Notice of Issuance of Final Determination Concerning Docave Computer Software, 75362-75364 [2013-29586]
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75362
Federal Register / Vol. 78, No. 238 / Wednesday, December 11, 2013 / Notices
emcdonald on DSK67QTVN1PROD with NOTICES
which conveyed the essential character of the
phones took place, that was the place where
the last substantial transformation occurred.
Moreover, subsequent assembly operations in
Singapore did not substantially transform the
programmed boards into a new and different
article. In scenarios III through V, the boards
were assembled in Malaysia or Malaysia and
Singapore. Handset programming took place
wholly, or in part, in Singapore, where the
phones were also assembled to completion.
For those scenarios, CBP found that the
country of origin of the phones was
Singapore.
We note that none of the rulings cited in
Arista’s submission (some discussed above)
are instructive because they do not address
situations in which assembly is performed in
one country and software is developed in a
second country and downloaded in a third
country. The rulings refer to situations in
which assembly and software downloading
are performed in one country using programs
developed in the same or another country, or
to situations in which assembly is performed
in one country and downloading is
performed in another country using programs
developed in the same country in which the
software is downloaded onto the article.
In this case, the switches are assembled to
completion in Malaysia and then shipped to
Singapore, where EOS software developed in
the United States at significant cost to Arista
and over many years is downloaded onto
them. It is claimed that the U.S.-origin EOS
software enables the imported switches to
interact with other network switches through
network switching and routing, and allows
for the management of functions such as
network performance monitoring and
security and access control; without this
software, the imported devices could not
function as Ethernet switches.
We find that the software downloading
performed in Singapore does not amount to
programming. Programming involves writing,
testing and implementing code necessary to
make a computer function in a certain way.
See Data General supra. See also ‘‘computer
program’’, Encyclop#dia Britannica (2013),
(9/19/2013) https://www.britannica.com/
EBchecked/topic/130654/computer-program,
which explains, in part, that ‘‘a program is
prepared by first formulating a task and then
expressing it in an appropriate computer
language, presumably one suited to the
application.’’
While the programming occurs in the U.S.,
the downloading occurs in Singapore. Given
these facts, we find that the country where
the last substantial transformation occurs is
Malaysia, that is, where the major assembly
processes are performed. The country of
origin for purposes of U.S. Government
procurement is Malaysia.
HOLDING:
Based on the facts provided, the last
substantial transformation occurs in
Malaysia. As such, the switches will be
considered products of Malaysia for purposes
of U.S. Government procurement.
Notice of this final determination will be
given in the Federal Register, as required by
19 CFR § 177.29. Any party-at-interest other
than the party which requested this final
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determination may request, pursuant to 19
CFR § 177.31, that CBP reexamine the matter
anew and issue a new final determination.
Pursuant to 19 CFR § 177.30, any party-atinterest may, within 30 days of publication
of the Federal Register Notice referenced
above, seek judicial review of this final
determination before the Court of
International Trade.
Sincerely,
Sandra L. Bell,
Executive Director, Regulations and Rulings,
Office of International Trade.
[FR Doc. 2013–29470 Filed 12–10–13; 8:45 am]
BILLING CODE 9111–14–P
DEPARTMENT OF HOMELAND
SECURITY
U.S. Customs and Border Protection
Notice of Issuance of Final
Determination Concerning Docave
Computer Software
U.S. Customs and Border
Protection, Department of Homeland
Security.
ACTION: Notice of final determination.
AGENCY:
This document provides
notice that U.S. Customs and Border
Protection (‘‘CBP’’) has issued a final
determination concerning the country of
origin of certain computer software
known as DocAve Software. Based upon
the facts presented, CBP has concluded
that the software build operations
performed in the United States
substantially transform software
modules developed in China. Therefore,
the country of origin of DocAve
Software is the United States for
purposes of U.S. Government
procurement.
DATES: The final determination was
issued on December 4, 2013. A copy of
the final determination is attached. Any
party-at-interest, as defined in 19 CFR
177.22(d), may seek judicial review of
this final determination on or before
January 10, 2014.
FOR FURTHER INFORMATION CONTACT:
Heather K. Pinnock, Valuation and
Special Programs Branch: (202) 325–
0034.
SUPPLEMENTARY INFORMATION: Notice is
hereby given that on December 4, 2013,
pursuant to subpart B of Part 177, U.S.
Customs and Border Protection
Regulations (19 CFR Part 177, subpart
B), CBP issued a final determination
concerning the country of origin of
certain computer software known as
DocAve Software, which may be offered
to the U.S. Government under an
undesignated government procurement
contract. This final determination, HQ
SUMMARY:
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H243606, was issued under procedures
set forth at 19 CFR Part 177, subpart B,
which implements Title III of the Trade
Agreements Act of 1979, as amended
(19 U.S.C. 2511–18). In the final
determination, CBP concluded that,
based upon the facts presented, the
software build operations performed in
the United States substantially
transform non-TAA country software
modules developed in China. Therefore,
the country of origin of DocAve
Software is the United States for
purposes of U.S. Government
procurement.
Section 177.29, CBP Regulations (19
CFR 177.29), provides that a notice of
final determination shall be published
in the Federal Register within 60 days
of the date the final determination is
issued. Section 177.30, CBP Regulations
(19 CFR 177.30), provides that any
party-at-interest, as defined in 19 CFR
177.22(d), may seek judicial review of a
final determination within 30 days of
publication of such determination in the
Federal Register.
Dated: December 4, 2013.
Sandra L. Bell,
Executive Director, Regulations and Rulings,
Office of International Trade.
Attachment
HQ H243606
December 4, 2013
Larry Hampel, Esq.
Albert B. Krachman, Esq.
Blank Rome, LLP
Watergate
600 New Hampshire Avenue, NW
Washington, DC 20037
RE: Trade Agreements Act; Substantial
Transformation; Country of Origin
of Software
Dear Mr. Hampel and Mr. Krachman:
This is in response to your letter
dated June 24, 2013, requesting a final
determination on behalf of AvePoint,
Inc. (‘‘AvePoint’’), pursuant to subpart B
of part 177 of the U.S. Customs and
Border Protection (CBP) Regulations (19
C.F.R. Part 177). Under these
regulations, which implement Title III
of the Trade Agreements Act of 1979
(TAA), as amended (19 U.S.C. § 2511 et
seq.), CBP issues country of origin
advisory rulings and final
determinations as to whether an article
is or would be a product of a designated
country or instrumentality for the
purposes of granting waivers of certain
‘‘Buy American’’ restrictions in U.S. law
or practice for products offered for sale
to the U.S. Government.
This final determination concerns the
country of origin of computer software.
As the U.S. importer of the subject
E:\FR\FM\11DEN1.SGM
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Federal Register / Vol. 78, No. 238 / Wednesday, December 11, 2013 / Notices
merchandise, AvePoint is a party-atinterest within the meaning of 19 C.F.R.
§ 177.22(d)(1) and is entitled to request
this final determination.
emcdonald on DSK67QTVN1PROD with NOTICES
FACTS:
AvePoint manufactures DocAve
Software (‘‘DocAve’’), a comprehensive
suite of applications for Microsoft®
SharePoint®. SharePoint is a
multipurpose set of Web technologies
backed by a common technical
infrastructure that is used to provide
intranet portals, document & file
management, collaboration, social
networks, extranets, Web sites,
enterprise search, and business
intelligence. It also has system
integration, process integration, and
workflow automation capabilities.
DocAve products simplify the
deployment, monitoring, and
enforcement of SharePoint governance
policies. DocAve products have a
browser-based user interface and a fully
distributed architecture that integrates
backup, administration and data
management technologies for all
SharePoint products. Its applications
can be executed separately, but they
function within a unified platform and
are provided as an integrated package.
According to the information
submitted, DocAve software is
developed in seven steps, described as
follows:
(1) Research: A list of ideas and
potential features to be included in
the software is compiled. A product
roadmap is developed and test
cases are written to govern and
ensure that all the requirements of
the application and software design
are met. Twenty percent of total
product development hours is
allocated to this step (18% of which
is performed in the U.S. and 2% in
China).
(2) Development of Graphic User
Interface (‘‘GUI’’): A prototype GUI
based on designs created in Step 1
is developed and tested. Ten
percent of total product
development hours is allocated to
this step, all of which is performed
in the U.S.
(3) Development/Writing of Software
Specifications and Architecture:
The chief architects create a
detailed software design in order to
modularize the software so that its
development can be easily
distributed and managed by
different development teams. Ten
percent of total product
development hours is allocated to
this step, all of which is performed
in the U.S.
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(4) Programming of Source Code:
Software modules are distributed to
different development teams in the
U.S. and China. Each module is
self-contained and can be
developed separately, but cannot
run independently and is not
executable code. Twenty-five
percent of total product
development hours is allocated to
this step (5% of which is performed
in the U.S. and 20% in China).
(5) Software Build: Separate source
code modules are transferred to the
repository server hosted in the U.S.,
which is the only place where a
development team has access to the
entire source code. The team
integrates the modules with each
other by compiling the source code
into object code (a sequence of
statements or instructions in a
computer language) and works out
incompatibilities or bugs by rewriting or correcting source code, as
needed, makes the software into
executable files, and constructs an
installation package that is easily
installed. The U.S. team creates all
the lines of the object code, makes
all the software executable files in
various versions and languages.
This step may be performed
multiple times if testing indicates
the need for correction. Fifteen
percent of total product
development hours is allocated to
this step, all of which is performed
in the U.S.
(6) Testing and Validation: The software
package is tested based on
functional specifications defined in
Step 1. Once the test case pass rate
is met, the software is ready for
release. Fifteen percent of total
product development hours is
allocated to this step (5% of which
is performed in the U.S. and 10%
in China).
(7) Preparing Software/Burning Media
for Distribution: The U.S. project
management team coordinates with
marketing and sales teams to make
the software publicly available. Five
percent of total product
development hours is allocated to
this step, all of which is performed
in the U.S.
In sum, steps 2, 3, 5, and 7
(development of the GUI, development/
writing of specification and architecture
software, software build, and
preparation of software for distribution)
are performed entirely in the U.S. Steps
1, 4, and 6 (research, programming of
the source code, and testing and
validation) are performed in the U.S.
and China. In terms of total product
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75363
development hours, which encompass
all seven steps, 68% is allocated to work
performed in the United States, and
32% to work performed in China. We
note that there were no documents
submitted in support of the estimated
percentages of work hours involved in
the overall manufacturing process. For
the purposes of this ruling, we presume
that the figures provided are correct.
ISSUE:
What is the country of origin of
AvePoint’s DocAve Software for
purposes of U.S. Government
procurement?
LAW AND ANALYSIS:
Pursuant to Subpart B of Part 177, 19
CFR § 177.21 et seq., which implements
Title III of the Trade Agreements Act of
1979, as amended (19 U.S.C. § 2511 et
seq.), CBP issues country of origin
advisory rulings and final
determinations as to whether an article
is or would be a product of a designated
country or instrumentality for the
purposes of granting waivers of certain
‘‘Buy American’’ restrictions in U.S. law
or practice for products offered for sale
to the U.S. Government.
Under the rule of origin set forth
under 19 U.S.C. § 2518(4)(B):
An article is a product of a country or
instrumentality only if (i) it is wholly
the growth, product, or manufacture of
that country or instrumentality, or (ii) in
the case of an article which consists in
whole or in part of materials from
another country or instrumentality, it
has been substantially transformed into
a new and different article of commerce
with a name, character, or use distinct
from that of the article or articles from
which it was so transformed.
See also 19 C.F.R. § 177.22(a).
In rendering advisory rulings and
final determinations for purposes of
U.S. Government procurement, CBP
applies the provisions of subpart B of
Part 177 consistent with the Federal
Procurement Regulations. See 19 C.F.R.
§ 177.21. In this regard, CBP recognizes
that the Federal Procurement
Regulations restrict the U.S.
Government’s purchase of products to
U.S.-made or designated country end
products for acquisitions subject to the
TAA. See 48 C.F.R. § 25.403(c)(1). The
Federal Procurement Regulations define
‘‘U.S.-made end product’’ as:
[A]n article that is mined, produced,
or manufactured in the United States or
that is substantially transformed in the
United States into a new and different
article of commerce with a name,
character, or use distinct from that of
the article or articles from which it was
transformed.
E:\FR\FM\11DEN1.SGM
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emcdonald on DSK67QTVN1PROD with NOTICES
75364
Federal Register / Vol. 78, No. 238 / Wednesday, December 11, 2013 / Notices
In Data General v. United States, 4 Ct.
Int’l Trade 182 (1982), the court
determined that for purposes of
determining eligibility under item
807.00, Tariff Schedules of the United
States (predecessor to subheading
9802.00.80, Harmonized Tariff Schedule
of the United States), the programming
of a foreign PROM (Programmable ReadOnly Memory chip) in the United States
substantially transformed the PROM
into a U.S. article. The PROMs had no
capacity to store and retrieve
information until they were
programmed in the U.S. by U.S.
engineers who interconnected the
discrete components in a defined logical
pattern. The programming bestowed
upon each circuit its electronic
function, that is, its ‘‘memory’’ which
could be retrieved. A distinct physical
change was effected in the PROM by the
opening or closing of the fuses,
depending on the method of
programming. This physical alteration,
not visible to the naked eye, could be
discerned by electronic testing of the
PROM. The court noted that the
programs were designed by a U.S.
project engineer with many years of
experience in ‘‘designing and building
hardware.’’ While replicating the
program pattern from a ‘‘master’’ PROM
may be a quick one-step process, the
development of the pattern and the
production of the ‘‘master’’ PROM
required much time and expertise. The
court noted that it was undisputed that
programming altered the character of a
PROM. The essence of the article, its
interconnections or stored memory, was
established by programming. The court
concluded that altering the nonfunctioning circuitry comprising a
PROM through technological expertise
in order to produce a functioning read
only memory device, possessing a
desired distinctive circuit pattern, was
no less a ‘‘substantial transformation’’
than the manual interconnection of
transistors, resistors and diodes upon a
circuit board creating a similar pattern.
You believe that the country of origin
of DocAve Software is the United States
because it is the country in which the
software build occurs, a process which
you liken to assembly and believe is
sufficient in itself to effect a substantial
transformation of all the software
inputs. You note that some of the prebuild design and architecture, and some
of the post- or re-build test design and
validation decisions also take place in
the U.S. Specifically, the design concept
and user-driven features of the software
are the result of work performed in the
U.S., and their functional
implementation is achieved only
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17:00 Dec 10, 2013
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through the compilation of source code
modules and the integration of
executable modules through numerous
build and test sequences, also
performed in the U.S. Additionally, you
note that while testing is largely
performed in China, the decisions on
critical functions and features pass rates
are taken by the U.S. project
management team. As a result of the
software development and production
processes performed in the U.S., you
believe that a new commercial product
(DocAve Software) is created that differs
from any of its components, which
individually are not capable of
achieving the purpose or function of the
completed software.
Based on the reasoning in Data
General supra, we find that the software
build performed in the U.S.
substantially transforms the software
modules developed in China and the
U.S. into a new article with a new name,
character and use, that is, DocAve
Software. During the software build
process, the source code modules
developed in the U.S. and China are
transferred to a server in the U.S, where
the U.S. software development team
creates DocAve Software by compiling
the source code into object code, and
works out incompatibilities or bugs by
re-writing or correcting source code as
needed. Moreover, the U.S. team creates
all the lines of the object code, makes
all the software executable files in
various versions and languages, and
constructs the installation package as an
easily installable unit. In addition, 90%
of the software development research is
performed in the U.S., as are aspects of
programming of the source code and
testing and validation, such that 68% of
the development of DocAve Software is
attributed to work performed in the
United States. Given these facts, we find
that the country of origin of DocAve
Software is the United States for
purposed of U.S. Government
procurement.
Please be advised that whether the
software may be marked ‘‘Made in the
U.S.A.’’ or with similar words, is an
issue under the authority of the Federal
Trade Commission (‘‘FTC’’). We suggest
that you contact the FTC, Division of
Enforcement, 6th and Pennsylvania
Avenue NW, Washington, DC 20508, on
the propriety of markings indicating that
articles are made in the United States.
HOLDING:
Based on the facts provided, the
software build operations performed in
the United States substantially
transforms the software modules
developed in China and the U.S. into a
new article with a new name, character
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and use, that is, DocAve Software. As
such, DocAve Software is considered a
product of the United States for
purposes of U.S. Government
procurement.
Notice of this final determination will
be given in the Federal Register, as
required by 19 C.F.R. § 177.29. Any
party-at-interest other than the party
which requested this final
determination may request, pursuant to
19 C.F.R. § 177.31, that CBP reexamine
the matter anew and issue a new final
determination. Pursuant to 19 C.F.R.
§ 177.30, any party-at-interest may,
within 30 days of publication of the
Federal Register Notice referenced
above, seek judicial review of this final
determination before the Court of
International Trade.
Sincerely,
Sandra L. Bell, Executive Director
Regulations and Rulings
Office of International Trade
[FR Doc. 2013–29586 Filed 12–10–13; 8:45 am]
BILLING CODE P
DEPARTMENT OF HOUSING AND
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[Docket No. FR–5687–N–47]
60-Day Notice of Proposed Information
Collection: Application for FHA
Insured Mortgages
Office of the Assistant
Secretary for Housing—Federal Housing
Commissioner, HUD.
ACTION: Notice.
AGENCY:
HUD is seeking approval from
the Office of Management and Budget
(OMB) for the information collection
described below. In accordance with the
Paperwork Reduction Act, HUD is
requesting comment from all interested
parties on the proposed collection of
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is to allow for 60 days of public
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SUMMARY:
Comments Due Date: February
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ADDRESSES: Interested persons are
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Control Number and should be sent to:
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and Urban Development, 451 7th Street
SW., Room 4176, Washington, DC
20410–5000; telephone 202–402–3400
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at Colette.Pollard@hud.gov for a copy of
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DATES:
E:\FR\FM\11DEN1.SGM
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]]>Agencies
[Federal Register Volume 78, Number 238 (Wednesday, December 11, 2013)]
[Notices]
[Pages 75362-75364]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-29586]
-----------------------------------------------------------------------
DEPARTMENT OF HOMELAND SECURITY
U.S. Customs and Border Protection
Notice of Issuance of Final Determination Concerning Docave
Computer Software
AGENCY: U.S. Customs and Border Protection, Department of Homeland
Security.
ACTION: Notice of final determination.
-----------------------------------------------------------------------
SUMMARY: This document provides notice that U.S. Customs and Border
Protection (``CBP'') has issued a final determination concerning the
country of origin of certain computer software known as DocAve
Software. Based upon the facts presented, CBP has concluded that the
software build operations performed in the United States substantially
transform software modules developed in China. Therefore, the country
of origin of DocAve Software is the United States for purposes of U.S.
Government procurement.
DATES: The final determination was issued on December 4, 2013. A copy
of the final determination is attached. Any party-at-interest, as
defined in 19 CFR 177.22(d), may seek judicial review of this final
determination on or before January 10, 2014.
FOR FURTHER INFORMATION CONTACT: Heather K. Pinnock, Valuation and
Special Programs Branch: (202) 325-0034.
SUPPLEMENTARY INFORMATION: Notice is hereby given that on December 4,
2013, pursuant to subpart B of Part 177, U.S. Customs and Border
Protection Regulations (19 CFR Part 177, subpart B), CBP issued a final
determination concerning the country of origin of certain computer
software known as DocAve Software, which may be offered to the U.S.
Government under an undesignated government procurement contract. This
final determination, HQ H243606, was issued under procedures set forth
at 19 CFR Part 177, subpart B, which implements Title III of the Trade
Agreements Act of 1979, as amended (19 U.S.C. 2511-18). In the final
determination, CBP concluded that, based upon the facts presented, the
software build operations performed in the United States substantially
transform non-TAA country software modules developed in China.
Therefore, the country of origin of DocAve Software is the United
States for purposes of U.S. Government procurement.
Section 177.29, CBP Regulations (19 CFR 177.29), provides that a
notice of final determination shall be published in the Federal
Register within 60 days of the date the final determination is issued.
Section 177.30, CBP Regulations (19 CFR 177.30), provides that any
party-at-interest, as defined in 19 CFR 177.22(d), may seek judicial
review of a final determination within 30 days of publication of such
determination in the Federal Register.
Dated: December 4, 2013.
Sandra L. Bell,
Executive Director, Regulations and Rulings, Office of International
Trade.
Attachment
HQ H243606
December 4, 2013
Larry Hampel, Esq.
Albert B. Krachman, Esq.
Blank Rome, LLP
Watergate
600 New Hampshire Avenue, NW
Washington, DC 20037
RE: Trade Agreements Act; Substantial Transformation; Country of Origin
of Software
Dear Mr. Hampel and Mr. Krachman:
This is in response to your letter dated June 24, 2013, requesting
a final determination on behalf of AvePoint, Inc. (``AvePoint''),
pursuant to subpart B of part 177 of the U.S. Customs and Border
Protection (CBP) Regulations (19 C.F.R. Part 177). Under these
regulations, which implement Title III of the Trade Agreements Act of
1979 (TAA), as amended (19 U.S.C. Sec. 2511 et seq.), CBP issues
country of origin advisory rulings and final determinations as to
whether an article is or would be a product of a designated country or
instrumentality for the purposes of granting waivers of certain ``Buy
American'' restrictions in U.S. law or practice for products offered
for sale to the U.S. Government.
This final determination concerns the country of origin of computer
software. As the U.S. importer of the subject
[[Page 75363]]
merchandise, AvePoint is a party-at-interest within the meaning of 19
C.F.R. Sec. 177.22(d)(1) and is entitled to request this final
determination.
FACTS:
AvePoint manufactures DocAve Software (``DocAve''), a comprehensive
suite of applications for Microsoft[supreg] SharePoint[supreg].
SharePoint is a multipurpose set of Web technologies backed by a common
technical infrastructure that is used to provide intranet portals,
document & file management, collaboration, social networks, extranets,
Web sites, enterprise search, and business intelligence. It also has
system integration, process integration, and workflow automation
capabilities. DocAve products simplify the deployment, monitoring, and
enforcement of SharePoint governance policies. DocAve products have a
browser-based user interface and a fully distributed architecture that
integrates backup, administration and data management technologies for
all SharePoint products. Its applications can be executed separately,
but they function within a unified platform and are provided as an
integrated package.
According to the information submitted, DocAve software is
developed in seven steps, described as follows:
(1) Research: A list of ideas and potential features to be included in
the software is compiled. A product roadmap is developed and test cases
are written to govern and ensure that all the requirements of the
application and software design are met. Twenty percent of total
product development hours is allocated to this step (18% of which is
performed in the U.S. and 2% in China).
(2) Development of Graphic User Interface (``GUI''): A prototype GUI
based on designs created in Step 1 is developed and tested. Ten percent
of total product development hours is allocated to this step, all of
which is performed in the U.S.
(3) Development/Writing of Software Specifications and Architecture:
The chief architects create a detailed software design in order to
modularize the software so that its development can be easily
distributed and managed by different development teams. Ten percent of
total product development hours is allocated to this step, all of which
is performed in the U.S.
(4) Programming of Source Code: Software modules are distributed to
different development teams in the U.S. and China. Each module is self-
contained and can be developed separately, but cannot run independently
and is not executable code. Twenty-five percent of total product
development hours is allocated to this step (5% of which is performed
in the U.S. and 20% in China).
(5) Software Build: Separate source code modules are transferred to the
repository server hosted in the U.S., which is the only place where a
development team has access to the entire source code. The team
integrates the modules with each other by compiling the source code
into object code (a sequence of statements or instructions in a
computer language) and works out incompatibilities or bugs by re-
writing or correcting source code, as needed, makes the software into
executable files, and constructs an installation package that is easily
installed. The U.S. team creates all the lines of the object code,
makes all the software executable files in various versions and
languages. This step may be performed multiple times if testing
indicates the need for correction. Fifteen percent of total product
development hours is allocated to this step, all of which is performed
in the U.S.
(6) Testing and Validation: The software package is tested based on
functional specifications defined in Step 1. Once the test case pass
rate is met, the software is ready for release. Fifteen percent of
total product development hours is allocated to this step (5% of which
is performed in the U.S. and 10% in China).
(7) Preparing Software/Burning Media for Distribution: The U.S. project
management team coordinates with marketing and sales teams to make the
software publicly available. Five percent of total product development
hours is allocated to this step, all of which is performed in the U.S.
In sum, steps 2, 3, 5, and 7 (development of the GUI, development/
writing of specification and architecture software, software build, and
preparation of software for distribution) are performed entirely in the
U.S. Steps 1, 4, and 6 (research, programming of the source code, and
testing and validation) are performed in the U.S. and China. In terms
of total product development hours, which encompass all seven steps,
68% is allocated to work performed in the United States, and 32% to
work performed in China. We note that there were no documents submitted
in support of the estimated percentages of work hours involved in the
overall manufacturing process. For the purposes of this ruling, we
presume that the figures provided are correct.
ISSUE:
What is the country of origin of AvePoint's DocAve Software for
purposes of U.S. Government procurement?
LAW AND ANALYSIS:
Pursuant to Subpart B of Part 177, 19 CFR Sec. 177.21 et seq.,
which implements Title III of the Trade Agreements Act of 1979, as
amended (19 U.S.C. Sec. 2511 et seq.), CBP issues country of origin
advisory rulings and final determinations as to whether an article is
or would be a product of a designated country or instrumentality for
the purposes of granting waivers of certain ``Buy American''
restrictions in U.S. law or practice for products offered for sale to
the U.S. Government.
Under the rule of origin set forth under 19 U.S.C. Sec.
2518(4)(B):
An article is a product of a country or instrumentality only if (i)
it is wholly the growth, product, or manufacture of that country or
instrumentality, or (ii) in the case of an article which consists in
whole or in part of materials from another country or instrumentality,
it has been substantially transformed into a new and different article
of commerce with a name, character, or use distinct from that of the
article or articles from which it was so transformed.
See also 19 C.F.R. Sec. 177.22(a).
In rendering advisory rulings and final determinations for purposes
of U.S. Government procurement, CBP applies the provisions of subpart B
of Part 177 consistent with the Federal Procurement Regulations. See 19
C.F.R. Sec. 177.21. In this regard, CBP recognizes that the Federal
Procurement Regulations restrict the U.S. Government's purchase of
products to U.S.-made or designated country end products for
acquisitions subject to the TAA. See 48 C.F.R. Sec. 25.403(c)(1). The
Federal Procurement Regulations define ``U.S.-made end product'' as:
[A]n article that is mined, produced, or manufactured in the United
States or that is substantially transformed in the United States into a
new and different article of commerce with a name, character, or use
distinct from that of the article or articles from which it was
transformed.
[[Page 75364]]
In Data General v. United States, 4 Ct. Int'l Trade 182 (1982), the
court determined that for purposes of determining eligibility under
item 807.00, Tariff Schedules of the United States (predecessor to
subheading 9802.00.80, Harmonized Tariff Schedule of the United
States), the programming of a foreign PROM (Programmable Read-Only
Memory chip) in the United States substantially transformed the PROM
into a U.S. article. The PROMs had no capacity to store and retrieve
information until they were programmed in the U.S. by U.S. engineers
who interconnected the discrete components in a defined logical
pattern. The programming bestowed upon each circuit its electronic
function, that is, its ``memory'' which could be retrieved. A distinct
physical change was effected in the PROM by the opening or closing of
the fuses, depending on the method of programming. This physical
alteration, not visible to the naked eye, could be discerned by
electronic testing of the PROM. The court noted that the programs were
designed by a U.S. project engineer with many years of experience in
``designing and building hardware.'' While replicating the program
pattern from a ``master'' PROM may be a quick one-step process, the
development of the pattern and the production of the ``master'' PROM
required much time and expertise. The court noted that it was
undisputed that programming altered the character of a PROM. The
essence of the article, its interconnections or stored memory, was
established by programming. The court concluded that altering the non-
functioning circuitry comprising a PROM through technological expertise
in order to produce a functioning read only memory device, possessing a
desired distinctive circuit pattern, was no less a ``substantial
transformation'' than the manual interconnection of transistors,
resistors and diodes upon a circuit board creating a similar pattern.
You believe that the country of origin of DocAve Software is the
United States because it is the country in which the software build
occurs, a process which you liken to assembly and believe is sufficient
in itself to effect a substantial transformation of all the software
inputs. You note that some of the pre-build design and architecture,
and some of the post- or re-build test design and validation decisions
also take place in the U.S. Specifically, the design concept and user-
driven features of the software are the result of work performed in the
U.S., and their functional implementation is achieved only through the
compilation of source code modules and the integration of executable
modules through numerous build and test sequences, also performed in
the U.S. Additionally, you note that while testing is largely performed
in China, the decisions on critical functions and features pass rates
are taken by the U.S. project management team. As a result of the
software development and production processes performed in the U.S.,
you believe that a new commercial product (DocAve Software) is created
that differs from any of its components, which individually are not
capable of achieving the purpose or function of the completed software.
Based on the reasoning in Data General supra, we find that the
software build performed in the U.S. substantially transforms the
software modules developed in China and the U.S. into a new article
with a new name, character and use, that is, DocAve Software. During
the software build process, the source code modules developed in the
U.S. and China are transferred to a server in the U.S, where the U.S.
software development team creates DocAve Software by compiling the
source code into object code, and works out incompatibilities or bugs
by re-writing or correcting source code as needed. Moreover, the U.S.
team creates all the lines of the object code, makes all the software
executable files in various versions and languages, and constructs the
installation package as an easily installable unit. In addition, 90% of
the software development research is performed in the U.S., as are
aspects of programming of the source code and testing and validation,
such that 68% of the development of DocAve Software is attributed to
work performed in the United States. Given these facts, we find that
the country of origin of DocAve Software is the United States for
purposed of U.S. Government procurement.
Please be advised that whether the software may be marked ``Made in
the U.S.A.'' or with similar words, is an issue under the authority of
the Federal Trade Commission (``FTC''). We suggest that you contact the
FTC, Division of Enforcement, 6th and Pennsylvania Avenue NW,
Washington, DC 20508, on the propriety of markings indicating that
articles are made in the United States.
HOLDING:
Based on the facts provided, the software build operations
performed in the United States substantially transforms the software
modules developed in China and the U.S. into a new article with a new
name, character and use, that is, DocAve Software. As such, DocAve
Software is considered a product of the United States for purposes of
U.S. Government procurement.
Notice of this final determination will be given in the Federal
Register, as required by 19 C.F.R. Sec. 177.29. Any party-at-interest
other than the party which requested this final determination may
request, pursuant to 19 C.F.R. Sec. 177.31, that CBP reexamine the
matter anew and issue a new final determination. Pursuant to 19 C.F.R.
Sec. 177.30, any party-at-interest may, within 30 days of publication
of the Federal Register Notice referenced above, seek judicial review
of this final determination before the Court of International Trade.
Sincerely,
Sandra L. Bell, Executive Director
Regulations and Rulings
Office of International Trade
[FR Doc. 2013-29586 Filed 12-10-13; 8:45 am]
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