[Federal Register Volume 86, Number 10 (Friday, January 15, 2021)]
[Proposed Rules]
[Pages 3935-3938]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-00615]
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DEPARTMENT OF DEFENSE
Defense Acquisition Regulations System
48 CFR Part 212, 225, and 252
[Docket DARS-2020-0039]
RIN 0750-AL15
Defense Federal Acquisition Regulation Supplement: Improved
Energy Security for Main Operating Bases in Europe (DFARS Case 2020-
D030)
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 a section of the National
Defense Authorization Act for Fiscal Year 2020 that prohibits contracts
for the acquisition of furnished energy for a covered military
installation in Europe that is sourced from inside the Russian
Federation.
DATES: Comments on the proposed rule should be submitted in writing to
the address shown below on or before March 16, 2021, to be considered
in the formation of a final rule.
ADDRESSES: Submit comments identified by DFARS Case 2020-D030, using
any of the following methods:
[cir] Regulations.gov: https://www.regulations.gov. Search for
``DFARS Case 2020-D030''. Select ``Comment Now'' and follow the
instructions provided to submit a comment. Please include ``DFARS Case
2020-D030'' on any attached documents.
[cir] Email: [email protected]. Include DFARS Case 2020-D030 in
the subject line of the message.
[cir] Mail: Defense Acquisition Regulations System, Attn: Ms.
Kimberly Bass, OUSD(A&S)DPC/DARS, Room 3B938, 3060 Defense Pentagon,
Washington, DC 20301-3060.
Comments received generally will be posted without change to
https://www.regulations.gov, including any personal information
provided. To confirm receipt of your comment(s), please check https://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. Kimberly Bass, telephone 571-372-
6174.
SUPPLEMENTARY INFORMATION:
I. Background
DoD is proposing to amend the DFARS to implement section 2821 of
the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2020
(Pub. L. 116-92). Section 2821 prohibits use of energy sourced from
inside the Russian Federation in an effort to promote energy security
in Europe. The prohibition applies to all forms of energy ``furnished
to a covered military installation'', as that term is defined in the
statute, and only to main operating bases as defined and identified by
DoD. This means the energy itself must be furnished to the military
installation, not to a third party that uses it to create some other
form of energy (e.g., heating, cooling, or electricity). The
prohibition applies only to Europe, not to Asia; for example, those
parts of Turkey located in Asia are not affected by the rule.
DoD will promote the energy security of its European installations
by encouraging energy security and energy resilience and will not
purchase energy sourced from inside the Russian Federation unless a
waiver of the prohibition in section 2821 is approved by the head of
the contracting activity.
[[Page 3936]]
The approval authority for the waiver may not be further delegated.
II. Discussion and Analysis
This rule proposes to add DFARS section 225.70XX, Prohibition on
use of energy sourced from inside the Russian Federation. A new
provision and a new clause are provided for use in solicitations and
contracts for the acquisition of furnished energy for a covered
military installation in Europe, including acquisitions at or below the
simplified acquisition threshold, and acquisitions using FAR part 12
procedures for the acquisition of commercial items, unless a waiver is
approved by the head of the contracting activity. Per the new
solicitation provision, 252.225-70XX, Representation Regarding
Prohibition on Use of Certain Energy Sourced from Inside the Russian
Federation, an offeror represents, by submission of its offer, that the
offeror will not use or supply energy sourced in the Russian Federation
in the performance of a contract resulting from the solicitation. The
proposed clause, 252.225-70YY, Prohibition on Use of Certain Energy
Sourced from Inside the Russian Federation, prohibits a contractor from
using, in the performance of the contract, any energy sourced from
inside the Russian Federation as a means of generating the furnished
energy for the covered military installation, unless a waiver is
approved.
Definitions for the following terms are included at DFARS 225.70XX-
1: ``covered military installation'', ``furnished energy'', and ``main
operating base''.
Waiver procedures at DFARS 225.70XX-3 provide that the head of the
contracting activity, without power of redelegation, may waive
application of section 2821 to a specific contract for the acquisition
of furnished energy for a covered military installation, if the head of
the contracting activity certifies to the congressional defense
committees that the--
Waiver of the prohibition is necessary to ensure an
adequate supply of furnished energy for the covered military
installation; and
The head of the contracting activity has balanced these
national security requirements against the potential risk associated
with reliance upon the Russian Federation for furnished energy.
Not later than 14 days before the execution of any energy contract
for which a waiver is granted, the head of the contracting activity
must submit to the congressional defense committees a notice of the
waiver. The waiver notice shall include the following:
The rationale for the waiver, including the basis for the
certification required by section 2821 of the NDAA for FY 2020;
An assessment of how the waiver may impact DoD's European
energy resilience strategy; and
An explanation of the measures DoD is taking to mitigate
the risk of using Russian Federation-furnished energy.
A cross-reference is provided to DFARS Procedures, Guidance, and
Information 225.70XX-3 that lists factors to take into consideration
for granting a waiver.
III. Applicability to Contracts at or Below the Simplified Acquisition
Threshold (SAT) and for Commercial Items, Including Commercially
Available Off-the-Shelf (COTS) Items
This DFARS rule implements section 2821 of the NDAA for FY 2020
(Pub. L. 116-92). Section 2821 prohibits use of energy sourced from
inside the Russian Federation in an effort to promote energy security
in Europe unless a waiver is approved by the head of the contracting
activity.
To implement section 2821, this rule proposes to create a new
provision and clause: (1) DFARS 252.225-70XX, Representation Regarding
Prohibition on Use of Certain Energy Sourced from Inside the Russian
Federation, and (2) DFARS 252.225-70YY, Prohibition on Use of Certain
Energy Sourced from Inside the Russian Federation.
Section 2821 is silent on applicability to contracts and
subcontracts in amounts at or below the SAT or for the acquisition of
commercial items. Also, the statute does not provide for civil or
criminal penalties. Therefore, it does not apply to the acquisition of
contracts or subcontracts in amounts not greater than the SAT or to the
acquisition of commercial items, including COTS items, unless a written
determination is made as provided for in 41 U.S.C. 1905 and 10 U.S.C.
2375, respectively. The Principal Director, Defense Pricing and
Contracting, is the appropriate authority to make a determination for
regulations to be published in the DFARS, which is part of the FAR
system of regulations.
In consonance with the written determination made by the Principal
Director, Defense Pricing and Contracting, on May 29, 2020, DoD plans
to apply section 2821 to solicitations and contracts below the SAT and
to the acquisition of commercial items, including COTS items, as
defined at FAR 2.101. Not applying this prohibition guidance to
contracts below the SAT and for the acquisition of commercial items,
including COTS items, would exclude contracts intended to be covered by
this rule and undermine the overarching purpose of the rule to prohibit
use of energy sourced from inside the Russian Federation. Consequently,
DoD plans to apply the rule to contracts below the SAT and for the
acquisition of commercial items, including COTS items, to promote
energy security in Europe and reduce the risk of supply shortages and
reliance on energy sourced inside the Russian Federation.
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
the rule is issued with respect to a national security function of the
United States.
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.
Nevertheless, an initial regulatory flexibility analysis has been
performed and is summarized as follows:
The rule proposes to amend the Defense Federal Acquisition
Regulation Supplement (DFARS) to implement a statute that prohibits
contracts for the use of energy sourced inside the Russian Federation
for military installations in Europe.
The legal basis for the rule is section 2821 of the National
Defense Authorization Act (NDAA) for Fiscal Year (FY) 2020, which
prohibits use of energy sourced from inside the Russian Federation in
an effort to promote energy security in Europe. The prohibition applies
to all forms of
[[Page 3937]]
energy ``furnished to a covered military installation'', as that term
is defined in the statute and only to main operating bases as defined
and identified by DoD.
Based on data obtained from the Federal Procurement Data System
(FPDS) for fiscal years 2017 through 2019 for awards coded for product
service code S111 (Utilities-Gas) with locations in Europe, 108 awards
per year were made on average over the three fiscal years, with an
average of 3 awards to unique entities that were other than small
businesses. The awardees were listed as foreign contractor consolidated
reporting, which is used to report procurement actions awarded to
contractors located outside the United States providing utilities goods
or services when a unique entity identifier is not available. When a
generic entity identifier is used to report these actions, FPDS only
allows contracting officers to select ``other than small business'' as
the contracting officer's determination of business size. FPDS allows
contracting officers to aggregate awards and report one record that
includes multiple awards, which masks the identity of the entity.
Consequently, reporting awards in this manner is likely to result in an
undercount of the number of unique entities, as there is no data
available to determine the number of entities or whether the entities
are small or other than small. Based on this analysis, DoD estimates it
is unlikely that an American small entity would be providing these
utility services in Europe.
This rule does not include any new reporting, recordkeeping, or
other compliance requirements for small businesses. The rule does not
duplicate, overlap, or conflict with any other Federal rules.
There are no known significant alternative approaches to the rule
that would meet the requirements of the statute.
DoD invites 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-D030), 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 212, 225, and 252
Government procurement.
Jennifer D. Johnson,
Regulatory Control Officer, Defense Acquisition Regulations System.
Therefore, 48 CFR parts 212, 225, and 252 are proposed to be
amended as follows:
0
1. The authority citation for 48 CFR parts 212, 225, and 252 continues
to read 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 adding paragraphs (f)(ix)(GG) and (HH) to
read as follows:
212.301 Solicitation provisions and contract clauses for the
acquisition of commercial items.
* * * * *
(f) * * *
(ix) * * *
(GG) Use the provision at 252.225-70XX, Representation Regarding
Prohibition on Use of Certain Energy Sourced from Inside the Russian
Federation, as prescribed in 225.70XX-4(a), to comply with section 2821
the National Defense Authorization Act for Fiscal Year 2020 (Pub. L.
116-92).
(HH) Use the clause at 252.225-70YY, Prohibition on Use of Certain
Energy Sourced from Inside the Russian Federation, as prescribed in
225.70XX-4(b), to comply with section 2821 of the National Defense
Authorization Act for Fiscal Year 2020 (Pub. L. 116-92).
* * * * *
PART 225--FOREIGN ACQUISITION
0
3. Add sections 225.70XX, 225.70XX-1, 225.70XX-2, 225.70XX-3, and
225.70XX-4 to subpart 225.70 to read as follows:
* * * * *
Sec.
225.70XX Prohibition on use of certain energy sourced from inside
the Russian Federation.
225.70XX-1 Definitions.
225.70XX-2 Prohibition.
225.70XX-3 Waiver.
225.70XX-4 Solicitation provision and contract clause.
* * * * *
225.70XX Prohibition on use of certain energy sourced from inside the
Russian Federation.
225.70XX-1 Definitions.
As used in this section--
Covered military installation means a military installation in
Europe identified by DoD as a main operating base.
Furnished energy means energy furnished to a covered military
installation in any form and for any purpose, including heating,
cooling, and electricity.
Main operating base means a facility outside the United States and
its territories with permanently stationed operating forces and robust
infrastructure.
225.70XX-2 Prohibition.
In accordance with section 2821 of the National Defense
Authorization Act for Fiscal Year 2020 (Pub. L. 116-92), contracts for
the acquisition of furnished energy for a covered military installation
shall not use any energy sourced from inside the Russian Federation as
a means of generating the furnished energy for the covered military
installation. The prohibition--
(a) Applies to all forms of energy that are furnished to a covered
military installation; and
(b) Does not apply to a third party that uses it to create some
other form of energy (e.g., heating, cooling, or electricity).
225.70XX-3 Waiver.
(a) The requiring activity may submit to the contracting activity a
request for waiver of the prohibition in section 225.70XX-2 for a
specific contract for the acquisition of furnished energy for a covered
military installation. The head of the contracting activity, without
power of redelegation, may approve the waiver, upon certification to
the congressional defense committees that--
(1) The waiver of section 2821 is necessary to ensure an adequate
supply of furnished energy for the covered military installation; and
(2) National security requirements have been balanced against the
potential risk associated with reliance upon the Russian Federation for
furnished energy.
(b) Submission of waiver notice.
(1) Not later than 14 days before the execution of any energy
contract for which a waiver is granted under paragraph (a) of this
section, the head of the contracting activity shall submit to the
congressional defense committees a notice of the waiver. See PGI
225.70XX-3 for waiver procedures.
(2) The waiver notice shall include the following:
(i) The rationale for the waiver, including the basis for the
certifications required by paragraph (a) of this section.
[[Page 3938]]
(ii) An assessment of how the waiver may impact DoD's European
energy resilience strategy.
(ii) An explanation of the measures DoD is taking to mitigate the
risk of using Russian Federation furnished energy.
225.70XX-4 Solicitation provision and contract clause.
Unless a waiver has been granted in accordance with 225.70XX-3--
(a) Use the provision at 252.225-70XX, Representation Regarding
Prohibition on Use of Certain Energy Sourced from Inside the Russian
Federation, in solicitations, including solicitations using FAR part 12
procedures for the acquisition of commercial items and solicitations at
or below the simplified acquisition threshold, that are for the
acquisition of furnished energy for a covered military installation;
and
(b) Use the clause at 252.225-70YY, Prohibition on Use of Certain
Energy Sourced from Inside the Russian Federation, in solicitations and
contracts, including solicitations and contracts using FAR part 12
procedures for the acquisition of commercial items and solicitations
and contracts at or below the simplified acquisition threshold, that
are for the acquisition of furnished energy for a covered military
installation.
PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
0
4. Add section 252.225-70XX to read as follows:
252.225-70XX Representation Regarding Prohibition on Use of Certain
Energy Sourced from Inside the Russian Federation.
As prescribed in 225.70XX-4(a), use the following provision:
REPRESENTATION REGARDING PROHIBITION ON USE OF CERTAIN ENERGY SOURCED
FROM INSIDE THE RUSSIAN FEDERATION (DATE)
(a) Definitions. As used in this provision--
Covered military installation means a military installation in
Europe identified by DoD as a main operating base.
Furnished energy means energy furnished to a covered military
installation in any form and for any purpose, including heating,
cooling, and electricity.
Main operating base means a facility outside the United States
and its territories with permanently stationed operating forces and
robust infrastructure.
(b) Prohibition. In accordance with section 2821 of the National
Defense Authorization Act for Fiscal Year 2020 (Pub. L. 116-92),
contracts for the acquisition of furnished energy for a covered
military installation shall not use any energy sourced from inside
the Russian Federation as a means of generating the furnished energy
for the covered military installation, unless a waiver is approved.
The prohibition--
(1) Applies to all forms of energy that are furnished to a
covered military installation; and
(2) Does not apply to a third party that uses it to create some
other form of energy (e.g., heating, cooling, or electricity).
(c) Representation. By submission of its offer, the Offeror
represents that the Offeror will not use or provide any energy
sourced from inside the Russian Federation as a means of generating
the furnished energy for the covered military installation in the
performance of any contract, subcontract, or other contractual
instrument resulting from this solicitation.
(End of provision)
0
5. Add section 252.225-70YY to read as follows:
252.225-70YY Prohibition on Use of Certain Energy Sourced from Inside
the Russian Federation.
As prescribed in 225.70XX-4(b), use the following clause:
PROHIBITION ON USE OF CERTAIN ENERGY SOURCED FROM INSIDE THE RUSSIAN
FEDERATION (DATE)
(a) Definitions. As used in this clause--
Covered military installation means a military installation in
Europe identified by DoD as a main operating base.
Furnished energy means energy furnished to a covered military
installation in any form and for any purpose, including heating,
cooling, and electricity.
Main operating base means a facility outside the United States
and its territories with permanently stationed operating forces and
robust infrastructure.
(b) Prohibition. In accordance with section 2821 of the National
Defense Authorization Act for Fiscal Year 2020 (Pub. L. 116-92), the
Contractor shall not use in the performance of this contract any
energy sourced from inside the Russian Federation as a means of
generating the furnished energy for the covered military
installation unless a waiver is approved. The prohibition--
(1) Applies to all forms of energy that are furnished to a
covered military installation; and
(2) Does not apply to a third party that uses it to create some
other form of energy (e.g., heating, cooling, or electricity).
(c) Subcontracts. The Contractor shall insert the substance of
this clause, including this paragraph (c), in subcontracts and other
commercial instruments that are for furnished energy at a covered
military installation, including subcontracts and commercial
instruments for commercial items.
(End of clause)
[FR Doc. 2021-00615 Filed 1-14-21; 8:45 am]
BILLING CODE 5001-06-P