Federal Acquisition Regulation; Federal Acquisition Circular 2005-65; Introduction, 6183-6185 [2013-01740]

Download as PDF Vol. 78 Tuesday, No. 19 January 29, 2013 Part II Department of Defense General Services Administration National Aeronautics and Space Administration srobinson on DSK4SPTVN1PROD with 48 CFR Chapter 1 Federal Acquisition Regulations; Final Rules VerDate Mar<15>2010 17:42 Jan 28, 2013 Jkt 229001 PO 00000 Frm 00001 Fmt 4717 Sfmt 4717 E:\FR\FM\29JAR2.SGM 29JAR2 6184 Federal Register / Vol. 78, No. 19 / Tuesday, January 29, 2013 / Rules and Regulations and National Aeronautics and Space Administration (NASA). ACTION: Summary presentation of final and interim rules. DEPARTMENT OF DEFENSE GENERAL SERVICES ADMINISTRATION NATIONAL AERONAUTICS AND SPACE ADMINISTRATION This document summarizes the Federal Acquisition Regulation (FAR) rules agreed to by the Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council (Councils) in this Federal Acquisition Circular (FAC) 2005–65. A companion document, the Small Entity Compliance Guide (SECG), follows this FAC. The FAC, including the SECG, is available via the Internet at https:// www.regulations.gov. SUMMARY: 48 CFR Chapter 1 [Docket FAR 2013–0076, Sequence 1] Federal Acquisition Regulation; Federal Acquisition Circular 2005–65; Introduction Department of Defense (DoD), General Services Administration (GSA), AGENCY: For effective dates and comment dates see separate documents, which follow. DATES: The analyst whose name appears in the table below in relation to each FAR case. Please cite FAC 2005–65 and the specific FAR case numbers. For information pertaining to status or publication schedules, contact the Regulatory Secretariat at 202–501–4755. FOR FURTHER INFORMATION CONTACT: LIST OF RULES IN FAC 2005–65 Item Subject I ....................... II ...................... III ..................... IV .................... V ..................... Prohibition on Contracting with Inverted Domestic Corporations ................................................. Extension of Sunset Date for Protests of Task and Delivery Orders .......................................... Free Trade Agreement—Colombia .............................................................................................. Unallowability of Costs Associated with Foreign Contractor Excise Tax ..................................... Technical Amendments. SUPPLEMENTARY INFORMATION: Summaries for each FAR rule follow. For the actual revisions and/or amendments made by these FAR cases, refer to the specific item numbers and subjects set forth in the documents following these item summaries. FAC 2005–65 amends the FAR as specified below: srobinson on DSK4SPTVN1PROD with Item I—Prohibition on Contracting With Inverted Domestic Corporations (FAR Case 2012–013) This rule adopts as final an interim rule implementing section 738 of Division C of the Consolidated Appropriations Act, 2012 (Pub. L. 112– 74), which prohibits the award of contracts using Fiscal Year 2012 appropriated funds to any foreign incorporated entity that is treated as an inverted domestic corporation or to any subsidiary of such an entity. The interim rule extended an existing prohibition that applied to the use of Fiscal Year 2008 through 2010 funds. Contracting officers are prohibited from awarding contracts using appropriated funds to any foreign incorporated entity that is treated as an inverted domestic corporation or to any subsidiary of such entity, unless an exception applies. This rule will not have any significant economic impact on small businesses because this rule only applies to an offeror that is an inverted domestic corporation and wants to do business with the Government. Small business concerns are unlikely to have been VerDate Mar<15>2010 17:42 Jan 28, 2013 Jkt 229001 FAR Case incorporated in the United States and then reincorporated in a tax haven. Item II—Extension of Sunset Date for Protests of Task and Delivery Orders (FAR Case 2012–007) This final rule amends the FAR to implement section 825 of the Ike Skelton National Defense Authorization Act for Fiscal Year 2011 (Pub. L. 111– 383) and section 813 of the National Defense Authorization Act for Fiscal Year 2012 (Pub. L. 112–81). These statutes extend the sunset date for protests against awards of task or delivery orders to September 30, 2016. There is no effect on Government automated systems. Item III—Free Trade Agreement— Colombia (FAR Case 2012–012) This final rule adopts, with minor change, the interim rule published in the Federal Register at 77 FR 27548 on May 10, 2012, to implement the United States-Colombia Trade Promotion Agreement. This Trade Promotion Agreement is a free trade agreement (FTA) that provides for mutually nondiscriminatory treatment of eligible products and services from Colombia. The Colombia FTA covers acquisition of supplies and services equal to or exceeding $77,494. The threshold for the Colombia FTA is $7,777,000 for construction. The excluded services for the Colombia FTA are the same as for the Bahrain FTA, Dominican RepublicCentral American FTA, Chile FTA, NAFTA, Oman FTA, and Peru FTA. PO 00000 Frm 00002 Fmt 4701 Sfmt 4700 2012–013 2012–007 2012–012 2011–011 Analyst Jackson. Lague. Davis. Chambers. Item IV—Unallowability of Costs Associated With Foreign Contractor Excise Tax (FAR Case 2011–011) This final rule amends the FAR to implement certain requirements of section 301 of the James Zadroga 9/11 Health and Compensation Act of 2010, which imposes a 2 percent excise tax on certain Federal procurement payments to foreign persons. First, the statute disallows the cost of the 2 percent excise tax on certain foreign procurements as part of a payment, or as part of a cost-based negotiated price. Second, the statute stipulates that no funds are to be disbursed to any foreign contractor in order to reimburse the tax imposed. This rule will have a minimal economic impact on small businesses because the 2 percent excise tax is applied only to foreign persons that receive Federal procurement payments pursuant to a contract with the Government of the United States for the provision of goods or services, if the goods are manufactured or produced in, or the services are performed in, a country that is not a party to an international procurement agreement with the United States. Item V—Technical Amendments Editorial changes are made at FAR 1.106, 2.000, and 31.205–6. E:\FR\FM\29JAR2.SGM 29JAR2 Federal Register / Vol. 78, No. 19 / Tuesday, January 29, 2013 / Rules and Regulations Dated: January 23, 2013. Laura Auletta, Director, Office of Governmentwide Acquisition Policy, Office of Acquisition Policy, Office of Governmentwide Policy. final rule on May 31, 2011 (76 FR 31410). An inverted domestic corporation is one that used to be incorporated in the United States, or used to be a partnership in the United States, but now is incorporated in a foreign country, or is a subsidiary whose parent corporation is incorporated in a foreign country. See the definition of inverted domestic corporation at FAR 9.108–1. Six respondents submitted comments on the interim rule. [FR Doc. 2013–01740 Filed 1–28–13; 8:45 am] BILLING CODE 6820–EP–P DEPARTMENT OF DEFENSE GENERAL SERVICES ADMINISTRATION NATIONAL AERONAUTICS AND SPACE ADMINISTRATION II. Discussion and Analysis The Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council (the Councils) reviewed the comments in the development of the final rule. A discussion of the comments is provided as follows: 48 CFR Parts 9 and 52 [FAC 2005–65; FAR Case 2012–013; Item I; Docket 2012–0013, Sequence 1] RIN 9000–AM22 Federal Acquisition Regulation; Prohibition on Contracting With Inverted Domestic Corporations A. Summary of Significant Changes Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA). ACTION: Final rule. There are no changes to the interim rule as a result of the public comments. DoD, GSA, and NASA are adopting as final, without change, an interim rule amending the Federal Acquisition Regulation (FAR) to implement a section of the Consolidated Appropriations Act, 2012, that prohibits the award of contracts using appropriated funds to any foreign incorporated entity that is treated as an inverted domestic corporation or to any subsidiary of such entity. DATES: Effective Date: January 29, 2013. FOR FURTHER INFORMATION CONTACT: Mr. Michael O. Jackson, Procurement Analyst, at 202–208–4949, for clarification of content. For information pertaining to status or publication schedules, contact the Regulatory Secretariat at 202–501–4755. Please cite FAC 2005–65, FAR Case 2012–013. SUPPLEMENTARY INFORMATION: Comment: Almost all respondents strongly supported the intent of the rule, to prohibit the Government from doing business with inverted domestic corporations. Some provided specific comments that the rule should be enforced and continued. Some of the specific reasons provided for support were as follows: AGENCY: SUMMARY: srobinson on DSK4SPTVN1PROD with I. Background DoD, GSA, and NASA published an interim rule in the Federal Register at 77 FR 27547 on May 10, 2012, to implement section 738 of Division C of the Consolidated Appropriations Act, 2012 (Pub. L. 112–74), which was signed on December 23, 2011. The same Governmentwide restrictions are already incorporated in the FAR for funds appropriated in Fiscal Years 2008 through 2010, under FAR case 2008– 009, published as an interim rule on July 1, 2009 (74 FR 31561), and as a VerDate Mar<15>2010 17:42 Jan 28, 2013 Jkt 229001 B. Analysis of Public Comments 1. Support for the Prohibition a. Impact on U.S. jobs. Comment: Several respondents stated that when millions of people in the United States are unemployed or underemployed, corporations that have ‘‘turned their back’’ on the United States and probably eliminated at least some of the jobs for American personnel should not receive Government contracts. Response: The Councils note that the views of these respondents are in accord with the intent of the law and this FAR rule. b. Companies should not be rewarded for tax avoidance. Comment: Many respondents stated that companies should not be rewarded for tax avoidance, which enables them to compete unfairly with U.S. companies. Response: The Councils note that the views of these respondents are in accord with the intent of the law and this FAR rule. PO 00000 Frm 00003 Fmt 4701 Sfmt 4700 6185 c. One respondent discussed additional costly measures that are required when dealing with inverted domestic corporations: e.g., proxy agreements, authorization from national authorities, additional security measures. Response: The Councils note that the views of this respondent are in accord with the intent of the law and this FAR rule. 2. Rule Should Be Even More Stringent Comment: One respondent stated that the FAR rule on inverted domestic corporations is a good beginning, but does not go far enough to have any effect on the issue. The respondent requests that the Government should also stop distributors of the products of inverted domestic corporations from selling such products to the Government, because the manufacturers pay no income tax, and products they make off shore impede manufacturing growth of the United States economy and job creation. Response: Prior to this FAR case 2012–013, the FAR already implemented restrictions that were contained in the FY 2008 through FY 2010 appropriations act restrictions: a provision at FAR 52.209–2, Prohibition on Contracting with Inverted Domestic Corporations—Representation; and a clause at 52.209–10, Prohibition on Contracting with Inverted Domestic Corporations. Comparable to the prior appropriations act restrictions, Section 738 of the Consolidated Appropriations Act, 2012 (Pub. L. 112–74), Division C, Title VII, prohibits the use of FY 2012 funds for contracts with any foreign entity which is treated as an inverted domestic corporation under section 835(b) of the Homeland Security Act of 2002. The statute only prohibits Government contracts directly awarded to an inverted domestic corporation. It does not cover contracts to distributors of the products of inverted domestic corporations. The purpose of the interim rule under this FAR Case 2012–013 was to extend the existing prohibition to solicitations and contracts using FY 2012 funds. It did not propose any changes in interpretation or application of the statutory prohibition. Therefore, application to distributors of the products of inverted domestic corporations is outside the scope of this rule. 3. Relationship to Buy American Statute Comment: One respondent stated that the Buy American Act of 1933 (now codified at 41 U.S.C. chapter 83) created E:\FR\FM\29JAR2.SGM 29JAR2

Agencies

[Federal Register Volume 78, Number 19 (Tuesday, January 29, 2013)]
[Rules and Regulations]
[Pages 6183-6185]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-01740]



[[Page 6183]]

Vol. 78

Tuesday,

No. 19

January 29, 2013

Part II





Department of Defense





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General Services Administration





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National Aeronautics and Space Administration





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48 CFR Chapter 1





Federal Acquisition Regulations; Final Rules

Federal Register / Vol. 78 , No. 19 / Tuesday, January 29, 2013 / 
Rules and Regulations

[[Page 6184]]


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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Chapter 1

[Docket FAR 2013-0076, Sequence 1]


Federal Acquisition Regulation; Federal Acquisition Circular 
2005-65; Introduction

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

ACTION: Summary presentation of final and interim rules.

-----------------------------------------------------------------------

SUMMARY: This document summarizes the Federal Acquisition Regulation 
(FAR) rules agreed to by the Civilian Agency Acquisition Council and 
the Defense Acquisition Regulations Council (Councils) in this Federal 
Acquisition Circular (FAC) 2005-65. A companion document, the Small 
Entity Compliance Guide (SECG), follows this FAC. The FAC, including 
the SECG, is available via the Internet at https://www.regulations.gov.

DATES: For effective dates and comment dates see separate documents, 
which follow.

FOR FURTHER INFORMATION CONTACT: The analyst whose name appears in the 
table below in relation to each FAR case. Please cite FAC 2005-65 and 
the specific FAR case numbers. For information pertaining to status or 
publication schedules, contact the Regulatory Secretariat at 202-501-
4755.

                      List of Rules in FAC 2005-65
------------------------------------------------------------------------
        Item              Subject         FAR Case          Analyst
------------------------------------------------------------------------
I..................  Prohibition on          2012-013  Jackson.
                      Contracting
                      with Inverted
                      Domestic
                      Corporations.
II.................  Extension of            2012-007  Lague.
                      Sunset Date for
                      Protests of
                      Task and
                      Delivery Orders.
III................  Free Trade              2012-012  Davis.
                      Agreement--Colo
                      mbia.
IV.................  Unallowability          2011-011  Chambers.
                      of Costs
                      Associated with
                      Foreign
                      Contractor
                      Excise Tax.
V..................  Technical
                      Amendments.
------------------------------------------------------------------------


SUPPLEMENTARY INFORMATION: Summaries for each FAR rule follow. For the 
actual revisions and/or amendments made by these FAR cases, refer to 
the specific item numbers and subjects set forth in the documents 
following these item summaries. FAC 2005-65 amends the FAR as specified 
below:

Item I--Prohibition on Contracting With Inverted Domestic Corporations 
(FAR Case 2012-013)

    This rule adopts as final an interim rule implementing section 738 
of Division C of the Consolidated Appropriations Act, 2012 (Pub. L. 
112-74), which prohibits the award of contracts using Fiscal Year 2012 
appropriated funds to any foreign incorporated entity that is treated 
as an inverted domestic corporation or to any subsidiary of such an 
entity. The interim rule extended an existing prohibition that applied 
to the use of Fiscal Year 2008 through 2010 funds. Contracting officers 
are prohibited from awarding contracts using appropriated funds to any 
foreign incorporated entity that is treated as an inverted domestic 
corporation or to any subsidiary of such entity, unless an exception 
applies. This rule will not have any significant economic impact on 
small businesses because this rule only applies to an offeror that is 
an inverted domestic corporation and wants to do business with the 
Government. Small business concerns are unlikely to have been 
incorporated in the United States and then reincorporated in a tax 
haven.

Item II--Extension of Sunset Date for Protests of Task and Delivery 
Orders (FAR Case 2012-007)

    This final rule amends the FAR to implement section 825 of the Ike 
Skelton National Defense Authorization Act for Fiscal Year 2011 (Pub. 
L. 111-383) and section 813 of the National Defense Authorization Act 
for Fiscal Year 2012 (Pub. L. 112-81). These statutes extend the sunset 
date for protests against awards of task or delivery orders to 
September 30, 2016. There is no effect on Government automated systems.

Item III--Free Trade Agreement--Colombia (FAR Case 2012-012)

    This final rule adopts, with minor change, the interim rule 
published in the Federal Register at 77 FR 27548 on May 10, 2012, to 
implement the United States-Colombia Trade Promotion Agreement. This 
Trade Promotion Agreement is a free trade agreement (FTA) that provides 
for mutually non-discriminatory treatment of eligible products and 
services from Colombia.
    The Colombia FTA covers acquisition of supplies and services equal 
to or exceeding $77,494. The threshold for the Colombia FTA is 
$7,777,000 for construction. The excluded services for the Colombia FTA 
are the same as for the Bahrain FTA, Dominican Republic-Central 
American FTA, Chile FTA, NAFTA, Oman FTA, and Peru FTA.

Item IV--Unallowability of Costs Associated With Foreign Contractor 
Excise Tax (FAR Case 2011-011)

    This final rule amends the FAR to implement certain requirements of 
section 301 of the James Zadroga 9/11 Health and Compensation Act of 
2010, which imposes a 2 percent excise tax on certain Federal 
procurement payments to foreign persons. First, the statute disallows 
the cost of the 2 percent excise tax on certain foreign procurements as 
part of a payment, or as part of a cost-based negotiated price. Second, 
the statute stipulates that no funds are to be disbursed to any foreign 
contractor in order to reimburse the tax imposed. This rule will have a 
minimal economic impact on small businesses because the 2 percent 
excise tax is applied only to foreign persons that receive Federal 
procurement payments pursuant to a contract with the Government of the 
United States for the provision of goods or services, if the goods are 
manufactured or produced in, or the services are performed in, a 
country that is not a party to an international procurement agreement 
with the United States.

Item V--Technical Amendments

    Editorial changes are made at FAR 1.106, 2.000, and 31.205-6.


[[Page 6185]]


    Dated: January 23, 2013.
Laura Auletta,
Director, Office of Governmentwide Acquisition Policy, Office of 
Acquisition Policy, Office of Governmentwide Policy.
[FR Doc. 2013-01740 Filed 1-28-13; 8:45 am]
BILLING CODE 6820-EP-P
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