Defense Federal Acquisition Regulations Supplement; Statutory Waiver for Commercially Available Off-the-Shelf Items (DFARS Case 2008-D009), 68384-68386 [E9-30294]
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68384
Federal Register / Vol. 74, No. 246 / Thursday, December 24, 2009 / Rules and Regulations
(c) ‘‘End product’’ is defined in the
clause at 252.225–7012, Preference for
Certain Domestic Commodities.
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*
■ 4. Section 225.7005–1 is revised to
read as follows:
225.7005–1
Restriction.
In accordance with 10 U.S.C. 2534, do
not acquire chemical weapons antidote
contained in automatic injectors, or the
components for such injectors, unless
the chemical weapons antidote or
component is manufactured in the
United States or Canada by a company
that—
(a) Has received all required
regulatory approvals; and
(b) Has the plant, equipment, and
personnel to perform the contract in the
United States or Canada at the time of
contract award.
■ 5. Section 225.7101 is revised to read
as follows:
225.7101
Definitions.
PART 252—SOLICITATION
PROVISIONS AND CONTRACT
CLAUSES
6. Section 252.225–7000 is amended
by revising the clause date and
paragraph (a) to read as follows:
■
252.225–7000 Buy American Act—Balance
of Payments Program Certificate.
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*
wwoods2 on DSK1DXX6B1PROD with RULES_PART 1
Buy American Act—Balance of
Payments Program Certificate (DEC
2009)
(a) Definitions. ‘‘Commercially
available off-the-shelf (COTS) item,’’
‘‘component,’’ ‘‘domestic end product,’’
‘‘foreign end product,’’ ‘‘qualifying
country,’’ ‘‘qualifying country end
product,’’ and ‘‘United States’’ have the
meanings given in the Buy American
Act and Balance of Payments Program
clause of this solicitation.
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*
■ 7. Section 252.225–7013 is amended
by:
■ a. Revising the clause date;
■ b. Redesignating paragraphs (a)(1)
through (3) as paragraphs (a)(2) through
(4) respectively; and
■ c. Adding a new paragraph (a)(1) to
read as follows:
252.225–7013
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VerDate Nov<24>2008
Duty-Free Entry.
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15:17 Dec 23, 2009
Jkt 220001
(a) * * *
(1) ‘‘Component’’ means any item
supplied to the Government as part of
an end product or of another
component.
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■ 8. Section 252.225–7019 is amended
by:
■ a. Revising the clause date;
■ b. Redesignating paragraphs (a)
through (c) as paragraphs (b) through (d)
respectively;
■ c. Adding a new paragraph (a);
■ d. Amending newly designated
paragraph (c) by removing ‘‘paragraph
(a) of this clause’’ and by adding
‘‘paragraph (b) of this clause’’ in its
place; and
■ e. Revising newly designated
paragraph (d) to read as follows:
252.225–7019 Restriction on Acquisition
of Anchor and Mooring Chain.
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Restriction on Acquisition of Anchor
and Mooring Chain (DEC 2009)
‘‘Component’’ and ‘‘domestic
manufacture,’’ as used in this subpart,
are defined in the clause at 252.225–
7025, Restriction on Acquisition of
Forgings.
*
Duty-Free Entry (DEC 2009)
(a) Definition.
‘‘Component,’’ as used in this clause,
means an article, material, or supply
incorporated directly into an end
product.
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*
(d) The Contractor shall insert the
substance of this clause, including this
paragraph (d), in all subcontracts for
items containing welded shipboard
anchor and mooring chain, four inches
or less in diameter.
■ 9. Section 252.225–7025 is amended
by:
■ a. Revising the clause date;
■ b. Redesignating paragraphs (a)(1) and
(2) as paragraphs (a)(2) and (3)
respectively;
■ c. Adding a new paragraph (a)(1); and
■ d. Revising newly designated
paragraph (a)(2) and paragraph (b) to
read as follows:
252.225–7025
of Forgings.
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*
Restriction on Acquisition
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*
Restriction on Acquisition of Forgings
(DEC 2009)
(a) * * *
(1) Component means any item
supplied to the Government as part of
an end product or of another
component.
(2) Domestic manufacture means
manufactured in the United States, its
outlying areas, or Canada.
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*
(b) End products and their
components delivered under this
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contract shall contain forging items that
are of domestic manufacture only.
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■ 10. Section 252.225–7035 is amended
by revising the clause date and
paragraph (a) to read as follows:
252.225–7035 Buy American Act—Free
Trade Agreements—Balance of Payments
Program Certificate.
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*
Buy American Act—Free Trade
Agreements—Balance of Payments
Program Certificate (DEC 2009)
(a) Definitions. ‘‘Bahrainian end
product,’’ ‘‘commercially available offthe-shelf (COTS) item,’’ ‘‘component,’’
‘‘domestic end product,’’ ‘‘Free Trade
Agreement country,’’ ‘‘Free Trade
Agreement country end product,’’
‘‘foreign end product,’’ ‘‘Moroccan end
product,’’ ‘‘qualifying country end
product,’’ and ‘‘United States,’’ as used
in this provision, have the meanings
given in the Buy American Act—Free
Trade Agreements—Balance of
Payments Program clause of this
solicitation.
*
*
*
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*
[FR Doc. E9–30296 Filed 12–23–09; 8:45 am]
BILLING CODE 5001–08–P
DEPARTMENT OF DEFENSE
Defense Acquisition Regulations
System
48 CFR Part 252
Defense Federal Acquisition
Regulations Supplement; Statutory
Waiver for Commercially Available Offthe-Shelf Items (DFARS Case 2008–
D009)
AGENCY: Defense Acquisition
Regulations System, Department of
Defense (DoD).
ACTION: Final rule.
SUMMARY: DoD has adopted as final,
without change, an interim rule
amending the Defense Federal
Acquisition Regulation Supplement
(DFARS) to conform to the FAR changes
implementing the waiver of the
component test of the Buy American
Act to contracts and subcontracts. The
Federal Acquisition Regulation (FAR)
Case 2000–305 implemented 41 U.S.C.
431 with respect to the inapplicability
of certain laws to contracts and
subcontracts for the acquisition of
commercially available off-the-shelf
(COTS) items.
DATES: Effective Date: December 24,
2009.
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Federal Register / Vol. 74, No. 246 / Thursday, December 24, 2009 / Rules and Regulations
FOR FURTHER INFORMATION CONTACT: Ms.
Amy Williams, Defense Acquisition
Regulations System, OUSD(AT&L)
DPAP(DARS), IMD 3D139, 3062 Defense
Pentagon, Washington, DC 20301–3062.
Telephone 703–602–0328; facsimile
703–602–7887. Please cite DFARS Case
2008–D009.
SUPPLEMENTARY INFORMATION:
wwoods2 on DSK1DXX6B1PROD with RULES_PART 1
A. Background
The Buy American Act (41 U.S.C.
10a–10b) uses a two-part test to define
a ‘‘domestic end product’’
(manufactured in the United States and
a formula based on cost of domestic
components) (see FAR 25.001(c)(1) and
definition of ‘‘domestic end products’’
at 25.003). The second part of this test
is referred to as the ‘‘component test.’’
DoD published an interim rule on
January 15, 2009 (74 FR 2422), to amend
the Defense Federal Acquisition
Regulation Supplement (DFARS) to
conform to the FAR changes
implementing the waiver of the
component test of the Buy American
Act for the acquisition of commercially
available off-the-shelf (COTS) items
(FAR Case 2000–305), published as a
final rule in the Federal Register on
January 15, 2009 (74 FR 2713), and
effective February 17, 2009.
The comment period on the DFARS
interim rule closed on March 16, 2009.
DoD received two responses, both
representing the view of manufacturers
of specialty metals.
1. The rule has been promulgated and
justified based on circular logic.
One respondent objects that the final
rule under FAR Case 2000–305 and the
interim rule under DFARS Case 2008–
D009 employ circular reasoning in
changing the definition of COTS item.
The respondent states that ‘‘each of the
two rules is justified by pointing to the
other.’’ The respondent objects that GSA
and DoD have adopted a rule without
meaningfully addressing comments on
the new COTS definition submitted in
response to DoD’s proposed rule 2008–
D003.
Response: This case was not based on
circular logic but on a progression from
the DFARS proposed rule 2008–D003 to
the FAR Case 2000–305 and to the
interim rule under this DFARS Case
2008–D009. The comments submitted in
response to the proposed rule were
thoroughly reviewed and analyzed prior
to the decision to incorporate this
definition in the FAR rule and this
DFARS rule and were then addressed in
the Federal Register when the final rule
2008–D003 was subsequently published
on July 29, 2009 (74 FR 52895).
VerDate Nov<24>2008
15:17 Dec 23, 2009
Jkt 220001
2. Definition of COTS item should not
allow modification to COTS items at
higher tiers in the supply chain.
Both respondents opposed the
definition of ‘‘commercially available
off-the-shelf (COTS) item’’ because they
consider it inconsistent with the
statutory definition of COTS item (41
U.S.C. 431(c)) to allow modifications to
occur at the next higher tier in the
supply chain.
The respondents were concerned that
an item could be substantially modified
by downstream contractors prior to
delivery to the Government.
• One respondent stated that under
this definition, a COTS item can be
modified in any way and still retain its
character as a COTS item.
• The respondent further stated that
this definition of COTS items results in
the COTS exception applying to all
commercial items.
• The respondent is concerned that
contractors may opt to deconstruct
major equipment end items such as
green aircraft with the expectation that
this approach would leave them with
just a very small set of items requiring
compliance. The respondent considered
that the use of the commercial
derivative military article exception
would be more appropriate.
• The respondents cited language
from the House Armed Services
Committee report which stated that the
exception for COTS items and
components generally applies to items
incorporated in non-commercial end
items. The Committee also stated that if
a contractor is using COTS items with
more substantial modifications, it must
use the de minimis or commercial
derivative military article (CDMA)
exceptions.
• The respondents requested that
DoD allow only modifications that are
incidental to installation, joining, or
incorporation into the non-commercial
end item.
Response: The arguments of these
respondents are not pertinent to this
DFARS rule and this DFARS rule has no
impact on these respondents. This case
implements a waiver of the component
test under the Buy American Act for end
items that are COTS items. The concern
of these respondents relates to treatment
of components containing specialty
metals as COTS items. Their rationale is
applicable to the restrictions of 10
U.S.C. 2533b on acquisition of specialty
metals, but not to the Buy American
Act.
The comments relating to the House
Report that accompanied the FY–09
Duncan Hunter National Defense
Authorization Act are inapplicable to
this case, as are the comments regarding
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Fmt 4700
Sfmt 4700
68385
exceptions for commercial derivative
military articles and de minimis
amounts of specialty metals, as these
apply only to the specialty metals
restriction at 10 U.S.C. 2533b.
The comments with regard to
treatment of components as COTS items
were addressed in more detail in the
preamble to the final rule under DFARS
Case 2008–D003 (74 FR 52895).
However, the statement that, under this
definition, COTS items that have been
substantially modified are still
considered to be COTS items is not
accurate. The item must be provided to
the next higher tier of the supply chain
without modification. Whether it is a
COTS item is determined at the time of
transfer. DoD considers it reasonable to
view COTS items that are provided from
the global supply chain to the next
higher tier supplier, without any
modifications, to be ‘‘delivered to the
Government’’ by those suppliers
without modification. If DoD were not
to view such items in this way, these
COTS suppliers would not be able to
provide globally available COTS items
to the Government without burdensome
investigations to track the eventual use
of the COTS item to the end of the final
assembly. Further, the COTS item
definition, unlike the definition of
‘‘commercial item’’, requires that the
item must be sold in substantial
quantities in the commercial
marketplace.
This rule was subject to Office of
Management and Budget review under
Executive Order 12866, dated
September 30, 1933.
B. Regulatory Flexibility Act
DoD certifies that this final rule will
not 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.
Under the rule, all offerors and
contractors (including small businesses)
that provide U.S.-made items will no
longer have to track the origin of the
components in order to determine
whether the items qualify as domestic
end products or domestic construction
material under the Buy American Act.
While beneficial in acquisitions subject
to the Buy American Act, the impact of
this change is not considered to be a
significant economic impact on small
businesses, because DoD has already
waived the component test for U.S.made items in acquisitions that are
subject to the World Trade Organization
Government Procurement Agreement
(WTO GPA), and contractors generally
pass on to the Government the
administrative costs incurred in
complying with burdensome
E:\FR\FM\24DER1.SGM
24DER1
68386
Federal Register / Vol. 74, No. 246 / Thursday, December 24, 2009 / Rules and Regulations
Government regulations such as the
component test under the Buy American
Act, or decline to sell to the
Government. No comments were
received with regard to impact on small
business.
Amy G. Williams,
Executive Editor, Defense Acquisition
Regulations System.
C. Paperwork Reduction Act
PART 252—[AMENDED]
The Paperwork Reduction Act (Pub.
L. 104–13) applies, because this rule
will result in some reduced burdens
under OMB Control number 0704–0229,
DFARS Part 225 and associated clauses.
A Paperwork Burden Act Change to
pertinent existing burdens has been
submitted to the Office of Management
and Budget under 44 U.S.C. 2502, et
seq.
List of Subjects in 48 CFR Part 252
Government procurement.
Fish and Wildlife Service
50 CFR Part 20
[FWS–R9–MB–2008–0124; 91200–1231–
9BPP–L2]
RIN 1018–AW31
Interim Rule Adopted as Final Without
Change
Accordingly, the interim rule
amending 48 CFR Part 252, which was
published at 74 FR 2422 on January 15,
2009, is adopted as a final rule without
change.
■
[FR Doc. E9–30294 Filed 12–23–09; 8:45 am]
BILLING CODE 5001–08–P
DEPARTMENT OF THE INTERIOR
Migratory Bird Hunting; Late Seasons
and Bag and Possession Limits for
Certain Migratory Game Birds
Correction
In rule document E9–22874 beginning
on page 49244 in the issue of Friday,
September 25, 2009 make the following
corrections:
On pages 49247, 49253 through
49276, 49280, and 49281, the incorrect
graphics published. These graphics are
being reprinted to read as set forth
below:
wwoods2 on DSK1DXX6B1PROD with RULES_PART 1
BILLING CODE 1301–00–C
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15:17 Dec 23, 2009
Jkt 220001
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Fmt 4700
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]]>Agencies
[Federal Register Volume 74, Number 246 (Thursday, December 24, 2009)]
[Rules and Regulations]
[Pages 68384-68386]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-30294]
-----------------------------------------------------------------------
DEPARTMENT OF DEFENSE
Defense Acquisition Regulations System
48 CFR Part 252
Defense Federal Acquisition Regulations Supplement; Statutory
Waiver for Commercially Available Off-the-Shelf Items (DFARS Case 2008-
D009)
AGENCY: Defense Acquisition Regulations System, Department of Defense
(DoD).
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: DoD has adopted as final, without change, an interim rule
amending the Defense Federal Acquisition Regulation Supplement (DFARS)
to conform to the FAR changes implementing the waiver of the component
test of the Buy American Act to contracts and subcontracts. The Federal
Acquisition Regulation (FAR) Case 2000-305 implemented 41 U.S.C. 431
with respect to the inapplicability of certain laws to contracts and
subcontracts for the acquisition of commercially available off-the-
shelf (COTS) items.
DATES: Effective Date: December 24, 2009.
[[Page 68385]]
FOR FURTHER INFORMATION CONTACT: Ms. Amy Williams, Defense Acquisition
Regulations System, OUSD(AT&L) DPAP(DARS), IMD 3D139, 3062 Defense
Pentagon, Washington, DC 20301-3062. Telephone 703-602-0328; facsimile
703-602-7887. Please cite DFARS Case 2008-D009.
SUPPLEMENTARY INFORMATION:
A. Background
The Buy American Act (41 U.S.C. 10a-10b) uses a two-part test to
define a ``domestic end product'' (manufactured in the United States
and a formula based on cost of domestic components) (see FAR
25.001(c)(1) and definition of ``domestic end products'' at 25.003).
The second part of this test is referred to as the ``component test.''
DoD published an interim rule on January 15, 2009 (74 FR 2422), to
amend the Defense Federal Acquisition Regulation Supplement (DFARS) to
conform to the FAR changes implementing the waiver of the component
test of the Buy American Act for the acquisition of commercially
available off-the-shelf (COTS) items (FAR Case 2000-305), published as
a final rule in the Federal Register on January 15, 2009 (74 FR 2713),
and effective February 17, 2009.
The comment period on the DFARS interim rule closed on March 16,
2009.
DoD received two responses, both representing the view of
manufacturers of specialty metals.
1. The rule has been promulgated and justified based on circular
logic.
One respondent objects that the final rule under FAR Case 2000-305
and the interim rule under DFARS Case 2008-D009 employ circular
reasoning in changing the definition of COTS item. The respondent
states that ``each of the two rules is justified by pointing to the
other.'' The respondent objects that GSA and DoD have adopted a rule
without meaningfully addressing comments on the new COTS definition
submitted in response to DoD's proposed rule 2008-D003.
Response: This case was not based on circular logic but on a
progression from the DFARS proposed rule 2008-D003 to the FAR Case
2000-305 and to the interim rule under this DFARS Case 2008-D009. The
comments submitted in response to the proposed rule were thoroughly
reviewed and analyzed prior to the decision to incorporate this
definition in the FAR rule and this DFARS rule and were then addressed
in the Federal Register when the final rule 2008-D003 was subsequently
published on July 29, 2009 (74 FR 52895).
2. Definition of COTS item should not allow modification to COTS
items at higher tiers in the supply chain.
Both respondents opposed the definition of ``commercially available
off-the-shelf (COTS) item'' because they consider it inconsistent with
the statutory definition of COTS item (41 U.S.C. 431(c)) to allow
modifications to occur at the next higher tier in the supply chain.
The respondents were concerned that an item could be substantially
modified by downstream contractors prior to delivery to the Government.
One respondent stated that under this definition, a COTS
item can be modified in any way and still retain its character as a
COTS item.
The respondent further stated that this definition of COTS
items results in the COTS exception applying to all commercial items.
The respondent is concerned that contractors may opt to
deconstruct major equipment end items such as green aircraft with the
expectation that this approach would leave them with just a very small
set of items requiring compliance. The respondent considered that the
use of the commercial derivative military article exception would be
more appropriate.
The respondents cited language from the House Armed
Services Committee report which stated that the exception for COTS
items and components generally applies to items incorporated in non-
commercial end items. The Committee also stated that if a contractor is
using COTS items with more substantial modifications, it must use the
de minimis or commercial derivative military article (CDMA) exceptions.
The respondents requested that DoD allow only
modifications that are incidental to installation, joining, or
incorporation into the non-commercial end item.
Response: The arguments of these respondents are not pertinent to
this DFARS rule and this DFARS rule has no impact on these respondents.
This case implements a waiver of the component test under the Buy
American Act for end items that are COTS items. The concern of these
respondents relates to treatment of components containing specialty
metals as COTS items. Their rationale is applicable to the restrictions
of 10 U.S.C. 2533b on acquisition of specialty metals, but not to the
Buy American Act.
The comments relating to the House Report that accompanied the FY-
09 Duncan Hunter National Defense Authorization Act are inapplicable to
this case, as are the comments regarding exceptions for commercial
derivative military articles and de minimis amounts of specialty
metals, as these apply only to the specialty metals restriction at 10
U.S.C. 2533b.
The comments with regard to treatment of components as COTS items
were addressed in more detail in the preamble to the final rule under
DFARS Case 2008-D003 (74 FR 52895). However, the statement that, under
this definition, COTS items that have been substantially modified are
still considered to be COTS items is not accurate. The item must be
provided to the next higher tier of the supply chain without
modification. Whether it is a COTS item is determined at the time of
transfer. DoD considers it reasonable to view COTS items that are
provided from the global supply chain to the next higher tier supplier,
without any modifications, to be ``delivered to the Government'' by
those suppliers without modification. If DoD were not to view such
items in this way, these COTS suppliers would not be able to provide
globally available COTS items to the Government without burdensome
investigations to track the eventual use of the COTS item to the end of
the final assembly. Further, the COTS item definition, unlike the
definition of ``commercial item'', requires that the item must be sold
in substantial quantities in the commercial marketplace.
This rule was subject to Office of Management and Budget review
under Executive Order 12866, dated September 30, 1933.
B. Regulatory Flexibility Act
DoD certifies that this final rule will not 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. Under
the rule, all offerors and contractors (including small businesses)
that provide U.S.-made items will no longer have to track the origin of
the components in order to determine whether the items qualify as
domestic end products or domestic construction material under the Buy
American Act. While beneficial in acquisitions subject to the Buy
American Act, the impact of this change is not considered to be a
significant economic impact on small businesses, because DoD has
already waived the component test for U.S.-made items in acquisitions
that are subject to the World Trade Organization Government Procurement
Agreement (WTO GPA), and contractors generally pass on to the
Government the administrative costs incurred in complying with
burdensome
[[Page 68386]]
Government regulations such as the component test under the Buy
American Act, or decline to sell to the Government. No comments were
received with regard to impact on small business.
C. Paperwork Reduction Act
The Paperwork Reduction Act (Pub. L. 104-13) applies, because this
rule will result in some reduced burdens under OMB Control number 0704-
0229, DFARS Part 225 and associated clauses. A Paperwork Burden Act
Change to pertinent existing burdens has been submitted to the Office
of Management and Budget under 44 U.S.C. 2502, et seq.
List of Subjects in 48 CFR Part 252
Government procurement.
Amy G. Williams,
Executive Editor, Defense Acquisition Regulations System.
PART 252--[AMENDED]
Interim Rule Adopted as Final Without Change
0
Accordingly, the interim rule amending 48 CFR Part 252, which was
published at 74 FR 2422 on January 15, 2009, is adopted as a final rule
without change.
[FR Doc. E9-30294 Filed 12-23-09; 8:45 am]
BILLING CODE 5001-08-P
