[Federal Register Volume 79, Number 238 (Thursday, December 11, 2014)]
[Rules and Regulations]
[Pages 73498-73499]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-28815]


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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 225 and 236

RIN 0750-AI33


Defense Federal Acquisition Regulation Supplement: Use of 
Military Construction Funds in Countries Bordering the Arabian Sea 
(DFARS Case 2014-D016)

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

ACTION: Final rule.

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SUMMARY: DoD has adopted as final, without change, an interim rule 
amending the Defense Federal Acquisition Regulation Supplement (DFARS) 
to implement sections of the Military Construction and Veterans 
Affairs, and Related Agencies Appropriations Act, 2014, that restricts 
use of military construction funds in various countries, including 
countries bordering the Arabian Sea.

DATES: Effective December 11, 2014.

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

SUPPLEMENTARY INFORMATION: 

[[Page 73499]]

I. Background

    DoD published an interim rule in the Federal Register at 79 FR 
44314 on July 31, 2014, to implement sections of the Military 
Construction and Veterans Affairs, and Related Agencies Appropriations 
Act, 2014, that restricts use of military construction funds in various 
countries, including countries bordering the Arabian Sea. Since 1997, 
sections 111 and 112 of the annual military construction appropriations 
acts restrict use of military construction funds for acquisitions 
exceeding certain dollar thresholds of architect-engineer services and 
military construction to be performed in certain countries. With some 
exceptions, these restrictions require award to a U.S. firm or provide 
a preference for award to a U.S. firm.
    One respondent submitted a public comment in response to the 
interim rule.

II. Discussion and Analysis

    DoD reviewed the public comment in the development of the final 
rule. The comment did not result in any changes in the final rule. A 
discussion of the comment is provided, as follows:
    Comment: The respondent disagreed with the substitution of 
``Arabian Sea'' for the ``Arabian Gulf'' for the following reasons:
     The respondent viewed the rule as a ``degradation of the 
intent of the law.''
     The respondent viewed the rule as harmful to all U.S. 
businesses, small and large, interested in construction projects in 
countries that border the Arabian Gulf, due to loss of the 20 percent 
preference.
    The respondent suggested extension of the preferences for U.S. 
businesses when awarding military construction or architect-engineer 
contracts in countries bordering the Arabian Gulf to contracts in 
countries bordering the Arabian Sea.
    Response: The interim rule was issued in order to comply with the 
law. For several years, the restrictions in the annual military 
construction appropriations acts have applied the use of military 
construction funds in countries bordering the Arabian Sea, not the 
Arabian Gulf. The law does not provide the option to provide the 20 
percent preference to U.S. firms performing construction projects in 
countries that border the Arabian Gulf.

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

    A final regulatory flexibility analysis has been prepared 
consistent with the Regulatory Flexibility Act, 5 U.S.C. 601, et seq., 
and is summarized as follows:
    This rule is necessary to implement the preference for award only 
to U.S. firms when awarding certain military construction and 
architect-engineer contracts to be performed in countries bordering the 
Arabian Sea.
    The objective of this rule is to implement sections 111 and 112 of 
the Military Construction and Veterans Affairs, and Related Agencies 
Appropriations Act, 2014 (Division J of Pub. L. 113-76). This rule 
revises the preference for award to U.S. firms of military construction 
contracts that have an estimated value greater than $1,000,000 and the 
restriction requiring award only to U.S. firms for architect-engineer 
contracts that have an estimated value greater than $500,000, to make 
it applicable to contracts to be performed in a country bordering the 
Arabian Sea, rather than a country bordering the Arabian Gulf (as 
required in earlier statutes).
    One respondent stated that the rule would cause harm to U.S. small 
business entities engaged in construction projects in countries 
bordering the Arabian Gulf, due to loss of the 20 percent preference. 
There was no change made to the rule as the result of this comment, 
because the law no longer provides a preference for U.S. businesses 
(small or large) performing construction projects in countries 
bordering the Arabian Gulf. The law changed the applicability of the 
preference from military construction projects in countries bordering 
the Arabian Gulf to military construction projects bordering the 
Arabian Sea.
    This will only apply to a very limited number of small entities--
those entities that submit offers in response to solicitations for 
military construction contracts that have an estimated value greater 
than $1,000,000 and architect-engineer contracts that have an estimated 
value greater than $500,000, when the contracts are to be performed in 
countries bordering the Arabian Sea.
    There is a requirement for offerors to indicate in their offer 
whether they are a U.S. firm.
    This rule does not impose any significant economic impact on small 
firms. The offeror must represent if it is a U.S. firm, but in return 
is granted a preference. DoD did not identify any alternatives that 
could reduce the burden and still meet the objectives of the rule.

V. Paperwork Reduction Act

    The rule does not impose any new 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). 
However, it modifies the prescription for use of the provision at DFARS 
252.236-7010, Overseas Military Construction--Preference for United 
States Firms, currently approved under OMB Clearance 0704-0255, Defense 
Federal Acquisition Regulation Supplement (DFARS) Part 236, 
Construction and Architect-Engineer Contracts, an amount of less than 8 
hours. Any change in the burden hours due to the changed prescription 
is negligible.

List of Subjects in 48 CFR Parts 225 and 236

    Government procurement.

Manuel Quinones,
Editor, Defense Acquisition Regulations System.


0
Accordingly, the interim rule amending 48 CFR part 225 and 236, which 
was published at 79 FR 44314 on July 31, 2014, is adopted as a final 
rule without change.

[FR Doc. 2014-28815 Filed 12-10-14; 8:45 am]
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