[Federal Register Volume 85, Number 189 (Tuesday, September 29, 2020)]
[Rules and Regulations]
[Pages 61500-61502]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-21121]



[[Page 61499]]

Vol. 85

Tuesday,

No. 189

September 29, 2020

Part V





Department of Defense





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Defense Acquisition Regulations System





48 CFR Parts 203, 204, 205, et al.





Defense Federal Acquisition Regulations; Interim Rules and Final Rule

  Federal Register / Vol. 85 , No. 189 / Tuesday, September 29, 2020 / 
Rules and Regulations  

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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 212, 225, and 252

[Docket DARS-2020-0035]
RIN 0750-AK94


Defense Federal Acquisition Regulation Supplement: Restriction on 
the Acquisition of Tantalum (DFARS Case 2020-D007)

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

ACTION: Interim rule.

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SUMMARY: DoD is issuing an interim rule amending the Defense Federal 
Acquisition Regulation Supplement (DFARS) to implement a section of the 
National Defense Authorization Act for Fiscal Year 2020 that prohibits 
the acquisition of tantalum metal and alloys from North Korea, China, 
Russia, and Iran.

DATES: Effective October 1, 2020.
    Comments on the interim rule should be submitted in writing to the 
address shown below on or before November 30, 2020, to be considered in 
the formation of a final rule.

ADDRESSES: Submit comments identified by DFARS Case 2020-D007, using 
any of the following methods:
    [cir] Federal eRulemaking Portal: http://www.regulations.gov. 
Search for ``DFARS Case 2020-D007'' under the heading ``Enter keyword 
or ID'' and selecting ``Search.'' Select ``Comment Now'' and follow the 
instructions to submit a comment. Please include your name, company 
name (if any), and ``DFARS Case 2020-D007'' on any attached document.
    [cir] Email: [email protected]. Include DFARS Case 2020-D007 in 
the subject line of the message.
    [cir] Fax: 571-372-6094.
    [cir] Mail: Defense Acquisition Regulations System, Attn: Ms. Amy 
Williams, OUSD(AT&L)DPAP/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 Williams, telephone 571-372-
6106.

SUPPLEMENTARY INFORMATION:

I. Background

    DoD is revising the DFARS to implement section 849 of the National 
Defense Authorization Act for Fiscal Year 2020 (Pub. L. 116-92). 
Section 849 adds tantalum to the definition of ``covered materials'' in 
10 U.S.C. 2533c. With some exceptions, 10 U.S.C. 2533c prohibits the 
acquisition of any covered material melted or produced in any covered 
country (North Korea, China, Russia, or Iran), or any end item, 
manufactured in any covered country, that contains a covered material. 
``Covered material'' also includes samarium-cobalt magnets, neodymium-
iron-boron magnets, tungsten metal powder, and tungsten heavy alloy or 
any finished or semi-finished components containing tungsten heavy 
alloy.

II. Discussion and Analysis

    This rule adds tantalum to the restriction at DFARS 225.7018, by 
amending the title of the section, adding ``tantalum metal and alloys'' 
to the definition of ``covered material'' at DFARS 225.7018-1, and 
including tantalum in the explanation of exceptions at DFARS 225.7018-3 
paragraphs (c)(1)(ii) (exception for commercially available off-the-
shelf (COTS) items inapplicable to a mill product that has not been 
incorporated into an end item, subsystem, assembly, or component) and 
(d)(1) (meaning of nonavailabilty of a covered material in the required 
form). Although the 10 U.S.C. 2533c provides that the exception to the 
restriction on tungsten for COTS items does not apply to a COTS item 
that is 50 percent or more tungsten by weight, DoD notes that section 
849 does not add a similar condition with regard to tantalum metal and 
alloys.
    In addition, a new paragraph (c) is added at DFARS 225.7018-2, 
Restriction, to explain that the restriction on production of tantalum 
metal and alloys, including the reduction of tantalum chemicals such as 
oxides, chlorides, or potassium salts, to metal powder and all 
subsequent phases of production of tantalum metal and alloys, such as 
consolidation of metal powders.
    These same changes are also incorporated in the clause at 252.225-
7052, now titled ``Restriction on the Acquisition of Certain Magnets, 
Tantalum, and Tungsten,'' and there are conforming changes to the 
clause title at DFARS 212.301(f)(ix)(FF) and 225.7018-5. There are no 
changes to the procedures for nonavailability determinations.

III. Applicability to Contracts at or Below the Simplified Acquisition 
Threshold and for Commercial Items, Including Commercially Available 
Off-the-Shelf Items

    This rule amends the clause at DFARS 252.225-7052, Restriction on 
Acquisition of Certain High Performance Magnets and Tungsten, to apply 
to tantalum. DFARS 252.225-7052 does not apply to acquisitions below 
the simplified acquisition threshold, in accordance with 41 U.S.C. 
1905, but applies to contracts for the acquisition of commercial items, 
except as provided in the statute at 10 U.S.C. 2533c(c)(3).

A. Applicability to Contracts at or Below the Simplified Acquisition 
Threshold

    41 U.S.C. 1905 governs the applicability of laws to contracts or 
subcontracts in amounts not greater than the simplified acquisition 
threshold. 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 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 Principal 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. DoD does not intend to 
make that determination. Therefore, this rule will not apply below the 
simplified acquisition threshold.

B. Applicability to Contracts for the Acquisition of Commercial Items, 
Including COTS Items

    10 U.S.C. 2375 governs the applicability of laws to contracts and 
subcontracts for the acquisition of commercial items, including COTS 
items, and is intended to limit the applicability of laws to contracts 
and subcontracts for the acquisition of commercial items, including 
COTS items. 10 U.S.C. 2375 provides that if a provision of law contains 
criminal or civil penalties, or if the Under Secretary of Defense 
(Acquisition and Sustainment) (USD (A&S)) makes a written determination 
that it is not in the best interest of the Federal

[[Page 61501]]

Government to exempt commercial item contracts, the provision of law 
will apply to contracts for the acquisition of commercial items. Due to 
delegations of authority from USD (A&S), the Principal Director, DPC, 
is the appropriate authority to make this determination. DoD has made 
that determination to apply this rule to the acquisition of commercial 
items, including COTS items, if otherwise applicable.
    10 U.S.C. 2533c specifically exempts the acquisition of an end item 
that is a COTS item, other than a COTS item that is 50 percent or more 
tungsten by weight, or a mill product that has not been incorporated 
into an end item, subsystem, assembly, or component. Although 10 U.S.C. 
2533c does not refer to 10 U.S.C. 2375 and does not provide that, 
notwithstanding that statute, it shall be applicable to contracts for 
the procurement of commercial items, it is the clear intent of 10 
U.S.C. 2533c to cover commercial items other than those specifically 
exempted. Therefore, DoD has signed a determination of applicability to 
acquisitions of commercial items, except as exempted in the statute.

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 a significant regulatory action and, therefore, was 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 rule is not subject to the requirements of E.O. 13771, because 
this rule is issued with respect to a national security function of the 
United States.

VI. Regulatory Flexibility Act

    DoD does not expect this interim 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 (IRFA) has been 
performed and is summarized as follows:
    This rule is required to implement section 849 of the National 
Defense Authorization Act (NDAA) for Fiscal Year (FY) 2020.
    The objective of the rule is to prohibit acquisition of tantalum 
metal and alloys from North Korea, China, Russia, or Iran.
    Based on Federal Procurement Data System data for FY 2017, DoD 
awarded in the United States 13,400 contracts that exceeded $250,000 
and were for the acquisition of manufactured end products, excluding 
those categories that could not include tantalum (such as clothing and 
fabrics, books, or lumber products). These contracts were awarded to 
5,073 unique entities, of which 3,074 were small entities. It is not 
known what percentage of these awards involved tantalum, or what lesser 
percentage might involve tantalum from China, North Korea, Russia, or 
Iran.
    There are no projected reporting or recordkeeping requirements. 
However, there may be compliance costs to track the origin of covered 
materials.
    The rule does not duplicate, overlap, or conflict with any other 
Federal rules.
    DoD is exempting acquisitions equal to or less than the simplified 
acquisition threshold in accordance with 41 U.S.C. 1905. DoD was unable 
to identify any other alternatives that would reduce burden on small 
businesses and still meet the objectives of the statute.
    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 
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 2020-D007), 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).

VIII. Determination To Issue an Interim Rule

    A determination has been made under the authority of the Secretary 
of Defense that urgent and compelling reasons exist to promulgate this 
interim rule without prior opportunity for public comment. Section 849 
adds tantalum to the other covered materials prohibited by 10 U.S.C. 
2533c if melted or produced in any covered country or any end item that 
contains a covered material manufactured in any covered country. 
Covered countries are North Korea, China, Russia, and Iran.
    Implementation of this prohibition is urgent, because the law was 
effective upon enactment (December 2019) and decreasing our dependence 
on covered materials that originate in covered countries is a matter of 
national security. It is a matter of national security to reduce U.S. 
dependence on the covered countries specified in section 849, because 
tantalum is an important element in the supply chain for production of 
both U.S. military systems, and nonmilitary systems that DoD uses. A 
shortage of supply of these covered materials would therefore hinder 
maintenance and replacement of many DoD military systems, and would 
also have a negative impact on the broader industrial base upon which 
DoD depends. Restricting acquisition from China and the other covered 
countries will promote growth in domestic capability and reduce 
dependence on foreign sources that are not our allies.
    However, pursuant to 41 U.S.C. 1707 and FAR 1.501-3(b), DoD will 
consider public comments received in response to this interim rule in 
the formation of the final rule.

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

    Government procurement.

Jennifer D. Johnson,
Regulatory Control Officer, Defense Acquisition Regulations System.

0
Therefore, 48 CFR parts 212, 225, and 252 are amended as follows:

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

PART 212--ACQUISITION OF COMMERCIAL ITEMS

0
2. Amend section 212.301 by revising paragraph (f)(ix)(FF) to read as 
follows:


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

* * * * *
    (f) * * *
    (ix) * * *
    (FF) Use the clause at 252.225-7052, Restriction on the Acquisition 
of Certain Magnets, Tantalum, and Tungsten, as prescribed in 225.7018-
5.
* * * * *

PART 225--FOREIGN ACQUISITION

0
3. Amend section 225.7002-2 by revising paragraph (b)(2) to read as 
follows:

[[Page 61502]]

225.7002-2   Exceptions.

* * * * *
    (b) * * *
    (2) The supporting documentation for the determination shall 
include an analysis and written certification by the requiring 
activity, with specificity, why alternatives that would not require a 
domestic nonavailability determination are unacceptable.
* * * * *

0
4. Amend section 225.7003-3 by revising paragraph (b)(5)(i) to read as 
follows:


225.7003-3  Exceptions.

* * * * *
    (b) * * *
    (5) * * *
    (i) The Secretary of the military department concerned is 
authorized, without power of redelegation, to make a domestic 
nonavailability determination that applies to only one contract. The 
supporting documentation for the determination shall include an 
analysis and written documentation by the requiring activity, with 
specificity, why alternatives that would not require a domestic 
nonavailability determination are unacceptable.
* * * * *

0
5. Revise the section 225.7018 heading to read as follows:


225.7018  Restriction on acquisition of certain magnets, tantalum, and 
tungsten.

* * * * *

0
6. In section 225.7018-1 revise the definition of ``Covered material'' 
to read as follows:


225.7018-1  Definitions.

* * * * *
    Covered material means--
    (1) Samarium-cobalt magnets;
    (2) Neodymium-iron-boron magnets;
    (3) Tantalum metal and alloys;
    (4) Tungsten metal powder; and
    (5) Tungsten heavy alloy or any finished or semi-finished component 
containing tungsten heavy alloy.
* * * * *

0
7. Amend 225.7018-2 by--
0
a. Redesignating paragraph (c) as paragraph (d); and
0
b. Adding a new paragraph (c).
    The addition reads as follows:


225.7018-2   Restriction.

* * * * *
    (c) For production of tantalum metal and alloys, this restriction 
includes the reduction of tantalum chemicals such as oxides, chlorides, 
or potassium salts, to metal powder and all subsequent phases of 
production of tantalum metal and alloys, such as consolidation of metal 
powders.
* * * * *


225.7018-3   [Amended]

0
8. Amend section 225.7018-3 by--
0
a. In (c)(1)(ii) removing ``tungsten heavy alloy mill product'' and 
adding ``tantalum metal, tantalum alloy, or tungsten heavy alloy mill 
product'' in its place;
0
b. In (c)(2) removing ``PGI 225.7018-3(c)(1)(ii)'' and adding ``PGI 
225.7018-3(c)(2)'' in its place;
0
c. In paragraph (d) introductory text removing ``concerned,'' and 
adding ``concerned, as specified in 225.7018-4,'' in its place; and
0
d. In paragraph (d)(1) removing ``tungsten heavy alloy'' and adding 
``tantalum metal, tantalum alloy, or tungsten heavy alloy'' in its 
place.

0
9. Amend section 225.7018-4 by--
0
a. Revising paragraph (a)(2); and
0
b. In paragraph (a)(3)(ii) removing ``individual waivers'' and adding 
``individual nonavilability determinations'' in its place.
    The revision reads as follows:


225.7018-4   Nonavailability determination.

    (a) * * *
    (2) The supporting documentation for the determination shall 
include an analysis and written certification by the requiring activity 
that describes, with specificity, why alternatives that would not 
require a nonavailability determination are unacceptable. The template 
for an individual nonavailability determination is available at PGI 
225.7018-4(a)(2).
* * * * *


225.7018-5   [Amended]

0
10. Amend section 225.7018-5 by removing ``Magnets and Tungsten'' and 
adding ``Magnets, Tantalum, and Tungsten'' in its place.

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
11. Amend section 252.225-7052 by--
0
a. Revising the section heading, clause title, and clause date;
0
b. In paragraph (a) revising the definition of ``Covered material'';
0
c. Redesignating paragraph (b)(3) as paragraph (b)(4);
0
d. Adding new paragraph (b)(3);
0
e. In paragraphs (c)(1)(i)(B) and (c)(2)(i) removing ``tungsten heavy 
alloy'' and adding ``tantalum metal, tantalum alloy, or tungsten heavy 
alloy'' in both places; and
0
f. Adding a paragraph heading to paragraph (d).
    The revisions and additions read as follows:


252.225-7052   Restriction on the Acquisition of Certain Magnets, 
Tantalum, and Tungsten.

* * * * *

Restriction on the Acquisition of Certain Magnets, Tantalum, and 
Tungsten (Oct 2020)

    (a) * * *
    Covered material means--
    (1) Samarium-cobalt magnets;
    (2) Neodymium-iron-boron magnets;
    (3) Tantalum metal and alloys;
    (4) Tungsten metal powder; and
    (5) Tungsten heavy alloy or any finished or semi-finished component 
containing tungsten heavy alloy.
* * * * *
    (b) * * *
    (3) For production of tantalum metal and alloys, this restriction 
includes the reduction of tantalum chemicals such as oxides, chlorides, 
or potassium salts, to metal powder and all subsequent phases of 
production of tantalum metal and alloys, such as consolidation of metal 
powders.
* * * * *
    (d) Subcontracts. * * *

[FR Doc. 2020-21121 Filed 9-28-20; 8:45 am]
BILLING CODE 5001-06-P