[Federal Register Volume 88, Number 20 (Tuesday, January 31, 2023)]
[Rules and Regulations]
[Pages 6600-6604]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-01295]


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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 212, 225, and 252

[Docket DARS-2023-0003]
RIN 0750-AL60


Defense Federal Acquisition Regulation Supplement: Restriction on 
Acquisition of Personal Protective Equipment and Certain Items From 
Non-Allied Foreign Nations (DFARS Case 2022-D009)

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

ACTION: Interim rule.

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SUMMARY: DoD is issuing an interim rule amending the Defense Federal 
Acquisition Regulation Supplement (DFARS) to implement a section of the 
National Defense Authorization Act for Fiscal Year 2022 that restricts 
the acquisition of personal protective equipment and certain other 
items from the Democratic People's Republic of North Korea, the 
People's Republic of China, the Russian Federation, and the Islamic 
Republic of Iran.

DATES: Effective January 31, 2023.
    Comments on the interim rule should be submitted in writing to the 
address shown below on or before April 3, 2023, to be considered in the 
formation of a final rule.

ADDRESSES: Submit comments identified by DFARS Case 2022-D009, using 
any of the following methods:
    [cir] Federal eRulemaking Portal: https://www.regulations.gov. 
Search for ``DFARS Case 2022-D009.'' Select ``Comment'' and follow the 
instructions to submit a comment. Please include your name, company 
name (if any), and ``DFARS Case 2022-D009'' on any attached documents.
    [cir] Email: [email protected]. Include DFARS Case 2022-D009 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 Bass, telephone 703-717-
3446.

SUPPLEMENTARY INFORMATION: 

I. Background

    This interim rule revises the DFARS to implement section 802 of the 
National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2022 
(Pub. L. 117-81) (10 U.S.C. 2533e) and section 881 of the NDAA for FY 
2023 (Pub. L. 117-263). Section 802 adds the restriction to 10 U.S.C. 
2533e (transferred to 10 U.S.C. 4875) that limits the acquisition of 
``covered items'' (personal protective equipment and certain other 
items) from any of the following ``covered countries'': the Democratic 
People's Republic of North Korea, the People's Republic of China, the 
Russian Federation, and the Islamic Republic of Iran, subject to 
exceptions. ``Covered item'' is defined as an article or item of--

[[Page 6601]]

    (1) Personal protective equipment for use in preventing spread of 
disease, such as by exposure to infected individuals or contamination 
or infection by infectious material including--
     Nitrile and vinyl gloves;
     Surgical masks;
     Respirator masks and powered air purifying respirators and 
required filters;
     Face shields and protective eyewear;
     Surgical and isolation gowns and head and foot coverings; 
or
     Clothing; and
     The materials and components thereof, other than sensors, 
electronics, or other items added to and not normally associated with, 
such personal protective equipment or clothing; or
    (2) Sanitizing and disinfecting wipes, testing swabs, gauze, and 
bandages.
    Section 802 amends section 1870(d) of the NDAA for FY 2021 (Pub. L. 
116-283) by providing for the future transfer of 10 U.S.C. 2533e to 10 
U.S.C. 4875. However, the chapter that would have included 10 U.S.C. 
2533e had already been repealed as part of the reorganization of the 
defense acquisition statutes (Title XVIII of the NDAA for FY 2021). As 
a result, section 2533e could not be added to title 10 of the U.S. 
Code. Section 881 of the NDAA for FY 2023 adjusts the effective date of 
section 802(b) of the NDAA for FY 2022 to allow for the addition of 
section 2533e to title 10 and the subsequent transfer to 10 U.S.C. 
4875.

II. Discussion and Analysis

A. Definitions

    The interim rule adds a definition at DFARS 225.7023-1, 
Definitions, for ``covered item'' and adds the definition of ``covered 
country'' at 225.7001, Definitions. The restriction limits the 
acquisition of a covered item from a covered country, subject to 
exceptions.
    The definition of ``covered country'' applies to this rule and 
continues to apply to the restriction at DFARS 225.7018 on the 
acquisition of certain magnets, tantalum, and tungsten. Accordingly, 
the definition of ``covered country'' is moved from DFARS section 
225.7018-1 to 225.7001 to apply at the subpart level.

B. Restriction

    The restriction on the acquisition of a covered item from a covered 
country is added at DFARS 225.7023-2 in accordance with the 
requirements of section 802 of the NDAA for FY 2022.

C. Exceptions

    The exceptions to the restriction at DFARS 225.7023-2 are added at 
DFARS 225.7023-3. The restriction does not apply to an acquisition for: 
(1) a covered item for use outside of the United States; (2) 
acquisitions at or below $150,000; or (3) if the head of the 
contracting activity determines that a covered item of satisfactory 
quality and quantity, in the required form, cannot be procured as and 
when needed from nations other than a covered country to meet 
requirements at a reasonable price.

D. Contract Clause

    A new clause is added at DFARS 252.225-7061, Restriction on the 
Acquisition of Personal Protective Equipment and Certain Other Items 
from Non-Allied Foreign Nations, for use in solicitations and 
contracts, including solicitations and contracts using Federal 
Acquisition Regulation (FAR) part 12 procedures for the acquisition of 
commercial items, with an estimated value above $150,000 that are for 
the acquisition of covered items and are for use within the United 
States.
    This rule also adds the new clause 252.225-7061, Restriction on the 
Acquisition of Personal Protective Equipment and Certain Other Items 
from Non-Allied Foreign Nations, to the list of solicitation provisions 
and contract clauses for the acquisition of commercial items at DFARS 
212.301(f).

III. Applicability to Contracts at or Below the Simplified Acquisition 
Threshold (SAT) and for Commercial Products, Including Commercially 
Available Off-the-Shelf (COTS) Items, and Commercial Services

    This rule creates a new contract clause at 252.225-7061, 
Restriction on the Acquisition of Personal Protective Equipment and 
Certain Other Items from Non-Allied Foreign Nations. The clause at 
DFARS 252.225-7061 is prescribed at DFARS 225.7023-4 for use in 
solicitations and contracts, including solicitations and contracts 
using FAR part 12 procedures for the acquisition of commercial items, 
with an estimated value above $150,000 that are for the acquisition of 
covered items for use within the United States. DoD is applying the 
rule to contracts valued above $150,000 but at or below the SAT. DoD is 
applying the rule to contracts 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 has made that determination. Therefore, this rule 
applies to contracts valued above $150,000 but at or below the SAT.

B. Applicability to Contracts for the Acquisition of Commercial 
Products, Including COTS Items, and Commercial Services

    10 U.S.C. 3452 exempts contracts and subcontracts for the 
acquisition of commercial products, including COTS items, and 
commercial services from provisions of law enacted after October 13, 
1994, unless the Under Secretary of Defense (Acquisition and 
Sustainment) (USD(A&S)) makes a written determination that it would not 
be in the best interest of DoD to exempt contracts for the procurement 
of commercial products and commercial services from the applicability 
of the provision or contract requirement, except for a provision of law 
that--
     Provides for criminal or civil penalties;
     Requires that certain articles be bought from American 
sources pursuant to 10 U.S.C. 4862, or that strategic materials 
critical to national security be bought from American sources pursuant 
to 10 U.S.C. 4863; or
     Specifically refers to 10 U.S.C. 3452 and states that it 
shall apply to contracts and subcontracts for the acquisition of 
commercial products (including COTS items) and commercial services.
    The statute implemented in this rule does not impose criminal or 
civil penalties, does not require purchase pursuant to 10 U.S.C. 4862 
or 4863, and does not refer to 10 U.S.C. 3452. Therefore, section 802 
of the NDAA for FY 2022 will not apply to the acquisition of commercial 
services or commercial products including COTS items unless a written 
determination is made. Due to delegations of authority, the Principal 
Director, DPC is the appropriate authority to make this determination. 
DoD has made that determination. Therefore, this rule

[[Page 6602]]

applies to the acquisition of commercial products, including COTS 
items.

C. Determination

    Although section 802 of the NDAA for FY 2022 does not refer to 10 
U.S.C. 3452 and state that it shall apply to contracts and subcontracts 
for the acquisition of commercial products (including COTS items) and 
commercial services, it is the clear intent of the statute to cover 
commercial products and commercial services other than those 
specifically excepted. Personal protective equipment is mainly 
commercial. Therefore, section 802 should apply to contracts for the 
acquisition of commercial products including COTS items and commercial 
services for acquisitions above $150,000.
    Decreasing DoD's dependence on personal protective equipment and 
other items identified in section 802 that originate in the covered 
countries is a matter of public health and national security. As a 
matter of national security, the domestic supply chain for personal 
protective equipment and certain other items identified in section 802 
is critical, and adequate continued supply of personal protective 
equipment and certain other items is vital to ensure domestic control 
with minimal disruption in production. Eradicating counterfeit items 
within the domestic supply chain is required to accommodate the demand 
for both DoD military use and nonmilitary Government requirements that 
DoD supports.
    A shortage of supply of personal protective equipment and certain 
other items would put at risk public health and the safety and well-
being of the general public and would hinder DoD's mission readiness. 
Restricting acquisition from the covered countries will promote growth 
in domestic capability and reduce dependence on foreign sources that 
are not our allies. An exception for contracts for the acquisition of 
commercial products, including COTS items, would exclude the contracts 
intended to be covered by the law, thereby undermining the overarching 
public policy purpose of the law.

IV. Executive Orders 12866 and 13563

    Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess 
all costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). E.O. 
13563 emphasizes the importance of quantifying both costs and benefits, 
of reducing costs, of harmonizing rules, and of promoting flexibility. 
This is 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.

V. 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 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. The Office of 
Information and Regulatory Affairs has determined that this rule is not 
a major rule as defined by 5 U.S.C. 804.

VI. Regulatory Flexibility Act

    DoD does not expect this interim rule to have a significant 
economic impact on a substantial number of small entities within the 
meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq. 
However, there may be minor compliance costs to validate the origin of 
covered items, materials, and components. An initial regulatory 
flexibility analysis has been performed and is summarized as follows:
    This rule is required to implement section 802 of the National 
Defense Authorization Act (NDAA) for Fiscal Year (FY) 2022 (Pub. L. 
117-81) (10 U.S.C. 2533e, transferred to 10 U.S.C. 4875).
    The objective of the rule is to implement the restriction provided 
by section 802 on the acquisition of a covered item, defined as an 
article or item of personal protective equipment for use in preventing 
the spread of disease, such as by exposure to infected individuals or 
contamination or infection by infectious material, or other items for 
sanitizing and disinfecting, testing, gauze, and bandages, from the 
Democratic People's Republic of North Korea, the People's Republic of 
China, the Russian Federation, or the Islamic Republic of Iran.
    Based on data from the Federal Procurement Data System for FY 2019, 
2020, and 2021, DoD awarded an average of 1,677 contracts in the United 
States that equaled or exceeded $150,000 in value and were for the 
acquisition of medical, dental, veterinary equipment and supplies 
(excluding covered items for use outside the United States). These 
contracts were awarded to 192 unique entities, of which 105 were small 
entities. It is not known what percentage of these awards might involve 
personal protective equipment and other materials and components from 
the Democratic People's Republic of North Korea, the People's Republic 
of China, the Russian Federation, or the Islamic Republic of Iran.
    There are no projected reporting or recordkeeping requirements. 
However, there may be minor compliance costs to validate with suppliers 
the origin of covered items, materials, and components.
    The rule does not duplicate, overlap, or conflict with any other 
Federal rules.
    In accordance with section 802, DoD is excepting acquisitions--
     Equal to or less than $150,000;
     For covered items for use outside the United States; and
     If a covered item of satisfactory quality and quantity is 
not available in the required form from nations other than the 
Democratic People's Republic of North Korea, the People's Republic of 
China, the Russian Federation, or the Islamic Republic of Iran.
    DoD was unable to identify any other alternatives that would reduce 
burden on small businesses and still meet the objectives of the 
statute.
    DoD invites comments from small business concerns and other 
interested parties on the expected impact of this rule on small 
entities.
    DoD will also consider comments from small entities concerning the 
existing regulations in subparts affected by this rule in accordance 
with 5 U.S.C. 610. Interested parties must submit such comments 
separately and should cite 5 U.S.C. 610 (DFARS Case 2022-D009), in 
correspondence.

VII. Paperwork Reduction Act

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

VIII. Determination To Issue an Interim Rule

    A determination has been made under the authority of the Secretary 
of Defense that urgent and compelling reasons exist to promulgate this 
interim rule without prior opportunity for public comment. This action 
is necessary because section 802 adds the restriction in 10 U.S.C. 
2533e (transferred to 10 U.S.C. 4875), with certain exceptions, that 
DoD may not acquire covered items of personal protective equipment 
(PPE) and certain

[[Page 6603]]

other items from any of the following covered countries: the Democratic 
People's Republic of North Korea; the People's Republic of China; the 
Russian Federation; and the Islamic Republic of Iran.
    Implementation of this restriction is urgent, because the law was 
effective upon enactment. Decreasing DoD's dependence on PPE and other 
items as identified in section 802 that originate in the covered 
countries is a matter of public health and national security. PPE is 
mainly commercial. It is a matter of national security to reduce U.S. 
dependence on the covered countries, because the domestic supply chain 
for PPE and certain other items is critical, and adequate continued 
supply of PPE and certain other items is vital to ensure domestic 
control with minimal disruption in production. Eradication of 
counterfeit items within the domestic supply chain is required to 
accommodate the demand for both DoD military use and nonmilitary 
Government requirements that DoD supports and to ensure DoD's mission 
readiness.
    A shortage of supply of PPE and certain other items would put at 
risk public health and the safety and well-being of the general public 
and would hinder DoD's mission readiness. Restricting acquisition of 
these items from covered countries will promote growth in domestic 
capability and reduce dependence on foreign sources that are not our 
allies.
    However, pursuant to 41 U.S.C. 1707 and FAR 1.501-3(b), DoD will 
consider public comments received in response to this interim rule in 
the formation of the final rule.

List of Subjects in 48 CFR Parts 212, 225, and 252

    Government procurement.

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

    Therefore, 48 CFR parts 212, 225, and 252 are amended as follows:

0
1. The authority citation for 48 CFR parts 212, 225, and 252 continues 
to read as follows:

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

PART 212--ACQUISITION OF COMMERCIAL PRODUCTS AND COMMERCIAL 
SERVICES

0
2. Amend section 212.301 by adding paragraph (f)(x)(MM) to read as 
follows:


212.301  Solicitation provisions and contract clauses for the 
acquisition of commercial products and commercial services.

* * * * *
    (f) * * *
    (x) * * *
    (MM) Use the clause at 252.225-7061, Restriction on the Acquisition 
of Personal Protective Equipment and Certain Other Items from Non-
Allied Foreign Nations, as prescribed in 225.7023-4, to comply with 
section 802 of the National Defense Authorization Act for Fiscal Year 
2022 (Pub. L. 117-81) (10 U.S.C. 4875).
* * * * *

PART 225--FOREIGN ACQUISITION

0
3. Amend section 225.7001 by adding a definition of ``Covered 
country'', in alphabetical order, to read as follows:


225.7001   Definitions.

* * * * *
    Covered country means--
    (1) The Democratic People's Republic of North Korea;
    (2) The People's Republic of China;
    (3) The Russian Federation; and
    (4) The Islamic Republic of Iran (10 U.S.C. 4872 and 4875).
* * * * *


225.7018-1   [Amended]

0
4. Amend section 225.7018-1 by removing the definition of ``Covered 
country''.

0
5. Add sections 225.7023, 225.7023-1, 225.7023-2, 225.7023-3, and 
225.7023-4 to read as follows:
* * * * *
Sec.
225.7023 Restriction on acquisition of personal protective equipment 
and certain other items from non-allied foreign nations.
225.7023-1 Definitions.
225.7023-2 Restriction.
225.7023-3 Exceptions.
225.7023-4 Contract clause.
* * * * *


225.7023   Restriction on acquisition of personal protective equipment 
and certain other items from non-allied foreign nations.


225.7023-1  Definitions.

    As used in this section--
    Covered item means an article or item of--
    (1) Personal protective equipment for use in preventing spread of 
disease, such as by exposure to infected individuals or contamination 
or infection by infectious material, including--
    (i) Nitrile and vinyl gloves;
    (ii) Surgical masks;
    (iii) Respirator masks and powered air purifying respirators and 
required filters;
    (iv) Face shields and protective eyewear;
    (v) Surgical and isolation gowns and head and foot coverings; or
    (vi) Clothing; and
    (vii) The materials and components thereof, other than sensors, 
electronics, or other items added to and not normally associated with 
such personal protective equipment or clothing; or
    (2) Sanitizing and disinfecting wipes, testing swabs, gauze, and 
bandages.


225.7023-2   Restriction.

    Except as provided in 225.7023-3, do not acquire a covered item 
from a covered country in accordance with section 802 of the National 
Defense Authorization Act for Fiscal Year 2022 (Pub. L. 117-81) (10 
U.S.C. 4875).


225.7023-3   Exceptions.

    The restriction in section 225.7023-2 does not apply to 
acquisitions--
    (a) Of covered items for use outside of the United States;
    (b) At or below $150,000; or
    (c)(1) If the head of the contracting activity determines that a 
covered item of satisfactory quality and quantity, in the required 
form, cannot be procured as and when needed from nations other than a 
covered country to meet requirements at a reasonable price.
    (2) The contracting officer shall include a copy of any such 
determination in the contract file.


225.7023-4   Contract clause.

    Unless an exception applies, use the clause at 252.225-7061, 
Restriction on the Acquisition of Personal Protective Equipment and 
Certain Other Items from Non-Allied Foreign Nations, in solicitations 
and contracts, including solicitations and contracts using FAR part 12 
procedures for the acquisition of commercial products, including COTS 
items, and commercial services, and that--
    (a) Are for the acquisition of covered items;
    (b) Are for use within the United States; and
    (c) Have an estimated value greater than $150,000.

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
6. Add section 252.225-7061 to read as follows:

[[Page 6604]]

252.225-7061   Restriction on the Acquisition of Personal Protective 
Equipment and Certain Other Items from Non-Allied Foreign Nations.

    As prescribed in 225.7023-4, use the following clause:

Restriction on the Acquisition of Personal Protective Equipment and 
Certain Other Items From Non-Allied Foreign Nations (Jan 2023)

    (a) Definitions. As used in this clause--
    Covered country means--
    (1) The Democratic People's Republic of North Korea;
    (2) The People's Republic of China;
    (3) The Russian Federation; and
    (4) The Islamic Republic of Iran.
    Covered item means an article or item of--
    (1) Personal protective equipment for use in preventing spread 
of disease, such as by exposure to infected individuals or 
contamination or infection by infectious material, including--
    (i) Nitrile and vinyl gloves;
    (ii) Surgical masks;
    (iii) Respirator masks and powered air purifying respirators and 
required filters;
    (iv) Face shields and protective eyewear;
    (v) Surgical and isolation gowns and head and foot coverings; or
    (vi) Clothing; and
    (vii) The materials and components thereof, other than sensors, 
electronics, or other items added to and not normally associated 
with such personal protective equipment or clothing; or
    (2) Sanitizing and disinfecting wipes, testing swabs, gauze, and 
bandages.
    (b) Restriction. The Contractor shall not deliver under this 
contract a covered item from a covered country (10 U.S.C. 4875).
    (c) Subcontracts. The Contractor shall insert this clause, 
including this paragraph (c), without alteration other than to 
identify the appropriate parties, in subcontracts valued above 
$150,000 that are for the acquisition of covered items, including 
subcontracts for commercial products, including commercially 
available off-the-shelf items, and commercial services.

    (End of clause)

[FR Doc. 2023-01295 Filed 1-30-23; 8:45 am]
BILLING CODE 5001-06-P