[Federal Register Volume 86, Number 144 (Friday, July 30, 2021)]
[Proposed Rules]
[Pages 40980-40996]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-15881]
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DEPARTMENT OF DEFENSE
GENERAL SERVICES ADMINISTRATION
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Parts 1, 25, and 52
[FAR Case 2021-008; Docket No. FAR-2021-0008, Sequence No. 1]
RIN 9000-AO22
Federal Acquisition Regulation: Amendments to the FAR Buy
American Act Requirements
AGENCY: Department of Defense (DoD), General Services Administration
(GSA), and National Aeronautics and Space Administration (NASA).
ACTION: Proposed rule.
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SUMMARY: DoD, GSA, and NASA are proposing to amend the Federal
Acquisition Regulation (FAR) to implement an Executive order (E.O.)
addressing domestic preferences in Government procurement.
DATES: Interested parties should submit comments to the Regulatory
Secretariat Division at one of the addresses shown below on or before
September 28, 2021 to be considered in the formulation of a final rule.
Public Meeting: A virtual public meeting will be held on August 26,
2021, from 9 a.m. to 3 p.m., Eastern Standard Time. The public meeting
will end at the stated time, or when the discussion ends, whichever
comes first. For more details, see section V of the preamble.
ADDRESSES: Submit comments in response to FAR Case 2021-008 to https://www.regulations.gov. Submit comments via the Federal eRulemaking portal
by searching for ``FAR Case 2021-008''. Select the link ``Comment Now''
that corresponds with ``FAR Case 2021-008.'' Follow the instructions
provided on the screen. Please include your name, company name (if
any), and ``FAR Case 2021-008'' on your attached document. If your
comment cannot be submitted using https://www.regulations.gov, call or
email the points of contact in the FOR FURTHER INFORMATION CONTACT
section of this document for alternate instructions.
Instructions: Please submit comments only and cite ``FAR Case 2021-
008'' in all correspondence related to this case.
Comments submitted in response to this notice will be made publicly
available and are subject to disclosure under the Freedom of
Information Act. For this reason, please do not include in your
comments information of a confidential nature, such as sensitive
personal information or proprietary information, or any information
that you would not want publicly disclosed unless you follow the
instructions below for confidential comments. Summary information of
the public comments received, including any specific comments, will be
posted on regulations.gov.
All filers using the portal should use the name of the person or
entity submitting comments as the name of their files, in accordance
with the instructions below. Anyone submitting business confidential/
proprietary information should clearly identify any business
confidential/proprietary portion at the time of submission, file a
statement justifying nondisclosure and referencing the specific legal
authority claimed, and provide a non-confidential/non-proprietary
version of the submission.
Any business confidential information should be in an uploaded file
that has a file name beginning with the characters ``BC.'' Any page
containing business confidential information must be clearly marked
``BUSINESS CONFIDENTIAL/PROPRIETARY'' on the top of that page. The
corresponding non-confidential/non-proprietary version of those
comments must be clearly marked ``PUBLIC.'' The file name of the non-
confidential version should begin with the character ``P.'' The ``BC''
and ``P'' should be followed by the name of the person or entity
submitting the comments or rebuttal comments. All filers should name
their files using the name of the person or entity submitting the
comments. Any submissions with file names that do not begin with a
``BC'' will be assumed to be public and will be made publicly available
through https://www.regulations.gov.
To confirm receipt of your comment(s), please check https://www.regulations.gov, approximately two to three days after submission
to verify posting.
FOR FURTHER INFORMATION CONTACT: Ms. Mahruba Uddowla, Procurement
Analyst, at 703-605-2868 or by email at [email protected], for
clarification of content. For information pertaining to status or
publication schedules, contact the Regulatory Secretariat Division at
202-501-4755 or [email protected]. Please cite FAR Case 2021-008.
SUPPLEMENTARY INFORMATION:
I. Background
On January 25, 2021, the President signed Executive Order (E.O.)
14005,
[[Page 40981]]
Ensuring the Future Is Made in All of America by All of America's
Workers (86 FR 7475, January 28, 2021). The E.O. contemplates a series
of actions to enable the United States Government to maximize the use
of goods, products, and materials produced in the United States in
order to strengthen and diversify domestic supplier bases and create
new opportunities for U.S. firms and workers. These actions include (i)
regulatory amendments to the implementation of the Buy American Act in
FAR part 25 to fit the current realities of the American economy; (ii)
the creation of a Made in America Office within the Office of
Management and Budget to provide centralized, strategic, and holistic
management of domestic sourcing activities across Federal procurement,
Federal financial assistance, and maritime policies; (iii) a public
website with information on all proposed waivers to the Buy American
Act and other Buy American Laws, as defined in the E.O., that helps
more U.S. firms access Federal contracting and provides data to the
Made in America Office to inform policy development for domestic
sourcing; and (iv) a review by the Federal Acquisition Regulatory
Council (FAR Council), in consultation with the Made in America Office,
of the longstanding statutory exemption from the Buy American Act for
commercial information technology (IT) to determine if the original
purpose or other goals of the exemption remain relevant in the current
economic and national security environment. Collectively, these and
other efforts called for by the E.O. will promote greater economic and
national security and further the Administration's commitment to build
back a stronger domestic manufacturing base, create good jobs, and
ensure the U.S. economy remains strong, resilient, and ready to meet
the challenges of the future. Strengthening implementation of the Buy
American Act will send clear demand signals to domestic producers,
spurring strategic investments in domestic supply chains.
This proposed rule addresses section 8 of the E.O., which requires
the FAR Council to strengthen the impact of the Buy American Act. The
dollars the Federal Government spends on goods and services are a
powerful tool to support American workers and manufacturers.
Contracting alone accounts for nearly $600 billion in Federal spending.
Federal law requires government agencies, in some circumstances, to
give preferences to American firms; however, these preferences have not
always been implemented consistently or effectively. Congress passed
the Buy American Act during the Great Depression to foster American
industry by protecting it from foreign competition for Federal
procurement contracts. The Buy American Act is codified at 41 U.S.C.
chapter 83 as the Buy American statute and requires public agencies to
procure articles, materials, and supplies that were mined, produced, or
manufactured in the United States, substantially all from domestic
components, subject to exceptions for nonavailability of domestic
products, unreasonable cost of domestic products, and when it would not
be in the public interest to buy domestic products. Additional
exceptions have been added over time, such as where trade agreements
apply, and for commissary resale, micro-purchases, and commercial
information technology.
Currently FAR part 25, which implements the Buy American statute
and all related Executive Orders, provides guidance on determining
whether solicited ``construction material'' or ``end products'' are
``domestic''--that is, whether they were mined, produced, or
manufactured in the United States, substantially from components mined,
produced, or manufactured in the United States. The determination of
whether a manufactured end product or construction material qualifies
as domestic is made using a two-part test:
1. The end product or construction material must be manufactured in
the United States.
2. A certain percentage of all component parts (determined by cost
of the components) must also be mined, produced, or manufactured in the
United States--a requirement known as the ``component test'' until
early 2021, when it was redesignated the ``domestic content test'' to
be consistent with terminology used in E.O. 13881, Maximizing Use of
American-Made Goods, Products, and Materials. For an end product that
does not consist wholly or predominantly of iron or steel or a
combination of both, the cost of domestic components must exceed 55
percent of the cost of all components; the test is waived for
acquisitions of commercially available off-the-shelf (COTS) items. For
an end product that consists wholly or predominantly of iron or steel
or a combination of both, the cost of foreign iron and steel must
constitute less than 5 percent of the cost of all the components. That
test is not waived for COTS items, except for COTS fasteners.
The Buy American statute does not prohibit the purchase of foreign
end products or use of foreign construction material. Instead, it
encourages the use of domestic end products and construction material
by imposing a price preference for them. Under the current FAR, large
businesses offering domestic supplies receive a 20 percent price
preference, and small businesses receive a 30 percent price preference.
The Buy American restrictions do not apply to acquisitions subject
to certain trade agreements (see FAR subpart 25.4). For these
acquisitions, end products and construction materials from certain
countries receive nondiscriminatory treatment when evaluated alongside
domestic offers. Generally, the dollar value of the acquisition
determines whether and which trade agreement applies to the
acquisition. For example, the World Trade Organization--Government
Procurement Agreement (WTO GPA) applies to acquisitions starting at
$182,000 for supply contracts, and at $7,008,000 for construction
contracts. Exceptions to the applicability of the trade agreements are
described in FAR subpart 25.4.
The percentages for the domestic content test and the price
preference were increased in the FAR on January 19, 2021, through FAR
case 2019-016, Maximizing Use of American-Made Goods, Products, and
Materials (86 FR 6180). However, the concept of the domestic content
test (formerly referred to as the component test) has been in the FAR
since it was first created and published in 1983.
Section 8 of E.O. 14005 requires the FAR Council to consider
amending the FAR to--
(1) Replace the component test used to identify domestic end
products and domestic construction materials with a test under which
domestic content is measured by the value that is added to the product
through U.S.-based production or U.S. job-supporting economic activity;
(2) Increase the threshold for the domestic content requirement;
and
(3) Increase the price preferences for domestic end products and
domestic construction materials.
As explained above, the purpose of the amendments is to promote the
procurement by the Government of goods, products, and materials from
sources that will help American businesses compete in strategic
industries and help America's workers thrive. Improved Buy American
rules will help ensure that Federal procurement plays an important role
as part of the Administration's policy to build back the American
economy so it can continue to lead the global
[[Page 40982]]
marketplace, supporting U.S.-based businesses--small and large, urban
and rural, including those that have been historically disadvantaged.
In pursuit of those goals, this proposed rule would provide for--
An increase to the domestic content threshold, a schedule
for future increases, and a fallback threshold that would allow for
products meeting a specific lower domestic content threshold to qualify
as domestic products under certain circumstances;
A framework for application of an enhanced price
preference for a domestic product that is considered a critical product
or made up of critical components; and
A postaward domestic content reporting requirement for
contractors.
The proposed rule does not seek to replace the ``component test''
in FAR Part 25 at this time. Instead, the FAR Council seeks additional
information regarding the strengths and shortcomings of the ``component
test,'' as currently structured, and requests public comment on how
domestic content might be better calculated to support America's
workers and businesses, strengthening our economy, workers, and
communities across the country (see related questions below).
II. Discussion and Analysis
A. Increase to the Domestic Content Threshold
This rule proposes to increase the domestic content threshold
initially from 55 percent to 60 percent, to increase the threshold to
65 percent in two years, and to increase the threshold to 75 percent
five years after the second increase. A supplier holding a contract
with a period of performance that spans the schedule of threshold
increases will be required to comply with each increased threshold for
the items in the year of delivery. For example, a supplier awarded a
contract in 2027 will have to comply with the 65 percent domestic
content threshold initially, but in 2029 will have to supply products
with 75 percent domestic content. The domestic content threshold is
implemented in the FAR through the definitions of ``domestic
construction material'' and ``domestic end product.'' As such, this
rule proposes to make amendments throughout FAR part 25 and to FAR
clauses 52.225-1, 52.225-3, 52.225-9, and 52.225-11 to reflect the
increases to the domestic content threshold.
B. Fallback Threshold
This rule also proposes to allow, until one year after the increase
of the domestic content threshold to 75 percent, for the acceptance of
the former domestic content threshold in instances where end products
or construction materials that meet the new domestic content threshold
are not available or are of unacceptable cost. For example, if a
domestic end product that exceeds the 60 percent domestic content
threshold is determined to be of unreasonable cost after application of
the price preference, then for evaluation purposes the Government will
treat an end product that is manufactured in the United States and
exceeds 55 percent domestic content, but not 60 percent domestic
content, as a domestic end product. In order to implement this fallback
threshold, the rule proposes to require offerors to indicate which of
their foreign end products exceed 55 percent domestic content. The
fallback threshold only applies to construction material that does not
consist wholly or predominantly of iron or steel or a combination of
both and to end products that do not consist wholly or predominantly of
iron or steel or a combination of both. Amendments are proposed
throughout FAR part 25, to FAR provisions 52.212-3, 52.225-2, and
52.225-4, and to FAR clauses 52.225-9 and 52.225-11 to reflect the
fallback threshold.
C. Enhanced Price Preference for Critical Products and Critical
Components
The rule provides for a framework through which higher price
preferences will be applied for end products and construction material
deemed to be critical or made up of critical components. The
definitions for critical component and/or critical item are added to
FAR 25.003 and to the FAR provisions and clauses at 52.212-3, 52.225-1,
52.225-2, 52.225-3, 52.225-9, and 52.225-11. The list of critical items
and components is being added to newly-designated FAR 25.105; existing
FAR 25.105 is proposed to be redesignated as 25.106. Procedures for
applying the price preferences associated with critical items and
components are added to the redesignated FAR 25.106 for supply
contracts and 25.204 for construction contracts. The rule requires
offerors to identify in their offer domestic end products that contain
a critical component, so that contracting officers can apply the higher
price preferences when appropriate. Without such information,
contracting officers would not know when a proposed domestic end
product contains a critical component. An explicit requirement to
provide this information is added to FAR provisions 52.212-3, 52.225-2,
and 52.225-4.
The process for identifying critical items and critical components
to receive the price preference would use the quadrennial critical
supply chain review instituted in E.O. 14017, America's Supply Chains
(86 FR 11849), as well as the National COVID Strategy. OMB will lead a
subsequent assessment to further distill the list of products
designated critical to those products for which procurement is likely
to make a meaningful difference toward strengthening U.S. supply
chains. The products that will receive a price preference will be
determined in a separate rulemaking, to allow time for the supply chain
review and trade pact waiver review to be completed first. Not all
critical products identified through the supply chain review will
necessarily qualify for the preference. The process for determining
critical products will also determine the enhanced price preference for
each critical item or end product with critical components.
Once the list is established in the FAR, the list will be published
in the Federal Register for public comment no less frequently than once
every four years to reflect changes to the list.
D. Postaward Reporting Requirement
In order to gain insight into the actual domestic content of
products sold under contract and thereby support the Administration's
broader supply chain security initiatives, this rule requires
contractors to provide the specific domestic content of critical items,
domestic end products containing a critical component, and domestic
construction material containing a critical component, that were
awarded under a contract. Contractors are not required to report the
domestic content of COTS items. Two new FAR clauses were created to
implement the reporting requirement. One clause is for supplies and one
is for construction materials; prescriptions were added to FAR 25.1101
and 25.1102 to capture this requirement. Since specific critical items
or critical components will not be added to the FAR until the separate
rulemaking referenced in section II.C of this preamble, these clauses
will not be operational until finalization of that separate rule.
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 rule amends the provisions and clauses at FAR--
[[Page 40983]]
52.212-3, Offeror Representations and Certifications--
Commercial Items;
52.225-1, Buy American--Supplies;
52.225-2, Buy American Certificate;
52.225-3, Buy American--Free Trade Agreements--Israeli
Trade Act;
52.225-4, Buy American--Free Trade Agreements--Israeli
Trade Act Certificate;
52.225-9, Buy American--Construction Materials; and
52.225-11, Buy American--Construction Materials Under
Trade Agreements.
Those provisions and clauses continue to apply, or not apply, to
acquisitions at or below the SAT and to acquisitions for commercial and
COTS items as they did prior to this rule.
This rule proposes to add two clauses at FAR 52.225-XX, Domestic
Content Reporting Requirement--Supplies, and FAR 52.225-YY, Domestic
Content Reporting Requirement--Construction Materials. The clauses are
prescribed at FAR 25.1101 for solicitations and contracts containing
the clause at 52.225-1 or 52.225-3 for supply contracts, and at FAR
25.1102 for solicitations and contracts containing the clause at
52.225-9 or 52.225-11 for construction contracts. The clauses are
applicable to acquisitions at or below the SAT and to acquisitions for
commercial items, excluding COTS items.
The clause will apply to acquisitions at or below the SAT and to
acquisitions for commercial items because exempting those acquisitions
would severely limit the use of the provision. Considering the
threshold at which certain trade agreements apply, the Buy American
statute predominantly applies to acquisitions below the SAT. Also,
according to procurement data, almost half of the acquisitions to which
the Buy American statute currently applies use commercial acquisition
procedures.
With respect to COTS items, the Administrator for Federal
Procurement Policy, using authorities provided at 41 U.S.C. 1907 to
reduce administrative burdens imposed by Government-unique
requirements, waived the component test of the Buy American statute for
the acquisition of COTS items in 2009. For this reason, it is not
expected at this time that the clause will apply to that class of
acquisitions. However, as explained in OMB Memorandum M-21-26,
Increasing Opportunities for Domestic Sourcing and Reducing the Need
for Waivers from Made in America Laws, the Made in America Office, in
collaboration with the Administrator, other members of the FAR Council,
and interested parties, will review the findings and conclusions of the
2009 determination. The results of that review will help to inform if
and the extent to which the component test should be restored.
IV. Expected Impact of the Rule
This rule proposes three sets of changes to the FAR's
implementation of the Buy American statute:
An increase to the domestic content threshold required to
be met for a product to be defined as ``domestic,'' a schedule for
future increases, and a fallback threshold that would allow for
products meeting a specific lower domestic content threshold to qualify
as a domestic product under certain circumstances;
A framework for application of an enhanced price
preference for a domestic product that is considered a critical product
or made up of critical components; and
A postaward domestic content reporting requirement for
contractors.
The impact of each set of changes is addressed individually below.
Scheduled Increase to the Domestic Content Threshold and the Use of a
Fallback Threshold
The fundamental goal of the rule is to increase the share of
American-made content in a domestic end product or construction
material. The graduated increase is intended to drive to this goal in a
proactive but measured fashion so that contractors have adequate time
to make adjustments in their supply chains. When this rule is
implemented, domestic industries supplying domestic end products are
likely to benefit from a competitive advantage.
Federal Procurement Data System (FPDS) data for fiscal year 2020
indicate there were 121,063 new contract awards for products and
construction, valued over the micro-purchase threshold through the
threshold at which the WTO GPA applies, to which the Buy American
statute applied. It is estimated that 37,503 of these awards were for
commercially available off-the-shelf (COTS) items and since the
domestic content threshold test does not apply to COTS items (except
those involving iron/steel), those awards were subtracted from the
121,063 total eligible awards. After removing potential COTS item
acquisitions from the data, there are estimated to be 83,560 contract
awards to 14,163 unique contractors.
It is unclear if the pool of qualified suppliers would be reduced,
resulting in less competition (and a possible increase in prices that
the Government will pay to procure these products). The fallback
threshold is intended to: (1) Help prevent scheduled increases in the
content threshold from taking work away from domestic suppliers who are
actively adjusting their supply chains; and (2) avoid unintentionally
raising the foreign content of Federal purchases through increased use
of waivers while domestic suppliers adjust. The fallback threshold
would be a temporary measure designed to limit foreign content while
contractors transition to U.S.-based supply chains.
In response to public comment, the FAR Council will consider larger
or smaller increases in the content threshold as well as differently
timed increases in the final rule. See questions for the public, below.
These determinations will be based on considerations such as potential
impact on competition, potential impact on supplier diversity,
including participation of small disadvantaged businesses and
businesses in other underserved communities, lost opportunities for
American workers, and other considerations identified by public comment
and other interested parties.
At least three arguments point to the possibility that any
increased burden with regard to the timed increase to the domestic
content threshold, on contractors in particular, could be small, if not
de minimis.
First, DoD, GSA, and NASA do not anticipate significant cost from
contractor familiarization with the rule given the history of
rulemaking and E.O.s in this area. The basic mechanics of the Buy
American statute (e.g., general definitions, certifications required of
offerors to demonstrate end products are domestic) remain unchanged and
continue to reflect processes that are decades old. Under the proposed
rule, when deciding whether to pursue a procurement or what kind of
product mix (i.e., domestic or foreign) and pricing to propose in
response to a solicitation, offerors now will have to plan for future
changes to the domestic content threshold during the period of
performance of the contemplated contract. Those offerors that make a
business decision not to modify their supply chains over time to comply
with the scheduled increases to the domestic content threshold will
still be able to propose an offer for Federal contracts but will
generally no longer enjoy a price preference.
Second, some, if not many, contractors may already be able to
comply with the higher domestic content requirement needed to meet the
definition of domestic end product under E.O. 14005 and the proposed
rule.
[[Page 40984]]
Laws such as the SECURE Technology Act, Public Law 115-390, which
requires a series of actions to strengthen the Federal infrastructure
for managing supply chain risks, are placing significantly increased
emphasis on the need for Federal agencies and Federal Government
contractors to identify and reduce risk in their supply chains. One way
to reduce supply chain risk is to increase domestic sourcing of
content. A U.S. Bureau of Economic Analysis study using 2015 data,
https://www.commerce.gov/sites/default/files/migrated/reports/2015-what-is-made-in-america_0.pdf, found that on average, 82 percent of the
value of U.S. manufacturing output is comprised of domestic content.
This seems to indicate that a domestic content threshold of 60 percent
would not inflict additional burden on contractors. In addition, a
preliminary analysis of available data in FPDS on the impact of an
increase earlier this year in the domestic content threshold from 50
percent to 55 percent did not appear to trigger an uptick in waivers,
suggesting companies may already be incorporating content that can meet
at least the 55 percent level:
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Feb-April 2021 Feb-April 2020 Feb-April 2019 Feb-April 2018
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Total spend Total spend Total spend Total spend
(millions of $) (millions of $) (millions of $) (millions of $)
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Total................................... $2,861 $7,578 $7,570 $7,635
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Buy American Waived *................... $15 $78 $70 $63
Percent Waived.......................... 0.5% 1.0% 0.9% 0.8%
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* Waivers included here are Commercial Information Technology, Domestic Non-availability, Public Interest
Determination, Resale, or Unreasonable Cost. They do not include waivers due to trade agreements or DoD
qualifying country, which would not be impacted by a change in the content threshold.
Third, it is anticipated that some contractors' products and
construction materials may not meet the definition of domestic end
product and construction material unless the contractors take steps to
adjust their supply chains to increase the domestic content. Those
contractors that make a business decision not to modify their supply
chains will still be able to bid on Federal contracts and could still
enjoy a price preference if their end product meets the prior
definition of domestic end product (i.e., exceeding 55 percent). In the
event that the Government does not receive any offers of domestic end
products or the domestic end products are of unreasonable cost, the
Government will treat the end products that have at least 55 percent
domestic content as a domestic end product for evaluation purposes.
Offerors now have an information collection burden of identifying when
a foreign end product meets the fallback threshold (see section VIII of
this preamble), but that burden should be offset by the benefit of
potentially still receiving a price preference for these end products
that would have been considered domestic prior to the increases to the
domestic content threshold proposed in this rule.
Offerors have an option to increase the domestic content and
continue to offer domestic products, in which case they may benefit
from the price preference for domestic products, or they may continue
to offer the same product, which will now be evaluated as foreign but
may still benefit from a price preference. DoD, GSA, and NASA do not
have any data on how many currently domestic products would fall into
this categoryor have any knowledge as to which option an offeror of
such products would select, since this is a business decision for each
offeror to make.
Enhanced Price Preference for Critical Items
The goal of the enhanced price preference for critical items and
components is to provide a steady source of demand for domestically
produced critical products. As explained above, the rule only creates a
framework. Separate rulemaking will be undertaken to add critical
products and components to the FAR and to establish the associated
preferences. Therefore, the impact associated with this concept will be
captured in the subsequent rulemaking.
There is an information collection burden associated with offerors
identifying when a domestic end product or domestic construction
material contains a critical component (see section VIII of this
preamble), but that burden should be offset by the larger price
preference received for these items.
Postaward Reporting Requirement for Contractors
Today, the acquisition community has limited direct information on
the overall level of domestic content of the items it buys, other than
whether or not the content meets the required threshold. The data on
the amount of actual domestic content provided in the contractors'
reports is expected to provide the Made in America Office in the Office
of Management and Budget valuable insight on the domestic content of
the manufactured products that are integral to U.S. national and
economic security. Separate rulemaking will be undertaken to add
critical items and components to the FAR and to establish the
associated preferences. Therefore, the impact associated with postaward
reporting for these items will be captured in the subsequent
rulemaking.
This postaward reporting requirement for critical items and
critical components is a step in building the Government's capability
in collecting data that will enable more informed decisions in this
arena, e.g., how and when to increase domestic content thresholds, what
enhanced price preference level for critical items is most efficient,
etc. This phased approach will provide an opportunity for the
Government to evaluate the impact of this information collection, with
potential expansion in future years.
There is an information collection burden associated with the
reporting requirement. See section VIII of this preamble. The
calculation provided in section VIII is a broad estimate since there is
no specified list of critical items or components at this time.
Request for Comments
Based on the above, DoD, GSA, and NASA do not expect a significant
cost impact on the public, but lack data to make a definitive
determination and seek information from the public to assist with this
analysis and to help further inform the regulatory drafters as they
develop the final rule and carry out other responsibilities under the
E.O. Feedback is requested on the following questions pertaining to
this proposed rule:
[[Page 40985]]
(1) Increased Domestic Content Thresholds: Do products you make or
sell to the Federal Government currently meet the proposed increased
domestic content thresholds of 60 percent, 65 percent, or 75 percent?
(a) Would you be willing and able to adjust your supply chain to
meet the proposed new thresholds given the scheduled phase-in? Why or
why not? Please discuss any obstacles that might interfere with, or
opportunities--including actions by the Federal Government--that might
support, your ability to meet the proposed increases in domestic
content thresholds.
(b) If you are willing to make supply chain adjustments, please
provide an overview of associated costs and benefits to making these
changes. Explain to what extent any costs may be offset by increased
Federal Government sales or price preferences. If relevant, provide an
overview of expected increased economic activity through the increased
use of domestic suppliers and domestic labor.
(2) Fallback Threshold: Please address the utility of the proposed
fallback threshold, including whether it would give your company time
to adjust to a higher domestic content threshold; whether the fallback
threshold should increase as the domestic content threshold increases;
whether the existence of the fallback threshold would delay the ability
to increase Made in America content in Federal procurement; the process
by which the fallback threshold should be eliminated in order to
maximize the use of Made in America content; and any challenges posed
by the complexity of employing a fallback threshold.
(3) Price Preferences: Please comment on the effectiveness of
current price preference levels at promoting domestic economic activity
and employment and strengthening domestic supply chains for critical
items; address whether increased price preferences would be more, less,
or equally as effective, and, if more effective, at what level.
(4) Enhanced Price Preferences: Please comment on the anticipated
effectiveness of providing enhanced price preferences to strengthen the
domestic supply chains for items and components deemed ``critical''. In
particular--
(a) Which specific items or components or combination thereof, if
any, should receive an enhanced price preference and why?
(b) What process should the Office of Management and Budget use to
determine which of the critical items identified through the critical
supply chain review under E.O. 14017 and the National COVID Strategy
are likely to make a meaningful difference toward strengthening
domestic supply chains such that an enhanced preference is merited? In
addition to national and economic security, should the process identify
items and components that are critical to other factors such as
national public health and sustainability? Should the process consider
the impact on the creation of well-paying jobs in identifying critical
items or components?
(c) Is four years a reasonable interval for updating the critical
components or item list? Why or why not?
(d) How should enhanced price preferences be applied? For example,
if a finished product includes multiple critical components, what is
the most effective way to apply an enhanced price preference (e.g., a
single time, once per component)?
(e) Please address whether and how enhanced price preferences
should be considered for commercial items that have been identified as
critical and currently are subject to either a full statutory Buy
American waiver (in the case of information technology) or a partial
regulatory Buy American waiver (in the case of COTS items) and the
reasons for your response.
(f) If particular vendors can supply products that exceed the
minimum domestic content threshold by significant margins, should the
Federal Government consider whether and how to incentivize such
practices to maximize the use of taxpayer dollars on domestic content?
(5) Content Calculation: Section 8(i) of the E.O. directed the FAR
Council to consider replacing the ``component test'' in FAR Part 25
with a test under which domestic content is measured by a ``value
added'' calculation. Please comment on (a) how such ``value'' could be
calculated in order to promote U.S.-based production or U.S. job-
supporting economic activity; (b) whether a ``value added'' calculation
would be superior to the current approach and why or why not; and (c)
whether approaches other than a ``value added'' calculation should be
employed to achieve the goals of the E.O. (for example, should the
definition of ``cost of components'' in FAR 25.003 be changed).
(6) Content Reporting: Will the proposed requirement to report on
the actual level of domestic content included in designated critical
products sold to the Federal Government provide greater compliance with
Made in America Laws? Why or why not?
(a) Will the requirement negatively impact small or disadvantaged
businesses, such as those who are resellers or distributors? How can
these impacts be mitigated?
(b) What other procedures can the Federal Government employ to
better monitor compliance with Made in America Laws?
(7) Contracting with small and disadvantaged businesses: What
specific steps should the Federal Government consider to maximize
opportunities for small and disadvantaged businesses and avoid
unintended barriers to entry as it works to strengthen the impact of
Made in America Laws, diversify domestic supplier bases, and create new
opportunities for U.S. firms and workers?
V. Public Meeting
The Made in America Office and the FAR Council are co-hosting a
virtual public meeting to obtain the views of experts and interested
parties in the private sector regarding implementation of section 8, as
well as other sections, of E.O. 14005. The meeting will be recorded and
a transcript of the meeting will be posted to regulations.gov, under
the ``FAR Case 2021-008'' docket. For more details on the public
meeting, such as the agenda, visit https://www.acquisition.gov/publicmeeting_FAR_proposedrule-2021-008_BuyAmericanAct.
Registration: Individuals wishing to participate in the virtual
meeting must register at https://gsa.zoomgov.com/webinar/register/WN_HXrvVS0hS1-pksKSNrEKIA. There is limited capacity of 3,000 attendees
and registration will be on a first-come, first-served basis. Early
registration is encouraged. Members of the press, in addition to
registering for this event, must also RSVP to [email protected] by August
16, 2021. For any questions regarding registration, please email
[email protected].
Presentations: If you wish to make a presentation, instructions for
submitting presentations will be posted at https://www.acquisition.gov/publicmeeting_FAR_proposedrule-2021-008_BuyAmericanAct. Presentations
will be posted to regulations.gov, under the ``FAR Case 2021-008''
docket.
Other means of submitting public comments: In lieu of, or in
addition to, participating in the public meeting, interested parties
may also submit written comments on the rule and responses to the
questions contained in this preamble to regulations.gov via the Federal
eRulemaking Portal in accordance with the instructions in the DATES and
ADDRESSES sections of this document.
[[Page 40986]]
Questions for the public: In addition to the questions in Section
IV above specific to FAR case 2021-008, public feedback is also
requested on the following questions pertaining to other sections of
E.O. 14005:
(1) Commercial IT: Acquisitions of commercial IT are exempt by
statute from the requirements of the Buy American statute. Section 10
of the Executive Order requires a review of the impact of this
exception, which has been in effect for more than 15 years. To help
inform this review, the FAR Council seeks input on the extent to which
the original purpose of the exception, or other goals of the exception,
remain relevant. Under what situations, if any, do current marketplace
conditions support narrowing or lifting the statutory waiver? Please be
specific in your description, which might identify market segments or
specific items, anticipated benefits and drawbacks of the rollback, and
steps the FAR Council or other Government stakeholders might take to
mitigate potential unintended consequences.
(2) Commercially Available Off-the-Shelf Items: In 2009, the Office
of Federal Procurement Policy (OFPP), using authorities provided by
Congress to reduce administrative burdens imposed by Government-unique
requirements, waived the component test of the Buy American statute for
acquisition of COTS items. In making the decision, OFPP concluded, in
part, that manufacturers' component purchasing decisions are based on
factors such as cost, quality, availability, and maintaining the state
of the art, not the country of origin, making it difficult for a
manufacturer to guarantee the source of its components over the term of
a contract. OFPP further concluded that continued application of the
content requirement created a barrier to entry which may limit the
Government's ability to purchase products already in the commercial
distribution systems. OFPP and the other members of the FAR Council
seek to understand the extent to which the original purpose of the
partial waiver remains relevant.
i. How has the application of the COTS waiver since 2009 been
consistent or inconsistent with its stated purpose? For example, has
the use of COTS expanded (or narrowed) since 2009 in ways that may not
have been originally contemplated? If applicable, provide specific
examples of the application of the COTS waiver that demonstrate
inconsistency with its original purpose.
ii. Has the COTS waiver benefitted domestic firms and their
employees? Why or why not?
iii. Under what situations, if any, do current marketplace
conditions support narrowing or lifting the partial waiver? Please be
specific in your description, which might identify critical industries,
specific market segments, or specific items; please discuss anticipated
benefits and drawbacks of a rollback, including impacts on small and
disadvantaged business enterprises, and steps the FAR Council or other
Federal entities could take to mitigate potential unintended
consequences.
iv. Regardless of any other changes to the COTS partial waiver,
should the Federal Government gather data on the domestic content of
all COTS items, some COTS items or categories of COTS items to inform
future policy making? If so, what items or categories should be
addressed? How might this be accomplished consistent with the intent of
the COTS partial waiver to reduce administrative burdens?
v. Please provide any recommendations to maintain and increase
domestic production of COTS items (both manufacturing of the end
product and its components) in critical industries.
(3) Services: How can the Federal Government promote the use of
Made in America services? What standards or methodologies might be
considered that could be easily adapted by commercial sellers? Are
there critical services that should be accorded price preferences, and
if so, why?
(4) Trade agreements: Because of the World Trade Organization--
Government Procurement Agreement (WTO GPA) and the Trade Agreements Act
(TAA), domestic content rules do not currently apply to most non-DoD
goods acquisitions over $182,000. Thus, the newly proposed domestic
content threshold will not apply to many purchases that the Government
makes. Under the TAA, a purchase is treated as U.S.-made if it is
mined, produced, or manufactured in the United States or substantially
transformed in the United States, even if it is made of 100 percent
foreign content. As a result, a substantially transformed U.S.-made
product may have far less domestic content when compared to a domestic
end product acquired under the Buy American statute. While U.S. trade
obligations are beyond the scope of this rulemaking, the Made in
America Office and the FAR Council seek to understand more about the
impact of the substantial transformation test and potential lost
opportunities for American workers.
i. To the best of your knowledge, what specific types of products
are sold to the Federal Government that count as being made in America
under the Trade Agreements Act (``U.S.-made end product''), but contain
less than the current 55 percent U.S. content threshold required under
the Buy American statute? Do the differing standards provide a benefit
to domestic firms?
ii. Is ``substantial transformation'' a useful tool to promote good
domestic jobs and domestic manufacturing? Why or why not?
iii. What steps could the Federal Government take, consistent with
its trade obligations, to acquire useful information about the content
of goods procured pursuant to trade obligations, including in critical
supply chains? Useful information might include the percentage of
domestic content and country of origin for certain components
identified by the agency.
iv. Please provide any recommendations to maintain and increase
domestic production in critical industries in acquisitions subject to
trade obligations.
(5) Additional ideas: Please provide any additional recommendations
for:
i. Strengthening content standards under the Buy American statute,
including recommendations for how content is calculated and whether and
why certain products or categories of products should have more
stringent content standards than others.
ii. The use of waivers and exceptions to the Buy American statute,
including proposals to narrow or expand the scope of existing waivers;
ensure appropriate interpretation of existing waivers; and policies or
practices to ensure that unnecessary waivers are not granted.
iii. Improving the Federal Government's ability to enforce the
content standards in the Buy American statute, including by verifying
domestic content levels.
VI. 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.
[[Page 40987]]
VII. Congressional Review Act
As required by the Congressional Review Act (5 U.S.C. 801-808)
before an interim or final rule takes effect, DoD, GSA, and NASA will
send the rule and the ``Submission of Federal Rules Under the
Congressional Review Act'' form to each House of Congress and to the
Comptroller General of the United States. A major rule cannot take
effect until 60 days after it is published in the Federal Register.
This rule is not anticipated to be a major rule under 5 U.S.C. 804.
VIII. Regulatory Flexibility Act
DoD, GSA, and NASA do not expect this 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. 601-612. This rule
changes the existing minimum domestic content percentages and
introduces a discretionary proposal evaluation strategy. This rule
proposes to amend the required percentage of domestic content and the
existing percentages for the price evaluation preferences in an effort
to decrease the amount of foreign-sourced content in a U.S.
manufactured product to promote economic and national security, help
stimulate economic growth, and create jobs. An Initial Regulatory
Flexibility Analysis (IRFA) has been performed and is summarized as
follows:
This rule proposes to amend the FAR to implement an Executive
Order regarding ensuring the future is made in all of America by all
of America's workers.
The objective of this rule is to strengthen domestic preferences
under the Buy American statute, as required by E.O. 14005, Ensuring
the Future is Made in All of America by All of America's Workers, by
providing--
An increase to the domestic content threshold required
to be met for a product to be defined as ``domestic,'' a schedule
for future increases, and a fallback threshold which would allow for
products meeting a specific lower domestic content threshold to
qualify as a domestic product under certain circumstances;
A framework for application of an enhanced price
preference for a domestic product that is considered a critical
product or made up of critical components; and
A postaward domestic content reporting requirement for
contractors.
Different parts of the rule are expected to apply to a different
number and universe of small entities. The impacted small entities,
by portion of the rule, are described below. But in general, the
rule will apply to contracts subject to the Buy American statute.
The statute does not apply to services, or overseas, nor does it
apply to acquisitions to which certain trade agreements apply (e.g.,
World Trade Organization Government Procurement Agreement (WTO-
GPA)). The maximum possible number of small entities to which the
rule will apply are the 31,103 active small business registrants in
the System for Award Management (SAM) who do not provide services.
--Timed increase to the domestic content threshold and allowance of
a fallback threshold. Federal Procurement Data System (FPDS) data
for fiscal year 2020 indicates there were 86,490 new contract awards
to small business for products and construction, valued over the
micro-purchase threshold through the threshold at which the WTO-GPA
applies, to which the Buy American statute applied. It is estimated
that 24,459 of these awards were for commercially available off-the-
shelf (COTS) items. Because the domestic content threshold test does
not apply to COTS items (except those involving iron/steel), those
awards were subtracted from the 86,490 total eligible awards. After
removing potential COTS item acquisitions from the data, there are
estimated to be 62,031 contract awards to 11,704 unique small
businesses.
--Enhanced price preference for a critical product or component.
This rule only creates a framework. Separate rulemaking will be done
to add critical products and components to the FAR and to establish
the associated preferences. However, the Government assumes that 10
percent of the contract awards subject to the Buy American statute
will be for critical products or components. Therefore, the
Government estimates that 8,649 (10 percent of 86,490) of awards to
small businesses may be impacted. This translates to 1,632 unique
small businesses.
--Postaward reporting requirement. The number of impacted small
businesses for this part of the rule is similar to the number of
those impacted by the enhanced price preference for critical
products or components: The postaward reporting requirement applies
to contracts awarded for critical products that are subject to the
Buy American statute. However, unlike the enhanced price preference,
the postaward reporting requirement will not apply to COTS item
acquisitions, which results in a lower estimate of 1,170 impacted
small businesses.
The proposed rule will strengthen domestic preferences under the
Buy American statute and provide small businesses the opportunity
and incentive to deliver U.S. manufactured products from domestic
suppliers. It is expected that this rule will benefit U.S.
manufacturers.
This proposed rule does not include any new recordkeeping or
other compliance requirements for small businesses. However, the
proposed rule does contain a few additional reporting requirements
for certain offerors, including small businesses.
Small businesses who submit an offer for a solicitation subject
to the Buy American statute already have to list the foreign end
products included in their offer. This proposed rule will require
that the offeror also identify which of these foreign end products
meet or exceed the fallback domestic content threshold. This rule
will also require proposals to identify which offered domestic end
products contain a critical component. Without that information,
contracting officers will not be able to apply the ``enhanced price
preference'' when applicable. These reporting requirements are not
specific to small businesses, so data does not exist to estimate the
number of small business subject to these requirements. However, the
data suggests that there will be approximately 8,800 impacted
respondents total, small and other than small.
Small businesses awarded a contract containing the new clause
requiring postaward reporting will need to provide to the Made in
America Office domestic content information for end products that
are critical products, domestic end products containing a critical
component, or domestic construction material containing a critical
component, if those items are awarded under the contract. Based on
fiscal year 2020 data from FPDS, it is estimated that there will be
6,203 contracts awarded to 1,170 unique small businesses that would
be subject to this reporting requirement.
This rule does not duplicate, overlap, or conflict with any
other Federal rules.
DoD, GSA, and NASA were unable to identify any significant
alternatives.
The Regulatory Secretariat Division has submitted a copy of the
IRFA to the Chief Counsel for Advocacy of the Small Business
Administration. A copy of the IRFA may be obtained from the Regulatory
Secretariat Division. DoD, GSA, and NASA invite comments from small
business concerns and other interested parties on the expected impact
of this rule on small entities.
DoD, GSA, and NASA will also consider comments from small entities
concerning the existing regulations in subparts affected by the rule in
accordance with 5 U.S.C. 610. Interested parties must submit such
comments separately and should cite 5 U.S.C. 610 (FAR Case 2021-008),
in correspondence.
IX. Paperwork Reduction Act
The Paperwork Reduction Act (44 U.S.C 3501-3521) applies because
the proposed rule contains information collection requirements. Some of
those information collection requirements are additional to the
paperwork burden previously approved under OMB Control Number 9000-
0024, Buy American, Trade Agreements, and Duty-Free Entry. The proposed
rule also contains a new information collection requirement.
Accordingly, the Regulatory Secretariat Division has submitted a
request for approval of a revised information collection requirement
concerning information collection 9000-0024 to the Office of Management
and Budget as well as a request for approval of a new
[[Page 40988]]
information collection requirement concerning ``Domestic Content
Reporting Requirement'' to the Office of Management and Budget.
With regard to existing information collection 9000-0024:
A. Public reporting burden for this collection of information is
estimated to average 0.63 hour per response, including the time for
reviewing instructions, searching existing data sources, gathering and
maintaining the data needed, and completing and reviewing the
collection of information.
The annual reporting burden estimated as follows:
Respondents: 16,478.
Total Annual Responses: 69,165.
Total Burden Hours: 43,469.
B. Request for Comments Regarding Paperwork Burden. Submit comments
on this collection of information no later than September 28, 2021
through https://www/regulations.gov and follow the instructions on the
site. All items submitted must cite OMB Control No. 9000-0024, Buy
American, Trade Agreements, and Duty-Free Entry. Comments received
generally will be posted without change to https://www.regulations.gov,
including any personal and/or business confidential 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. If there are difficulties submitting comments,
contact the GSA Regulatory Secretariat Division at 202-501-4755 or
[email protected].
With regard to the new information collection for clauses 52.225-XX
and 52.225-YY:
A. Public reporting burden for this collection of information is
estimated to average 3 hours per response, including the time for
reviewing instructions, searching existing data sources, gathering and
maintaining the data needed, and completing and reviewing the
collection of information.
The annual reporting burden estimated as follows:
Respondents: 1,393.
Total Annual Responses: 8,356.
Total Burden Hours: 25,068.
B. Request for Comments Regarding Paperwork Burden.
Submit comments on this collection of information no later than
September 28, 2021 through https://www/regulations.gov and follow the
instructions on the site. All items submitted must cite OMB Control No.
9000-XXXX, Domestic Content Reporting Requirement. Comments received
generally will be posted without change to https://www.regulations.gov,
including any personal and/or business confidential 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. If there are difficulties submitting comments,
contact the GSA Regulatory Secretariat Division at 202-501-4755 or
[email protected].
C. For both sets of information collections, public comments are
particularly invited on:
The necessity of this collection of information for the
proper performance of the functions of Federal Government acquisitions,
including whether the information will have practical utility;
The accuracy of the estimate of the burden of this
collection of information;
Ways to enhance the quality, utility, and clarity of the
information to be collected; and
Ways to minimize the burden of the collection of
information on respondents, including the use of automated collection
techniques or other forms of information technology.
Requesters may obtain a copy of the supporting statement from the
General Services Administration, Regulatory Secretariat Division by
calling 202-501-4755 or emailing [email protected]. Please cite OMB
Control Number 9000-XXXX, Domestic Content Reporting Requirement or OMB
Control Number 9000-0024, Buy American, Trade Agreements, and Duty-Free
Entry, in all correspondence.
List of Subjects in 48 CFR Parts 1, 25, and 52
Government procurement.
William F. Clark,
Director, Office of Government-wide Acquisition Policy, Office of
Acquisition Policy, Office of Government-wide Policy.
Therefore, DoD, GSA, and NASA propose amending 48 CFR parts 1, 25,
and 52 as set forth below:
0
1. The authority citation for 48 CFR parts 1, 25, and 52 continues to
read as follows:
Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 51
U.S.C. 20113.
PART 1-- FEDERAL ACQUISITION REGULATION SYSTEM
0
2. In section 1.106 amend in the table following the introductory text,
by adding in numerical order, entries for ``52.225-XX'' and ``52.225-
YY'' to read as follows.
1.106 OMB approval under the Paperwork Reduction Act.
* * * * *
------------------------------------------------------------------------
OMB Control
FAR segment No.
------------------------------------------------------------------------
* * * * *
52.225-XX............................................... 9000-XXXX
52.225-YY............................................... 9000-XXXX
* * * * *
------------------------------------------------------------------------
* * * * *
PART 25--FOREIGN ACQUISITION
0
3. Amend section 25.003 by--
0
a. Adding, in alphabetical order, the definitions ``Critical
component'' and ``Critical item'';
0
b. In the definition ``Domestic construction material'' revising the
first sentence of paragraph (1)(i)(B)(1); and
0
c. In the definition ``Domestic end product'' revising the first
sentence of paragraph (1)(ii)(A).
The additions and revisions reads as follows:
25.003 Definitions.
* * * * *
Critical component means a component that is mined, produced, or
manufactured in the United States and deemed critical to the U.S.
supply chain. The list of critical components is at 25.105.
Critical item means a domestic construction material or domestic
end product that is deemed critical to the U.S. supply chain. The list
of critical items is at 25.105.
* * * * *
Domestic construction material means--
(1) * * *
(i) * * *
(B) * * *
(1) The cost of the components mined, produced, or manufactured in
the United States exceeds 60 percent of the cost of all its components,
except that the percentage will be 65 percent for items delivered in
calendar years 2024 through 2028, and 75 percent for items delivered
starting in calendar year 2029. * * *
* * * * *
Domestic end product means--
(1) * * *
(ii) * * *
(A) The cost of its components mined, produced, or manufactured in
the United States exceeds 60 percent of the cost of all its components,
except that the percentage will be 65 percent for items delivered in
calendar years 2024 through 2028 and 75 percent for items delivered
starting in calendar year 2029. * * *
* * * * *
[[Page 40989]]
0
4. Amend section 25.100 by--
0
a. Removing the word ``and'' at the end of paragraph (a)(3);
0
b. Redesignating paragraph (a)(4) as (a)(5); and
0
c. Adding a new paragraph (a)(4).
The addition reads as follows:
25.100 Scope of subpart.
(a) * * *
(4) Executive Order 14005, January 25, 2021; and
* * * * *
0
5. Amend section 25.101 by--
0
a. Removing from paragraph (a) the phrase ``the Buy American statute
and E.O. 13881 use'' and adding in its place the phrase ``the Buy
American statute, E.O. 13881, and E.O. 14005 use''; and
0
b. Revising the first sentence of paragraph (a)(2)(i).
The revision reads as follows:
25.101 General.
(a) * * *
(2)(i) Except for an end product that consists wholly or
predominantly of iron or steel or a combination of both, the cost of
domestic components shall exceed 60 percent of the cost of all the
components, except that the percentage will be 65 percent for items
delivered in calendar years 2024 through 2028 and 75 percent for items
delivered starting in calendar year 2029. * * *
* * * * *
25.103 [Amended]
0
6. Amend section 25.103 by removing from paragraph (c) ``25.105'' and
``Subpart 25.5'' and adding ``25.106'' and ``subpart 25.5'' in their
places, respectively.
25.105 [Redesignated]
0
7. Redesignate section 25.105 as section 25.106.
0
8. Add a new section 25.105 to read as follows:
25.105 Critical components and critical items.
(a) The following is a list of articles that have been determined
to be a critical component or critical item and their respective
preference factor(s):
(1) [Reserved]
(2) [Reserved]
(b) The list of articles and preference factors in paragraph (a) of
this section will be published in the Federal Register for public
comment no less frequently than once every 4 years. Unsolicited
recommendations for deletions from this list may be submitted at any
time and should provide sufficient data and rationale to permit
evaluation (see 1.502).
(c) For determining reasonableness of cost for domestic end
products that contain critical components or are critical items, see
25.106(c).
0
9. Amend newly redesignated section 25.106 by--
0
a. In paragraph (a)(1) removing the phrase ``paragraph (b) of this
section'' and adding the phrase ``paragraphs (b) and (c) of this
section'' in its place;
0
b. In paragraph (a)(2) remove the word ``Subpart'' and adding the word
``subpart'' in its place;
0
c. Revise paragraph (b); and
0
d. Revising paragraph (c).
The added and revised text reads as follows:
25.106 Determining reasonableness of cost.
* * * * *
(b) For end products that are not critical items and do not contain
critical components. (1)(i) If there is a domestic offer that is not
the low offer, and the restrictions of the Buy American statute apply
to the low offer, the contracting officer must determine the
reasonableness of the cost of the domestic offer by adding to the price
of the low offer, inclusive of duty--
(A) 20 percent, if the lowest domestic offer is from a large
business concern; or
(B) 30 percent, if the lowest domestic offer is from a small
business concern. The contracting officer must use this factor, or
another factor established in agency regulations, in small business
set-asides if the low offer is from a small business concern offering
the product of a small business concern that is not a domestic end
product (see subpart 19.5).
(ii) The price of the domestic offer is reasonable if it does not
exceed the evaluated price of the low offer after addition of the
appropriate evaluation factor in accordance with paragraph (a) or
(b)(1)(i) of this section. See evaluation procedures at subpart 25.5.
(2)(i) For end products that do not consist wholly or predominantly
of iron or steel or a combination of both, if the procedures in
paragraph (b)(1)(i) of this section result in an unreasonable cost
determination for the domestic offer or there is no domestic offer
received, and the low offer is for a foreign end product that does not
exceed 55 percent domestic content, the contracting officer shall--
(A) Treat the lowest offer of a foreign end product that is
manufactured in the United States and exceeds 55 percent domestic
content as a domestic offer; and
(B) Determine the reasonableness of the cost of this offer by
applying the evaluation factors listed in paragraph (b)(1)(i) to the
low offer.
(ii) The price of the lowest offer of a foreign end product that
exceeds 55 percent domestic content is reasonable if it does not exceed
the evaluated price of the low offer after addition of the appropriate
evaluation factor in accordance with paragraph (a) or (b)(1)(i) of this
section. See evaluation procedures at subpart 25.5.
(iii) The procedures in this paragraph (b)(2) will no longer apply
as of January 1, 2030.
(c) For end products that are critical items or contain critical
components. (1)(i) If there is a domestic offer that is not the low
offer, and the restrictions of the Buy American statute apply to the
low offer, the contracting officer shall determine the reasonableness
of the cost of the domestic offer by adding to the price of the low
offer, inclusive of duty--
(A) 20 percent, plus the additional preference factor identified
for the critical item or end product containing critical components
listed at section 25.105, if the lowest domestic offer is from a large
business concern; or
(B) 30 percent, plus the additional preference factor identified
for the critical item or end product containing critical components
listed at section 25.105, if the lowest domestic offer is from a small
business concern. The contracting officer shall use this factor, or
another factor established in agency regulations, in small business
set-asides if the low offer is from a small business concern offering
the product of a small business concern that is not a domestic end
product (see subpart 19.5).
(ii) The price of the domestic offer is reasonable if it does not
exceed the evaluated price of the low offer after addition of the
appropriate evaluation factor in accordance with paragraph (a) or (b)
of this section. See evaluation procedures at subpart 25.5.
(2)(i) For end products that do not consist wholly or predominantly
of iron or steel or a combination of both, if the procedures in
paragraph (c)(1)(ii) of this section result in an unreasonable cost
determination for the domestic offer or there is no domestic offer
received, and the low offer is for a foreign end product that does not
exceed 55 percent domestic content, the contracting officer shall--
(A) Treat the lowest offer of a foreign end product that is
manufactured in the United States and exceeds 55 percent domestic
content as a domestic offer; and
(B) Determine the reasonableness of the cost of this offer by
applying the evaluation factors listed in paragraph (c)(1) to the low
offer.
(ii) The price of the lowest offer of a foreign end product that
exceeds 55 percent domestic content is reasonable
[[Page 40990]]
if it does not exceed the evaluated price of the low offer after
addition of the appropriate evaluation factor in accordance with
paragraph (a) or (b) of this section. See evaluation procedures at
subpart 25.5.
(iii) The procedures in this paragraph (c)(2) will no longer apply
as of January 1, 2030.
0
10. Amend section 25.200 by--
0
a. In paragraph (a)(3) removing the word ``and'';
0
b. Redesignating paragraph (a)(4) as paragraph (a)(5);
0
c. Adding a new paragraph (a)(4); and
0
d. In paragraph (c) removing the word ``Subpart'' and adding the word
``subpart'' in its place.
The addition reads as follows:
25.200 Scope of subpart.
(a) * * *
(4) Executive Order 14005, January 25, 2021; and
* * * * *
0
11. Amend section 25.201 by--
0
a. In paragraph (b) removing the phrase ``statute and E.O. 13881 use''
and adding the phrase ``statute, E.O. 13881, and E.O. 14005 use'' in
its place; and
0
b. Revising the first sentence of paragraph (b)(2)(i).
The revision reads as follows.
25.201 Policy.
* * * * *
(b) * * *
(2)(i) Except for construction material that consists wholly or
predominantly of iron or steel or a combination of both, the cost of
domestic components must exceed 60 percent of the cost of all the
components, except that the percentage will be 65 percent for items
delivered in calendar years 2024 through 2028 and 75 percent for items
delivered starting in calendar year 2029. * * *
* * * * *
0
12. Amend section 25.204 by revising paragraph (b) to read as follows:
25.204 Evaluating offers of foreign construction material.
* * * * *
(b)(1) For construction materials that are not critical items and
do not contain critical components. (i) Unless the head of the agency
specifies a higher percentage, the contracting officer shall add to the
offered price 20 percent of the cost of any foreign construction
material proposed for exception from the requirements of the Buy
American statute based on the unreasonable cost of domestic
construction materials. In the case of a tie, the contracting officer
shall give preference to an offer that does not include foreign
construction material excepted at the request of the offeror on the
basis of unreasonable cost.
(ii) For construction material that does not consist wholly or
predominantly of iron or steel or a combination of both, if the
procedures in paragraph (b)(1)(i) of this section result in an
unreasonable cost determination for the domestic construction material
offer or there is no domestic construction material offer received, and
the low offer is for foreign construction material that does not exceed
55 percent domestic content, the contracting officer shall--
(A) Treat the lowest offer of foreign construction material that is
manufactured in the United States and exceeds 55 percent domestic
content as a domestic offer; and
(B) Determine the reasonableness of the cost of this offer by
applying the evaluation factor listed in paragraph (b)(1)(i) to the low
offer.
(iii) The procedures in paragraph (b)(1)(ii) will no longer apply
as of January 1, 2030.
(2) For construction material that are critical items or contain
critical components. (i) The contracting officer shall add to the
offered price 20 percent, plus the additional preference factor
identified for the critical item or construction material containing
critical components listed at section 25.105, of the cost of any
foreign construction material proposed for exception from the
requirements of the Buy American statute based on the unreasonable cost
of domestic construction materials. In the case of a tie, the
contracting officer shall give preference to an offer that does not
include foreign construction material excepted at the request of the
offeror on the basis of unreasonable cost. See 25.105 for list of
critical components and critical items.
(ii) For construction material that does not consist wholly or
predominantly of iron or steel or a combination of both, if the
procedures in paragraph (b)(2)(i) of this section result in an
unreasonable cost determination for the domestic construction material
offer or there is no domestic construction material offer received, and
the low offer is for foreign construction material that does not exceed
55 percent domestic content, the contracting officer shall--
(A) Treat the lowest offer of foreign construction material that is
manufactured in the United States and exceeds 55 percent domestic
content as a domestic offer; and
(B) Determine the reasonableness of the cost of this offer by
applying the evaluation factors listed in paragraph (b)(2) to the low
offer.
(iii) The procedures in paragraph (c)(1)(ii) will no longer apply
as of January 1, 2030.
* * * * *
25.501 [Amended]
0
13. Amend section 25.501 by--
0
a. In paragraph (c) removing the word ``Subpart'' and adding the word
``subpart'' in its place; and
0
b. In paragraph (d) removing the word ``Must'' and adding the phrase
``When trade agreements are involved, shall'' in its place.
0
14. Amend section 25.502 by revising paragraphs (c)(2), (3), and (4) to
reads as follows:
25.502 Application.
* * * * *
(c) * * *
(2) If the low offer is a noneligible offer and there were no
domestic offers (see 25.103(b)(3)), award on the low offer. The
procedures at 25.106(b)(2) and 25.106(c)(2) do not apply.
(3) If the low offer is a noneligible offer and there is an
eligible offer that is lower than the lowest domestic offer, award on
the low offer. The procedures at 25.106(b)(2) and 25.106(c)(2) do not
apply.
(4) Otherwise, apply the appropriate evaluation factor provided in
25.106 to the low offer. The procedures at 25.106(b)(2) and
25.106(c)(2) do not apply.
* * * * *
0
15. Amend section 25.503 by--
0
a. In paragraph (a)(1) removing the word ``Subpart' and adding the word
``subpart'' in its place; and
0
b. Adding paragraph (d) to read as follows:
25.503 Group offers.
* * * * *
(d) If no trade agreement applies to a solicitation and the
solicitation specifies that award will be made only on a group of line
items or all line items contained in the solicitation, determine the
category of end products on the basis of each line item, but determine
whether to apply an evaluation factor on the basis of the group of
items (see 25.504-4(c), Example 3).
(1) If the proposed price of domestic end products exceeds 50
percent of the total proposed price of the group, evaluate the entire
group as a domestic offer. Evaluate all other groups as foreign offers.
(2) Apply the evaluation factor to the entire group in accordance
with 25.502, except where 25.502(c)(4) applies and the evaluated price
of the low offer remains less than the lowest domestic offer. Where the
evaluated price of the
[[Page 40991]]
low offer remains less than the lowest domestic offer, treat as a
domestic offer any group where the proposed price of end products with
a domestic content of at least 55 percent exceeds 50 percent of the
total proposed price of the group.
(3) Apply the evaluation factor to the entire group in accordance
with 25.502(c)(4).
0
16. Amend section 25.504-1 by--
0
a. In paragraph (a)(1), in the table revising the entry for ``Offer
C'';
0
b. Revising paragraph (a)(2); and
0
c. Adding paragraph (c).
The revised and added text reads as follows:
25.504-1 Buy American statute.
(a)(1) * * *
------------------------------------------------------------------------
------------------------------------------------------------------------
* * * * * * *
Offer C....................... $10,100 U.S.-made end product
(not domestic), small
business.
------------------------------------------------------------------------
(2) Analysis: This acquisition is for end products for use in the
United States and is set aside for small business concerns. The Buy
American statute applies. Since the acquisition value is less than
$25,000 and the acquisition is set aside, none of the trade agreements
apply. Perform the steps in 25.502(a). Offer C is evaluated as a
foreign end product, because it is the product of a small business but
is not a domestic end product because the offer is of 50% domestic
content (see 25.502(c)(4)). Since Offer B is a domestic offer, apply
the 30 percent factor to Offer C (see 25.106(b)(2)). The resulting
evaluated price of $13,130 remains lower than Offer B. The cost of
Offer B is therefore unreasonable (see 25.106(b)(1)(ii)). The
25.106(b)(2) procedures do not apply. Award on Offer C at $10,100 (see
25.502(c)(4)(i)).
* * * * *
(c)(1) Example 3.
------------------------------------------------------------------------
------------------------------------------------------------------------
Offer A....................... $14,000 Domestic end product
(complies with the
required domestic
content), small
business.
Offer B....................... 12,500 U.S.-made end product
(not domestic,
exceeds 55% domestic
content), small
business.
Offer C....................... 10,100 U.S.-made end product
(not domestic, with
less than 55%
domestic content),
small business.
------------------------------------------------------------------------
(2) Analysis: This acquisition is for end products for use in the
United States and is set aside for small business concerns. The Buy
American statute applies. Since the acquisition value is less than
$25,000 and the acquisition is set aside, none of the trade agreements
apply. Perform the steps in 25.502(a). Offers B and C are initially
evaluated as foreign end products, because they are the products of
small businesses but are not domestic end products (see 25.502(c)(4)).
Offer C is the low offer. After applying the 30 percent factor, the
evaluated price of Offer C is $13,130. The resulting evaluated price of
$13,130 remains lower than Offer A. The cost of Offer A is therefore
unreasonable. Offer B is then treated as a domestic offer, because it
is for a U.S.-made end product that exceeds 55 percent domestic content
(see 25.106(b)(2)). Offer B is determined reasonable because it is
lower than the $13,130 evaluated price of Offer C. Award on Offer B at
$12,500.
0
17. Amend section 25.504-4 by adding paragraph (c) to read as follows:
25.504-4 Group award basis.
* * * * *
(c) Example 3.
------------------------------------------------------------------------
Offers
Item --------------------------------------------------
A B C
------------------------------------------------------------------------
1.................... DO = $17,800... FO (>55%) = FO (<55%) =
$16,000. $11,200
2.................... FO (>55%) = FO (>55%) = DO = $10,200
$9,000. $8,500.
3.................... FO (<55%) = FO (>55%) = FO (<55%) =
$11,200. $12,000. $11,000
4.................... DO = $10,000... DO = $9,000.... FO (<55%) =
$6,400
--------------------------------------------------
Total............ $48,000........ $45,500........ $38,800
------------------------------------------------------------------------
Key:
DO=Domestic end product (complies with the required domestic content).
FO >55% = Foreign end product with domestic content exceeding 55%.
FO <55% = Foreign end product with domestic content of 55% or less.
Problem: The solicitation specifies award on a group basis. Assume
only the Buy American statute applies (i.e., no trade agreements apply)
and the acquisition cannot be set aside for small business concerns.
All offerors are large businesses.
Analysis: (see 25.503(d)).
STEP 1: Determine which of the offers are domestic (see
25.503(d)(1)):
----------------------------------------------------------------------------------------------------------------
Domestic (percent) Determination
----------------------------------------------------------------------------------------------------------------
A.............................. $17,800 (Offer A1) + $10,000 Domestic.
(Offer A4) = $27,800.
$27,800/$48,000 (Offer A Total) ..............................................
= 58%
B.............................. $9,000 (Offer B4)/$45,500 Foreign.
(Offer B Total) = 19.8%.
C.............................. $10,200 (Offer C2)/$38,800 Foreign.
(Offer C Total) = 26.3%.
----------------------------------------------------------------------------------------------------------------
[[Page 40992]]
STEP 2: Determine which offer, domestic or foreign, is the low
offer. If the low offer is a foreign offer, apply the evaluation factor
(see 25.503(d)(2)). The low offer (Offer C) is a foreign offer.
Therefore, apply the factor to the low offer. Addition of the 20
percent factor (use 30 percent if Offer A is a small business) to Offer
C yields an evaluated price of $46,560 ($38,800 + 20 percent). Offer C
remains the low offer.
STEP 3: Determine if there is a foreign offer that could be treated
as a domestic offer (see 25.106(b)(2) and 25.503(d)(2)).
----------------------------------------------------------------------------------------------------------------
Amount of domestic content
(percent) Determination
----------------------------------------------------------------------------------------------------------------
A.............................. N/A............................ N/A.
B.............................. $9,000 (Offer B4)/$45,500 Can be treated as domestic.
(Offer B Total) $ = 19.8% is
domestic AND.
$16,000 (Offer B1) + $8,500 ..............................................
(Offer B2) + $12,000 (Offer
B3) = $36,500.
$36,500/$45,500 (Offer B Total) ..............................................
= 80.2% can be treated as
domestic.
19.8% + 80.2% = 100% is ..............................................
domestic or can be treated as
domestic.
C.............................. $10,200 (Offer C2)/$38,800 Foreign.
(Offer C Total) = 26.3% is
domestic.
----------------------------------------------------------------------------------------------------------------
STEP 4: If there is a foreign offer that could be treated as a
domestic offer, compare the evaluated price of the low offer to the
price of the offer treated as domestic (see 25.503(d)(3)). Offer B can
be treated as a domestic offer ($45,500). The evaluated price of the
low offer (Offer C) is $46,560. Award on Offer B.
0
18. Amend section 25.1101 by adding paragraph (g) to read as follows:
25.1101 Acquisition of supplies.
* * * * *
(g) Insert the clause at 52.225-XX, Domestic Content Reporting
Requirement--Supplies, in solicitations and contracts containing the
clause at 52.225-1 or 52.225-3.
0
19. Amend section 25.1102 by adding paragraph (f) to read as follows:
25.1102 Acquisition of construction.
* * * * *
(f) Insert the clause at 52.225-YY, Domestic Content Reporting
Requirement--Construction Materials, in solicitations and contracts
containing the clause at 52.225-9 or 52.225-11.
PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
0
20. Amend section 52.212-3 by--
0
a. Revising the date of the provision;
0
b. In paragraph (f)(1)(i) removing the word ``product.'' and adding the
phrase ``product and that each domestic end product listed in paragraph
(f)(3) of this provision contains a critical component.'' in its place;
0
c. Adding two sentences to the end of paragraph (f)(1)(ii);
0
d. Redesignating paragraph (f)(1)(iii) as paragraph (f)(1)(iv) and
adding a new paragraph (f)(1)(iii);
0
e. Removing from the newly redesignated paragraph (f)(1)(iv) ``The
terms ``domestic end product,'' and adding ``The terms ``critical
component,'' ``domestic end product,'' in its place;
0
f. Revising the table in paragraph (f)(2);
0
g. Redesignating paragraph (f)(3) as paragraph (f)(4) and adding a new
paragraph (f)(3);
0
h. In newly redesignated paragraph (f)(4) remove the word ``Part'' and
adding the word ``part'' in its place;
0
i. In paragraph (g)(1)(i)(A) removing the word ``product.'' and adding
the phrase ``product and that each domestic end product listed in
paragraph (g)(1)(iv) of this provision contains a critical component.''
in its place;
0
j. In paragraph (g)(1)(i)(B) removing the phrases ``Peruvian end
product,'' and ``domestic end product,'' and adding in their place
``Peruvian end product,'' ``critical component,'' ``domestic end
product,'';
0
k. Adding two sentences at the end of paragraph (g)(1)(iii) and
revising the table;
0
l. Redesignating paragraph (g)(1)(iv) as paragraph (g)(1)(v) and adding
a new paragraph (g)(1)(iv); and
0
m. In newly redesignated paragraph (g)(1)(v) removing the word ``Part''
and adding the word ``part'' in its place.
The revisions and additions read as follows:
52.212-3 Offeror Representations and Certifications--Commercial
Items.
* * * * *
Offeror Representations and Certifications--Commercial Items (DATE)
* * * * *
(f) * * *
(1) * * *
(ii) * * * The Offeror shall also indicate whether these foreign
end products exceed 55 percent domestic content. If the percentage
of the domestic content is unknown, select ``no''.
(iii) The Offeror shall separately list the line item numbers of
domestic end products that contain a critical component.
* * * * *
(2) * * *
------------------------------------------------------------------------
Exceeds 55% domestic
Line item No. Country of origin content (yes/no)
------------------------------------------------------------------------
------------------------------------------------------------------------
------------------------------------------------------------------------
------------------------------------------------------------------------
(3) Domestic end products containing a critical component:
Line Item No.----------------------------------------------------------
[List as necessary]
(g)(1) * * *
(iii) * * * The Offeror shall also indicate whether these
foreign end products exceed 55 percent domestic content. If the
percentage of the domestic content is unknown, select ``no''.
Other Foreign End Products:
[[Page 40993]]
------------------------------------------------------------------------
Exceeds 55% domestic
Line item No. Country of origin content (yes/no)
------------------------------------------------------------------------
------------------------------------------------------------------------
------------------------------------------------------------------------
------------------------------------------------------------------------
(iv) The Offeror shall list the line item numbers of domestic
end products that contain a critical component.
Line Item No.----------------------------------------------------------
[List as necessary]
* * * * *
0
21. Amend section 52.212-5 by--
0
a. Revising the date of the clause;
0
b. Removing from paragraph (b)(48) ``(JAN 2021)'' and adding ``(DATE)''
in its place; and
0
c. Removing from paragraph (b)(49)(i) ``(JAN 2021)'' and adding
``(DATE)'' in its place; and
0
d. Redesignating paragraphs (b)(53) through (b)(63) as paragraphs
(b)(54) through (b)(64) and adding a new paragraph (b)(53).
The revision and addition reads as follows:
52.212-5 Contract Terms and Conditions Required To Implement Statutes
or Executive Orders--Commercial Items.
* * * * *
Contract Terms and Conditions Required To Implement Statutes or
Executive Orders--Commercial Items (DATE)
* * * * *
(b) * * *
_(53) 52.225-XX, Domestic Content Reporting Requirement--
Supplies (DATE) (Executive Order 14005).
* * * * *
0
22. Amend section 52.213-4 by--
0
a. Revising the date of the clause;
0
b. In paragraph (b)(1)(xvii)removing the words ``(JAN 2021)'' and
adding the word ``(DATE)'' in its place;
0
c. Redesignating paragraphs (b)(1)(xviii) through (b)(1)(xxi) as
paragraphs (b)(1)(xx) through (b)(1)(xxiii) and adding new paragraphs
(b)(1)(xviii) and (b)(1)(xix).
The revisions and additions read as follows:
52.213-4 Terms and Conditions--Simplified Acquisitions (Other Than
Commercial Items).
* * * * *
Terms and Conditions--Simplified Acquisitions (Other Than Commercial
Items) (DATE)
(b) * * *
(1) * * *
(xviii) 52.225-XX, Domestic Content Reporting Requirement--
Supplies (DATE) (Executive Order 14005) (Applies to contracts
containing the clause at 52.225-1 or 52.225-3).
(xix) 52.225-YY, Domestic Content Reporting Requirement--
Construction Materials (DATE) (Executive Order 14005) (Applies to
contracts containing the clause at 52.225-9).
* * * * *
0
23. Amend section 52.225-1 by--
0
a. Revising the date of the clause;
0
b. Adding, in alphabetical order, the definition of ``Critical
component''; and
0
c. In the definition of ``Domestic end product'' revising the first
sentence of paragraph (1)(ii)(A).
The addition and revision read as follows:
52.225-1 Buy American--Supplies.
* * * * *
Buy American--Supplies (DATE)
(a) * * *
Critical component means a component that is mined, produced, or
manufactured in the United States and deemed critical to the U.S.
supply chain. The list of critical components is at FAR 25.105.
Domestic end product means--
(1) * * *
(ii) * * *
(A) The cost of its components mined, produced, or manufactured
in the United States exceeds 60 percent of the cost of all its
components, except that the percentage will be 65 percent for items
delivered in calendar years 2024 through 2028 and 75 percent for
items delivered starting in calendar year 2029. * * *
* * * * *
0
24. Amend section 52.225-2 by--
0
a. Revising the date of the provision;
0
b. Revising paragraph (a)(1);
0
c. Adding two sentences at the end of paragraph (a)(2);
0
d. Redesignating paragraph (a)(3) as paragraph (a)(4) and adding a new
paragraph (a)(3);
0
e. In newly redesignated paragraph (a)(4) removing the phrase ``The
terms'' and adding the phrase ``The terms ``critical component,'' '' in
its place;
0
f. Revising the table in paragraph (b);
0
g. Redesignating paragraph (c) as paragraph (d) and adding a new
paragraph (c).
The revisions and additions read as follows:
52.225-2 Buy American Certificate.
* * * * *
Buy American Certificate (DATE)
(a)(1) The Offeror certifies that each end product, except those
listed in paragraph (b) of this provision, is a domestic end product
and that each domestic end product listed in paragraph (c) of this
provision contains a critical component.
(2) * * * The Offeror shall also indicate whether these foreign
end products exceed 55 percent domestic content. If the percentage
of the domestic content is unknown, select ``no''.
(3) The Offeror shall separately list the line item numbers of
domestic end products that contain a critical component.
* * * * *
(b) * * *
------------------------------------------------------------------------
Exceeds 55% domestic
Line item No. Country of origin content (yes/no)
------------------------------------------------------------------------
------------------------------------------------------------------------
------------------------------------------------------------------------
------------------------------------------------------------------------
(c) Domestic end products containing a critical component:
Line Item No.----------------------------------------------------------
[List as necessary]
* * * * *
0
25. Amend section 52.225-3 by--
0
a. Revising the date of the clause;
0
b. Adding, in alphabetical order, the definition of ``Critical
component'';
[[Page 40994]]
0
c. In the definition ``Domestic end product'' revising the first
sentence of paragraph (1)(ii)(A).
The addition and revision read as follows:
52.225-3 Buy American--Free Trade Agreements--Israeli Trade Act.
* * * * *
Buy American--Free Trade Agreements--Israeli Trade Act (DATE)
(a) * * *
Critical component means a component that is mined, produced, or
manufactured in the United States and deemed critical to the U.S.
supply chain. The list of critical components is at FAR 25.105.
Domestic end product means--
(1) * * *
(ii) * * *
(A) The cost of its components mined, produced, or manufactured
in the United States exceeds 60 percent of the cost of all its
components, except that the percentage will be 65 percent for items
delivered in calendar years 2024 through 2028 and 75 percent for
items delivered starting in calendar year 2029. * * *
* * * * *
0
26. Amend section 52.225-4 by--
0
a. Revising the date of the provision;
0
b. Revising paragraph (a)(1);
0
c. In paragraph (a)(2) removing the phrases ``Peruvian end product,''
``domestic end product,'' and adding in their place ``Peruvian end
product,'' ``critical component,'' ``domestic end product,'';
0
d. Redesignating paragraph (c) as paragraph (c)(1) and adding two
sentences at the end of newly designated paragraph (c)(1);
0
e. Revising the table in newly designated paragraph (c)(1); and
0
f. Adding paragraph (c)(2).
The revisions and additions read as follows:
52.225-4 Buy American--Free Trade Agreements--Israeli Trade Act
Certificate.
* * * * *
Buy American--Free Trade Agreements--Israeli Trade Act Certificate
(DATE)
(a)(1) The Offeror certifies that each end product, except those
listed in paragraph (b) or (c)(1) of this provision, is a domestic
end product and that each domestic end product listed in paragraph
(c)(2) of this provision contains a critical component.
* * * * *
(c)(1) * * * The Offeror shall also indicate whether these
foreign end products exceed 55 percent domestic content. If the
percentage of the domestic content is unknown, select ``no''.
* * * * *
------------------------------------------------------------------------
Exceeds 55% domestic
Line item No. Country of origin content (yes/no)
------------------------------------------------------------------------
------------------------------------------------------------------------
------------------------------------------------------------------------
------------------------------------------------------------------------
* * * * *
(2) The Offeror shall list the line item numbers of domestic end
products that contain a critical component.
Line Item No.----------------------------------------------------------
[List as necessary]
* * * * *
0
27. Amend section 52.225-9 by--
0
a. Revising the date of the clause;
0
b. Adding, in alphabetical order, the definitions of ``Critical
component'' and ``Critical item'';
0
c. In the definition ``Domestic construction material'' revising the
first sentence of paragraph (1)(ii)(A); and
0
d. Revising paragraph (b)(3)(i).
The revisions and additions read as follows:
52.225-9 Buy American--Construction Materials.
* * * * *
Buy American--Construction Materials (DATE)
(a) * * *
Critical component means a component that is mined, produced, or
manufactured in the United States and deemed critical to the U.S.
supply chain. The list of critical components is at FAR 25.105.
Critical item means a domestic construction material or domestic
end product that is deemed critical to U.S. supply chain resiliency.
The list of critical items is at FAR 25.105.
Domestic construction material means--
(1) * * *
(ii) * * *
(A) The cost of its components mined, produced, or manufactured
in the United States exceeds 60 percent of the cost of all its
components, except that the percentage will be 65 percent for items
delivered in calendar years 2024 through 2028 and 75 percent for
items delivered starting in calendar year 2029.
* * * * *
(b) * * *
(3) * * *
(i) The cost of domestic construction material would be
unreasonable.
(A) For domestic construction material that are not critical
items or do not contain critical components.
(1) The cost of a particular domestic construction material
subject to the requirements of the Buy American statute is
unreasonable when the cost of such material exceeds the cost of
foreign material by more than 20 percent;
(2) For construction material that does not consist wholly or
predominantly of iron or steel or a combination of both, if the cost
of a particular domestic construction material is determined to be
unreasonable or there is no domestic offer received, and the low
offer is for foreign construction material that is manufactured in
the United States and does not exceed 55 percent domestic content,
the Contracting Officer will treat the lowest offer of foreign
construction material that exceeds 55 percent domestic content as a
domestic offer and determine whether the cost of that offer is
unreasonable by applying the evaluation factor listed in paragraph
(b)(3)(i)(A)(1) of this clause.
(3) The procedures in paragraph (b)(3)(i)(A)(2) will no longer
apply as of January 1, 2030.
(B)(1) For domestic construction material that are critical
items or contain critical components. The cost of a particular
domestic construction material that is a critical item or contains
critical components, subject to the requirements of the Buy American
statute, is unreasonable when the cost of such material exceeds the
cost of foreign material by more than 20 percent plus the additional
preference factor identified for the critical item or construction
material containing critical components listed at FAR 25.105.
(2) For construction material that does not consist wholly or
predominantly of iron or steel or a combination of both, if the cost
of a particular domestic construction material is determined to be
unreasonable or there is no domestic offer received, and the low
offer is for foreign construction material that does not exceed 55
percent domestic content, the Contracting Officer will treat the
lowest foreign offer of construction material that is manufactured
in the United States and exceeds 55 percent domestic content as a
domestic offer, and determine whether the cost of that offer is
unreasonable by applying the evaluation factor listed in paragraph
(b)(3)(i)(B)(1) of this clause.
(3) The procedures in paragraph (b)(3)(i)(B)(2) will no longer
apply as of January 1, 2030.
* * * * *
0
28. Amend section 52.225-11 by--
0
a. Revising the date of the clause;
0
b. Adding, in alphabetical order, the definitions of ``Critical
component'' and ``Critical item'';
[[Page 40995]]
0
c. In the definition ``Domestic construction material'' revising the
first sentence of paragraph (1)(ii)(A); and
0
d. Revising paragraph (b)(4)(i).
The revisions and additions read as follows:
52.225-11 Buy American--Construction Materials Under Trade
Agreements.
* * * * *
Buy American--Construction Materials Under Trade Agreements (DATE)
(a) * * *
Critical component means a component that is mined, produced, or
manufactured in the United States and deemed critical to the U.S.
supply chain. The list of critical components is at FAR 25.105.
Critical item means a domestic construction material or domestic
end product that is deemed critical to U.S. supply chain resiliency.
The list of critical items is at FAR 25.105.
* * * * *
Domestic construction material means--
(1) * * *
(ii) * * *
(A) The cost of its components mined, produced, or manufactured
in the United States exceeds 60 percent of the cost of all its
components, except that the percentage will be 65 percent for items
delivered in calendar years 2024 through 2028 and 75 percent for
items delivered starting in calendar year 2029.
* * * * *
(b) * * *
(4) * * *
(i) The cost of domestic construction material would be
unreasonable.
(A) For domestic construction material that are not critical
items or do not contain critical components.
(1) The cost of a particular domestic construction material
subject to the restrictions of the Buy American statute is
unreasonable when the cost of such material exceeds the cost of
foreign material by more than 20 percent;
(2) For construction material that does not consist wholly or
predominantly of iron or steel or a combination of both, if the cost
of a particular domestic construction material is determined to be
unreasonable or there is no domestic offer received, and the low
offer is for foreign construction material that does not exceed 55
percent domestic content, the Contracting Officer will treat the
lowest offer of foreign construction material that is manufactured
in the United States and exceeds 55 percent domestic content as a
domestic offer and determine whether the cost of that offer is
unreasonable by applying the evaluation factor listed in paragraph
(b)(4)(i)(A)(1) of this clause.
(3) The procedures in paragraph (b)(4)(i)(A)(2) do not apply
effective January 1, 2030.
(B) For domestic construction material that are critical items
or contain critical components. (1) The cost of a particular
domestic construction material that is a critical item or contains
critical components, subject to the requirements of the Buy American
statute, is unreasonable when the cost of such material exceeds the
cost of foreign material by more than 20 percent plus the additional
preference factor identified for the critical item or construction
material containing critical components listed at FAR 25.105.
(2) For construction material that does not consist wholly or
predominantly of iron or steel or a combination of both, if the cost
of a particular domestic construction material is determined to be
unreasonable or there is no domestic offer received, and the low
offer is for foreign construction material that does not exceed 55
percent domestic content, the Contracting Officer will treat the
lowest offer of foreign construction material that is manufactured
in the United States and exceeds 55 percent domestic content as a
domestic offer, and determine whether the cost of that offer is
unreasonable by applying the evaluation factor listed in paragraph
(b)(4)(i)(B)(1) of this clause.
(3) The procedures in paragraph (b)(4)(i)(B)(2) will no longer
apply as of January 1, 2030.
* * * * *
0
29. Add section 52.225-XX to read as follows:
52.225-XX Domestic Content Reporting Requirement--Supplies.
As prescribed in 25.1101(g), insert the following clause:
Domestic Content Reporting Requirement--Supplies (DATE)
(a) Definitions. As used in this clause--
Critical item means a domestic construction material or domestic
end product that is deemed critical to the U.S. supply chain. The
list of critical items is at FAR 25.105.
The terms Critical component, Domestic end product, and End
product are defined in the clause of this solicitation entitled
``Buy American-Supplies'' or ``Buy American-Free Trade Agreements-
Israeli Trade Act''.
(b) Applicability. This clause does not apply to commercially
available off-the-shelf (COTS) items.
(c) Reporting requirement. Within 15 days of award, the
Contractor shall provide the contract number, the amount of domestic
content in each critical item, and the amount of domestic content in
each domestic end product containing a critical component, to the
Made in America Office under the Office of Management and Budget via
[email protected]:
------------------------------------------------------------------------
Critical component/ Percentage of
Line item No. end product domestic content
------------------------------------------------------------------------
------------------------------------------------------------------------
------------------------------------------------------------------------
------------------------------------------------------------------------
[List as necessary]
(End of clause)
0
30. Add section 52.225-YY to read as follows:
52.225-YY Domestic Content Reporting Requirement--Construction
Materials.
As prescribed in 25.1102(f), insert the following clause:
Domestic Content Reporting Requirement--Construction Materials (DATE)
(a) Definitions. As used in this clause--
The terms Critical component, Critical item, and Domestic
construction material, are defined in the clause of this contract
entitled ``Buy American-Construction Materials'' or ``Buy American-
Construction Materials under Trade Agreements''.
(b) Applicability. This clause does not apply to commercially
available off-the-shelf (COTS) items.
(c) Reporting requirement. Within 15 days of award, the
Contractor shall provide the contract number, the amount of domestic
content in each critical item, and the amount of domestic content in
each domestic construction material containing a critical component,
to the Made in America Office under the Office of Management and
Budget via [email protected]:
------------------------------------------------------------------------
Critical component/ Percentage of
Line item No. end product domestic content
------------------------------------------------------------------------
------------------------------------------------------------------------
[[Page 40996]]
------------------------------------------------------------------------
------------------------------------------------------------------------
[List as necessary]
(End of clause)
[FR Doc. 2021-15881 Filed 7-29-21; 8:45 am]
BILLING CODE 6820-EP-P