[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