Defense Federal Acquisition Regulation Supplement; Acquisitions in Support of Operations in Iraq or Afghanistan (DFARS Case 2008-D002), 18035-18040 [2010-7261]
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updated the policy at 235.006 to address
requirements for other than MDAPs.
Two sources submitted comments on
the interim rule. DoD’s single response
to both comments is provided following
the comments.
1. Comment: One respondent
suggested that the interim rule appears
to be requiring written determinations
on MDAPs and non-MDAPs that are
exactly the opposite of one another. For
MDAPS, 234.004(iii) requires a written
determination by the MDA at the time
of Milestone B approval if a fixed-price
contract is not selected, and for nonMDAPs, 235.006(b)(i)(A)(3) requires a
written determination if a fixed-price
contract is selected for a developmental
program. The respondent indicated that
it is hard for him to understand the logic
that would discourage the use of fixedprice development contracts for nonmajor programs, but would encourage
their use for major programs. Moreover,
he suggested that fixed-price
development contracts are likely to be a
source of numerous requests for
equitable adjustments or claims, and
concluded that instituting such a policy
would be challenging and ill-timed even
for a robust, experienced, and
disciplined workforce.
2. Comment: The respondent stated
that the interim rule appears to
introduce additional burdens on DoD
program managers and contracting
personnel to justify the decision to issue
a shipbuilding contract on a cost-type
basis. The respondent believes that,
when selecting a contract type for any
program, DoD’s focus should be on
‘‘whether a product, system, or item is
still developing or has reached
maturity.’’ Further, although they are
MDAPs, the respondent believes that
the first several ships of a new class
should be viewed as developmental
products that are procured most
efficiently through cost-type contracts
because of the inherently high level of
risk and uncertainty associated with
them. Therefore, for the first several
ships of a class, the burden placed upon
the MDA should most often be to
explain why a fixed-price contract type
is selected rather than why a cost-type
contract is selected. For this reason, the
respondent believes that the interim
rule is flawed since the requirements
should be in reverse order when applied
to shipbuilding contracts.
DoD Response: For MDAPs, the
procedures in DFARS 234.004 are
mandated by section 818 of the FY07
NDAA. For other than MDAPs, DoD
determined that it would be in the best
interest of the Government to retain the
policy in DFARS 235.006 for a written
determination if a fixed-price contract is
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selected for a development program.
Therefore, DoD has made no change to
the language set forth in the interim
rule, and is adopting the interim 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 certifies that this 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.,
because the rule relates to internal DoD
considerations and documentation
requirements relating to the selection of
contract type for development programs.
No comments were received in response
to publication of the interim rule with
respect to any impact on small entities.
C. Paperwork Reduction Act
The Paperwork Reduction Act does
not apply, because the rule does not
impose any information collection
requirements that require the approval
of the Office of Management and Budget
under 44 U.S.C. 3501, et seq.
List of Subjects in 48 CFR Parts 234 and
235
Government procurement.
Ynette R. Shelkin,
Editor, Defense Acquisition Regulations
System.
Interim Rule Adopted as Final Without
Change
Accordingly, the interim rule
amending 48 CFR parts 234 and 235,
which was published at 73 FR 4117 on
January 24, 2008, is adopted as a final
rule without change.
■
[FR Doc. 2010–7259 Filed 4–7–10; 8:45 am]
BILLING CODE 5001–08–P
DEPARTMENT OF DEFENSE
Defense Acquisition Regulations
System
48 CFR Parts 206, 225, and 252
RIN 0750–AG02
Defense Federal Acquisition
Regulation Supplement; Acquisitions
in Support of Operations in Iraq or
Afghanistan (DFARS Case 2008–D002)
AGENCY: Defense Acquisition
Regulations System, Department of
Defense (DoD).
ACTION: Final rule.
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18035
SUMMARY: DoD is adopting as final, with
minor changes, an interim rule
amending the Defense Federal
Acquisition Regulation Supplement
(DFARS) to implement sections 886 and
892 of the National Defense
Authorization Act for Fiscal Year 2008.
Section 886 provides authority for DoD
to limit competition when acquiring
products or services in support of
operations in Iraq or Afghanistan.
Section 892 addresses competition
requirements for the procurement of
small arms for assistance to Iraq or
Afghanistan.
Effective Date: April 8, 2010.
Ms.
Amy Williams, 703–602–0328.
SUPPLEMENTARY INFORMATION:
DATES:
FOR FURTHER INFORMATION CONTACT:
A. Background
DoD published an interim rule at 73
FR 53151 on September 15, 2008, to
implement sections 886 and 892 of the
National Defense Authorization Act for
Fiscal Year 2008. The comment period
closed on November 14, 2008. Four
respondents provided comments. In
consideration of the public comments
received, several changes were made in
developing the final rule.
The final rule:
• Clarifies applicability of the trade
agreements (see response to comment
3.a.)
• Includes a modified definition of
‘‘service from Iraq or Afghanistan’’ in the
prescribed clauses, so that it reads ‘‘a
service (including construction) that is
performed in Iraq or Afghanistan.
* * *’’. (See the DoD response to
comment 4.c.)
• Adds the Commander of the Joint
Contracting Command—Iraq/
Afghanistan as an official authorized to
make a determination that applies to an
individual acquisition with a value of
$78.5 million or more, or to a class of
acquisitions.
DoD received comments from four
persons or organizations in response to
the interim rule (available on the Web
at regulations.gov). The comments are
grouped into the following categories:
1. Concern for U.S. industrial base.
2. Concern for industrial base of Iraq
and Afghanistan.
3. Applicability of trade agreements.
4. Definitions relating to sources,
products, and services from Iraq or
Afghanistan.
5. Clarification of contracting officer
flexibility with regard to the evaluation
factor.
6. Decision authority no higher than
head of the contracting activity.
7. Justification for issuing an interim
rule.
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The following is a discussion of the
comments and the changes included in
this final rule as a result of the public
comments:
1. Concern for the U.S. Industrial Base
a. Two respondents disagreed with
the proposed DFARS statement in
225.7703–2(b)(1)(ii)(B) that the
authorizing official may generally
presume that there will not be an
adverse effect on the U.S. industrial
base as a result of using one of the
procedures authorized by section 886.
They advocated a change that would
require that the effect on the U.S.
industrial base should be considered in
each contracting action, and should be
presumed adverse unless otherwise
documented.
Response: The industrial base
supporting defense is a vehicle for
achieving the ultimate objective of the
Department of Defense—the
development, production, and support
of defense materiel necessary to provide
for the nation’s defense. Accordingly,
DoD’s overarching objective is to ensure
it has access to reliable and costeffective industrial capabilities
sufficient to meet current and projected
military requirements. When
considering a contract’s potential
impact on the U.S. industrial and
technological base, DoD focuses on
ensuring that the contract does not
result in the loss of industrial or
technological capabilities essential for
the nation’s defense. It is extremely
unlikely—because of both the relatively
small size of such U.S.-funded
procurements and the specific products/
services associated with such U.S.funded procurements—that any
contracts issued for products or services
to be used for the military forces, police,
or other security personnel of Iraq or
Afghanistan would result in the loss of
industrial or technological capabilities
essential for the nation’s defense.
Additionally, utilization of non-U.S.
sources for the products or services
likely to be acquired for the military/
security forces of Iraq and Afghanistan
with U.S. funds will generally not
impact the economic viability of
individual elements of the U.S. national
technology and industrial base because
of the relatively small values of such
acquisitions. To demonstrate, the first
quarterly report to Congress in response
to section 886 of the Fiscal Year 2008
NDAA reported 91 percent of actions
(there were 22 total actions with 11
different contractors) using section 886
authority were for construction/repair or
services. The two supply items were for
billboards for a total of $73 million. DoD
has a relatively small role in the overall
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U.S. economy. In 2008, the total of all
DoD budget authority represented only
about 4 percent of the gross domestic
product. Especially in dual-use market
segments, DoD’s influence is very small.
Additionally, DoD purchases non-U.S.
materiel very judiciously; and the
transactions contemplated here likely
will be even smaller in value. For
example—
• As reported to Congress in its
September 2008 report ‘‘Foreign Sources
of Supply,’’ in Fiscal Year 2007, DoD
awarded contracts to foreign suppliers
for defense items and components
totaling approximately $1.57 billion,
less than one-half of one percent of all
DoD contracts; and only about 1.5
percent of all DoD contracts for defense
items and components. The remaining
99.5 percent of all DoD contracts and
98.5 percent of all DoD contracts for
defense items and components were
awarded to U.S. prime contractors.
• As reported to Congress in its July
2008 report ‘‘Department of Defense
Fiscal Year 2007 Purchases of Supplies
Manufactured Outside the United
States,’’ DoD procurement actions in
Fiscal Year 2007 totaled approximately
$316 billion. Of that amount,
approximately $18.9 billion (5.9
percent) was expended on purchases
from foreign entities. ‘‘Weapons’’
purchases totaled $106.13 million (0.57
percent) and ‘‘subsistence’’ purchases
totaled $84.95 million (0.46 percent).
Finally, DoD notes that both
respondents supply rations or other
shelf-stable meals. Title 10 United
States Code, section 2533a(d) Exception
for Certain Procurements provides that
requirements to buy food from U.S.
suppliers are excepted for procurements
outside the United States in support of
combat operations. The Congress has
recognized that even food for U.S.
Service members need not be procured
from U.S. sources when the
procurements take place outside the
United States and are in support of
combat operations.
Therefore, an authorizing official’s
presumption of no adverse impact on
the U.S. industrial base is an
appropriate posture. In the event of
uncertainty, DFARS 225.7703–
2(b)(1)(ii)(B) would require that the
authorizing official coordinate with the
applicable subject matter expert. This is
reasonable and would protect industrial
and technological capabilities essential
for U.S. defense in those rare cases
where contemplated procurements
could have a negative impact.
b. Comment: Two respondents
believed that DoD should require
evaluation of the impact on the U.S.
industrial base for each acquisition,
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whether or not the products or services
being acquired are to be used only by
the military forces, police, or other
security personnel of Iraq or
Afghanistan.
Response: According to subsection
(b)(1) of section 886, a determination
that the products or services being
acquired are to be used only by the
military forces, police, or other security
personnel of Iraq or Afghanistan is
adequate to support use of the
procedures authorized by subsection (a).
The interim rule at DFARS 225.7703–
2(a) implements the law appropriately
by not requiring an assessment of the
impact on the industrial base in such
cases.
c. Comment: Two respondents
requested that DoD define ‘‘U.S.
industrial base’’ for the purpose of this
DFARS rule narrowly enough for the
impact analysis to be meaningful (e.g.,
as all potential U.S. contractors and
subcontractors of the same or similar
end product).
Response: DoD does not consider it
necessary for DFARS subpart 225.77 to
define ‘‘U.S. industrial base’’, nor does
DoD agree that the suggested definition
would be appropriate. As indicated in
the response to comment 1.a., when
considering a contract’s potential
impact on the U.S. industrial and
technological base, DoD focuses on
ensuring that the contract does not
result in the loss of industrial or
technological capabilities essential for
the nation’s defense. For this purpose,
the term ‘‘U.S. industrial base’’ is
sufficiently clear without being defined.
Also, for this purpose, ‘‘U.S. industrial
base’’ has a broad meaning and not the
narrow meaning suggested by the
respondents. U.S.-funded procurements
of products or services in support of
military or stability operations in Iraq or
Afghanistan are not likely to result in
the loss of industrial or technological
capabilities essential for the nation’s
defense.
d. Comment: Two respondents
requested that DoD define ‘‘adversely
affected’’ for the purpose of the
industrial base evaluation required by
this DFARS rule. According to these
respondents, the definition should
include loss of volume for prime
contractors and their supplier networks
and loss of key suppliers due to reduced
volume of purchases.
Response: ‘‘Adversely affected,’’ the
terminology used in section 886, is
sufficiently clear to enable the type of
assessment required by section 886. The
term does not need to be defined in
DFARS subpart 225.77.
e. Comment: Two respondents
recommended that DoD should not
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allow performance requirements to be
reduced to match the potential (local)
bidders’ capabilities.
Response: The interim rule does not
regulate the development of
performance requirements. Operational
users and program managers are
responsible for defining requirements,
and contracting officers are responsible
for awarding and managing contracts
that will satisfy those requirements.
f. Comment: Two respondents stated
that U.S. competitors should not be
excluded from any contracting action,
i.e., should be allowed to participate in
every procurement conducted using a
procedure authorized by section 886.
Response: If the DFARS were changed
as suggested, it would not include two
procedures specifically authorized by
section 886, and, therefore, would
deprive DoD contracting officers of the
flexibility provided and intended by the
law. Section 886(a) authorizes two
procedures that, if used, preclude U.S.
firms from competing: Competition
limited to products or services that are
from Iraq or Afghanistan (subsection
(a)(1)), and a procedure other than a
competitive procedure used to award to
a particular source or sources from Iraq
or Afghanistan (subsection (a)(2)).
Conference Report 110–477 explains
that the legislation’s purpose is to
provide a stable source of jobs and
employment in Iraq and Afghanistan in
cases where the preference will not have
an adverse effect on U.S. military
operations or the U.S. industrial base.
The interim rule, as written,
appropriately implements the law and
facilitates achievement of the law’s
intended purpose.
g. Comment: One respondent
recommended that DoD should not
apply the 50 percent penalty in
225.7703–1(a) to offers of U.S. products.
In the respondent’s view, this aspect of
the DFARS rule is not stated or inferred
in section 886.
Response: Section 886 is specifically
intended to provide a stable source of
jobs and employment in Iraq and
Afghanistan. To that end, it authorizes
a preference for, and only for, products
or services that are from Iraq or
Afghanistan. The 50 percent mark-up
applied to offers of products or services
that are NOT from Iraq or Afghanistan
is the mechanism that provides the
intended preference by putting offers of
products from other countries,
including the U.S., at a competitive
disadvantage. If the DFARS were
changed so that the mark-up was never
applied to offers of U.S. products, the
preference intended for Iraqi and
Afghani products would also be applied
to U.S. products. That would not be
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consistent with section 886 and would
negate significantly the intended boost
to the Iraqi and Afghani industrial base.
2. Concern for the Industrial Base of
Iraq and Afghanistan
a. Comment: Two respondents
recommended changing the interim rule
to compel local bidders to work toward
creation of a supplier network within
Iraq and Afghanistan in order to achieve
the goal of section 886. The respondents
stated that this could be done by—
(1) Requiring 100 percent of the
product to be from Iraq or Afghanistan,
without allowances to use non-Iraqi or
non-Afghani components (see 252.225–
7021(a)(14)(ii)); or
(2) Specifically prohibiting award of
contracts to brokers, distributors, and
middlemen such that contracts must be
awarded to Iraqi/Afghani producers that
are part of a true Iraqi or Afghani
national industrial base.
Response: The interim rule
encourages rather than compels
achievement of the goal of section 886,
consistent with the authorities provided
by section 886. Regarding 2.a.(1), even
the Buy American Act allows 50 percent
of the value of components of a
domestic end product to be of foreign
origin. See also the response regarding
substantial transformation at paragraph
3.b., below. Regarding 2.a.(2), the
interim rule appropriately implements
the section 886 focus on products and
services from Iraq or Afghanistan rather
than on the national affiliation of the
entity receiving the contract award. The
rule has its intended effect without
prohibiting award to brokers,
distributors, or middlemen. If a
distributor from the U.S. or a third
country offers and delivers a ‘‘product
from Iraq or Afghanistan,’’ as defined in
section 886 and the interim rule, the
procurement facilitates the development
of the industrial base of Iraq or
Afghanistan. On the other hand, if a
distributor in Iraq or Afghanistan
offered and delivered a product from
other than Iraq or Afghanistan, the
procurement would not strengthen the
Iraqi or Afghani industrial base.
b. Comment: Two respondents
recommended limiting the percentage of
non-Iraqi/non-Afghani components or,
alternatively, when evaluating
competitive offers of products or
services that are not products or services
of Iraq or Afghanistan, increasing by 50
percent the prices of all non-Iraqi or
non-Afghani raw materials, ingredients,
components, and/or items that are part
of the end product offered.
Response: Section 886 authorizes a
procedure in which a preference is
provided for ‘‘products or services’’ that
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18037
are from Iraq or Afghanistan, and goes
on to define those terms. The provision
at 252.225–7023 and the clause at
252.225–7024 state that the contracting
officer will increase by 50 percent the
prices of offers of ‘‘products or services’’
that are not products or services from
Iraq or Afghanistan. (The definition of
‘‘product from Iraq or Afghanistan’’ is
identical to that in section 886, and the
definition of ‘‘service from Iraq or
Afghanistan’’ adds only the word
‘‘predominantly’’ to the definition from
section 886.) The comment suggests that
the preference be applied not only at the
level of products, but also at the level
of the raw materials, ingredients,
components, and/or items that are part
of the end product offered. DoD
understands that this would create a
greater competitive advantage for
products with a higher proportion of
Iraqi or Afghani content. However, it
would also complicate significantly the
rule and the submission and evaluation
of offers and probably contribute to
lengthening solicitation and evaluation
periods. Therefore, DoD has not
changed the final rule in response to
this comment.
3. Applicability of Trade Agreements
a. Comment: One respondent
suggested that the rule should
emphasize that acquisitions under the
authority of section 886 are exempt from
application of the trade agreements.
Response:
i. Acquisitions with a preference for
Iraqi or Afghani products. The Trade
Agreements Act applies to those
acquisitions in which only a preference
for Iraqi or Afghani products is
imposed, as authorized by 225.7703–
1(a)(1). However, based on consultation
with legal counsel prior to publishing
the interim rule, DoD concluded that
when using this new authority to
provide a preference for Iraqi products,
the Trade Agreements Act purchasing
prohibition does not apply with regard
to purchases of products or services
from Iraq. Afghani end products are
already acceptable in any covered
procurement because Afghanistan is a
‘‘designated country,’’ as that term is
defined in FAR 25.003. Therefore, the
interim rule provided an Alternate I to
the Trade Agreements clause at FAR
52.225–7021, and a new certification to
replace the FAR Trade Agreements
Certification at 52.225–7020, unless the
preference applies only to the products
of Afghanistan.
ii. Acquisitions that are limited to
products or services from Iraq or
Afghanistan. FAR 25.401(a)(5) provides
that the trade agreements do not apply
to acquisitions not using full and open
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competition, if authorized by subpart
6.2 or 6.3, when the limitation of
competition would preclude use of the
procedures of subpart 25.4. Although
the procedures at 225.7703–1(a)(2) and
(a)(3) are not authorized by subpart 6.2
or 6.3, section 886 has provided
comparable separate statutory
authorization, which precludes the use
of the procedures of subpart 25.4, since
such application would be inconsistent
with implementation of section 886.
This principle is implemented at
225.1101(6)(iii)(B), which prohibits use
of any Trade Agreements provision or
clause, if the clause at 252.225–7026,
Acquisition Restricted to Products or
Services from Iraq or Afghanistan, is
included in the solicitation and
contract. However, DoD has further
clarified the application of trade
agreements in the final rule (see
225.401–71 and 225.7703–5(f)).
b. Comment: Two respondents
recommended that DoD should not
allow the ‘‘substantial transformation’’
test in 252.225–7021(a)(14)(ii) to be
applied to contracting actions made
under the authority of this DFARS rule.
Response: According to 225.7703–5(d)
of the interim rule, contracting officers
are to use the appropriate provision and
clause when the Trade Agreements Act
applies to the acquisition. The
‘‘substantial transformation’’ test applies
in procurements covered by the Trade
Agreements Act. The objective of
Alternate I to 252.225–7021 is to enable
the purchase of Iraqi (or Afghani) end
products in such procurements, not to
change the rules, such as the
‘‘substantial transformation’’ test, that
otherwise apply to such procurements.
4. Definitions Relating to Sources,
Products, and Services From Iraq or
Afghanistan
a. Comment: One respondent
recommended that DoD define or clarify
‘‘located in Iraq or Afghanistan’’ as the
term is used in the DFARS 225.7701
definition of ‘‘source from Iraq or
Afghanistan.’’
Response: ‘‘Located in Iraq or
Afghanistan’’ is self-explanatory and
does not require definition or
clarification.
b. Comment: One respondent
requested that DoD add
‘‘predominantly’’ to the definition of
‘‘product from Iraq or Afghanistan.’’
Response: The DFARS definition of
‘‘product from Iraq or Afghanistan,’’
taken directly from section 886, is ‘‘a
product that is mined, produced, or
manufactured in Iraq or Afghanistan.’’
Without a modifier, the implication is
that the end product is entirely mined,
produced, or manufactured in Iraq or
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Afghanistan. A change to
‘‘predominantly mined, produced, or
manufactured’’ would reduce the
standard from the implied ‘‘entirely’’ to
‘‘predominantly.’’ This would weaken
rather than strengthen the effectiveness
of the rule in facilitating development of
the industrial base of Iraq and
Afghanistan. This does not mean that all
the components must be from Iraq or
Afghanistan. Unlike the Buy American
Act definition of ‘‘domestic end
product,’’ there is no component test in
the statutory definition of ‘‘product from
Iraq or Afghanistan.’’ However, if the
Trade Agreements Act applies, the item
must be substantially transformed in
Iraq or Afghanistan.
c. Comment: One respondent
requested that DoD add ‘‘construction’’
as a stand-alone type of acquisition,
since it does not appropriately fit in
either the ‘‘products’’ or ‘‘services’’
category.
Response: The interim rule makes
clear that construction is included in
the meaning of ‘‘service.’’ See DFARS
225.7703–1(a). However, while this is
clear in the DFARS text, it is not stated
in the clauses. Accordingly, the final
rule includes a modified definition of
‘‘service from Iraq or Afghanistan’’ in the
prescribed clauses, so that it reads ‘‘a
service (including construction) that is
performed in Iraq or Afghanistan.
* * *’’. DoD cannot make
‘‘construction’’ a stand-alone category
because the law provides these special
authorizations only for the acquisition
of products and services from Iraq or
Afghanistan.
5. Clarify Contracting Officer Flexibility
With Regard to the Evaluation Factor
Comment: One respondent requested
clarification that contracting officers are
allowed to determine the percentage
evaluation factor to apply to non-local/
national products and services and
eliminate the 50 percent factor
(225.7703–5; 252.225–7023).
Response: The interim rule at
225.7703–5(a)(2) clearly establishes that
the contracting officer may modify the
50 percent evaluation factor in
accordance with contracting office
procedures. This approach is consistent
with DFARS writing standards. The
provision (252.225–7023) includes a
default percentage, and the prescription
(225.7703–5(a)) for using the provision
enables the contracting officer to modify
that percentage. Contracting offices are
responsible for establishing procedures
to be used for this purpose, and for
ensuring contracting officers are aware
of the discretion provided by the
DFARS and how it can be applied.
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6. Decision Authority No Higher Than
Head of the Contracting Activity
Comment: One respondent requested
that DoD add language to allow the head
of the contracting agency, rather than
acquisition executives, to make class
determinations (225.7703–2).
Response: Although DoD is unwilling
to provide this authority to all heads of
contracting activities, the draft final rule
adds the Commander of the Joint
Contracting Command—Iraq/
Afghanistan to the list of officials at
225.7703–2(b)(2)(ii) who are authorized,
without power of redelegation, to make
a determination in accordance with
section 886 that applies to an individual
acquisition of $78.5 million or more or
to a class determination.
Decision To Issue an Interim Rule
Comment: One respondent requested
explanation of the ‘‘urgent and
compelling’’ reasons that supported
DoD’s determination to publish an
interim rule rather than a proposed rule.
Response: First, this is a statutory
requirement which became effective
upon enactment. Further, there was and
is an urgent and compelling need to
achieve stability in Iraq and
Afghanistan. Section 886 authorized the
use of procurement procedures that
could help provide a stable source of
jobs and employment in those countries
and as such, the Joint Contracting
Command—Iraq/Afghanistan
specifically requested immediate
guidance on how to implement this
section. DoD had an urgent and
compelling need to implement section
886 in a way that would enable
contracting officers to use the new
procedures as soon as possible, and thus
facilitate the creation of stable jobs and
employment sooner rather than later.
B. Other Changes in the Final Rule
In addition to the written responses
posted on regulations.gov, DoD was
informed by a telephone caller that
Alternate I to DFARS clause 252.225–
7021, Trade Agreements, added in the
interim rule, was erroneously not added
to the listing of that same clause in the
commercial items clause at DFARS
252.212–7001, Contract Terms and
Conditions Required to Implement
Statutes or Executive Orders Applicable
to Defense Acquisitions of Commercial
Items. DoD has corrected this oversight
in the final rule.
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.
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C. 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.,
because the rule does not impose any
requirements on small businesses and
only impacts acquisitions in Iraq and
Afghanistan. There were no comments
received on regulatory flexibility in
response to the interim rule.
D. Paperwork Reduction Act
The Paperwork Reduction Act does
not apply because the rule does not
impose any information collection
requirements that require the approval
of the Office of Management and Budget
under 44 U.S.C. 3501, et seq.
List of Subjects in 48 CFR Parts 206,
225, and 252
Government procurement.
Ynette R. Shelkin,
Editor, Defense Acquisition Regulations
System.
Accordingly, the interim rule
amending 48 CFR parts 206, 225, and
252, which was published at 73 FR
53151, September 15, 2008, is adopted
as a final rule with the following
changes:
■ 1. The authority citation for 48 CFR
parts 225 and 252 continues to read as
follows:
■
Authority: 41 U.S.C. 421 and 48 CFR
chapter 1.
PART 225—FOREIGN ACQUISITION
2. Section 225.401–71 is revised to
read as follows:
■
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When acquiring products or services,
other than small arms, in support of
operations in Iraq or Afghanistan—
(a) If using the procedure specified in
225.7703–1(a)(1), the purchase
restriction at FAR 25.403(c) does not
apply with regard to products or
services from Iraq.
(b) If using a procedure specified in
225.7703–1(a)(2) or (3), the procedures
of subpart 25.4 are not applicable.
■ 3. Section 225.7701 is amended by
revising the definition of ‘‘service from
Iraq or Afghanistan’’ to read as follows:
Definitions.
*
*
*
*
*
Service from Iraq or Afghanistan means
a service (including construction) that is
performed in Iraq or Afghanistan
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4. Section 225.7703–2 is amended by
revising paragraph (b)(2)(ii) introductory
text and adding new paragraph
(b)(2)(ii)(E) to read as follows:
■
225.7703–2
Determination requirements.
*
*
*
*
*
(b) * * *
(2) * * *
(ii) The Director, Defense
Procurement and Acquisition Policy,
and the following officials, without
power of redelegation, are authorized to
make a determination that applies to an
individual acquisition with a value of
$78.5 million or more or to a class of
acquisitions:
*
*
*
*
*
(E) Commander of the Joint
Contracting Command—Iraq/
Afghanistan (JCC–I/A).
*
*
*
*
*
5. Section 225.7703–4 is amended by
revising the introductory text to read as
follows:
■
225.7703–4
Reporting requirement.
The following organizations shall
submit periodic reports to the Deputy
Director, Contingency Contracting &
Acquisition Policy, Defense
Procurement and Acquisition Policy, in
accordance with PGI 225.7703–4, to
address the organization’s use of the
procedures authorized by this section:
*
*
*
*
*
6. Section 225.7703–5 is amended by
revising paragraph (d); removing
paragraph (e)(4); redesignating existing
paragraphs (e)(5) through (e)(8) as
paragraphs (e)(4) through (e)(7),
respectively; and adding paragraph (f) to
read as follows:
■
225.401–71 Products or services in
support of operations in Iraq or
Afghanistan.
225.7701
predominantly by citizens or permanent
resident aliens of Iraq or Afghanistan.
*
*
*
*
*
225.7703–5 Solicitation provisions and
contract clauses.
*
*
*
*
*
(d) When the Trade Agreements Act
applies to the acquisition, use the
appropriate clause and provision as
prescribed at 225.1101 (5), (6), or (7).
(f) Do not use the following clause or
provision in solicitations or contracts
that include the clause at 252.225–7026:
(1) 252.225–7020, Trade Agreements
Certificate.
(2) 252.225–7021, Trade Agreements.
(3) 252.225–7022, Trade Agreements
Certificate—Inclusion of Iraqi End
Products.
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18039
PART 252—SOLICITATION
PROVISIONS AND CONTRACT
CLAUSES
8. Section 252.212–7001 is amended
by revising the clause date and revising
paragraph (b)(11) to read as follows:
■
252.212–7001 Contract terms and
conditions required to implement statutes
or Executive orders applicable to Defense
acquisitions of commercial items.
*
*
*
*
*
CONTRACT TERMS AND CONDITIONS
REQUIRED TO IMPLEMENT STATUTES OR
EXECUTIVE ORDERS APPLICABLE TO
DEFENSE ACQUISITIONS OF
COMMERCIAL ITEMS (APR 2010)
*
*
*
*
*
(b) * * *
(11)(i)ll 252.225–7021, Trade
Agreements (NOV 2009) (19 U.S.C. 2501–
2518 and 19 U.S.C. 3301 note).
(ii) Alternate I (SEP 2008).
*
*
*
*
*
9. Section 252.225–7023 is amended
by revising the clause date and revising
paragraph (b)(2) to read as follows:
■
252.225–7023 Preference for products or
services from Iraq or Afghanistan.
*
*
*
*
*
PREFERENCE FOR PRODUCTS OR
SERVICES FROM IRAQ OR AFGHANISTAN
(APR 2010)
*
*
*
*
*
(b) * * *
(2) Paragraph (c)(2) of the provision
entitled Trade Agreements Certificate,’’ or
‘‘Trade Agreements Certificate—Inclusion of
Iraqi End Products,’’ if included in this
solicitation.
*
*
*
*
*
10. Section 252.225–7024 is amended
by revising the clause date and revising
paragraph (a)(2) to read as follows:
■
252.225–7024 Requirement for products or
services from Iraq or Afghanistan.
*
*
*
*
*
REQUIREMENT FOR PRODUCTS OR
SERVICES FROM IRAQ OR AFGHANISTAN
(APR 2010)
(a) * * *
(2) Service from Iraq or Afghanistan means
a service (including construction) that is
performed in Iraq or Afghanistan
predominantly by citizens or permanent
resident aliens of Iraq or Afghanistan.
*
*
*
*
*
11. Section 252.225–7026 is amended
by revising the clause date and revising
paragraph (a)(2) to read as follows:
■
252.225–7026 Acquisition restricted to
products or services from Iraq or
Afghanistan.
*
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*
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*
*
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Federal Register / Vol. 75, No. 67 / Thursday, April 8, 2010 / Rules and Regulations
ACQUISITION RESTRICTED TO
PRODUCTS OR SERVICES FROM IRAQ OR
AFGHANISTAN (APR 2010)
(2) Service from Iraq or Afghanistan means
a service (including construction) that is
performed in Iraq or Afghanistan
(a) * * *
predominantly by citizens or permanent
resident aliens of Iraq or Afghanistan.
*
*
*
*
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]]>Agencies
[Federal Register Volume 75, Number 67 (Thursday, April 8, 2010)]
[Rules and Regulations]
[Pages 18035-18040]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-7261]
-----------------------------------------------------------------------
DEPARTMENT OF DEFENSE
Defense Acquisition Regulations System
48 CFR Parts 206, 225, and 252
RIN 0750-AG02
Defense Federal Acquisition Regulation Supplement; Acquisitions
in Support of Operations in Iraq or Afghanistan (DFARS Case 2008-D002)
AGENCY: Defense Acquisition Regulations System, Department of Defense
(DoD).
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: DoD is adopting as final, with minor changes, an interim rule
amending the Defense Federal Acquisition Regulation Supplement (DFARS)
to implement sections 886 and 892 of the National Defense Authorization
Act for Fiscal Year 2008. Section 886 provides authority for DoD to
limit competition when acquiring products or services in support of
operations in Iraq or Afghanistan. Section 892 addresses competition
requirements for the procurement of small arms for assistance to Iraq
or Afghanistan.
DATES: Effective Date: April 8, 2010.
FOR FURTHER INFORMATION CONTACT: Ms. Amy Williams, 703-602-0328.
SUPPLEMENTARY INFORMATION:
A. Background
DoD published an interim rule at 73 FR 53151 on September 15, 2008,
to implement sections 886 and 892 of the National Defense Authorization
Act for Fiscal Year 2008. The comment period closed on November 14,
2008. Four respondents provided comments. In consideration of the
public comments received, several changes were made in developing the
final rule.
The final rule:
Clarifies applicability of the trade agreements (see
response to comment 3.a.)
Includes a modified definition of ``service from Iraq or
Afghanistan'' in the prescribed clauses, so that it reads ``a service
(including construction) that is performed in Iraq or Afghanistan. * *
*''. (See the DoD response to comment 4.c.)
Adds the Commander of the Joint Contracting Command--Iraq/
Afghanistan as an official authorized to make a determination that
applies to an individual acquisition with a value of $78.5 million or
more, or to a class of acquisitions.
DoD received comments from four persons or organizations in
response to the interim rule (available on the Web at regulations.gov).
The comments are grouped into the following categories:
1. Concern for U.S. industrial base.
2. Concern for industrial base of Iraq and Afghanistan.
3. Applicability of trade agreements.
4. Definitions relating to sources, products, and services from
Iraq or Afghanistan.
5. Clarification of contracting officer flexibility with regard to
the evaluation factor.
6. Decision authority no higher than head of the contracting
activity.
7. Justification for issuing an interim rule.
[[Page 18036]]
The following is a discussion of the comments and the changes
included in this final rule as a result of the public comments:
1. Concern for the U.S. Industrial Base
a. Two respondents disagreed with the proposed DFARS statement in
225.7703-2(b)(1)(ii)(B) that the authorizing official may generally
presume that there will not be an adverse effect on the U.S. industrial
base as a result of using one of the procedures authorized by section
886. They advocated a change that would require that the effect on the
U.S. industrial base should be considered in each contracting action,
and should be presumed adverse unless otherwise documented.
Response: The industrial base supporting defense is a vehicle for
achieving the ultimate objective of the Department of Defense--the
development, production, and support of defense materiel necessary to
provide for the nation's defense. Accordingly, DoD's overarching
objective is to ensure it has access to reliable and cost-effective
industrial capabilities sufficient to meet current and projected
military requirements. When considering a contract's potential impact
on the U.S. industrial and technological base, DoD focuses on ensuring
that the contract does not result in the loss of industrial or
technological capabilities essential for the nation's defense. It is
extremely unlikely--because of both the relatively small size of such
U.S.-funded procurements and the specific products/services associated
with such U.S.-funded procurements--that any contracts issued for
products or services to be used for the military forces, police, or
other security personnel of Iraq or Afghanistan would result in the
loss of industrial or technological capabilities essential for the
nation's defense.
Additionally, utilization of non-U.S. sources for the products or
services likely to be acquired for the military/security forces of Iraq
and Afghanistan with U.S. funds will generally not impact the economic
viability of individual elements of the U.S. national technology and
industrial base because of the relatively small values of such
acquisitions. To demonstrate, the first quarterly report to Congress in
response to section 886 of the Fiscal Year 2008 NDAA reported 91
percent of actions (there were 22 total actions with 11 different
contractors) using section 886 authority were for construction/repair
or services. The two supply items were for billboards for a total of
$73 million. DoD has a relatively small role in the overall U.S.
economy. In 2008, the total of all DoD budget authority represented
only about 4 percent of the gross domestic product. Especially in dual-
use market segments, DoD's influence is very small. Additionally, DoD
purchases non-U.S. materiel very judiciously; and the transactions
contemplated here likely will be even smaller in value. For example--
As reported to Congress in its September 2008 report
``Foreign Sources of Supply,'' in Fiscal Year 2007, DoD awarded
contracts to foreign suppliers for defense items and components
totaling approximately $1.57 billion, less than one-half of one percent
of all DoD contracts; and only about 1.5 percent of all DoD contracts
for defense items and components. The remaining 99.5 percent of all DoD
contracts and 98.5 percent of all DoD contracts for defense items and
components were awarded to U.S. prime contractors.
As reported to Congress in its July 2008 report
``Department of Defense Fiscal Year 2007 Purchases of Supplies
Manufactured Outside the United States,'' DoD procurement actions in
Fiscal Year 2007 totaled approximately $316 billion. Of that amount,
approximately $18.9 billion (5.9 percent) was expended on purchases
from foreign entities. ``Weapons'' purchases totaled $106.13 million
(0.57 percent) and ``subsistence'' purchases totaled $84.95 million
(0.46 percent).
Finally, DoD notes that both respondents supply rations or other
shelf-stable meals. Title 10 United States Code, section 2533a(d)
Exception for Certain Procurements provides that requirements to buy
food from U.S. suppliers are excepted for procurements outside the
United States in support of combat operations. The Congress has
recognized that even food for U.S. Service members need not be procured
from U.S. sources when the procurements take place outside the United
States and are in support of combat operations.
Therefore, an authorizing official's presumption of no adverse
impact on the U.S. industrial base is an appropriate posture. In the
event of uncertainty, DFARS 225.7703-2(b)(1)(ii)(B) would require that
the authorizing official coordinate with the applicable subject matter
expert. This is reasonable and would protect industrial and
technological capabilities essential for U.S. defense in those rare
cases where contemplated procurements could have a negative impact.
b. Comment: Two respondents believed that DoD should require
evaluation of the impact on the U.S. industrial base for each
acquisition, whether or not the products or services being acquired are
to be used only by the military forces, police, or other security
personnel of Iraq or Afghanistan.
Response: According to subsection (b)(1) of section 886, a
determination that the products or services being acquired are to be
used only by the military forces, police, or other security personnel
of Iraq or Afghanistan is adequate to support use of the procedures
authorized by subsection (a). The interim rule at DFARS 225.7703-2(a)
implements the law appropriately by not requiring an assessment of the
impact on the industrial base in such cases.
c. Comment: Two respondents requested that DoD define ``U.S.
industrial base'' for the purpose of this DFARS rule narrowly enough
for the impact analysis to be meaningful (e.g., as all potential U.S.
contractors and subcontractors of the same or similar end product).
Response: DoD does not consider it necessary for DFARS subpart
225.77 to define ``U.S. industrial base'', nor does DoD agree that the
suggested definition would be appropriate. As indicated in the response
to comment 1.a., when considering a contract's potential impact on the
U.S. industrial and technological base, DoD focuses on ensuring that
the contract does not result in the loss of industrial or technological
capabilities essential for the nation's defense. For this purpose, the
term ``U.S. industrial base'' is sufficiently clear without being
defined. Also, for this purpose, ``U.S. industrial base'' has a broad
meaning and not the narrow meaning suggested by the respondents. U.S.-
funded procurements of products or services in support of military or
stability operations in Iraq or Afghanistan are not likely to result in
the loss of industrial or technological capabilities essential for the
nation's defense.
d. Comment: Two respondents requested that DoD define ``adversely
affected'' for the purpose of the industrial base evaluation required
by this DFARS rule. According to these respondents, the definition
should include loss of volume for prime contractors and their supplier
networks and loss of key suppliers due to reduced volume of purchases.
Response: ``Adversely affected,'' the terminology used in section
886, is sufficiently clear to enable the type of assessment required by
section 886. The term does not need to be defined in DFARS subpart
225.77.
e. Comment: Two respondents recommended that DoD should not
[[Page 18037]]
allow performance requirements to be reduced to match the potential
(local) bidders' capabilities.
Response: The interim rule does not regulate the development of
performance requirements. Operational users and program managers are
responsible for defining requirements, and contracting officers are
responsible for awarding and managing contracts that will satisfy those
requirements.
f. Comment: Two respondents stated that U.S. competitors should not
be excluded from any contracting action, i.e., should be allowed to
participate in every procurement conducted using a procedure authorized
by section 886.
Response: If the DFARS were changed as suggested, it would not
include two procedures specifically authorized by section 886, and,
therefore, would deprive DoD contracting officers of the flexibility
provided and intended by the law. Section 886(a) authorizes two
procedures that, if used, preclude U.S. firms from competing:
Competition limited to products or services that are from Iraq or
Afghanistan (subsection (a)(1)), and a procedure other than a
competitive procedure used to award to a particular source or sources
from Iraq or Afghanistan (subsection (a)(2)). Conference Report 110-477
explains that the legislation's purpose is to provide a stable source
of jobs and employment in Iraq and Afghanistan in cases where the
preference will not have an adverse effect on U.S. military operations
or the U.S. industrial base. The interim rule, as written,
appropriately implements the law and facilitates achievement of the
law's intended purpose.
g. Comment: One respondent recommended that DoD should not apply
the 50 percent penalty in 225.7703-1(a) to offers of U.S. products. In
the respondent's view, this aspect of the DFARS rule is not stated or
inferred in section 886.
Response: Section 886 is specifically intended to provide a stable
source of jobs and employment in Iraq and Afghanistan. To that end, it
authorizes a preference for, and only for, products or services that
are from Iraq or Afghanistan. The 50 percent mark-up applied to offers
of products or services that are NOT from Iraq or Afghanistan is the
mechanism that provides the intended preference by putting offers of
products from other countries, including the U.S., at a competitive
disadvantage. If the DFARS were changed so that the mark-up was never
applied to offers of U.S. products, the preference intended for Iraqi
and Afghani products would also be applied to U.S. products. That would
not be consistent with section 886 and would negate significantly the
intended boost to the Iraqi and Afghani industrial base.
2. Concern for the Industrial Base of Iraq and Afghanistan
a. Comment: Two respondents recommended changing the interim rule
to compel local bidders to work toward creation of a supplier network
within Iraq and Afghanistan in order to achieve the goal of section
886. The respondents stated that this could be done by--
(1) Requiring 100 percent of the product to be from Iraq or
Afghanistan, without allowances to use non-Iraqi or non-Afghani
components (see 252.225-7021(a)(14)(ii)); or
(2) Specifically prohibiting award of contracts to brokers,
distributors, and middlemen such that contracts must be awarded to
Iraqi/Afghani producers that are part of a true Iraqi or Afghani
national industrial base.
Response: The interim rule encourages rather than compels
achievement of the goal of section 886, consistent with the authorities
provided by section 886. Regarding 2.a.(1), even the Buy American Act
allows 50 percent of the value of components of a domestic end product
to be of foreign origin. See also the response regarding substantial
transformation at paragraph 3.b., below. Regarding 2.a.(2), the interim
rule appropriately implements the section 886 focus on products and
services from Iraq or Afghanistan rather than on the national
affiliation of the entity receiving the contract award. The rule has
its intended effect without prohibiting award to brokers, distributors,
or middlemen. If a distributor from the U.S. or a third country offers
and delivers a ``product from Iraq or Afghanistan,'' as defined in
section 886 and the interim rule, the procurement facilitates the
development of the industrial base of Iraq or Afghanistan. On the other
hand, if a distributor in Iraq or Afghanistan offered and delivered a
product from other than Iraq or Afghanistan, the procurement would not
strengthen the Iraqi or Afghani industrial base.
b. Comment: Two respondents recommended limiting the percentage of
non-Iraqi/non-Afghani components or, alternatively, when evaluating
competitive offers of products or services that are not products or
services of Iraq or Afghanistan, increasing by 50 percent the prices of
all non-Iraqi or non-Afghani raw materials, ingredients, components,
and/or items that are part of the end product offered.
Response: Section 886 authorizes a procedure in which a preference
is provided for ``products or services'' that are from Iraq or
Afghanistan, and goes on to define those terms. The provision at
252.225-7023 and the clause at 252.225-7024 state that the contracting
officer will increase by 50 percent the prices of offers of ``products
or services'' that are not products or services from Iraq or
Afghanistan. (The definition of ``product from Iraq or Afghanistan'' is
identical to that in section 886, and the definition of ``service from
Iraq or Afghanistan'' adds only the word ``predominantly'' to the
definition from section 886.) The comment suggests that the preference
be applied not only at the level of products, but also at the level of
the raw materials, ingredients, components, and/or items that are part
of the end product offered. DoD understands that this would create a
greater competitive advantage for products with a higher proportion of
Iraqi or Afghani content. However, it would also complicate
significantly the rule and the submission and evaluation of offers and
probably contribute to lengthening solicitation and evaluation periods.
Therefore, DoD has not changed the final rule in response to this
comment.
3. Applicability of Trade Agreements
a. Comment: One respondent suggested that the rule should emphasize
that acquisitions under the authority of section 886 are exempt from
application of the trade agreements.
Response:
i. Acquisitions with a preference for Iraqi or Afghani products.
The Trade Agreements Act applies to those acquisitions in which only a
preference for Iraqi or Afghani products is imposed, as authorized by
225.7703-1(a)(1). However, based on consultation with legal counsel
prior to publishing the interim rule, DoD concluded that when using
this new authority to provide a preference for Iraqi products, the
Trade Agreements Act purchasing prohibition does not apply with regard
to purchases of products or services from Iraq. Afghani end products
are already acceptable in any covered procurement because Afghanistan
is a ``designated country,'' as that term is defined in FAR 25.003.
Therefore, the interim rule provided an Alternate I to the Trade
Agreements clause at FAR 52.225-7021, and a new certification to
replace the FAR Trade Agreements Certification at 52.225-7020, unless
the preference applies only to the products of Afghanistan.
ii. Acquisitions that are limited to products or services from Iraq
or Afghanistan. FAR 25.401(a)(5) provides that the trade agreements do
not apply to acquisitions not using full and open
[[Page 18038]]
competition, if authorized by subpart 6.2 or 6.3, when the limitation
of competition would preclude use of the procedures of subpart 25.4.
Although the procedures at 225.7703-1(a)(2) and (a)(3) are not
authorized by subpart 6.2 or 6.3, section 886 has provided comparable
separate statutory authorization, which precludes the use of the
procedures of subpart 25.4, since such application would be
inconsistent with implementation of section 886. This principle is
implemented at 225.1101(6)(iii)(B), which prohibits use of any Trade
Agreements provision or clause, if the clause at 252.225-7026,
Acquisition Restricted to Products or Services from Iraq or
Afghanistan, is included in the solicitation and contract. However, DoD
has further clarified the application of trade agreements in the final
rule (see 225.401-71 and 225.7703-5(f)).
b. Comment: Two respondents recommended that DoD should not allow
the ``substantial transformation'' test in 252.225-7021(a)(14)(ii) to
be applied to contracting actions made under the authority of this
DFARS rule.
Response: According to 225.7703-5(d) of the interim rule,
contracting officers are to use the appropriate provision and clause
when the Trade Agreements Act applies to the acquisition. The
``substantial transformation'' test applies in procurements covered by
the Trade Agreements Act. The objective of Alternate I to 252.225-7021
is to enable the purchase of Iraqi (or Afghani) end products in such
procurements, not to change the rules, such as the ``substantial
transformation'' test, that otherwise apply to such procurements.
4. Definitions Relating to Sources, Products, and Services From Iraq or
Afghanistan
a. Comment: One respondent recommended that DoD define or clarify
``located in Iraq or Afghanistan'' as the term is used in the DFARS
225.7701 definition of ``source from Iraq or Afghanistan.''
Response: ``Located in Iraq or Afghanistan'' is self-explanatory
and does not require definition or clarification.
b. Comment: One respondent requested that DoD add ``predominantly''
to the definition of ``product from Iraq or Afghanistan.''
Response: The DFARS definition of ``product from Iraq or
Afghanistan,'' taken directly from section 886, is ``a product that is
mined, produced, or manufactured in Iraq or Afghanistan.'' Without a
modifier, the implication is that the end product is entirely mined,
produced, or manufactured in Iraq or Afghanistan. A change to
``predominantly mined, produced, or manufactured'' would reduce the
standard from the implied ``entirely'' to ``predominantly.'' This would
weaken rather than strengthen the effectiveness of the rule in
facilitating development of the industrial base of Iraq and
Afghanistan. This does not mean that all the components must be from
Iraq or Afghanistan. Unlike the Buy American Act definition of
``domestic end product,'' there is no component test in the statutory
definition of ``product from Iraq or Afghanistan.'' However, if the
Trade Agreements Act applies, the item must be substantially
transformed in Iraq or Afghanistan.
c. Comment: One respondent requested that DoD add ``construction''
as a stand-alone type of acquisition, since it does not appropriately
fit in either the ``products'' or ``services'' category.
Response: The interim rule makes clear that construction is
included in the meaning of ``service.'' See DFARS 225.7703-1(a).
However, while this is clear in the DFARS text, it is not stated in the
clauses. Accordingly, the final rule includes a modified definition of
``service from Iraq or Afghanistan'' in the prescribed clauses, so that
it reads ``a service (including construction) that is performed in Iraq
or Afghanistan. * * *''. DoD cannot make ``construction'' a stand-alone
category because the law provides these special authorizations only for
the acquisition of products and services from Iraq or Afghanistan.
5. Clarify Contracting Officer Flexibility With Regard to the
Evaluation Factor
Comment: One respondent requested clarification that contracting
officers are allowed to determine the percentage evaluation factor to
apply to non-local/national products and services and eliminate the 50
percent factor (225.7703-5; 252.225-7023).
Response: The interim rule at 225.7703-5(a)(2) clearly establishes
that the contracting officer may modify the 50 percent evaluation
factor in accordance with contracting office procedures. This approach
is consistent with DFARS writing standards. The provision (252.225-
7023) includes a default percentage, and the prescription (225.7703-
5(a)) for using the provision enables the contracting officer to modify
that percentage. Contracting offices are responsible for establishing
procedures to be used for this purpose, and for ensuring contracting
officers are aware of the discretion provided by the DFARS and how it
can be applied.
6. Decision Authority No Higher Than Head of the Contracting Activity
Comment: One respondent requested that DoD add language to allow
the head of the contracting agency, rather than acquisition executives,
to make class determinations (225.7703-2).
Response: Although DoD is unwilling to provide this authority to
all heads of contracting activities, the draft final rule adds the
Commander of the Joint Contracting Command--Iraq/Afghanistan to the
list of officials at 225.7703-2(b)(2)(ii) who are authorized, without
power of redelegation, to make a determination in accordance with
section 886 that applies to an individual acquisition of $78.5 million
or more or to a class determination.
Decision To Issue an Interim Rule
Comment: One respondent requested explanation of the ``urgent and
compelling'' reasons that supported DoD's determination to publish an
interim rule rather than a proposed rule.
Response: First, this is a statutory requirement which became
effective upon enactment. Further, there was and is an urgent and
compelling need to achieve stability in Iraq and Afghanistan. Section
886 authorized the use of procurement procedures that could help
provide a stable source of jobs and employment in those countries and
as such, the Joint Contracting Command--Iraq/Afghanistan specifically
requested immediate guidance on how to implement this section. DoD had
an urgent and compelling need to implement section 886 in a way that
would enable contracting officers to use the new procedures as soon as
possible, and thus facilitate the creation of stable jobs and
employment sooner rather than later.
B. Other Changes in the Final Rule
In addition to the written responses posted on regulations.gov, DoD
was informed by a telephone caller that Alternate I to DFARS clause
252.225-7021, Trade Agreements, added in the interim rule, was
erroneously not added to the listing of that same clause in the
commercial items clause at DFARS 252.212-7001, Contract Terms and
Conditions Required to Implement Statutes or Executive Orders
Applicable to Defense Acquisitions of Commercial Items. DoD has
corrected this oversight in the final rule.
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.
[[Page 18039]]
C. 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.,
because the rule does not impose any requirements on small businesses
and only impacts acquisitions in Iraq and Afghanistan. There were no
comments received on regulatory flexibility in response to the interim
rule.
D. Paperwork Reduction Act
The Paperwork Reduction Act does not apply because the rule does
not impose any information collection requirements that require the
approval of the Office of Management and Budget under 44 U.S.C. 3501,
et seq.
List of Subjects in 48 CFR Parts 206, 225, and 252
Government procurement.
Ynette R. Shelkin,
Editor, Defense Acquisition Regulations System.
0
Accordingly, the interim rule amending 48 CFR parts 206, 225, and 252,
which was published at 73 FR 53151, September 15, 2008, is adopted as a
final rule with the following changes:
0
1. The authority citation for 48 CFR parts 225 and 252 continues to
read as follows:
Authority: 41 U.S.C. 421 and 48 CFR chapter 1.
PART 225--FOREIGN ACQUISITION
0
2. Section 225.401-71 is revised to read as follows:
225.401-71 Products or services in support of operations in Iraq or
Afghanistan.
When acquiring products or services, other than small arms, in
support of operations in Iraq or Afghanistan--
(a) If using the procedure specified in 225.7703-1(a)(1), the
purchase restriction at FAR 25.403(c) does not apply with regard to
products or services from Iraq.
(b) If using a procedure specified in 225.7703-1(a)(2) or (3), the
procedures of subpart 25.4 are not applicable.
0
3. Section 225.7701 is amended by revising the definition of ``service
from Iraq or Afghanistan'' to read as follows:
225.7701 Definitions.
* * * * *
Service from Iraq or Afghanistan means a service (including
construction) that is performed in Iraq or Afghanistan predominantly by
citizens or permanent resident aliens of Iraq or Afghanistan.
* * * * *
0
4. Section 225.7703-2 is amended by revising paragraph (b)(2)(ii)
introductory text and adding new paragraph (b)(2)(ii)(E) to read as
follows:
225.7703-2 Determination requirements.
* * * * *
(b) * * *
(2) * * *
(ii) The Director, Defense Procurement and Acquisition Policy, and
the following officials, without power of redelegation, are authorized
to make a determination that applies to an individual acquisition with
a value of $78.5 million or more or to a class of acquisitions:
* * * * *
(E) Commander of the Joint Contracting Command--Iraq/Afghanistan
(JCC-I/A).
* * * * *
0
5. Section 225.7703-4 is amended by revising the introductory text to
read as follows:
225.7703-4 Reporting requirement.
The following organizations shall submit periodic reports to the
Deputy Director, Contingency Contracting & Acquisition Policy, Defense
Procurement and Acquisition Policy, in accordance with PGI 225.7703-4,
to address the organization's use of the procedures authorized by this
section:
* * * * *
0
6. Section 225.7703-5 is amended by revising paragraph (d); removing
paragraph (e)(4); redesignating existing paragraphs (e)(5) through
(e)(8) as paragraphs (e)(4) through (e)(7), respectively; and adding
paragraph (f) to read as follows:
225.7703-5 Solicitation provisions and contract clauses.
* * * * *
(d) When the Trade Agreements Act applies to the acquisition, use
the appropriate clause and provision as prescribed at 225.1101 (5),
(6), or (7).
(f) Do not use the following clause or provision in solicitations
or contracts that include the clause at 252.225-7026:
(1) 252.225-7020, Trade Agreements Certificate.
(2) 252.225-7021, Trade Agreements.
(3) 252.225-7022, Trade Agreements Certificate--Inclusion of Iraqi
End Products.
PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
0
8. Section 252.212-7001 is amended by revising the clause date and
revising paragraph (b)(11) to read as follows:
252.212-7001 Contract terms and conditions required to implement
statutes or Executive orders applicable to Defense acquisitions of
commercial items.
* * * * *
CONTRACT TERMS AND CONDITIONS REQUIRED TO IMPLEMENT STATUTES OR
EXECUTIVE ORDERS APPLICABLE TO DEFENSE ACQUISITIONS OF COMMERCIAL ITEMS
(APR 2010)
* * * * *
(b) * * *
(11)(i)---- 252.225-7021, Trade Agreements (NOV 2009) (19 U.S.C.
2501-2518 and 19 U.S.C. 3301 note).
(ii) Alternate I (SEP 2008).
* * * * *
0
9. Section 252.225-7023 is amended by revising the clause date and
revising paragraph (b)(2) to read as follows:
252.225-7023 Preference for products or services from Iraq or
Afghanistan.
* * * * *
PREFERENCE FOR PRODUCTS OR SERVICES FROM IRAQ OR AFGHANISTAN (APR 2010)
* * * * *
(b) * * *
(2) Paragraph (c)(2) of the provision entitled Trade Agreements
Certificate,'' or ``Trade Agreements Certificate--Inclusion of Iraqi
End Products,'' if included in this solicitation.
* * * * *
0
10. Section 252.225-7024 is amended by revising the clause date and
revising paragraph (a)(2) to read as follows:
252.225-7024 Requirement for products or services from Iraq or
Afghanistan.
* * * * *
REQUIREMENT FOR PRODUCTS OR SERVICES FROM IRAQ OR AFGHANISTAN (APR
2010)
(a) * * *
(2) Service from Iraq or Afghanistan means a service (including
construction) that is performed in Iraq or Afghanistan predominantly
by citizens or permanent resident aliens of Iraq or Afghanistan.
* * * * *
0
11. Section 252.225-7026 is amended by revising the clause date and
revising paragraph (a)(2) to read as follows:
252.225-7026 Acquisition restricted to products or services from Iraq
or Afghanistan.
* * * * *
[[Page 18040]]
ACQUISITION RESTRICTED TO PRODUCTS OR SERVICES FROM IRAQ OR AFGHANISTAN
(APR 2010)
(a) * * *
(2) Service from Iraq or Afghanistan means a service (including
construction) that is performed in Iraq or Afghanistan predominantly
by citizens or permanent resident aliens of Iraq or Afghanistan.
* * * * *
[FR Doc. 2010-7261 Filed 4-7-10; 8:45 am]
BILLING CODE 5001-08-P
