[Federal Register Volume 79, Number 238 (Thursday, December 11, 2014)]
[Rules and Regulations]
[Pages 73488-73490]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-28819]


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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 204, 209, 212, 225, and 252

RIN 0750-AI34


Defense Federal Acquisition Regulation Supplement: State Sponsors 
of Terrorism (DFARS Case 2014-D014)

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

ACTION: Final rule.

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SUMMARY: DoD is issuing a final rule amending the Defense Federal 
Acquisition Regulation Supplement (DFARS) to clarify and relocate text 
relating to state sponsors of terrorism (as identified by the 
Department of State), add an explicit representation, and conform the 
terminology.

DATES: Effective December 11, 2014.

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

SUPPLEMENTARY INFORMATION: 

I. Background

    DoD published a proposed rule in the Federal Register at 79 FR 
45666 on August 5, 2014, to clarify and relocate coverage relating to 
state sponsors of terrorism (as identified by the Department of State), 
add an explicit representation, and conform the terminology. No 
respondents submitted public comments in response to the proposed rule.
    This rule is part of DoD's retrospective plan, completed in August 
2011, under Executive Order 13563, ``Improving Regulation and 
Regulatory Review.'' DoD's full plan and updates can be accessed at: 
http://www.regulations.gov/#!docketDetail;dct=FR+PR+N+O+SR;rpp=10;po=0;D=DOD-2011-OS-0036.

II. Discussion and Analysis

    No public comments were received. The final rule is the same as the 
proposed rule, except for minor edits.

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 certifies that this 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 this 
rule will only have an impact on a firm, or a subsidiary of a firm, in 
which the government of a country that is a state sponsor of terrorism 
has a significant interest.
    The number of domestic entities significantly impacted by this rule 
will be minimal, if any. For the definition of ``small business,'' the 
Regulatory Flexibility Act refers to the Small Business Act, which in 
turn allows the U.S. Small Business Administration (SBA) Administrator 
to specify detailed definitions or standards (5 U.S.C. 601(3) and 15 
U.S.C. 632(a)). The SBA regulations at 13 CFR 121.105 discuss who is a 
small business: ``(a)(1) Except for small agricultural cooperatives, a 
business concern eligible for assistance from SBA as a small business 
is a business entity organized for profit, with a place of business 
located in the United States, and which operates primarily within the 
United States or which makes a significant contribution to the U.S. 
economy through payment of taxes or use of American products, materials 
or labor.''

V. Paperwork Reduction Act

    The rule contains 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, these changes to the 
DFARS do not impose additional information collection requirements to 
the paperwork burden previously approved under OMB Control Number 0704-
0187, entitled ``Information Collection in Support of the DoD 
Acquisition Process (Various Miscellaneous Requirements).'' This final 
rule removes provision 252.209-7001, Disclosure of Ownership or Control 
by the Government of a Terrorist Country, and replaces it with 
provision 252.225-7050, Disclosure of Ownership or Control by the 
Government of a Country that is a State Sponsor of Terrorism. The 
burden in clearance 0704-0187 previously associated with the provision 
252.209-7001, which is now associated with provision 252.225-7050, 
remains unchanged and is estimated at 1 hour, because such disclosure 
occurs rarely, if ever. 10 U.S.C. prohibits award to a firm or a 
subsidiary of a firm if the government of country that is a state 
sponsor of terrorism has a significant interest in the firm or 
subsidiary, unless the Secretary of Defense grants a waiver.

[[Page 73489]]

List of Subjects in 48 CFR Parts 204, 209, 212, 225, and 252

    Government procurement.

Manuel Quinones,
Editor, Defense Acquisition Regulations System.

    Therefore, 48 CFR parts 204, 209, 212, 225, and 252 are proposed to 
be amended as follows:

0
1. The authority citation for parts 204, 209, 212, 225, and 252 
continues to read as follows:

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

PART 204--ADMINISTRATIVE MATTERS

0
2. Amend section 204.1202 by--
0
a. Removing paragraph (2)(i);
0
b. Redesignating paragraphs (2)(ii) through (x) as (2)(i) though (ix), 
respectively; and
0
c. Adding new paragraph (2)(x) to read as follows:


204.1202  Solicitation provision.

* * * * *
    (2) * * *
    (x) 252.225-7050, Disclosure of Ownership or Control by the 
Government of a Country that is a State Sponsor of Terrorism.
* * * * *

PART 209--CONTRACTOR QUALIFICATIONS

0
3. Amend section 209.104-1, by revising paragraph (g)(i) to read as 
follows:


209.104-1  General standards.

* * * * *
    (g)(i) Ownership or control by the government of a country that is 
a state sponsor of terrorism. (See 225.771.)
* * * * *

0
4. Revise section 209.104-70 to read as follows:


209.104-70  Solicitation provision.

    Use the provision at 252.209-7002, Disclosure of Ownership or 
Control by a Foreign Government, in all solicitations, including those 
subject to the procedures in FAR part 13, when access to proscribed 
information is necessary for contract performance. If the solicitation 
includes the provision at FAR 52.204-7, do not separately list the 
provision 252.209-7002 in the solicitation.

0
5. Amend section 209.405, by revising paragraph (b)(i) to read as 
follows:


209.405  Effect of listing.

* * * * *
    (b)(i) The Procurement Cause and Treatment Code ``H'' annotation in 
the Exclusions section of the System for Award Management (SAM 
Exclusions) identifies contractor facilities where no part of a 
contract or subcontract may be performed because of a violation of the 
Clean Air Act (42 U.S.C. 7606) or the Clean Water Act (33 U.S.C. 1368).
* * * * *

0
6. Revise section 209.405-2 to read as follows:


209.405-2  Restrictions on subcontracting.

    (a) The contracting officer shall not consent to any subcontract 
with a firm, or a subsidiary of a firm, that is identified by the 
Secretary of Defense in SAM Exclusions as being owned or controlled by 
the government of a country that is a state sponsor of terrorism unless 
the agency head states in writing the compelling reasons for the 
subcontract. (See also 225.771.)

0
7. Revise section 209.409 to read as follows:


209.409  Solicitation provision and contract clause.

    Use the clause at 252.209-7004, Subcontracting with Firms that are 
Owned or Controlled by the Government of a Country that is a State 
Sponsor of Terrorism, in solicitations and contracts with a value of 
$150,000 or more.

PART 212--ACQUISITION OF COMMERCIAL ITEMS

0
8. Amend section 212.301 by--
0
a. Removing paragraph (f)(xi);
0
b. Redesignating paragraphs (f)(xii) through (xlviii) as (xi) through 
(xlvii); and
0
b. Adding a new paragraph (f)(xlviii) to read as follows:


212.301  Solicitation provisions and contract clauses for the 
acquisition of commercial items.

    (f) * * * * *
    (xlviii) Use the provision at 252.225-7050, Disclosure of Ownership 
or Control by the Government of a Country that is a State Sponsor of 
Terrorism, as prescribed in 225.771-5, to comply with 10 U.S.C. 
2327(b).
* * * * *

PART 225--FOREIGN ACQUISITION


225.701  [Amended]

0
9. In section 225.701, remove the section text.
0
10. Add sections 225.771, 225.771-0, 225.771-1, 225.771-2, 225.771-3, 
225.771-4, and 225.771-5 to subpart 225.7 to read as follows:


225.771  Prohibition on contracting or subcontracting with a firm that 
is owned or controlled by the government of a country that is a state 
sponsor of terrorism.


225.771-0  Scope.

    This section implements 10 U.S.C. 2327(b).


225.771-1  Definition.

    ``State sponsor of terrorism,'' as used in this section, is defined 
in the provision at 252.225-7050, Disclosure of Ownership or Control by 
the Government of a Country that is a State Sponsor of Terrorism.


225.771-2  Prohibition.

    (a) The contracting officer shall not award a contract of $150,000 
or more to a firm when a foreign government that is a state sponsor of 
terrorism owns or controls, either directly or indirectly, a 
significant interest in--
    (i) The firm;
    (ii) A subsidiary of the firm; or
    (iii) Any other firm that owns or controls the firm.
    (b) For restrictions on subcontracting with a firm, or a subsidiary 
of a firm, that is identified by the Secretary of Defense as being 
owned or controlled by the government of a country that is a state 
sponsor of terrorism, see 209.405-2.


225.771-3  Notification.

    Any disclosure that the government of a country that is a state 
sponsor of terrorism has a significant interest in an offeror, a 
subsidiary of an offeror, or any other firm that owns or controls an 
offeror shall be forwarded through agency channels to the address at 
PGI 225.771-3.


225.771-4  Waiver of prohibition.

    The prohibition in 225.771-2 may be waived if the Secretary of 
Defense determines that a waiver is not inconsistent with the national 
security objectives of the United States in accordance with 10 U.S.C. 
2327(c).


225.771-5  Solicitation provision.

    Use the provision at 252.225-7050, Disclosure of Ownership or 
Control by the Government of a Country that is a State Sponsor of 
Terrorism, in solicitations, including solicitations using FAR part 12 
procedures for the acquisition of commercial items (other than 
commercial satellite services), that are expected to result in 
contracts of $150,000 or more. If the solicitation includes the 
provision at FAR 52.204-7, do not separately list the provision 
252.225-7050 in the solicitation.

[[Page 73490]]

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
11. Amend section 252.204-7007 by--
0
a. Removing the clause date ``(AUG 2014)'' and adding ``(DEC 2014)'' in 
its place;
0
b. Removing paragraph (d)(1)(i);
0
c. Redesignating paragraphs (d)(1)(ii) through (v) as (d)(1)(i) through 
(iv); and
0
d. Adding a new paragraph (d)(1)(v).
    The addition reads as follows:


252.204-7007  Alternate A, Annual Representations and Certifications.

* * * * *
    (d)(1) * * *
    (v) 252.225-7050, Disclosure of Ownership or Control by the 
Government of a Country that is a State Sponsor of Terrorism. Applies 
to all solicitations expected to result in contracts of $150,000 or 
more.
* * * * *


252.209-7001  [Removed and Reserved]

0
12. Remove and reserve section 252.209-7001.


252.209-7002  [Amended]

0
13. Amend section 252.209-7002 introductory text by removing ``209.104-
70(b)'' and adding ``209.104-70'' in its place.

0
14. Revise section 252.209-7004 to read as follows:


252.209-7004  Subcontracting with Firms that are Owned or Controlled by 
the Government of a Country that is a State Sponsor of Terrorism.

    As prescribed in 209.409, use the following clause:

SUBCONTRACTING WITH FIRMS THAT ARE OWNED OR CONTROLLED BY THE 
GOVERNMENT OF A COUNTRY THAT IS A STATE SPONSOR OF TERRORISM (DEC 2014)

    (a) Unless the Government determines that there is a compelling 
reason to do so, the Contractor shall not enter into any subcontract 
in excess of $30,000 with a firm, or a subsidiary of a firm, that is 
identified in the Exclusions section of the System for Award 
Management System (SAM Exclusions) as being ineligible for the award 
of Defense contracts or subcontracts because it is owned or 
controlled by the government of a country that is a state sponsor of 
terrorism.
    (b) A corporate officer or a designee of the Contractor shall 
notify the Contracting Officer, in writing, before entering into a 
subcontract with a party that is identified, in SAM Exclusions, as 
being ineligible for the award of Defense contracts or subcontracts 
because it is owned or controlled by the government of a country 
that is a state sponsor of terrorism. The notice must include the 
name of the proposed subcontractor and the compelling reason(s) for 
doing business with the subcontractor notwithstanding its inclusion 
in SAM Exclusions.

(End of clause)


0
15. Add section 252.225-7050 to read as follows:


252.225-7050  Disclosure of Ownership or Control by the Government of a 
Country that is a State Sponsor of Terrorism.

    As prescribed in 225.771-5, use the following provision:

DISCLOSURE OF OWNERSHIP OR CONTROL BY THE GOVERNMENT OF A COUNTRY THAT 
IS A STATE SPONSOR OF TERRORISM (DEC 2014)

    (a) Definitions. As used in this provision--
    Government of a country that is a state sponsor of terrorism 
includes the state and the government of a country that is a state 
sponsor of terrorism, as well as any political subdivision, agency, 
or instrumentality thereof.
    Significant interest means--
    (i) Ownership of or beneficial interest in 5 percent or more of 
the firm's or subsidiary's securities. Beneficial interest includes 
holding 5 percent or more of any class of the firm's securities in 
``nominee shares,'' ``street names,'' or some other method of 
holding securities that does not disclose the beneficial owner;
    (ii) Holding a management position in the firm, such as a 
director or officer;
    (iii) Ability to control or influence the election, appointment, 
or tenure of directors or officers in the firm;
    (iv) Ownership of 10 percent or more of the assets of a firm 
such as equipment, buildings, real estate, or other tangible assets 
of the firm; or
    (v) Holding 50 percent or more of the indebtedness of a firm.
    State sponsor of terrorism means a country determined by the 
Secretary of State, under section 6(j)(1)(A) of the Export 
Administration Act of 1979 (50 U.S.C. App. 2405(j)(1)(A)), to be a 
country the government of which has repeatedly provided support for 
acts of international terrorism. As of the date of this provision, 
state sponsors of terrorism include: Cuba, Iran, Sudan, and Syria.
    (b) Prohibition on award. In accordance with 10 U.S.C. 2327, 
unless a waiver is granted by the Secretary of Defense, no contract 
may be awarded to a firm if the government of a country that is a 
state sponsor of terrorism owns or controls a significant interest 
in--
    (1) The firm;
    (2) A subsidiary of the firm; or
    (3) Any other firm that owns or controls the firm.
    (c) Representation. Unless the Offeror submits with its offer 
the disclosure required in paragraph (d) of this provision, the 
Offeror represents, by submission of its offer, that the government 
of a country that is a state sponsor of terrorism does not own or 
control a significant interest in--
    (1) The Offeror;
    (2) A subsidiary of the Offeror; or
    (3) Any other firm that owns or controls the Offeror.
    (d) Disclosure. (1) The Offeror shall disclose in an attachment 
to its offer if the government of a country that is a state sponsor 
of terrorism owns or controls a significant interest in the Offeror; 
a subsidiary of the Offeror; or any other firm that owns or controls 
the Offeror.
    (2) The disclosure shall include--
    (i) Identification of each government holding a significant 
interest; and
    (ii) A description of the significant interest held by each 
government.

(End of provision)

[FR Doc. 2014-28819 Filed 12-10-14; 8:45 am]
BILLING CODE 5001-06-P