[Federal Register Volume 84, Number 105 (Friday, May 31, 2019)]
[Rules and Regulations]
[Pages 25188-25190]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-11306]
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DEPARTMENT OF DEFENSE
Defense Acquisition Regulations System
48 CFR Parts 204, 212, 225, and 252
[Docket DARS-2018-0060]
RIN 0750-AJ82
Defense Federal Acquisition Regulation Supplement: Foreign
Commercial Satellite Services and Certain Items on the Commerce Control
List (DFARS Case 2018-D020)
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 National Defense Authorization Act for
Fiscal Years 2017 and 2018. One section imposes additional prohibitions
with regard to acquisition of certain foreign commercial satellite
services, such as cybersecurity risk and source of satellites and
launch vehicles used to provide the foreign commercial satellite
services, and expands the definition of ``covered foreign country'' to
include Russia. Another section prohibits purchase of items originating
in the People's Republic of China that meet the definition of goods and
services controlled as munitions items when moved to the Commerce
Control List of the Export Administration Regulations of the Department
of Commerce.
DATES: Effective May 31, 2019.
FOR FURTHER INFORMATION CONTACT: Ms. Amy G. Williams, telephone 571-
372-6106.
SUPPLEMENTARY INFORMATION:
I. Background
DoD published an interim rule in the Federal Register at 83 FR
66066 on December 21, 2018, to implement section 1603 of the National
Defense Authorization Act (NDAA) for Fiscal Year (FY) 2018 (Pub. L.
115-91) and section 1296 of the NDAA for FY 2017 (Pub. L. 114-328).
Section 1603 amends 10 U.S.C. 2279 to impose additional prohibitions
with regard to acquisition of certain foreign commercial satellite
services, such as cybersecurity risk and source of satellites and
launch vehicles used to provide the foreign commercial satellite
services. Section 1603 also expands the definition of ``Covered foreign
country'' to include Russia. Section 1296 prohibits purchase of items
from a Communist Chinese military company. One respondent submitted a
public comment in response to the interim rule.
II. Discussion and Analysis
DoD reviewed the public comment received. It was favorable to
implementation of the rule. No changes from the interim rule are made
in the final rule.
III. Applicability to Contracts at or Below the Simplified Acquisition
Threshold and for Commercial Items, Including Commercially Available
Off-the-Shelf Items
A. The Interim Rule Amended the Applicability of Existing DFARS
Solicitation Provisions and Contract Clauses and Added a New Clause as
Follows
To implement section 1603 of the NDAA for FY 2018, this
rule amended the provision at DFARS 252.225-7049, Prohibition on
Acquisition of Commercial Satellite Services from Certain Foreign
Entities--Representation, and added a clause to
[[Page 25189]]
enforce compliance with the representations in the associated
provisions. This provision and clause apply to acquisitions not greater
than the simplified acquisition threshold (SAT) and acquisitions of
commercial items.
To implement section 1296 of the NDAA for FY 2017, this
rule modified the clause at DFARS 252.225-7007, Prohibition on
Acquisition of United States Munitions List Items from Communist
Chinese Military Companies, to prohibit contractors or subcontractors
from acquiring items listed on the 600 series of the CCL that are to be
delivered under the contract from any Communist Chinese military
company. The rule continues to prescribe the use of this clause for use
in solicitations and contracts for items valued at or below the SAT.
However, the clause now applies to the acquisition of commercial items,
including Commercially Available Off-the-Shelf (COTS) items, if the
items are 600 series items on the CCL, or USML items. Although most 600
series items are not commercial items, and USML items are even less
likely to be commercial items, it is possible that some of these
covered items will be commercial items and must not be purchased from a
Communist Chinese military company.
B. Determinations
Section 1603 of the NDAA for FY 2018. A determination and
finding was signed by the Director, Defense Procurement and Acquisition
Policy, on June 23, 2014, that due to potential risk to national
security it would not be in the best interest of the United States to
exempt acquisitions not greater than the SAT and acquisitions of
commercial items from the applicability of 10 U.S.C. 2279.
Section 1296 of the NDAA for FY 2017. A determination
under 41 U.S.C. 1905 was not required to prescribe DFARS 252.225-7012
for use in solicitations and contracts valued at or below the SAT,
because this is consistent with the current applicability of the clause
DFARS 252.225-7007, which prohibits acquisitions of items on the USML
from Communist Chinese Military companies. The Principal Director, DPC,
determined that it is in the best interest of the Government to apply
the requirements of section 1296 to contracts for the acquisition of
commercial items, including COTS items, to prevent insertion of
malicious items into U.S. weapons platforms, information technology
systems, and other areas, presenting a threat to our warfighters and
their ability to defend national security.
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. Regulatory Flexibility Act
A final regulatory flexibility analysis (FRFA) has been prepared
consistent with the Regulatory Flexibility Act, 5 U.S.C. 601, et seq.
The FRFA is summarized as follows:
The reason for this rule is to implement section 1603 of the
National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2018 and
section 1296 of the NDAA for FY 2017. Section 1603 of the NDAA for FY
2018 amends 10 U.S.C. 2279, which prohibits acquisition of certain
foreign commercial satellite services. Section 1296 of the NDAA for FY
2017 amends section 1211 of the NDAA for FY 2006 to prohibit purchase
from any Communist Chinese military company, through a contract or
subcontract (at any tier), of goods and services controlled as
munitions items on the 600 series of the Commerce Control List (CCL) of
the Export Administration Regulations of the Department of Commerce.
The objectives of the rule are as follows:
Section 1603. To prohibit award of contracts for
commercial satellite services to a foreign entity if entering into such
contract would create an unacceptable cybersecurity risk. In addition,
the definition of covered foreign country is expanded to include Russia
(other covered foreign countries are China, North Korea, Iran, Sudan,
and Syria). New restrictions are also added with regard to the
satellites and launch vehicles to be used to provide the satellite
services, but these restrictions do not apply to launches that occur
prior to December 31, 2022.
Section 1296. To prohibit purchase of items originating in
the People's Republic of China that meet the definition of goods and
services controlled as munitions items when moved to the 600 series of
the CCL of the Export Administration Regulations of the Department of
Commerce.
There were no significant issues raised by the public comments in
response to the initial regulatory flexibility analysis.
DoD estimates that this rule applies to small entities as follows:
Section 1603. This part of the rule applies to less than
86 small entities. According to Federal Procurement Data System (FPDS)
data for FY 2016, 86 small entities were awarded contracts or orders
for services under Product Service Code D304 (ADP Telecommunications
and Transmission Services), of which commercial satellite services are
a subset. Although the focus of the Regulatory Flexibility Act is
protection of domestic small business entities that are eligible for
assistance from the Small Business Administration, there may be
domestic small business entities in the United States that offer the
satellite services of a foreign entity that would be restricted by this
rule.
Section 1296. This part of the rule applies to any small
entities that intend to provide items on the 600 series of the Commerce
Control List under a DoD contract or subcontract. The 600 series
consists of items on the Commerce Control List that have an export
control classification number of which the third character is a ``6''.
These items were transitioned from the United States Munitions List
(USML) to the 600 series, because they have less than a critical
military or intelligence capability than the items that remain on the
USML, but they are not currently in normal commercial use. Data on the
number of entities that can provide such items, and whether they are
small or other than small entities, is not available in FPDS, because
these items are not readily identifiable in FPDS and are often acquired
through subcontracts.
Projected reporting or recordkeeping requirements of this rule are
as follows:
Section 1603. In addition to the current annual
representations as to whether the offeror is, or is not, a foreign
entity subject to the prohibitions of the statute; or is, or is not,
offering commercial satellite services provided by such a foreign
entity, this rule adds five more annual representations as to whether
the offeror--
[cir] Is, or is not offering commercial satellite services using
satellites, launched on or after December 31, 2022, that will be
designed or manufactured in a covered foreign country;
[[Page 25190]]
[cir] Is, or is not offering commercial satellite services using
satellites, launched on or after December 31, 2022, that will be
designed or manufactured by an entity controlled in whole or in part
by, or acting on behalf of, the government of a covered foreign
country;
[cir] Is, or is not offering commercial satellite services using
satellites, launched outside the United States on or after December 31,
2022, using a launch vehicle that is designed or manufactured in a
covered foreign country;
[cir] Is, or is not offering commercial satellite services using
satellites, launched outside the United States on or after December 31,
2022, using a launch vehicle that is provided by the government of a
covered foreign country; and
[cir] Is, or is not offering commercial satellite services using
satellites, launched outside the United States on or after December 31,
2022, using a launch vehicle that is provided by an entity controlled
in whole or in part by, or acting on behalf of, the government of a
covered foreign country.
Further information is required if the offeror provides an
affirmative response to any of the representations, but such
affirmative response and further submission is expected to be extremely
rare because of the statutory prohibition and the expected rarity of a
waiver by the Under Secretary of Defense for Acquisition and
Sustainment or for Policy. Furthermore, this prohibition is only
applicable to launches on or after December 31, 2022.
If the satellite service provider responded affirmatively to any of
the new representations regarding launch vehicles, if such launches are
covered in whole or in part by a contract or other agreement relating
to launch services that, prior to June 10, 2018, was either fully paid
by the satellite service provider or covered by a legally binding
commitment of the satellite service provider to pay for such services,
a de minimis amount of information is required with regard to such
contract or agreement in order to establish an exception to the
associated prohibitions.
Section 1296. There are no projected reporting or
recordkeeping requirements relating to implementation of section 1296.
The only compliance requirements are to not purchase 600 series items
that originate in the People's Republic of China.
This rule will not have a significant economic impact on any small
entities, unless they are offering commercial satellite services
subject to the restrictions of this rule or providing 600 series items
that originate in the Peoples Republic of China. DoD was not able to
identify any alternatives that would reduce the burden on small
entities and meet the objectives of the rule.
VI. Paperwork Reduction Act
The interim rule affected the information collection requirements
in the provision at DFARS 252.225-7049, currently approved through
March 31, 2021, under OMB Control Number 0704-0525, entitled
Prohibition on Acquisition of Commercial Satellite Services from
Certain Foreign Entities, in accordance with the Paperwork Reduction
Act (44 U.S.C. chapter 35). The impact, however, is negligible at this
time, because the prohibition on use of certain foreign satellites and
launch vehicles only applies to launches outside the United States on
or after December 31, 2022. The information collection will be updated
to reflect these changes when renewed.
List of Subjects in 48 CFR Parts 201, 212, 225, and 252
Government procurement.
0
Accordingly, the interim rule amending 48 CFR parts 201, 212, 225, and
252, which was published at 83 FR 66066 on December 21, 2018, is
adopted as final without change.
Jennifer Lee Hawes,
Regulatory Control Officer, Defense Acquisition Regulations System.
[FR Doc. 2019-11306 Filed 5-30-19; 8:45 am]
BILLING CODE 5001-06-P