[Federal Register Volume 83, Number 165 (Friday, August 24, 2018)]
[Proposed Rules]
[Pages 42828-42831]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-18245]
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DEPARTMENT OF DEFENSE
Defense Acquisition Regulations System
48 CFR Parts 225 and 252
[Docket DARS-2018-0004]
RIN 0750-AJ22
Defense Federal Acquisition Regulation Supplement: Restrictions
on Acquisitions From Foreign Sources (DFARS Case 2017-D011)
AGENCY: Defense Acquisition Regulations System, Department of Defense
(DoD).
ACTION: Proposed rule.
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SUMMARY: DoD is proposing to amend the Defense Federal Acquisition
Regulation Supplement (DFARS) to implement sections of the National
Defense Authorization Act for Fiscal Year 2017 to apply domestic source
requirements to acquisitions at or below the simplified acquisition
threshold when acquiring athletic footwear to be furnished to enlisted
members of the Armed Forces upon their initial entry into the Armed
Forces, and add Australia and the United Kingdom to the definition of
the ``National Technology and Industrial Base.''
DATES: Comments on the proposed rule should be submitted in writing to
the address shown below on or before October 23, 2018, to be considered
in the formation of a final rule.
ADDRESSES: Submit comments identified by DFARS Case 2017-D011, using
any of the following methods:
[cir] Federal eRulemaking Portal: http://www.regulations.gov.
Search for
[[Page 42829]]
``DFARS Case 2017-D011.'' Select ``Comment Now'' and follow the
instructions provided to submit a comment. Please include ``DFARS Case
2017-D011'' on any attached documents.
[cir] Email: [email protected]. Include DFARS Case 2017-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(A&S)DPC/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, telephone 571-
372-6106.
SUPPLEMENTARY INFORMATION:
I. Background
DoD is proposing to amend the DFARS to implement the following two
sections of the National Defense Authorization Act (NDAA) for Fiscal
Year (FY) 2017 (Pub. L. 114-328):
A. Section 817 of the NDAA for FY 2017
Section 817 extends the domestic source requirements of 10 U.S.C.
2533a (the Berry Amendment) below the simplified acquisition threshold,
when acquiring athletic footwear to be furnished to the members of the
Army, Navy, Air Force, or Marine Corps upon their initial entry into
the Armed Forces.
B. Section 881(b) of the NDAA for FY 2017
Section 881(b) amends 10 U.S.C. 2500(1) by adding Australia and the
United Kingdom of Great Britain and Northern Ireland to the United
States and Canada as the countries within which the activities of the
national technology and industrial base are conducted. 10 U.S.C. 2534,
Miscellaneous Limitations on the Procurement of Goods Other Than United
States Goods, requires that DoD only procure certain items if the
manufacturer of the items is part of the national technology and
industrial base.
II. Discussion and Analysis
This rule proposes to amend the DFARS as follows--
A. Section 817 of the NDAA for FY 2017
Amends DFARS 225.7002(a) to ensure that purchases of athletic
footwear valued at or below the SAT are not exempt from the Berry
Amendment (i.e. shall be procured from domestic sources). A conforming
change is made at DFARS 225.7002-3(a) to remove the phrase ``that
exceed the simplified acquisition threshold'' in order to rely on the
introductory text of the section, which qualifies all of the
prescription in the section as inapplicable if an exception at DFARS
225.7002-2 applies.
B. Section 881(b) of the NDAA for FY 2017
Modifies the following DFARS sections, which implement the
restrictions of 10 U.S.C. 2534, to allow acquisition of certain items
from Australia and the United Kingdom:
DFARS 225.7004, Restriction on acquisition of foreign
buses.
DFARS 225.7005, Restriction on certain chemical weapons
antidote.
DFARS 225.7006, Restriction on air circuit breakers for
naval vessels.
DFARS 252.225-7037, Evaluation of Offers for Air Circuit
Breakers.
DFARS 252.225-7038, Restriction on Acquisition of Air
Circuit Breakers.
Purchases from the United Kingdom were already authorized in the
provision and clause through annual waivers, which cover air circuit
breakers and certain other naval vessel components.
In addition, this rule proposes to remove coverage at DFARS
225.7006-3(b) and 225.7006-4(a)(2) of the annual waiver for air circuit
breakers for naval vessels from the United Kingdom, because waiver is
no longer required.
III. Applicability to Contracts at or Below the Simplified Acquisition
Threshold and for Commercial Items, Including Commercially Available
Off-the-Shelf Items
This rule proposes to amend the applicability of existing DFARS
solicitation provisions and contract clauses as follows:
To implement section 817 of the NDAA for FY 2017, this
rule proposes to extend use of DFARS clause 252.225-7012, Preference
for Certain Domestic Commodities, to acquisitions at or below the
simplified acquisition threshold (SAT) when buying athletic footwear to
be furnished to enlisted members of the Armed Forces upon their initial
entry into the Armed Forces. This clause is already prescribed for use
in solicitations and contracts using FAR part 12 procedures for the
acquisition of commercial items, including commercially available off-
the-shelf (COTS) items.
To implement section 881(b) of the NDAA for FY 2017, this
rule proposes to modify the provision at DFARS 252.225-7037, Evaluation
of Offers for Air Circuit Breakers, and the clause at DFARS 252.225-
7038, Restriction on Acquisition of Air Circuit Breakers, to add
Australia as a country from which items restricted by 10 U.S.C. 2534
may be purchased. This rule does not change the prescriptions for the
use of this provision or clause, which are already required for use in
solicitations and contracts for commercial items, including COTS items.
The clause does not apply below the SAT.
A. Applicability to Contracts at or Below the SAT
41 U.S.C. 1905 governs the applicability of laws to contracts or
subcontracts in amounts not greater than the SAT. It is intended to
limit the applicability of laws to such contracts or subcontracts. 41
U.S.C. 1905 provides that if a provision of law contains criminal or
civil penalties, or if the Federal Acquisition Regulation (FAR) Council
makes a written determination that it is not in the best interest of
the Federal Government to exempt contracts or subcontracts at or below
the SAT, the law will apply to them. The Director, Defense Pricing and
Contracting (DPC), is the appropriate authority to make comparable
determinations for regulations to be published in the DFARS, which is
part of the FAR system of regulations.
B. Applicability to Contracts for the Acquisition of Commercial Items,
Including Commercially Available Off-the-Shelf (COTS) Items
41 U.S.C. 1906 governs the applicability of laws to contracts for
the acquisition of commercial items, and is intended to limit the
applicability of laws to contracts for the acquisition of commercial
items. 41 U.S.C. 1906 provides that if a provision of law contains
criminal or civil penalties, or if the FAR Council makes a written
determination that it is not in the best interest of the Federal
Government to exempt commercial item contracts, the provision of law
will apply to contracts for the acquisition of commercial items.
Likewise, 41 U.S.C. 1907 governs the applicability of laws to COTS
items, with the Administrator for Federal Procurement Policy the
decision authority to determine that it is in the best interest of the
Government to apply a provision of law to acquisitions of COTS items in
the FAR. The Director,
[[Page 42830]]
DPC, is the appropriate authority to make comparable determinations for
regulations to be published in the DFARS, which is part of the FAR
system of regulations.
C. Determinations
A determination under 41 U.S.C. 1905 is not required to prescribe
DFARS 252.225-7012 for use in solicitations and contracts valued at or
below the SAT, because section 817 of the NDAA for FY 2017 specifically
states that DoD shall acquire athletic footwear that complies with the
requirements of 10 U.S.C. 2533a ``without regard to the applicability
of any simplified acquisition threshold under chapter 137 of title 10
(or any other provision of law).''
A determination under 41 U.S.C. 1906 and 1907 is not required to
apply the requirements of DFARS 252.225-7037 and 252.225-7038 to
acquisitions for commercial items, including COTS items, because the
statute that this provision and clause implements is not a covered
statute subject to 41 U.S.C. 1905-1907. At the time of the Federal
Acquisition Streamlining Act of 1994 (FASA) (Pub. L. 103-355), now
codified in part at 41 U.S.C. 1905-1907, this provision and clause were
a single clause, DFARS 252.225-7029, Restriction on Acquisition of Air
Circuit Breakers, which implemented 10 U.S.C. 2534. Because 10 U.S.C.
2534 predated FASA, it was not subject to 41 U.S.C. 1905-1907. The
DFARS clause 252.225-7029 was included on the initial list of statutes
applicable to the acquisition of commercial items at DFARS 252.212-
7001, incorporated in the DFARS by DFARS Case 95-D712 on November 30,
1995 (Defense Acquisition Circular 91-9).
IV. 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.
V. Executive Order 13771
This proposed rule is not expected to be an E.O. 13771, Reducing
Regulation and Controlling Regulatory Costs, regulatory action, because
this proposed rule is not significant under E.O. 12866.
VI. Regulatory Flexibility Act
DoD does not expect this proposed 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.
However, an initial regulatory flexibility analysis has been performed
and is summarized as follows:
The reason for this rule is to implement sections 817 and 881(b) of
the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2017
(Pub. L. 114-328).
The objectives of the rule are as follows:
To remove the exception to domestic source restriction of
the Berry Amendment (10 U.S.C. 2533a) for acquisitions at or below the
simplified acquisition threshold when buying athletic footwear to be
furnished to enlisted members of the Armed Forces upon their initial
entry into the Armed Forces, as required by section 817 of the NDAA for
FY 2017.
To allow acquisition of certain items from Australia and
the United Kingdom, for which purchase is currently restricted to items
from the United States or Canada, in accordance with 10 U.S.C. 2534, as
amended by section 881(b) of the NDAA for FY 2017.
A. Section 817 of the NDAA for FY 2017
This rule may apply to only a few small entities, because there are
few sources that meet the domestic source requirements of the Berry
Amendment with regard to athletic footwear. The Defense Logistics
Agency (DLA) estimates a potential annual demand for approximately
200,000 to 250,000 pairs of athletic shoes to be delivered at the rate
of approximately 27,500 pairs per month. In response to a request for
information issued by DLA in December 2016, there were 5 responses from
athletic footwear manufacturers, one of which was a small business.
Small entities who are athletic shoe manufacturers could likely support
portions of DoD's total requirements for athletic footwear. In
addition, there are likely a number of domestic component suppliers who
are small entities who would benefit from this new requirement as well.
On the other hand, small entities that cannot provide athletic shoes
that meet the domestic source requirements of the Berry Amendment, will
no longer be able to compete for acquisition of athletic footwear at or
below the simplified acquisition threshold that are for the purpose of
providing athletic footwear to enlisted members of the Armed Forces
upon their initial entry into the Armed Forces.
B. Section 881(b) of the NDAA for FY 2017
This rule will not apply to any small entities at the prime
contract level, as there are only a few prime contractors for the
restricted items, which are all U.S. firms that are other than small
businesses. 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.'' Therefore, if an item currently purchased from a U.S.
entity that is other than a small business were to be purchased from an
entity in the Australia or the United Kingdom, there could be an impact
on a few small entities that are currently subcontractors to a U.S.
prime contractor.
There are no projected reporting or recordkeeping requirements of
this rule. The only compliance requirements are to furnish athletic
footwear that complies with the Berry Amendment.
The rule does not duplicate, overlap, or conflict with any other
Federal rules.
By extending the restriction of the Berry Amendment to acquisitions
that do not exceed the simplified acquisition threshold, this rule may
benefit small entities that can provide athletic footwear that is
compliant with the Berry Amendment, because they may be more able to
compete for smaller acquisitions.
DoD was unable to identify any alternatives that would meet the
requirements of the statutes.
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
[[Page 42831]]
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 2017-D011), in
correspondence.
VII. 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 Parts 225 and 252
Government procurement.
Jennifer Lee Hawes,
Regulatory Control Officer, Defense Acquisition Regulations System.
Therefore, 48 CFR parts 225 and 252 are proposed to be amended as
follows:
0
1. The authority citation for 48 CFR parts 225 and 252 continues to
read as follows:
Authority: 41 U.S.C. 1303 and 48 CFR chapter 1.
PART 225--FOREIGN ACQUISITION
0
2. Amend section 225.7002-2 by revising paragraph (a) to read as
follows:
225.7002-2 Exceptions.
* * * * *
(a) Acquisitions at or below the simplified acquisition threshold,
except for athletic footwear purchased by DoD for use by members of the
Army, Navy, Air Force, or Marine Corps upon their initial entry into
the Armed Forces (section 817 of the National Defense Authorization Act
for Fiscal Year 2017 (Pub. L. 114-328)).
* * * * *
225.7002-3 [Amended]
0
3. Amend section 225.7002-3, in paragraph (a) by removing ``commercial
items, that exceed the simplified acquisition threshold'' and adding
``commercial items'' in its place.
225.7004-1 [Amended]
0
4. Amend section 225.7004-1 by removing ``United States or Canada'' and
adding ``United States, Australia, Canada, or the United Kingdom'' in
its place.
225.7004-3 [Amended]
0
5. Amend section 225.7004-3 by:
0
a. In paragraph (a) by removing ``United States or Canada'' and adding
``United States, Australia, Canada, or the United Kingdom'' in its
place wherever it appears.
0
b. In paragraphs (a), (b), and (c) by removing ``United States and
Canada'' and adding ``United States, Australia, Canada, or the United
Kingdom'' in its place wherever it appears.
225.7005-1 [Amended]
0
6. Amend section 225.7005-1, in the introductory text and paragraph
(b), by removing ``United States or Canada'' and adding ``United
States, Australia, Canada, or the United Kingdom'' in its place in both
places.
225.7006-1 [Amended]
0
7. Amend section 225.7006-1 by removing ``United States or Canada'' and
adding ``United States, Australia, Canada, or the United Kingdom'' in
its place.
0
8. Revise section 225.7006-3 to read as follows:
225.7006-3 Waiver.
The waiver criteria at 225.7008(a) apply to this restriction.
225.7006-4 [Amended]
0
9. Amend section 225.7006-4 by:
0
a. In paragraph (a)(2), removing ``A waiver has been granted, other
than the waiver for the United Kingdom, which has been incorporated
into the provision'' and adding ``A waiver has been granted'' in its
place; and
0
b. In paragraph (b)(2), removing ``A waiver has been granted, other
than the waiver for the United Kingdom, which has been incorporated
into the clause'' and adding ``A waiver has been granted'' in its
place.
PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
252.225-7037 [Amended]
0
10. Amend section 252.225-7037 by:
0
a. Removing the provision date of ``(JUN 2012)'' and adding ``(DATE)''
in its place; and
0
b. In paragraphs (a) and (b), removing ``outlying areas, Canada,'' and
adding ``outlying areas, Australia, Canada,'' in its place in both
places.
252.225-7038 [Amended]
0
11. Amend section 252.225-7038 by:
0
a. Removing the provision date of ``(JUN 2005)'' and adding ``(DATE)''
in its place; and
0
b. Removing ``outlying areas, Canada,'' and adding ``outlying areas,
Australia, Canada,'' in its place.
[FR Doc. 2018-18245 Filed 8-23-18; 8:45 am]
BILLING CODE 6820-ep-P