricts the acquisition of 
specialty metals not melted in the United States, its outlying areas, 
or a qualifying country, in order to strengthen the United States 
industrial base.
    This rule applies to DoD contractors and subcontractors that are 
providing aircraft, missile or space systems, ships, tank or automotive 
items, weapon systems, ammunition, or components thereof that contain 
specialty metals.
    Based on FY 2013 data in the Federal Procurement Data System 
(FPDS), DoD awarded 1,566 contracts that exceeded the simplified 
acquisition threshold for aircraft, missile or space systems, ships, 
tank or automotive items, weapon systems, ammunition, or components 
thereof. Of those awards, 642 were to 533 unique small business 
entities. FPDS does not contain data on subcontracts. If we estimate an 
average of 20 subcontracts per contract for items containing specialty 
metals, and that 35 percent of those subcontracts are awarded to small 
businesses, 2 subcontracts per small entity, then this rule may apply 
to approximately 6,123 small business entities subject to DFARS 52.225-
7009.

(1,566 x 20 = 31,320 x .35 = 10,962 x .5 = 5,481 small business 
subcontractors + 642 small business prime contractors = 6,123)

    There are no reporting or recordkeeping requirements associated 
with this rule. With some exceptions, the rule requires contractors to 
provide certain end products containing specialty metals melted or 
produced in the United States, its outlying areas, or a qualifying 
country. However, end items may contain a minimal amount of otherwise 
noncompliant specialty metals, if the total weight of such noncompliant 
metals does not exceed 2 percent of the total of all specialty metals 
in the end item. Therefore, the contractor has some discretion in 
flowing down the requirement to subcontractors to the extent necessary 
to ensure compliance of the end products the contractor will deliver to 
the Government.
    The rule does not duplicate, overlap, or conflict with any other 
Federal rules.
    DoD did not identify any alternatives to this rule that would 
reduce burdens on small entities and meet the objective of the rule. 
This rule does not impose any significant new burdens on small 
entities, because it only clarifies what was intended by the 
conventional statement to insert ``the substance of the clause'' in 
subcontracts for items containing specialty metals.
    DoD invites comments from small business concerns and other 
interested parties on the expected impact of this rule on small 
entities.
    DoD will also consider comments from small entities concerning the 
existing regulations in subparts affected by this rule in accordance 
with 5 U.S.C. 610. Interested parties must submit such comments 
separately and should cite 5 U.S.C 610 (DFARS Case 2014-D011), in 
correspondence.

V. Paperwork Reduction Act

    The 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 Part 252

    Government procurement.

Amy G. Williams,
Deputy, Defense Acquisition Regulations System.

    Therefore, 48 CFR part 252 is proposed to be amended as follows:

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
1. The authority citation for 48 CFR part 252 continues to read as 
follows:

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

0
2. Amend section 252.225-7009 by--
0
a. Removing the clause date ``(JUN 2013)'' and adding ``(DATE)'' in its 
place; and
0
b. Revising paragraph (e) to read as follows:


252.225-7009  Restriction on Acquisition of Certain Articles Containing 
Specialty Metals

* * * * *
    (e) Subcontracts.
    (1) The Contractor shall exclude and reserve paragraph (d) and this 
paragraph (e)(1) when flowing down this clause to subcontracts.
    (2) The Contractor shall insert paragraphs (a) through (c) and this 
paragraph (e)(2) of this clause in subcontracts, including subcontracts 
for commercial items, that are for items containing specialty metals to 
ensure compliance of the end products that the Contractor will deliver 
to the Government. When inserting this clause in subcontracts, the 
Contractor shall--
    (i) Modify paragraph (c)(6) of this clause only as necessary to 
facilitate management of the minimal content

[[Page 35509]]

exception at the prime contract level. The minimal content exception 
does not apply to specialty metals contained in high-performance 
magnets; and
    (ii) Not further alter the clause other than to identify the 
appropriate parties.

[FR Doc. 2014-14590 Filed 6-20-14; 8:45 am]
BILLING CODE 5001-06-P