[Federal Register Volume 88, Number 55 (Wednesday, March 22, 2023)]
[Proposed Rules]
[Pages 17357-17360]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-05676]



  Federal Register / Vol. 88, No. 55 / Wednesday, March 22, 2023 / 
Proposed Rules  

[[Page 17357]]


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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 212, 225, and 252

[Docket DARS-2023-0005]
RIN 0750-AK35


Defense Federal Acquisition Regulation Supplement: Export-
Controlled Items (DFARS Case 2018-D053)

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 requirement for certain 
contractors to provide export authorizations.

DATES: Comments on the proposed rule should be submitted in writing to 
the address shown below on or before May 22, 2023, to be considered in 
the formation of a final rule.

ADDRESSES: Submit comments identified by DFARS Case 2018-D053, using 
either of the following methods:
     Federal eRulemaking Portal: https://www.regulations.gov. 
Search for ``DFARS Case 2018-D053.'' Select ``Comment'' and follow the 
instructions to submit a comment. Please include ``DFARS Case 2018-
D053'' on any attached documents.
     Email: [email protected]. Include DFARS Case 2018-D053 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: Kimberly Bass, telephone 703-717-3446.

SUPPLEMENTARY INFORMATION: 

I. Background

    DoD is proposing to amend the DFARS to enable the Defense Contract 
Management Agency (DCMA) to obtain export authorizations from certain 
contractors. Specifically, when a contract requires government quality 
assurance surveillance oversight and has delivery to, or production or 
performance in, government quality assurance countries, DoD proposes to 
require the contractor to provide relevant export authorizations (i.e., 
export license exemptions, export license exceptions, export licenses, 
or other approvals) to the cognizant DCMA administrative contracting 
officer along with contact information for the empowered official or 
the export point of contact. Government quality assurance countries 
include the following countries: Australia, Belgium, Canada, Czech 
Republic, Denmark, Finland, France, Germany, Greece, Israel, Italy, 
Republic of Korea, Netherlands, Norway, Poland, Romania, Slovakia, 
Spain, Sweden, Turkey, and the United Kingdom.
    DCMA has found that a significant amount of time is required to 
determine whether or not a contractor's export license allows for 
foreign auditors to perform required quality assurance functions in 
lieu of DCMA. Currently, DCMA is not able to review the export 
authorization unless their personnel travel to the contractor's 
worksite. If DCMA is able to receive and review an export authorization 
from the contractor to determine whether or not they can delegate the 
work to foreign auditors, this problem would be resolved.

II. Discussion and Analysis

    The proposed rule updates DFARS clause 252.225-7048, Export-
Controlled Items, by adding to the clause at paragraph (e) a 
requirement for certain contractors to provide relevant export 
authorizations to the cognizant DCMA administrative contracting officer 
along with contact information for the empowered official or the export 
point of contact. A contractor will be required to submit this 
information if their contract requires--
    (1) Performance in or delivery to a government quality assurance 
country; and
    (2) Government quality assurance surveillance oversight.
    The proposed rule revises the term export-controlled items and adds 
the following terms to the list of definitions at 252.225-7048: 
Empowered official, export license exception, export license exemption, 
government quality assurance countries, other approval, and relevant 
export authorization. The purpose of adding these definitions to the 
clause is to clarify for contractors the requirement that is proposed 
to be added at 252.225-7048(e).

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

    The proposed rule applies to contracts at or below the simplified 
acquisition threshold, for commercial products including commercially 
available off-the-shelf items, and for commercial services. This 
proposed rule requires relevant export authorizations and the contact 
information of the export point of contact or the empowered official be 
provided to DCMA for DoD contracts that require government quality 
assurance surveillance oversight and have delivery to, or performance 
in, government quality assurance countries. Therefore, the proposed 
rule will apply to contracts at or below the simplified acquisition 
threshold, for commercial products including commercially available 
off-the-shelf items, and for commercial services.

IV. Expected Impact of the Proposed Rule

    Currently, DCMA is required to cite Federal Acquisition Regulation 
4.703(a) in order to obtain access to a contractor's export 
authorization, which only requires the contractor to make the 
information available to DCMA, not to submit the information directly 
to DCMA. Therefore, DCMA personnel are not able to review the 
information unless they travel to the contractor's international 
worksite to inspect the export authorization in person.
    This proposed rule would require the contractor to provide the 
information to DCMA and identify a point of contact to answer 
questions. Receiving the information directly will allow DCMA, without 
traveling internationally, to make an informed determination regarding 
whether quality assurance activities must be performed by a U.S. 
contract administrator or may be delegated to a qualified foreign 
inspector.
    Contractors would already have the export authorization. Therefore, 
the only burden associated with this proposed rule is providing a copy 
to the DCMA administrative contracting officer. DoD has calculated this 
burden in section VIII of this preamble.

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

[[Page 17358]]

(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. 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. 
However, an initial regulatory flexibility analysis has been performed 
and is summarized as follows:
    This proposed rule is required to enable DCMA to obtain export 
authorizations from certain contractors. Currently, DCMA is not able to 
review the information unless their personnel travel to the 
contractor's worksite. Until DCMA determines if export control items 
are present and the licenses are examined, DCMA is unable to exercise 
Host Nation Agreements. Requiring the export control license will allow 
DCMA to make the determination necessary to exercise Host Nation 
Agreements.
    The objective of this proposed rule is to require certain 
contractors and subcontractors to provide, upon receipt, relevant 
export authorizations (i.e., export license exemptions, export license 
exceptions, export licenses, or other approvals) to the cognizant DCMA 
administrative contracting officer along with contact information for 
the empowered official or the export point of contact. The legal basis 
for the proposed rule is 41 U.S.C. 1303.
    Based on the extrapolation from the DCMA Compass database, it is 
estimated that 723 small entities were awarded DoD contracts that 
require government quality assurance oversight surveillance and have 
delivery to, or performance in, government quality assurance countries 
from May 2018 through May 2019. It is estimated that most of these 
small entities have subcontracts with delivery to, or performance in, 
government quality assurance countries. The government quality 
assurance countries are as follows: Australia, Belgium, Canada, Czech 
Republic, Denmark, Finland, France, Germany, Greece, Israel, Italy, 
Republic of Korea, Netherlands, Norway, Poland, Romania, Slovakia, 
Spain, Sweden, Turkey, and the United Kingdom. Any additional burden 
from having to submit relevant export authorizations along with contact 
information for the empowered official or the export point of contact 
to DCMA will impact these small entities.
    There are reporting, recordkeeping, or other compliance 
requirements associated with this proposed rule. The proposed rule may 
result in a reporting or recordkeeping burden requirement.
    The proposed rule does not duplicate, overlap, or conflict with any 
other Federal rules.
    There are no known significant alternative approaches to the 
proposed rule that would meet the proposed objectives.
    DoD invites comments from small business concerns and other 
interested parties on the expected impact of this proposed rule on 
small entities.
    DoD will also consider comments from small entities concerning the 
existing regulations in subparts affected by this proposed 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 2018-D053), 
in correspondence.

VII. Paperwork Reduction Act

    This proposed rule contains 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). Accordingly, DoD 
has submitted a request for approval of a new information collection 
requirement concerning 2018-D053, Export-Controlled Items, to the 
Office of Management and Budget.

A. Estimate of Public Burden

    Public reporting burden for this collection of information is 
estimated to average 4 hours per response for: (1) the contractor to 
locate the contact information for the cognizant DCMA Office using the 
DCMA locater website; (2) the contractor to provide relevant export 
authorizations and contact information for the empowered official or 
export point of contact to DCMA; and (3) if necessary, for the 
empowered official to provide clarifications to DCMA.
    The annual reporting burden is estimated as follows for all 
contractors with awards that require government quality assurance 
surveillance oversight and have delivery to, or production or 
performance in, government quality assurance countries:
    Respondents: 3,614.
    Responses per Respondent: 1.
    Total Annual Responses: 3,614.
    Preparation Hours per Response: 4 hours.
    Total Response Burden Hours: 14,456.

B. Request for Comments Regarding Paperwork Burden

    Written comments and recommendations on the proposed information 
collection, including suggestions for reducing this burden, should be 
submitted using the Federal eRulemaking Portal at https://www.regulations.gov. Search for ``DFARS Case 2018-D053.'' Select 
``Comment'' and follow the instructions to submit a comment. Please 
include ``Paperwork Burden--DFARS Case 2018-D053'' on any attached 
documents. Comments must be submitted by the date for submission of 
public comments shown in the DATES section of this preamble.
    Public comments are particularly invited on: whether this 
collection of information is necessary for the proper performance of 
functions of the DFARS, and will have practical utility; whether our 
estimate of the public burden of this collection of information is 
accurate, and based on valid assumptions and methodology; 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 those who are to respond, through the use of appropriate 
technological collection techniques or other forms of information 
technology.
    To obtain a copy of the supporting statement and associated 
collection instruments, please email [email protected]. Include DFARS 
Case 2018-D053 in the subject line of the message.

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 proposed to be 
amended as follows:

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

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

PART 212--ACQUISITION OF COMMERCIAL PRODUCTS AND COMMERCIAL 
SERVICES

0
2. Amend section 212.301 by--
0
a. Redesignating paragraphs (f)(ix)(CC) through (MM) as (f)(ix)(DD) 
through (NN); and
0
b. Adding a new paragraph (f)(ix)(CC).
    The addition reads as follows:

[[Page 17359]]

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

* * * * *
    (f) * * *
    (ix) * * *
    (CC) Use the clause at 252.225-7048, Export-Controlled Items, as 
prescribed in 225.7901-4, to comply with section 890(a) of the National 
Defense Authorization Act for Fiscal Year 2008 (Pub. L. 110-181).
* * * * *

PART 225--FOREIGN ACQUISITION

0
3. Revise section 225.7901-1 to read as follows:


225.7901-1   Definitions.

    As used in this section--
    Export-controlled items means--
    (1) Any information or material that cannot be released to foreign 
nationals or representatives of a foreign entity, without first 
obtaining approval or license from the Department of State or the 
Department of Commerce;
    (2) Items subject to the International Traffic in Arms Regulations 
(ITAR) (22 CFR parts 120 through 130) or the Export Administration 
Regulations (EAR) (15 CFR parts 730 through 774); and
    (3) Includes--
    (i) ``Defense article'' (22 CFR 120.31), which means any item or 
technical data that is specifically designed, developed, configured, 
adapted, or modified for a military or other controlled use listed on 
the U.S. Munitions List;
    (ii) ``Defense service'' (22 CFR 120.32), which means providing 
technical data, assistance, or training to a foreign person in the 
design, manufacture, installation, repair, or operation of a defense 
article;
    (iii) ``Technical data'' (22 CFR 120.33), which means any 
information for the design, development, assembly, production, 
operation, repair, testing, maintenance, or modification of a defense 
article; and
    (iv) ``Item,'' defined in the EAR (15 CFR 772.1) as ``commodities, 
software, and technology''.


225.7901-2   [Amended]

0
4. Amend section 225.7901-2 by removing ``International Traffic in Arms 
Regulations'' and ``Export Administration Regulations'' and adding 
``ITAR'' and ``EAR'' in their places, respectively.
0
5. Revise section 225.7901-4 to read as follows:


225.7901-4   Contract clause.

    Use the clause at 252.225-7048, Export-Controlled Items, in all 
solicitations and contracts, including solicitations and contracts 
using FAR part 12 procedures for the acquisition of commercial products 
and commercial services.


225.7902-2   [Amended]

0
6. Amend section 225.7902-2 by removing ``International Traffic in Arms 
Regulation (ITAR)'' and adding ``ITAR'' in its place.

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
7. Amend section 252.225-7048-
0
a. In the clause heading, by removing the date ``(JUN 2013)'' and 
adding ``(DATE)'' in its place;
0
b. By revising paragraph (a);
0
c. In paragraphs (d)(4) and (5), by removing ``Parts'' and adding 
``parts'' in its place;
0
d. By redesignating paragraph (e) as paragraph (f);
0
e. By adding a new paragraph (e); and
0
f. By revising the newly redesignated paragraph (f).
    The revisions and addition read as follows.


252.225[dash]7048   Export-Controlled Items.

* * * * *
    (a) Definitions. As used in this clause--
    Empowered official, as defined in the International Traffic in Arms 
Regulations (ITAR) at 22 CFR 120.67, means--
    (1) A U.S. person who--
    (i) Is directly employed by the applicant or a subsidiary in a 
position having authority for policy or management within the applicant 
organization;
    (ii) Is legally empowered in writing by the applicant to sign 
license applications or other requests for approval on behalf of the 
applicant;
    (iii) Understands the provisions and requirements of the various 
export control statutes and regulations, and the criminal liability, 
civil liability, and administrative penalties for violating the Arms 
Export Control Act and the ITAR; and
    (iv) Has the independent authority to--
    (A) Inquire into any aspect of a proposed export, temporary import, 
or brokering activity by the applicant;
    (B) Verify the legality of the transaction and the accuracy of the 
information to be submitted; and
    (C) Refuse to sign any license application or other request for 
approval without prejudice or other adverse recourse.
    (2) For the purposes of a broker who is a foreign person, the 
empowered official may be a foreign person who otherwise meets the 
criteria for an empowered official in paragraph (1) of this definition.
    Export-controlled items means--
    (1) Any information or material that cannot be released to foreign 
nationals or representatives of a foreign entity, without first 
obtaining approval or license from the Department of State or the 
Department of Commerce;
    (2) Items subject to the ITAR (22 CFR parts 120 through 130) or the 
Export Administration Regulations (EAR) (15 CFR parts 730 through 774); 
and
    (3) Includes--
    (i) ``Defense article'' (22 CFR 120.31), which means any item or 
technical data that is specifically designed, developed, configured, 
adapted, or modified for a military or other controlled use listed on 
the U.S. Munitions List;
    (ii) ``Defense service'' (22 CFR 120.32), which means providing 
technical data, assistance, or training to a foreign person in the 
design, manufacture, installation, repair, or operation of a defense 
article;
    (iii) ``Technical data'' (22 CFR 120.33), which means any 
information for the design, development, assembly, production, 
operation, repair, testing, maintenance, or modification of a defense 
article; and
    (iv) ``Item,'' defined in the EAR (15 CFR 772.1) as ``commodities, 
software, and technology''.
    Export license exception means a special authorization that allows 
export or re-export, under stated conditions, of items that are subject 
to the EAR that would otherwise require an export license. Export 
license exceptions are detailed in the EAR, 15 CFR 740.
    Export license exemption means the authorization that exempts the 
item or items from the otherwise applicable licensing requirements 
under certain conditions. Export license exemptions are detailed in the 
ITAR, 22 CFR parts 120 through 130.
    Government quality assurance countries means countries that have 
current Government Reciprocal Quality Assurance agreements with the 
Department of Defense or Reciprocal Government Quality Assurance 
annexes contained in a Reciprocal Defense Procurement Memorandum of 
Understanding. Accordingly, the following are government quality 
assurance countries: Australia, Belgium, Canada, Czech Republic, 
Denmark, Finland, France, Germany, Greece, Israel, Italy, Republic of 
Korea, Netherlands, Norway, Poland, Romania, Slovakia, Spain, Sweden, 
Turkey, and the United Kingdom.

[[Page 17360]]

    ``Other approval'' as defined in the ITAR at 22 CFR 120.57, means a 
document issued by the Deputy Assistant Secretary of State for Defense 
Trade Controls, or authorized designee, that approves an activity 
regulated by the ITAR (e.g., approvals for brokering activities or 
retransfer authorizations), or the use of an exemption to the license 
requirements as described in the ITAR.
    Relevant export authorization means an export license exemption, 
export license exception, export license, or other approval.
* * * * *
    (e)(1) If the contract requires government quality assurance 
surveillance oversight and has delivery to, or production or 
performance in, government quality assurance countries, the Contractor 
shall, upon receipt of relevant export authorizations, provide to the 
Defense Contract Management Agency (DCMA) Administrative Contracting 
Officer--
    (i) A copy of the relevant export authorizations; and
    (ii) Contact information for the empowered official or the export 
point of contact.
    (2) The DCMA administrative contracting officer locater can be 
found at https://pubmini.dcma.mil/CMT_View/CMT_View_Search.cfm.
    (f) Subcontracts. The Contractor shall include the substance of 
this clause, including this paragraph (f), in all subcontracts.
* * * * *
[FR Doc. 2023-05676 Filed 3-21-23; 8:45 am]
BILLING CODE 50010-06-P