Federal Acquisition Regulation; Exception from Buy American Act for Commercial Information Technology, 223-224 [05-24552]

Agencies

• General Services Administration
• National Aeronautics and Space Administration
• DEPARTMENT OF DEFENSE

[Federal Register Volume 71, Number 1 (Tuesday, January 3, 2006)]
[Rules and Regulations]
[Pages 223-224]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-24552]


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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Part 25

[FAC 2005-07; FAR Case 2005-022; Item VII]
RIN 9000-AK34


Federal Acquisition Regulation; Exception from Buy American Act 
for Commercial Information Technology

AGENCIES: Department of Defense (DoD), General Services Administration 
(GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Interim rule with request for comments.

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SUMMARY: The Civilian Agency Acquisition Council and the Defense 
Acquisition Regulations Council (Councils) have agreed on an interim 
rule to implement Section 517 of Division H, Title V of the 
Consolidated Appropriations Act, 2005 (Pub. L. 108-447). Section 517 
authorizes exemption from the Buy American Act for acquisitions of 
information technology that are commercial items.

DATES: Effective Date: January 3, 2006.
    Comment Date: Interested parties should submit written comments to 
the FAR Secretariat on or before March 6, 2006 to be considered in the 
formulation of a final rule.

ADDRESSES: Submit comments identified by FAC 2005-07, FAR case 2005-
022, by any of the following methods:
     Federal eRulemaking Portal: https://www.regulations.gov. 
Follow the instructions for submitting comments.
     Agency Web Site: https://www.acqnet.gov/far/ProposedRules/proposed.htm. Click on the FAR case number to submit comments.
     E-mail: farcase.2005-022@gsa.gov. Include FAC 2005-07, FAR 
case 2005-022, in the subject line of the message.
     Fax: 202-501-4067.
     Mail: General Services Administration, Regulatory 
Secretariat (VIR), 1800 F Street, NW, Room 4035, ATTN: Laurieann 
Duarte, Washington, DC 20405.
    Instructions: Please submit comments only and cite FAC 2005-07, FAR 
case 2005-022, in all correspondence related to this case. All comments 
received will be posted without change to https://www.acqnet.gov/far/ProposedRules/proposed.htm, including any personal and/or business 
confidential information provided.

FOR FURTHER INFORMATION CONTACT: The FAR Secretariat at (202) 501-4755, 
for information pertaining to status or publication schedules. For 
clarification of content, contact Ms. Kimberly Marshall, Procurement 
Analyst, at (202) 219-0986. Please cite FAC 2005-07, FAR case 2005-022.

SUPPLEMENTARY INFORMATION:

A. Background

    This interim rule amends FAR 25.103 and FAR Subpart 25.11 to 
implement Section 517 of Division H, Title V of the Consolidated 
Appropriations Act, 2005 (Pub. L. 108-447). Section 517 authorizes 
exemption from the Buy American Act for acquisitions of information 
technology that are commercial items. This applies only to the use of 
FY 2005 funds.
    This same exemption appeared last year in section 535(a) of 
Division F, Title V, Consolidated Appropriations Act, 2004 (Pub. L. 
108-199). The FY 04 exemption was implemented through deviations by the 
individual agencies.
    The interim rule is based on the estimation that the exemption of 
commercial information technology is likely to continue. If the 
exception does not appear in a future appropriations act, a prompt 
change to the FAR will be made to limit applicability of the exemption 
to the fiscal years to which it applies.
    The effect of this exemption is that the following clauses are no 
longer applicable in acquisition of commercial information technology:
     FAR 52.225-1, Buy American Act--Supplies.
     FAR 52.225-2, Buy American Act Certificate.
     FAR 52.225-3, Buy American Act--Free Trade Agreements--
Israeli Trade Act.
     FAR 52.225-4, Buy American Act--Free Trade Agreements--
Israeli Trade Act Certificate.
    This is because the Buy American Act no longer applies; and the 
Free Trade Agreement non-discriminatory provisions are no longer 
necessary, since all products now are treated without the restrictions 
of the Buy American Act.
    The Trade Agreements provision and clause at FAR 52.225-5 and FAR 
52.225-6 are still necessary when the Trade Agreements Act applies 
(acquisitions above $175,000). The Trade Agreements provision and 
clause already waive applicability of the Buy American Act for eligible 
products, and are needed to implement the restrictions on procurement 
of noneligible end products. Section 535 and subsequent similar 
sections waived only the Buy American Act, not all restrictions on the 
purchase of foreign information technology.
    ``Information technology'' and ``Commercial item'' are already 
defined in FAR Part 2.
    This is not a significant regulatory action and, therefore, was not 
subject to review under Section 6(b) of Executive Order 12866, 
Regulatory Planning and Review, dated September 30, 1993. This rule is 
not a major rule under 5 U.S.C. 804.

B. Regulatory Flexibility Act

    The changes may 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 increases the 
exceptions to the Buy American Act to include the acquisitions of 
information technology that are commercial items. An Initial Regulatory 
Flexibility Analysis (IRFA) has been prepared and is summarized as 
follows:

    The objective of the interim rule is to add the exemption to the 
Buy American Act for acquisitions of commercial information 
technology. As a result of the additional exception, the Buy 
American Act will no longer apply to those acquisitions and the Free 
Trade Agreement non-discriminatory

[[Page 224]]

provisions are no longer necessary, since all products will be 
treated without the restrictions of the Buy American Act. The 
interim rule applies to all offerors responding to solicitations for 
commercial information technology where the Buy American Act 
previously applied (generally, acquisitions between $2,500 and 
$175,000). This rule does not apply to the Department of Defense, 
which uses DFARS clauses to implement the Buy American Act. This 
exception will allow small entities to compete without meeting the 
Buy American Act domestic end product requirements.
     It is anticipated that small business concerns will 
continue to receive the same number of awards in the range of $2,500 
to $100,000, because these awards are generally set-aside for small 
business concerns.
     It is also expected that small business concerns will 
continue to receive awards in the range of $100,000 to $175,000, but 
in this range they will face competition from foreign end products.
     This rule will not have an effect on small businesses 
affected by the ``non-manufacturer rule'' which means that a 
contractor under a small business set-aside or 8(a) contract shall 
be a small business under the applicable size standard and shall 
provide either its own product or that of another domestic small 
business manufacturing or processing concern. If there is a small 
business set-aside, and there is no SBA waiver of the 
nonmanufacturer rule, then FAR 52.219-6(c) and/or FAR 52.219-18(d) 
require that a domestic product must be furnished. In this case, the 
rule will have no effect on small businesses because the 
nonmanufacturer rule is not changed.
     If SBA did waive the nonmanufacturer rule, then there 
is no requirement to purchase a domestic product but an evaluation 
preference would apply.
     The rule could have an impact on small businesses when 
there is no small business set-aside because small businesses may 
lose the evaluation preference for acquisitions between $25,000 and 
$175,000.
    The FAR Secretariat has submitted a copy of the IRFA to the Chief 
Counsel for Advocacy of the Small Business Administration. Interested 
parties may obtain a copy from the FAR Secretariat. We invite comments 
from small business concerns and other interested parties on this 
issue. The Councils will also consider comments from small entities 
concerning the affected FAR Part 25 in accordance with 5 U.S.C. 610. 
Interested parties must submit such comments separately and should cite 
5 U.S.C 601, et seq. (FAC 2005-07, FAR case 2005-022), in 
correspondence.

C. Paperwork Reduction Act

    The Paperwork Reduction Act does apply because the changes to the 
FAR will slightly reduce the information collection requirements 
currently approved by the Office of Management and Budget OMB 
Clearances 9000-0024 and 9000-0130.
    We estimate a reduction of approximately 5 percent (300 hours) for 
OMB Clearance 9000-0024 and a reduction of 50 hours to 9000-0130.

D. Determination to Issue an Interim Rule

    A determination has been made under the authority of the Secretary 
of Defense (DoD), the Administrator of General Services (GSA), and the 
Administrator of the National Aeronautics and Space Administration 
(NASA) that urgent and compelling reasons exist to promulgate this 
interim rule without prior opportunity for public comment. This action 
is necessary to implement the changes resulting from the enactment of 
Section 517 of Division H, Title V of the Consolidated Appropriations 
Act, 2005 (Pub. L. 108-447), effective December 8, 2004. However, 
pursuant to Public Law 98-577 and FAR 1.501, the Councils will consider 
public comments received in response to this interim rule in the 
formation of the final rule.

List of Subjects in 48 CFR Part 25

    Government procurement.

    Dated: December 22, 2005.
Gerald Zaffos,
Director, Contract Policy Division.

0
Therefore, DoD, GSA, and NASA amend 48 CFR part 25 as set forth below:

PART 25--FOREIGN ACQUISITION

0
1. The authority citation for 48 CFR part 25 continues to read as 
follows:

    Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 42 
U.S.C. 2473(c).
0
2. Amend section 25.103 by adding paragraph (e) to read as follows:


25.103  Exceptions.

* * * * *
    (e) Information technology that is a commercial item. The 
restriction on purchasing foreign end products does not apply to the 
acquisition of information technology that is a commercial item, when 
using fiscal year 2004 or subsequent fiscal year funds (Section 535(a) 
of Division F, Title V, Consolidated Appropriations Act, 2004, and 
similar sections in subsequent appropriations acts).
0
3. Amend section 25.1101 by--
0
a. Revising paragraph (a)(1)(ii);
0
b. Amending paragraph (b)(1)(i)(A) by removing ``and'' from the end of 
the sentence;
0
c. Redesignating paragraph (b)(1)(i)(B) as (b)(1)(i)(C) and adding a 
new paragraph (b)(1)(i)(B) to read as follows:


25.1101  Acquisition of supplies.

* * * * *
    (a)(1) * * *
    (ii) The acquisition is for supplies for use within the United 
States and an exception to the Buy American Act applies (e.g., 
nonavailability, public interest, or information technology that is a 
commercial item); or
* * * * *
    (b)(1)(i) * * *
    (B) The acquisition is not for information technology that is a 
commercial item, using fiscal year 2004 or subsequent fiscal year 
funds; and
* * * * *
[FR Doc. 05-24552 Filed 12-30-05; 8:45 am]
BILLING CODE 6820-EP-S