[Federal Register Volume 86, Number 186 (Wednesday, September 29, 2021)]
[Proposed Rules]
[Pages 53931-53933]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-20939]


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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 225 and 252

[Docket DARS-2021-0018]
RIN 0750-AL29


Defense Federal Acquisition Regulation Supplement: Modification 
of Small Purchase Threshold Exceptions (DFARS Case 2021-D010)

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

ACTION: Proposed rule.

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SUMMARY: DoD is proposing to amend the Defense Federal Acquisition 
Regulation Supplement (DFARS) to implement a section of the National 
Defense Authorization Act for Fiscal Year 2021, which reduces the 
dollar threshold at which an acquisition is excepted from certain 
source restrictions.

DATES: Comments on the proposed rule should be submitted in writing to 
the address shown below on or before November 29, 2021, to be 
considered in the formation of the final rule.

ADDRESSES: Submit comments identified by DFARS Case 2021-D010, using 
any of the following methods:
    [cir] Federal eRulemaking Portal: https://www.regulations.gov. 
Search for ``DFARS Case 2021-D010.'' Select ``Comment'' and follow the 
instructions to submit a comment. Please include your name, company 
name (if any), and ``DFARS Case 2021-D010'' on any attached documents.
    [cir] Email: [email protected]. Include DFARS Case 2021-D010 in 
the subject line of the message.
    Comments received generally will be posted without change to 
https://www.regulations.gov, including any personal information 
provided. To confirm receipt of your comment(s), please check https://www.regulations.gov, approximately two to three days after submission 
to verify posting.

FOR FURTHER INFORMATION CONTACT: Ms. Kimberly R. Ziegler, telephone 
571-372-6095.

SUPPLEMENTARY INFORMATION:

I. Background

    This rule proposes to amend DFARS subpart 225.70 to implement 
section 817 of the National Defense Authorization Act (NDAA) for Fiscal 
Year (FY) 2021 (Pub. L. 116-283). Section 817 amends 10 U.S.C. 2533a 
(commonly known as the ``Berry Amendment''), by reducing the dollar 
threshold at which an acquisition is excepted from the source 
restrictions of the Berry Amendment from the simplified acquisition 
threshold (SAT) to an amount not to exceed $150,000.
    DFARS 225.7002 identifies the domestic source restrictions of 10 
U.S.C. 2533a on food, clothing, fabrics, fibers, hand or measuring 
tools, and flags, unless an exception applies. DFARS 225.7002-2, 
Exceptions, has historically referred to ``actions at or below the 
small purchase threshold,'' rather than a specific dollar value, as an 
exception to the domestic source restrictions of the Berry Amendment. 
As a result, each time the SAT increased, the exception threshold also 
increased to align with the new SAT, to include the most recent SAT 
increase to $250,000. Federal Acquisition Regulation (FAR) Case 2018-
004, published July 2, 2020 (85 FR 40064) raised the SAT at FAR 2.101 
from $150,000 to $250,000.

II. Discussion and Analysis

    The proposed rule implements section 817 of the NDAA for FY 2021 by 
revising the exception at DFARS 225.7002-2(a) from ``at or below the 
simplified acquisition threshold'' to ``not exceeding $150,000''. The 
net effect of this revision will be to increase the number of 
acquisitions subject to the domestic source requirements at DFARS 
225.7002. Conforming changes will also be made at DFARS 225.7002-
2(j)(2), 225.7002-3(b) and (c), and the associated contract clause 
252.225-7012, Preference for Certain Domestic Commodities.
    While the statute reduces the dollar value of the current exception 
threshold, it also authorizes the adjustment of this statutory 
threshold for inflation every five years, in accordance with 41 U.S.C. 
1908.

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 proposes to amend the applicability of the following 
DFARS clauses: (1) 252.225-7006, Acquisition of the American Flag; (2) 
252.225-7012, Preference for Certain Domestic Commodities; and (3) 
252.225-7015, Restriction on Acquisition of Hand or Measuring Tools. 
DoD does intend to apply the rule to contracts valued above $150,000 
but at or below the SAT. The clauses impacted by the rule are already 
prescribed for use in solicitations and contracts using FAR part 12 
procedures for the acquisition of commercial items, including COTS 
items.

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

    41 U.S.C. 1905 governs the applicability of laws to contracts or 
subcontracts in amounts not greater than the simplified acquisition 
threshold. It is intended to limit the applicability of laws to such 
contracts or subcontracts. 41 U.S.C. 1905 provides that if a provision 
of law contains criminal or civil penalties, or if the Federal 
Acquisition Regulatory Council makes a written determination that it is 
not in the best interest of the Federal Government to exempt contracts 
or subcontracts at or below the SAT, the law will apply to them. The 
Principal Director, Defense Pricing and Contracting (DPC), is the 
appropriate authority to make comparable determinations for regulations 
to be published in the DFARS, which is part of the FAR system of 
regulations. DoD does intend to make that determination. Therefore, 
this rule will apply below the simplified acquisition threshold.

B. Determination

    DoD plans to apply the rule to contracts valued above $150,000 but 
at or below the SAT for the following DFARS clauses: (1) 252.225-7006, 
Acquisition of the American Flag; (2) 252.225-7012, Preference for 
Certain Domestic Commodities; and (3) 252.225-7015, Restriction on 
Acquisition of Hand or Measuring Tools.
    Not applying these clauses to contracts valued above $150,000 but 
at or below the SAT would exclude contracts intended to be covered by 
this rule and undermine the overarching purpose of the rule, which is 
to increase the number of acquisitions subject to the domestic source 
restrictions at DFARS 225.7002 by reducing the volume of procurements 
subject to the exception at DFARS 225.7002-2(a). The clauses already 
apply to commercial items, including COTS items.

IV. Expected Impact of the Rule

    DFARS 225.7002 identifies the domestic source restrictions of 10 
U.S.C. 2533a on food, clothing, fabrics, fibers, hand or measuring 
tools, and flags, unless an exception at DFARS 225.7002-2 applies. 
Acquisitions valued

[[Page 53932]]

below the SAT, currently defined at FAR 2.201 as $250,000, are excepted 
from the domestic source restrictions of the Berry Amendment.
    This rule proposes to implement section 817 of the NDAA for FY 2021 
by reducing the exception threshold from the SAT to $150,000. DoD 
expects the reduction required by section 817 to result in an increase 
in the number of procurements of domestically sourced end products that 
are subject to 10 U.S.C. 2533a.
    DoD estimates that approximately 970 procurements valued between 
$150,000 and the SAT of $250,000 are awarded to an estimated 400 
entities annually, based upon data obtained from the Federal 
Procurement Data System (FPDS) for fiscal years 2018 through 2020. 
Until the final rule for FAR case 2018-004 (85 FR 40064), which 
increased the SAT from $150,000 to $250,000, became effective on August 
31, 2020, these entities were required to comply with domestic source 
restrictions of the Berry Amendment, including the $150,000 exception 
threshold. It has only been since August 31, 2020, that these entities 
have had the benefit of the higher exception threshold (i.e., the SAT 
of $250,000). DoD assumes that some of these entities may have adjusted 
their procurement sources in the short time since the threshold was 
raised, while some may have continued with their established supply 
chains. There is currently no data source that would identify the 
entities that made adjustments and would have to make additional 
adjustments to return to their previous practices.

V. 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 not a significant regulatory action and, therefore, was not 
subject to review under section 6(b) of E.O. 12866, Regulatory Planning 
and Review, dated September 30, 1993.

VI. 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 will submit a copy of 
the interim or final rule with the form, Submission of Federal Rules 
Under the Congressional Review Act, to the U.S. Senate, the U.S. House 
of Representatives, and to the Comptroller General of the United 
States. A major rule under the Congressional Review Act 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.

VII. Regulatory Flexibility Act

    DoD does not expect this proposed rule to have a significant 
economic impact on a substantial number of small entities within the 
meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq., 
because the types of end products or components subject to 10 U.S.C. 
2533a are generally at a dollar value below the simplified acquisition 
threshold (SAT) and normally set aside for small entities. However, an 
initial regulatory flexibility analysis has been performed and is 
summarized as follows:
    This rule proposes to amend the DFARS to implement section 817 of 
the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2021 
(Pub. L. 116-283). Section 817 reduces the dollar threshold exception 
at DFARS 225.7002, which implements 10 U.S.C. 2533a (commonly known as 
the ``Berry Amendment''), from the SAT to an amount not to exceed 
$150,000.
    The objective of the rule is to increase the number of acquisitions 
subject to the domestic source restrictions at DFARS 225.7002 by 
reducing the number of procurements subject to the exception at DFARS 
225.7002-2(a). The legal basis of the rule is section 817 of the NDAA 
for FY 2021.
    This rule is expected to affect small entities that participate in 
procurements subject to the domestic source restrictions at DFARS 
225.7002. However, DoD does not expect a significant change in the 
number of actions awarded to small entities resulting from the 
reduction in the threshold from the current SAT of $250,000 to 
$150,000. To assess the impact of this reduction, data was obtained 
from the Federal Procurement Data System (FPDS). According to FPDS for 
fiscal years 2018 through 2020, DoD awarded an average of approximately 
970 applicable actions valued above $150,000 but below the SAT. Of 
those actions, an average of 200 contract actions were awarded to 
approximately 72 unique small entities.
    The rule does not impose any new reporting, recordkeeping, or 
compliance requirements.
    The rule does not duplicate, overlap, or conflict with any other 
Federal rules.
    There are no practical alternatives that will accomplish the 
objectives of the statute.
    DoD invites comments from small business concerns and other 
interested parties on the expected impact of this rule on small 
entities.
    DoD will also consider comments from small entities concerning the 
existing regulations in subparts affected by 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 (DFARS Case 2021-D010), in 
correspondence.

VIII. Paperwork Reduction Act

    This rule does not contain any information collection requirements 
that require the approval of the Office of Management and Budget (OMB) 
under the Paperwork Reduction Act (44 U.S.C. chapter 35).

List of Subjects in 48 CFR Parts 225 and 252

    Government procurement.

Jennifer D. Johnson,
Editor/Publisher, Defense Acquisition Regulations System.

    Therefore, 48 CFR parts 225 and 252 are proposed to be amended as 
follows:

0
1. The authority citation for 48 CFR Parts 225 and 252 continues to 
read as follows:

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

PART 225--FOREIGN ACQUISITION


225.7002-2   [Amended]

0
2. Amend section 225.7002-2 by--
0
a. In paragraph (a), removing ``at or below the simplified acquisition 
threshold'' and adding ``not exceeding $150,000'' in its place; and
0
b. In paragraph (j)(2), removing ``simplified acquisition threshold'' 
and adding ``threshold at 225.7002-2(a)'' in its place.


225.7002-3   [Amended]

0
3. Amend section 225.7002-3, in paragraphs (b) and (c), by removing 
``simplified acquisition threshold'' and adding ``threshold at 
225.7002-2(a)'' in both places.

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
4. Amend section 252.225-7012 by--
0
a. Revising the date of the clause;
0
b. In paragraph (a), in the definition of ``Structural component of a 
tent'', redesignating paragraphs (i) and (ii) as

[[Page 53933]]

paragraphs (1) and (2), and at the end of the newly redesignated 
paragraph (1) removing the semicolon and adding ``; and'' in its place, 
and
0
c. Revising paragraph (c)(2)(ii).
    The revisions read as follows:


252.225-7012   Preference for Certain Domestic Commodities.

* * * * *

Preference for Certain Domestic Commodities (DATE)

* * * * *
    (c) * * *
    (2) * * *
    (ii) Does not exceed the threshold at 225.7002-2(a);
* * * * *
[FR Doc. 2021-20939 Filed 9-28-21; 8:45 am]
BILLING CODE 5001-06-P