Defense Federal Acquisition Regulation Supplement; Buy American Act Exemption for Commercial Information Technology (DFARS Case 2005-D011), 58539-58540 [E6-16401]
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Federal Register / Vol. 71, No. 192 / Wednesday, October 4, 2006 / Rules and Regulations
DEPARTMENT OF DEFENSE
Defense Acquisition Regulations
System
48 CFR Part 225
RIN 0750–AF23
Defense Federal Acquisition
Regulation Supplement; Buy American
Act Exemption for Commercial
Information Technology (DFARS Case
2005–D011)
Defense Acquisition
Regulations System, Department of
Defense (DoD).
ACTION: Final rule.
AGENCY:
erjones on PROD1PC72 with RULES
SUMMARY: DoD has issued a final rule
amending the Defense Federal
Acquisition Regulation Supplement
(DFARS) to implement provisions of
annual appropriations acts that
authorize an exemption from the Buy
American Act for the acquisition of
commercial information technology.
DATES: Effective Date: October 4, 2006.
FOR FURTHER INFORMATION CONTACT: Ms.
Amy Williams, Defense Acquisition
Regulations System,
OUSD(AT&L)DPAP(DARS), IMD 3C132,
3062 Defense Pentagon, Washington, DC
20301–3062. Telephone (703) 602–0328;
facsimile (703) 602–0350. Please cite
DFARS Case 2005–D011.
SUPPLEMENTARY INFORMATION:
A. Background
Section 535 of Division F of the
Consolidated Appropriations Act, 2004
(Pub. L. 108–199); Section 517 of
Division H of the Consolidated
Appropriations Act, 2005 (Pub. L. 108–
447); and Section 717 of the
Consolidated Appropriations Act, 2006
(Pub. L. 109–115) provide an exemption
from the Buy American Act for the
acquisition of information technology
that is a commercial item. This final
rule amends the acquisition procedures
in DFARS Part 225 to reflect the
exemption, which previously had been
implemented through the issuance of
annual DoD-wide class deviations.
DoD published a proposed rule at 71
FR 18694 on April 12, 2006. Five
sources submitted comments on the
proposed rule. Three of the respondents
supported the rule. A discussion of the
other comments is provided below.
1. Comment. One respondent
recommended that application of the
Buy American Act restrictions to nonsensitive electrical and electronic
products be reevaluated in the context
of both the increasingly global economy
and potential savings to the
Government.
VerDate Aug<31>2005
14:25 Oct 03, 2006
Jkt 211001
DoD Response. Revision of the
application of the Buy American Act to
electrical/electronic products would
require statutory change and, therefore,
is outside the scope of this DFARS case.
2. Comment. One respondent
requested that the rule clearly apply as
an exemption to the Berry Amendment
requirements of the clause at DFARS
252.225–7014, Preference for Domestic
Specialty Metals, for commercial
information technology.
DoD Response. The appropriations act
provisions contain authority only for an
exemption from the Buy American Act
(41 U.S.C. 10a–d). Therefore, DoD is
unable to adopt this recommendation
for an exemption from the Berry
Amendment (10 U.S.C. 2533a).
3. Comment. One respondent
disagreed with the rule, due to the
security risk associated with foreign
entities potentially gaining access to
DoD information systems.
DoD Response. The policy in the rule
is required by statute. The
appropriations act provisions state that
the restrictions of the Buy American Act
‘‘shall not apply’’ to the acquisition of
information technology that is a
commercial item. This policy has been
in effect since May 2004, through the
issuance of annual DoD-wide class
deviations. Security of information
technology is addressed in DFARS
Subpart 239.71, which requires agencies
to ensure that information assurance is
provided for information technology in
accordance with current policies,
procedures, and statutes, to include—
(1) The National Security Act;
(2) The Clinger-Cohen Act;
(3) National Security
Telecommunications and Information
Systems Security Policy No. 11;
(4) Federal Information Processing
Standards;
(5) DoD Directive 8500.1, Information
Assurance; and
(6) DoD Instruction 8500.2,
Information Assurance Implementation.
Therefore, DoD has adopted the
proposed rule as a final rule without
change.
This rule was not subject to Office of
Management and Budget review under
Executive Order 12866, dated
September 30, 1993.
B. Regulatory Flexibility Act
DoD has prepared a final regulatory
flexibility analysis consistent with 5
U.S.C. 604. A copy of the analysis may
be obtained from the point of contact
specified herein. The analysis is
summarized as follows:
This final rule amends the DFARS to
implement provisions of annual
appropriations acts that authorize an
PO 00000
Frm 00055
Fmt 4700
Sfmt 4700
58539
exemption from the Buy American Act
for the acquisition of information
technology that is a commercial item.
The objective of the rule is to promote
Government access to commercial
information technology, by eliminating
the application of domestic source
requirements to the acquisition of such
information technology. The rule
applies to (1) All offerors responding to
DoD solicitations for commercial
information technology where the Buy
American Act previously applied
(generally, acquisitions between the
micropurchase threshold of $2,500 and
the World Trade Organization
Government Procurement Agreement
(WTO GPA) threshold of $193,000); and
(2) manufacturers of components of
commercial information technology
products. Based on DD Form 350,
Individual Contracting Action Report,
data for Product Service Codes 7010
through 7050, which include ADP
Equipment Software, Supplies, and
Support Equipment, DoD awarded
approximately 8,170 contracts to small
business concerns for the acquisition of
commercial information technology
during fiscal year 2005. Of those
contracts, 7,850 were under $175,000,
which was the WTO GPA threshold in
2005. The potential negative impact of
increased competition from offerors of
foreign products is expected to have
minimal impact in the range of $2,500
to $100,000, because these awards are
generally set aside for small business
concerns. Furthermore, there will be a
positive impact due to a reduction in
administrative burden, since offerors
and contractors will no longer need to
track the origin of components to
determine if an information technology
product complies with Buy American
Act requirements. The DD Form 350
system does not provide data at the
subcontract level. However,
manufacturers of domestic components
of information technology products may
face increased competition from
manufacturers of foreign components as
a result of this rule. There are no
practical alternatives that would
accomplish the objectives of the
statutory requirements.
C. Paperwork Reduction Act
This rule will reduce the information
collection requirements that have been
approved by the Office of Management
and Budget, under Control Number
0704–0229, for use through May 31,
2007. Under this clearance, 36,175
annual burden hours have been
approved for the provision at DFARS
252.225–7000, Buy American Act—
Balance of Payments Program
Certificate; and 1,000 annual burden
E:\FR\FM\04OCR1.SGM
04OCR1
58540
Federal Register / Vol. 71, No. 192 / Wednesday, October 4, 2006 / Rules and Regulations
hours have been approved for the
provision at DFARS 252.225–7035, Buy
American Act—Free Trade
Agreements—Balance of Payments
Program Certificate. DoD estimates that
the rule will result in a 5 percent
reduction in the burden hours for the
provision at DFARS 252.225–7000
(1,800 hours) and a 50 percent reduction
in the burden hours for the provision at
DFARS 252.225–7035 (500 hours).
List of Subjects in 48 CFR Part 225
Government procurement.
Michele P. Peterson,
Editor, Defense Acquisition Regulations
System.
Therefore, 48 CFR Part 225 is
amended as follows:
I
and adding paragraph (a)(2)(vi) to read
as follows:
§ 225.7501
Policy.
*
*
*
*
*
(a) * * *
(2) * * *
(iv) An industrial gas;
(v) A brand drug specified by the
Defense Medical Materiel Board; or
(vi) Information technology that is a
commercial item, using fiscal year 2004
or subsequent funds (Section 535 of
Division F of the Consolidated
Appropriations Act, 2004 (Pub. L. 108–
199), and the same provision in
subsequent appropriations acts);
*
*
*
*
*
[FR Doc. E6–16401 Filed 10–3–06; 8:45 am]
BILLING CODE 5001–08–P
PART 225—FOREIGN ACQUISITION
I
1. The authority citation for 48 CFR
Part 225 continues to read as follows:
DEPARTMENT OF DEFENSE
Authority: 41 U.S.C. 421 and 48 CFR
Chapter 1.
Defense Acquisition Regulations
System
2. Section 225.1101 is amended by
revising paragraph (2)(iii), paragraph
(10)(i) introductory text, and paragraph
(10)(ii) to read as follows:
I
§ 225.1101
Acquisition of supplies.
erjones on PROD1PC72 with RULES
*
*
*
*
*
(2) * * *
(iii) An exception to the Buy
American Act or Balance of Payments
Program applies (see FAR 25.103,
225.103, and 225.7501); or
*
*
*
*
*
(10)(i) Except as provided in
paragraph (10)(ii) of this section, use the
clause at 252.225–7036, Buy American
Act—Free Trade Agreements—Balance
of Payments Program, instead of the
clause at FAR 52.225–3, Buy American
Act—Free Trade Agreements—Israeli
Trade Act, in solicitations and contracts
for the items listed at 225.401–70, when
the estimated value equals or exceeds
$25,000, but is less than $193,000, and
a Free Trade Agreement applies to the
acquisition.
*
*
*
*
*
(ii) Do not use the clause if—
(A) Purchase from foreign sources is
restricted (see 225.401(a)(2)), unless the
contracting officer anticipates a waiver
of the restriction; or
(B) Acquiring information technology
that is a commercial item, using fiscal
year 2004 or subsequent funds (Section
535 of Division F of the Consolidated
Appropriations Act, 2004 (Pub. L. 108–
199), and the same provision in
subsequent appropriations acts).
*
*
*
*
*
I 3. Section 225.7501 is amended by
revising paragraphs (a)(2)(iv) and (v)
VerDate Aug<31>2005
14:25 Oct 03, 2006
Jkt 211001
48 CFR Part 236
RIN 0750–AF41
Defense Federal Acquisition
Regulation Supplement;
Congressional Notification of
Architect-Engineer Services/Military
Family Housing Contracts (DFARS
Case 2006–D015)
Defense Acquisition
Regulations System, Department of
Defense (DoD).
ACTION: Interim rule with request for
comments.
AGENCY:
SUMMARY: DoD has issued an interim
rule amending the Defense Federal
Acquisition Regulation Supplement
(DFARS) to implement Section
1031(a)(37) of the National Defense
Authorization Act for Fiscal Year 2004.
Section 1031(a)(37) amended the
requirements for submission of a
notification to Congress before the
award of a contract for architectural and
engineering services or construction
design in connection with military
construction, military family housing, or
restoration or replacement of damaged
or destroyed facilities.
DATES: Effective date: October 4, 2006.
Comment date: Comments on the
interim rule should be submitted in
writing to the address shown below on
or before December 4, 2006, to be
considered in the formation of the final
rule.
ADDRESSES: You may submit comments,
identified by DFARS Case 2006–D015,
using any of the following methods:
PO 00000
Frm 00056
Fmt 4700
Sfmt 4700
• Federal eRulemaking Portal: https://
www.regulations.gov. Follow the
instructions for submitting comments.
• E-mail: dfars@osd.mil. Include
DFARS Case 2006–D015 in the subject
line of the message.
• Fax: (703) 602–0350.
• Mail: Defense Acquisition
Regulations System, Attn: Ms. Debra
Overstreet, OUSD(AT&L)DPAP(DARS),
IMD 3C132, 3062 Defense Pentagon,
Washington, DC 20301–3062.
• Hand Delivery/Courier: Defense
Acquisition Regulations System, Crystal
Square 4, Suite 200A, 241 18th Street,
Arlington, VA 22202–3402.
Comments received generally will be
posted without change to https://
www.regulations.gov, including any
personal information provided.
FOR FURTHER INFORMATION CONTACT: Ms.
Debra Overstreet, (703) 602–0310.
SUPPLEMENTARY INFORMATION:
A. Background
This interim rule revises DFARS
236.601 to implement Section
1031(a)(37) of the National Defense
Authorization Act for Fiscal Year 2004
(Public Law 108–136). Section
1031(a)(37) amended the requirements
at 10 U.S.C. 2807, for submission of a
notification to Congress before the
award of a contract for architectural and
engineering services or construction
design in connection with military
construction, military family housing, or
restoration or replacement of damaged
or destroyed facilities. The amendments
increased the contract dollar threshold
for submission from $500,000 to
$1,000,000; and reduced the time period
for submission, from 21 to 14 days
before obligation of funds, when the
notification is provided in electronic
medium.
This rule was not subject to Office of
Management and Budget review under
Executive Order 12866, dated
September 30, 1993.
B. Regulatory Flexibility Act
DoD does not expect this 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 relates to reporting
requirements that are internal to the
Government. Therefore, DoD has not
performed an initial regulatory
flexibility analysis. DoD invites
comments from small businesses and
other interested parties. DoD also will
consider comments from small entities
concerning the affected DFARS subpart
in accordance with 5 U.S.C. 610. Such
comments should be submitted
E:\FR\FM\04OCR1.SGM
04OCR1
]]>Agencies
[Federal Register Volume 71, Number 192 (Wednesday, October 4, 2006)]
[Rules and Regulations]
[Pages 58539-58540]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-16401]
[[Page 58539]]
-----------------------------------------------------------------------
DEPARTMENT OF DEFENSE
Defense Acquisition Regulations System
48 CFR Part 225
RIN 0750-AF23
Defense Federal Acquisition Regulation Supplement; Buy American
Act Exemption for Commercial Information Technology (DFARS Case 2005-
D011)
AGENCY: Defense Acquisition Regulations System, Department of Defense
(DoD).
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: DoD has issued a final rule amending the Defense Federal
Acquisition Regulation Supplement (DFARS) to implement provisions of
annual appropriations acts that authorize an exemption from the Buy
American Act for the acquisition of commercial information technology.
Dates: Effective Date: October 4, 2006.
FOR FURTHER INFORMATION CONTACT: Ms. Amy Williams, Defense Acquisition
Regulations System, OUSD(AT&L)DPAP(DARS), IMD 3C132, 3062 Defense
Pentagon, Washington, DC 20301-3062. Telephone (703) 602-0328;
facsimile (703) 602-0350. Please cite DFARS Case 2005-D011.
SUPPLEMENTARY INFORMATION:
A. Background
Section 535 of Division F of the Consolidated Appropriations Act,
2004 (Pub. L. 108-199); Section 517 of Division H of the Consolidated
Appropriations Act, 2005 (Pub. L. 108-447); and Section 717 of the
Consolidated Appropriations Act, 2006 (Pub. L. 109-115) provide an
exemption from the Buy American Act for the acquisition of information
technology that is a commercial item. This final rule amends the
acquisition procedures in DFARS Part 225 to reflect the exemption,
which previously had been implemented through the issuance of annual
DoD-wide class deviations.
DoD published a proposed rule at 71 FR 18694 on April 12, 2006.
Five sources submitted comments on the proposed rule. Three of the
respondents supported the rule. A discussion of the other comments is
provided below.
1. Comment. One respondent recommended that application of the Buy
American Act restrictions to non-sensitive electrical and electronic
products be reevaluated in the context of both the increasingly global
economy and potential savings to the Government.
DoD Response. Revision of the application of the Buy American Act
to electrical/electronic products would require statutory change and,
therefore, is outside the scope of this DFARS case.
2. Comment. One respondent requested that the rule clearly apply as
an exemption to the Berry Amendment requirements of the clause at DFARS
252.225-7014, Preference for Domestic Specialty Metals, for commercial
information technology.
DoD Response. The appropriations act provisions contain authority
only for an exemption from the Buy American Act (41 U.S.C. 10a-d).
Therefore, DoD is unable to adopt this recommendation for an exemption
from the Berry Amendment (10 U.S.C. 2533a).
3. Comment. One respondent disagreed with the rule, due to the
security risk associated with foreign entities potentially gaining
access to DoD information systems.
DoD Response. The policy in the rule is required by statute. The
appropriations act provisions state that the restrictions of the Buy
American Act ``shall not apply'' to the acquisition of information
technology that is a commercial item. This policy has been in effect
since May 2004, through the issuance of annual DoD-wide class
deviations. Security of information technology is addressed in DFARS
Subpart 239.71, which requires agencies to ensure that information
assurance is provided for information technology in accordance with
current policies, procedures, and statutes, to include--
(1) The National Security Act;
(2) The Clinger-Cohen Act;
(3) National Security Telecommunications and Information Systems
Security Policy No. 11;
(4) Federal Information Processing Standards;
(5) DoD Directive 8500.1, Information Assurance; and
(6) DoD Instruction 8500.2, Information Assurance Implementation.
Therefore, DoD has adopted the proposed rule as a final rule
without change.
This rule was not subject to Office of Management and Budget review
under Executive Order 12866, dated September 30, 1993.
B. Regulatory Flexibility Act
DoD has prepared a final regulatory flexibility analysis consistent
with 5 U.S.C. 604. A copy of the analysis may be obtained from the
point of contact specified herein. The analysis is summarized as
follows:
This final rule amends the DFARS to implement provisions of annual
appropriations acts that authorize an exemption from the Buy American
Act for the acquisition of information technology that is a commercial
item. The objective of the rule is to promote Government access to
commercial information technology, by eliminating the application of
domestic source requirements to the acquisition of such information
technology. The rule applies to (1) All offerors responding to DoD
solicitations for commercial information technology where the Buy
American Act previously applied (generally, acquisitions between the
micropurchase threshold of $2,500 and the World Trade Organization
Government Procurement Agreement (WTO GPA) threshold of $193,000); and
(2) manufacturers of components of commercial information technology
products. Based on DD Form 350, Individual Contracting Action Report,
data for Product Service Codes 7010 through 7050, which include ADP
Equipment Software, Supplies, and Support Equipment, DoD awarded
approximately 8,170 contracts to small business concerns for the
acquisition of commercial information technology during fiscal year
2005. Of those contracts, 7,850 were under $175,000, which was the WTO
GPA threshold in 2005. The potential negative impact of increased
competition from offerors of foreign products is expected to have
minimal impact in the range of $2,500 to $100,000, because these awards
are generally set aside for small business concerns. Furthermore, there
will be a positive impact due to a reduction in administrative burden,
since offerors and contractors will no longer need to track the origin
of components to determine if an information technology product
complies with Buy American Act requirements. The DD Form 350 system
does not provide data at the subcontract level. However, manufacturers
of domestic components of information technology products may face
increased competition from manufacturers of foreign components as a
result of this rule. There are no practical alternatives that would
accomplish the objectives of the statutory requirements.
C. Paperwork Reduction Act
This rule will reduce the information collection requirements that
have been approved by the Office of Management and Budget, under
Control Number 0704-0229, for use through May 31, 2007. Under this
clearance, 36,175 annual burden hours have been approved for the
provision at DFARS 252.225-7000, Buy American Act--Balance of Payments
Program Certificate; and 1,000 annual burden
[[Page 58540]]
hours have been approved for the provision at DFARS 252.225-7035, Buy
American Act--Free Trade Agreements--Balance of Payments Program
Certificate. DoD estimates that the rule will result in a 5 percent
reduction in the burden hours for the provision at DFARS 252.225-7000
(1,800 hours) and a 50 percent reduction in the burden hours for the
provision at DFARS 252.225-7035 (500 hours).
List of Subjects in 48 CFR Part 225
Government procurement.
Michele P. Peterson,
Editor, Defense Acquisition Regulations System.
0
Therefore, 48 CFR Part 225 is 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. 421 and 48 CFR Chapter 1.
0
2. Section 225.1101 is amended by revising paragraph (2)(iii),
paragraph (10)(i) introductory text, and paragraph (10)(ii) to read as
follows:
Sec. 225.1101 Acquisition of supplies.
* * * * *
(2) * * *
(iii) An exception to the Buy American Act or Balance of Payments
Program applies (see FAR 25.103, 225.103, and 225.7501); or
* * * * *
(10)(i) Except as provided in paragraph (10)(ii) of this section,
use the clause at 252.225-7036, Buy American Act--Free Trade
Agreements--Balance of Payments Program, instead of the clause at FAR
52.225-3, Buy American Act--Free Trade Agreements--Israeli Trade Act,
in solicitations and contracts for the items listed at 225.401-70, when
the estimated value equals or exceeds $25,000, but is less than
$193,000, and a Free Trade Agreement applies to the acquisition.
* * * * *
(ii) Do not use the clause if--
(A) Purchase from foreign sources is restricted (see
225.401(a)(2)), unless the contracting officer anticipates a waiver of
the restriction; or
(B) Acquiring information technology that is a commercial item,
using fiscal year 2004 or subsequent funds (Section 535 of Division F
of the Consolidated Appropriations Act, 2004 (Pub. L. 108-199), and the
same provision in subsequent appropriations acts).
* * * * *
0
3. Section 225.7501 is amended by revising paragraphs (a)(2)(iv) and
(v) and adding paragraph (a)(2)(vi) to read as follows:
Sec. 225.7501 Policy.
* * * * *
(a) * * *
(2) * * *
(iv) An industrial gas;
(v) A brand drug specified by the Defense Medical Materiel Board;
or
(vi) Information technology that is a commercial item, using fiscal
year 2004 or subsequent funds (Section 535 of Division F of the
Consolidated Appropriations Act, 2004 (Pub. L. 108-199), and the same
provision in subsequent appropriations acts);
* * * * *
[FR Doc. E6-16401 Filed 10-3-06; 8:45 am]
BILLING CODE 5001-08-P
