Federal Acquisition Regulation: Maximizing Use of American-Made Goods, Products, and Materials, 6180-6194 [2021-00710]

Download as PDF 6180 Federal Register / Vol. 86, No. 11 / Tuesday, January 19, 2021 / Rules and Regulations Maximizing Use of American-Made Goods, Products, and Materials (FAR Case 2019–016) DEPARTMENT OF DEFENSE GENERAL SERVICES ADMINISTRATION NATIONAL AERONAUTICS AND SPACE ADMINISTRATION 48 CFR Chapter 1 [Docket No. FAR–2021–0051, Sequence No. 1] Federal Acquisition Regulation; Federal Acquisition Circular 2021–04; Introduction Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA). AGENCY: ACTION: Summary presentation of final rule. This document summarizes the Federal Acquisition Regulation (FAR) rule agreed to by the Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council (Councils) in this Federal Acquisition Circular (FAC) 2021–04. A companion document, the Small Entity Compliance Guide (SECG), follows this FAC. SUMMARY: For effective dates see the separate documents, which follow. DATES: Ms. Zenaida Delgado, Procurement Analyst, at 202–969–7207 or zenaida.delgado@ gsa.gov for clarification of content. For information pertaining to status or publication schedules, contact the Regulatory Secretariat Division at 202– 501–4755 or GSARegSec@gsa.gov. Please cite FAC 2021–04, FAR Case 2019–016. FOR FURTHER INFORMATION CONTACT: RULES LISTED IN FAC 2021–04 Subject FAR case Maximizing Use of AmericanMade Goods, Products and Materials ......................................... 2019–016 The FAC, including the SECG, is available via the internet at https://www.regulations.gov. khammond on DSKJM1Z7X2PROD with RULES11 ADDRESSES: A summary for the FAR rule follows. For the actual revisions and/or amendments by this FAR rule, refer to the specific item numbers and subjects set forth in the documents following this summary. FAC 2021–04 amends the FAR as follows: SUPPLEMENTARY INFORMATION: VerDate Sep<11>2014 21:32 Jan 17, 2021 Jkt 253001 This final rule strengthens domestic preferences under the Buy American statute by making adjustments to the required percentage of domestic content and the existing percentages for the price evaluation preferences in an effort to decrease the amount of foreignsourced content in a U.S. manufactured product to promote economic and national security, help stimulate economic growth, and create jobs. The price evaluation preferences increase from 6 percent to 20 percent for large business and from 12 percent to 30 percent for small business; for DoD procurements there is no change to the DoD 50 percent amount. The domestic content requirement for iron and steel increases from 50 percent to 95 percent; for other end products and construction materials, the domestic content requirement increases from 50 percent to 55 percent. Foreign iron and steel is iron or steel products that are not produced in the United States. The rule implements E.O. 13881, Maximizing Use of American-Made Goods, Products, and Materials. This final rule will not have a significant economic impact on a substantial number of small entities. William F. Clark, Director, Office of Government-wide Acquisition Policy, Office of Acquisition Policy, Office of Government-wide Policy. Federal Acquisition Circular (FAC) 2021–04 is issued under the authority of the Secretary of Defense, the Administrator of General Services, and the Administrator of National Aeronautics and Space Administration. Unless otherwise specified, all Federal Acquisition Regulation (FAR) and other directive material contained in FAC 2021–04 is effective January 19, 2021. John M. Tenaglia, Principal Director, Defense Pricing and Contracting, Department of Defense. Jeffrey A. Koses, Senior Procurement Executive/Deputy CAO, Office of Acquisition Policy, U.S. General Services Administration. William G. Roets, II, Acting Assistant Administrator, Office of Procurement, National Aeronautics and Space Administration. [FR Doc. 2021–00708 Filed 1–15–21; 8:45 am] BILLING CODE 6820–EP–P PO 00000 Frm 00002 Fmt 4701 Sfmt 4700 DEPARTMENT OF DEFENSE GENERAL SERVICES ADMINISTRATION NATIONAL AERONAUTICS AND SPACE ADMINISTRATION 48 CFR Parts 12, 25, and 52 [FAC 2021–04; FAR Case 2019–016; Docket No. FAR–2019–0016, Sequence No. 1] RIN 9000–AN99 Federal Acquisition Regulation: Maximizing Use of American-Made Goods, Products, and Materials Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA). ACTION: Final rule. AGENCY: DoD, GSA, and NASA are issuing a final rule amending the Federal Acquisition Regulation (FAR) to implement an Executive order (E.O.) addressing domestic preferences in Government procurement. DATES: Effective: January 21, 2021. Applicability: The changes in this rule apply to solicitations issued on or after February 22, 2021 and resultant contracts. SUMMARY: Ms. Zenaida Delgado, Procurement Analyst, at 202–969–7207 or zenaida.delgado@ gsa.gov for clarification of content. For information pertaining to status or publication schedules, contact the Regulatory Secretariat Division at 202– 501–4755 or GSARegSec@gsa.gov. Please cite FAC 2021–04, FAR Case 2019–016. SUPPLEMENTARY INFORMATION: FOR FURTHER INFORMATION CONTACT: I. Background DoD, GSA, and NASA published a proposed rule at 85 FR 56558 on September 14, 2020, to implement E.O. 13881, Maximizing Use of AmericanMade Goods, Products, and Materials (84 FR 34257, July 18, 2019). In order to implement the E.O., this final rule changes FAR clauses implementing the Buy American statute by increasing the— 1. Domestic content requirements; and 2. Price preference for domestic products. Increased Domestic Content Requirements Under E.O. 13881, and this final rule, in order to meet the definition of ‘‘domestic construction material’’ or ‘‘domestic end product,’’ the cost of E:\FR\FM\19JAR11.SGM 19JAR11 Federal Register / Vol. 86, No. 11 / Tuesday, January 19, 2021 / Rules and Regulations foreign iron and steel for iron and steel products must be less than 5 percent of the cost of all components in the product. For everything else, the domestic content requirement increases from 50 percent to more than 55 percent of the cost of all components. E.O. 13881 creates a new separate higher standard for iron and steel products. This distinction has existed for many years in domestic preference requirements governing certain Federal grant programs, such as the Federal Transit Administration’s Buy America regulations applicable to grantees. Also, DoD procurements are affected by the increased domestic content requirements of E.O. 13881; the changes will be implemented in the Defense Federal Acquisition Regulation Supplement (DFARS) through DFARS Case 2019–D045, Maximizing Use of American-Made Goods. Increased Price Preference for Domestic Offers The Buy American statute does not prohibit the purchase of foreign end products or use of foreign construction material. Instead, it encourages the use of domestic end products and construction material by imposing a price preference for domestic end products and construction material. E.O. 13881 and this final rule increase the price preference from 6 percent to 20 percent for large businesses, and from 12 percent to 30 percent for small businesses. The E.O. does not impact the price preference for end products for DoD procurements, which is 50 percent for both large and small businesses, because the DoD percentage exceeds the requirements of the E.O. Thirty-five respondents submitted comments on the proposed rule. khammond on DSKJM1Z7X2PROD with RULES11 II. Discussion and Analysis The Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council (the Councils) reviewed the public comments in the development of the final rule. A discussion of the comments and the changes made to the rule as a result of those comments are provided as follows: A. Summary of Significant Changes This final rule makes the following significant changes from the proposed rule: • Definitions. At FAR 25.003, the definitions of ‘‘domestic construction material,’’ ‘‘domestic end product,’’ and ‘‘predominantly of iron or steel or a combination of both’’ are revised; and a definition of ‘‘foreign iron and steel’’ is added. VerDate Sep<11>2014 21:32 Jan 17, 2021 Jkt 253001 Æ The definitions of ‘‘domestic construction material’’ and ‘‘domestic end product’’ now specify that the cost of foreign iron and steel includes but is not limited to the cost of foreign iron or steel mill products (such as bar, billet, slab, wire, plate, or sheet), castings, or forgings utilized in the manufacture of the product and a good faith estimate of the cost of all foreign iron or steel components excluding commercially available off-the-shelf (COTS) fasteners. The definition specifies that the iron or steel components of unknown origin are treated as foreign. Also, the definition explains that if the construction material contains multiple components, the cost of all the materials used in the construction material is calculated in accordance with the definition of ‘‘cost of components’’ in FAR 25.003. Æ A definition of ‘‘foreign iron and steel’’ which includes language explaining ‘‘produced in the United States’’ is added to clarify the term as it is used in the revised definitions of ‘‘domestic construction material’’ and ‘‘domestic end product’’. Æ The definition of ‘‘predominantly of iron or steel or a combination of both’’ now clarifies what is meant by the phrase ‘‘the cost of iron and steel.’’ Æ Conforming changes are made at FAR 25.101(a)(2)(ii) and 25.201(b)(2)(ii), as well as to FAR clauses 52.225–1, Buy American—Supplies; 52.225–3, Buy American—Free Trade Agreements— Israeli Trade Act; 52.225–9, Buy American—Construction Materials; and 52.225–11, Buy American— Construction Materials Under Trade Agreement. • COTS fasteners. Revisions have been made throughout the FAR to clarify that the domestic content test does not apply to COTS fasteners. These revisions are made at FAR 25.001, 25.003, 25.101, 25.201, as well as in FAR clauses 52.225–1, Buy AmericanSupplies; 52.225–3, Buy American— Free Trade Agreements—Israeli Trade Act, and its alternates; 52.225–9, Buy American—Construction Materials; and 52.225–11, Buy American— Construction Materials Under Trade Agreement, and its alternate. B. Analysis of Public Comments 1. Strong Support for the Rule Comment: Most of the respondents strongly supported the proposed rule. One respondent noted positive factors regarding this rule as follows: • Improves America’s position from an economic standpoint. • Helps increase jobs. • Improves relationships with companies within our country. PO 00000 Frm 00003 Fmt 4701 Sfmt 4700 6181 • Interests other countries to do more trades and business with companies that have American-made products, goods, and materials. • Improves our national image. Response: Noted. 2. Domestic Content Test for COTS Items 2a. Remove the COTS Waiver for All Construction Materials Comment: A few respondents stated that the rule should restore the domestic content test for all COTS construction material, not just for COTS construction iron and steel products. The respondents pointed out that there are instances where ‘‘nonferrous’’ construction materials compete with iron and steel products and in these instances, the rule provides an advantage to foreign nonferrous producers when they compete with U.S. producers of iron and steel products by not applying the domestic content test to the ‘‘nonferrous’’ construction material. Response: This FAR change is required to implement E.O. 13881. 2b. Remove the COTS Waiver for Fasteners Comment: Many respondents (using an essentially identical form letter) urged the Councils to remove the waiver of the domestic content test of the Buy American statute for the acquisition of COTS fasteners. These respondents stated that not doing so would not provide U.S. fastener manufacturers the same protection being offered to manufacturers of other iron and steel products. Response: The Councils determined that requiring offerors to keep track of the origin of all fasteners could have a significant negative impact by creating an administrative burden on offerors that would outweigh any benefit to the American iron and steel industrial base. However, a clarification is made in FAR 25.001 to exclude only COTS fasteners. 2c. No Changes to Current COTS Waiver Comment: A few respondents stated that the COTS waiver should remain as is and not subject iron and steel products to the additional rigor of the domestic content test. These respondents commented that contractors for COTS items have built their supply chains to comply with the existing COTS waiver and changing this paradigm will impede projects around the country, adversely impact these contractors, be administratively burdensome for them, and increase compliance costs that will eventually be borne by the Government. One of the E:\FR\FM\19JAR11.SGM 19JAR11 6182 Federal Register / Vol. 86, No. 11 / Tuesday, January 19, 2021 / Rules and Regulations khammond on DSKJM1Z7X2PROD with RULES11 respondents stated that waiving some COTS items, but not others, would create a dissimilar application of the domestic content rule that is not in the public interest and should not be implemented in the FAR. Response: As explained in the proposed rule, roll-back of the COTS waiver is necessary to give full effect to the E.O. 13881 requirement. 3. Definitions Comment: One respondent stated that it was not clear why the longstanding practice of using cost of ‘‘components’’ has been replaced with ‘‘content’’ when determining whether an end product is a steel end product and the implications of this change. The respondent recommended defining the word ‘‘content’’ and providing examples of application of this new standard. Response: The Councils note that the domestic content test is not applied to determine whether an item is wholly or predominantly of iron or steel or a combination of both, but to determine whether such a product is foreign or domestic. As explained in paragraph II.B.2.i of the proposed rule preamble, the term ‘‘component test’’ was replaced with ‘‘domestic content test’’ because of the wording of the E.O. regarding iron and steel. Per FAR 25.001(c)(1), this domestic content test is one of the twopart test elements used by the Buy American statute to define a ‘‘domestic construction material’’ or ‘‘domestic end product.’’ Regarding iron and steel end products, the E.O. states that the materials shall be considered to be of foreign origin if ‘‘the cost of foreign iron and steel used in such iron and steel end products constitutes 5 percent or more of the cost of all the products used in such iron and steel end products.’’ ‘‘All the products used’’ in an item would be the common meaning of ‘‘content.’’ The Councils do not consider it necessary to define ‘‘content’’. However, the Councils added the explanation that the cost of all the materials used in a product is to be calculated consistent with the definition of ‘‘cost of components’’ at FAR 25.003, if the product contains multiple components. The Councils also specified that the cost of foreign iron and steel includes but is not limited to the cost of foreign iron or steel mill products (such as bar, billet, slab, wire, plate, or sheet), castings, or forgings utilized in the manufacture of the product and a good faith estimate of the cost of all foreign iron or steel components excluding COTS fasteners, both in the definitions of ‘‘domestic construction material,’’ and ‘‘domestic end product.’’ VerDate Sep<11>2014 21:32 Jan 17, 2021 Jkt 253001 To determine whether a product that is wholly or predominantly of iron or steel or a combination of both is foreign or domestic, it is necessary to determine the following: (i) Does the product consist wholly or ‘‘predominantly of iron or steel or a combination of both’’ (as defined in FAR 25.003)? (ii) Is any of the iron or steel content not produced in the United States? (iii) Is the cost of foreign iron or steel mill products (such as bar, billet, slab, wire, plate, or sheet), castings, or forgings utilized in the manufacture of the product, and a good faith estimate of the cost of all foreign iron or steel components (excluding COTS fasteners), less than 5 percent of the cost of all the components used in the end product (or construction material)? If the product contains multiple components, the cost is to be calculated consistent with the definition of ‘‘cost of components’’ at FAR 25.003. See the following examples: • A steel beam. For purposes of this example, this steel beam consists wholly of steel. The cost of all material in the beam, excluding final manufacture, overhead costs, and profit, is $50. If the steel beam is rolled from steel bloom, then the steel beam probably contains either all domestic steel, or all foreign steel. However, if the beam is welded or riveted from separate steel plates, then it is conceivable that some of the steel plates could have been formed from steel not produced in the United States. If the cost of the foreign steel plates used to make the beam equals or exceeds $2.50 (i.e., 5 percent of the cost of all the components used in the product), then the entire beam is a foreign construction material. • A steel safe. The steel safe may include other components such as a combination lock, a dehumidifier, or drawers. The safe costs $1,000 and the cost of all components in the safe is $500. If the cost of the steel plates or other steel mill products (excluding COTS fasteners) utilized in the manufacture of the safe exceeds $250 (i.e., 50 percent of the total cost of all the components as defined in FAR 25.003), then the safe consists predominantly of steel. If the cost of foreign iron or steel mill products (such as bar, billet, slab, wire, plate, or sheet), castings, or forgings utilized in the manufacture of the safe and a good faith estimate of the cost of all foreign iron or steel components (excluding COTS fasteners) is less than $25 (i.e., 5 percent of the cost of all the components used in the product), then the safe is a domestic end product. PO 00000 Frm 00004 Fmt 4701 Sfmt 4700 • A refrigerator. The refrigerator consists of many components and materials. The exterior cabinet and door and the inner cabinet of this refrigerator are steel. The refrigerator also includes insulation, cooling system, refrigerant, and fixtures. The refrigerator costs $2,000 and the cost of all components in the refrigerator is $1,000. If the cost of the steel plates or other steel mill products (excluding COTS fasteners) utilized in the manufacture of the refrigerator does not exceed $500 (i.e., 50 percent of the total cost of all the components as defined in FAR 25.003), then the refrigerator does not consist predominantly of steel. Comment: One respondent recommended clarifying the meaning of ‘‘metallurgical processes’’ and providing a list of representative metallurgical functions such as smelting, melting, pouring, rolling, casting, and other similar processes. The respondent based the recommendation on their interpretation of the existing guidance and the proposed rule, suggesting that raw steel and iron material for a steel end product may enter the United States and after undergoing all manufacturing processes for its intended final use, it would then be considered ‘‘produced in the U.S.’’ both for purposes of being a domestic component (if it is a component in an end product) or a domestic end product itself (if solely from one foreign material). The respondent’s interpretation also suggested that if ‘‘the steel came with any foreign manufacturing outside the original metallurgical process, the item would be considered foreign, even if all subsequent manufacturing occurred in the U.S.’’ One respondent suggested defining ‘‘manufactured in the United States’’ under the Buy American statute’s two-part test using a more stringent standard where all steelmaking processes, including the melting and pouring of the steel (i.e., the actual steelmaking), occur in the United States. Other respondents requested the rule provide a clear, explicit definition of ‘‘foreign iron and steel’’ to prevent any adverse or unintended consequences. Response: The exception relating to metallurgical processes involving refinement of steel additives does not apply to any of the metallurgical processes involved in the making of the steel itself. Steel is defined in FAR 25.003 as an alloy that includes at least 50 percent iron, between 0.02 and 2 percent carbon, and may include other elements. These other elements (e.g., manganese, silicon, copper, aluminum, chromium, cobalt, molybdenum, nickel, niobium, titanium, tungsten, vanadium) are termed steel additives, and as such, E:\FR\FM\19JAR11.SGM 19JAR11 khammond on DSKJM1Z7X2PROD with RULES11 Federal Register / Vol. 86, No. 11 / Tuesday, January 19, 2021 / Rules and Regulations are added to the steel alloy to create steel with different properties (e.g., stainless steel). Therefore, whatever metallurgical processes are used to separate and concentrate and reduce the ore to metal, then refine to increase the grade or purity of a steel additive (such as titanium or tungsten) can occur anywhere, prior to adding these other metals to produce the steel alloy in the United States. As stated in the proposed rule, in order to be domestic, all manufacturing processes of the iron or steel (other than the additives) must take place in the United States. In the final rule, language is added from the definition of ‘‘produced in the United States’’ from E.O. 13788, Buy American and Hire American (82 FR 18837) to better explain how the iron or steel is considered domestic. For clarity, the final rule moves the explanation of what it means to produce iron or steel in the United States from the definition of ‘‘domestic construction material’’ and ‘‘domestic end product’’ to a new, separate definition in FAR 25.003 for the term ‘‘foreign iron and steel.’’ The definition of ‘‘foreign iron and steel’’ is based on the existing description of ‘‘iron or steel components’’ at FAR 25.602–1(a)(1)(ii), consistent with the intent articulated in the proposed rule. Comment: One respondent recommended that ‘‘good faith’’ be further defined to include a subjective and objective standard for a ‘‘reasonable business person without legal knowledge or training’’. Response: The term ‘‘good faith’’ is used in many instances in the FAR and other agency regulations. The Councils concluded that ‘‘a good faith estimate’’ should be sufficient; and that adding the suggested language will not make the standard any clearer. Comment: One respondent stated that requiring nothing more than a ‘‘good faith assurance’’ to calculate the cost of foreign components could lead to abuse or fraud in calculating the cost of foreign components, which would undermine the purpose of E.O. 13881. The respondent commented that because the origin of the iron and steel products should be readily discernible, the final rule should require suppliers to track the domestic content in iron and steel products and subject this accounting to periodic audit. Another respondent submitted a similar comment. Response: The Councils agree that the origin of the iron and steel components should be readily discernible. As such, the final rule has been revised to clarify that contractors are to make a ‘‘good faith estimate’’ only for the cost of all foreign iron or steel components, other VerDate Sep<11>2014 21:32 Jan 17, 2021 Jkt 253001 than the cost of foreign iron or steel mill products (such as bar, billet, slab, wire, plate, or sheet), castings, or forgings utilized in the manufacture of the product. It is highly likely that current procedures will yield the needed information for the offeror to make the required determinations in this rule. The cost of the iron and steel items are included in invoices and already used to determine whether an end product or construction material is foreign. Comment: A few respondents stated that defining ‘‘predominantly of iron or steel’’ based on cost of the components, as opposed to weight, volume, and cost, opens a loophole that will allow manufacturers and contractors to evade the domestic content requirements through creative accounting practices. Response: The Councils reiterate that basing the predominance on cost, rather than weight or volume, is consistent with the requirement of the E.O. that the ‘‘cost’’ of foreign iron and steel be limited to less than 5 percent of the ‘‘cost’’ of all components. Therefore, the final rule remains unchanged regarding the basis for determining whether an item is predominantly of iron or steel. Comment: One respondent stated that the proposed rule’s definition of ‘‘fasteners’’ was overly broad and by exempting fasteners from the domestic content requirements, the rule creates an opportunity for abuse of this ‘‘loophole.’’ The respondent requested the definition of ‘‘fasteners’’ be modified to reflect the qualifiers the Councils provided in the proposed rule, i.e., that the fasteners being exempted were those that were ‘‘small’’ or ‘‘inexpensive.’’ Response: The Councils have clarified the text in the final rule to state that the fasteners being exempted from the domestic content requirement are those that are COTS items. Comment: One respondent stated that requiring iron and steel products to contain 95 percent domestic content is too onerous and burdensome on manufacturers. The respondent commented that the 95 percent requirement should be reduced or phased in over time. Alternatively, the respondent also suggested that in determining whether a predominantly of iron or steel product is domestic, manufacturers should be allowed to use the cost of non-iron and non-steel components of the item; this way, manufacturers can mitigate the 95 percent requirement, while still incentivizing domestic purchase of nonsteel components. Another respondent had a similar comment, pointing out that the Environmental Protection Agency allows for 5 percent of the total ‘‘project’’ cost to be foreign iron and PO 00000 Frm 00005 Fmt 4701 Sfmt 4700 6183 steel products instead of 5 percent of the total cost of the individual product. Response: This FAR change is required to implement E.O. 13881, which increased the domestic content requirement for iron and steel end products to 95 percent. However, the Councils note that the proposed rule presented the requirement as whether 5 percent of the cost of all the components was foreign iron or steel, not whether 5 percent of the cost of only the iron or steel components were foreign iron or steel; thereby, giving credit to the noniron and non-steel components of the end item as requested by the respondent. Comment: One respondent stated their interpretation that the proposed rule encompassed steel subcomponents, not just steel components. Due to lack of visibility into the cost of these steel subcomponents by manufacturers, the respondent requested the rule consider exempting the cost of subcomponents from the calculations. Another respondent had a similar comment, pointing out that the Federal Transit Administration’s policy explicitly exempts subcomponents from countryof-origin consideration, including iron and steel components. Response: The Councils confirm that the intent of the proposed rule was to include the cost of subcomponents in the domestic content calculations. However, the Councils did not add ‘‘subcomponents’’ in the FAR text because the definition of ‘‘components’’ at FAR 25.003 is written broadly enough to already cover subcomponents. In acknowledging the difficulty contractors may have to know, definitively, the cost of all subcomponents in iron or steel items, the Councils clarify in the final rule that contractors are to make a ‘‘good faith estimate’’ of the cost of all foreign iron or steel components, other than the cost of foreign iron or steel mill products (such as bar, billet, slab, wire, plate, or sheet), castings, or forgings utilized in the manufacture of the product. 4. Outside the Scope of This Rule Comment: Two respondents provided comments regarding marketing their specific businesses, and two respondents provided comments of a political nature. Response: These comments did not address the rule and, as such, are outside the scope of this rule. Comment: One respondent recommended that if no domestic offers are received on an acquisition conducted using full and open competition, then the procurement officer should confirm with at least two E:\FR\FM\19JAR11.SGM 19JAR11 khammond on DSKJM1Z7X2PROD with RULES11 6184 Federal Register / Vol. 86, No. 11 / Tuesday, January 19, 2021 / Rules and Regulations other manufacturers within the same NAICS code their non-interest in the procurement. Response: The Councils concluded the recommendation would add a significant burden on contracting officers, and is not necessary for implementation of the E.O. Comment: One respondent recommended defining ‘‘manufactured’’ and adopting a clear non-shift approach to the items specified in the procurement document for all purchases (aside from systems). Response: This recommendation is not necessary for implementation of the E.O. The Councils note that definitions of ‘‘manufacture’’ have been considered in the past and rejected. Although the FAR does not define ‘‘manufacture,’’ it does define ‘‘place of manufacture,’’ at FAR 52.225–18, as ‘‘the place where an end product is assembled out of components, or otherwise made or processed from raw materials into the finished product that is to be provided to the Government.’’ Comment: One respondent recommended removing the Buy American statute’s exception for ‘‘Goods for Use Outside the United States’’ and using an evaluation factor instead. Response: The exception for articles, materials, or supplies for use outside the United States is included in the Buy American statute (41 U.S.C. 8302(a)(2)(A) and 8303(b)(1)(A)). The Balance of Payments Program provided a preference for U.S. products and services for overseas use, and its restrictions were similar to the restrictions of the Buy American statute, which apply only within the United States. Purchases of supplies for use outside the United States, and construction materials for construction contracts performed outside the United States, were covered by the Balance of Payments Program in FAR subpart 25.3, as a matter of policy, until it was removed in 2002. Only a few civilian agencies make purchases for use outside the United States. Furthermore, even fewer civilian agencies award construction contracts that are performed outside the United States. The Balance of Payments Program applied to purchases valued at more than the simplified acquisition threshold and had little impact for civilian agency acquisitions of supplies in excess of the Trade Agreements Act threshold, because the civilian agencies do not apply the Balance of Payments Program when the Trade Agreements Act applies. Therefore, because there was no statutory requirement for the Balance of Payments Program, and because elimination of this Program for VerDate Sep<11>2014 21:32 Jan 17, 2021 Jkt 253001 civilian agencies would reduce administrative burdens on both the Government and the public, without significant impact on the Government’s international balance of payments, the Balance of Payments Program was eliminated for civilian agencies. The rationale for elimination of this Program for civilian agencies has not changed. Note that DoD has retained the Balance of Payments Program for acquisitions of supplies for use outside the United States or construction projects to be performed overseas. 5. Oppose the Rule Comment: Some respondents urged the Councils not to increase the iron and steel content requirements beyond their current levels because of the limited availability of U.S. sources for components, which will result in increased costs and a decrease in competition. Some of these respondents also stated that Buying American should be an incentive, not a requirement. Response: This FAR change implements the content requirements established in E.O. 13881. III. Applicability to Contracts at or Below the Simplified Acquisition Threshold (SAT) and for Commercial Items, Including Commercially Available Off-the-Shelf (COTS) Items This final rule does not add any new provisions or clauses, nor change the applicability of existing provisions or clauses, to contracts at or below the SAT and contracts for the acquisition of commercial items, including COTS items. However, this rule applies the domestic content test of the Buy American statute, as implemented by E.O. 13881, to COTS items that consist wholly or predominantly of iron or steel (excluding COTS fasteners). In accordance with 41 U.S.C. 1907, since 2008, the domestic content test of the Buy American statute has been waived for COTS items, in part due to the complexity and cost of keeping track of components in a world of global sourcing where the Government is not a market driver. But absent restoration of the domestic content test, the E.O. 13881 requirement regarding iron and steel construction material would have very little effect. As such, the Administrator for Federal Procurement Policy has determined that it would not be in the best interest of the Federal Government to exempt iron and steel products (excluding COTS fasteners) that are COTS items from the applicability of the content test for foreign iron and steel under the Buy American statute. PO 00000 Frm 00006 Fmt 4701 Sfmt 4700 The domestic content waiver for COTS items would continue to apply to COTS iron and steel fasteners, such as nuts, bolts, pins, rivets, nails, clips, and screws, which are generally so small, inexpensive, and comingled that trying to keep track of the origin of all fasteners would create an administrative burden on offerors that would outweigh any benefit to the American iron and steel industrial base. IV. Executive Orders 12866 and 13563 Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This rule is not a significant regulatory action and, therefore, was not subject to the review of the Office of Information and Regulatory Affairs under section 6(b) of E.O. 12866. This rule is not a major rule under 5 U.S.C. 804. V. Expected Impact of the Final Rule The FAR clauses implementing the Buy American statute apply to a narrow set of procurements. Also, because the FAR Council is leaving the COTS items exception in place for most COTS items, the heightened domestic content requirements will not be applicable to those procurements. With this rule’s implementation, domestic industries supplying domestic end products are likely to benefit from a competitive advantage. Based on the E.O., it is unclear if the pool of qualified suppliers would be reduced, resulting in less competition (and a possible increase in prices that the Government will pay to procure these products). At least three arguments point to the possibility that any increased burden, on contractors in particular, could be small if not de minimis: (1) Familiarization costs should be low; (2) some, if not many, contractors may already be able to meet the more stringent threshold; and (3) costs incurred by contractors that adjust their supply chains so that their end products qualify as domestic will enjoy a larger price preference that should help to offset these costs over time. Each of these arguments is explained below. First, DoD, GSA, and NASA do not anticipate significant costs from contractors’ familiarization with this E:\FR\FM\19JAR11.SGM 19JAR11 Federal Register / Vol. 86, No. 11 / Tuesday, January 19, 2021 / Rules and Regulations rule given the history of rulemaking and E.O.s in this area. The basic mechanics of the Buy American statute (e.g., definitions, how and when the price preference is used to favor domestic end products, certifications required of offerors to demonstrate end products are domestic) remain unchanged and continue to reflect processes that are decades old. Second, some, if not many, contractors may already be able to comply with the lower foreign content requirement needed to meet the definition of ‘‘domestic end product’’ under E.O. 13881 and this rule. Laws such as the SECURE Technology Act, Public Law 115–390, which requires a series of actions to strengthen the Federal infrastructure for managing supply chain risks, are placing a significantly increased emphasis on Federal agencies and Federal Government contractors to identify and reduce risk in their supply chains. One way to reduce supply chain risk is to increase domestic sourcing of content. In addition, in the context of iron and steel, many existing laws already require more stringent content. For example, the Recovery Act required that all construction material for a project for the construction, alteration, maintenance, or repair of a public building or a public work in the United States, consisting wholly or predominantly of iron or steel, had to be produced in the United States when using Recovery Act funds, to the extent consistent with trade agreements (see FAR 25.602–1, implementing section 1605 of the Recovery Act). In addition, Federal contractors who also work on subawards funded under Federal grants may, in some cases, find that the steel, iron, and manufactured goods used in the project be produced in the United States, as is the case for certain funding administrated by the Federal Transit Administration for public transportation projects (see 49 U.S.C. 5323(j)). Accordingly, it is possible that the Federal market for iron and steel has already done significant retooling and could meet the requirements of E.O. 13881 with minor additional effort. Third, it is anticipated that some contractors’ products and construction materials may not meet the definitions of ‘‘domestic construction material,’’ and ‘‘domestic end product’’ unless the contractors take steps to adjust their supply chains to increase the domestic content. Contractors that make a business decision not to modify their supply chains will still be able to propose in response to Federal contract solicitations but will no longer enjoy a price preference. Contractors that sell to civilian agencies and retool their supply sources to meet the more stringent threshold will have a more generous price preference applied to their products. These stronger preferences, which are designed as an incentive to encourage more domestic sourcing, may help to offset costs of meeting the new standards. This rule has the potential to slightly increase the estimated percentage of foreign offers. It can only impact products that are made in the United States as follows: Iron or steel products where the cost of foreign iron and steel is 5 percent or more of the cost of all components in the product; or other products, other than COTS items, that have a content of 45 to 50 percent foreign components. Offerors of such products have an option to increase the domestic content and continue to offer domestic products, in which case they may benefit from the increased preference for domestic products, or they may continue to offer the same product, which will now be evaluated as foreign. The Councils do not have any data on how many currently domestic products would fall into this category. Nor do the Councils have any knowledge as to which option an offeror of such products would select since this is a business decision for each offeror to make. Regarding the increased price preference for domestic offers, the Councils note that robust competition among vendors offering domestic products will decrease the extent to which the Government could pay an additional 20 to 30 percent for domestic products above and beyond the cost of otherwise equivalent foreign products. Therefore, based on public comments received, DoD, GSA, and NASA have concluded that the initial assessment is correct that the cost impact of this rule is not significant, and any impact is predominantly positive. VI. Executive Order 13771 This rule is not subject to E.O. 13771, Reducing Regulation and Controlling Regulatory Costs, because this rule has a de minimis impact on the public (see section V. of this preamble). VII. Regulatory Flexibility Act DoD, GSA, and NASA have prepared a Final Regulatory Flexibility Analysis (FRFA) consistent with the Regulatory Flexibility Act, 5 U.S.C. 601, et seq. The FRFA is summarized as follows: This rule strengthens domestic preferences under the Buy American statute by making adjustments to the required percentage of domestic content and the existing percentages for the price evaluation preferences in an effort to decrease the amount of foreign-sourced content in a U.S. manufactured product to promote economic and national security, help stimulate economic growth, and create jobs. The objective of this rule is to implement E.O. 13881, Maximizing Use of American-Made Goods, Products, and Materials (84 FR 34257, July 18, 2019). There were no significant issues raised by the public comments in response to the initial regulatory flexibility analysis. DoD, GSA, and NASA examined data from the Federal Procurement Data System for fiscal years (FY) 2017, 2018, and 2019, for new awards with a foreign place of performance for construction valued over the micro-purchase threshold and awards for supplies to unique small businesses. This rule will apply to only the 8 percent of foreign construction awards that were made to small businesses, and only 14 percent of foreign supply awards were made to small businesses. FY 2017 FY 2018 FY 2019 Median SB/total SB/total SB/total SB (%) Buy american statute khammond on DSKJM1Z7X2PROD with RULES11 Construction ............................................................................. Supplies ................................................................................... This rule is covered under the existing information collection requirements associated with the Buy American statute. The rule will strengthen domestic preferences under the Buy American statute and provide small businesses the opportunity and incentive to deliver U.S. manufactured VerDate Sep<11>2014 21:32 Jan 17, 2021 Jkt 253001 18/217 = 8% 153/1,200 = 13% 13/223 = 6% 164/1,161 = 14% products from domestic suppliers. It is expected that this rule will benefit U.S. small business manufacturers, including those of iron or steel. PO 00000 Frm 00007 6185 Fmt 4701 Sfmt 4700 15/199 = 8% 164/1,048 = 16% 8 14 There are no available alternatives to the rule to accomplish the desired objective of the statute. Interested parties may obtain a copy of the FRFA from the Regulatory Secretariat Division. The Regulatory E:\FR\FM\19JAR11.SGM 19JAR11 6186 Federal Register / Vol. 86, No. 11 / Tuesday, January 19, 2021 / Rules and Regulations Secretariat Division has submitted a copy of the FRFA to the Chief Counsel for Advocacy of the Small Business Administration. VIII. Paperwork Reduction Act The Paperwork Reduction Act (44 U.S.C. chapter 35) does apply; however, these changes to the FAR do not impose additional information collection requirements to the paperwork burden previously approved under the Office of Management and Budget Control Number 9000–0024, Buy American, Trade Agreements, and Duty-Free Entry. List of Subjects in 48 CFR Parts 12, 25, and 52 Government procurement. William F. Clark, Director, Office of Government-wide Acquisition Policy, Office of Acquisition Policy, Office of Government-wide Policy. Therefore, DoD, GSA, and NASA amend 48 CFR parts 12, 25, and 52 as set forth below: ■ 1. The authority citation for 48 CFR parts 12, 25, and 52 continues to read as follows: 2. Amend section 12.505 by revising paragraph (a) to read as follows: ■ 12.505 Applicability of certain laws to contracts for the acquisition of COTS items. khammond on DSKJM1Z7X2PROD with RULES11 * * * * (a)(1) The portion of 41 U.S.C. 8302, American Materials Required for Public Use, paragraph (a)(1) that reads ‘‘substantially all from articles, materials, or supplies mined, produced, or manufactured in the United States,’’ Buy American—Supplies, domestic content test, except as provided in 25.101(a)(2)(ii) (see 52.225–1 and 52.225–3). (2) The portion of 41 U.S.C. 8303, Contracts for Public Works, paragraph (a)(2) that reads ‘‘substantially all from articles, materials, or supplies mined, produced, or manufactured in the United States,’’ Buy American— Construction Materials, domestic content test, except as provided in 25.201(b)(2)(ii)(see 52.225–9 and 52.225–11). * * * * * 3. Amend section 25.001 by revising paragraph (c)(1) to read as follows: ■ VerDate Sep<11>2014 21:32 Jan 17, 2021 Jkt 253001 * * * * (c) * * * (1) The Buy American statute uses a two-part test to define a ‘‘domestic end product’’ or ‘‘domestic construction material’’ (manufactured in the United States and a domestic content test). The domestic content test has been waived for acquisition of commercially available off-the-shelf (COTS) items, except a product that consists wholly or predominantly of iron or steel or a combination of both (excluding COTS fasteners) (see 25.101(a) and 25.201(b)). * * * * * ■ 4. Amend section 25.003 by— ■ a. Revising the definitions ‘‘Domestic construction material’’ and ‘‘Domestic end product’’; and ■ b. Adding in alphabetical order the definitions ‘‘Fastener’’, ‘‘Foreign iron and steel’’, ‘‘Predominantly of iron or steel or a combination of both’’, and ‘‘Steel’’. The revisions and additions read as follows: Definitions. * PART 12—ACQUISITION OF COMMERCIAL ITEMS PART 25—FOREIGN ACQUISITION General. * 25.003 Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 51 U.S.C. 20113. * 25.001 * * * * Domestic construction material means— (1) For use in subparts other than 25.6— (i) For construction material that does not consist wholly or predominantly of iron or steel or a combination of both— (A) An unmanufactured construction material mined or produced in the United States; or (B) A construction material manufactured in the United States, if— (1) The cost of the components mined, produced, or manufactured in the United States exceeds 55 percent of the cost of all its components. Components of foreign origin of the same class or kind for which nonavailability determinations have been made are treated as domestic. Components of unknown origin are treated as foreign; or (2) The construction material is a commercially available off-the-shelf (COTS) item; or (ii) For construction material that consists wholly or predominantly of iron or steel or a combination of both, a construction material manufactured in the United States if the cost of foreign iron and steel constitutes less than 5 percent of the cost of all the components used in such construction material. The cost of foreign iron and steel includes but is not limited to the cost of foreign iron or steel mill products (such as bar, billet, slab, wire, plate, or sheet), castings, or forgings utilized in the PO 00000 Frm 00008 Fmt 4701 Sfmt 4700 manufacture of the construction material and a good faith estimate of the cost of all foreign iron or steel components excluding COTS fasteners. Iron or steel components of unknown origin are treated as foreign. If the construction material contains multiple components, the cost of all the materials used in such construction material is calculated in accordance with the definition of ‘‘cost of components’’ in this section; or (2) For use in subpart 25.6, see the definition in 25.601. Domestic end product means— (1) For an end product that does not consist wholly or predominantly of iron or steel or a combination of both— (i) An unmanufactured end product mined or produced in the United States; (ii) An end product manufactured in the United States, if— (A) The cost of its components mined, produced, or manufactured in the United States exceeds 55 percent of the cost of all its components. Components of foreign origin of the same class or kind as those that the agency determines are not mined, produced, or manufactured in sufficient and reasonably available commercial quantities of a satisfactory quality are treated as domestic. Components of unknown origin are treated as foreign. Scrap generated, collected, and prepared for processing in the United States is considered domestic; or (B) The end product is a COTS item; or (2) For an end product that consists wholly or predominantly of iron or steel or a combination of both, an end product manufactured in the United States, if the cost of foreign iron and steel constitutes less than 5 percent of the cost of all the components used in the end product. The cost of foreign iron and steel includes but is not limited to the cost of foreign iron or steel mill products (such as bar, billet, slab, wire, plate, or sheet), castings, or forgings utilized in the manufacture of the end product and a good faith estimate of the cost of all foreign iron or steel components excluding COTS fasteners. Iron or steel components of unknown origin are treated as foreign. If the end product contains multiple components, the cost of all the materials used in such end product is calculated in accordance with the definition of ‘‘cost of components’’ in this section. * * * * * Fastener means a hardware device that mechanically joins or affixes two or more objects together. Examples of fasteners are nuts, bolts, pins, rivets, nails, clips, and screws. * * * * * E:\FR\FM\19JAR11.SGM 19JAR11 Federal Register / Vol. 86, No. 11 / Tuesday, January 19, 2021 / Rules and Regulations Foreign iron and steel means iron or steel products not produced in the United States. Produced in the United States means that all manufacturing processes of the iron or steel must take place in the United States, from the initial melting stage through the application of coatings, except metallurgical processes involving refinement of steel additives. The origin of the elements of the iron or steel is not relevant to the determination of whether it is domestic or foreign. * * * * * Predominantly of iron or steel or a combination of both means that the cost of the iron and steel content exceeds 50 percent of the total cost of all its components. The cost of iron and steel is the cost of the iron or steel mill products (such as bar, billet, slab, wire, plate, or sheet), castings, or forgings utilized in the manufacture of the product and a good faith estimate of the cost of iron or steel components excluding COTS fasteners. Steel means an alloy that includes at least 50 percent iron, between 0.02 and 2 percent carbon, and may include other elements. * * * * * ■ 5. Amend section 25.100 by— ■ a. Removing from the end of paragraph (a)(2) ‘‘and’’; ■ b. Redesignating paragraph (a)(3) as paragraph (a)(4); ■ c. Adding a new paragraph (a)(3); and ■ d. Revising the newly redesignated paragraph (a)(4). The addition and revision read as follows: khammond on DSKJM1Z7X2PROD with RULES11 25.100 Scope of subpart. (a) * * * (3) Executive Order 13881, July 15, 2019; and (4) Waiver of the domestic content test of the Buy American statute for acquisition of commercially available off-the-shelf (COTS) items in accordance with 41 U.S.C. 1907, but see 25.101(a)(2)(ii). * * * * * ■ 6. Amend section 25.101 by— ■ a. Removing from paragraph (a) introductory text ‘‘statute uses’’ and adding ‘‘statute and E.O. 13881 use’’ in its place; ■ b. Revising paragraph (a)(2); ■ c. Removing from paragraph (b) ‘‘component test’’ and adding ‘‘domestic content test’’ in its place; and ■ d. Removing from paragraph (c) ‘‘Subpart 25.5’’ and adding ‘‘subpart 25.5’’ in its place. The revision reads as follows: 25.101 General. (a) * * * VerDate Sep<11>2014 21:32 Jan 17, 2021 Jkt 253001 (2)(i) Except for an end product that consists wholly or predominantly of iron or steel or a combination of both, the cost of domestic components must exceed 55 percent of the cost of all the components. In accordance with 41 U.S.C. 1907, this domestic content test of the Buy American statute has been waived for acquisitions of COTS items (see 12.505(a)) (but see paragraph (a)(2)(ii) of this section). (ii) For an end product that consists wholly or predominantly of iron or steel or a combination of both, the cost of foreign iron and steel must constitute less than 5 percent of the cost of all the components used in the end product (see the definition of ‘‘foreign iron and steel’’ at 25.003). The cost of foreign iron and steel includes but is not limited to the cost of foreign iron or steel mill products (such as bar, billet, slab, wire, plate, or sheet), castings, or forgings utilized in the manufacture of the end product and a good faith estimate of the cost of all foreign iron or steel components excluding COTS fasteners. This domestic content test of the Buy American statute has not been waived for acquisitions of COTS items in this category, except for COTS fasteners. * * * * * 25.105 [Amended] 7. Amend section 25.105 by— a. Removing from paragraph (b)(1) ‘‘6 percent’’ and adding ‘‘20 percent’’ in its place; and ■ b. Removing from paragraph (b)(2) ‘‘12 percent’’ and ‘‘Subpart 19.5’’ and adding ‘‘30 percent’’ and ‘‘subpart 19.5’’ in their places, respectively. ■ 8. Amend section 25.200 by— ■ a. Removing from the end of paragraph (a)(2) ‘‘and’’; ■ b. Redesignating paragraph (a)(3) as paragraph (a)(4); ■ c. Adding a new paragraph (a)(3); and ■ d. Revising the newly redesignated paragraph (a)(4). The addition and revision read as follows: ■ ■ 25.200 Scope of subpart. (a) * * * (3) Executive Order 13881, July 15, 2019; and (4) Waiver of the domestic content test of the Buy American statute for acquisitions of commercially available off-the-shelf (COTS) items in accordance with 41 U.S.C. 1907, but see 25.201(b)(2)(ii). * * * * * ■ 9. Revise section 25.201 to read as follows: PO 00000 Frm 00009 Fmt 4701 Sfmt 4700 25.201 6187 Policy. (a) Except as provided in 25.202, use only domestic construction materials in construction contracts performed in the United States. (b) The Buy American statute restricts the purchase of construction materials that are not domestic construction materials. For manufactured construction materials, the Buy American statute and E.O. 13881 use a two-part test to define domestic construction materials. (1) The article must be manufactured in the United States; and (2)(i) Except for construction material that consists wholly or predominantly of iron or steel or a combination of both, the cost of domestic components must exceed 55 percent of the cost of all the components. In accordance with 41 U.S.C. 1907, this domestic content test of the Buy American statute has been waived for acquisitions of COTS items (see 12.505(a)). (ii) For construction material that consists wholly or predominantly of iron or steel or a combination of both, the cost of foreign iron and steel must constitute less than 5 percent of the cost of all the components used in such construction material (see the definition of ‘‘foreign iron and steel’’ at 25.003). The cost of foreign iron and steel includes but is not limited to the cost of foreign iron or steel mill products (such as bar, billet, slab, wire, plate, or sheet), castings, or forgings utilized in the manufacture of the construction material and a good faith estimate of the cost of all foreign iron or steel components excluding COTS fasteners. This domestic content test of the Buy American statute has not been waived for acquisitions of COTS items in this category, except for COTS fasteners. 25.204 [Amended] 10. Amend section 25.204 in paragraph (b) by removing ‘‘6 percent’’ and adding ‘‘20 percent’’ in its place. ■ 11. Amend section 25.504–1 by— ■ a. Revising the table in paragraph (a)(1); ■ b. Removing from paragraph (a)(2) ‘‘12 percent’’ and ‘‘$11,200’’ and adding ‘‘30 percent’’ and ‘‘$13,000’’ in their places, respectively; and ■ c. Removing from paragraph (b)(2) ‘‘12 percent’’ and ‘‘$11,424’’ and adding ‘‘30 percent’’ and ‘‘$13,260’’ in their places, respectively. The revision reads as follows: ■ 25.504–1 Buy American statute. (a)(1) * * * Offer A E:\FR\FM\19JAR11.SGM $16,000 19JAR11 Domestic end product, small business. 6188 Offer B Offer C Federal Register / Vol. 86, No. 11 / Tuesday, January 19, 2021 / Rules and Regulations $15,700 $10,000 Domestic end product, small business. U.S.-made end product (not domestic), small business. * * * * * 12. Amend section 25.504–2 by revising the table to read as follows: ■ 25.504–2 WTO GPA/Caribbean Basin Trade Initiative/FTAs. * * * * Offer A $304,000 Offer B $303,000 Offer C Offer D * * $300,000 $295,000 * 13. Amend section 25.504–3 by— a. Revising the entry ‘‘Offer B’’ in the table in paragraph (a); ■ b. Revising the entry ‘‘Offer B’’ in the table in paragraph (b); and ■ c. Revising entries ‘‘Offer B’’ and ‘‘Offer C’’ in the table in paragraph (c). The revisions read as follows: * 25.504–3 ■ ■ ■ * Offer B Offer C * FTA/Israeli Trade Act. (a) * * * * * Offer B * * * (b) * * * * Offer B * * $100,000 * * Eligible product. * * $103,000 * * $103,000 100,000 * * * * * * Eligible product. Noneligible product. * * 14. Amend section 25.504–4 by— ■ a. In paragraph (a)— ■ i. Revising the table; ■ ii. In STEP 1, Items 3 and 5, removing ‘‘6 percent’’ and adding ‘‘20 percent’’ in their places, respectively; and ■ iii. Revising STEP 2 and 3. ■ b. Revising paragraph (b). The revisions read as follows: * U.S.-made end product (not domestic). U.S.-made end product (domestic), small business. Eligible product. Noneligible product (not U.S.-made). * * (c) * * * * * * * * Noneligible product. 25.504–4 Group award basis. (a) * * * Offers Item A 1 2 3 4 5 * B C ........................................................................................................................... ........................................................................................................................... ........................................................................................................................... ........................................................................................................................... ........................................................................................................................... DO = $55,000 NEL = 13,000 NEL = 11,500 NEL = 24,000 DO = 18,000 EL = $56,000 EL = 10,000 DO = 12,000 EL = 28,000 NEL = 10,000 NEL = $50,000 EL = 13,000 DO = 10,000 NEL = 22,000 DO = 14,000 Total .............................................................................................................. 121,500 116,000 109,000 * * * * STEP 2: Evaluate Offer C against the tentative award pattern for Offers A and B: Offers Item Tentative award pattern from A and B Low offer 1 2 3 4 5 ............................................................................ ............................................................................ ............................................................................ ............................................................................ ............................................................................ A B B A B Total ............................................................... C ........................................................................... ........................................................................... ........................................................................... ........................................................................... ........................................................................... DO = $55,000 EL = 10,000 DO = 12,000 NEL = 24,000 *NEL = 12,000 * NEL = $60,000 EL = 13,000 DO = 10,000 NEL = 22,000 DO = 14,000 ............................................................................... 113,000 119,000 khammond on DSKJM1Z7X2PROD with RULES11 * Offer + 20 percent. On a line item basis, apply a factor to any noneligible offer if the other offer for that line item is domestic. For Item 1, apply a factor to Offer C because Offer A is domestic and the acquisition was not covered by the WTO GPA. The evaluated price of Offer C, Item 1, becomes $60,000 ($50,000 plus 20 percent). Apply a factor to Offer B, Item 5, because it is a noneligible product and Offer C is domestic. The evaluated price of Offer B is $12,000 ($10,000 plus 20 percent). Evaluate the remaining items without applying a factor. STEP 3: The tentative unrestricted award pattern from Offers A and B is lower than the evaluated price of Offer C. Award the combination of Offers A and B. Note that if Offer C had not specified all-or-none award, award would be made on Offer C for line items 3 and 4, totaling an award of $32,000. (b) Example 2. Offers Item A 1 ........................................................................................................................... VerDate Sep<11>2014 21:32 Jan 17, 2021 Jkt 253001 PO 00000 Frm 00010 Fmt 4701 Sfmt 4700 DO = $50,000 E:\FR\FM\19JAR11.SGM B EL = $50,500 19JAR11 C NEL = $50,000 6189 Federal Register / Vol. 86, No. 11 / Tuesday, January 19, 2021 / Rules and Regulations Offers Item A B C 2 ........................................................................................................................... 3 ........................................................................................................................... 4 ........................................................................................................................... NEL = 10,300 EL = 20,400 DO = 10,500 NEL = 10,000 EL = 21,000 DO = 10,300 EL = 10,200 NEL = 20,200 DO = 10,400 Total .............................................................................................................. 91,200 91,800 90,800 Problem: The solicitation specifies award on a group basis. Assume the Buy American statute applies and the acquisition cannot be set aside for small business concerns. All offerors are large businesses. Analysis: (see 25.503(c)) STEP 1: Determine which of the offers are domestic (see 25.503(c)(1)): Domestic (percent) A .............. B .............. C .............. Determination $50,000 (Offer A1) + $10,500 (Offer A4) = $60,500 ............................................................................ $60,500/$91,200 (Offer A Total) = 66.3% ............................................................................................. $10,300 (Offer B4)/$91,800 (Offer B Total) $ = 11.2% ........................................................................ $10,400 (Offer C4)/$90,800 (Offer C Total) = 11.5% ........................................................................... Domestic. Foreign. Foreign. STEP 2: Determine whether foreign offers are eligible or noneligible offers (see 25.503(c)(2)): Domestic + eligible (percent) A .............. B .............. C .............. N/A (Both Domestic) ............................................................................................................................. $50,500 (Offer B1) + $21,000 (Offer B3) + $10,300 (Offer B4) = $81,800 .......................................... $81,800/$91,800 (Offer B Total) = 89.1% ............................................................................................. $10,200 (Offer C2) + $10,400 (Offer C4) = $20,600 ............................................................................ $20,600/$90,800 (Offer C Total) = 22.7% ............................................................................................ STEP 3: Determine whether to apply an evaluation factor (see 25.503(c)(3)). The low offer (Offer C) is a foreign offer. There is no eligible offer lower than the domestic offer. Therefore, apply the factor to the low offer. Addition of the 20 percent factor (use 30 percent if Offer A is a small business) to Offer C yields an evaluated price of $108,960 ($90,800 + 20 percent). Award on Offer A (see 25.502(c)(4)(ii)). Note that, if Offer A were greater than Offer B, an evaluation factor would not be applied, and award would be on Offer C (see 25.502(c)(3)). 25.601 [Amended] 15. Amend section 25.601 by removing the definition ‘‘Steel’’. 16. Amend section 25.604 in paragraph (c)(2) by removing ‘‘6 percent’’ and adding ‘‘20 percent’’ in its place. khammond on DSKJM1Z7X2PROD with RULES11 [Amended] 17. Amend section 25.605 by— a. Removing from paragraph (a)(2) ‘‘6 percent’’ and adding ‘‘20 percent’’ in its place; and ■ b. Removing from paragraph (a)(3) ‘‘.06’’ and adding ‘‘.20’’ in its place. ■ ■ VerDate Sep<11>2014 21:32 Jan 17, 2021 Jkt 253001 18. Amend section 52.212–3 by— a. Revising the date of the provision; and ■ b. Revising paragraphs (f)(1), (g)(1)(i), the first sentence of (g)(1)(ii), and (g)(1)(iii) introductory text. The revisions read as follows: ■ ■ 52.212–3 Offeror Representations and Certifications—Commercial Items. * * [Amended] ■ 25.605 PART 52—SOLICITATION PROVISIONS AND CONTRACT CLAUSES * * * * Offeror Representations and Certifications—Commercial Items (Jan 2021) ■ 25.604 Determination * * * * (f) * * * (1)(i) The Offeror certifies that each end product, except those listed in paragraph (f)(2) of this provision, is a domestic end product. (ii) The Offeror shall list as foreign end products those end products manufactured in the United States that do not qualify as domestic end products. (iii) The terms ‘‘domestic end product,’’ ‘‘end product,’’ ‘‘foreign end product,’’ and ‘‘United States’’ are defined in the clause of this solicitation entitled ‘‘Buy AmericanSupplies.’’ * PO 00000 * * Frm 00011 * Fmt 4701 * Sfmt 4700 Domestic. Eligible. Noneligible. (g)(1) * * * (i)(A) The Offeror certifies that each end product, except those listed in paragraph (g)(1)(ii) or (iii) of this provision, is a domestic end product. (B) The terms ‘‘Bahrainian, Moroccan, Omani, Panamanian, or Peruvian end product,’’ ‘‘domestic end product,’’ ‘‘end product,’’ ‘‘foreign end product,’’ ‘‘Free Trade Agreement country,’’ ‘‘Free Trade Agreement country end product,’’ ‘‘Israeli end product,’’ and ‘‘United States’’ are defined in the clause of this solicitation entitled ‘‘Buy American— Free Trade Agreements—Israeli Trade Act.’’ (ii) The Offeror certifies that the following supplies are Free Trade Agreement country end products (other than Bahrainian, Moroccan, Omani, Panamanian, or Peruvian end products) or Israeli end products as defined in the clause of this solicitation entitled ‘‘Buy American—Free Trade Agreements—Israeli Trade Act.’’ * * * * * (iii) The Offeror shall list those supplies that are foreign end products (other than those listed in paragraph (g)(1)(ii) of this provision) as defined in the clause of this solicitation entitled ‘‘Buy American—Free Trade Agreements—Israeli Trade Act.’’ The Offeror shall list as other foreign end products those end products manufactured in the United States that do not qualify as domestic end products. * ■ * * * * 19. Amend section 52.212–5 by— E:\FR\FM\19JAR11.SGM 19JAR11 6190 Federal Register / Vol. 86, No. 11 / Tuesday, January 19, 2021 / Rules and Regulations a. Revising the date of the clause; and b. Removing from paragraphs (b)(48) and (b)(49)(i) through (iv) ‘‘(MAY 2014)’’ and adding ‘‘(JAN 2021)’’ in their places, respectively. The revision reads as follows: ■ ■ 52.212–5 Contract Terms and Conditions Required To Implement Statutes or Executive Orders—Commercial Items. * * * * * Contract Terms and Conditions Required To Implement Statutes or Executive Orders—Commercial Items (Jan 2021) * * * * * 20. Amend section 52.213–4 by— a. Revising the date of the clause; and b. Removing from paragraph (b)(1)(xvii) introductory text ‘‘(MAY 2014)’’ and adding ‘‘(JAN 2021)’’ in its place. The revision reads as follows: ■ ■ ■ 52.213–4 Terms and Conditions— Simplified Acquisitions (Other Than Commercial Items). * * * * * * Terms and Conditions—Simplified Acquisitions (Other Than Commercial Items) (Jan 2021) * * * * * ■ 21. Amend section 52.225–1 by— ■ a. Revising the date of the clause; ■ b. In paragraph (a): ■ i. Removing from paragraph (1)(i) in the definition ‘‘Commercially available off-the-shelf (COTS) item’’ ‘‘FAR’’ and adding ‘‘Federal Acquisition Regulation (FAR)’’ in its place; ■ ii. Revising the definition ‘‘Domestic end product’’; ■ iii. Adding in alphabetical order the definitions ‘‘Fastener’’ ‘‘Foreign iron and steel’’ ‘‘Predominantly of iron or steel or a combination of both’’ and ‘‘Steel’’; and ■ c. Revising paragraph (b). The revisions and additions read as follows: 52.225–1 * * Buy American—Supplies. * * * khammond on DSKJM1Z7X2PROD with RULES11 Buy American—Supplies (Jan 2021) 21:32 Jan 17, 2021 Jkt 253001 * * * * Fastener means a hardware device that mechanically joins or affixes two or more objects together. Examples of fasteners are nuts, bolts, pins, rivets, nails, clips, and screws. * * * * * Foreign iron and steel means iron or steel products not produced in the United States. Produced in the United States means that all manufacturing processes of the iron or steel must take place in the United States, from the initial melting stage through the application of coatings, except metallurgical processes involving refinement of steel additives. The origin of the elements of the iron or steel is not relevant to the determination of whether it is domestic or foreign. Predominantly of iron or steel or a combination of both means that the cost of the iron and steel content exceeds 50 percent of the total cost of all its components. The cost of iron and steel is the cost of the iron or steel mill products (such as bar, billet, slab, wire, plate, or sheet), castings, or forgings utilized in the manufacture of the product and a good faith estimate of the cost of iron or steel components excluding COTS fasteners. Steel means an alloy that includes at least 50 percent iron, between 0.02 and 2 percent carbon, and may include other elements. * (a) * * * Domestic end product means— (1) For an end product that does not consist wholly or predominantly of iron or steel or a combination of both— (i) An unmanufactured end product mined or produced in the United States; (ii) An end product manufactured in the United States, if— (A) The cost of its components mined, produced, or manufactured in the United States exceeds 55 percent of the cost of all its components. Components of foreign origin of the same class or kind as those that the VerDate Sep<11>2014 agency determines are not mined, produced, or manufactured in sufficient and reasonably available commercial quantities of a satisfactory quality are treated as domestic. Components of unknown origin are treated as foreign. Scrap generated, collected, and prepared for processing in the United States is considered domestic; or (B) The end product is a COTS item; or (2) For an end product that consists wholly or predominantly of iron or steel or a combination of both, an end product manufactured in the United States, if the cost of foreign iron and steel constitutes less than 5 percent of the cost of all the components used in the end product. The cost of foreign iron and steel includes but is not limited to the cost of foreign iron or steel mill products (such as bar, billet, slab, wire, plate, or sheet), castings, or forgings utilized in the manufacture of the end product and a good faith estimate of the cost of all foreign iron or steel components excluding COTS fasteners. Iron or steel components of unknown origin are treated as foreign. If the end product contains multiple components, the cost of all the materials used in such end product is calculated in accordance with the definition of ‘‘cost of components’’. * * * * (b) 41 U.S.C. chapter 83, Buy American, provides a preference for domestic end products for supplies acquired for use in the United States. In accordance with 41 U.S.C. 1907, the domestic content test of the Buy American statute is waived for an end product that is a COTS item (see 12.505(a)(1)), except that for an end product that consists wholly or predominantly of iron or steel or a combination of both, the domestic content test is applied only to the iron and steel content of the end product, excluding COTS fasteners. * PO 00000 * * Frm 00012 * Fmt 4701 * Sfmt 4700 22. Amend section 52.225–2 by— a. Revising the date of the provision and paragraphs (a) and (b); ■ b. Removing from paragraph (c) ‘‘Part’’ and adding ‘‘part’’ in its place. The revisions read as follows: ■ ■ 52.225–2 * * Buy American Certificate. * * * Buy American Certificate (Jan 2021) (a)(1) The Offeror certifies that each end product, except those listed in paragraph (b) of this provision, is a domestic end product. (2) The Offeror shall list as foreign end products those end products manufactured in the United States that do not qualify as domestic end products. (3) The terms ‘‘domestic end product,’’ ‘‘end product,’’ and ‘‘foreign end product’’ are defined in the clause of this solicitation entitled ‘‘Buy American—Supplies.’’ (b) Foreign End Products: Line item No. Country of origin llllllll llllllll llllllll llllllll llllllll llllllll [List as necessary.] * * * * * 23. Amend section 52.225–3 by— a. Revising the date of the clause; b. In paragraph (a): i. Removing from paragraph (1)(i) in the definition ‘‘Commercially available off-the-shelf (COTS) item’’ ‘‘FAR’’ and adding ‘‘Federal Acquisition Regulation (FAR)’’ in its place; ■ ii. Revising the definition ‘‘Domestic end product’’; and ■ iii. Adding in alphabetical order the definitions ‘‘Fastener’’ ‘‘Foreign iron and steel’’ ‘‘Predominantly of iron or steel or a combination of both’’ and ‘‘Steel’’; ■ c. Revising the second sentence of paragraph (c); ■ d. Revising the date in the introductory text and the second sentence of paragraph (c) of Alternate I; ■ e. Revising the date in the introductory text and the second sentence of paragraph (c) of Alternate II and adding a period to the end of paragraph (c); and ■ f. Revising the date in the introductory text and the second sentence of paragraph (c) of Alternate III. The revisions and additions read as follows: ■ ■ ■ ■ 52.225–3 Buy American—Free Trade Agreements—Israeli Trade Act. * * * * * Buy American—Free Trade Agreements—Israeli Trade Act (Jan 2021) (a) * * * Domestic end product means— E:\FR\FM\19JAR11.SGM 19JAR11 Federal Register / Vol. 86, No. 11 / Tuesday, January 19, 2021 / Rules and Regulations (1) For an end product that does not consist wholly or predominantly of iron or steel or a combination of both— (i) An unmanufactured end product mined or produced in the United States; (ii) An end product manufactured in the United States, if— (A) The cost of its components mined, produced, or manufactured in the United States exceeds 55 percent of the cost of all its components. Components of foreign origin of the same class or kind as those that the agency determines are not mined, produced, or manufactured in sufficient and reasonably available commercial quantities of a satisfactory quality are treated as domestic. Components of unknown origin are treated as foreign. Scrap generated, collected, and prepared for processing in the United States is considered domestic; or (B) The end product is a COTS item; or (2) For an end product that consists wholly or predominantly of iron or steel or a combination of both, an end product manufactured in the United States, if the cost of foreign iron and steel constitutes less than 5 percent of the cost of all the components used in the end product. The cost of foreign iron and steel includes but is not limited to the cost of foreign iron or steel mill products (such as bar, billet, slab, wire, plate, or sheet), castings, or forgings utilized in the manufacture of the end product and a good faith estimate of the cost of all foreign iron or steel components excluding COTS fasteners. Iron or steel components of unknown origin are treated as foreign. If the end product contains multiple components, the cost of all the materials used in such end product is calculated in accordance with the definition of ‘‘cost of components’’. * * * * * Fastener means a hardware device that mechanically joins or affixes two or more objects together. Examples of fasteners are nuts, bolts, pins, rivets, nails, clips, and screws. * * * * * Foreign iron and steel means iron or steel products not produced in the United States. Produced in the United States means that all manufacturing processes of the iron or steel must take place in the United States, from the initial melting stage through the application of coatings, except metallurgical processes involving refinement of steel additives. The origin of the elements of the iron or steel is not relevant to the determination of whether it is domestic or foreign. khammond on DSKJM1Z7X2PROD with RULES11 * * * * * Predominantly of iron or steel or a combination of both means that the cost of the iron and steel content exceeds 50 percent of the total cost of all its components. The cost of iron and steel is the cost of the iron or steel mill products (such as bar, billet, slab, wire, plate, or sheet), castings, or forgings utilized in the manufacture of the product and a good faith estimate of the cost of iron or steel components excluding COTS fasteners. Steel means an alloy that includes at least 50 percent iron, between 0.02 and 2 percent carbon, and may include other elements. * * * VerDate Sep<11>2014 * * 21:32 Jan 17, 2021 Jkt 253001 (c) * * * In accordance with 41 U.S.C. 1907, the domestic content test of the Buy American statute is waived for an end product that is a COTS item (see 12.505(a)(1)), except that for an end product that consists wholly or predominantly of iron or steel or a combination of both, the domestic content test is applied only to the iron and steel content of the end product, excluding COTS fasteners. * * * Alternate I (Jan 2021) * * * (c) * * * In accordance with 41 U.S.C. 1907, the domestic content test of the Buy American statute is waived for an end product that is a COTS item (see 12.505(a)(1)), except that for an end product that consists wholly or predominantly of iron or steel or a combination of both, the domestic content test is applied only to the iron and steel content of the end product, excluding COTS fasteners. * * * Alternate II (Jan 2021) * * * (c) * * * In accordance with 41 U.S.C. 1907, the domestic content test of the Buy American statute is waived for an end product that is a COTS item (see 12.505(a)(1)), except that for an end product that consists wholly or predominantly of iron or steel or a combination of both, the domestic content test is applied only to the iron and steel content of the end product, excluding COTS fasteners. * * * Alternate III (Jan 2021) * * * (c) * * * In accordance with 41 U.S.C. 1907, the domestic content test of the Buy American statute is waived for an end product that is a COTS item (see 12.505(a)(1)), except that for an end product that consists wholly or predominantly of iron or steel or a combination of both, the domestic content test is applied only to the iron and steel content of the end product, excluding COTS fasteners. * * * 24. Amend section 52.225–4 by— a. Revising the date of the provision; b. Revising paragraph (a); c. In paragraph (b) introductory text removing ‘‘offeror’’ and adding ‘‘Offeror’’ in its place; ■ d. Revising the first and second sentences of paragraph (c); ■ e. Removing from paragraph (d) ‘‘Part’’ and adding ‘‘part’’ in its place; ■ f. In Alternate I by— ■ i. Revising the date of the Alternate; and ■ ii. Removing from paragraph (b) introductory text ‘‘offeror’’ and adding ‘‘Offeror’’ in its place; ■ g. In Alternate II by— ■ i. Revising the date of the Alternate; and ■ ii. Removing from paragraph (b) introductory text ‘‘offeror’’ and adding ‘‘Offeror’’ in its place; and ■ h. In Alternate III by— ■ i. Revising the date of the Alternate; and ■ ii. Removing from paragraph (b) introductory text ‘‘offeror’’ and adding ■ ■ ■ ■ PO 00000 Frm 00013 Fmt 4701 Sfmt 4700 6191 ‘‘Offeror’’ in its place, and removing from the second paragraph of (b) ‘‘Products (Other’’ and adding ‘‘Products (other’’ in its place. The revisions read as follows: 52.225–4 Buy American—Free Trade Agreements—Israeli Trade Act Certificate. * * * * * Buy American—Free Trade Agreements—Israeli Trade Act Certificate (Jan 2021) (a)(1) The Offeror certifies that each end product, except those listed in paragraph (b) or (c) of this provision, is a domestic end product. (2) The terms ‘‘Bahrainian, Moroccan, Omani, Panamanian, or Peruvian end product,’’ ‘‘domestic end product,’’ ‘‘end product,’’ ‘‘foreign end product,’’ ‘‘Free Trade Agreement country,’’ ‘‘Free Trade Agreement country end product,’’ ‘‘Israeli end product,’’ and ‘‘United States’’ are defined in the clause of this solicitation entitled ‘‘Buy American— Free Trade Agreements—Israeli Trade Act.’’ * * * * * (c) The Offeror shall list those supplies that are foreign end products (other than those listed in paragraph (b) of this provision) as defined in the clause of this solicitation entitled ‘‘Buy American—Free Trade Agreements—Israeli Trade Act.’’ The Offeror shall list as other foreign end products those end products manufactured in the United States that do not qualify as domestic end products. * * * * * Alternate I (Jan 2021) * * * Alternate II (Jan 2021) * * * Alternate III (Jan 2021) * * * 25. Amend section 52.225–9 by— a. Revising the date of the clause; ■ b. In paragraph (a): ■ i. Removing from paragraph (1)(i) in the definition ‘‘Commercially available off-the-shelf (COTS) item’’ ‘‘FAR’’ and adding ‘‘Federal Acquisition Regulation (FAR)’’ in its place; ■ ii. Revising the definition ‘‘Domestic construction material’’; and ■ iii. Adding in alphabetical order the definitions ‘‘Fastener’’ ‘‘Foreign iron and steel’’ ‘‘Predominantly of iron or steel or a combination of both’’ and ‘‘Steel’’; ■ c. Revising paragraph (b)(1); ■ d. Removing from paragraph (b)(3)(i) ‘‘6 percent’’ and adding ‘‘20 percent’’ in its place; and ■ e. Revising paragraph (d). The revisions and additions read as follows: ■ ■ 52.225–9 Buy American—Construction Materials. * E:\FR\FM\19JAR11.SGM * * 19JAR11 * * 6192 Federal Register / Vol. 86, No. 11 / Tuesday, January 19, 2021 / Rules and Regulations Buy American—Construction Materials (Jan 2021) (a) * * * Domestic construction material means— (1) For construction material that does not consist wholly or predominantly of iron or steel or a combination of both— (i) An unmanufactured construction material mined or produced in the United States; or (ii) A construction material manufactured in the United States, if— (A) The cost of its components mined, produced, or manufactured in the United States exceeds 55 percent of the cost of all its components. Components of foreign origin of the same class or kind for which nonavailability determinations have been made are treated as domestic. Components of unknown origin are treated as foreign; or (B) The construction material is a COTS item; or (2) For construction material that consists wholly or predominantly of iron or steel or a combination of both, a construction material manufactured in the United States if the cost of foreign iron and steel constitutes less than 5 percent of the cost of all components used in such construction material. The cost of foreign iron and steel includes but is not limited to the cost of foreign iron or steel mill products (such as bar, billet, slab, wire, plate, or sheet), castings, or forgings utilized in the manufacture of the construction material and a good faith estimate of the cost of all foreign iron or steel components excluding COTS fasteners. Iron or steel components of unknown origin are treated as foreign. If the construction material contains multiple components, the cost of all the materials used in such construction material is calculated in accordance with the definition of ‘‘cost of components’’. Fastener means a hardware device that mechanically joins or affixes two or more objects together. Examples of fasteners are nuts, bolts, pins, rivets, nails, clips, and screws. * * * * * Foreign iron and steel means iron or steel products not produced in the United States. Produced in the United States means that all manufacturing processes of the iron or steel must take place in the United States, from the initial melting stage through the application of coatings, except metallurgical processes involving refinement of steel additives. The origin of the elements of the iron or steel is not relevant to the determination of whether it is domestic or foreign. Predominantly of iron or steel or a combination of both means that the cost of the iron and steel content exceeds 50 percent of the total cost of all its components. The cost of iron and steel is the cost of the iron or steel mill products (such as bar, billet, slab, wire, plate, or sheet), castings, or forgings utilized in the manufacture of the product and a good faith estimate of the cost of iron or steel components excluding COTS fasteners. Steel means an alloy that includes at least 50 percent iron, between 0.02 and 2 percent carbon, and may include other elements. * * * * * (b) * * * (1) This clause implements 41 U.S.C. chapter 83, Buy American, by providing a preference for domestic construction material. In accordance with 41 U.S.C. 1907, the domestic content test of the Buy American statute is waived for construction material that is a COTS item, except that for construction material that consists wholly or predominantly of iron or steel or a combination of both, the domestic content test is applied only to the iron and steel content of the construction materials, excluding COTS fasteners. (See FAR 12.505(a)(2)). The Contractor shall use only domestic construction material in performing this contract, except as provided in paragraphs (b)(2) and (b)(3) of this clause. * * * * * (d) Data. To permit evaluation of requests under paragraph (c) of this clause based on unreasonable cost, the Contractor shall include the following information and any applicable supporting data based on the survey of suppliers: FOREIGN AND DOMESTIC CONSTRUCTION MATERIALS PRICE COMPARISON Unit of measure Construction material description Quantity Price (dollars) * Item 1: Foreign construction material. Domestic construction material. Item 2: Foreign construction material. Domestic construction material. khammond on DSKJM1Z7X2PROD with RULES11 [* Include all delivery costs to the construction site and any applicable duty (whether or not a duty-free entry certificate is issued)]. [List name, address, telephone number, and contact for suppliers surveyed. Attach copy of response; if oral, attach summary.] [Include other applicable supporting information.] (End of clause) ■ 26. Amend section 52.225–11 by— ■ a. Revising the date of the clause; ■ b. In paragraph (a): ■ i. Removing from paragraph (1)(i) in the definition ‘‘Commercially available off-the-shelf (COTS) item’’ ‘‘FAR’’ and adding ‘‘Federal Acquisition Regulation (FAR)’’ in its place; ■ ii. Revising the definition ‘‘Domestic construction material’’; ■ iii. Adding in alphabetical order the definitions ‘‘Fastener’’ ‘‘Foreign iron and steel’’ ‘‘Predominantly of iron or steel or a combination of both’’ and ‘‘Steel’’; ■ c. Revising paragraph (b)(1); ■ d. Removing from paragraph (b)(4)(i) ‘‘6 percent’’ and adding ‘‘20 percent’’ in its place; ■ e. Revising paragraph (d); ■ f. In Alternate I— VerDate Sep<11>2014 21:32 Jan 17, 2021 Jkt 253001 i. Revising the date of the Alternate; and ■ ii. Revising paragraph (b)(1). The revisions and additions read as follows: ■ 52.225–11 Buy American—Construction Materials Under Trade Agreements. * * * * * Buy American—Construction Materials Under Trade Agreements (Jan 2021) (a) * * * Domestic construction material means— (1) For construction material that does not consist wholly or predominantly of iron or steel or a combination of both— (i) An unmanufactured construction material mined or produced in the United States; or (ii) A construction material manufactured in the United States, if— (A) The cost of its components mined, produced, or manufactured in the United PO 00000 Frm 00014 Fmt 4701 Sfmt 4700 States exceeds 55 percent of the cost of all its components. Components of foreign origin of the same class or kind for which nonavailability determinations have been made are treated as domestic. Components of unknown origin are treated as foreign; or (B) The construction material is a COTS item; or (2) For construction material that consists wholly or predominantly of iron or steel or a combination of both, a construction material manufactured in the United States if the cost of foreign iron and steel constitutes less than 5 percent of the cost of all components used in such construction material. The cost of foreign iron and steel includes but is not limited to the cost of foreign iron or steel mill products (such as bar, billet, slab, wire, plate, or sheet), castings, or forgings utilized in the manufacture of the construction material and a good faith estimate of the cost of all foreign iron or steel components excluding COTS fasteners. Iron or steel components of unknown origin are treated as foreign. If the E:\FR\FM\19JAR11.SGM 19JAR11 Federal Register / Vol. 86, No. 11 / Tuesday, January 19, 2021 / Rules and Regulations construction material contains multiple components, the cost of all the materials used in such construction material is calculated in accordance with the definition of ‘‘cost of components’’. Fastener means a hardware device that mechanically joins or affixes two or more objects together. Examples of fasteners are nuts, bolts, pins, rivets, nails, clips, and screws. * * * * * Foreign iron and steel means iron or steel products not produced in the United States. Produced in the United States means that all manufacturing processes of the iron or steel must take place in the United States, from the initial melting stage through the application of coatings, except metallurgical processes involving refinement of steel additives. The origin of the elements of the iron or steel is not relevant to the determination of whether it is domestic or foreign. * * * * * Predominantly of iron or steel or a combination of both means that the cost of the iron and steel content exceeds 50 percent of the total cost of all its components. The cost of iron and steel is the cost of the iron or steel mill products (such as bar, billet, slab, wire, plate, or sheet), castings, or forgings utilized in the manufacture of the product and a good faith estimate of the cost of iron or steel components excluding COTS fasteners. Steel means an alloy that includes at least 50 percent iron, between 0.02 and 2 percent carbon, and may include other elements. * * * * * (b) * * * (1) This clause implements 41 U.S.C. chapter 83, Buy American, by providing a preference for domestic construction material. In accordance with 41 6193 U.S.C. 1907, the domestic content test of the Buy American statute is waived for construction material that is a COTS item, except that for construction material that consists wholly or predominantly of iron or steel or a combination of both, the domestic content test is applied only to the iron and steel content of the construction material, excluding COTS fasteners. (See FAR 12.505(a)(2)). In addition, the Contracting Officer has determined that the WTO GPA and Free Trade Agreements (FTAs) apply to this acquisition. Therefore, the Buy American restrictions are waived for designated country construction materials. * * * * * (d) Data. To permit evaluation of requests under paragraph (c) of this clause based on unreasonable cost, the Contractor shall include the following information and any applicable supporting data based on the survey of suppliers: FOREIGN AND DOMESTIC CONSTRUCTION MATERIALS PRICE COMPARISON Unit of measure Construction material description Quantity Price (dollars) * Item 1: Foreign construction material. Domestic construction material. Item 2: Foreign construction material. Domestic construction material. [* Include all delivery costs to the construction site and any applicable duty (whether or not a duty-free entry certificate is issued)]. [List name, address, telephone number, and contact for suppliers surveyed. Attach copy of response; if oral, attach summary.] [Include other applicable supporting information.] (End of clause) Alternate I (Jan 2021) * * * (b) * * * (1) This clause implements 41 U.S.C. chapter 83, Buy American, by providing a preference for domestic construction material. In accordance with 41 U.S.C. 1907, the domestic content test of the Buy American statute is waived for construction material that is a COTS item, except that for construction material that consists wholly or predominantly of iron or steel or a combination of both, the domestic content test is applied only to the iron and steel content of the construction material, excluding COTS fasteners. (See FAR 12.505(a)(2)). In addition, the Contracting Officer has determined that the WTO GPA and all the Free Trade Agreements except the Bahrain FTA, NAFTA, and the Oman FTA apply to this acquisition. Therefore, the Buy American statute restrictions are waived for designated country construction materials other than Bahrainian, Mexican, or Omani construction materials. khammond on DSKJM1Z7X2PROD with RULES11 * * * * * ■ 27. Amend section 52.225–21 by— ■ a. Revising the date of the clause; ■ b. In paragraph (a) in the definition ‘‘Steel’’ removing ‘‘.02’’ and adding ‘‘0.02’’ in its place; ■ c. Removing from paragraph (b)(4)(i)(B) ‘‘6 percent’’ and adding ‘‘20 percent’’ in its place; VerDate Sep<11>2014 21:32 Jan 17, 2021 d. Removing from paragraph (c) heading ‘‘Section’’ and adding ‘‘section’’ in its place; and ■ e. In paragraph (d): ■ i. Removing from the first undesignated paragraph following the table ‘‘reponse’’ and adding ‘‘response’’ in its place; and ■ ii Removing from the second undesignated paragraph following the table ‘‘*Include’’ and adding ‘‘[*Include’’ in its place. The revision reads as follows: ■ Jkt 253001 52.225–21 Required Use of American Iron, Steel, and Manufactured Goods—Buy American Statute—Construction Materials. * * * * * Required Use of American Iron, Steel, and Manufactured Goods—Buy American Statute—Construction Materials (Jan 2021) * * * * * 28. Amend section 52.225–22 by— ■ a. Revising the date of the provision; ■ b. Removing from paragraph (b) ‘‘offeror’’ and adding ‘‘Offeror’’ in its place wherever it appears; ■ c. Removing from paragraph (c)(1)(ii) ‘‘6 percent’’ and adding ‘‘20 percent’’ in its place; ■ PO 00000 Frm 00015 Fmt 4701 Sfmt 4700 d. Removing from paragraph (c)(3) ‘‘offeror’’ and adding ‘‘Offeror’’ in its place; and ■ e. Removing from paragraphs (d)(1), (2), and (3) introductory text ‘‘offeror’’ and adding ‘‘Offeror’’ in their places, respectively. The revision reads as follows: ■ 52.225–22 Notice of Required Use of American Iron, Steel, and Manufactured Goods—Buy American Statute— Construction Materials. * * * * * Notice of Required Use of American Iron, Steel, and Manufactured Goods— Buy American Statute—Construction Materials (Jan 2021) * * * * * 29. Amend section 52.225–23 by— a. Revising the date of the clause; ■ b. In paragraph (a), in the definition ‘‘Steel’’ removing ‘‘.02’’ and adding ‘‘0.02’’ in its place; and ■ c. Removing from paragraph (b)(4)(i)(B) ‘‘6 percent’’ and adding ‘‘20 percent’’ in its place. The revision reads as follows: ■ ■ E:\FR\FM\19JAR11.SGM 19JAR11 6194 Federal Register / Vol. 86, No. 11 / Tuesday, January 19, 2021 / Rules and Regulations 52.225–23 Required Use of American Iron, Steel, and Manufactured Goods—Buy American Statute—Construction Materials Under Trade Agreements. * * * * * * * * 30. Amend section 52.225–24 by— a. Revising the date of the provision; ■ b. Removing from paragraph (b) ‘‘offeror’’ and adding ‘‘Offeror’’ in its place wherever it appears; ■ c. Removing from paragraph (c)(1)(ii) ‘‘6 percent’’ and adding ‘‘20 percent’’ in its place; ■ d. Removing from paragraph (c)(3) ‘‘offeror’’ and adding ‘‘Offeror’’ in its place; and ■ e. Removing from paragraphs (d)(1), (2), and (3) introductory text ‘‘offeror’’ and adding ‘‘Offeror’’ in their places, respectively. The revision reads as follows: ■ ■ 52.225–24 Notice of Required Use of American Iron, Steel, and Manufactured Goods—Buy American Statute— Construction Materials Under Trade Agreements. * * * * * Notice of Required Use of American Iron, Steel, and Manufactured Goods— Buy American Statute—Construction Materials Under Trade Agreements (Jan 2021) * * * * GENERAL SERVICES ADMINISTRATION * Required Use of American Iron, Steel, and Manufactured Goods—Buy American Statute—Construction Materials Under Trade Agreements (Jan 2021) * RULES LISTED IN FAC 2021–04 DEPARTMENT OF DEFENSE * [FR Doc. 2021–00710 Filed 1–15–21; 8:45 am] BILLING CODE 6820–EP–P NATIONAL AERONAUTICS AND SPACE ADMINISTRATION [Docket No. FAR–2021–0051, Sequence No. 1] Federal Acquisition Regulation; Federal Acquisition Circular 2021–04; Small Entity Compliance Guide Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA). AGENCY: Small Entity Compliance Guide. This document is issued under the joint authority of DOD, GSA, and NASA. This Small Entity Compliance Guide has been prepared in accordance with section 212 of the Small Business Regulatory Enforcement Fairness Act of 1996. It consists of a summary of the rule appearing in Federal Acquisition Circular (FAC) 2021–04, which amends the Federal Acquisition Regulation (FAR). Interested parties may obtain further information regarding this rule by referring to FAC 2021–04, which precedes this document. SUMMARY: DATES: FAR case * Maximizing Use of AmericanMade Goods, Products and Materials ......................................... 2019–016 The FAC, including the SECG, is available via the internet at https://www.regulations.gov. SUPPLEMENTARY INFORMATION: A summary for the FAR rule follows. For the actual revisions and/or amendments made by this FAR rule, refer to the specific subject set forth in the document following this summary. FAC 2021–04 amends the FAR as follows: ADDRESSES: 48 CFR Chapter 1 ACTION: Subject January 19, 2021. The FAC, including the SECG, is available via the internet at https://www.regulations.gov. ADDRESSES: Ms. Zenaida Delgado, Procurement Analyst, at 202–969–7207 or zenaida.delgado@ gsa.gov for clarification of content. For information pertaining to status or publication schedules, contact the Regulatory Secretariat Division at 202– 501–4755 or GSARegSec@gsa.gov. Please cite FAC 2021–04, FAR Case 2019–016. An asterisk (*) next to a rule indicates that a regulatory flexibility analysis has been prepared. FOR FURTHER INFORMATION CONTACT: Maximizing Use of American-Made Goods, Products, and Materials (FAR Case 2019–016) This final rule strengthens domestic preferences under the Buy American statute by making adjustments to the required percentage of domestic content and the existing percentages for the price evaluation preferences in an effort to decrease the amount of foreignsourced content in a U.S. manufactured product to promote economic and national security, help stimulate economic growth, and create jobs. The price evaluation preferences increase from 6 percent to 20 percent for large business and from 12 percent to 30 percent for small business; for DoD procurements there is no change to the DoD 50 percent amount. The domestic content requirement for iron and steel increases from 50 percent to 95 percent; for other end products and construction materials, the domestic content requirement increases from 50 percent to 55 percent. Foreign iron and steel is iron or steel products that are not produced in the United States. The rule implements E.O. 13881, Maximizing Use of American-Made Goods, Products, and Materials. This final rule will not have a significant economic impact on a substantial number of small entities. William F. Clark, Director, Office of Government-wide Acquisition Policy, Office of Acquisition Policy, Office of Government-wide Policy. [FR Doc. 2021–00711 Filed 1–15–21; 8:45 am] khammond on DSKJM1Z7X2PROD with RULES11 BILLING CODE 6820–EP–P VerDate Sep<11>2014 21:32 Jan 17, 2021 Jkt 253001 PO 00000 Frm 00016 Fmt 4701 Sfmt 9990 E:\FR\FM\19JAR11.SGM 19JAR11

Agencies

[Federal Register Volume 86, Number 11 (Tuesday, January 19, 2021)]
[Rules and Regulations]
[Pages 6180-6194]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-00710]


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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 12, 25, and 52

[FAC 2021-04; FAR Case 2019-016; Docket No. FAR-2019-0016, Sequence No. 
1]
RIN 9000-AN99


Federal Acquisition Regulation: Maximizing Use of American-Made 
Goods, Products, and Materials

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

ACTION: Final rule.

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

SUMMARY: DoD, GSA, and NASA are issuing a final rule amending the 
Federal Acquisition Regulation (FAR) to implement an Executive order 
(E.O.) addressing domestic preferences in Government procurement.

DATES: Effective: January 21, 2021.
    Applicability: The changes in this rule apply to solicitations 
issued on or after February 22, 2021 and resultant contracts.

FOR FURTHER INFORMATION CONTACT: Ms. Zenaida Delgado, Procurement 
Analyst, at 202-969-7207 or [email protected] for clarification 
of content. For information pertaining to status or publication 
schedules, contact the Regulatory Secretariat Division at 202-501-4755 
or [email protected]. Please cite FAC 2021-04, FAR Case 2019-016.

SUPPLEMENTARY INFORMATION: 

I. Background

    DoD, GSA, and NASA published a proposed rule at 85 FR 56558 on 
September 14, 2020, to implement E.O. 13881, Maximizing Use of 
American-Made Goods, Products, and Materials (84 FR 34257, July 18, 
2019). In order to implement the E.O., this final rule changes FAR 
clauses implementing the Buy American statute by increasing the--
    1. Domestic content requirements; and
    2. Price preference for domestic products.

Increased Domestic Content Requirements

    Under E.O. 13881, and this final rule, in order to meet the 
definition of ``domestic construction material'' or ``domestic end 
product,'' the cost of

[[Page 6181]]

foreign iron and steel for iron and steel products must be less than 5 
percent of the cost of all components in the product. For everything 
else, the domestic content requirement increases from 50 percent to 
more than 55 percent of the cost of all components. E.O. 13881 creates 
a new separate higher standard for iron and steel products. This 
distinction has existed for many years in domestic preference 
requirements governing certain Federal grant programs, such as the 
Federal Transit Administration's Buy America regulations applicable to 
grantees. Also, DoD procurements are affected by the increased domestic 
content requirements of E.O. 13881; the changes will be implemented in 
the Defense Federal Acquisition Regulation Supplement (DFARS) through 
DFARS Case 2019-D045, Maximizing Use of American-Made Goods.

Increased Price Preference for Domestic Offers

    The Buy American statute does not prohibit the purchase of foreign 
end products or use of foreign construction material. Instead, it 
encourages the use of domestic end products and construction material 
by imposing a price preference for domestic end products and 
construction material. E.O. 13881 and this final rule increase the 
price preference from 6 percent to 20 percent for large businesses, and 
from 12 percent to 30 percent for small businesses. The E.O. does not 
impact the price preference for end products for DoD procurements, 
which is 50 percent for both large and small businesses, because the 
DoD percentage exceeds the requirements of the E.O.
    Thirty-five respondents submitted comments on the proposed rule.

II. Discussion and Analysis

    The Civilian Agency Acquisition Council and the Defense Acquisition 
Regulations Council (the Councils) reviewed the public comments in the 
development of the final rule. A discussion of the comments and the 
changes made to the rule as a result of those comments are provided as 
follows:

A. Summary of Significant Changes

    This final rule makes the following significant changes from the 
proposed rule:
     Definitions. At FAR 25.003, the definitions of ``domestic 
construction material,'' ``domestic end product,'' and ``predominantly 
of iron or steel or a combination of both'' are revised; and a 
definition of ``foreign iron and steel'' is added.
    [cir] The definitions of ``domestic construction material'' and 
``domestic end product'' now specify that the cost of foreign iron and 
steel includes but is not limited to the cost of foreign iron or steel 
mill products (such as bar, billet, slab, wire, plate, or sheet), 
castings, or forgings utilized in the manufacture of the product and a 
good faith estimate of the cost of all foreign iron or steel components 
excluding commercially available off-the-shelf (COTS) fasteners. The 
definition specifies that the iron or steel components of unknown 
origin are treated as foreign. Also, the definition explains that if 
the construction material contains multiple components, the cost of all 
the materials used in the construction material is calculated in 
accordance with the definition of ``cost of components'' in FAR 25.003.
    [cir] A definition of ``foreign iron and steel'' which includes 
language explaining ``produced in the United States'' is added to 
clarify the term as it is used in the revised definitions of ``domestic 
construction material'' and ``domestic end product''.
    [cir] The definition of ``predominantly of iron or steel or a 
combination of both'' now clarifies what is meant by the phrase ``the 
cost of iron and steel.''
    [cir] Conforming changes are made at FAR 25.101(a)(2)(ii) and 
25.201(b)(2)(ii), as well as to FAR clauses 52.225-1, Buy American--
Supplies; 52.225-3, Buy American--Free Trade Agreements--Israeli Trade 
Act; 52.225-9, Buy American--Construction Materials; and 52.225-11, Buy 
American--Construction Materials Under Trade Agreement.
     COTS fasteners. Revisions have been made throughout the 
FAR to clarify that the domestic content test does not apply to COTS 
fasteners. These revisions are made at FAR 25.001, 25.003, 25.101, 
25.201, as well as in FAR clauses 52.225-1, Buy American-Supplies; 
52.225-3, Buy American--Free Trade Agreements--Israeli Trade Act, and 
its alternates; 52.225-9, Buy American--Construction Materials; and 
52.225-11, Buy American--Construction Materials Under Trade Agreement, 
and its alternate.

B. Analysis of Public Comments

1. Strong Support for the Rule
    Comment: Most of the respondents strongly supported the proposed 
rule. One respondent noted positive factors regarding this rule as 
follows:
     Improves America's position from an economic standpoint.
     Helps increase jobs.
     Improves relationships with companies within our country.
     Interests other countries to do more trades and business 
with companies that have American-made products, goods, and materials.
     Improves our national image.
    Response: Noted.
2. Domestic Content Test for COTS Items
2a. Remove the COTS Waiver for All Construction Materials
    Comment: A few respondents stated that the rule should restore the 
domestic content test for all COTS construction material, not just for 
COTS construction iron and steel products. The respondents pointed out 
that there are instances where ``nonferrous'' construction materials 
compete with iron and steel products and in these instances, the rule 
provides an advantage to foreign nonferrous producers when they compete 
with U.S. producers of iron and steel products by not applying the 
domestic content test to the ``nonferrous'' construction material.
    Response: This FAR change is required to implement E.O. 13881.
2b. Remove the COTS Waiver for Fasteners
    Comment: Many respondents (using an essentially identical form 
letter) urged the Councils to remove the waiver of the domestic content 
test of the Buy American statute for the acquisition of COTS fasteners. 
These respondents stated that not doing so would not provide U.S. 
fastener manufacturers the same protection being offered to 
manufacturers of other iron and steel products.
    Response: The Councils determined that requiring offerors to keep 
track of the origin of all fasteners could have a significant negative 
impact by creating an administrative burden on offerors that would 
outweigh any benefit to the American iron and steel industrial base. 
However, a clarification is made in FAR 25.001 to exclude only COTS 
fasteners.
2c. No Changes to Current COTS Waiver
    Comment: A few respondents stated that the COTS waiver should 
remain as is and not subject iron and steel products to the additional 
rigor of the domestic content test. These respondents commented that 
contractors for COTS items have built their supply chains to comply 
with the existing COTS waiver and changing this paradigm will impede 
projects around the country, adversely impact these contractors, be 
administratively burdensome for them, and increase compliance costs 
that will eventually be borne by the Government. One of the

[[Page 6182]]

respondents stated that waiving some COTS items, but not others, would 
create a dissimilar application of the domestic content rule that is 
not in the public interest and should not be implemented in the FAR.
    Response: As explained in the proposed rule, roll-back of the COTS 
waiver is necessary to give full effect to the E.O. 13881 requirement.
3. Definitions
    Comment: One respondent stated that it was not clear why the 
longstanding practice of using cost of ``components'' has been replaced 
with ``content'' when determining whether an end product is a steel end 
product and the implications of this change. The respondent recommended 
defining the word ``content'' and providing examples of application of 
this new standard.
    Response: The Councils note that the domestic content test is not 
applied to determine whether an item is wholly or predominantly of iron 
or steel or a combination of both, but to determine whether such a 
product is foreign or domestic. As explained in paragraph II.B.2.i of 
the proposed rule preamble, the term ``component test'' was replaced 
with ``domestic content test'' because of the wording of the E.O. 
regarding iron and steel. Per FAR 25.001(c)(1), this domestic content 
test is one of the two-part test elements used by the Buy American 
statute to define a ``domestic construction material'' or ``domestic 
end product.'' Regarding iron and steel end products, the E.O. states 
that the materials shall be considered to be of foreign origin if ``the 
cost of foreign iron and steel used in such iron and steel end products 
constitutes 5 percent or more of the cost of all the products used in 
such iron and steel end products.'' ``All the products used'' in an 
item would be the common meaning of ``content.'' The Councils do not 
consider it necessary to define ``content''.
    However, the Councils added the explanation that the cost of all 
the materials used in a product is to be calculated consistent with the 
definition of ``cost of components'' at FAR 25.003, if the product 
contains multiple components. The Councils also specified that the cost 
of foreign iron and steel includes but is not limited to the cost of 
foreign iron or steel mill products (such as bar, billet, slab, wire, 
plate, or sheet), castings, or forgings utilized in the manufacture of 
the product and a good faith estimate of the cost of all foreign iron 
or steel components excluding COTS fasteners, both in the definitions 
of ``domestic construction material,'' and ``domestic end product.''
    To determine whether a product that is wholly or predominantly of 
iron or steel or a combination of both is foreign or domestic, it is 
necessary to determine the following:
    (i) Does the product consist wholly or ``predominantly of iron or 
steel or a combination of both'' (as defined in FAR 25.003)?
    (ii) Is any of the iron or steel content not produced in the United 
States?
    (iii) Is the cost of foreign iron or steel mill products (such as 
bar, billet, slab, wire, plate, or sheet), castings, or forgings 
utilized in the manufacture of the product, and a good faith estimate 
of the cost of all foreign iron or steel components (excluding COTS 
fasteners), less than 5 percent of the cost of all the components used 
in the end product (or construction material)? If the product contains 
multiple components, the cost is to be calculated consistent with the 
definition of ``cost of components'' at FAR 25.003.
    See the following examples:
     A steel beam. For purposes of this example, this steel 
beam consists wholly of steel. The cost of all material in the beam, 
excluding final manufacture, overhead costs, and profit, is $50. If the 
steel beam is rolled from steel bloom, then the steel beam probably 
contains either all domestic steel, or all foreign steel. However, if 
the beam is welded or riveted from separate steel plates, then it is 
conceivable that some of the steel plates could have been formed from 
steel not produced in the United States. If the cost of the foreign 
steel plates used to make the beam equals or exceeds $2.50 (i.e., 5 
percent of the cost of all the components used in the product), then 
the entire beam is a foreign construction material.
     A steel safe. The steel safe may include other components 
such as a combination lock, a dehumidifier, or drawers. The safe costs 
$1,000 and the cost of all components in the safe is $500. If the cost 
of the steel plates or other steel mill products (excluding COTS 
fasteners) utilized in the manufacture of the safe exceeds $250 (i.e., 
50 percent of the total cost of all the components as defined in FAR 
25.003), then the safe consists predominantly of steel. If the cost of 
foreign iron or steel mill products (such as bar, billet, slab, wire, 
plate, or sheet), castings, or forgings utilized in the manufacture of 
the safe and a good faith estimate of the cost of all foreign iron or 
steel components (excluding COTS fasteners) is less than $25 (i.e., 5 
percent of the cost of all the components used in the product), then 
the safe is a domestic end product.
     A refrigerator. The refrigerator consists of many 
components and materials. The exterior cabinet and door and the inner 
cabinet of this refrigerator are steel. The refrigerator also includes 
insulation, cooling system, refrigerant, and fixtures. The refrigerator 
costs $2,000 and the cost of all components in the refrigerator is 
$1,000. If the cost of the steel plates or other steel mill products 
(excluding COTS fasteners) utilized in the manufacture of the 
refrigerator does not exceed $500 (i.e., 50 percent of the total cost 
of all the components as defined in FAR 25.003), then the refrigerator 
does not consist predominantly of steel.
    Comment: One respondent recommended clarifying the meaning of 
``metallurgical processes'' and providing a list of representative 
metallurgical functions such as smelting, melting, pouring, rolling, 
casting, and other similar processes. The respondent based the 
recommendation on their interpretation of the existing guidance and the 
proposed rule, suggesting that raw steel and iron material for a steel 
end product may enter the United States and after undergoing all 
manufacturing processes for its intended final use, it would then be 
considered ``produced in the U.S.'' both for purposes of being a 
domestic component (if it is a component in an end product) or a 
domestic end product itself (if solely from one foreign material). The 
respondent's interpretation also suggested that if ``the steel came 
with any foreign manufacturing outside the original metallurgical 
process, the item would be considered foreign, even if all subsequent 
manufacturing occurred in the U.S.'' One respondent suggested defining 
``manufactured in the United States'' under the Buy American statute's 
two-part test using a more stringent standard where all steelmaking 
processes, including the melting and pouring of the steel (i.e., the 
actual steelmaking), occur in the United States. Other respondents 
requested the rule provide a clear, explicit definition of ``foreign 
iron and steel'' to prevent any adverse or unintended consequences.
    Response: The exception relating to metallurgical processes 
involving refinement of steel additives does not apply to any of the 
metallurgical processes involved in the making of the steel itself. 
Steel is defined in FAR 25.003 as an alloy that includes at least 50 
percent iron, between 0.02 and 2 percent carbon, and may include other 
elements. These other elements (e.g., manganese, silicon, copper, 
aluminum, chromium, cobalt, molybdenum, nickel, niobium, titanium, 
tungsten, vanadium) are termed steel additives, and as such,

[[Page 6183]]

are added to the steel alloy to create steel with different properties 
(e.g., stainless steel). Therefore, whatever metallurgical processes 
are used to separate and concentrate and reduce the ore to metal, then 
refine to increase the grade or purity of a steel additive (such as 
titanium or tungsten) can occur anywhere, prior to adding these other 
metals to produce the steel alloy in the United States. As stated in 
the proposed rule, in order to be domestic, all manufacturing processes 
of the iron or steel (other than the additives) must take place in the 
United States. In the final rule, language is added from the definition 
of ``produced in the United States'' from E.O. 13788, Buy American and 
Hire American (82 FR 18837) to better explain how the iron or steel is 
considered domestic. For clarity, the final rule moves the explanation 
of what it means to produce iron or steel in the United States from the 
definition of ``domestic construction material'' and ``domestic end 
product'' to a new, separate definition in FAR 25.003 for the term 
``foreign iron and steel.'' The definition of ``foreign iron and 
steel'' is based on the existing description of ``iron or steel 
components'' at FAR 25.602-1(a)(1)(ii), consistent with the intent 
articulated in the proposed rule.
    Comment: One respondent recommended that ``good faith'' be further 
defined to include a subjective and objective standard for a 
``reasonable business person without legal knowledge or training''.
    Response: The term ``good faith'' is used in many instances in the 
FAR and other agency regulations. The Councils concluded that ``a good 
faith estimate'' should be sufficient; and that adding the suggested 
language will not make the standard any clearer.
    Comment: One respondent stated that requiring nothing more than a 
``good faith assurance'' to calculate the cost of foreign components 
could lead to abuse or fraud in calculating the cost of foreign 
components, which would undermine the purpose of E.O. 13881. The 
respondent commented that because the origin of the iron and steel 
products should be readily discernible, the final rule should require 
suppliers to track the domestic content in iron and steel products and 
subject this accounting to periodic audit. Another respondent submitted 
a similar comment.
    Response: The Councils agree that the origin of the iron and steel 
components should be readily discernible. As such, the final rule has 
been revised to clarify that contractors are to make a ``good faith 
estimate'' only for the cost of all foreign iron or steel components, 
other than the cost of foreign iron or steel mill products (such as 
bar, billet, slab, wire, plate, or sheet), castings, or forgings 
utilized in the manufacture of the product. It is highly likely that 
current procedures will yield the needed information for the offeror to 
make the required determinations in this rule. The cost of the iron and 
steel items are included in invoices and already used to determine 
whether an end product or construction material is foreign.
    Comment: A few respondents stated that defining ``predominantly of 
iron or steel'' based on cost of the components, as opposed to weight, 
volume, and cost, opens a loophole that will allow manufacturers and 
contractors to evade the domestic content requirements through creative 
accounting practices.
    Response: The Councils reiterate that basing the predominance on 
cost, rather than weight or volume, is consistent with the requirement 
of the E.O. that the ``cost'' of foreign iron and steel be limited to 
less than 5 percent of the ``cost'' of all components. Therefore, the 
final rule remains unchanged regarding the basis for determining 
whether an item is predominantly of iron or steel.
    Comment: One respondent stated that the proposed rule's definition 
of ``fasteners'' was overly broad and by exempting fasteners from the 
domestic content requirements, the rule creates an opportunity for 
abuse of this ``loophole.'' The respondent requested the definition of 
``fasteners'' be modified to reflect the qualifiers the Councils 
provided in the proposed rule, i.e., that the fasteners being exempted 
were those that were ``small'' or ``inexpensive.''
    Response: The Councils have clarified the text in the final rule to 
state that the fasteners being exempted from the domestic content 
requirement are those that are COTS items.
    Comment: One respondent stated that requiring iron and steel 
products to contain 95 percent domestic content is too onerous and 
burdensome on manufacturers. The respondent commented that the 95 
percent requirement should be reduced or phased in over time. 
Alternatively, the respondent also suggested that in determining 
whether a predominantly of iron or steel product is domestic, 
manufacturers should be allowed to use the cost of non-iron and non-
steel components of the item; this way, manufacturers can mitigate the 
95 percent requirement, while still incentivizing domestic purchase of 
non-steel components. Another respondent had a similar comment, 
pointing out that the Environmental Protection Agency allows for 5 
percent of the total ``project'' cost to be foreign iron and steel 
products instead of 5 percent of the total cost of the individual 
product.
    Response: This FAR change is required to implement E.O. 13881, 
which increased the domestic content requirement for iron and steel end 
products to 95 percent. However, the Councils note that the proposed 
rule presented the requirement as whether 5 percent of the cost of all 
the components was foreign iron or steel, not whether 5 percent of the 
cost of only the iron or steel components were foreign iron or steel; 
thereby, giving credit to the non-iron and non-steel components of the 
end item as requested by the respondent.
    Comment: One respondent stated their interpretation that the 
proposed rule encompassed steel subcomponents, not just steel 
components. Due to lack of visibility into the cost of these steel 
subcomponents by manufacturers, the respondent requested the rule 
consider exempting the cost of subcomponents from the calculations. 
Another respondent had a similar comment, pointing out that the Federal 
Transit Administration's policy explicitly exempts subcomponents from 
country-of-origin consideration, including iron and steel components.
    Response: The Councils confirm that the intent of the proposed rule 
was to include the cost of subcomponents in the domestic content 
calculations. However, the Councils did not add ``subcomponents'' in 
the FAR text because the definition of ``components'' at FAR 25.003 is 
written broadly enough to already cover subcomponents. In acknowledging 
the difficulty contractors may have to know, definitively, the cost of 
all subcomponents in iron or steel items, the Councils clarify in the 
final rule that contractors are to make a ``good faith estimate'' of 
the cost of all foreign iron or steel components, other than the cost 
of foreign iron or steel mill products (such as bar, billet, slab, 
wire, plate, or sheet), castings, or forgings utilized in the 
manufacture of the product.
4. Outside the Scope of This Rule
    Comment: Two respondents provided comments regarding marketing 
their specific businesses, and two respondents provided comments of a 
political nature.
    Response: These comments did not address the rule and, as such, are 
outside the scope of this rule.
    Comment: One respondent recommended that if no domestic offers are 
received on an acquisition conducted using full and open competition, 
then the procurement officer should confirm with at least two

[[Page 6184]]

other manufacturers within the same NAICS code their non-interest in 
the procurement.
    Response: The Councils concluded the recommendation would add a 
significant burden on contracting officers, and is not necessary for 
implementation of the E.O.
    Comment: One respondent recommended defining ``manufactured'' and 
adopting a clear non-shift approach to the items specified in the 
procurement document for all purchases (aside from systems).
    Response: This recommendation is not necessary for implementation 
of the E.O. The Councils note that definitions of ``manufacture'' have 
been considered in the past and rejected. Although the FAR does not 
define ``manufacture,'' it does define ``place of manufacture,'' at FAR 
52.225-18, as ``the place where an end product is assembled out of 
components, or otherwise made or processed from raw materials into the 
finished product that is to be provided to the Government.''
    Comment: One respondent recommended removing the Buy American 
statute's exception for ``Goods for Use Outside the United States'' and 
using an evaluation factor instead.
    Response: The exception for articles, materials, or supplies for 
use outside the United States is included in the Buy American statute 
(41 U.S.C. 8302(a)(2)(A) and 8303(b)(1)(A)).
    The Balance of Payments Program provided a preference for U.S. 
products and services for overseas use, and its restrictions were 
similar to the restrictions of the Buy American statute, which apply 
only within the United States. Purchases of supplies for use outside 
the United States, and construction materials for construction 
contracts performed outside the United States, were covered by the 
Balance of Payments Program in FAR subpart 25.3, as a matter of policy, 
until it was removed in 2002. Only a few civilian agencies make 
purchases for use outside the United States. Furthermore, even fewer 
civilian agencies award construction contracts that are performed 
outside the United States. The Balance of Payments Program applied to 
purchases valued at more than the simplified acquisition threshold and 
had little impact for civilian agency acquisitions of supplies in 
excess of the Trade Agreements Act threshold, because the civilian 
agencies do not apply the Balance of Payments Program when the Trade 
Agreements Act applies. Therefore, because there was no statutory 
requirement for the Balance of Payments Program, and because 
elimination of this Program for civilian agencies would reduce 
administrative burdens on both the Government and the public, without 
significant impact on the Government's international balance of 
payments, the Balance of Payments Program was eliminated for civilian 
agencies. The rationale for elimination of this Program for civilian 
agencies has not changed. Note that DoD has retained the Balance of 
Payments Program for acquisitions of supplies for use outside the 
United States or construction projects to be performed overseas.
5. Oppose the Rule
    Comment: Some respondents urged the Councils not to increase the 
iron and steel content requirements beyond their current levels because 
of the limited availability of U.S. sources for components, which will 
result in increased costs and a decrease in competition. Some of these 
respondents also stated that Buying American should be an incentive, 
not a requirement.
    Response: This FAR change implements the content requirements 
established in E.O. 13881.

III. Applicability to Contracts at or Below the Simplified Acquisition 
Threshold (SAT) and for Commercial Items, Including Commercially 
Available Off-the-Shelf (COTS) Items

    This final rule does not add any new provisions or clauses, nor 
change the applicability of existing provisions or clauses, to 
contracts at or below the SAT and contracts for the acquisition of 
commercial items, including COTS items.
    However, this rule applies the domestic content test of the Buy 
American statute, as implemented by E.O. 13881, to COTS items that 
consist wholly or predominantly of iron or steel (excluding COTS 
fasteners). In accordance with 41 U.S.C. 1907, since 2008, the domestic 
content test of the Buy American statute has been waived for COTS 
items, in part due to the complexity and cost of keeping track of 
components in a world of global sourcing where the Government is not a 
market driver. But absent restoration of the domestic content test, the 
E.O. 13881 requirement regarding iron and steel construction material 
would have very little effect. As such, the Administrator for Federal 
Procurement Policy has determined that it would not be in the best 
interest of the Federal Government to exempt iron and steel products 
(excluding COTS fasteners) that are COTS items from the applicability 
of the content test for foreign iron and steel under the Buy American 
statute.
    The domestic content waiver for COTS items would continue to apply 
to COTS iron and steel fasteners, such as nuts, bolts, pins, rivets, 
nails, clips, and screws, which are generally so small, inexpensive, 
and comingled that trying to keep track of the origin of all fasteners 
would create an administrative burden on offerors that would outweigh 
any benefit to the American iron and steel industrial base.

IV. Executive Orders 12866 and 13563

    Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess 
all costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). E.O. 
13563 emphasizes the importance of quantifying both costs and benefits, 
of reducing costs, of harmonizing rules, and of promoting flexibility. 
This rule is not a significant regulatory action and, therefore, was 
not subject to the review of the Office of Information and Regulatory 
Affairs under section 6(b) of E.O. 12866. This rule is not a major rule 
under 5 U.S.C. 804.

V. Expected Impact of the Final Rule

    The FAR clauses implementing the Buy American statute apply to a 
narrow set of procurements. Also, because the FAR Council is leaving 
the COTS items exception in place for most COTS items, the heightened 
domestic content requirements will not be applicable to those 
procurements.
    With this rule's implementation, domestic industries supplying 
domestic end products are likely to benefit from a competitive 
advantage. Based on the E.O., it is unclear if the pool of qualified 
suppliers would be reduced, resulting in less competition (and a 
possible increase in prices that the Government will pay to procure 
these products).
    At least three arguments point to the possibility that any 
increased burden, on contractors in particular, could be small if not 
de minimis: (1) Familiarization costs should be low; (2) some, if not 
many, contractors may already be able to meet the more stringent 
threshold; and (3) costs incurred by contractors that adjust their 
supply chains so that their end products qualify as domestic will enjoy 
a larger price preference that should help to offset these costs over 
time. Each of these arguments is explained below.
    First, DoD, GSA, and NASA do not anticipate significant costs from 
contractors' familiarization with this

[[Page 6185]]

rule given the history of rulemaking and E.O.s in this area. The basic 
mechanics of the Buy American statute (e.g., definitions, how and when 
the price preference is used to favor domestic end products, 
certifications required of offerors to demonstrate end products are 
domestic) remain unchanged and continue to reflect processes that are 
decades old.
    Second, some, if not many, contractors may already be able to 
comply with the lower foreign content requirement needed to meet the 
definition of ``domestic end product'' under E.O. 13881 and this rule. 
Laws such as the SECURE Technology Act, Public Law 115-390, which 
requires a series of actions to strengthen the Federal infrastructure 
for managing supply chain risks, are placing a significantly increased 
emphasis on Federal agencies and Federal Government contractors to 
identify and reduce risk in their supply chains. One way to reduce 
supply chain risk is to increase domestic sourcing of content. In 
addition, in the context of iron and steel, many existing laws already 
require more stringent content. For example, the Recovery Act required 
that all construction material for a project for the construction, 
alteration, maintenance, or repair of a public building or a public 
work in the United States, consisting wholly or predominantly of iron 
or steel, had to be produced in the United States when using Recovery 
Act funds, to the extent consistent with trade agreements (see FAR 
25.602-1, implementing section 1605 of the Recovery Act). In addition, 
Federal contractors who also work on subawards funded under Federal 
grants may, in some cases, find that the steel, iron, and manufactured 
goods used in the project be produced in the United States, as is the 
case for certain funding administrated by the Federal Transit 
Administration for public transportation projects (see 49 U.S.C. 
5323(j)). Accordingly, it is possible that the Federal market for iron 
and steel has already done significant retooling and could meet the 
requirements of E.O. 13881 with minor additional effort.
    Third, it is anticipated that some contractors' products and 
construction materials may not meet the definitions of ``domestic 
construction material,'' and ``domestic end product'' unless the 
contractors take steps to adjust their supply chains to increase the 
domestic content. Contractors that make a business decision not to 
modify their supply chains will still be able to propose in response to 
Federal contract solicitations but will no longer enjoy a price 
preference. Contractors that sell to civilian agencies and retool their 
supply sources to meet the more stringent threshold will have a more 
generous price preference applied to their products. These stronger 
preferences, which are designed as an incentive to encourage more 
domestic sourcing, may help to offset costs of meeting the new 
standards.
    This rule has the potential to slightly increase the estimated 
percentage of foreign offers. It can only impact products that are made 
in the United States as follows: Iron or steel products where the cost 
of foreign iron and steel is 5 percent or more of the cost of all 
components in the product; or other products, other than COTS items, 
that have a content of 45 to 50 percent foreign components. Offerors of 
such products have an option to increase the domestic content and 
continue to offer domestic products, in which case they may benefit 
from the increased preference for domestic products, or they may 
continue to offer the same product, which will now be evaluated as 
foreign. The Councils do not have any data on how many currently 
domestic products would fall into this category. Nor do the Councils 
have any knowledge as to which option an offeror of such products would 
select since this is a business decision for each offeror to make. 
Regarding the increased price preference for domestic offers, the 
Councils note that robust competition among vendors offering domestic 
products will decrease the extent to which the Government could pay an 
additional 20 to 30 percent for domestic products above and beyond the 
cost of otherwise equivalent foreign products.
    Therefore, based on public comments received, DoD, GSA, and NASA 
have concluded that the initial assessment is correct that the cost 
impact of this rule is not significant, and any impact is predominantly 
positive.

VI. Executive Order 13771

    This rule is not subject to E.O. 13771, Reducing Regulation and 
Controlling Regulatory Costs, because this rule has a de minimis impact 
on the public (see section V. of this preamble).

VII. Regulatory Flexibility Act

    DoD, GSA, and NASA have prepared a Final Regulatory Flexibility 
Analysis (FRFA) consistent with the Regulatory Flexibility Act, 5 
U.S.C. 601, et seq. The FRFA is summarized as follows:

    This rule strengthens domestic preferences under the Buy 
American statute by making adjustments to the required percentage of 
domestic content and the existing percentages for the price 
evaluation preferences in an effort to decrease the amount of 
foreign-sourced content in a U.S. manufactured product to promote 
economic and national security, help stimulate economic growth, and 
create jobs. The objective of this rule is to implement E.O. 13881, 
Maximizing Use of American-Made Goods, Products, and Materials (84 
FR 34257, July 18, 2019).
    There were no significant issues raised by the public comments 
in response to the initial regulatory flexibility analysis.
    DoD, GSA, and NASA examined data from the Federal Procurement 
Data System for fiscal years (FY) 2017, 2018, and 2019, for new 
awards with a foreign place of performance for construction valued 
over the micro-purchase threshold and awards for supplies to unique 
small businesses. This rule will apply to only the 8 percent of 
foreign construction awards that were made to small businesses, and 
only 14 percent of foreign supply awards were made to small 
businesses.

----------------------------------------------------------------------------------------------------------------
                                            FY 2017             FY 2018             FY 2019           Median
        Buy american statute         ---------------------------------------------------------------------------
                                           SB/total            SB/total            SB/total           SB (%)
----------------------------------------------------------------------------------------------------------------
Construction........................         18/217 = 8%         13/223 = 6%         15/199 = 8%               8
Supplies............................     153/1,200 = 13%     164/1,161 = 14%     164/1,048 = 16%              14
----------------------------------------------------------------------------------------------------------------

    This rule is covered under the existing information collection 
requirements associated with the Buy American statute. The rule will 
strengthen domestic preferences under the Buy American statute and 
provide small businesses the opportunity and incentive to deliver 
U.S. manufactured products from domestic suppliers. It is expected 
that this rule will benefit U.S. small business manufacturers, 
including those of iron or steel.

    There are no available alternatives to the rule to accomplish the 
desired objective of the statute.
    Interested parties may obtain a copy of the FRFA from the 
Regulatory Secretariat Division. The Regulatory

[[Page 6186]]

Secretariat Division has submitted a copy of the FRFA to the Chief 
Counsel for Advocacy of the Small Business Administration.

VIII. Paperwork Reduction Act

    The Paperwork Reduction Act (44 U.S.C. chapter 35) does apply; 
however, these changes to the FAR do not impose additional information 
collection requirements to the paperwork burden previously approved 
under the Office of Management and Budget Control Number 9000-0024, Buy 
American, Trade Agreements, and Duty-Free Entry.

List of Subjects in 48 CFR Parts 12, 25, and 52

    Government procurement.

William F. Clark,
Director, Office of Government-wide Acquisition Policy, Office of 
Acquisition Policy, Office of Government-wide Policy.

    Therefore, DoD, GSA, and NASA amend 48 CFR parts 12, 25, and 52 as 
set forth below:

0
1. The authority citation for 48 CFR parts 12, 25, and 52 continues to 
read as follows:

    Authority:  40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 51 
U.S.C. 20113.

PART 12--ACQUISITION OF COMMERCIAL ITEMS

0
2. Amend section 12.505 by revising paragraph (a) to read as follows:


12.505  Applicability of certain laws to contracts for the acquisition 
of COTS items.

* * * * *
    (a)(1) The portion of 41 U.S.C. 8302, American Materials Required 
for Public Use, paragraph (a)(1) that reads ``substantially all from 
articles, materials, or supplies mined, produced, or manufactured in 
the United States,'' Buy American--Supplies, domestic content test, 
except as provided in 25.101(a)(2)(ii) (see 52.225-1 and 52.225-3).
    (2) The portion of 41 U.S.C. 8303, Contracts for Public Works, 
paragraph (a)(2) that reads ``substantially all from articles, 
materials, or supplies mined, produced, or manufactured in the United 
States,'' Buy American--Construction Materials, domestic content test, 
except as provided in 25.201(b)(2)(ii)(see 52.225-9 and 52.225-11).
* * * * *

PART 25--FOREIGN ACQUISITION

0
3. Amend section 25.001 by revising paragraph (c)(1) to read as 
follows:


25.001   General.

* * * * *
    (c) * * *
    (1) The Buy American statute uses a two-part test to define a 
``domestic end product'' or ``domestic construction material'' 
(manufactured in the United States and a domestic content test). The 
domestic content test has been waived for acquisition of commercially 
available off-the-shelf (COTS) items, except a product that consists 
wholly or predominantly of iron or steel or a combination of both 
(excluding COTS fasteners) (see 25.101(a) and 25.201(b)).
* * * * *

0
4. Amend section 25.003 by--
0
a. Revising the definitions ``Domestic construction material'' and 
``Domestic end product''; and
0
b. Adding in alphabetical order the definitions ``Fastener'', ``Foreign 
iron and steel'', ``Predominantly of iron or steel or a combination of 
both'', and ``Steel''.
    The revisions and additions read as follows:


25.003  Definitions.

* * * * *
    Domestic construction material means--
    (1) For use in subparts other than 25.6--
    (i) For construction material that does not consist wholly or 
predominantly of iron or steel or a combination of both--
    (A) An unmanufactured construction material mined or produced in 
the United States; or
    (B) A construction material manufactured in the United States, if--
    (1) The cost of the components mined, produced, or manufactured in 
the United States exceeds 55 percent of the cost of all its components. 
Components of foreign origin of the same class or kind for which 
nonavailability determinations have been made are treated as domestic. 
Components of unknown origin are treated as foreign; or
    (2) The construction material is a commercially available off-the-
shelf (COTS) item; or
    (ii) For construction material that consists wholly or 
predominantly of iron or steel or a combination of both, a construction 
material manufactured in the United States if the cost of foreign iron 
and steel constitutes less than 5 percent of the cost of all the 
components used in such construction material. The cost of foreign iron 
and steel includes but is not limited to the cost of foreign iron or 
steel mill products (such as bar, billet, slab, wire, plate, or sheet), 
castings, or forgings utilized in the manufacture of the construction 
material and a good faith estimate of the cost of all foreign iron or 
steel components excluding COTS fasteners. Iron or steel components of 
unknown origin are treated as foreign. If the construction material 
contains multiple components, the cost of all the materials used in 
such construction material is calculated in accordance with the 
definition of ``cost of components'' in this section; or
    (2) For use in subpart 25.6, see the definition in 25.601.
    Domestic end product means--
    (1) For an end product that does not consist wholly or 
predominantly of iron or steel or a combination of both--
    (i) An unmanufactured end product mined or produced in the United 
States;
    (ii) An end product manufactured in the United States, if--
    (A) The cost of its components mined, produced, or manufactured in 
the United States exceeds 55 percent of the cost of all its components. 
Components of foreign origin of the same class or kind as those that 
the agency determines are not mined, produced, or manufactured in 
sufficient and reasonably available commercial quantities of a 
satisfactory quality are treated as domestic. Components of unknown 
origin are treated as foreign. Scrap generated, collected, and prepared 
for processing in the United States is considered domestic; or
    (B) The end product is a COTS item; or
    (2) For an end product that consists wholly or predominantly of 
iron or steel or a combination of both, an end product manufactured in 
the United States, if the cost of foreign iron and steel constitutes 
less than 5 percent of the cost of all the components used in the end 
product. The cost of foreign iron and steel includes but is not limited 
to the cost of foreign iron or steel mill products (such as bar, 
billet, slab, wire, plate, or sheet), castings, or forgings utilized in 
the manufacture of the end product and a good faith estimate of the 
cost of all foreign iron or steel components excluding COTS fasteners. 
Iron or steel components of unknown origin are treated as foreign. If 
the end product contains multiple components, the cost of all the 
materials used in such end product is calculated in accordance with the 
definition of ``cost of components'' in this section.
* * * * *
    Fastener means a hardware device that mechanically joins or affixes 
two or more objects together. Examples of fasteners are nuts, bolts, 
pins, rivets, nails, clips, and screws.
* * * * *

[[Page 6187]]

    Foreign iron and steel means iron or steel products not produced in 
the United States. Produced in the United States means that all 
manufacturing processes of the iron or steel must take place in the 
United States, from the initial melting stage through the application 
of coatings, except metallurgical processes involving refinement of 
steel additives. The origin of the elements of the iron or steel is not 
relevant to the determination of whether it is domestic or foreign.
* * * * *
    Predominantly of iron or steel or a combination of both means that 
the cost of the iron and steel content exceeds 50 percent of the total 
cost of all its components. The cost of iron and steel is the cost of 
the iron or steel mill products (such as bar, billet, slab, wire, 
plate, or sheet), castings, or forgings utilized in the manufacture of 
the product and a good faith estimate of the cost of iron or steel 
components excluding COTS fasteners.
    Steel means an alloy that includes at least 50 percent iron, 
between 0.02 and 2 percent carbon, and may include other elements.
* * * * *

0
5. Amend section 25.100 by--
0
a. Removing from the end of paragraph (a)(2) ``and'';
0
b. Redesignating paragraph (a)(3) as paragraph (a)(4);
0
c. Adding a new paragraph (a)(3); and
0
d. Revising the newly redesignated paragraph (a)(4).
    The addition and revision read as follows:


25.100  Scope of subpart.

    (a) * * *
    (3) Executive Order 13881, July 15, 2019; and
    (4) Waiver of the domestic content test of the Buy American statute 
for acquisition of commercially available off-the-shelf (COTS) items in 
accordance with 41 U.S.C. 1907, but see 25.101(a)(2)(ii).
* * * * *

0
6. Amend section 25.101 by--
0
a. Removing from paragraph (a) introductory text ``statute uses'' and 
adding ``statute and E.O. 13881 use'' in its place;
0
b. Revising paragraph (a)(2);
0
c. Removing from paragraph (b) ``component test'' and adding ``domestic 
content test'' in its place; and
0
d. Removing from paragraph (c) ``Subpart 25.5'' and adding ``subpart 
25.5'' in its place.
    The revision reads as follows:


25.101  General.

    (a) * * *
    (2)(i) Except for an end product that consists wholly or 
predominantly of iron or steel or a combination of both, the cost of 
domestic components must exceed 55 percent of the cost of all the 
components. In accordance with 41 U.S.C. 1907, this domestic content 
test of the Buy American statute has been waived for acquisitions of 
COTS items (see 12.505(a)) (but see paragraph (a)(2)(ii) of this 
section).
    (ii) For an end product that consists wholly or predominantly of 
iron or steel or a combination of both, the cost of foreign iron and 
steel must constitute less than 5 percent of the cost of all the 
components used in the end product (see the definition of ``foreign 
iron and steel'' at 25.003). The cost of foreign iron and steel 
includes but is not limited to the cost of foreign iron or steel mill 
products (such as bar, billet, slab, wire, plate, or sheet), castings, 
or forgings utilized in the manufacture of the end product and a good 
faith estimate of the cost of all foreign iron or steel components 
excluding COTS fasteners. This domestic content test of the Buy 
American statute has not been waived for acquisitions of COTS items in 
this category, except for COTS fasteners.
* * * * *


25.105   [Amended]

0
7. Amend section 25.105 by--
0
a. Removing from paragraph (b)(1) ``6 percent'' and adding ``20 
percent'' in its place; and
0
b. Removing from paragraph (b)(2) ``12 percent'' and ``Subpart 19.5'' 
and adding ``30 percent'' and ``subpart 19.5'' in their places, 
respectively.

0
8. Amend section 25.200 by--
0
a. Removing from the end of paragraph (a)(2) ``and'';
0
b. Redesignating paragraph (a)(3) as paragraph (a)(4);
0
c. Adding a new paragraph (a)(3); and
0
d. Revising the newly redesignated paragraph (a)(4).
    The addition and revision read as follows:


25.200   Scope of subpart.

    (a) * * *
    (3) Executive Order 13881, July 15, 2019; and
    (4) Waiver of the domestic content test of the Buy American statute 
for acquisitions of commercially available off-the-shelf (COTS) items 
in accordance with 41 U.S.C. 1907, but see 25.201(b)(2)(ii).
* * * * *

0
9. Revise section 25.201 to read as follows:


25.201   Policy.

    (a) Except as provided in 25.202, use only domestic construction 
materials in construction contracts performed in the United States.
    (b) The Buy American statute restricts the purchase of construction 
materials that are not domestic construction materials. For 
manufactured construction materials, the Buy American statute and E.O. 
13881 use a two-part test to define domestic construction materials.
    (1) The article must be manufactured in the United States; and
    (2)(i) Except for construction material that consists wholly or 
predominantly of iron or steel or a combination of both, the cost of 
domestic components must exceed 55 percent of the cost of all the 
components. In accordance with 41 U.S.C. 1907, this domestic content 
test of the Buy American statute has been waived for acquisitions of 
COTS items (see 12.505(a)).
    (ii) For construction material that consists wholly or 
predominantly of iron or steel or a combination of both, the cost of 
foreign iron and steel must constitute less than 5 percent of the cost 
of all the components used in such construction material (see the 
definition of ``foreign iron and steel'' at 25.003). The cost of 
foreign iron and steel includes but is not limited to the cost of 
foreign iron or steel mill products (such as bar, billet, slab, wire, 
plate, or sheet), castings, or forgings utilized in the manufacture of 
the construction material and a good faith estimate of the cost of all 
foreign iron or steel components excluding COTS fasteners. This 
domestic content test of the Buy American statute has not been waived 
for acquisitions of COTS items in this category, except for COTS 
fasteners.


25.204  [Amended]

0
10. Amend section 25.204 in paragraph (b) by removing ``6 percent'' and 
adding ``20 percent'' in its place.

0
11. Amend section 25.504-1 by--
0
a. Revising the table in paragraph (a)(1);
0
b. Removing from paragraph (a)(2) ``12 percent'' and ``$11,200'' and 
adding ``30 percent'' and ``$13,000'' in their places, respectively; 
and
0
c. Removing from paragraph (b)(2) ``12 percent'' and ``$11,424'' and 
adding ``30 percent'' and ``$13,260'' in their places, respectively.
    The revision reads as follows:


25.504-1  Buy American statute.

    (a)(1) * * *

------------------------------------------------------------------------
 
------------------------------------------------------------------------
Offer A....................    $16,000  Domestic end product, small
                                         business.

[[Page 6188]]

 
Offer B....................    $15,700  Domestic end product, small
                                         business.
Offer C....................    $10,000  U.S.-made end product (not
                                         domestic), small business.
------------------------------------------------------------------------

* * * * *

0
12. Amend section 25.504-2 by revising the table to read as follows:


25.504-2   WTO GPA/Caribbean Basin Trade Initiative/FTAs.

* * * * *

------------------------------------------------------------------------
 
------------------------------------------------------------------------
Offer A....................   $304,000  U.S.-made end product (not
                                         domestic).
Offer B....................   $303,000  U.S.-made end product
                                         (domestic), small business.
Offer C....................   $300,000  Eligible product.
Offer D....................   $295,000  Noneligible product (not U.S.-
                                         made).
------------------------------------------------------------------------

* * * * *

0
13. Amend section 25.504-3 by--
0
a. Revising the entry ``Offer B'' in the table in paragraph (a);
0
b. Revising the entry ``Offer B'' in the table in paragraph (b); and
0
c. Revising entries ``Offer B'' and ``Offer C'' in the table in 
paragraph (c).
    The revisions read as follows:


25.504-3  FTA/Israeli Trade Act.

    (a) * * *

------------------------------------------------------------------------
 
------------------------------------------------------------------------
 
                                * * * * *
Offer B....................   $100,000  Eligible product.
------------------------------------------------------------------------

* * * * *
    (b) * * *

------------------------------------------------------------------------
 
------------------------------------------------------------------------
 
                                * * * * *
Offer B....................   $103,000  Noneligible product.
------------------------------------------------------------------------

* * * * *
    (c) * * *

------------------------------------------------------------------------
 
------------------------------------------------------------------------
 
                                * * * * *
Offer B....................   $103,000  Eligible product.
Offer C....................    100,000  Noneligible product.
------------------------------------------------------------------------

* * * * *

0
14. Amend section 25.504-4 by--
0
a. In paragraph (a)--
0
i. Revising the table;
0
ii. In STEP 1, Items 3 and 5, removing ``6 percent'' and adding ``20 
percent'' in their places, respectively; and
0
iii. Revising STEP 2 and 3.
0
b. Revising paragraph (b).
    The revisions read as follows:


25.504-4   Group award basis.

    (a) * * *

----------------------------------------------------------------------------------------------------------------
                                                                                Offers
                        Item                         -----------------------------------------------------------
                                                               A                   B                   C
----------------------------------------------------------------------------------------------------------------
1...................................................        DO = $55,000        EL = $56,000       NEL = $50,000
2...................................................        NEL = 13,000         EL = 10,000         EL = 13,000
3...................................................        NEL = 11,500         DO = 12,000         DO = 10,000
4...................................................        NEL = 24,000         EL = 28,000        NEL = 22,000
5...................................................         DO = 18,000        NEL = 10,000         DO = 14,000
                                                     -----------------------------------------------------------
    Total...........................................             121,500             116,000             109,000
----------------------------------------------------------------------------------------------------------------

* * * * *
    STEP 2: Evaluate Offer C against the tentative award pattern for 
Offers A and B:

----------------------------------------------------------------------------------------------------------------
                                                                           Offers
                                           ---------------------------------------------------------------------
                   Item                                                     Tentative award
                                                      Low offer           pattern from A and           C
                                                                                   B
----------------------------------------------------------------------------------------------------------------
1.........................................  A...........................        DO = $55,000     * NEL = $60,000
2.........................................  B...........................         EL = 10,000         EL = 13,000
3.........................................  B...........................         DO = 12,000         DO = 10,000
4.........................................  A...........................        NEL = 24,000        NEL = 22,000
5.........................................  B...........................       *NEL = 12,000         DO = 14,000
                                           ---------------------------------------------------------------------
    Total.................................  ............................             113,000             119,000
----------------------------------------------------------------------------------------------------------------
* Offer + 20 percent.

    On a line item basis, apply a factor to any noneligible offer if 
the other offer for that line item is domestic.
    For Item 1, apply a factor to Offer C because Offer A is domestic 
and the acquisition was not covered by the WTO GPA. The evaluated price 
of Offer C, Item 1, becomes $60,000 ($50,000 plus 20 percent). Apply a 
factor to Offer B, Item 5, because it is a noneligible product and 
Offer C is domestic. The evaluated price of Offer B is $12,000 ($10,000 
plus 20 percent). Evaluate the remaining items without applying a 
factor.
    STEP 3: The tentative unrestricted award pattern from Offers A and 
B is lower than the evaluated price of Offer C. Award the combination 
of Offers A and B. Note that if Offer C had not specified all-or-none 
award, award would be made on Offer C for line items 3 and 4, totaling 
an award of $32,000.
    (b) Example 2.

----------------------------------------------------------------------------------------------------------------
                                                                                Offers
                        Item                         -----------------------------------------------------------
                                                               A                   B                   C
----------------------------------------------------------------------------------------------------------------
1...................................................        DO = $50,000        EL = $50,500       NEL = $50,000

[[Page 6189]]

 
2...................................................        NEL = 10,300        NEL = 10,000         EL = 10,200
3...................................................         EL = 20,400         EL = 21,000        NEL = 20,200
4...................................................         DO = 10,500         DO = 10,300         DO = 10,400
                                                     -----------------------------------------------------------
    Total...........................................              91,200              91,800              90,800
----------------------------------------------------------------------------------------------------------------

    Problem: The solicitation specifies award on a group basis. Assume 
the Buy American statute applies and the acquisition cannot be set 
aside for small business concerns. All offerors are large businesses.
    Analysis: (see 25.503(c))
    STEP 1: Determine which of the offers are domestic (see 
25.503(c)(1)):

------------------------------------------------------------------------
                          Domestic (percent)              Determination
------------------------------------------------------------------------
A............  $50,000 (Offer A1) + $10,500 (Offer A4)   Domestic.
                = $60,500.
               $60,500/$91,200 (Offer A Total) = 66.3%.
B............  $10,300 (Offer B4)/$91,800 (Offer B       Foreign.
                Total) $ = 11.2%.
C............  $10,400 (Offer C4)/$90,800 (Offer C       Foreign.
                Total) = 11.5%.
------------------------------------------------------------------------

    STEP 2: Determine whether foreign offers are eligible or 
noneligible offers (see 25.503(c)(2)):

------------------------------------------------------------------------
                     Domestic + eligible (percent)        Determination
------------------------------------------------------------------------
A............  N/A (Both Domestic).....................  Domestic.
B............  $50,500 (Offer B1) + $21,000 (Offer B3)   Eligible.
                + $10,300 (Offer B4) = $81,800.
               $81,800/$91,800 (Offer B Total) = 89.1%.
C............  $10,200 (Offer C2) + $10,400 (Offer C4)   Noneligible.
                = $20,600.
               $20,600/$90,800 (Offer C Total) = 22.7%.
------------------------------------------------------------------------

    STEP 3: Determine whether to apply an evaluation factor (see 
25.503(c)(3)). The low offer (Offer C) is a foreign offer. There is no 
eligible offer lower than the domestic offer. Therefore, apply the 
factor to the low offer. Addition of the 20 percent factor (use 30 
percent if Offer A is a small business) to Offer C yields an evaluated 
price of $108,960 ($90,800 + 20 percent). Award on Offer A (see 
25.502(c)(4)(ii)). Note that, if Offer A were greater than Offer B, an 
evaluation factor would not be applied, and award would be on Offer C 
(see 25.502(c)(3)).


25.601  [Amended]

0
15. Amend section 25.601 by removing the definition ``Steel''.


25.604   [Amended]

0
16. Amend section 25.604 in paragraph (c)(2) by removing ``6 percent'' 
and adding ``20 percent'' in its place.


25.605   [Amended]

0
17. Amend section 25.605 by--
0
a. Removing from paragraph (a)(2) ``6 percent'' and adding ``20 
percent'' in its place; and
0
b. Removing from paragraph (a)(3) ``.06'' and adding ``.20'' in its 
place.

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
18. Amend section 52.212-3 by--
0
a. Revising the date of the provision; and
0
b. Revising paragraphs (f)(1), (g)(1)(i), the first sentence of 
(g)(1)(ii), and (g)(1)(iii) introductory text.
    The revisions read as follows:


52.212-3   Offeror Representations and Certifications--Commercial 
Items.

* * * * *

Offeror Representations and Certifications--Commercial Items (Jan 2021)

* * * * *
    (f) * * *
    (1)(i) The Offeror certifies that each end product, except those 
listed in paragraph (f)(2) of this provision, is a domestic end 
product.
    (ii) The Offeror shall list as foreign end products those end 
products manufactured in the United States that do not qualify as 
domestic end products.
    (iii) The terms ``domestic end product,'' ``end product,'' 
``foreign end product,'' and ``United States'' are defined in the 
clause of this solicitation entitled ``Buy American-Supplies.''
* * * * *
    (g)(1) * * *
    (i)(A) The Offeror certifies that each end product, except those 
listed in paragraph (g)(1)(ii) or (iii) of this provision, is a 
domestic end product.
    (B) The terms ``Bahrainian, Moroccan, Omani, Panamanian, or 
Peruvian end product,'' ``domestic end product,'' ``end product,'' 
``foreign end product,'' ``Free Trade Agreement country,'' ``Free 
Trade Agreement country end product,'' ``Israeli end product,'' and 
``United States'' are defined in the clause of this solicitation 
entitled ``Buy American--Free Trade Agreements--Israeli Trade Act.''
    (ii) The Offeror certifies that the following supplies are Free 
Trade Agreement country end products (other than Bahrainian, 
Moroccan, Omani, Panamanian, or Peruvian end products) or Israeli 
end products as defined in the clause of this solicitation entitled 
``Buy American--Free Trade Agreements--Israeli Trade Act.''
* * * * *
    (iii) The Offeror shall list those supplies that are foreign end 
products (other than those listed in paragraph (g)(1)(ii) of this 
provision) as defined in the clause of this solicitation entitled 
``Buy American--Free Trade Agreements--Israeli Trade Act.'' The 
Offeror shall list as other foreign end products those end products 
manufactured in the United States that do not qualify as domestic 
end products.
* * * * *

0
19. Amend section 52.212-5 by--

[[Page 6190]]

0
a. Revising the date of the clause; and
0
b. Removing from paragraphs (b)(48) and (b)(49)(i) through (iv) ``(MAY 
2014)'' and adding ``(JAN 2021)'' in their places, respectively.
    The revision reads as follows:


52.212-5  Contract Terms and Conditions Required To Implement Statutes 
or Executive Orders--Commercial Items.

* * * * *

Contract Terms and Conditions Required To Implement Statutes or 
Executive Orders--Commercial Items (Jan 2021)

* * * * *

0
20. Amend section 52.213-4 by--
0
a. Revising the date of the clause; and
0
b. Removing from paragraph (b)(1)(xvii) introductory text ``(MAY 
2014)'' and adding ``(JAN 2021)'' in its place.
    The revision reads as follows:


52.213-4   Terms and Conditions--Simplified Acquisitions (Other Than 
Commercial Items).

* * * * *

Terms and Conditions--Simplified Acquisitions (Other Than Commercial 
Items) (Jan 2021)

* * * * *

0
21. Amend section 52.225-1 by--
0
a. Revising the date of the clause;
0
b. In paragraph (a):
0
i. Removing from paragraph (1)(i) in the definition ``Commercially 
available off-the-shelf (COTS) item'' ``FAR'' and adding ``Federal 
Acquisition Regulation (FAR)'' in its place;
0
ii. Revising the definition ``Domestic end product'';
0
iii. Adding in alphabetical order the definitions ``Fastener'' 
``Foreign iron and steel'' ``Predominantly of iron or steel or a 
combination of both'' and ``Steel''; and
0
c. Revising paragraph (b).
    The revisions and additions read as follows:


52.225-1   Buy American--Supplies.

* * * * *

Buy American--Supplies (Jan 2021)

    (a) * * *
    Domestic end product means--
    (1) For an end product that does not consist wholly or 
predominantly of iron or steel or a combination of both--
    (i) An unmanufactured end product mined or produced in the 
United States;
    (ii) An end product manufactured in the United States, if--
    (A) The cost of its components mined, produced, or manufactured 
in the United States exceeds 55 percent of the cost of all its 
components. Components of foreign origin of the same class or kind 
as those that the agency determines are not mined, produced, or 
manufactured in sufficient and reasonably available commercial 
quantities of a satisfactory quality are treated as domestic. 
Components of unknown origin are treated as foreign. Scrap 
generated, collected, and prepared for processing in the United 
States is considered domestic; or
    (B) The end product is a COTS item; or
    (2) For an end product that consists wholly or predominantly of 
iron or steel or a combination of both, an end product manufactured 
in the United States, if the cost of foreign iron and steel 
constitutes less than 5 percent of the cost of all the components 
used in the end product. The cost of foreign iron and steel includes 
but is not limited to the cost of foreign iron or steel mill 
products (such as bar, billet, slab, wire, plate, or sheet), 
castings, or forgings utilized in the manufacture of the end product 
and a good faith estimate of the cost of all foreign iron or steel 
components excluding COTS fasteners. Iron or steel components of 
unknown origin are treated as foreign. If the end product contains 
multiple components, the cost of all the materials used in such end 
product is calculated in accordance with the definition of ``cost of 
components''.
* * * * *
    Fastener means a hardware device that mechanically joins or 
affixes two or more objects together. Examples of fasteners are 
nuts, bolts, pins, rivets, nails, clips, and screws.
* * * * *
    Foreign iron and steel means iron or steel products not produced 
in the United States. Produced in the United States means that all 
manufacturing processes of the iron or steel must take place in the 
United States, from the initial melting stage through the 
application of coatings, except metallurgical processes involving 
refinement of steel additives. The origin of the elements of the 
iron or steel is not relevant to the determination of whether it is 
domestic or foreign.
    Predominantly of iron or steel or a combination of both means 
that the cost of the iron and steel content exceeds 50 percent of 
the total cost of all its components. The cost of iron and steel is 
the cost of the iron or steel mill products (such as bar, billet, 
slab, wire, plate, or sheet), castings, or forgings utilized in the 
manufacture of the product and a good faith estimate of the cost of 
iron or steel components excluding COTS fasteners.
    Steel means an alloy that includes at least 50 percent iron, 
between 0.02 and 2 percent carbon, and may include other elements.
* * * * *
    (b) 41 U.S.C. chapter 83, Buy American, provides a preference 
for domestic end products for supplies acquired for use in the 
United States. In accordance with 41 U.S.C. 1907, the domestic 
content test of the Buy American statute is waived for an end 
product that is a COTS item (see 12.505(a)(1)), except that for an 
end product that consists wholly or predominantly of iron or steel 
or a combination of both, the domestic content test is applied only 
to the iron and steel content of the end product, excluding COTS 
fasteners.
* * * * *

0
22. Amend section 52.225-2 by--
0
a. Revising the date of the provision and paragraphs (a) and (b);
0
b. Removing from paragraph (c) ``Part'' and adding ``part'' in its 
place.
    The revisions read as follows:


52.225-2  Buy American Certificate.

* * * * *

Buy American Certificate (Jan 2021)

    (a)(1) The Offeror certifies that each end product, except those 
listed in paragraph (b) of this provision, is a domestic end 
product.
    (2) The Offeror shall list as foreign end products those end 
products manufactured in the United States that do not qualify as 
domestic end products.
    (3) The terms ``domestic end product,'' ``end product,'' and 
``foreign end product'' are defined in the clause of this 
solicitation entitled ``Buy American--Supplies.''
    (b) Foreign End Products:

 
 
 
            Line item No.                      Country of origin
________                              ________
________                              ________
________                              ________
                          [List as necessary.]
 

* * * * *

0
23. Amend section 52.225-3 by--
0
a. Revising the date of the clause;
0
b. In paragraph (a):
0
i. Removing from paragraph (1)(i) in the definition ``Commercially 
available off-the-shelf (COTS) item'' ``FAR'' and adding ``Federal 
Acquisition Regulation (FAR)'' in its place;
0
ii. Revising the definition ``Domestic end product''; and
0
iii. Adding in alphabetical order the definitions ``Fastener'' 
``Foreign iron and steel'' ``Predominantly of iron or steel or a 
combination of both'' and ``Steel'';
0
c. Revising the second sentence of paragraph (c);
0
d. Revising the date in the introductory text and the second sentence 
of paragraph (c) of Alternate I;
0
e. Revising the date in the introductory text and the second sentence 
of paragraph (c) of Alternate II and adding a period to the end of 
paragraph (c); and
0
f. Revising the date in the introductory text and the second sentence 
of paragraph (c) of Alternate III.
    The revisions and additions read as follows:


52.225-3  Buy American--Free Trade Agreements--Israeli Trade Act.

* * * * *

Buy American--Free Trade Agreements--Israeli Trade Act (Jan 2021)

    (a) * * *
    Domestic end product means--

[[Page 6191]]

    (1) For an end product that does not consist wholly or 
predominantly of iron or steel or a combination of both--
    (i) An unmanufactured end product mined or produced in the 
United States;
    (ii) An end product manufactured in the United States, if--
    (A) The cost of its components mined, produced, or manufactured 
in the United States exceeds 55 percent of the cost of all its 
components. Components of foreign origin of the same class or kind 
as those that the agency determines are not mined, produced, or 
manufactured in sufficient and reasonably available commercial 
quantities of a satisfactory quality are treated as domestic. 
Components of unknown origin are treated as foreign. Scrap 
generated, collected, and prepared for processing in the United 
States is considered domestic; or
    (B) The end product is a COTS item; or
    (2) For an end product that consists wholly or predominantly of 
iron or steel or a combination of both, an end product manufactured 
in the United States, if the cost of foreign iron and steel 
constitutes less than 5 percent of the cost of all the components 
used in the end product. The cost of foreign iron and steel includes 
but is not limited to the cost of foreign iron or steel mill 
products (such as bar, billet, slab, wire, plate, or sheet), 
castings, or forgings utilized in the manufacture of the end product 
and a good faith estimate of the cost of all foreign iron or steel 
components excluding COTS fasteners. Iron or steel components of 
unknown origin are treated as foreign. If the end product contains 
multiple components, the cost of all the materials used in such end 
product is calculated in accordance with the definition of ``cost of 
components''.
* * * * *
    Fastener means a hardware device that mechanically joins or 
affixes two or more objects together. Examples of fasteners are 
nuts, bolts, pins, rivets, nails, clips, and screws.
* * * * *
    Foreign iron and steel means iron or steel products not produced 
in the United States. Produced in the United States means that all 
manufacturing processes of the iron or steel must take place in the 
United States, from the initial melting stage through the 
application of coatings, except metallurgical processes involving 
refinement of steel additives. The origin of the elements of the 
iron or steel is not relevant to the determination of whether it is 
domestic or foreign.
* * * * *
    Predominantly of iron or steel or a combination of both means 
that the cost of the iron and steel content exceeds 50 percent of 
the total cost of all its components. The cost of iron and steel is 
the cost of the iron or steel mill products (such as bar, billet, 
slab, wire, plate, or sheet), castings, or forgings utilized in the 
manufacture of the product and a good faith estimate of the cost of 
iron or steel components excluding COTS fasteners.
    Steel means an alloy that includes at least 50 percent iron, 
between 0.02 and 2 percent carbon, and may include other elements.
* * * * *
    (c) * * * In accordance with 41 U.S.C. 1907, the domestic 
content test of the Buy American statute is waived for an end 
product that is a COTS item (see 12.505(a)(1)), except that for an 
end product that consists wholly or predominantly of iron or steel 
or a combination of both, the domestic content test is applied only 
to the iron and steel content of the end product, excluding COTS 
fasteners. * * *

Alternate I (Jan 2021) * * *

    (c) * * * In accordance with 41 U.S.C. 1907, the domestic 
content test of the Buy American statute is waived for an end 
product that is a COTS item (see 12.505(a)(1)), except that for an 
end product that consists wholly or predominantly of iron or steel 
or a combination of both, the domestic content test is applied only 
to the iron and steel content of the end product, excluding COTS 
fasteners. * * *

Alternate II (Jan 2021) * * *

    (c) * * * In accordance with 41 U.S.C. 1907, the domestic 
content test of the Buy American statute is waived for an end 
product that is a COTS item (see 12.505(a)(1)), except that for an 
end product that consists wholly or predominantly of iron or steel 
or a combination of both, the domestic content test is applied only 
to the iron and steel content of the end product, excluding COTS 
fasteners. * * *

Alternate III (Jan 2021) * * *

    (c) * * * In accordance with 41 U.S.C. 1907, the domestic 
content test of the Buy American statute is waived for an end 
product that is a COTS item (see 12.505(a)(1)), except that for an 
end product that consists wholly or predominantly of iron or steel 
or a combination of both, the domestic content test is applied only 
to the iron and steel content of the end product, excluding COTS 
fasteners. * * *

0
24. Amend section 52.225-4 by--
0
a. Revising the date of the provision;
0
b. Revising paragraph (a);
0
c. In paragraph (b) introductory text removing ``offeror'' and adding 
``Offeror'' in its place;
0
d. Revising the first and second sentences of paragraph (c);
0
e. Removing from paragraph (d) ``Part'' and adding ``part'' in its 
place;
0
f. In Alternate I by--
0
i. Revising the date of the Alternate; and
0
ii. Removing from paragraph (b) introductory text ``offeror'' and 
adding ``Offeror'' in its place;
0
g. In Alternate II by--
0
i. Revising the date of the Alternate; and
0
ii. Removing from paragraph (b) introductory text ``offeror'' and 
adding ``Offeror'' in its place; and
0
h. In Alternate III by--
0
i. Revising the date of the Alternate; and
0
ii. Removing from paragraph (b) introductory text ``offeror'' and 
adding ``Offeror'' in its place, and removing from the second paragraph 
of (b) ``Products (Other'' and adding ``Products (other'' in its place.
    The revisions read as follows:


52.225-4  Buy American--Free Trade Agreements--Israeli Trade Act 
Certificate.

* * * * *

Buy American--Free Trade Agreements--Israeli Trade Act Certificate (Jan 
2021)

    (a)(1) The Offeror certifies that each end product, except those 
listed in paragraph (b) or (c) of this provision, is a domestic end 
product.
    (2) The terms ``Bahrainian, Moroccan, Omani, Panamanian, or 
Peruvian end product,'' ``domestic end product,'' ``end product,'' 
``foreign end product,'' ``Free Trade Agreement country,'' ``Free 
Trade Agreement country end product,'' ``Israeli end product,'' and 
``United States'' are defined in the clause of this solicitation 
entitled ``Buy American--Free Trade Agreements--Israeli Trade Act.''
* * * * *
    (c) The Offeror shall list those supplies that are foreign end 
products (other than those listed in paragraph (b) of this 
provision) as defined in the clause of this solicitation entitled 
``Buy American--Free Trade Agreements--Israeli Trade Act.'' The 
Offeror shall list as other foreign end products those end products 
manufactured in the United States that do not qualify as domestic 
end products.
* * * * *

Alternate I (Jan 2021) * * *

Alternate II (Jan 2021) * * *

Alternate III (Jan 2021) * * *

0
25. Amend section 52.225-9 by--
0
a. Revising the date of the clause;
0
b. In paragraph (a):
0
i. Removing from paragraph (1)(i) in the definition ``Commercially 
available off-the-shelf (COTS) item'' ``FAR'' and adding ``Federal 
Acquisition Regulation (FAR)'' in its place;
0
ii. Revising the definition ``Domestic construction material''; and
0
iii. Adding in alphabetical order the definitions ``Fastener'' 
``Foreign iron and steel'' ``Predominantly of iron or steel or a 
combination of both'' and ``Steel'';
0
c. Revising paragraph (b)(1);
0
d. Removing from paragraph (b)(3)(i) ``6 percent'' and adding ``20 
percent'' in its place; and
0
e. Revising paragraph (d).
    The revisions and additions read as follows:


52.225-9  Buy American--Construction Materials.

* * * * *

[[Page 6192]]

Buy American--Construction Materials (Jan 2021)

    (a) * * *
    Domestic construction material means--
    (1) For construction material that does not consist wholly or 
predominantly of iron or steel or a combination of both--
    (i) An unmanufactured construction material mined or produced in 
the United States; or
    (ii) A construction material manufactured in the United States, 
if--
    (A) The cost of its components mined, produced, or manufactured 
in the United States exceeds 55 percent of the cost of all its 
components. Components of foreign origin of the same class or kind 
for which nonavailability determinations have been made are treated 
as domestic. Components of unknown origin are treated as foreign; or
    (B) The construction material is a COTS item; or
    (2) For construction material that consists wholly or 
predominantly of iron or steel or a combination of both, a 
construction material manufactured in the United States if the cost 
of foreign iron and steel constitutes less than 5 percent of the 
cost of all components used in such construction material. The cost 
of foreign iron and steel includes but is not limited to the cost of 
foreign iron or steel mill products (such as bar, billet, slab, 
wire, plate, or sheet), castings, or forgings utilized in the 
manufacture of the construction material and a good faith estimate 
of the cost of all foreign iron or steel components excluding COTS 
fasteners. Iron or steel components of unknown origin are treated as 
foreign. If the construction material contains multiple components, 
the cost of all the materials used in such construction material is 
calculated in accordance with the definition of ``cost of 
components''.
    Fastener means a hardware device that mechanically joins or 
affixes two or more objects together. Examples of fasteners are 
nuts, bolts, pins, rivets, nails, clips, and screws.
* * * * *
    Foreign iron and steel means iron or steel products not produced 
in the United States. Produced in the United States means that all 
manufacturing processes of the iron or steel must take place in the 
United States, from the initial melting stage through the 
application of coatings, except metallurgical processes involving 
refinement of steel additives. The origin of the elements of the 
iron or steel is not relevant to the determination of whether it is 
domestic or foreign.
    Predominantly of iron or steel or a combination of both means 
that the cost of the iron and steel content exceeds 50 percent of 
the total cost of all its components. The cost of iron and steel is 
the cost of the iron or steel mill products (such as bar, billet, 
slab, wire, plate, or sheet), castings, or forgings utilized in the 
manufacture of the product and a good faith estimate of the cost of 
iron or steel components excluding COTS fasteners.
    Steel means an alloy that includes at least 50 percent iron, 
between 0.02 and 2 percent carbon, and may include other elements.
* * * * *
    (b) * * * (1) This clause implements 41 U.S.C. chapter 83, Buy 
American, by providing a preference for domestic construction 
material. In accordance with 41 U.S.C. 1907, the domestic content 
test of the Buy American statute is waived for construction material 
that is a COTS item, except that for construction material that 
consists wholly or predominantly of iron or steel or a combination 
of both, the domestic content test is applied only to the iron and 
steel content of the construction materials, excluding COTS 
fasteners. (See FAR 12.505(a)(2)). The Contractor shall use only 
domestic construction material in performing this contract, except 
as provided in paragraphs (b)(2) and (b)(3) of this clause.
* * * * *
    (d) Data. To permit evaluation of requests under paragraph (c) 
of this clause based on unreasonable cost, the Contractor shall 
include the following information and any applicable supporting data 
based on the survey of suppliers:

                          Foreign and Domestic Construction Materials Price Comparison
----------------------------------------------------------------------------------------------------------------
                                                                      Unit of                          Price
                Construction material description                     measure        Quantity       (dollars) *
----------------------------------------------------------------------------------------------------------------
Item 1:
    Foreign construction material.
    Domestic construction material.
  Item 2:
    Foreign construction material.
    Domestic construction material.
----------------------------------------------------------------------------------------------------------------
[* Include all delivery costs to the construction site and any applicable duty (whether or not a duty-free entry
  certificate is issued)].
[List name, address, telephone number, and contact for suppliers surveyed. Attach copy of response; if oral,
  attach summary.]
[Include other applicable supporting information.]


(End of clause)

0
26. Amend section 52.225-11 by--
0
a. Revising the date of the clause;
0
b. In paragraph (a):
0
i. Removing from paragraph (1)(i) in the definition ``Commercially 
available off-the-shelf (COTS) item'' ``FAR'' and adding ``Federal 
Acquisition Regulation (FAR)'' in its place;
0
ii. Revising the definition ``Domestic construction material'';
0
iii. Adding in alphabetical order the definitions ``Fastener'' 
``Foreign iron and steel'' ``Predominantly of iron or steel or a 
combination of both'' and ``Steel'';
0
c. Revising paragraph (b)(1);
0
d. Removing from paragraph (b)(4)(i) ``6 percent'' and adding ``20 
percent'' in its place;
0
e. Revising paragraph (d);
0
f. In Alternate I--
0
i. Revising the date of the Alternate; and
0
ii. Revising paragraph (b)(1).
    The revisions and additions read as follows:


52.225-11  Buy American--Construction Materials Under Trade Agreements.

* * * * *

Buy American--Construction Materials Under Trade Agreements (Jan 2021)

    (a) * * *
    Domestic construction material means--
    (1) For construction material that does not consist wholly or 
predominantly of iron or steel or a combination of both--
    (i) An unmanufactured construction material mined or produced in 
the United States; or
    (ii) A construction material manufactured in the United States, 
if--
    (A) The cost of its components mined, produced, or manufactured 
in the United States exceeds 55 percent of the cost of all its 
components. Components of foreign origin of the same class or kind 
for which nonavailability determinations have been made are treated 
as domestic. Components of unknown origin are treated as foreign; or
    (B) The construction material is a COTS item; or
    (2) For construction material that consists wholly or 
predominantly of iron or steel or a combination of both, a 
construction material manufactured in the United States if the cost 
of foreign iron and steel constitutes less than 5 percent of the 
cost of all components used in such construction material. The cost 
of foreign iron and steel includes but is not limited to the cost of 
foreign iron or steel mill products (such as bar, billet, slab, 
wire, plate, or sheet), castings, or forgings utilized in the 
manufacture of the construction material and a good faith estimate 
of the cost of all foreign iron or steel components excluding COTS 
fasteners. Iron or steel components of unknown origin are treated as 
foreign. If the

[[Page 6193]]

construction material contains multiple components, the cost of all 
the materials used in such construction material is calculated in 
accordance with the definition of ``cost of components''.
    Fastener means a hardware device that mechanically joins or 
affixes two or more objects together. Examples of fasteners are 
nuts, bolts, pins, rivets, nails, clips, and screws.
* * * * *
    Foreign iron and steel means iron or steel products not produced 
in the United States. Produced in the United States means that all 
manufacturing processes of the iron or steel must take place in the 
United States, from the initial melting stage through the 
application of coatings, except metallurgical processes involving 
refinement of steel additives. The origin of the elements of the 
iron or steel is not relevant to the determination of whether it is 
domestic or foreign.
* * * * *
    Predominantly of iron or steel or a combination of both means 
that the cost of the iron and steel content exceeds 50 percent of 
the total cost of all its components. The cost of iron and steel is 
the cost of the iron or steel mill products (such as bar, billet, 
slab, wire, plate, or sheet), castings, or forgings utilized in the 
manufacture of the product and a good faith estimate of the cost of 
iron or steel components excluding COTS fasteners.
    Steel means an alloy that includes at least 50 percent iron, 
between 0.02 and 2 percent carbon, and may include other elements.
* * * * *
    (b) * * * (1) This clause implements 41 U.S.C. chapter 83, Buy 
American, by providing a preference for domestic construction 
material. In accordance with 41 U.S.C. 1907, the domestic content 
test of the Buy American statute is waived for construction material 
that is a COTS item, except that for construction material that 
consists wholly or predominantly of iron or steel or a combination 
of both, the domestic content test is applied only to the iron and 
steel content of the construction material, excluding COTS 
fasteners. (See FAR 12.505(a)(2)). In addition, the Contracting 
Officer has determined that the WTO GPA and Free Trade Agreements 
(FTAs) apply to this acquisition. Therefore, the Buy American 
restrictions are waived for designated country construction 
materials.
* * * * *
    (d) Data. To permit evaluation of requests under paragraph (c) 
of this clause based on unreasonable cost, the Contractor shall 
include the following information and any applicable supporting data 
based on the survey of suppliers:

      Foreign and Domestic Construction Materials Price Comparison
------------------------------------------------------------------------
  Construction material       Unit of                          Price
       description            measure        Quantity       (dollars) *
------------------------------------------------------------------------
Item 1:
    Foreign construction
     material.
    Domestic
     construction
     material.
Item 2:
    Foreign construction
     material.
    Domestic
     construction
     material.
------------------------------------------------------------------------
[* Include all delivery costs to the construction site and any
  applicable duty (whether or not a duty-free entry certificate is
  issued)].
[List name, address, telephone number, and contact for suppliers
  surveyed. Attach copy of response; if oral, attach summary.]
[Include other applicable supporting information.]



(End of clause)

Alternate I (Jan 2021) * * *

    (b) * * * (1) This clause implements 41 U.S.C. chapter 83, Buy 
American, by providing a preference for domestic construction 
material. In accordance with 41 U.S.C. 1907, the domestic content 
test of the Buy American statute is waived for construction material 
that is a COTS item, except that for construction material that 
consists wholly or predominantly of iron or steel or a combination 
of both, the domestic content test is applied only to the iron and 
steel content of the construction material, excluding COTS 
fasteners. (See FAR 12.505(a)(2)). In addition, the Contracting 
Officer has determined that the WTO GPA and all the Free Trade 
Agreements except the Bahrain FTA, NAFTA, and the Oman FTA apply to 
this acquisition. Therefore, the Buy American statute restrictions 
are waived for designated country construction materials other than 
Bahrainian, Mexican, or Omani construction materials.
* * * * *

0
27. Amend section 52.225-21 by--
0
a. Revising the date of the clause;
0
b. In paragraph (a) in the definition ``Steel'' removing ``.02'' and 
adding ``0.02'' in its place;
0
c. Removing from paragraph (b)(4)(i)(B) ``6 percent'' and adding ``20 
percent'' in its place;
0
d. Removing from paragraph (c) heading ``Section'' and adding 
``section'' in its place; and
0
e. In paragraph (d):
0
i. Removing from the first undesignated paragraph following the table 
``reponse'' and adding ``response'' in its place; and
0
ii Removing from the second undesignated paragraph following the table 
``*Include'' and adding ``[*Include'' in its place.
    The revision reads as follows:


52.225-21   Required Use of American Iron, Steel, and Manufactured 
Goods--Buy American Statute--Construction Materials.

* * * * *

Required Use of American Iron, Steel, and Manufactured Goods--Buy 
American Statute--Construction Materials (Jan 2021)

* * * * *

0
28. Amend section 52.225-22 by--
0
a. Revising the date of the provision;
0
b. Removing from paragraph (b) ``offeror'' and adding ``Offeror'' in 
its place wherever it appears;
0
c. Removing from paragraph (c)(1)(ii) ``6 percent'' and adding ``20 
percent'' in its place;
0
d. Removing from paragraph (c)(3) ``offeror'' and adding ``Offeror'' in 
its place; and
0
e. Removing from paragraphs (d)(1), (2), and (3) introductory text 
``offeror'' and adding ``Offeror'' in their places, respectively.
    The revision reads as follows:


52.225-22   Notice of Required Use of American Iron, Steel, and 
Manufactured Goods--Buy American Statute--Construction Materials.

* * * * *

Notice of Required Use of American Iron, Steel, and Manufactured 
Goods--Buy American Statute--Construction Materials (Jan 2021)

* * * * *

0
29. Amend section 52.225-23 by--
0
a. Revising the date of the clause;
0
b. In paragraph (a), in the definition ``Steel'' removing ``.02'' and 
adding ``0.02'' in its place; and
0
c. Removing from paragraph (b)(4)(i)(B) ``6 percent'' and adding ``20 
percent'' in its place.
    The revision reads as follows:

[[Page 6194]]

52.225-23   Required Use of American Iron, Steel, and Manufactured 
Goods--Buy American Statute--Construction Materials Under Trade 
Agreements.

* * * * *

Required Use of American Iron, Steel, and Manufactured Goods--Buy 
American Statute--Construction Materials Under Trade Agreements (Jan 
2021)

* * * * *

0
30. Amend section 52.225-24 by--
0
a. Revising the date of the provision;
0
b. Removing from paragraph (b) ``offeror'' and adding ``Offeror'' in 
its place wherever it appears;
0
c. Removing from paragraph (c)(1)(ii) ``6 percent'' and adding ``20 
percent'' in its place;
0
d. Removing from paragraph (c)(3) ``offeror'' and adding ``Offeror'' in 
its place; and
0
e. Removing from paragraphs (d)(1), (2), and (3) introductory text 
``offeror'' and adding ``Offeror'' in their places, respectively.
    The revision reads as follows:


52.225-24   Notice of Required Use of American Iron, Steel, and 
Manufactured Goods--Buy American Statute--Construction Materials Under 
Trade Agreements.

* * * * *

Notice of Required Use of American Iron, Steel, and Manufactured 
Goods--Buy American Statute--Construction Materials Under Trade 
Agreements (Jan 2021)

* * * * *

[FR Doc. 2021-00710 Filed 1-15-21; 8:45 am]
BILLING CODE 6820-EP-P