[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: osd.dfars@mail.mil. 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