[Federal Register Volume 88, Number 55 (Wednesday, March 22, 2023)]
[Proposed Rules]
[Pages 17360-17362]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-05677]


-----------------------------------------------------------------------

DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Part 225

[Docket DARS-2023-0006]
RIN 0750-AL39


Defense Federal Acquisition Regulation Supplement: Restrictions 
on Overhaul and Repair of Naval Vessels in Foreign Shipyards (DFARS 
Case 2021-D021)

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

ACTION: Proposed rule.

-----------------------------------------------------------------------

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 that restricts overhaul 
and repair of a naval vessel in a shipyard outside the United States or 
Guam.

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 2021-D021, using 
any of the following methods:
    [cir] Federal eRulemaking Portal: https://www.regulations.gov. 
Search for ``DFARS Case 2021-D021.'' Select ``Comment'' and follow the 
instructions to submit a comment. Please include ``DFARS Case 2021-
D021'' on any attached documents.
    [cir] Email: [email protected]. Include DFARS Case 2021-D021 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 revise the DFARS to implement section 1025 of 
the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2021 
(Pub. L. 116-283). Section 1025 amends 10 U.S.C. 8680(a) to restrict 
the overhaul or repair of a naval vessel in a shipyard outside the 
United States or Guam. The restriction does not apply to voyage repairs 
or to repairs required for damage sustained due to hostile actions or 
interventions. In addition, the restriction does not apply to a naval 
vessel classified as a littoral combat ship operating on deployment for 
corrective and preventive maintenance or repair and facilities 
maintenance.
    The proposed rule also establishes the criteria under which foreign 
workers or foreign contractors may be used to perform corrective and 
preventive maintenance or repair or facilities maintenance on a naval 
vessel.

II. Discussion and Analysis

A. Overhaul and Repair Restrictions

    The proposed revisions to the DFARS implement the 10 U.S.C. 8680(a) 
restrictions and identify the exceptions for the repair of damage 
sustained as a result of hostile actions or interventions and for 
corrective and preventive maintenance and facilities maintenance on a 
littoral combat ship operating on deployment. DFARS 225.7013 is revised 
to add definitions at 225.7013-1 and expand restrictions at 225.7013-2.

B. Definitions

    DFARS 225.7013-1, Definitions, is added to define the terms 
``corrective and preventive maintenance or repair'' and ``facilities 
maintenance'' as defined in 10 U.S.C. 8680.

C. Restrictions and Exceptions

    DFARS 225.7013-2(a) restates the restriction previously located at 
DFARS 225.7013(a) to not award a contract to construct a vessel or 
major component of a vessel in a foreign shipyard. DFARS 225.7013-2(b) 
provides the restriction to not overhaul, repair, or maintain in a 
shipyard outside the United States or Guam, except the restriction does 
not apply to: (1) voyage repairs or repairs necessary to correct damage 
sustained due to hostile actions or interventions; and (2) corrective 
and preventive maintenance or repair or facilities maintenance on a 
naval vessel classified as a littoral combat ship operating on 
deployment.

D. Foreign Workers and Contractors

    DFARS 225.7013-2(b) also specifies the circumstances in which 
foreign workers and contractors may be used to maintain or repair 
littoral combat ships operating on deployment. Foreign workers may be 
used only if the Secretary of the Navy, without further delegation, 
determines that travel by U.S. Government or contractor personnel is 
not advisable for health or safety reasons. Foreign contractors may be 
used to perform facilities maintenance only as approved by the 
Secretary of Navy.

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

    This proposed rule does not create any new solicitation provisions 
or contract clauses. It does not impact any existing solicitation 
provisions or contract clauses or prescriptions for their use.

IV. Expected Impact of the Proposed Rule

    Currently, DFARS 225.7013 includes the restrictions on the 
construction or repair of vessels in foreign shipyards. This proposed 
rule adds the exception for repairs necessary to correct damage

[[Page 17361]]

sustained due to hostile actions or interventions and for corrective 
and preventive maintenance or repair and facilities maintenance on 
naval vessels classified as littoral combat ships operating on 
deployment. Under these exceptions, the repairs or maintenance 
described above may be performed in a shipyard outside the United 
States or Guam in accordance with 10 U.S.C. 8680(a). The proposed rule 
also specifies the authorized use of foreign workers under certain 
conditions when a determination is made by the Secretary of the Navy, 
who cannot further delegate the authority to make such a determination.

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. 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 rule only includes the restrictions on the construction or 
repair of vessels in shipyards outside the United States or Guam. 
However, an initial regulatory flexibility analysis has been performed 
and is summarized as follows:
    DoD proposes to amend the DFARS to implement section 1025 of the 
National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2021 
(Pub. L. 116-283) that amends 10 U.S.C. 8680(a). Section 1025 restricts 
the overhaul or repair of a naval vessel in a shipyard outside the 
United States or Guam, unless the repairs are: (1) voyage repairs or 
repairs necessary to correct damage sustained due to hostile actions or 
interventions; or (2) to a naval vessel classified as a littoral combat 
ship operating on deployment for corrective and preventive maintenance 
or repair and facilities maintenance. The proposed rule also 
establishes that: (1) foreign workers may not be used to perform 
corrective and preventive maintenance or repair on a naval vessel, 
unless the Secretary of the Navy (without further delegation) makes a 
determination; and (2) foreign contractors may not be used to perform 
facilities maintenance unless approved by the Secretary of the Navy.
    The objective of the proposed rule is to implement the restrictions 
of section 1025. The legal basis for the proposed rule is section 1025 
of the NDAA for FY 2021.
    DoD reviewed data from the Federal Procurement Data System (FPDS) 
for fiscal years 2019, 2020, and 2021 for contracts for the repair or 
overhaul of naval vessels outside the United States or Guam that 
exceeded the simplified acquisition threshold. DoD awarded a total of 
379 contracts to an average of 222 unique small entities.
    It is expected that this proposed rule will continue to provide 
small businesses the opportunity to participate in acquisitions for the 
overhaul or repair of a naval vessel in a shipyard outside the United 
States or Guam, since naval vessel overhaul restrictions currently 
exist and this rule provides exceptions that allow for U.S. contractor 
personnel to perform certain repairs and maintenance in accordance with 
10 U.S.C. 8680.
    This proposed rule does not include any new reporting, 
recordkeeping, or other compliance requirements for small entities.
    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 requirements of the statute.
    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 2021-
D021), in correspondence.

VII. Paperwork Reduction Act

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

List of Subjects in 48 CFR Part 225

    Government procurement.

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

    Therefore, 48 CFR part 225 is proposed to be amended as follows:

PART 225--FOREIGN ACQUISITION

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

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

0
2. Revise section 225.7013 to read as follows:


225.7013  Restrictions on construction or repair of vessels in foreign 
shipyards.

0
3. Add sections 225.7013-0, 225.7013-1, and 225.7013-2 to read as 
follows:


225.7013-0  Scope.

    This section implements 10 U.S.C. 8679 and 10 U.S.C. 8680.


225.7013-1  Definitions.

    As used in this section--
    Corrective and preventive maintenance or repair means--
    (1) Maintenance or repair actions performed as a result of a 
failure in order to return or restore equipment to acceptable 
performance levels; and
    (2) Scheduled maintenance or repair actions to prevent or discover 
functional failures.
    Facilities maintenance means the effort required to--
    (1) Provide housekeeping services throughout the ship;
    (2) Perform coating maintenance and repair to exterior and interior 
surfaces due to normal environmental conditions; and
    (3) Clean mechanical spaces, mission zones, and topside spaces.


225.7013-2  Restrictions.

    (a) Contract award (10 U.S.C. 8679). Do not award a contract to 
construct in a foreign shipyard--
    (1) A vessel for any of the armed forces; or
    (2) A major component of the hull or superstructure of a vessel for 
any of the armed forces.
    (b) Overhaul, repair, or maintenance (10 U.S.C. 8680). (1) Do not 
overhaul, repair, or maintain, in a shipyard outside the United States 
or Guam, a naval vessel (or any other vessel under the jurisdiction of 
the Secretary of the Navy) homeported in the United States or Guam.
    (2) This restriction on overhaul, repair, or maintenance does not 
apply to--

[[Page 17362]]

    (i) Voyage repairs;
    (ii) Repairs necessary to correct damage sustained due to hostile 
actions or interventions.
    (3) For a naval vessel classified as a littoral combat ship and 
operating on deployment--
    (i) Corrective and preventive maintenance or repair, whether 
intermediate or depot level, and facilities maintenance may be 
performed if the work is performed by U.S. Government personnel or U.S. 
contractor personnel--
    (A) In a foreign shipyard;
    (B) At a facility outside of a foreign shipyard; or
    (C) At any other facility convenient to the vessel.
    (ii) Foreign workers may be used to perform corrective and 
preventive maintenance or repair, only if the Secretary of the Navy, 
without power of delegation, determines that travel by U.S. Government 
or contractor personnel to perform the maintenance or repair is not 
advisable for health or safety reasons.
    (iii) Foreign contractors may perform facilities maintenance only 
as approved by the Secretary of Navy.

[FR Doc. 2023-05677 Filed 3-21-23; 8:45 am]
BILLING CODE 5001-066-P