[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
[[Page 61500]]
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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