Federal Acquisition Regulation: Amendments to the FAR Buy American Act Requirements, 40980-40996 [2021-15881]

Download as PDF 40980 Federal Register / Vol. 86, No. 144 / Friday, July 30, 2021 / Proposed Rules Authority: 42 U.S.C. 7401 et seq. ‘‘(79)’’ in numerical order to read as follows: Subpart AA—Missouri 2. In § 52.1320, the table in paragraph (e) is amended by adding the entry ■ § 52.1320 * (e) * * * Identification of plan. * * * * EPA-APPOVED MISSOURI NONREGULATORY SIP PROVISIONS Name of nonregulatory SIP provision Applicable geographic or nonattainment area State submittal date * (79) Revisions to St. Louis 2008 8Hour Ozone Maintenance Plan. * * St. Louis Area: Missouri counties of Franklin, Jefferson, St. Charles, and St. Louis along with the City of St. Louis. * 11/12/2019 * * * BILLING CODE 6560–50–P DEPARTMENT OF DEFENSE GENERAL SERVICES ADMINISTRATION NATIONAL AERONAUTICS AND SPACE ADMINISTRATION 48 CFR Parts 1, 25, and 52 [FAR Case 2021–008; Docket No. FAR– 2021–0008, Sequence No. 1] RIN 9000–AO22 Federal Acquisition Regulation: Amendments to the FAR Buy American Act Requirements Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA). ACTION: Proposed rule. AGENCY: DoD, GSA, and NASA are proposing to amend the Federal Acquisition Regulation (FAR) to implement an Executive order (E.O.) addressing domestic preferences in Government procurement. DATES: Interested parties should submit comments to the Regulatory Secretariat Division at one of the addresses shown below on or before September 28, 2021 to be considered in the formulation of a final rule. Public Meeting: A virtual public meeting will be held on August 26, 2021, from 9 a.m. to 3 p.m., Eastern Standard Time. The public meeting will end at the stated time, or when the discussion ends, whichever comes first. For more details, see section V of the preamble. lotter on DSK11XQN23PROD with PROPOSALS1 VerDate Sep<11>2014 21:28 Jul 29, 2021 Jkt 253001 Explanation * * [Date of publication of the final rule in the Federal Register], [Federal Register citation of the final rule]. * This action replaces Maintenance plans for the following ozone NAAQS: 1979 1-hour (68 FR 25413),1997 8-hour (80 FR 9207), 2008 8-hour (83 FR 47572). * * Submit comments in response to FAR Case 2021–008 to https://www.regulations.gov. Submit comments via the Federal eRulemaking portal by searching for ‘‘FAR Case 2021– 008’’. Select the link ‘‘Comment Now’’ that corresponds with ‘‘FAR Case 2021– 008.’’ Follow the instructions provided on the screen. Please include your name, company name (if any), and ‘‘FAR Case 2021–008’’ on your attached document. If your comment cannot be submitted using https:// www.regulations.gov, call or email the points of contact in the FOR FURTHER INFORMATION CONTACT section of this document for alternate instructions. Instructions: Please submit comments only and cite ‘‘FAR Case 2021–008’’ in all correspondence related to this case. Comments submitted in response to this notice will be made publicly available and are subject to disclosure under the Freedom of Information Act. For this reason, please do not include in your comments information of a confidential nature, such as sensitive personal information or proprietary information, or any information that you would not want publicly disclosed unless you follow the instructions below for confidential comments. Summary information of the public comments received, including any specific comments, will be posted on regulations.gov. All filers using the portal should use the name of the person or entity submitting comments as the name of their files, in accordance with the instructions below. Anyone submitting business confidential/proprietary information should clearly identify any business confidential/proprietary portion at the time of submission, file a statement justifying nondisclosure and referencing the specific legal authority ADDRESSES: [FR Doc. 2021–15731 Filed 7–29–21; 8:45 am] SUMMARY: EPA approval date PO 00000 Frm 00019 Fmt 4702 Sfmt 4702 * * claimed, and provide a nonconfidential/non-proprietary version of the submission. Any business confidential information should be in an uploaded file that has a file name beginning with the characters ‘‘BC.’’ Any page containing business confidential information must be clearly marked ‘‘BUSINESS CONFIDENTIAL/ PROPRIETARY’’ on the top of that page. The corresponding non-confidential/ non-proprietary version of those comments must be clearly marked ‘‘PUBLIC.’’ The file name of the nonconfidential version should begin with the character ‘‘P.’’ The ‘‘BC’’ and ‘‘P’’ should be followed by the name of the person or entity submitting the comments or rebuttal comments. All filers should name their files using the name of the person or entity submitting the comments. Any submissions with file names that do not begin with a ‘‘BC’’ will be assumed to be public and will be made publicly available through https://www.regulations.gov. To confirm receipt of your comment(s), please check https:// www.regulations.gov, approximately two to three days after submission to verify posting. FOR FURTHER INFORMATION CONTACT: Ms. Mahruba Uddowla, Procurement Analyst, at 703–605–2868 or by email at mahruba.uddowla@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 FAR Case 2021–008. SUPPLEMENTARY INFORMATION: I. Background On January 25, 2021, the President signed Executive Order (E.O.) 14005, E:\FR\FM\30JYP1.SGM 30JYP1 lotter on DSK11XQN23PROD with PROPOSALS1 Federal Register / Vol. 86, No. 144 / Friday, July 30, 2021 / Proposed Rules Ensuring the Future Is Made in All of America by All of America’s Workers (86 FR 7475, January 28, 2021). The E.O. contemplates a series of actions to enable the United States Government to maximize the use of goods, products, and materials produced in the United States in order to strengthen and diversify domestic supplier bases and create new opportunities for U.S. firms and workers. These actions include (i) regulatory amendments to the implementation of the Buy American Act in FAR part 25 to fit the current realities of the American economy; (ii) the creation of a Made in America Office within the Office of Management and Budget to provide centralized, strategic, and holistic management of domestic sourcing activities across Federal procurement, Federal financial assistance, and maritime policies; (iii) a public website with information on all proposed waivers to the Buy American Act and other Buy American Laws, as defined in the E.O., that helps more U.S. firms access Federal contracting and provides data to the Made in America Office to inform policy development for domestic sourcing; and (iv) a review by the Federal Acquisition Regulatory Council (FAR Council), in consultation with the Made in America Office, of the longstanding statutory exemption from the Buy American Act for commercial information technology (IT) to determine if the original purpose or other goals of the exemption remain relevant in the current economic and national security environment. Collectively, these and other efforts called for by the E.O. will promote greater economic and national security and further the Administration’s commitment to build back a stronger domestic manufacturing base, create good jobs, and ensure the U.S. economy remains strong, resilient, and ready to meet the challenges of the future. Strengthening implementation of the Buy American Act will send clear demand signals to domestic producers, spurring strategic investments in domestic supply chains. This proposed rule addresses section 8 of the E.O., which requires the FAR Council to strengthen the impact of the Buy American Act. The dollars the Federal Government spends on goods and services are a powerful tool to support American workers and manufacturers. Contracting alone accounts for nearly $600 billion in Federal spending. Federal law requires government agencies, in some circumstances, to give preferences to American firms; however, these preferences have not always been VerDate Sep<11>2014 21:28 Jul 29, 2021 Jkt 253001 implemented consistently or effectively. Congress passed the Buy American Act during the Great Depression to foster American industry by protecting it from foreign competition for Federal procurement contracts. The Buy American Act is codified at 41 U.S.C. chapter 83 as the Buy American statute and requires public agencies to procure articles, materials, and supplies that were mined, produced, or manufactured in the United States, substantially all from domestic components, subject to exceptions for nonavailability of domestic products, unreasonable cost of domestic products, and when it would not be in the public interest to buy domestic products. Additional exceptions have been added over time, such as where trade agreements apply, and for commissary resale, micropurchases, and commercial information technology. Currently FAR part 25, which implements the Buy American statute and all related Executive Orders, provides guidance on determining whether solicited ‘‘construction material’’ or ‘‘end products’’ are ‘‘domestic’’—that is, whether they were mined, produced, or manufactured in the United States, substantially from components mined, produced, or manufactured in the United States. The determination of whether a manufactured end product or construction material qualifies as domestic is made using a two-part test: 1. The end product or construction material must be manufactured in the United States. 2. A certain percentage of all component parts (determined by cost of the components) must also be mined, produced, or manufactured in the United States—a requirement known as the ‘‘component test’’ until early 2021, when it was redesignated the ‘‘domestic content test’’ to be consistent with terminology used in E.O. 13881, Maximizing Use of American-Made Goods, Products, and Materials. For an end product that does not consist 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 components; the test is waived for acquisitions of commercially available off-the-shelf (COTS) items. 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. That test is not waived for COTS items, except for COTS fasteners. The Buy American statute does not prohibit the purchase of foreign end PO 00000 Frm 00020 Fmt 4702 Sfmt 4702 40981 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 them. Under the current FAR, large businesses offering domestic supplies receive a 20 percent price preference, and small businesses receive a 30 percent price preference. The Buy American restrictions do not apply to acquisitions subject to certain trade agreements (see FAR subpart 25.4). For these acquisitions, end products and construction materials from certain countries receive nondiscriminatory treatment when evaluated alongside domestic offers. Generally, the dollar value of the acquisition determines whether and which trade agreement applies to the acquisition. For example, the World Trade Organization—Government Procurement Agreement (WTO GPA) applies to acquisitions starting at $182,000 for supply contracts, and at $7,008,000 for construction contracts. Exceptions to the applicability of the trade agreements are described in FAR subpart 25.4. The percentages for the domestic content test and the price preference were increased in the FAR on January 19, 2021, through FAR case 2019–016, Maximizing Use of American-Made Goods, Products, and Materials (86 FR 6180). However, the concept of the domestic content test (formerly referred to as the component test) has been in the FAR since it was first created and published in 1983. Section 8 of E.O. 14005 requires the FAR Council to consider amending the FAR to— (1) Replace the component test used to identify domestic end products and domestic construction materials with a test under which domestic content is measured by the value that is added to the product through U.S.-based production or U.S. job-supporting economic activity; (2) Increase the threshold for the domestic content requirement; and (3) Increase the price preferences for domestic end products and domestic construction materials. As explained above, the purpose of the amendments is to promote the procurement by the Government of goods, products, and materials from sources that will help American businesses compete in strategic industries and help America’s workers thrive. Improved Buy American rules will help ensure that Federal procurement plays an important role as part of the Administration’s policy to build back the American economy so it can continue to lead the global E:\FR\FM\30JYP1.SGM 30JYP1 40982 Federal Register / Vol. 86, No. 144 / Friday, July 30, 2021 / Proposed Rules marketplace, supporting U.S.-based businesses—small and large, urban and rural, including those that have been historically disadvantaged. In pursuit of those goals, this proposed rule would provide for— • An increase to the domestic content threshold, a schedule for future increases, and a fallback threshold that would allow for products meeting a specific lower domestic content threshold to qualify as domestic products under certain circumstances; • A framework for application of an enhanced price preference for a domestic product that is considered a critical product or made up of critical components; and • A postaward domestic content reporting requirement for contractors. The proposed rule does not seek to replace the ‘‘component test’’ in FAR Part 25 at this time. Instead, the FAR Council seeks additional information regarding the strengths and shortcomings of the ‘‘component test,’’ as currently structured, and requests public comment on how domestic content might be better calculated to support America’s workers and businesses, strengthening our economy, workers, and communities across the country (see related questions below). percent, for the acceptance of the former domestic content threshold in instances where end products or construction materials that meet the new domestic content threshold are not available or are of unacceptable cost. For example, if a domestic end product that exceeds the 60 percent domestic content threshold is determined to be of unreasonable cost after application of the price preference, then for evaluation purposes the Government will treat an end product that is manufactured in the United States and exceeds 55 percent domestic content, but not 60 percent domestic content, as a domestic end product. In order to implement this fallback threshold, the rule proposes to require offerors to indicate which of their foreign end products exceed 55 percent domestic content. The fallback threshold only applies to construction material that does not consist wholly or predominantly of iron or steel or a combination of both and to end products that do not consist wholly or predominantly of iron or steel or a combination of both. Amendments are proposed throughout FAR part 25, to FAR provisions 52.212–3, 52.225–2, and 52.225–4, and to FAR clauses 52.225–9 and 52.225–11 to reflect the fallback threshold. II. Discussion and Analysis C. Enhanced Price Preference for Critical Products and Critical Components lotter on DSK11XQN23PROD with PROPOSALS1 A. Increase to the Domestic Content Threshold This rule proposes to increase the domestic content threshold initially from 55 percent to 60 percent, to increase the threshold to 65 percent in two years, and to increase the threshold to 75 percent five years after the second increase. A supplier holding a contract with a period of performance that spans the schedule of threshold increases will be required to comply with each increased threshold for the items in the year of delivery. For example, a supplier awarded a contract in 2027 will have to comply with the 65 percent domestic content threshold initially, but in 2029 will have to supply products with 75 percent domestic content. The domestic content threshold is implemented in the FAR through the definitions of ‘‘domestic construction material’’ and ‘‘domestic end product.’’ As such, this rule proposes to make amendments throughout FAR part 25 and to FAR clauses 52.225–1, 52.225–3, 52.225–9, and 52.225–11 to reflect the increases to the domestic content threshold. B. Fallback Threshold This rule also proposes to allow, until one year after the increase of the domestic content threshold to 75 VerDate Sep<11>2014 21:28 Jul 29, 2021 Jkt 253001 The rule provides for a framework through which higher price preferences will be applied for end products and construction material deemed to be critical or made up of critical components. The definitions for critical component and/or critical item are added to FAR 25.003 and to the FAR provisions and clauses at 52.212–3, 52.225–1, 52.225–2, 52.225–3, 52.225–9, and 52.225–11. The list of critical items and components is being added to newly-designated FAR 25.105; existing FAR 25.105 is proposed to be redesignated as 25.106. Procedures for applying the price preferences associated with critical items and components are added to the redesignated FAR 25.106 for supply contracts and 25.204 for construction contracts. The rule requires offerors to identify in their offer domestic end products that contain a critical component, so that contracting officers can apply the higher price preferences when appropriate. Without such information, contracting officers would not know when a proposed domestic end product contains a critical component. An explicit requirement to provide this information is added to PO 00000 Frm 00021 Fmt 4702 Sfmt 4702 FAR provisions 52.212–3, 52.225–2, and 52.225–4. The process for identifying critical items and critical components to receive the price preference would use the quadrennial critical supply chain review instituted in E.O. 14017, America’s Supply Chains (86 FR 11849), as well as the National COVID Strategy. OMB will lead a subsequent assessment to further distill the list of products designated critical to those products for which procurement is likely to make a meaningful difference toward strengthening U.S. supply chains. The products that will receive a price preference will be determined in a separate rulemaking, to allow time for the supply chain review and trade pact waiver review to be completed first. Not all critical products identified through the supply chain review will necessarily qualify for the preference. The process for determining critical products will also determine the enhanced price preference for each critical item or end product with critical components. Once the list is established in the FAR, the list will be published in the Federal Register for public comment no less frequently than once every four years to reflect changes to the list. D. Postaward Reporting Requirement In order to gain insight into the actual domestic content of products sold under contract and thereby support the Administration’s broader supply chain security initiatives, this rule requires contractors to provide the specific domestic content of critical items, domestic end products containing a critical component, and domestic construction material containing a critical component, that were awarded under a contract. Contractors are not required to report the domestic content of COTS items. Two new FAR clauses were created to implement the reporting requirement. One clause is for supplies and one is for construction materials; prescriptions were added to FAR 25.1101 and 25.1102 to capture this requirement. Since specific critical items or critical components will not be added to the FAR until the separate rulemaking referenced in section II.C of this preamble, these clauses will not be operational until finalization of that separate rule. 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 rule amends the provisions and clauses at FAR— E:\FR\FM\30JYP1.SGM 30JYP1 lotter on DSK11XQN23PROD with PROPOSALS1 Federal Register / Vol. 86, No. 144 / Friday, July 30, 2021 / Proposed Rules • 52.212–3, Offeror Representations and Certifications—Commercial Items; • 52.225–1, Buy American— Supplies; • 52.225–2, Buy American Certificate; • 52.225–3, Buy American—Free Trade Agreements—Israeli Trade Act; • 52.225–4, Buy American—Free Trade Agreements—Israeli Trade Act Certificate; • 52.225–9, Buy American— Construction Materials; and • 52.225–11, Buy American— Construction Materials Under Trade Agreements. Those provisions and clauses continue to apply, or not apply, to acquisitions at or below the SAT and to acquisitions for commercial and COTS items as they did prior to this rule. This rule proposes to add two clauses at FAR 52.225–XX, Domestic Content Reporting Requirement—Supplies, and FAR 52.225–YY, Domestic Content Reporting Requirement—Construction Materials. The clauses are prescribed at FAR 25.1101 for solicitations and contracts containing the clause at 52.225–1 or 52.225–3 for supply contracts, and at FAR 25.1102 for solicitations and contracts containing the clause at 52.225–9 or 52.225–11 for construction contracts. The clauses are applicable to acquisitions at or below the SAT and to acquisitions for commercial items, excluding COTS items. The clause will apply to acquisitions at or below the SAT and to acquisitions for commercial items because exempting those acquisitions would severely limit the use of the provision. Considering the threshold at which certain trade agreements apply, the Buy American statute predominantly applies to acquisitions below the SAT. Also, according to procurement data, almost half of the acquisitions to which the Buy American statute currently applies use commercial acquisition procedures. With respect to COTS items, the Administrator for Federal Procurement Policy, using authorities provided at 41 U.S.C. 1907 to reduce administrative burdens imposed by Governmentunique requirements, waived the component test of the Buy American statute for the acquisition of COTS items in 2009. For this reason, it is not expected at this time that the clause will apply to that class of acquisitions. However, as explained in OMB Memorandum M–21–26, Increasing Opportunities for Domestic Sourcing and Reducing the Need for Waivers from Made in America Laws, the Made in America Office, in collaboration with the Administrator, other members of the FAR Council, and interested parties, VerDate Sep<11>2014 21:28 Jul 29, 2021 Jkt 253001 will review the findings and conclusions of the 2009 determination. The results of that review will help to inform if and the extent to which the component test should be restored. IV. Expected Impact of the Rule This rule proposes three sets of changes to the FAR’s implementation of the Buy American statute: • An increase to the domestic content threshold required to be met for a product to be defined as ‘‘domestic,’’ a schedule for future increases, and a fallback threshold that would allow for products meeting a specific lower domestic content threshold to qualify as a domestic product under certain circumstances; • A framework for application of an enhanced price preference for a domestic product that is considered a critical product or made up of critical components; and • A postaward domestic content reporting requirement for contractors. The impact of each set of changes is addressed individually below. Scheduled Increase to the Domestic Content Threshold and the Use of a Fallback Threshold The fundamental goal of the rule is to increase the share of American-made content in a domestic end product or construction material. The graduated increase is intended to drive to this goal in a proactive but measured fashion so that contractors have adequate time to make adjustments in their supply chains. When this rule is implemented, domestic industries supplying domestic end products are likely to benefit from a competitive advantage. Federal Procurement Data System (FPDS) data for fiscal year 2020 indicate there were 121,063 new contract awards for products and construction, valued over the micro-purchase threshold through the threshold at which the WTO GPA applies, to which the Buy American statute applied. It is estimated that 37,503 of these awards were for commercially available off-the-shelf (COTS) items and since the domestic content threshold test does not apply to COTS items (except those involving iron/steel), those awards were subtracted from the 121,063 total eligible awards. After removing potential COTS item acquisitions from the data, there are estimated to be 83,560 contract awards to 14,163 unique contractors. 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). The PO 00000 Frm 00022 Fmt 4702 Sfmt 4702 40983 fallback threshold is intended to: (1) Help prevent scheduled increases in the content threshold from taking work away from domestic suppliers who are actively adjusting their supply chains; and (2) avoid unintentionally raising the foreign content of Federal purchases through increased use of waivers while domestic suppliers adjust. The fallback threshold would be a temporary measure designed to limit foreign content while contractors transition to U.S.-based supply chains. In response to public comment, the FAR Council will consider larger or smaller increases in the content threshold as well as differently timed increases in the final rule. See questions for the public, below. These determinations will be based on considerations such as potential impact on competition, potential impact on supplier diversity, including participation of small disadvantaged businesses and businesses in other underserved communities, lost opportunities for American workers, and other considerations identified by public comment and other interested parties. At least three arguments point to the possibility that any increased burden with regard to the timed increase to the domestic content threshold, on contractors in particular, could be small, if not de minimis. First, DoD, GSA, and NASA do not anticipate significant cost from contractor familiarization with the rule given the history of rulemaking and E.O.s in this area. The basic mechanics of the Buy American statute (e.g., general definitions, certifications required of offerors to demonstrate end products are domestic) remain unchanged and continue to reflect processes that are decades old. Under the proposed rule, when deciding whether to pursue a procurement or what kind of product mix (i.e., domestic or foreign) and pricing to propose in response to a solicitation, offerors now will have to plan for future changes to the domestic content threshold during the period of performance of the contemplated contract. Those offerors that make a business decision not to modify their supply chains over time to comply with the scheduled increases to the domestic content threshold will still be able to propose an offer for Federal contracts but will generally no longer enjoy a price preference. Second, some, if not many, contractors may already be able to comply with the higher domestic content requirement needed to meet the definition of domestic end product under E.O. 14005 and the proposed rule. E:\FR\FM\30JYP1.SGM 30JYP1 40984 Federal Register / Vol. 86, No. 144 / Friday, July 30, 2021 / Proposed Rules 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 significantly increased emphasis on the need for 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. A U.S. Bureau of Economic Analysis study using 2015 data, https:// www.commerce.gov/sites/default/files/ migrated/reports/2015-what-is-made-inamerica_0.pdf, found that on average, 82 percent of the value of U.S. manufacturing output is comprised of domestic content. This seems to indicate that a domestic content threshold of 60 percent would not inflict additional burden on contractors. In addition, a preliminary analysis of available data in FPDS on the impact of an increase earlier this year in the domestic content threshold from 50 percent to 55 percent did not appear to trigger an uptick in waivers, suggesting companies may already be incorporating content that can meet at least the 55 percent level: Feb–April 2021 Feb–April 2020 Feb–April 2019 Feb–April 2018 Total spend (millions of $) Total spend (millions of $) Total spend (millions of $) Total spend (millions of $) Total ................................................................................................. $2,861 $7,578 $7,570 $7,635 Buy American Waived * ................................................................... Percent Waived ............................................................................... $15 0.5% $78 1.0% $70 0.9% $63 0.8% lotter on DSK11XQN23PROD with PROPOSALS1 * Waivers included here are Commercial Information Technology, Domestic Non-availability, Public Interest Determination, Resale, or Unreasonable Cost. They do not include waivers due to trade agreements or DoD qualifying country, which would not be impacted by a change in the content threshold. Third, it is anticipated that some contractors’ products and construction materials may not meet the definition of domestic end product and construction material unless the contractors take steps to adjust their supply chains to increase the domestic content. Those contractors that make a business decision not to modify their supply chains will still be able to bid on Federal contracts and could still enjoy a price preference if their end product meets the prior definition of domestic end product (i.e., exceeding 55 percent). In the event that the Government does not receive any offers of domestic end products or the domestic end products are of unreasonable cost, the Government will treat the end products that have at least 55 percent domestic content as a domestic end product for evaluation purposes. Offerors now have an information collection burden of identifying when a foreign end product meets the fallback threshold (see section VIII of this preamble), but that burden should be offset by the benefit of potentially still receiving a price preference for these end products that would have been considered domestic prior to the increases to the domestic content threshold proposed in this rule. Offerors have an option to increase the domestic content and continue to offer domestic products, in which case they may benefit from the price preference for domestic products, or they may continue to offer the same product, which will now be evaluated as foreign but may still benefit from a price preference. DoD, GSA, and NASA do not have any data on how many currently domestic products would fall into this categoryor have any knowledge VerDate Sep<11>2014 21:28 Jul 29, 2021 Jkt 253001 as to which option an offeror of such products would select, since this is a business decision for each offeror to make. Enhanced Price Preference for Critical Items The goal of the enhanced price preference for critical items and components is to provide a steady source of demand for domestically produced critical products. As explained above, the rule only creates a framework. Separate rulemaking will be undertaken to add critical products and components to the FAR and to establish the associated preferences. Therefore, the impact associated with this concept will be captured in the subsequent rulemaking. There is an information collection burden associated with offerors identifying when a domestic end product or domestic construction material contains a critical component (see section VIII of this preamble), but that burden should be offset by the larger price preference received for these items. Postaward Reporting Requirement for Contractors Today, the acquisition community has limited direct information on the overall level of domestic content of the items it buys, other than whether or not the content meets the required threshold. The data on the amount of actual domestic content provided in the contractors’ reports is expected to provide the Made in America Office in the Office of Management and Budget valuable insight on the domestic content of the manufactured products that are PO 00000 Frm 00023 Fmt 4702 Sfmt 4702 integral to U.S. national and economic security. Separate rulemaking will be undertaken to add critical items and components to the FAR and to establish the associated preferences. Therefore, the impact associated with postaward reporting for these items will be captured in the subsequent rulemaking. This postaward reporting requirement for critical items and critical components is a step in building the Government’s capability in collecting data that will enable more informed decisions in this arena, e.g., how and when to increase domestic content thresholds, what enhanced price preference level for critical items is most efficient, etc. This phased approach will provide an opportunity for the Government to evaluate the impact of this information collection, with potential expansion in future years. There is an information collection burden associated with the reporting requirement. See section VIII of this preamble. The calculation provided in section VIII is a broad estimate since there is no specified list of critical items or components at this time. Request for Comments Based on the above, DoD, GSA, and NASA do not expect a significant cost impact on the public, but lack data to make a definitive determination and seek information from the public to assist with this analysis and to help further inform the regulatory drafters as they develop the final rule and carry out other responsibilities under the E.O. Feedback is requested on the following questions pertaining to this proposed rule: E:\FR\FM\30JYP1.SGM 30JYP1 lotter on DSK11XQN23PROD with PROPOSALS1 Federal Register / Vol. 86, No. 144 / Friday, July 30, 2021 / Proposed Rules (1) Increased Domestic Content Thresholds: Do products you make or sell to the Federal Government currently meet the proposed increased domestic content thresholds of 60 percent, 65 percent, or 75 percent? (a) Would you be willing and able to adjust your supply chain to meet the proposed new thresholds given the scheduled phase-in? Why or why not? Please discuss any obstacles that might interfere with, or opportunities— including actions by the Federal Government—that might support, your ability to meet the proposed increases in domestic content thresholds. (b) If you are willing to make supply chain adjustments, please provide an overview of associated costs and benefits to making these changes. Explain to what extent any costs may be offset by increased Federal Government sales or price preferences. If relevant, provide an overview of expected increased economic activity through the increased use of domestic suppliers and domestic labor. (2) Fallback Threshold: Please address the utility of the proposed fallback threshold, including whether it would give your company time to adjust to a higher domestic content threshold; whether the fallback threshold should increase as the domestic content threshold increases; whether the existence of the fallback threshold would delay the ability to increase Made in America content in Federal procurement; the process by which the fallback threshold should be eliminated in order to maximize the use of Made in America content; and any challenges posed by the complexity of employing a fallback threshold. (3) Price Preferences: Please comment on the effectiveness of current price preference levels at promoting domestic economic activity and employment and strengthening domestic supply chains for critical items; address whether increased price preferences would be more, less, or equally as effective, and, if more effective, at what level. (4) Enhanced Price Preferences: Please comment on the anticipated effectiveness of providing enhanced price preferences to strengthen the domestic supply chains for items and components deemed ‘‘critical’’. In particular— (a) Which specific items or components or combination thereof, if any, should receive an enhanced price preference and why? (b) What process should the Office of Management and Budget use to determine which of the critical items identified through the critical supply chain review under E.O. 14017 and the VerDate Sep<11>2014 21:28 Jul 29, 2021 Jkt 253001 National COVID Strategy are likely to make a meaningful difference toward strengthening domestic supply chains such that an enhanced preference is merited? In addition to national and economic security, should the process identify items and components that are critical to other factors such as national public health and sustainability? Should the process consider the impact on the creation of well-paying jobs in identifying critical items or components? (c) Is four years a reasonable interval for updating the critical components or item list? Why or why not? (d) How should enhanced price preferences be applied? For example, if a finished product includes multiple critical components, what is the most effective way to apply an enhanced price preference (e.g., a single time, once per component)? (e) Please address whether and how enhanced price preferences should be considered for commercial items that have been identified as critical and currently are subject to either a full statutory Buy American waiver (in the case of information technology) or a partial regulatory Buy American waiver (in the case of COTS items) and the reasons for your response. (f) If particular vendors can supply products that exceed the minimum domestic content threshold by significant margins, should the Federal Government consider whether and how to incentivize such practices to maximize the use of taxpayer dollars on domestic content? (5) Content Calculation: Section 8(i) of the E.O. directed the FAR Council to consider replacing the ‘‘component test’’ in FAR Part 25 with a test under which domestic content is measured by a ‘‘value added’’ calculation. Please comment on (a) how such ‘‘value’’ could be calculated in order to promote U.S.based production or U.S. job-supporting economic activity; (b) whether a ‘‘value added’’ calculation would be superior to the current approach and why or why not; and (c) whether approaches other than a ‘‘value added’’ calculation should be employed to achieve the goals of the E.O. (for example, should the definition of ‘‘cost of components’’ in FAR 25.003 be changed). (6) Content Reporting: Will the proposed requirement to report on the actual level of domestic content included in designated critical products sold to the Federal Government provide greater compliance with Made in America Laws? Why or why not? (a) Will the requirement negatively impact small or disadvantaged businesses, such as those who are PO 00000 Frm 00024 Fmt 4702 Sfmt 4702 40985 resellers or distributors? How can these impacts be mitigated? (b) What other procedures can the Federal Government employ to better monitor compliance with Made in America Laws? (7) Contracting with small and disadvantaged businesses: What specific steps should the Federal Government consider to maximize opportunities for small and disadvantaged businesses and avoid unintended barriers to entry as it works to strengthen the impact of Made in America Laws, diversify domestic supplier bases, and create new opportunities for U.S. firms and workers? V. Public Meeting The Made in America Office and the FAR Council are co-hosting a virtual public meeting to obtain the views of experts and interested parties in the private sector regarding implementation of section 8, as well as other sections, of E.O. 14005. The meeting will be recorded and a transcript of the meeting will be posted to regulations.gov, under the ‘‘FAR Case 2021–008’’ docket. For more details on the public meeting, such as the agenda, visit https:// www.acquisition.gov/publicmeeting_ FAR_proposedrule-2021-008_ BuyAmericanAct. Registration: Individuals wishing to participate in the virtual meeting must register at https://gsa.zoomgov.com/ webinar/register/WN_HXrvVS0hS1pksKSNrEKIA. There is limited capacity of 3,000 attendees and registration will be on a first-come, first-served basis. Early registration is encouraged. Members of the press, in addition to registering for this event, must also RSVP to press@gsa.gov by August 16, 2021. For any questions regarding registration, please email gsaombudsman@gsa.gov. Presentations: If you wish to make a presentation, instructions for submitting presentations will be posted at https:// www.acquisition.gov/publicmeeting_ FAR_proposedrule-2021-008_ BuyAmericanAct. Presentations will be posted to regulations.gov, under the ‘‘FAR Case 2021–008’’ docket. Other means of submitting public comments: In lieu of, or in addition to, participating in the public meeting, interested parties may also submit written comments on the rule and responses to the questions contained in this preamble to regulations.gov via the Federal eRulemaking Portal in accordance with the instructions in the DATES and ADDRESSES sections of this document. E:\FR\FM\30JYP1.SGM 30JYP1 lotter on DSK11XQN23PROD with PROPOSALS1 40986 Federal Register / Vol. 86, No. 144 / Friday, July 30, 2021 / Proposed Rules Questions for the public: In addition to the questions in Section IV above specific to FAR case 2021–008, public feedback is also requested on the following questions pertaining to other sections of E.O. 14005: (1) Commercial IT: Acquisitions of commercial IT are exempt by statute from the requirements of the Buy American statute. Section 10 of the Executive Order requires a review of the impact of this exception, which has been in effect for more than 15 years. To help inform this review, the FAR Council seeks input on the extent to which the original purpose of the exception, or other goals of the exception, remain relevant. Under what situations, if any, do current marketplace conditions support narrowing or lifting the statutory waiver? Please be specific in your description, which might identify market segments or specific items, anticipated benefits and drawbacks of the rollback, and steps the FAR Council or other Government stakeholders might take to mitigate potential unintended consequences. (2) Commercially Available Off-theShelf Items: In 2009, the Office of Federal Procurement Policy (OFPP), using authorities provided by Congress to reduce administrative burdens imposed by Government-unique requirements, waived the component test of the Buy American statute for acquisition of COTS items. In making the decision, OFPP concluded, in part, that manufacturers’ component purchasing decisions are based on factors such as cost, quality, availability, and maintaining the state of the art, not the country of origin, making it difficult for a manufacturer to guarantee the source of its components over the term of a contract. OFPP further concluded that continued application of the content requirement created a barrier to entry which may limit the Government’s ability to purchase products already in the commercial distribution systems. OFPP and the other members of the FAR Council seek to understand the extent to which the original purpose of the partial waiver remains relevant. i. How has the application of the COTS waiver since 2009 been consistent or inconsistent with its stated purpose? For example, has the use of COTS expanded (or narrowed) since 2009 in ways that may not have been originally contemplated? If applicable, provide specific examples of the application of the COTS waiver that demonstrate inconsistency with its original purpose. ii. Has the COTS waiver benefitted domestic firms and their employees? Why or why not? VerDate Sep<11>2014 21:28 Jul 29, 2021 Jkt 253001 iii. Under what situations, if any, do current marketplace conditions support narrowing or lifting the partial waiver? Please be specific in your description, which might identify critical industries, specific market segments, or specific items; please discuss anticipated benefits and drawbacks of a rollback, including impacts on small and disadvantaged business enterprises, and steps the FAR Council or other Federal entities could take to mitigate potential unintended consequences. iv. Regardless of any other changes to the COTS partial waiver, should the Federal Government gather data on the domestic content of all COTS items, some COTS items or categories of COTS items to inform future policy making? If so, what items or categories should be addressed? How might this be accomplished consistent with the intent of the COTS partial waiver to reduce administrative burdens? v. Please provide any recommendations to maintain and increase domestic production of COTS items (both manufacturing of the end product and its components) in critical industries. (3) Services: How can the Federal Government promote the use of Made in America services? What standards or methodologies might be considered that could be easily adapted by commercial sellers? Are there critical services that should be accorded price preferences, and if so, why? (4) Trade agreements: Because of the World Trade Organization— Government Procurement Agreement (WTO GPA) and the Trade Agreements Act (TAA), domestic content rules do not currently apply to most non-DoD goods acquisitions over $182,000. Thus, the newly proposed domestic content threshold will not apply to many purchases that the Government makes. Under the TAA, a purchase is treated as U.S.-made if it is mined, produced, or manufactured in the United States or substantially transformed in the United States, even if it is made of 100 percent foreign content. As a result, a substantially transformed U.S.-made product may have far less domestic content when compared to a domestic end product acquired under the Buy American statute. While U.S. trade obligations are beyond the scope of this rulemaking, the Made in America Office and the FAR Council seek to understand more about the impact of the substantial transformation test and potential lost opportunities for American workers. i. To the best of your knowledge, what specific types of products are sold to the Federal Government that count as being made in America under the Trade PO 00000 Frm 00025 Fmt 4702 Sfmt 4702 Agreements Act (‘‘U.S.-made end product’’), but contain less than the current 55 percent U.S. content threshold required under the Buy American statute? Do the differing standards provide a benefit to domestic firms? ii. Is ‘‘substantial transformation’’ a useful tool to promote good domestic jobs and domestic manufacturing? Why or why not? iii. What steps could the Federal Government take, consistent with its trade obligations, to acquire useful information about the content of goods procured pursuant to trade obligations, including in critical supply chains? Useful information might include the percentage of domestic content and country of origin for certain components identified by the agency. iv. Please provide any recommendations to maintain and increase domestic production in critical industries in acquisitions subject to trade obligations. (5) Additional ideas: Please provide any additional recommendations for: i. Strengthening content standards under the Buy American statute, including recommendations for how content is calculated and whether and why certain products or categories of products should have more stringent content standards than others. ii. The use of waivers and exceptions to the Buy American statute, including proposals to narrow or expand the scope of existing waivers; ensure appropriate interpretation of existing waivers; and policies or practices to ensure that unnecessary waivers are not granted. iii. Improving the Federal Government’s ability to enforce the content standards in the Buy American statute, including by verifying domestic content levels. VI. 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 is a significant regulatory action and, therefore, was subject to review under Section 6(b) of E.O. 12866, Regulatory Planning and Review, dated September 30, 1993. E:\FR\FM\30JYP1.SGM 30JYP1 Federal Register / Vol. 86, No. 144 / Friday, July 30, 2021 / Proposed Rules VII. Congressional Review Act As required by the Congressional Review Act (5 U.S.C. 801–808) before an interim or final rule takes effect, DoD, GSA, and NASA will send the rule and the ‘‘Submission of Federal Rules Under the Congressional Review Act’’ form to each House of Congress and to the Comptroller General of the United States. A major rule cannot take effect until 60 days after it is published in the Federal Register. This rule is not anticipated to be a major rule under 5 U.S.C. 804. VIII. Regulatory Flexibility Act lotter on DSK11XQN23PROD with PROPOSALS1 DoD, GSA, and NASA do not expect this rule to have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601– 612. This rule changes the existing minimum domestic content percentages and introduces a discretionary proposal evaluation strategy. This rule proposes to amend 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. An Initial Regulatory Flexibility Analysis (IRFA) has been performed and is summarized as follows: This rule proposes to amend the FAR to implement an Executive Order regarding ensuring the future is made in all of America by all of America’s workers. The objective of this rule is to strengthen domestic preferences under the Buy American statute, as required by E.O. 14005, Ensuring the Future is Made in All of America by All of America’s Workers, by providing— • An increase to the domestic content threshold required to be met for a product to be defined as ‘‘domestic,’’ a schedule for future increases, and a fallback threshold which would allow for products meeting a specific lower domestic content threshold to qualify as a domestic product under certain circumstances; • A framework for application of an enhanced price preference for a domestic product that is considered a critical product or made up of critical components; and • A postaward domestic content reporting requirement for contractors. Different parts of the rule are expected to apply to a different number and universe of small entities. The impacted small entities, by portion of the rule, are described below. But in general, the rule will apply to contracts subject to the Buy American statute. The statute does not apply to services, or overseas, nor does it apply to acquisitions to which certain trade agreements apply (e.g., World Trade Organization Government Procurement VerDate Sep<11>2014 21:28 Jul 29, 2021 Jkt 253001 Agreement (WTO–GPA)). The maximum possible number of small entities to which the rule will apply are the 31,103 active small business registrants in the System for Award Management (SAM) who do not provide services. —Timed increase to the domestic content threshold and allowance of a fallback threshold. Federal Procurement Data System (FPDS) data for fiscal year 2020 indicates there were 86,490 new contract awards to small business for products and construction, valued over the micropurchase threshold through the threshold at which the WTO–GPA applies, to which the Buy American statute applied. It is estimated that 24,459 of these awards were for commercially available off-the-shelf (COTS) items. Because the domestic content threshold test does not apply to COTS items (except those involving iron/ steel), those awards were subtracted from the 86,490 total eligible awards. After removing potential COTS item acquisitions from the data, there are estimated to be 62,031 contract awards to 11,704 unique small businesses. —Enhanced price preference for a critical product or component. This rule only creates a framework. Separate rulemaking will be done to add critical products and components to the FAR and to establish the associated preferences. However, the Government assumes that 10 percent of the contract awards subject to the Buy American statute will be for critical products or components. Therefore, the Government estimates that 8,649 (10 percent of 86,490) of awards to small businesses may be impacted. This translates to 1,632 unique small businesses. —Postaward reporting requirement. The number of impacted small businesses for this part of the rule is similar to the number of those impacted by the enhanced price preference for critical products or components: The postaward reporting requirement applies to contracts awarded for critical products that are subject to the Buy American statute. However, unlike the enhanced price preference, the postaward reporting requirement will not apply to COTS item acquisitions, which results in a lower estimate of 1,170 impacted small businesses. The proposed 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. manufacturers. This proposed rule does not include any new recordkeeping or other compliance requirements for small businesses. However, the proposed rule does contain a few additional reporting requirements for certain offerors, including small businesses. Small businesses who submit an offer for a solicitation subject to the Buy American statute already have to list the foreign end products included in their offer. This proposed rule will require that the offeror also identify which of these foreign end products meet or exceed the fallback PO 00000 Frm 00026 Fmt 4702 Sfmt 4702 40987 domestic content threshold. This rule will also require proposals to identify which offered domestic end products contain a critical component. Without that information, contracting officers will not be able to apply the ‘‘enhanced price preference’’ when applicable. These reporting requirements are not specific to small businesses, so data does not exist to estimate the number of small business subject to these requirements. However, the data suggests that there will be approximately 8,800 impacted respondents total, small and other than small. Small businesses awarded a contract containing the new clause requiring postaward reporting will need to provide to the Made in America Office domestic content information for end products that are critical products, domestic end products containing a critical component, or domestic construction material containing a critical component, if those items are awarded under the contract. Based on fiscal year 2020 data from FPDS, it is estimated that there will be 6,203 contracts awarded to 1,170 unique small businesses that would be subject to this reporting requirement. This rule does not duplicate, overlap, or conflict with any other Federal rules. DoD, GSA, and NASA were unable to identify any significant alternatives. The Regulatory Secretariat Division has submitted a copy of the IRFA to the Chief Counsel for Advocacy of the Small Business Administration. A copy of the IRFA may be obtained from the Regulatory Secretariat Division. DoD, GSA, and NASA invite comments from small business concerns and other interested parties on the expected impact of this rule on small entities. DoD, GSA, and NASA will also consider comments from small entities concerning the existing regulations in subparts affected by the rule in accordance with 5 U.S.C. 610. Interested parties must submit such comments separately and should cite 5 U.S.C. 610 (FAR Case 2021–008), in correspondence. IX. Paperwork Reduction Act The Paperwork Reduction Act (44 U.S.C 3501–3521) applies because the proposed rule contains information collection requirements. Some of those information collection requirements are additional to the paperwork burden previously approved under OMB Control Number 9000–0024, Buy American, Trade Agreements, and DutyFree Entry. The proposed rule also contains a new information collection requirement. Accordingly, the Regulatory Secretariat Division has submitted a request for approval of a revised information collection requirement concerning information collection 9000–0024 to the Office of Management and Budget as well as a request for approval of a new E:\FR\FM\30JYP1.SGM 30JYP1 lotter on DSK11XQN23PROD with PROPOSALS1 40988 Federal Register / Vol. 86, No. 144 / Friday, July 30, 2021 / Proposed Rules information collection requirement concerning ‘‘Domestic Content Reporting Requirement’’ to the Office of Management and Budget. With regard to existing information collection 9000–0024: A. Public reporting burden for this collection of information is estimated to average 0.63 hour per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. The annual reporting burden estimated as follows: Respondents: 16,478. Total Annual Responses: 69,165. Total Burden Hours: 43,469. B. Request for Comments Regarding Paperwork Burden. Submit comments on this collection of information no later than September 28, 2021 through https://www/regulations.gov and follow the instructions on the site. All items submitted must cite OMB Control No. 9000–0024, Buy American, Trade Agreements, and Duty-Free Entry. Comments received generally will be posted without change to https:// www.regulations.gov, including any personal and/or business confidential information provided. To confirm receipt of your comment(s), please check https://www.regulations.gov, approximately two to three days after submission to verify posting. If there are difficulties submitting comments, contact the GSA Regulatory Secretariat Division at 202–501–4755 or GSARegSec@gsa.gov. With regard to the new information collection for clauses 52.225–XX and 52.225–YY: A. Public reporting burden for this collection of information is estimated to average 3 hours per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. The annual reporting burden estimated as follows: Respondents: 1,393. Total Annual Responses: 8,356. Total Burden Hours: 25,068. B. Request for Comments Regarding Paperwork Burden. Submit comments on this collection of information no later than September 28, 2021 through https://www/ regulations.gov and follow the instructions on the site. All items submitted must cite OMB Control No. 9000–XXXX, Domestic Content Reporting Requirement. Comments received generally will be posted without change to https:// VerDate Sep<11>2014 21:28 Jul 29, 2021 Jkt 253001 www.regulations.gov, including any personal and/or business confidential information provided. To confirm receipt of your comment(s), please check https://www.regulations.gov, approximately two to three days after submission to verify posting. If there are difficulties submitting comments, contact the GSA Regulatory Secretariat Division at 202–501–4755 or GSARegSec@gsa.gov. C. For both sets of information collections, public comments are particularly invited on: • The necessity of this collection of information for the proper performance of the functions of Federal Government acquisitions, including whether the information will have practical utility; • The accuracy of the estimate of the burden of this collection of information; • Ways to enhance the quality, utility, and clarity of the information to be collected; and • Ways to minimize the burden of the collection of information on respondents, including the use of automated collection techniques or other forms of information technology. Requesters may obtain a copy of the supporting statement from the General Services Administration, Regulatory Secretariat Division by calling 202–501– 4755 or emailing GSARegSec@gsa.gov. Please cite OMB Control Number 9000– XXXX, Domestic Content Reporting Requirement or OMB Control Number 9000–0024, Buy American, Trade Agreements, and Duty-Free Entry, in all correspondence. List of Subjects in 48 CFR Parts 1, 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 propose amending 48 CFR parts 1, 25, and 52 as set forth below: ■ 1. The authority citation for 48 CFR parts 1, 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 1— FEDERAL ACQUISITION REGULATION SYSTEM 2. In section 1.106 amend in the table following the introductory text, by adding in numerical order, entries for ‘‘52.225–XX’’ and ‘‘52.225–YY’’ to read as follows. ■ 1.106 OMB approval under the Paperwork Reduction Act. * PO 00000 * Frm 00027 * * Fmt 4702 * Sfmt 4702 OMB Control No. FAR segment * * * 52.225–XX ............................ 52.225–YY ............................ * * * * * * * * * 9000–XXXX 9000–XXXX * * * PART 25—FOREIGN ACQUISITION 3. Amend section 25.003 by— a. Adding, in alphabetical order, the definitions ‘‘Critical component’’ and ‘‘Critical item’’; ■ b. In the definition ‘‘Domestic construction material’’ revising the first sentence of paragraph (1)(i)(B)(1); and ■ c. In the definition ‘‘Domestic end product’’ revising the first sentence of paragraph (1)(ii)(A). The additions and revisions reads as follows: ■ ■ 25.003 Definitions. * * * * * Critical component means a component that is mined, produced, or manufactured in the United States and deemed critical to the U.S. supply chain. The list of critical components is at 25.105. Critical item means a domestic construction material or domestic end product that is deemed critical to the U.S. supply chain. The list of critical items is at 25.105. * * * * * Domestic construction material means— (1) * * * (i) * * * (B) * * * (1) The cost of the components mined, produced, or manufactured in the United States exceeds 60 percent of the cost of all its components, except that the percentage will be 65 percent for items delivered in calendar years 2024 through 2028, and 75 percent for items delivered starting in calendar year 2029. * * * * * * * * Domestic end product means— (1) * * * (ii) * * * (A) The cost of its components mined, produced, or manufactured in the United States exceeds 60 percent of the cost of all its components, except that the percentage will be 65 percent for items delivered in calendar years 2024 through 2028 and 75 percent for items delivered starting in calendar year 2029. * * * * * * * * E:\FR\FM\30JYP1.SGM 30JYP1 Federal Register / Vol. 86, No. 144 / Friday, July 30, 2021 / Proposed Rules 4. Amend section 25.100 by— a. Removing the word ‘‘and’’ at the end of paragraph (a)(3); ■ b. Redesignating paragraph (a)(4) as (a)(5); and ■ c. Adding a new paragraph (a)(4). The addition reads as follows: ■ ■ 25.100 Scope of subpart. (a) * * * (4) Executive Order 14005, January 25, 2021; and * * * * * ■ 5. Amend section 25.101 by— ■ a. Removing from paragraph (a) the phrase ‘‘the Buy American statute and E.O. 13881 use’’ and adding in its place the phrase ‘‘the Buy American statute, E.O. 13881, and E.O. 14005 use’’; and ■ b. Revising the first sentence of paragraph (a)(2)(i). 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 shall exceed 60 percent of the cost of all the components, except that the percentage will be 65 percent for items delivered in calendar years 2024 through 2028 and 75 percent for items delivered starting in calendar year 2029. * * * * * * * * 25.103 [Amended] 6. Amend section 25.103 by removing from paragraph (c) ‘‘25.105’’ and ‘‘Subpart 25.5’’ and adding ‘‘25.106’’ and ‘‘subpart 25.5’’ in their places, respectively. ■ 25.105 [Redesignated] 7. Redesignate section 25.105 as section 25.106. ■ 8. Add a new section 25.105 to read as follows: ■ lotter on DSK11XQN23PROD with PROPOSALS1 25.105 items. Critical components and critical (a) The following is a list of articles that have been determined to be a critical component or critical item and their respective preference factor(s): (1) [Reserved] (2) [Reserved] (b) The list of articles and preference factors in paragraph (a) of this section will be published in the Federal Register for public comment no less frequently than once every 4 years. Unsolicited recommendations for deletions from this list may be submitted at any time and should provide sufficient data and rationale to permit evaluation (see 1.502). (c) For determining reasonableness of cost for domestic end products that VerDate Sep<11>2014 21:28 Jul 29, 2021 Jkt 253001 contain critical components or are critical items, see 25.106(c). ■ 9. Amend newly redesignated section 25.106 by— ■ a. In paragraph (a)(1) removing the phrase ‘‘paragraph (b) of this section’’ and adding the phrase ‘‘paragraphs (b) and (c) of this section’’ in its place; ■ b. In paragraph (a)(2) remove the word ‘‘Subpart’’ and adding the word ‘‘subpart’’ in its place; ■ c. Revise paragraph (b); and ■ d. Revising paragraph (c). The added and revised text reads as follows: 25.106 cost. Determining reasonableness of * * * * * (b) For end products that are not critical items and do not contain critical components. (1)(i) If there is a domestic offer that is not the low offer, and the restrictions of the Buy American statute apply to the low offer, the contracting officer must determine the reasonableness of the cost of the domestic offer by adding to the price of the low offer, inclusive of duty— (A) 20 percent, if the lowest domestic offer is from a large business concern; or (B) 30 percent, if the lowest domestic offer is from a small business concern. The contracting officer must use this factor, or another factor established in agency regulations, in small business set-asides if the low offer is from a small business concern offering the product of a small business concern that is not a domestic end product (see subpart 19.5). (ii) The price of the domestic offer is reasonable if it does not exceed the evaluated price of the low offer after addition of the appropriate evaluation factor in accordance with paragraph (a) or (b)(1)(i) of this section. See evaluation procedures at subpart 25.5. (2)(i) For end products that do not consist wholly or predominantly of iron or steel or a combination of both, if the procedures in paragraph (b)(1)(i) of this section result in an unreasonable cost determination for the domestic offer or there is no domestic offer received, and the low offer is for a foreign end product that does not exceed 55 percent domestic content, the contracting officer shall— (A) Treat the lowest offer of a foreign end product that is manufactured in the United States and exceeds 55 percent domestic content as a domestic offer; and (B) Determine the reasonableness of the cost of this offer by applying the evaluation factors listed in paragraph (b)(1)(i) to the low offer. (ii) The price of the lowest offer of a foreign end product that exceeds 55 PO 00000 Frm 00028 Fmt 4702 Sfmt 4702 40989 percent domestic content is reasonable if it does not exceed the evaluated price of the low offer after addition of the appropriate evaluation factor in accordance with paragraph (a) or (b)(1)(i) of this section. See evaluation procedures at subpart 25.5. (iii) The procedures in this paragraph (b)(2) will no longer apply as of January 1, 2030. (c) For end products that are critical items or contain critical components. (1)(i) If there is a domestic offer that is not the low offer, and the restrictions of the Buy American statute apply to the low offer, the contracting officer shall determine the reasonableness of the cost of the domestic offer by adding to the price of the low offer, inclusive of duty— (A) 20 percent, plus the additional preference factor identified for the critical item or end product containing critical components listed at section 25.105, if the lowest domestic offer is from a large business concern; or (B) 30 percent, plus the additional preference factor identified for the critical item or end product containing critical components listed at section 25.105, if the lowest domestic offer is from a small business concern. The contracting officer shall use this factor, or another factor established in agency regulations, in small business set-asides if the low offer is from a small business concern offering the product of a small business concern that is not a domestic end product (see subpart 19.5). (ii) The price of the domestic offer is reasonable if it does not exceed the evaluated price of the low offer after addition of the appropriate evaluation factor in accordance with paragraph (a) or (b) of this section. See evaluation procedures at subpart 25.5. (2)(i) For end products that do not consist wholly or predominantly of iron or steel or a combination of both, if the procedures in paragraph (c)(1)(ii) of this section result in an unreasonable cost determination for the domestic offer or there is no domestic offer received, and the low offer is for a foreign end product that does not exceed 55 percent domestic content, the contracting officer shall— (A) Treat the lowest offer of a foreign end product that is manufactured in the United States and exceeds 55 percent domestic content as a domestic offer; and (B) Determine the reasonableness of the cost of this offer by applying the evaluation factors listed in paragraph (c)(1) to the low offer. (ii) The price of the lowest offer of a foreign end product that exceeds 55 percent domestic content is reasonable E:\FR\FM\30JYP1.SGM 30JYP1 40990 Federal Register / Vol. 86, No. 144 / Friday, July 30, 2021 / Proposed Rules if it does not exceed the evaluated price of the low offer after addition of the appropriate evaluation factor in accordance with paragraph (a) or (b) of this section. See evaluation procedures at subpart 25.5. (iii) The procedures in this paragraph (c)(2) will no longer apply as of January 1, 2030. ■ 10. Amend section 25.200 by— ■ a. In paragraph (a)(3) removing the word ‘‘and’’; ■ b. Redesignating paragraph (a)(4) as paragraph (a)(5); ■ c. Adding a new paragraph (a)(4); and ■ d. In paragraph (c) removing the word ‘‘Subpart’’ and adding the word ‘‘subpart’’ in its place. The addition reads as follows: 25.200 Scope of subpart. (a) * * * (4) Executive Order 14005, January 25, 2021; and * * * * * ■ 11. Amend section 25.201 by— ■ a. In paragraph (b) removing the phrase ‘‘statute and E.O. 13881 use’’ and adding the phrase ‘‘statute, E.O. 13881, and E.O. 14005 use’’ in its place; and ■ b. Revising the first sentence of paragraph (b)(2)(i). The revision reads as follows. 25.201 Policy. * * * * * (b) * * * (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 60 percent of the cost of all the components, except that the percentage will be 65 percent for items delivered in calendar years 2024 through 2028 and 75 percent for items delivered starting in calendar year 2029. * * * * * * * * ■ 12. Amend section 25.204 by revising paragraph (b) to read as follows: 25.204 Evaluating offers of foreign construction material. lotter on DSK11XQN23PROD with PROPOSALS1 * * * * * (b)(1) For construction materials that are not critical items and do not contain critical components. (i) Unless the head of the agency specifies a higher percentage, the contracting officer shall add to the offered price 20 percent of the cost of any foreign construction material proposed for exception from the requirements of the Buy American statute based on the unreasonable cost of domestic construction materials. In the case of a tie, the contracting officer shall give preference to an offer that does not include foreign construction material excepted at the request of the VerDate Sep<11>2014 21:28 Jul 29, 2021 Jkt 253001 offeror on the basis of unreasonable cost. (ii) For construction material that does not consist wholly or predominantly of iron or steel or a combination of both, if the procedures in paragraph (b)(1)(i) of this section result in an unreasonable cost determination for the domestic construction material offer or there is no domestic construction material offer received, and the low offer is for foreign construction material that does not exceed 55 percent domestic content, the contracting officer shall— (A) Treat the lowest offer of foreign construction material that is manufactured in the United States and exceeds 55 percent domestic content as a domestic offer; and (B) Determine the reasonableness of the cost of this offer by applying the evaluation factor listed in paragraph (b)(1)(i) to the low offer. (iii) The procedures in paragraph (b)(1)(ii) will no longer apply as of January 1, 2030. (2) For construction material that are critical items or contain critical components. (i) The contracting officer shall add to the offered price 20 percent, plus the additional preference factor identified for the critical item or construction material containing critical components listed at section 25.105, of the cost of any foreign construction material proposed for exception from the requirements of the Buy American statute based on the unreasonable cost of domestic construction materials. In the case of a tie, the contracting officer shall give preference to an offer that does not include foreign construction material excepted at the request of the offeror on the basis of unreasonable cost. See 25.105 for list of critical components and critical items. (ii) For construction material that does not consist wholly or predominantly of iron or steel or a combination of both, if the procedures in paragraph (b)(2)(i) of this section result in an unreasonable cost determination for the domestic construction material offer or there is no domestic construction material offer received, and the low offer is for foreign construction material that does not exceed 55 percent domestic content, the contracting officer shall— (A) Treat the lowest offer of foreign construction material that is manufactured in the United States and exceeds 55 percent domestic content as a domestic offer; and (B) Determine the reasonableness of the cost of this offer by applying the evaluation factors listed in paragraph (b)(2) to the low offer. PO 00000 Frm 00029 Fmt 4702 Sfmt 4702 (iii) The procedures in paragraph (c)(1)(ii) will no longer apply as of January 1, 2030. * * * * * 25.501 [Amended] 13. Amend section 25.501 by— a. In paragraph (c) removing the word ‘‘Subpart’’ and adding the word ‘‘subpart’’ in its place; and ■ b. In paragraph (d) removing the word ‘‘Must’’ and adding the phrase ‘‘When trade agreements are involved, shall’’ in its place. ■ 14. Amend section 25.502 by revising paragraphs (c)(2), (3), and (4) to reads as follows: ■ ■ 25.502 Application. * * * * * (c) * * * (2) If the low offer is a noneligible offer and there were no domestic offers (see 25.103(b)(3)), award on the low offer. The procedures at 25.106(b)(2) and 25.106(c)(2) do not apply. (3) If the low offer is a noneligible offer and there is an eligible offer that is lower than the lowest domestic offer, award on the low offer. The procedures at 25.106(b)(2) and 25.106(c)(2) do not apply. (4) Otherwise, apply the appropriate evaluation factor provided in 25.106 to the low offer. The procedures at 25.106(b)(2) and 25.106(c)(2) do not apply. * * * * * ■ 15. Amend section 25.503 by— ■ a. In paragraph (a)(1) removing the word ‘‘Subpart’ and adding the word ‘‘subpart’’ in its place; and ■ b. Adding paragraph (d) to read as follows: 25.503 Group offers. * * * * * (d) If no trade agreement applies to a solicitation and the solicitation specifies that award will be made only on a group of line items or all line items contained in the solicitation, determine the category of end products on the basis of each line item, but determine whether to apply an evaluation factor on the basis of the group of items (see 25.504– 4(c), Example 3). (1) If the proposed price of domestic end products exceeds 50 percent of the total proposed price of the group, evaluate the entire group as a domestic offer. Evaluate all other groups as foreign offers. (2) Apply the evaluation factor to the entire group in accordance with 25.502, except where 25.502(c)(4) applies and the evaluated price of the low offer remains less than the lowest domestic offer. Where the evaluated price of the E:\FR\FM\30JYP1.SGM 30JYP1 40991 Federal Register / Vol. 86, No. 144 / Friday, July 30, 2021 / Proposed Rules low offer remains less than the lowest domestic offer, treat as a domestic offer any group where the proposed price of end products with a domestic content of at least 55 percent exceeds 50 percent of the total proposed price of the group. (3) Apply the evaluation factor to the entire group in accordance with 25.502(c)(4). ■ 16. Amend section 25.504–1 by— ■ a. In paragraph (a)(1), in the table revising the entry for ‘‘Offer C’’; ■ b. Revising paragraph (a)(2); and * * Offer C ..................................................... * Offer C is evaluated as a foreign end product, because it is the product of a small business but is not a domestic end product because the offer is of 50% domestic content (see 25.502(c)(4)). Since Offer B is a domestic offer, apply the 30 percent factor to Offer C (see 25.106(b)(2)). The resulting evaluated Offer A ..................................................... $14,000 Offer B ..................................................... 12,500 Offer C ..................................................... 10,100 (2) Analysis: This acquisition is for end products for use in the United States and is set aside for small business concerns. The Buy American statute applies. Since the acquisition value is less than $25,000 and the acquisition is set aside, none of the trade agreements apply. Perform the steps in 25.502(a). Offers B and C are initially evaluated as foreign end products, because they are the products of small businesses but are 25.504–1 Buy American statute. (a)(1) * * * * * * U.S.-made end product (not domestic), small business. $10,100 (2) Analysis: This acquisition is for end products for use in the United States and is set aside for small business concerns. The Buy American statute applies. Since the acquisition value is less than $25,000 and the acquisition is set aside, none of the trade agreements apply. Perform the steps in 25.502(a). c. Adding paragraph (c). The revised and added text reads as follows: ■ * price of $13,130 remains lower than Offer B. The cost of Offer B is therefore unreasonable (see 25.106(b)(1)(ii)). The 25.106(b)(2) procedures do not apply. Award on Offer C at $10,100 (see 25.502(c)(4)(i)). * * * * * (c)(1) Example 3. Domestic end product (complies with the required domestic content), small business. U.S.-made end product (not domestic, exceeds 55% domestic content), small business. U.S.-made end product (not domestic, with less than 55% domestic content), small business. not domestic end products (see 25.502(c)(4)). Offer C is the low offer. After applying the 30 percent factor, the evaluated price of Offer C is $13,130. The resulting evaluated price of $13,130 remains lower than Offer A. The cost of Offer A is therefore unreasonable. Offer B is then treated as a domestic offer, because it is for a U.S.-made end product that exceeds 55 percent domestic content (see 25.106(b)(2)). Offer B is determined reasonable because it is lower than the $13,130 evaluated price of Offer C. Award on Offer B at $12,500. ■ 17. Amend section 25.504–4 by adding paragraph (c) to read as follows: 25.504–4 * Group award basis. * * * (c) Example 3. * Offers Item A 1 2 3 4 B C ......................... ......................... ......................... ......................... DO = $17,800 ........................................ FO (>55%) = $9,000 .............................. FO (<55%) = $11,200 ............................ DO = $10,000 ........................................ FO (>55%) = FO (>55%) = FO (>55%) = DO = $9,000 $16,000 ............................ $8,500 .............................. $12,000 ............................ .......................................... Total ............ $48,000 .................................................. $45,500 .................................................. FO (<55%) = $11,200 DO = $10,200 FO (<55%) = $11,000 FO (<55%) = $6,400 $38,800 Key: DO=Domestic end product (complies with the required domestic content). FO >55% = Foreign end product with domestic content exceeding 55%. FO <55% = Foreign end product with domestic content of 55% or less. lotter on DSK11XQN23PROD with PROPOSALS1 Problem: The solicitation specifies award on a group basis. Assume only the Buy American statute applies (i.e., no trade agreements apply) and the acquisition cannot be set aside for small business concerns. All offerors are large businesses. Analysis: (see 25.503(d)). STEP 1: Determine which of the offers are domestic (see 25.503(d)(1)): Domestic (percent) A ........................ B ........................ C ........................ VerDate Sep<11>2014 Determination $17,800 (Offer A1) + $10,000 (Offer A4) = $27,800 ................................................................. $27,800/$48,000 (Offer A Total) = 58% $9,000 (Offer B4)/$45,500 (Offer B Total) = 19.8% ................................................................... $10,200 (Offer C2)/$38,800 (Offer C Total) = 26.3% ................................................................ 21:28 Jul 29, 2021 Jkt 253001 PO 00000 Frm 00030 Fmt 4702 Sfmt 4702 E:\FR\FM\30JYP1.SGM 30JYP1 Domestic. Foreign. Foreign. 40992 Federal Register / Vol. 86, No. 144 / Friday, July 30, 2021 / Proposed Rules STEP 2: Determine which offer, domestic or foreign, is the low offer. If the low offer is a foreign offer, apply the evaluation factor (see 25.503(d)(2)). The low offer (Offer C) is a foreign 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 $46,560 ($38,800 + 20 percent). Offer C remains the low offer. STEP 3: Determine if there is a foreign offer that could be treated as a domestic offer (see 25.106(b)(2) and 25.503(d)(2)). Amount of domestic content (percent) A ........................ B ........................ C ........................ N/A .............................................................................................................................................. $9,000 (Offer B4)/$45,500 (Offer B Total) $ = 19.8% is domestic AND ................................... $16,000 (Offer B1) + $8,500 (Offer B2) + $12,000 (Offer B3) = $36,500. $36,500/$45,500 (Offer B Total) = 80.2% can be treated as domestic. 19.8% + 80.2% = 100% is domestic or can be treated as domestic. $10,200 (Offer C2)/$38,800 (Offer C Total) = 26.3% is domestic ............................................. STEP 4: If there is a foreign offer that could be treated as a domestic offer, compare the evaluated price of the low offer to the price of the offer treated as domestic (see 25.503(d)(3)). Offer B can be treated as a domestic offer ($45,500). The evaluated price of the low offer (Offer C) is $46,560. Award on Offer B. ■ 18. Amend section 25.1101 by adding paragraph (g) to read as follows: 25.1101 Acquisition of supplies. * * * * * (g) Insert the clause at 52.225–XX, Domestic Content Reporting Requirement—Supplies, in solicitations and contracts containing the clause at 52.225–1 or 52.225–3. ■ 19. Amend section 25.1102 by adding paragraph (f) to read as follows: 25.1102 Acquisition of construction. * * * * * (f) Insert the clause at 52.225–YY, Domestic Content Reporting Requirement—Construction Materials, in solicitations and contracts containing the clause at 52.225–9 or 52.225–11. PART 52—SOLICITATION PROVISIONS AND CONTRACT CLAUSES ■ ■ 20. Amend section 52.212–3 by— a. Revising the date of the provision; b. In paragraph (f)(1)(i) removing the word ‘‘product.’’ and adding the phrase ‘‘product and that each domestic end product listed in paragraph (f)(3) of this provision contains a critical component.’’ in its place; ■ c. Adding two sentences to the end of paragraph (f)(1)(ii); ■ d. Redesignating paragraph (f)(1)(iii) as paragraph (f)(1)(iv) and adding a new paragraph (f)(1)(iii); ■ e. Removing from the newly redesignated paragraph (f)(1)(iv) ‘‘The terms ‘‘domestic end product,’’ and adding ‘‘The terms ‘‘critical component,’’ ‘‘domestic end product,’’ in its place; ■ f. Revising the table in paragraph (f)(2); ■ g. Redesignating paragraph (f)(3) as paragraph (f)(4) and adding a new paragraph (f)(3); ■ h. In newly redesignated paragraph (f)(4) remove the word ‘‘Part’’ and adding the word ‘‘part’’ in its place; ■ i. In paragraph (g)(1)(i)(A) removing the word ‘‘product.’’ and adding the phrase ‘‘product and that each domestic end product listed in paragraph (g)(1)(iv) of this provision contains a critical component.’’ in its place; ■ j. In paragraph (g)(1)(i)(B) removing the phrases ‘‘Peruvian end product,’’ and ‘‘domestic end product,’’ and ■ Line item No. lotter on DSK11XQN23PROD with PROPOSALS1 Determination 21:28 Jul 29, 2021 Jkt 253001 PO 00000 Frm 00031 Fmt 4702 Sfmt 4702 Foreign. adding in their place ‘‘Peruvian end product,’’ ‘‘critical component,’’ ‘‘domestic end product,’’; ■ k. Adding two sentences at the end of paragraph (g)(1)(iii) and revising the table; ■ l. Redesignating paragraph (g)(1)(iv) as paragraph (g)(1)(v) and adding a new paragraph (g)(1)(iv); and ■ m. In newly redesignated paragraph (g)(1)(v) removing the word ‘‘Part’’ and adding the word ‘‘part’’ in its place. The revisions and additions read as follows: 52.212–3 Offeror Representations and Certifications—Commercial Items. * * * * * Offeror Representations and Certifications— Commercial Items (DATE) * * * * * (f) * * * (1) * * * (ii) * * * The Offeror shall also indicate whether these foreign end products exceed 55 percent domestic content. If the percentage of the domestic content is unknown, select ‘‘no’’. (iii) The Offeror shall separately list the line item numbers of domestic end products that contain a critical component. * * * * * (2) * * * Exceeds 55% domestic content (yes/no) Country of origin (3) Domestic end products containing a [List as necessary] critical component: (g)(1) * * * (iii) * * * The Offeror shall also indicate Line Item No. llllllllllllll whether these foreign end products exceed VerDate Sep<11>2014 N/A. Can be treated as domestic. 55 percent domestic content. If the percentage of the domestic content is unknown, select ‘‘no’’. Other Foreign End Products: E:\FR\FM\30JYP1.SGM 30JYP1 40993 Federal Register / Vol. 86, No. 144 / Friday, July 30, 2021 / Proposed Rules Line item No. Exceeds 55% domestic content (yes/no) Country of origin (iv) The Offeror shall list the line item The revisions and additions read as numbers of domestic end products that follows: contain a critical component. Line Item No. llllllllllllll 52.213–4 Terms and Conditions— Simplified Acquisitions (Other Than [List as necessary] Commercial Items). * * * * * * 21. Amend section 52.212–5 by— a. Revising the date of the clause; b. Removing from paragraph (b)(48) ‘‘(JAN 2021)’’ and adding ‘‘(DATE)’’ in its place; and ■ c. Removing from paragraph (b)(49)(i) ‘‘(JAN 2021)’’ and adding ‘‘(DATE)’’ in its place; and ■ d. Redesignating paragraphs (b)(53) through (b)(63) as paragraphs (b)(54) through (b)(64) and adding a new paragraph (b)(53). The revision and addition 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 (DATE) * * * * * (b) * * * l(53) 52.225–XX, Domestic Content Reporting Requirement—Supplies (DATE) (Executive Order 14005). * * * * * 22. Amend section 52.213–4 by— a. Revising the date of the clause; b. In paragraph (b)(1)(xvii)removing the words ‘‘(JAN 2021)’’ and adding the word ‘‘(DATE)’’ in its place; ■ c. Redesignating paragraphs (b)(1)(xviii) through (b)(1)(xxi) as paragraphs (b)(1)(xx) through (b)(1)(xxiii) and adding new paragraphs (b)(1)(xviii) and (b)(1)(xix). ■ ■ ■ * * * * * * * * 23. Amend section 52.225–1 by— a. Revising the date of the clause; b. Adding, in alphabetical order, the definition of ‘‘Critical component’’; and ■ c. In the definition of ‘‘Domestic end product’’ revising the first sentence of paragraph (1)(ii)(A). The addition and revision read as follows: ■ ■ ■ 52.225–1 * Buy American—Supplies. * * * * Buy American—Supplies (DATE) (a) * * * Critical component means a component that is mined, produced, or manufactured in the United States and deemed critical to the U.S. supply chain. The list of critical components is at FAR 25.105. Domestic end product means— (1) * * * (ii) * * * (A) The cost of its components mined, produced, or manufactured in the United ■ 21:28 Jul 29, 2021 * Jkt 253001 PO 00000 Fmt 4702 * 24. Amend section 52.225–2 by— a. Revising the date of the provision; ■ b. Revising paragraph (a)(1); ■ c. Adding two sentences at the end of paragraph (a)(2); ■ d. Redesignating paragraph (a)(3) as paragraph (a)(4) and adding a new paragraph (a)(3); ■ e. In newly redesignated paragraph (a)(4) removing the phrase ‘‘The terms’’ and adding the phrase ‘‘The terms ‘‘critical component,’’ ’’ in its place; ■ f. Revising the table in paragraph (b); ■ g. Redesignating paragraph (c) as paragraph (d) and adding a new paragraph (c). The revisions and additions read as follows: ■ 52.225–2 * Buy American Certificate. * * * * Buy American Certificate (DATE) (a)(1) The Offeror certifies that each end product, except those listed in paragraph (b) of this provision, is a domestic end product and that each domestic end product listed in paragraph (c) of this provision contains a critical component. (2) * * * The Offeror shall also indicate whether these foreign end products exceed 55 percent domestic content. If the percentage of the domestic content is unknown, select ‘‘no’’. (3) The Offeror shall separately list the line item numbers of domestic end products that contain a critical component. * * * * * (b) * * * a. Revising the date of the clause; b. Adding, in alphabetical order, the definition of ‘‘Critical component’’; ■ Sfmt 4702 * Exceeds 55% domestic content (yes/no) * 25. Amend section 52.225–3 by— Frm 00032 * ■ Country of origin (c) Domestic end products containing a [List as necessary] critical component: * * * * Line Item No. llllllllllllll VerDate Sep<11>2014 * Terms and Conditions—Simplified Acquisitions (Other Than Commercial Items) (DATE) (b) * * * (1) * * * (xviii) 52.225–XX, Domestic Content Reporting Requirement—Supplies (DATE) (Executive Order 14005) (Applies to contracts containing the clause at 52.225–1 or 52.225– 3). (xix) 52.225–YY, Domestic Content Reporting Requirement—Construction Materials (DATE) (Executive Order 14005) (Applies to contracts containing the clause at 52.225–9). Line item No. lotter on DSK11XQN23PROD with PROPOSALS1 * States exceeds 60 percent of the cost of all its components, except that the percentage will be 65 percent for items delivered in calendar years 2024 through 2028 and 75 percent for items delivered starting in calendar year 2029. * * * ■ E:\FR\FM\30JYP1.SGM 30JYP1 40994 Federal Register / Vol. 86, No. 144 / Friday, July 30, 2021 / Proposed Rules c. In the definition ‘‘Domestic end product’’ revising the first sentence of paragraph (1)(ii)(A). The addition and revision read as follows: ■ 52.225–3 Buy American—Free Trade Agreements—Israeli Trade Act. * * * * * Buy American—Free Trade Agreements— Israeli Trade Act (DATE) (a) * * * Critical component means a component that is mined, produced, or manufactured in the United States and deemed critical to the U.S. supply chain. The list of critical components is at FAR 25.105. Domestic end product means— (1) * * * (ii) * * * (A) The cost of its components mined, produced, or manufactured in the United States exceeds 60 percent of the cost of all its components, except that the percentage will be 65 percent for items delivered in calendar years 2024 through 2028 and 75 percent for items delivered starting in calendar year 2029. * * * ■ * * * * * * 26. Amend section 52.225–4 by— a. Revising the date of the provision; b. Revising paragraph (a)(1); c. In paragraph (a)(2) removing the phrases ‘‘Peruvian end product,’’ ‘‘domestic end product,’’ and adding in their place ‘‘Peruvian end product,’’ ‘‘critical component,’’ ‘‘domestic end product,’’; ■ d. Redesignating paragraph (c) as paragraph (c)(1) and adding two sentences at the end of newly designated paragraph (c)(1); ■ e. Revising the table in newly designated paragraph (c)(1); and ■ ■ ■ ■ Line item No. * * * * * * * * * * 27. Amend section 52.225–9 by— a. Revising the date of the clause; b. Adding, in alphabetical order, the definitions of ‘‘Critical component’’ and ‘‘Critical item’’; ■ c. In the definition ‘‘Domestic construction material’’ revising the first sentence of paragraph (1)(ii)(A); and ■ d. Revising paragraph (b)(3)(i). The revisions and additions read as follows: ■ ■ ■ 52.225–9 Buy American—Construction Materials. lotter on DSK11XQN23PROD with PROPOSALS1 * * * * Buy American—Construction Materials (DATE) (a) * * * Critical component means a component that is mined, produced, or manufactured in the United States and deemed critical to the U.S. supply chain. The list of critical components is at FAR 25.105. Critical item means a domestic construction material or domestic end product that is deemed critical to U.S. supply chain resiliency. The list of critical items is at FAR 25.105. Domestic construction material means— (1) * * * (ii) * * * VerDate Sep<11>2014 21:28 Jul 29, 2021 52.225–4 Buy American—Free Trade Agreements—Israeli Trade Act Certificate. Jkt 253001 * * * * (b) * * * (3) * * * (i) The cost of domestic construction material would be unreasonable. (A) For domestic construction material that are not critical items or do not contain critical components. (1) The cost of a particular domestic construction material subject to the requirements of the Buy American statute is unreasonable when the cost of such material exceeds the cost of foreign material by more than 20 percent; (2) For construction material that does not consist wholly or predominantly of iron or steel or a combination of both, if the cost of a particular domestic construction material is determined to be unreasonable or there is no domestic offer received, and the low offer is for foreign construction material that is manufactured in the United States and does not exceed 55 percent domestic content, the Contracting Officer will treat the lowest offer of foreign construction material that exceeds 55 percent domestic content as a domestic offer and determine whether the cost of that offer is unreasonable by applying the evaluation factor listed in paragraph (b)(3)(i)(A)(1) of this clause. (3) The procedures in paragraph (b)(3)(i)(A)(2) will no longer apply as of January 1, 2030. PO 00000 Frm 00033 Fmt 4702 Sfmt 4702 * * * * * * * * (c)(1) * * * The Offeror shall also indicate whether these foreign end products exceed 55 percent domestic content. If the percentage of the domestic content is unknown, select ‘‘no’’. * * * * * Exceeds 55% domestic content (yes/no) (A) The cost of its components mined, produced, or manufactured in the United States exceeds 60 percent of the cost of all its components, except that the percentage will be 65 percent for items delivered in calendar years 2024 through 2028 and 75 percent for items delivered starting in calendar year 2029. * * Buy American—Free Trade Agreements— Israeli Trade Act Certificate (DATE) (a)(1) The Offeror certifies that each end product, except those listed in paragraph (b) or (c)(1) of this provision, is a domestic end product and that each domestic end product listed in paragraph (c)(2) of this provision contains a critical component. Country of origin (2) The Offeror shall list the line item numbers of domestic end products that contain a critical component. Line Item No. llllllllllllll [List as necessary] * f. Adding paragraph (c)(2). The revisions and additions read as follows: (B)(1) For domestic construction material that are critical items or contain critical components. The cost of a particular domestic construction material that is a critical item or contains critical components, subject to the requirements of the Buy American statute, is unreasonable when the cost of such material exceeds the cost of foreign material by more than 20 percent plus the additional preference factor identified for the critical item or construction material containing critical components listed at FAR 25.105. (2) For construction material that does not consist wholly or predominantly of iron or steel or a combination of both, if the cost of a particular domestic construction material is determined to be unreasonable or there is no domestic offer received, and the low offer is for foreign construction material that does not exceed 55 percent domestic content, the Contracting Officer will treat the lowest foreign offer of construction material that is manufactured in the United States and exceeds 55 percent domestic content as a domestic offer, and determine whether the cost of that offer is unreasonable by applying the evaluation factor listed in paragraph (b)(3)(i)(B)(1) of this clause. (3) The procedures in paragraph (b)(3)(i)(B)(2) will no longer apply as of January 1, 2030. * * * * * ■ 28. Amend section 52.225–11 by— ■ a. Revising the date of the clause; ■ b. Adding, in alphabetical order, the definitions of ‘‘Critical component’’ and ‘‘Critical item’’; E:\FR\FM\30JYP1.SGM 30JYP1 40995 Federal Register / Vol. 86, No. 144 / Friday, July 30, 2021 / Proposed Rules c. In the definition ‘‘Domestic construction material’’ revising the first sentence of paragraph (1)(ii)(A); and ■ d. Revising paragraph (b)(4)(i). The revisions and additions read as follows: ■ 52.225–11 Buy American—Construction Materials Under Trade Agreements. * * * * * Buy American—Construction Materials Under Trade Agreements (DATE) (a) * * * Critical component means a component that is mined, produced, or manufactured in the United States and deemed critical to the U.S. supply chain. The list of critical components is at FAR 25.105. Critical item means a domestic construction material or domestic end product that is deemed critical to U.S. supply chain resiliency. The list of critical items is at FAR 25.105. * * * * * Domestic construction material means— (1) * * * (ii) * * * (A) The cost of its components mined, produced, or manufactured in the United States exceeds 60 percent of the cost of all its components, except that the percentage will be 65 percent for items delivered in calendar years 2024 through 2028 and 75 percent for items delivered starting in calendar year 2029. * * * * * (b) * * * (4) * * * (i) The cost of domestic construction material would be unreasonable. (A) For domestic construction material that are not critical items or do not contain critical components. (1) The cost of a particular domestic construction material subject to the restrictions of the Buy American statute is unreasonable when the cost of such material exceeds the cost of foreign material by more than 20 percent; (2) For construction material that does not consist wholly or predominantly of iron or steel or a combination of both, if the cost of a particular domestic construction material is determined to be unreasonable or there is no domestic offer received, and the low offer is for foreign construction material that does not exceed 55 percent domestic content, the Contracting Officer will treat the lowest offer of foreign construction material that is manufactured in the United States and exceeds 55 percent domestic content as a domestic offer and determine whether the cost of that offer is unreasonable by applying the evaluation factor listed in paragraph (b)(4)(i)(A)(1) of this clause. (3) The procedures in paragraph (b)(4)(i)(A)(2) do not apply effective January 1, 2030. (B) For domestic construction material that are critical items or contain critical components. (1) The cost of a particular domestic construction material that is a critical item or contains critical components, subject to the requirements of the Buy American statute, is unreasonable when the cost of such material exceeds the cost of foreign material by more than 20 percent plus the additional preference factor identified for the critical item or construction material containing critical components listed at FAR 25.105. (2) For construction material that does not consist wholly or predominantly of iron or steel or a combination of both, if the cost of a particular domestic construction material is determined to be unreasonable or there is no domestic offer received, and the low offer is for foreign construction material that does not exceed 55 percent domestic content, the Contracting Officer will treat the lowest offer [List as necessary] (End of clause) Domestic Content Reporting Requirement— Construction Materials (DATE) 30. Add section 52.225–YY to read as follows: ■ lotter on DSK11XQN23PROD with PROPOSALS1 52.225–YY Domestic Content Reporting Requirement—Construction Materials. As prescribed in 25.1102(f), insert the following clause: (a) Definitions. As used in this clause— The terms Critical component, Critical item, and Domestic construction material, are defined in the clause of this contract entitled ‘‘Buy American-Construction Materials’’ or ‘‘Buy American-Construction Materials under Trade Agreements’’. Jkt 253001 PO 00000 Frm 00034 Fmt 4702 Sfmt 4702 * * * * 29. Add section 52.225–XX to read as follows: ■ 52.225–XX Domestic Content Reporting Requirement—Supplies. As prescribed in 25.1101(g), insert the following clause: Domestic Content Reporting Requirement— Supplies (DATE) (a) Definitions. As used in this clause— Critical item means a domestic construction material or domestic end product that is deemed critical to the U.S. supply chain. The list of critical items is at FAR 25.105. The terms Critical component, Domestic end product, and End product are defined in the clause of this solicitation entitled ‘‘Buy American-Supplies’’ or ‘‘Buy American-Free Trade Agreements-Israeli Trade Act’’. (b) Applicability. This clause does not apply to commercially available off-the-shelf (COTS) items. (c) Reporting requirement. Within 15 days of award, the Contractor shall provide the contract number, the amount of domestic content in each critical item, and the amount of domestic content in each domestic end product containing a critical component, to the Made in America Office under the Office of Management and Budget via MadeInAmerica@omb.eop.gov: Percentage of domestic content (b) Applicability. This clause does not apply to commercially available off-the-shelf (COTS) items. (c) Reporting requirement. Within 15 days of award, the Contractor shall provide the contract number, the amount of domestic content in each critical item, and the amount of domestic content in each domestic construction material containing a critical component, to the Made in America Office under the Office of Management and Budget via MadeInAmerica@omb.eop.gov: Critical component/end product Line item No. 21:28 Jul 29, 2021 * Critical component/end product Line item No. VerDate Sep<11>2014 of foreign construction material that is manufactured in the United States and exceeds 55 percent domestic content as a domestic offer, and determine whether the cost of that offer is unreasonable by applying the evaluation factor listed in paragraph (b)(4)(i)(B)(1) of this clause. (3) The procedures in paragraph (b)(4)(i)(B)(2) will no longer apply as of January 1, 2030. E:\FR\FM\30JYP1.SGM Percentage of domestic content 30JYP1 40996 Federal Register / Vol. 86, No. 144 / Friday, July 30, 2021 / Proposed Rules Critical component/end product Line item No. [List as necessary] (End of clause) [FR Doc. 2021–15881 Filed 7–29–21; 8:45 am] BILLING CODE 6820–EP–P DEPARTMENT OF THE INTERIOR Fish and Wildlife Service 50 CFR Part 17 [Docket No. FWS–R4–ES–2020–0125; FF09E22000 FXES11130900000 212] RIN 1018–BE41 Endangered and Threatened Wildlife and Plants; Removing Adiantum vivesii From the Federal List of Endangered and Threatened Plants Fish and Wildlife Service, Interior. ACTION: Proposed rule. AGENCY: We, the U.S. Fish and Wildlife Service (Service), propose to remove the plant Adiantum vivesii (no common name) from the Federal List of Endangered and Threatened Plants (List). Our review of the best available scientific and commercial data, including peer reviewer comments received on the 5-year status review (2008), indicate that A. vivesii is not a distinct species, but rather a sterile hybrid that does not have the capacity to establish a lineage that could be lost to extinction. Therefore, A. vivesii is not a listable entity under the Endangered Species Act of 1973, as amended (Act). DATES: We will accept comments received or postmarked on or before September 28, 2021. Comments submitted electronically using the Federal eRulemaking Portal (see ADDRESSES, below) must be received by 11:59 p.m. Eastern Time on the closing date. We must receive requests for a public hearing, in writing, at the address shown in FOR FURTHER INFORMATION CONTACT by September 13, 2021. ADDRESSES: You may submit comments by one of the following methods: (1) Electronically: Go to the Federal eRulemaking Portal: http:// www.regulations.gov. In the Search box, enter FWS–R4–ES–2020–0125, which is the docket number for this rulemaking. Then, click on the Search button. On the resulting page, in the Search panel on lotter on DSK11XQN23PROD with PROPOSALS1 SUMMARY: VerDate Sep<11>2014 21:28 Jul 29, 2021 Jkt 253001 the left side of the screen, under the Document Type heading, check the Proposed Rule box to locate this document. You may submit a comment by clicking on ‘‘Comment.’’ (2) By hard copy: Submit by U.S. mail to: Public Comments Processing, Attn: FWS–R4–ES–2020–0125, U.S. Fish and Wildlife Service, MS: PRB/3W, 5275 Leesburg Pike, Falls Church, VA 22041– 3803. We request that you send comments only by the methods described above. We will post all comments on http:// www.regulations.gov. This generally means that we will post any personal information you provide us (see Information Requested, below, for more information). Availability of supporting materials: This proposed rule and supporting documents, including the 5-year review, are available at https://www.fws.gov/ southeast/caribbean/ and http:// www.regulations.gov under Docket No. FWS–R4–ES–2020–0125. FOR FURTHER INFORMATION CONTACT: Edwin Mun˜iz, Field Supervisor, Caribbean Ecological Services Field Office, P.O. Box 491, Boquero´n, PR 00622; telephone 787–851–7297. Persons who use a telecommunications device for the deaf (TDD) may call the Federal Relay Service at 800–877–8339. SUPPLEMENTARY INFORMATION: Information Requested We intend that any final action resulting from this proposed rule will be based on the best scientific and commercial data available and be as accurate and as effective as possible. Therefore, we request comments or information from other concerned governmental agencies, the scientific community, industry, or any other interested parties concerning this proposed rule. We particularly seek comments concerning: (1) Reasons we should or should not remove A. vivesii from the List of Endangered and Threatened Plants. (2) The location and characteristics of any additional populations not considered in previous work that might have bearing on the current taxonomic interpretation. (3) Additional information concerning range, distribution, and population sizes, particularly if it would assist in PO 00000 Frm 00035 Fmt 4702 Sfmt 4702 Percentage of domestic content the evaluation of the accuracy of the current taxonomic interpretation. Please include sufficient information with your submission (such as scientific journal articles or other publications) to allow us to verify any scientific or commercial information you include. Please note that submissions merely stating support for, or opposition to, the action under consideration without providing supporting information, although noted, will not be considered in making a determination, as section 4(b)(1)(A) of the Act directs that determinations as to whether any species is an endangered or a threatened species must be made ‘‘solely on the basis of the best scientific and commercial data available.’’ You may submit your comments and materials concerning this proposed rule by one of the methods listed in ADDRESSES. We request that you send comments only by the methods described in ADDRESSES. If you submit information via http:// www.regulations.gov, your entire submission—including any personal identifying information—will be posted on the website. If your submission is made via a hardcopy that includes personal identifying information, you may request at the top of your document that we withhold this information from public review. However, we cannot guarantee that we will be able to do so. We will post all hardcopy submissions on http://www.regulations.gov. Comments and materials we receive, as well as supporting documentation we used in preparing this proposed rule, will be available for public inspection on http://www.regulations.gov. Because we will consider all substantial comments and information received during the comment period, our final determinations may differ from this proposal. Based on the new information we receive (and any comments on that new information), we may conclude that the species is a valid listable entity and should remained listed as endangered, or be reclassified from endangered to threatened. Public Hearing Section 4(b)(5) of the Act provides for a public hearing on this proposal, if requested. Requests must be received by the date specified in DATES. Such requests must be sent to the address E:\FR\FM\30JYP1.SGM 30JYP1

Agencies

[Federal Register Volume 86, Number 144 (Friday, July 30, 2021)]
[Proposed Rules]
[Pages 40980-40996]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-15881]


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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 1, 25, and 52

[FAR Case 2021-008; Docket No. FAR-2021-0008, Sequence No. 1]
RIN 9000-AO22


Federal Acquisition Regulation: Amendments to the FAR Buy 
American Act Requirements

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

ACTION: Proposed rule.

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

DATES: Interested parties should submit comments to the Regulatory 
Secretariat Division at one of the addresses shown below on or before 
September 28, 2021 to be considered in the formulation of a final rule.
    Public Meeting: A virtual public meeting will be held on August 26, 
2021, from 9 a.m. to 3 p.m., Eastern Standard Time. The public meeting 
will end at the stated time, or when the discussion ends, whichever 
comes first. For more details, see section V of the preamble.

ADDRESSES: Submit comments in response to FAR Case 2021-008 to https://www.regulations.gov. Submit comments via the Federal eRulemaking portal 
by searching for ``FAR Case 2021-008''. Select the link ``Comment Now'' 
that corresponds with ``FAR Case 2021-008.'' Follow the instructions 
provided on the screen. Please include your name, company name (if 
any), and ``FAR Case 2021-008'' on your attached document. If your 
comment cannot be submitted using https://www.regulations.gov, call or 
email the points of contact in the FOR FURTHER INFORMATION CONTACT 
section of this document for alternate instructions.
    Instructions: Please submit comments only and cite ``FAR Case 2021-
008'' in all correspondence related to this case.
    Comments submitted in response to this notice will be made publicly 
available and are subject to disclosure under the Freedom of 
Information Act. For this reason, please do not include in your 
comments information of a confidential nature, such as sensitive 
personal information or proprietary information, or any information 
that you would not want publicly disclosed unless you follow the 
instructions below for confidential comments. Summary information of 
the public comments received, including any specific comments, will be 
posted on regulations.gov.
    All filers using the portal should use the name of the person or 
entity submitting comments as the name of their files, in accordance 
with the instructions below. Anyone submitting business confidential/
proprietary information should clearly identify any business 
confidential/proprietary portion at the time of submission, file a 
statement justifying nondisclosure and referencing the specific legal 
authority claimed, and provide a non-confidential/non-proprietary 
version of the submission.
    Any business confidential information should be in an uploaded file 
that has a file name beginning with the characters ``BC.'' Any page 
containing business confidential information must be clearly marked 
``BUSINESS CONFIDENTIAL/PROPRIETARY'' on the top of that page. The 
corresponding non-confidential/non-proprietary version of those 
comments must be clearly marked ``PUBLIC.'' The file name of the non-
confidential version should begin with the character ``P.'' The ``BC'' 
and ``P'' should be followed by the name of the person or entity 
submitting the comments or rebuttal comments. All filers should name 
their files using the name of the person or entity submitting the 
comments. Any submissions with file names that do not begin with a 
``BC'' will be assumed to be public and will be made publicly available 
through https://www.regulations.gov.
    To confirm receipt of your comment(s), please check https://www.regulations.gov, approximately two to three days after submission 
to verify posting.

FOR FURTHER INFORMATION CONTACT: Ms. Mahruba Uddowla, Procurement 
Analyst, at 703-605-2868 or by email at [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 FAR Case 2021-008.

SUPPLEMENTARY INFORMATION:

I. Background

    On January 25, 2021, the President signed Executive Order (E.O.) 
14005,

[[Page 40981]]

Ensuring the Future Is Made in All of America by All of America's 
Workers (86 FR 7475, January 28, 2021). The E.O. contemplates a series 
of actions to enable the United States Government to maximize the use 
of goods, products, and materials produced in the United States in 
order to strengthen and diversify domestic supplier bases and create 
new opportunities for U.S. firms and workers. These actions include (i) 
regulatory amendments to the implementation of the Buy American Act in 
FAR part 25 to fit the current realities of the American economy; (ii) 
the creation of a Made in America Office within the Office of 
Management and Budget to provide centralized, strategic, and holistic 
management of domestic sourcing activities across Federal procurement, 
Federal financial assistance, and maritime policies; (iii) a public 
website with information on all proposed waivers to the Buy American 
Act and other Buy American Laws, as defined in the E.O., that helps 
more U.S. firms access Federal contracting and provides data to the 
Made in America Office to inform policy development for domestic 
sourcing; and (iv) a review by the Federal Acquisition Regulatory 
Council (FAR Council), in consultation with the Made in America Office, 
of the longstanding statutory exemption from the Buy American Act for 
commercial information technology (IT) to determine if the original 
purpose or other goals of the exemption remain relevant in the current 
economic and national security environment. Collectively, these and 
other efforts called for by the E.O. will promote greater economic and 
national security and further the Administration's commitment to build 
back a stronger domestic manufacturing base, create good jobs, and 
ensure the U.S. economy remains strong, resilient, and ready to meet 
the challenges of the future. Strengthening implementation of the Buy 
American Act will send clear demand signals to domestic producers, 
spurring strategic investments in domestic supply chains.
    This proposed rule addresses section 8 of the E.O., which requires 
the FAR Council to strengthen the impact of the Buy American Act. The 
dollars the Federal Government spends on goods and services are a 
powerful tool to support American workers and manufacturers. 
Contracting alone accounts for nearly $600 billion in Federal spending. 
Federal law requires government agencies, in some circumstances, to 
give preferences to American firms; however, these preferences have not 
always been implemented consistently or effectively. Congress passed 
the Buy American Act during the Great Depression to foster American 
industry by protecting it from foreign competition for Federal 
procurement contracts. The Buy American Act is codified at 41 U.S.C. 
chapter 83 as the Buy American statute and requires public agencies to 
procure articles, materials, and supplies that were mined, produced, or 
manufactured in the United States, substantially all from domestic 
components, subject to exceptions for nonavailability of domestic 
products, unreasonable cost of domestic products, and when it would not 
be in the public interest to buy domestic products. Additional 
exceptions have been added over time, such as where trade agreements 
apply, and for commissary resale, micro-purchases, and commercial 
information technology.
    Currently FAR part 25, which implements the Buy American statute 
and all related Executive Orders, provides guidance on determining 
whether solicited ``construction material'' or ``end products'' are 
``domestic''--that is, whether they were mined, produced, or 
manufactured in the United States, substantially from components mined, 
produced, or manufactured in the United States. The determination of 
whether a manufactured end product or construction material qualifies 
as domestic is made using a two-part test:
    1. The end product or construction material must be manufactured in 
the United States.
    2. A certain percentage of all component parts (determined by cost 
of the components) must also be mined, produced, or manufactured in the 
United States--a requirement known as the ``component test'' until 
early 2021, when it was redesignated the ``domestic content test'' to 
be consistent with terminology used in E.O. 13881, Maximizing Use of 
American-Made Goods, Products, and Materials. For an end product that 
does not consist 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 components; the test is waived for 
acquisitions of commercially available off-the-shelf (COTS) items. 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. That 
test is not waived for COTS items, except for COTS fasteners.
    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 them. Under the current FAR, large 
businesses offering domestic supplies receive a 20 percent price 
preference, and small businesses receive a 30 percent price preference.
    The Buy American restrictions do not apply to acquisitions subject 
to certain trade agreements (see FAR subpart 25.4). For these 
acquisitions, end products and construction materials from certain 
countries receive nondiscriminatory treatment when evaluated alongside 
domestic offers. Generally, the dollar value of the acquisition 
determines whether and which trade agreement applies to the 
acquisition. For example, the World Trade Organization--Government 
Procurement Agreement (WTO GPA) applies to acquisitions starting at 
$182,000 for supply contracts, and at $7,008,000 for construction 
contracts. Exceptions to the applicability of the trade agreements are 
described in FAR subpart 25.4.
    The percentages for the domestic content test and the price 
preference were increased in the FAR on January 19, 2021, through FAR 
case 2019-016, Maximizing Use of American-Made Goods, Products, and 
Materials (86 FR 6180). However, the concept of the domestic content 
test (formerly referred to as the component test) has been in the FAR 
since it was first created and published in 1983.
    Section 8 of E.O. 14005 requires the FAR Council to consider 
amending the FAR to--
    (1) Replace the component test used to identify domestic end 
products and domestic construction materials with a test under which 
domestic content is measured by the value that is added to the product 
through U.S.-based production or U.S. job-supporting economic activity;
    (2) Increase the threshold for the domestic content requirement; 
and
    (3) Increase the price preferences for domestic end products and 
domestic construction materials.
    As explained above, the purpose of the amendments is to promote the 
procurement by the Government of goods, products, and materials from 
sources that will help American businesses compete in strategic 
industries and help America's workers thrive. Improved Buy American 
rules will help ensure that Federal procurement plays an important role 
as part of the Administration's policy to build back the American 
economy so it can continue to lead the global

[[Page 40982]]

marketplace, supporting U.S.-based businesses--small and large, urban 
and rural, including those that have been historically disadvantaged. 
In pursuit of those goals, this proposed rule would provide for--
     An increase to the domestic content threshold, a schedule 
for future increases, and a fallback threshold that would allow for 
products meeting a specific lower domestic content threshold to qualify 
as domestic products under certain circumstances;
     A framework for application of an enhanced price 
preference for a domestic product that is considered a critical product 
or made up of critical components; and
     A postaward domestic content reporting requirement for 
contractors.
    The proposed rule does not seek to replace the ``component test'' 
in FAR Part 25 at this time. Instead, the FAR Council seeks additional 
information regarding the strengths and shortcomings of the ``component 
test,'' as currently structured, and requests public comment on how 
domestic content might be better calculated to support America's 
workers and businesses, strengthening our economy, workers, and 
communities across the country (see related questions below).

II. Discussion and Analysis

A. Increase to the Domestic Content Threshold

    This rule proposes to increase the domestic content threshold 
initially from 55 percent to 60 percent, to increase the threshold to 
65 percent in two years, and to increase the threshold to 75 percent 
five years after the second increase. A supplier holding a contract 
with a period of performance that spans the schedule of threshold 
increases will be required to comply with each increased threshold for 
the items in the year of delivery. For example, a supplier awarded a 
contract in 2027 will have to comply with the 65 percent domestic 
content threshold initially, but in 2029 will have to supply products 
with 75 percent domestic content. The domestic content threshold is 
implemented in the FAR through the definitions of ``domestic 
construction material'' and ``domestic end product.'' As such, this 
rule proposes to make amendments throughout FAR part 25 and to FAR 
clauses 52.225-1, 52.225-3, 52.225-9, and 52.225-11 to reflect the 
increases to the domestic content threshold.

B. Fallback Threshold

    This rule also proposes to allow, until one year after the increase 
of the domestic content threshold to 75 percent, for the acceptance of 
the former domestic content threshold in instances where end products 
or construction materials that meet the new domestic content threshold 
are not available or are of unacceptable cost. For example, if a 
domestic end product that exceeds the 60 percent domestic content 
threshold is determined to be of unreasonable cost after application of 
the price preference, then for evaluation purposes the Government will 
treat an end product that is manufactured in the United States and 
exceeds 55 percent domestic content, but not 60 percent domestic 
content, as a domestic end product. In order to implement this fallback 
threshold, the rule proposes to require offerors to indicate which of 
their foreign end products exceed 55 percent domestic content. The 
fallback threshold only applies to construction material that does not 
consist wholly or predominantly of iron or steel or a combination of 
both and to end products that do not consist wholly or predominantly of 
iron or steel or a combination of both. Amendments are proposed 
throughout FAR part 25, to FAR provisions 52.212-3, 52.225-2, and 
52.225-4, and to FAR clauses 52.225-9 and 52.225-11 to reflect the 
fallback threshold.

C. Enhanced Price Preference for Critical Products and Critical 
Components

    The rule provides for a framework through which higher price 
preferences will be applied for end products and construction material 
deemed to be critical or made up of critical components. The 
definitions for critical component and/or critical item are added to 
FAR 25.003 and to the FAR provisions and clauses at 52.212-3, 52.225-1, 
52.225-2, 52.225-3, 52.225-9, and 52.225-11. The list of critical items 
and components is being added to newly-designated FAR 25.105; existing 
FAR 25.105 is proposed to be redesignated as 25.106. Procedures for 
applying the price preferences associated with critical items and 
components are added to the redesignated FAR 25.106 for supply 
contracts and 25.204 for construction contracts. The rule requires 
offerors to identify in their offer domestic end products that contain 
a critical component, so that contracting officers can apply the higher 
price preferences when appropriate. Without such information, 
contracting officers would not know when a proposed domestic end 
product contains a critical component. An explicit requirement to 
provide this information is added to FAR provisions 52.212-3, 52.225-2, 
and 52.225-4.
    The process for identifying critical items and critical components 
to receive the price preference would use the quadrennial critical 
supply chain review instituted in E.O. 14017, America's Supply Chains 
(86 FR 11849), as well as the National COVID Strategy. OMB will lead a 
subsequent assessment to further distill the list of products 
designated critical to those products for which procurement is likely 
to make a meaningful difference toward strengthening U.S. supply 
chains. The products that will receive a price preference will be 
determined in a separate rulemaking, to allow time for the supply chain 
review and trade pact waiver review to be completed first. Not all 
critical products identified through the supply chain review will 
necessarily qualify for the preference. The process for determining 
critical products will also determine the enhanced price preference for 
each critical item or end product with critical components.
    Once the list is established in the FAR, the list will be published 
in the Federal Register for public comment no less frequently than once 
every four years to reflect changes to the list.

D. Postaward Reporting Requirement

    In order to gain insight into the actual domestic content of 
products sold under contract and thereby support the Administration's 
broader supply chain security initiatives, this rule requires 
contractors to provide the specific domestic content of critical items, 
domestic end products containing a critical component, and domestic 
construction material containing a critical component, that were 
awarded under a contract. Contractors are not required to report the 
domestic content of COTS items. Two new FAR clauses were created to 
implement the reporting requirement. One clause is for supplies and one 
is for construction materials; prescriptions were added to FAR 25.1101 
and 25.1102 to capture this requirement. Since specific critical items 
or critical components will not be added to the FAR until the separate 
rulemaking referenced in section II.C of this preamble, these clauses 
will not be operational until finalization of that separate rule.

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 rule amends the provisions and clauses at FAR--

[[Page 40983]]

     52.212-3, Offeror Representations and Certifications--
Commercial Items;
     52.225-1, Buy American--Supplies;
     52.225-2, Buy American Certificate;
     52.225-3, Buy American--Free Trade Agreements--Israeli 
Trade Act;
     52.225-4, Buy American--Free Trade Agreements--Israeli 
Trade Act Certificate;
     52.225-9, Buy American--Construction Materials; and
     52.225-11, Buy American--Construction Materials Under 
Trade Agreements.
    Those provisions and clauses continue to apply, or not apply, to 
acquisitions at or below the SAT and to acquisitions for commercial and 
COTS items as they did prior to this rule.
    This rule proposes to add two clauses at FAR 52.225-XX, Domestic 
Content Reporting Requirement--Supplies, and FAR 52.225-YY, Domestic 
Content Reporting Requirement--Construction Materials. The clauses are 
prescribed at FAR 25.1101 for solicitations and contracts containing 
the clause at 52.225-1 or 52.225-3 for supply contracts, and at FAR 
25.1102 for solicitations and contracts containing the clause at 
52.225-9 or 52.225-11 for construction contracts. The clauses are 
applicable to acquisitions at or below the SAT and to acquisitions for 
commercial items, excluding COTS items.
    The clause will apply to acquisitions at or below the SAT and to 
acquisitions for commercial items because exempting those acquisitions 
would severely limit the use of the provision. Considering the 
threshold at which certain trade agreements apply, the Buy American 
statute predominantly applies to acquisitions below the SAT. Also, 
according to procurement data, almost half of the acquisitions to which 
the Buy American statute currently applies use commercial acquisition 
procedures.
    With respect to COTS items, the Administrator for Federal 
Procurement Policy, using authorities provided at 41 U.S.C. 1907 to 
reduce administrative burdens imposed by Government-unique 
requirements, waived the component test of the Buy American statute for 
the acquisition of COTS items in 2009. For this reason, it is not 
expected at this time that the clause will apply to that class of 
acquisitions. However, as explained in OMB Memorandum M-21-26, 
Increasing Opportunities for Domestic Sourcing and Reducing the Need 
for Waivers from Made in America Laws, the Made in America Office, in 
collaboration with the Administrator, other members of the FAR Council, 
and interested parties, will review the findings and conclusions of the 
2009 determination. The results of that review will help to inform if 
and the extent to which the component test should be restored.

IV. Expected Impact of the Rule

    This rule proposes three sets of changes to the FAR's 
implementation of the Buy American statute:
     An increase to the domestic content threshold required to 
be met for a product to be defined as ``domestic,'' a schedule for 
future increases, and a fallback threshold that would allow for 
products meeting a specific lower domestic content threshold to qualify 
as a domestic product under certain circumstances;
     A framework for application of an enhanced price 
preference for a domestic product that is considered a critical product 
or made up of critical components; and
     A postaward domestic content reporting requirement for 
contractors.
    The impact of each set of changes is addressed individually below.
Scheduled Increase to the Domestic Content Threshold and the Use of a 
Fallback Threshold
    The fundamental goal of the rule is to increase the share of 
American-made content in a domestic end product or construction 
material. The graduated increase is intended to drive to this goal in a 
proactive but measured fashion so that contractors have adequate time 
to make adjustments in their supply chains. When this rule is 
implemented, domestic industries supplying domestic end products are 
likely to benefit from a competitive advantage.
    Federal Procurement Data System (FPDS) data for fiscal year 2020 
indicate there were 121,063 new contract awards for products and 
construction, valued over the micro-purchase threshold through the 
threshold at which the WTO GPA applies, to which the Buy American 
statute applied. It is estimated that 37,503 of these awards were for 
commercially available off-the-shelf (COTS) items and since the 
domestic content threshold test does not apply to COTS items (except 
those involving iron/steel), those awards were subtracted from the 
121,063 total eligible awards. After removing potential COTS item 
acquisitions from the data, there are estimated to be 83,560 contract 
awards to 14,163 unique contractors.
    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). The fallback 
threshold is intended to: (1) Help prevent scheduled increases in the 
content threshold from taking work away from domestic suppliers who are 
actively adjusting their supply chains; and (2) avoid unintentionally 
raising the foreign content of Federal purchases through increased use 
of waivers while domestic suppliers adjust. The fallback threshold 
would be a temporary measure designed to limit foreign content while 
contractors transition to U.S.-based supply chains.
    In response to public comment, the FAR Council will consider larger 
or smaller increases in the content threshold as well as differently 
timed increases in the final rule. See questions for the public, below. 
These determinations will be based on considerations such as potential 
impact on competition, potential impact on supplier diversity, 
including participation of small disadvantaged businesses and 
businesses in other underserved communities, lost opportunities for 
American workers, and other considerations identified by public comment 
and other interested parties.
    At least three arguments point to the possibility that any 
increased burden with regard to the timed increase to the domestic 
content threshold, on contractors in particular, could be small, if not 
de minimis.
    First, DoD, GSA, and NASA do not anticipate significant cost from 
contractor familiarization with the rule given the history of 
rulemaking and E.O.s in this area. The basic mechanics of the Buy 
American statute (e.g., general definitions, certifications required of 
offerors to demonstrate end products are domestic) remain unchanged and 
continue to reflect processes that are decades old. Under the proposed 
rule, when deciding whether to pursue a procurement or what kind of 
product mix (i.e., domestic or foreign) and pricing to propose in 
response to a solicitation, offerors now will have to plan for future 
changes to the domestic content threshold during the period of 
performance of the contemplated contract. Those offerors that make a 
business decision not to modify their supply chains over time to comply 
with the scheduled increases to the domestic content threshold will 
still be able to propose an offer for Federal contracts but will 
generally no longer enjoy a price preference.
    Second, some, if not many, contractors may already be able to 
comply with the higher domestic content requirement needed to meet the 
definition of domestic end product under E.O. 14005 and the proposed 
rule.

[[Page 40984]]

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 significantly increased 
emphasis on the need for 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. A U.S. Bureau of Economic Analysis study using 2015 data, 
https://www.commerce.gov/sites/default/files/migrated/reports/2015-what-is-made-in-america_0.pdf, found that on average, 82 percent of the 
value of U.S. manufacturing output is comprised of domestic content. 
This seems to indicate that a domestic content threshold of 60 percent 
would not inflict additional burden on contractors. In addition, a 
preliminary analysis of available data in FPDS on the impact of an 
increase earlier this year in the domestic content threshold from 50 
percent to 55 percent did not appear to trigger an uptick in waivers, 
suggesting companies may already be incorporating content that can meet 
at least the 55 percent level:

----------------------------------------------------------------------------------------------------------------
                                           Feb-April 2021    Feb-April 2020    Feb-April 2019    Feb-April 2018
                                         -----------------------------------------------------------------------
                                             Total spend       Total spend       Total spend       Total spend
                                           (millions of $)   (millions of $)   (millions of $)   (millions of $)
----------------------------------------------------------------------------------------------------------------
Total...................................            $2,861            $7,578            $7,570            $7,635
----------------------------------------------------------------------------------------------------------------
Buy American Waived *...................               $15               $78               $70               $63
Percent Waived..........................              0.5%              1.0%              0.9%              0.8%
----------------------------------------------------------------------------------------------------------------
* Waivers included here are Commercial Information Technology, Domestic Non-availability, Public Interest
  Determination, Resale, or Unreasonable Cost. They do not include waivers due to trade agreements or DoD
  qualifying country, which would not be impacted by a change in the content threshold.

    Third, it is anticipated that some contractors' products and 
construction materials may not meet the definition of domestic end 
product and construction material unless the contractors take steps to 
adjust their supply chains to increase the domestic content. Those 
contractors that make a business decision not to modify their supply 
chains will still be able to bid on Federal contracts and could still 
enjoy a price preference if their end product meets the prior 
definition of domestic end product (i.e., exceeding 55 percent). In the 
event that the Government does not receive any offers of domestic end 
products or the domestic end products are of unreasonable cost, the 
Government will treat the end products that have at least 55 percent 
domestic content as a domestic end product for evaluation purposes. 
Offerors now have an information collection burden of identifying when 
a foreign end product meets the fallback threshold (see section VIII of 
this preamble), but that burden should be offset by the benefit of 
potentially still receiving a price preference for these end products 
that would have been considered domestic prior to the increases to the 
domestic content threshold proposed in this rule.
    Offerors have an option to increase the domestic content and 
continue to offer domestic products, in which case they may benefit 
from the price preference for domestic products, or they may continue 
to offer the same product, which will now be evaluated as foreign but 
may still benefit from a price preference. DoD, GSA, and NASA do not 
have any data on how many currently domestic products would fall into 
this categoryor 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.
Enhanced Price Preference for Critical Items
    The goal of the enhanced price preference for critical items and 
components is to provide a steady source of demand for domestically 
produced critical products. As explained above, the rule only creates a 
framework. Separate rulemaking will be undertaken to add critical 
products and components to the FAR and to establish the associated 
preferences. Therefore, the impact associated with this concept will be 
captured in the subsequent rulemaking.
    There is an information collection burden associated with offerors 
identifying when a domestic end product or domestic construction 
material contains a critical component (see section VIII of this 
preamble), but that burden should be offset by the larger price 
preference received for these items.
Postaward Reporting Requirement for Contractors
    Today, the acquisition community has limited direct information on 
the overall level of domestic content of the items it buys, other than 
whether or not the content meets the required threshold. The data on 
the amount of actual domestic content provided in the contractors' 
reports is expected to provide the Made in America Office in the Office 
of Management and Budget valuable insight on the domestic content of 
the manufactured products that are integral to U.S. national and 
economic security. Separate rulemaking will be undertaken to add 
critical items and components to the FAR and to establish the 
associated preferences. Therefore, the impact associated with postaward 
reporting for these items will be captured in the subsequent 
rulemaking.
    This postaward reporting requirement for critical items and 
critical components is a step in building the Government's capability 
in collecting data that will enable more informed decisions in this 
arena, e.g., how and when to increase domestic content thresholds, what 
enhanced price preference level for critical items is most efficient, 
etc. This phased approach will provide an opportunity for the 
Government to evaluate the impact of this information collection, with 
potential expansion in future years.
    There is an information collection burden associated with the 
reporting requirement. See section VIII of this preamble. The 
calculation provided in section VIII is a broad estimate since there is 
no specified list of critical items or components at this time.
Request for Comments
    Based on the above, DoD, GSA, and NASA do not expect a significant 
cost impact on the public, but lack data to make a definitive 
determination and seek information from the public to assist with this 
analysis and to help further inform the regulatory drafters as they 
develop the final rule and carry out other responsibilities under the 
E.O. Feedback is requested on the following questions pertaining to 
this proposed rule:

[[Page 40985]]

    (1) Increased Domestic Content Thresholds: Do products you make or 
sell to the Federal Government currently meet the proposed increased 
domestic content thresholds of 60 percent, 65 percent, or 75 percent?
    (a) Would you be willing and able to adjust your supply chain to 
meet the proposed new thresholds given the scheduled phase-in? Why or 
why not? Please discuss any obstacles that might interfere with, or 
opportunities--including actions by the Federal Government--that might 
support, your ability to meet the proposed increases in domestic 
content thresholds.
    (b) If you are willing to make supply chain adjustments, please 
provide an overview of associated costs and benefits to making these 
changes. Explain to what extent any costs may be offset by increased 
Federal Government sales or price preferences. If relevant, provide an 
overview of expected increased economic activity through the increased 
use of domestic suppliers and domestic labor.
    (2) Fallback Threshold: Please address the utility of the proposed 
fallback threshold, including whether it would give your company time 
to adjust to a higher domestic content threshold; whether the fallback 
threshold should increase as the domestic content threshold increases; 
whether the existence of the fallback threshold would delay the ability 
to increase Made in America content in Federal procurement; the process 
by which the fallback threshold should be eliminated in order to 
maximize the use of Made in America content; and any challenges posed 
by the complexity of employing a fallback threshold.
    (3) Price Preferences: Please comment on the effectiveness of 
current price preference levels at promoting domestic economic activity 
and employment and strengthening domestic supply chains for critical 
items; address whether increased price preferences would be more, less, 
or equally as effective, and, if more effective, at what level.
    (4) Enhanced Price Preferences: Please comment on the anticipated 
effectiveness of providing enhanced price preferences to strengthen the 
domestic supply chains for items and components deemed ``critical''. In 
particular--
    (a) Which specific items or components or combination thereof, if 
any, should receive an enhanced price preference and why?
    (b) What process should the Office of Management and Budget use to 
determine which of the critical items identified through the critical 
supply chain review under E.O. 14017 and the National COVID Strategy 
are likely to make a meaningful difference toward strengthening 
domestic supply chains such that an enhanced preference is merited? In 
addition to national and economic security, should the process identify 
items and components that are critical to other factors such as 
national public health and sustainability? Should the process consider 
the impact on the creation of well-paying jobs in identifying critical 
items or components?
    (c) Is four years a reasonable interval for updating the critical 
components or item list? Why or why not?
    (d) How should enhanced price preferences be applied? For example, 
if a finished product includes multiple critical components, what is 
the most effective way to apply an enhanced price preference (e.g., a 
single time, once per component)?
    (e) Please address whether and how enhanced price preferences 
should be considered for commercial items that have been identified as 
critical and currently are subject to either a full statutory Buy 
American waiver (in the case of information technology) or a partial 
regulatory Buy American waiver (in the case of COTS items) and the 
reasons for your response.
    (f) If particular vendors can supply products that exceed the 
minimum domestic content threshold by significant margins, should the 
Federal Government consider whether and how to incentivize such 
practices to maximize the use of taxpayer dollars on domestic content?
    (5) Content Calculation: Section 8(i) of the E.O. directed the FAR 
Council to consider replacing the ``component test'' in FAR Part 25 
with a test under which domestic content is measured by a ``value 
added'' calculation. Please comment on (a) how such ``value'' could be 
calculated in order to promote U.S.-based production or U.S. job-
supporting economic activity; (b) whether a ``value added'' calculation 
would be superior to the current approach and why or why not; and (c) 
whether approaches other than a ``value added'' calculation should be 
employed to achieve the goals of the E.O. (for example, should the 
definition of ``cost of components'' in FAR 25.003 be changed).
    (6) Content Reporting: Will the proposed requirement to report on 
the actual level of domestic content included in designated critical 
products sold to the Federal Government provide greater compliance with 
Made in America Laws? Why or why not?
    (a) Will the requirement negatively impact small or disadvantaged 
businesses, such as those who are resellers or distributors? How can 
these impacts be mitigated?
    (b) What other procedures can the Federal Government employ to 
better monitor compliance with Made in America Laws?
    (7) Contracting with small and disadvantaged businesses: What 
specific steps should the Federal Government consider to maximize 
opportunities for small and disadvantaged businesses and avoid 
unintended barriers to entry as it works to strengthen the impact of 
Made in America Laws, diversify domestic supplier bases, and create new 
opportunities for U.S. firms and workers?

V. Public Meeting

    The Made in America Office and the FAR Council are co-hosting a 
virtual public meeting to obtain the views of experts and interested 
parties in the private sector regarding implementation of section 8, as 
well as other sections, of E.O. 14005. The meeting will be recorded and 
a transcript of the meeting will be posted to regulations.gov, under 
the ``FAR Case 2021-008'' docket. For more details on the public 
meeting, such as the agenda, visit https://www.acquisition.gov/publicmeeting_FAR_proposedrule-2021-008_BuyAmericanAct.
    Registration: Individuals wishing to participate in the virtual 
meeting must register at https://gsa.zoomgov.com/webinar/register/WN_HXrvVS0hS1-pksKSNrEKIA. There is limited capacity of 3,000 attendees 
and registration will be on a first-come, first-served basis. Early 
registration is encouraged. Members of the press, in addition to 
registering for this event, must also RSVP to [email protected] by August 
16, 2021. For any questions regarding registration, please email 
[email protected].
    Presentations: If you wish to make a presentation, instructions for 
submitting presentations will be posted at https://www.acquisition.gov/publicmeeting_FAR_proposedrule-2021-008_BuyAmericanAct. Presentations 
will be posted to regulations.gov, under the ``FAR Case 2021-008'' 
docket.
    Other means of submitting public comments: In lieu of, or in 
addition to, participating in the public meeting, interested parties 
may also submit written comments on the rule and responses to the 
questions contained in this preamble to regulations.gov via the Federal 
eRulemaking Portal in accordance with the instructions in the DATES and 
ADDRESSES sections of this document.

[[Page 40986]]

    Questions for the public: In addition to the questions in Section 
IV above specific to FAR case 2021-008, public feedback is also 
requested on the following questions pertaining to other sections of 
E.O. 14005:
    (1) Commercial IT: Acquisitions of commercial IT are exempt by 
statute from the requirements of the Buy American statute. Section 10 
of the Executive Order requires a review of the impact of this 
exception, which has been in effect for more than 15 years. To help 
inform this review, the FAR Council seeks input on the extent to which 
the original purpose of the exception, or other goals of the exception, 
remain relevant. Under what situations, if any, do current marketplace 
conditions support narrowing or lifting the statutory waiver? Please be 
specific in your description, which might identify market segments or 
specific items, anticipated benefits and drawbacks of the rollback, and 
steps the FAR Council or other Government stakeholders might take to 
mitigate potential unintended consequences.
    (2) Commercially Available Off-the-Shelf Items: In 2009, the Office 
of Federal Procurement Policy (OFPP), using authorities provided by 
Congress to reduce administrative burdens imposed by Government-unique 
requirements, waived the component test of the Buy American statute for 
acquisition of COTS items. In making the decision, OFPP concluded, in 
part, that manufacturers' component purchasing decisions are based on 
factors such as cost, quality, availability, and maintaining the state 
of the art, not the country of origin, making it difficult for a 
manufacturer to guarantee the source of its components over the term of 
a contract. OFPP further concluded that continued application of the 
content requirement created a barrier to entry which may limit the 
Government's ability to purchase products already in the commercial 
distribution systems. OFPP and the other members of the FAR Council 
seek to understand the extent to which the original purpose of the 
partial waiver remains relevant.
    i. How has the application of the COTS waiver since 2009 been 
consistent or inconsistent with its stated purpose? For example, has 
the use of COTS expanded (or narrowed) since 2009 in ways that may not 
have been originally contemplated? If applicable, provide specific 
examples of the application of the COTS waiver that demonstrate 
inconsistency with its original purpose.
    ii. Has the COTS waiver benefitted domestic firms and their 
employees? Why or why not?
    iii. Under what situations, if any, do current marketplace 
conditions support narrowing or lifting the partial waiver? Please be 
specific in your description, which might identify critical industries, 
specific market segments, or specific items; please discuss anticipated 
benefits and drawbacks of a rollback, including impacts on small and 
disadvantaged business enterprises, and steps the FAR Council or other 
Federal entities could take to mitigate potential unintended 
consequences.
    iv. Regardless of any other changes to the COTS partial waiver, 
should the Federal Government gather data on the domestic content of 
all COTS items, some COTS items or categories of COTS items to inform 
future policy making? If so, what items or categories should be 
addressed? How might this be accomplished consistent with the intent of 
the COTS partial waiver to reduce administrative burdens?
    v. Please provide any recommendations to maintain and increase 
domestic production of COTS items (both manufacturing of the end 
product and its components) in critical industries.
    (3) Services: How can the Federal Government promote the use of 
Made in America services? What standards or methodologies might be 
considered that could be easily adapted by commercial sellers? Are 
there critical services that should be accorded price preferences, and 
if so, why?
    (4) Trade agreements: Because of the World Trade Organization--
Government Procurement Agreement (WTO GPA) and the Trade Agreements Act 
(TAA), domestic content rules do not currently apply to most non-DoD 
goods acquisitions over $182,000. Thus, the newly proposed domestic 
content threshold will not apply to many purchases that the Government 
makes. Under the TAA, a purchase is treated as U.S.-made if it is 
mined, produced, or manufactured in the United States or substantially 
transformed in the United States, even if it is made of 100 percent 
foreign content. As a result, a substantially transformed U.S.-made 
product may have far less domestic content when compared to a domestic 
end product acquired under the Buy American statute. While U.S. trade 
obligations are beyond the scope of this rulemaking, the Made in 
America Office and the FAR Council seek to understand more about the 
impact of the substantial transformation test and potential lost 
opportunities for American workers.
    i. To the best of your knowledge, what specific types of products 
are sold to the Federal Government that count as being made in America 
under the Trade Agreements Act (``U.S.-made end product''), but contain 
less than the current 55 percent U.S. content threshold required under 
the Buy American statute? Do the differing standards provide a benefit 
to domestic firms?
    ii. Is ``substantial transformation'' a useful tool to promote good 
domestic jobs and domestic manufacturing? Why or why not?
    iii. What steps could the Federal Government take, consistent with 
its trade obligations, to acquire useful information about the content 
of goods procured pursuant to trade obligations, including in critical 
supply chains? Useful information might include the percentage of 
domestic content and country of origin for certain components 
identified by the agency.
    iv. Please provide any recommendations to maintain and increase 
domestic production in critical industries in acquisitions subject to 
trade obligations.
    (5) Additional ideas: Please provide any additional recommendations 
for:
    i. Strengthening content standards under the Buy American statute, 
including recommendations for how content is calculated and whether and 
why certain products or categories of products should have more 
stringent content standards than others.
    ii. The use of waivers and exceptions to the Buy American statute, 
including proposals to narrow or expand the scope of existing waivers; 
ensure appropriate interpretation of existing waivers; and policies or 
practices to ensure that unnecessary waivers are not granted.
    iii. Improving the Federal Government's ability to enforce the 
content standards in the Buy American statute, including by verifying 
domestic content levels.

VI. 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 is a significant regulatory action and, therefore, was subject to 
review under Section 6(b) of E.O. 12866, Regulatory Planning and 
Review, dated September 30, 1993.

[[Page 40987]]

VII. Congressional Review Act

    As required by the Congressional Review Act (5 U.S.C. 801-808) 
before an interim or final rule takes effect, DoD, GSA, and NASA will 
send the rule and the ``Submission of Federal Rules Under the 
Congressional Review Act'' form to each House of Congress and to the 
Comptroller General of the United States. A major rule cannot take 
effect until 60 days after it is published in the Federal Register. 
This rule is not anticipated to be a major rule under 5 U.S.C. 804.

VIII. Regulatory Flexibility Act

    DoD, GSA, and NASA do not expect this rule to have a significant 
economic impact on a substantial number of small entities within the 
meaning of the Regulatory Flexibility Act, 5 U.S.C. 601-612. This rule 
changes the existing minimum domestic content percentages and 
introduces a discretionary proposal evaluation strategy. This rule 
proposes to amend 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. An Initial Regulatory 
Flexibility Analysis (IRFA) has been performed and is summarized as 
follows:

    This rule proposes to amend the FAR to implement an Executive 
Order regarding ensuring the future is made in all of America by all 
of America's workers.
    The objective of this rule is to strengthen domestic preferences 
under the Buy American statute, as required by E.O. 14005, Ensuring 
the Future is Made in All of America by All of America's Workers, by 
providing--
     An increase to the domestic content threshold required 
to be met for a product to be defined as ``domestic,'' a schedule 
for future increases, and a fallback threshold which would allow for 
products meeting a specific lower domestic content threshold to 
qualify as a domestic product under certain circumstances;
     A framework for application of an enhanced price 
preference for a domestic product that is considered a critical 
product or made up of critical components; and
     A postaward domestic content reporting requirement for 
contractors.
    Different parts of the rule are expected to apply to a different 
number and universe of small entities. The impacted small entities, 
by portion of the rule, are described below. But in general, the 
rule will apply to contracts subject to the Buy American statute. 
The statute does not apply to services, or overseas, nor does it 
apply to acquisitions to which certain trade agreements apply (e.g., 
World Trade Organization Government Procurement Agreement (WTO-
GPA)). The maximum possible number of small entities to which the 
rule will apply are the 31,103 active small business registrants in 
the System for Award Management (SAM) who do not provide services.

--Timed increase to the domestic content threshold and allowance of 
a fallback threshold. Federal Procurement Data System (FPDS) data 
for fiscal year 2020 indicates there were 86,490 new contract awards 
to small business for products and construction, valued over the 
micro-purchase threshold through the threshold at which the WTO-GPA 
applies, to which the Buy American statute applied. It is estimated 
that 24,459 of these awards were for commercially available off-the-
shelf (COTS) items. Because the domestic content threshold test does 
not apply to COTS items (except those involving iron/steel), those 
awards were subtracted from the 86,490 total eligible awards. After 
removing potential COTS item acquisitions from the data, there are 
estimated to be 62,031 contract awards to 11,704 unique small 
businesses.
--Enhanced price preference for a critical product or component. 
This rule only creates a framework. Separate rulemaking will be done 
to add critical products and components to the FAR and to establish 
the associated preferences. However, the Government assumes that 10 
percent of the contract awards subject to the Buy American statute 
will be for critical products or components. Therefore, the 
Government estimates that 8,649 (10 percent of 86,490) of awards to 
small businesses may be impacted. This translates to 1,632 unique 
small businesses.
--Postaward reporting requirement. The number of impacted small 
businesses for this part of the rule is similar to the number of 
those impacted by the enhanced price preference for critical 
products or components: The postaward reporting requirement applies 
to contracts awarded for critical products that are subject to the 
Buy American statute. However, unlike the enhanced price preference, 
the postaward reporting requirement will not apply to COTS item 
acquisitions, which results in a lower estimate of 1,170 impacted 
small businesses.

    The proposed 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. 
manufacturers.
    This proposed rule does not include any new recordkeeping or 
other compliance requirements for small businesses. However, the 
proposed rule does contain a few additional reporting requirements 
for certain offerors, including small businesses.
    Small businesses who submit an offer for a solicitation subject 
to the Buy American statute already have to list the foreign end 
products included in their offer. This proposed rule will require 
that the offeror also identify which of these foreign end products 
meet or exceed the fallback domestic content threshold. This rule 
will also require proposals to identify which offered domestic end 
products contain a critical component. Without that information, 
contracting officers will not be able to apply the ``enhanced price 
preference'' when applicable. These reporting requirements are not 
specific to small businesses, so data does not exist to estimate the 
number of small business subject to these requirements. However, the 
data suggests that there will be approximately 8,800 impacted 
respondents total, small and other than small.
    Small businesses awarded a contract containing the new clause 
requiring postaward reporting will need to provide to the Made in 
America Office domestic content information for end products that 
are critical products, domestic end products containing a critical 
component, or domestic construction material containing a critical 
component, if those items are awarded under the contract. Based on 
fiscal year 2020 data from FPDS, it is estimated that there will be 
6,203 contracts awarded to 1,170 unique small businesses that would 
be subject to this reporting requirement.
    This rule does not duplicate, overlap, or conflict with any 
other Federal rules.
    DoD, GSA, and NASA were unable to identify any significant 
alternatives.

    The Regulatory Secretariat Division has submitted a copy of the 
IRFA to the Chief Counsel for Advocacy of the Small Business 
Administration. A copy of the IRFA may be obtained from the Regulatory 
Secretariat Division. DoD, GSA, and NASA invite comments from small 
business concerns and other interested parties on the expected impact 
of this rule on small entities.
    DoD, GSA, and NASA will also consider comments from small entities 
concerning the existing regulations in subparts affected by the rule in 
accordance with 5 U.S.C. 610. Interested parties must submit such 
comments separately and should cite 5 U.S.C. 610 (FAR Case 2021-008), 
in correspondence.

IX. Paperwork Reduction Act

    The Paperwork Reduction Act (44 U.S.C 3501-3521) applies because 
the proposed rule contains information collection requirements. Some of 
those information collection requirements are additional to the 
paperwork burden previously approved under OMB Control Number 9000-
0024, Buy American, Trade Agreements, and Duty-Free Entry. The proposed 
rule also contains a new information collection requirement. 
Accordingly, the Regulatory Secretariat Division has submitted a 
request for approval of a revised information collection requirement 
concerning information collection 9000-0024 to the Office of Management 
and Budget as well as a request for approval of a new

[[Page 40988]]

information collection requirement concerning ``Domestic Content 
Reporting Requirement'' to the Office of Management and Budget.
    With regard to existing information collection 9000-0024:
    A. Public reporting burden for this collection of information is 
estimated to average 0.63 hour per response, including the time for 
reviewing instructions, searching existing data sources, gathering and 
maintaining the data needed, and completing and reviewing the 
collection of information.
    The annual reporting burden estimated as follows:
    Respondents: 16,478.
    Total Annual Responses: 69,165.
    Total Burden Hours: 43,469.
    B. Request for Comments Regarding Paperwork Burden. Submit comments 
on this collection of information no later than September 28, 2021 
through https://www/regulations.gov and follow the instructions on the 
site. All items submitted must cite OMB Control No. 9000-0024, Buy 
American, Trade Agreements, and Duty-Free Entry. Comments received 
generally will be posted without change to https://www.regulations.gov, 
including any personal and/or business confidential information 
provided. To confirm receipt of your comment(s), please check https://www.regulations.gov, approximately two to three days after submission 
to verify posting. If there are difficulties submitting comments, 
contact the GSA Regulatory Secretariat Division at 202-501-4755 or 
[email protected].
    With regard to the new information collection for clauses 52.225-XX 
and 52.225-YY:
    A. Public reporting burden for this collection of information is 
estimated to average 3 hours per response, including the time for 
reviewing instructions, searching existing data sources, gathering and 
maintaining the data needed, and completing and reviewing the 
collection of information.
    The annual reporting burden estimated as follows:
    Respondents: 1,393.
    Total Annual Responses: 8,356.
    Total Burden Hours: 25,068.
    B. Request for Comments Regarding Paperwork Burden.
    Submit comments on this collection of information no later than 
September 28, 2021 through https://www/regulations.gov and follow the 
instructions on the site. All items submitted must cite OMB Control No. 
9000-XXXX, Domestic Content Reporting Requirement. Comments received 
generally will be posted without change to https://www.regulations.gov, 
including any personal and/or business confidential information 
provided. To confirm receipt of your comment(s), please check https://www.regulations.gov, approximately two to three days after submission 
to verify posting. If there are difficulties submitting comments, 
contact the GSA Regulatory Secretariat Division at 202-501-4755 or 
[email protected].
    C. For both sets of information collections, public comments are 
particularly invited on:
     The necessity of this collection of information for the 
proper performance of the functions of Federal Government acquisitions, 
including whether the information will have practical utility;
     The accuracy of the estimate of the burden of this 
collection of information;
     Ways to enhance the quality, utility, and clarity of the 
information to be collected; and
     Ways to minimize the burden of the collection of 
information on respondents, including the use of automated collection 
techniques or other forms of information technology.
    Requesters may obtain a copy of the supporting statement from the 
General Services Administration, Regulatory Secretariat Division by 
calling 202-501-4755 or emailing [email protected]. Please cite OMB 
Control Number 9000-XXXX, Domestic Content Reporting Requirement or OMB 
Control Number 9000-0024, Buy American, Trade Agreements, and Duty-Free 
Entry, in all correspondence.

List of Subjects in 48 CFR Parts 1, 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 propose amending 48 CFR parts 1, 25, 
and 52 as set forth below:

0
1. The authority citation for 48 CFR parts 1, 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 1-- FEDERAL ACQUISITION REGULATION SYSTEM

0
2. In section 1.106 amend in the table following the introductory text, 
by adding in numerical order, entries for ``52.225-XX'' and ``52.225-
YY'' to read as follows.


1.106   OMB approval under the Paperwork Reduction Act.

* * * * *

------------------------------------------------------------------------
                                                           OMB  Control
                       FAR segment                              No.
------------------------------------------------------------------------
 
                                * * * * *
52.225-XX...............................................       9000-XXXX
52.225-YY...............................................       9000-XXXX
 
 
                                * * * * *
------------------------------------------------------------------------

* * * * *

PART 25--FOREIGN ACQUISITION

0
3. Amend section 25.003 by--
0
a. Adding, in alphabetical order, the definitions ``Critical 
component'' and ``Critical item'';
0
b. In the definition ``Domestic construction material'' revising the 
first sentence of paragraph (1)(i)(B)(1); and
0
c. In the definition ``Domestic end product'' revising the first 
sentence of paragraph (1)(ii)(A).
    The additions and revisions reads as follows:


25.003   Definitions.

* * * * *
    Critical component means a component that is mined, produced, or 
manufactured in the United States and deemed critical to the U.S. 
supply chain. The list of critical components is at 25.105.
    Critical item means a domestic construction material or domestic 
end product that is deemed critical to the U.S. supply chain. The list 
of critical items is at 25.105.
* * * * *
    Domestic construction material means--
    (1) * * *
    (i) * * *
    (B) * * *
    (1) The cost of the components mined, produced, or manufactured in 
the United States exceeds 60 percent of the cost of all its components, 
except that the percentage will be 65 percent for items delivered in 
calendar years 2024 through 2028, and 75 percent for items delivered 
starting in calendar year 2029. * * *
* * * * *
    Domestic end product means--
    (1) * * *
    (ii) * * *
    (A) The cost of its components mined, produced, or manufactured in 
the United States exceeds 60 percent of the cost of all its components, 
except that the percentage will be 65 percent for items delivered in 
calendar years 2024 through 2028 and 75 percent for items delivered 
starting in calendar year 2029. * * *
* * * * *

[[Page 40989]]

0
4. Amend section 25.100 by--
0
a. Removing the word ``and'' at the end of paragraph (a)(3);
0
b. Redesignating paragraph (a)(4) as (a)(5); and
0
c. Adding a new paragraph (a)(4).
    The addition reads as follows:


25.100   Scope of subpart.

    (a) * * *
    (4) Executive Order 14005, January 25, 2021; and
* * * * *
0
5. Amend section 25.101 by--
0
a. Removing from paragraph (a) the phrase ``the Buy American statute 
and E.O. 13881 use'' and adding in its place the phrase ``the Buy 
American statute, E.O. 13881, and E.O. 14005 use''; and
0
b. Revising the first sentence of paragraph (a)(2)(i).
    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 shall exceed 60 percent of the cost of all the 
components, except that the percentage will be 65 percent for items 
delivered in calendar years 2024 through 2028 and 75 percent for items 
delivered starting in calendar year 2029. * * *
* * * * *


25.103   [Amended]

0
6. Amend section 25.103 by removing from paragraph (c) ``25.105'' and 
``Subpart 25.5'' and adding ``25.106'' and ``subpart 25.5'' in their 
places, respectively.


25.105   [Redesignated]

0
7. Redesignate section 25.105 as section 25.106.
0
8. Add a new section 25.105 to read as follows:


25.105   Critical components and critical items.

    (a) The following is a list of articles that have been determined 
to be a critical component or critical item and their respective 
preference factor(s):
    (1) [Reserved]
    (2) [Reserved]
    (b) The list of articles and preference factors in paragraph (a) of 
this section will be published in the Federal Register for public 
comment no less frequently than once every 4 years. Unsolicited 
recommendations for deletions from this list may be submitted at any 
time and should provide sufficient data and rationale to permit 
evaluation (see 1.502).
    (c) For determining reasonableness of cost for domestic end 
products that contain critical components or are critical items, see 
25.106(c).
0
9. Amend newly redesignated section 25.106 by--
0
a. In paragraph (a)(1) removing the phrase ``paragraph (b) of this 
section'' and adding the phrase ``paragraphs (b) and (c) of this 
section'' in its place;
0
b. In paragraph (a)(2) remove the word ``Subpart'' and adding the word 
``subpart'' in its place;
0
c. Revise paragraph (b); and
0
d. Revising paragraph (c).
    The added and revised text reads as follows:


25.106   Determining reasonableness of cost.

* * * * *
    (b) For end products that are not critical items and do not contain 
critical components. (1)(i) If there is a domestic offer that is not 
the low offer, and the restrictions of the Buy American statute apply 
to the low offer, the contracting officer must determine the 
reasonableness of the cost of the domestic offer by adding to the price 
of the low offer, inclusive of duty--
    (A) 20 percent, if the lowest domestic offer is from a large 
business concern; or
    (B) 30 percent, if the lowest domestic offer is from a small 
business concern. The contracting officer must use this factor, or 
another factor established in agency regulations, in small business 
set-asides if the low offer is from a small business concern offering 
the product of a small business concern that is not a domestic end 
product (see subpart 19.5).
    (ii) The price of the domestic offer is reasonable if it does not 
exceed the evaluated price of the low offer after addition of the 
appropriate evaluation factor in accordance with paragraph (a) or 
(b)(1)(i) of this section. See evaluation procedures at subpart 25.5.
    (2)(i) For end products that do not consist wholly or predominantly 
of iron or steel or a combination of both, if the procedures in 
paragraph (b)(1)(i) of this section result in an unreasonable cost 
determination for the domestic offer or there is no domestic offer 
received, and the low offer is for a foreign end product that does not 
exceed 55 percent domestic content, the contracting officer shall--
    (A) Treat the lowest offer of a foreign end product that is 
manufactured in the United States and exceeds 55 percent domestic 
content as a domestic offer; and
    (B) Determine the reasonableness of the cost of this offer by 
applying the evaluation factors listed in paragraph (b)(1)(i) to the 
low offer.
    (ii) The price of the lowest offer of a foreign end product that 
exceeds 55 percent domestic content is reasonable if it does not exceed 
the evaluated price of the low offer after addition of the appropriate 
evaluation factor in accordance with paragraph (a) or (b)(1)(i) of this 
section. See evaluation procedures at subpart 25.5.
    (iii) The procedures in this paragraph (b)(2) will no longer apply 
as of January 1, 2030.
    (c) For end products that are critical items or contain critical 
components. (1)(i) If there is a domestic offer that is not the low 
offer, and the restrictions of the Buy American statute apply to the 
low offer, the contracting officer shall determine the reasonableness 
of the cost of the domestic offer by adding to the price of the low 
offer, inclusive of duty--
    (A) 20 percent, plus the additional preference factor identified 
for the critical item or end product containing critical components 
listed at section 25.105, if the lowest domestic offer is from a large 
business concern; or
    (B) 30 percent, plus the additional preference factor identified 
for the critical item or end product containing critical components 
listed at section 25.105, if the lowest domestic offer is from a small 
business concern. The contracting officer shall use this factor, or 
another factor established in agency regulations, in small business 
set-asides if the low offer is from a small business concern offering 
the product of a small business concern that is not a domestic end 
product (see subpart 19.5).
    (ii) The price of the domestic offer is reasonable if it does not 
exceed the evaluated price of the low offer after addition of the 
appropriate evaluation factor in accordance with paragraph (a) or (b) 
of this section. See evaluation procedures at subpart 25.5.
    (2)(i) For end products that do not consist wholly or predominantly 
of iron or steel or a combination of both, if the procedures in 
paragraph (c)(1)(ii) of this section result in an unreasonable cost 
determination for the domestic offer or there is no domestic offer 
received, and the low offer is for a foreign end product that does not 
exceed 55 percent domestic content, the contracting officer shall--
    (A) Treat the lowest offer of a foreign end product that is 
manufactured in the United States and exceeds 55 percent domestic 
content as a domestic offer; and
    (B) Determine the reasonableness of the cost of this offer by 
applying the evaluation factors listed in paragraph (c)(1) to the low 
offer.
    (ii) The price of the lowest offer of a foreign end product that 
exceeds 55 percent domestic content is reasonable

[[Page 40990]]

if it does not exceed the evaluated price of the low offer after 
addition of the appropriate evaluation factor in accordance with 
paragraph (a) or (b) of this section. See evaluation procedures at 
subpart 25.5.
    (iii) The procedures in this paragraph (c)(2) will no longer apply 
as of January 1, 2030.
0
10. Amend section 25.200 by--
0
a. In paragraph (a)(3) removing the word ``and'';
0
b. Redesignating paragraph (a)(4) as paragraph (a)(5);
0
c. Adding a new paragraph (a)(4); and
0
d. In paragraph (c) removing the word ``Subpart'' and adding the word 
``subpart'' in its place.
    The addition reads as follows:


25.200   Scope of subpart.

    (a) * * *
    (4) Executive Order 14005, January 25, 2021; and
* * * * *
0
11. Amend section 25.201 by--
0
a. In paragraph (b) removing the phrase ``statute and E.O. 13881 use'' 
and adding the phrase ``statute, E.O. 13881, and E.O. 14005 use'' in 
its place; and
0
b. Revising the first sentence of paragraph (b)(2)(i).
    The revision reads as follows.


25.201   Policy.

* * * * *
    (b) * * *
    (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 60 percent of the cost of all the 
components, except that the percentage will be 65 percent for items 
delivered in calendar years 2024 through 2028 and 75 percent for items 
delivered starting in calendar year 2029. * * *
* * * * *
0
12. Amend section 25.204 by revising paragraph (b) to read as follows:


25.204   Evaluating offers of foreign construction material.

* * * * *
    (b)(1) For construction materials that are not critical items and 
do not contain critical components. (i) Unless the head of the agency 
specifies a higher percentage, the contracting officer shall add to the 
offered price 20 percent of the cost of any foreign construction 
material proposed for exception from the requirements of the Buy 
American statute based on the unreasonable cost of domestic 
construction materials. In the case of a tie, the contracting officer 
shall give preference to an offer that does not include foreign 
construction material excepted at the request of the offeror on the 
basis of unreasonable cost.
    (ii) For construction material that does not consist wholly or 
predominantly of iron or steel or a combination of both, if the 
procedures in paragraph (b)(1)(i) of this section result in an 
unreasonable cost determination for the domestic construction material 
offer or there is no domestic construction material offer received, and 
the low offer is for foreign construction material that does not exceed 
55 percent domestic content, the contracting officer shall--
    (A) Treat the lowest offer of foreign construction material that is 
manufactured in the United States and exceeds 55 percent domestic 
content as a domestic offer; and
    (B) Determine the reasonableness of the cost of this offer by 
applying the evaluation factor listed in paragraph (b)(1)(i) to the low 
offer.
    (iii) The procedures in paragraph (b)(1)(ii) will no longer apply 
as of January 1, 2030.
    (2) For construction material that are critical items or contain 
critical components. (i) The contracting officer shall add to the 
offered price 20 percent, plus the additional preference factor 
identified for the critical item or construction material containing 
critical components listed at section 25.105, of the cost of any 
foreign construction material proposed for exception from the 
requirements of the Buy American statute based on the unreasonable cost 
of domestic construction materials. In the case of a tie, the 
contracting officer shall give preference to an offer that does not 
include foreign construction material excepted at the request of the 
offeror on the basis of unreasonable cost. See 25.105 for list of 
critical components and critical items.
    (ii) For construction material that does not consist wholly or 
predominantly of iron or steel or a combination of both, if the 
procedures in paragraph (b)(2)(i) of this section result in an 
unreasonable cost determination for the domestic construction material 
offer or there is no domestic construction material offer received, and 
the low offer is for foreign construction material that does not exceed 
55 percent domestic content, the contracting officer shall--
    (A) Treat the lowest offer of foreign construction material that is 
manufactured in the United States and exceeds 55 percent domestic 
content as a domestic offer; and
    (B) Determine the reasonableness of the cost of this offer by 
applying the evaluation factors listed in paragraph (b)(2) to the low 
offer.
    (iii) The procedures in paragraph (c)(1)(ii) will no longer apply 
as of January 1, 2030.
* * * * *


25.501  [Amended]

0
13. Amend section 25.501 by--
0
a. In paragraph (c) removing the word ``Subpart'' and adding the word 
``subpart'' in its place; and
0
b. In paragraph (d) removing the word ``Must'' and adding the phrase 
``When trade agreements are involved, shall'' in its place.
0
14. Amend section 25.502 by revising paragraphs (c)(2), (3), and (4) to 
reads as follows:


25.502   Application.

* * * * *
    (c) * * *
    (2) If the low offer is a noneligible offer and there were no 
domestic offers (see 25.103(b)(3)), award on the low offer. The 
procedures at 25.106(b)(2) and 25.106(c)(2) do not apply.
    (3) If the low offer is a noneligible offer and there is an 
eligible offer that is lower than the lowest domestic offer, award on 
the low offer. The procedures at 25.106(b)(2) and 25.106(c)(2) do not 
apply.
    (4) Otherwise, apply the appropriate evaluation factor provided in 
25.106 to the low offer. The procedures at 25.106(b)(2) and 
25.106(c)(2) do not apply.
* * * * *
0
15. Amend section 25.503 by--
0
a. In paragraph (a)(1) removing the word ``Subpart' and adding the word 
``subpart'' in its place; and
0
b. Adding paragraph (d) to read as follows:


25.503   Group offers.

* * * * *
    (d) If no trade agreement applies to a solicitation and the 
solicitation specifies that award will be made only on a group of line 
items or all line items contained in the solicitation, determine the 
category of end products on the basis of each line item, but determine 
whether to apply an evaluation factor on the basis of the group of 
items (see 25.504-4(c), Example 3).
    (1) If the proposed price of domestic end products exceeds 50 
percent of the total proposed price of the group, evaluate the entire 
group as a domestic offer. Evaluate all other groups as foreign offers.
    (2) Apply the evaluation factor to the entire group in accordance 
with 25.502, except where 25.502(c)(4) applies and the evaluated price 
of the low offer remains less than the lowest domestic offer. Where the 
evaluated price of the

[[Page 40991]]

low offer remains less than the lowest domestic offer, treat as a 
domestic offer any group where the proposed price of end products with 
a domestic content of at least 55 percent exceeds 50 percent of the 
total proposed price of the group.
    (3) Apply the evaluation factor to the entire group in accordance 
with 25.502(c)(4).
0
16. Amend section 25.504-1 by--
0
a. In paragraph (a)(1), in the table revising the entry for ``Offer 
C'';
0
b. Revising paragraph (a)(2); and
0
c. Adding paragraph (c).
    The revised and added text reads as follows:


25.504-1  Buy American statute.

    (a)(1) * * *

------------------------------------------------------------------------
 
------------------------------------------------------------------------
 
                              * * * * * * *
Offer C.......................           $10,100  U.S.-made end product
                                                   (not domestic), small
                                                   business.
------------------------------------------------------------------------

    (2) Analysis: This acquisition is for end products for use in the 
United States and is set aside for small business concerns. The Buy 
American statute applies. Since the acquisition value is less than 
$25,000 and the acquisition is set aside, none of the trade agreements 
apply. Perform the steps in 25.502(a). Offer C is evaluated as a 
foreign end product, because it is the product of a small business but 
is not a domestic end product because the offer is of 50% domestic 
content (see 25.502(c)(4)). Since Offer B is a domestic offer, apply 
the 30 percent factor to Offer C (see 25.106(b)(2)). The resulting 
evaluated price of $13,130 remains lower than Offer B. The cost of 
Offer B is therefore unreasonable (see 25.106(b)(1)(ii)). The 
25.106(b)(2) procedures do not apply. Award on Offer C at $10,100 (see 
25.502(c)(4)(i)).
* * * * *
    (c)(1) Example 3.

------------------------------------------------------------------------
 
------------------------------------------------------------------------
Offer A.......................           $14,000  Domestic end product
                                                   (complies with the
                                                   required domestic
                                                   content), small
                                                   business.
Offer B.......................            12,500  U.S.-made end product
                                                   (not domestic,
                                                   exceeds 55% domestic
                                                   content), small
                                                   business.
Offer C.......................            10,100  U.S.-made end product
                                                   (not domestic, with
                                                   less than 55%
                                                   domestic content),
                                                   small business.
------------------------------------------------------------------------

    (2) Analysis: This acquisition is for end products for use in the 
United States and is set aside for small business concerns. The Buy 
American statute applies. Since the acquisition value is less than 
$25,000 and the acquisition is set aside, none of the trade agreements 
apply. Perform the steps in 25.502(a). Offers B and C are initially 
evaluated as foreign end products, because they are the products of 
small businesses but are not domestic end products (see 25.502(c)(4)). 
Offer C is the low offer. After applying the 30 percent factor, the 
evaluated price of Offer C is $13,130. The resulting evaluated price of 
$13,130 remains lower than Offer A. The cost of Offer A is therefore 
unreasonable. Offer B is then treated as a domestic offer, because it 
is for a U.S.-made end product that exceeds 55 percent domestic content 
(see 25.106(b)(2)). Offer B is determined reasonable because it is 
lower than the $13,130 evaluated price of Offer C. Award on Offer B at 
$12,500.
0
17. Amend section 25.504-4 by adding paragraph (c) to read as follows:


25.504-4   Group award basis.

* * * * *
    (c) Example 3.

------------------------------------------------------------------------
                                             Offers
         Item         --------------------------------------------------
                              A                B                C
------------------------------------------------------------------------
1....................  DO = $17,800...  FO (>55%) =      FO (<55%) =
                                         $16,000.         $11,200
2....................  FO (>55%) =      FO (>55%) =      DO = $10,200
                        $9,000.          $8,500.
3....................  FO (<55%) =      FO (>55%) =      FO (<55%) =
                        $11,200.         $12,000.         $11,000
4....................  DO = $10,000...  DO = $9,000....  FO (<55%) =
                                                          $6,400
                      --------------------------------------------------
    Total............  $48,000........  $45,500........  $38,800
------------------------------------------------------------------------
Key:
DO=Domestic end product (complies with the required domestic content).
FO >55% = Foreign end product with domestic content exceeding 55%.
FO <55% = Foreign end product with domestic content of 55% or less.

    Problem: The solicitation specifies award on a group basis. Assume 
only the Buy American statute applies (i.e., no trade agreements apply) 
and the acquisition cannot be set aside for small business concerns. 
All offerors are large businesses.
    Analysis: (see 25.503(d)).
    STEP 1: Determine which of the offers are domestic (see 
25.503(d)(1)):

----------------------------------------------------------------------------------------------------------------
                                        Domestic (percent)                         Determination
----------------------------------------------------------------------------------------------------------------
A..............................  $17,800 (Offer A1) + $10,000     Domestic.
                                  (Offer A4) = $27,800.
                                 $27,800/$48,000 (Offer A Total)  ..............................................
                                  = 58%
B..............................  $9,000 (Offer B4)/$45,500        Foreign.
                                  (Offer B Total) = 19.8%.
C..............................  $10,200 (Offer C2)/$38,800       Foreign.
                                  (Offer C Total) = 26.3%.
----------------------------------------------------------------------------------------------------------------


[[Page 40992]]

    STEP 2: Determine which offer, domestic or foreign, is the low 
offer. If the low offer is a foreign offer, apply the evaluation factor 
(see 25.503(d)(2)). The low offer (Offer C) is a foreign 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 $46,560 ($38,800 + 20 percent). Offer C 
remains the low offer.
    STEP 3: Determine if there is a foreign offer that could be treated 
as a domestic offer (see 25.106(b)(2) and 25.503(d)(2)).

----------------------------------------------------------------------------------------------------------------
                                    Amount of domestic content
                                            (percent)                              Determination
----------------------------------------------------------------------------------------------------------------
A..............................  N/A............................  N/A.
B..............................  $9,000 (Offer B4)/$45,500        Can be treated as domestic.
                                  (Offer B Total) $ = 19.8% is
                                  domestic AND.
                                 $16,000 (Offer B1) + $8,500      ..............................................
                                  (Offer B2) + $12,000 (Offer
                                  B3) = $36,500.
                                 $36,500/$45,500 (Offer B Total)  ..............................................
                                  = 80.2% can be treated as
                                  domestic.
                                 19.8% + 80.2% = 100% is          ..............................................
                                  domestic or can be treated as
                                  domestic.
C..............................  $10,200 (Offer C2)/$38,800       Foreign.
                                  (Offer C Total) = 26.3% is
                                  domestic.
----------------------------------------------------------------------------------------------------------------

    STEP 4: If there is a foreign offer that could be treated as a 
domestic offer, compare the evaluated price of the low offer to the 
price of the offer treated as domestic (see 25.503(d)(3)). Offer B can 
be treated as a domestic offer ($45,500). The evaluated price of the 
low offer (Offer C) is $46,560. Award on Offer B.
0
18. Amend section 25.1101 by adding paragraph (g) to read as follows:


25.1101  Acquisition of supplies.

* * * * *
    (g) Insert the clause at 52.225-XX, Domestic Content Reporting 
Requirement--Supplies, in solicitations and contracts containing the 
clause at 52.225-1 or 52.225-3.
0
19. Amend section 25.1102 by adding paragraph (f) to read as follows:


25.1102   Acquisition of construction.

* * * * *
    (f) Insert the clause at 52.225-YY, Domestic Content Reporting 
Requirement--Construction Materials, in solicitations and contracts 
containing the clause at 52.225-9 or 52.225-11.

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
20. Amend section 52.212-3 by--
0
a. Revising the date of the provision;
0
b. In paragraph (f)(1)(i) removing the word ``product.'' and adding the 
phrase ``product and that each domestic end product listed in paragraph 
(f)(3) of this provision contains a critical component.'' in its place;
0
c. Adding two sentences to the end of paragraph (f)(1)(ii);
0
d. Redesignating paragraph (f)(1)(iii) as paragraph (f)(1)(iv) and 
adding a new paragraph (f)(1)(iii);
0
e. Removing from the newly redesignated paragraph (f)(1)(iv) ``The 
terms ``domestic end product,'' and adding ``The terms ``critical 
component,'' ``domestic end product,'' in its place;
0
f. Revising the table in paragraph (f)(2);
0
g. Redesignating paragraph (f)(3) as paragraph (f)(4) and adding a new 
paragraph (f)(3);
0
h. In newly redesignated paragraph (f)(4) remove the word ``Part'' and 
adding the word ``part'' in its place;
0
i. In paragraph (g)(1)(i)(A) removing the word ``product.'' and adding 
the phrase ``product and that each domestic end product listed in 
paragraph (g)(1)(iv) of this provision contains a critical component.'' 
in its place;
0
j. In paragraph (g)(1)(i)(B) removing the phrases ``Peruvian end 
product,'' and ``domestic end product,'' and adding in their place 
``Peruvian end product,'' ``critical component,'' ``domestic end 
product,'';
0
k. Adding two sentences at the end of paragraph (g)(1)(iii) and 
revising the table;
0
l. Redesignating paragraph (g)(1)(iv) as paragraph (g)(1)(v) and adding 
a new paragraph (g)(1)(iv); and
0
m. In newly redesignated paragraph (g)(1)(v) removing the word ``Part'' 
and adding the word ``part'' in its place.
    The revisions and additions read as follows:


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

* * * * *

Offeror Representations and Certifications--Commercial Items (DATE)

* * * * *
    (f) * * *
    (1) * * *
    (ii) * * * The Offeror shall also indicate whether these foreign 
end products exceed 55 percent domestic content. If the percentage 
of the domestic content is unknown, select ``no''.
    (iii) The Offeror shall separately list the line item numbers of 
domestic end products that contain a critical component.
* * * * *
    (2) * * *

------------------------------------------------------------------------
                                                    Exceeds 55% domestic
        Line item No.           Country of origin     content (yes/no)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
 
------------------------------------------------------------------------
 
------------------------------------------------------------------------

    (3) Domestic end products containing a critical component:

Line Item No.----------------------------------------------------------

[List as necessary]

    (g)(1) * * *
    (iii) * * * The Offeror shall also indicate whether these 
foreign end products exceed 55 percent domestic content. If the 
percentage of the domestic content is unknown, select ``no''.
    Other Foreign End Products:

[[Page 40993]]



------------------------------------------------------------------------
                                                    Exceeds 55% domestic
        Line item No.           Country of origin     content (yes/no)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
 
------------------------------------------------------------------------
 
------------------------------------------------------------------------

    (iv) The Offeror shall list the line item numbers of domestic 
end products that contain a critical component.

Line Item No.----------------------------------------------------------

[List as necessary]
* * * * *

0
21. Amend section 52.212-5 by--
0
a. Revising the date of the clause;
0
b. Removing from paragraph (b)(48) ``(JAN 2021)'' and adding ``(DATE)'' 
in its place; and
0
c. Removing from paragraph (b)(49)(i) ``(JAN 2021)'' and adding 
``(DATE)'' in its place; and
0
d. Redesignating paragraphs (b)(53) through (b)(63) as paragraphs 
(b)(54) through (b)(64) and adding a new paragraph (b)(53).
    The revision and addition 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 (DATE)

* * * * *
    (b) * * *
    _(53) 52.225-XX, Domestic Content Reporting Requirement--
Supplies (DATE) (Executive Order 14005).
* * * * *

0
22. Amend section 52.213-4 by--
0
a. Revising the date of the clause;
0
b. In paragraph (b)(1)(xvii)removing the words ``(JAN 2021)'' and 
adding the word ``(DATE)'' in its place;
0
c. Redesignating paragraphs (b)(1)(xviii) through (b)(1)(xxi) as 
paragraphs (b)(1)(xx) through (b)(1)(xxiii) and adding new paragraphs 
(b)(1)(xviii) and (b)(1)(xix).
    The revisions and additions read as follows:


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

* * * * *

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

    (b) * * *
    (1) * * *
    (xviii) 52.225-XX, Domestic Content Reporting Requirement--
Supplies (DATE) (Executive Order 14005) (Applies to contracts 
containing the clause at 52.225-1 or 52.225-3).
    (xix) 52.225-YY, Domestic Content Reporting Requirement--
Construction Materials (DATE) (Executive Order 14005) (Applies to 
contracts containing the clause at 52.225-9).
* * * * *

0
23. Amend section 52.225-1 by--
0
a. Revising the date of the clause;
0
b. Adding, in alphabetical order, the definition of ``Critical 
component''; and
0
c. In the definition of ``Domestic end product'' revising the first 
sentence of paragraph (1)(ii)(A).
    The addition and revision read as follows:


52.225-1   Buy American--Supplies.

* * * * *

Buy American--Supplies (DATE)

    (a) * * *
    Critical component means a component that is mined, produced, or 
manufactured in the United States and deemed critical to the U.S. 
supply chain. The list of critical components is at FAR 25.105.
    Domestic end product means--
    (1) * * *
    (ii) * * *
    (A) The cost of its components mined, produced, or manufactured 
in the United States exceeds 60 percent of the cost of all its 
components, except that the percentage will be 65 percent for items 
delivered in calendar years 2024 through 2028 and 75 percent for 
items delivered starting in calendar year 2029. * * *
* * * * *

0
24. Amend section 52.225-2 by--
0
a. Revising the date of the provision;
0
b. Revising paragraph (a)(1);
0
c. Adding two sentences at the end of paragraph (a)(2);
0
d. Redesignating paragraph (a)(3) as paragraph (a)(4) and adding a new 
paragraph (a)(3);
0
e. In newly redesignated paragraph (a)(4) removing the phrase ``The 
terms'' and adding the phrase ``The terms ``critical component,'' '' in 
its place;
0
f. Revising the table in paragraph (b);
0
g. Redesignating paragraph (c) as paragraph (d) and adding a new 
paragraph (c).
    The revisions and additions read as follows:


52.225-2   Buy American Certificate.

* * * * *

Buy American Certificate (DATE)

    (a)(1) The Offeror certifies that each end product, except those 
listed in paragraph (b) of this provision, is a domestic end product 
and that each domestic end product listed in paragraph (c) of this 
provision contains a critical component.
    (2) * * * The Offeror shall also indicate whether these foreign 
end products exceed 55 percent domestic content. If the percentage 
of the domestic content is unknown, select ``no''.
    (3) The Offeror shall separately list the line item numbers of 
domestic end products that contain a critical component.
* * * * *
    (b) * * *

------------------------------------------------------------------------
                                                    Exceeds 55% domestic
        Line item No.           Country of origin     content (yes/no)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
 
------------------------------------------------------------------------
 
------------------------------------------------------------------------

    (c) Domestic end products containing a critical component:

Line Item No.----------------------------------------------------------

[List as necessary]
* * * * *
0
25. Amend section 52.225-3 by--
0
a. Revising the date of the clause;
0
b. Adding, in alphabetical order, the definition of ``Critical 
component'';

[[Page 40994]]

0
c. In the definition ``Domestic end product'' revising the first 
sentence of paragraph (1)(ii)(A).
    The addition and revision read as follows:


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

* * * * *

Buy American--Free Trade Agreements--Israeli Trade Act (DATE)

    (a) * * *
    Critical component means a component that is mined, produced, or 
manufactured in the United States and deemed critical to the U.S. 
supply chain. The list of critical components is at FAR 25.105.
    Domestic end product means--
    (1) * * *
    (ii) * * *
    (A) The cost of its components mined, produced, or manufactured 
in the United States exceeds 60 percent of the cost of all its 
components, except that the percentage will be 65 percent for items 
delivered in calendar years 2024 through 2028 and 75 percent for 
items delivered starting in calendar year 2029. * * *
* * * * *
0
26. Amend section 52.225-4 by--
0
a. Revising the date of the provision;
0
b. Revising paragraph (a)(1);
0
c. In paragraph (a)(2) removing the phrases ``Peruvian end product,'' 
``domestic end product,'' and adding in their place ``Peruvian end 
product,'' ``critical component,'' ``domestic end product,'';
0
d. Redesignating paragraph (c) as paragraph (c)(1) and adding two 
sentences at the end of newly designated paragraph (c)(1);
0
e. Revising the table in newly designated paragraph (c)(1); and
0
f. Adding paragraph (c)(2).
    The revisions and additions read as follows:


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

* * * * *

Buy American--Free Trade Agreements--Israeli Trade Act Certificate 
(DATE)

    (a)(1) The Offeror certifies that each end product, except those 
listed in paragraph (b) or (c)(1) of this provision, is a domestic 
end product and that each domestic end product listed in paragraph 
(c)(2) of this provision contains a critical component.
* * * * *
    (c)(1) * * * The Offeror shall also indicate whether these 
foreign end products exceed 55 percent domestic content. If the 
percentage of the domestic content is unknown, select ``no''.
* * * * *

------------------------------------------------------------------------
                                                    Exceeds 55% domestic
        Line item No.           Country of origin     content (yes/no)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
 
------------------------------------------------------------------------
 
------------------------------------------------------------------------

* * * * *
    (2) The Offeror shall list the line item numbers of domestic end 
products that contain a critical component.

Line Item No.----------------------------------------------------------

[List as necessary]
* * * * *
0
27. Amend section 52.225-9 by--
0
a. Revising the date of the clause;
0
b. Adding, in alphabetical order, the definitions of ``Critical 
component'' and ``Critical item'';
0
c. In the definition ``Domestic construction material'' revising the 
first sentence of paragraph (1)(ii)(A); and
0
d. Revising paragraph (b)(3)(i).
    The revisions and additions read as follows:


52.225-9   Buy American--Construction Materials.

* * * * *

Buy American--Construction Materials (DATE)

    (a) * * *
    Critical component means a component that is mined, produced, or 
manufactured in the United States and deemed critical to the U.S. 
supply chain. The list of critical components is at FAR 25.105.
    Critical item means a domestic construction material or domestic 
end product that is deemed critical to U.S. supply chain resiliency. 
The list of critical items is at FAR 25.105.
    Domestic construction material means--
    (1) * * *
    (ii) * * *
    (A) The cost of its components mined, produced, or manufactured 
in the United States exceeds 60 percent of the cost of all its 
components, except that the percentage will be 65 percent for items 
delivered in calendar years 2024 through 2028 and 75 percent for 
items delivered starting in calendar year 2029.
* * * * *
    (b) * * *
    (3) * * *
    (i) The cost of domestic construction material would be 
unreasonable.
    (A) For domestic construction material that are not critical 
items or do not contain critical components.
    (1) The cost of a particular domestic construction material 
subject to the requirements of the Buy American statute is 
unreasonable when the cost of such material exceeds the cost of 
foreign material by more than 20 percent;
    (2) For construction material that does not consist wholly or 
predominantly of iron or steel or a combination of both, if the cost 
of a particular domestic construction material is determined to be 
unreasonable or there is no domestic offer received, and the low 
offer is for foreign construction material that is manufactured in 
the United States and does not exceed 55 percent domestic content, 
the Contracting Officer will treat the lowest offer of foreign 
construction material that exceeds 55 percent domestic content as a 
domestic offer and determine whether the cost of that offer is 
unreasonable by applying the evaluation factor listed in paragraph 
(b)(3)(i)(A)(1) of this clause.
    (3) The procedures in paragraph (b)(3)(i)(A)(2) will no longer 
apply as of January 1, 2030.
    (B)(1) For domestic construction material that are critical 
items or contain critical components. The cost of a particular 
domestic construction material that is a critical item or contains 
critical components, subject to the requirements of the Buy American 
statute, is unreasonable when the cost of such material exceeds the 
cost of foreign material by more than 20 percent plus the additional 
preference factor identified for the critical item or construction 
material containing critical components listed at FAR 25.105.
    (2) For construction material that does not consist wholly or 
predominantly of iron or steel or a combination of both, if the cost 
of a particular domestic construction material is determined to be 
unreasonable or there is no domestic offer received, and the low 
offer is for foreign construction material that does not exceed 55 
percent domestic content, the Contracting Officer will treat the 
lowest foreign offer of construction material that is manufactured 
in the United States and exceeds 55 percent domestic content as a 
domestic offer, and determine whether the cost of that offer is 
unreasonable by applying the evaluation factor listed in paragraph 
(b)(3)(i)(B)(1) of this clause.
    (3) The procedures in paragraph (b)(3)(i)(B)(2) will no longer 
apply as of January 1, 2030.
* * * * *
0
28. Amend section 52.225-11 by--
0
a. Revising the date of the clause;
0
b. Adding, in alphabetical order, the definitions of ``Critical 
component'' and ``Critical item'';

[[Page 40995]]

0
c. In the definition ``Domestic construction material'' revising the 
first sentence of paragraph (1)(ii)(A); and
0
d. Revising paragraph (b)(4)(i).
    The revisions and additions read as follows:


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

* * * * *

Buy American--Construction Materials Under Trade Agreements (DATE)

    (a) * * *
    Critical component means a component that is mined, produced, or 
manufactured in the United States and deemed critical to the U.S. 
supply chain. The list of critical components is at FAR 25.105.
    Critical item means a domestic construction material or domestic 
end product that is deemed critical to U.S. supply chain resiliency. 
The list of critical items is at FAR 25.105.
* * * * *
    Domestic construction material means--
    (1) * * *
    (ii) * * *
    (A) The cost of its components mined, produced, or manufactured 
in the United States exceeds 60 percent of the cost of all its 
components, except that the percentage will be 65 percent for items 
delivered in calendar years 2024 through 2028 and 75 percent for 
items delivered starting in calendar year 2029.
* * * * *
    (b) * * *
    (4) * * *
    (i) The cost of domestic construction material would be 
unreasonable.
    (A) For domestic construction material that are not critical 
items or do not contain critical components.
    (1) The cost of a particular domestic construction material 
subject to the restrictions of the Buy American statute is 
unreasonable when the cost of such material exceeds the cost of 
foreign material by more than 20 percent;
    (2) For construction material that does not consist wholly or 
predominantly of iron or steel or a combination of both, if the cost 
of a particular domestic construction material is determined to be 
unreasonable or there is no domestic offer received, and the low 
offer is for foreign construction material that does not exceed 55 
percent domestic content, the Contracting Officer will treat the 
lowest offer of foreign construction material that is manufactured 
in the United States and exceeds 55 percent domestic content as a 
domestic offer and determine whether the cost of that offer is 
unreasonable by applying the evaluation factor listed in paragraph 
(b)(4)(i)(A)(1) of this clause.
    (3) The procedures in paragraph (b)(4)(i)(A)(2) do not apply 
effective January 1, 2030.
    (B) For domestic construction material that are critical items 
or contain critical components. (1) The cost of a particular 
domestic construction material that is a critical item or contains 
critical components, subject to the requirements of the Buy American 
statute, is unreasonable when the cost of such material exceeds the 
cost of foreign material by more than 20 percent plus the additional 
preference factor identified for the critical item or construction 
material containing critical components listed at FAR 25.105.
    (2) For construction material that does not consist wholly or 
predominantly of iron or steel or a combination of both, if the cost 
of a particular domestic construction material is determined to be 
unreasonable or there is no domestic offer received, and the low 
offer is for foreign construction material that does not exceed 55 
percent domestic content, the Contracting Officer will treat the 
lowest offer of foreign construction material that is manufactured 
in the United States and exceeds 55 percent domestic content as a 
domestic offer, and determine whether the cost of that offer is 
unreasonable by applying the evaluation factor listed in paragraph 
(b)(4)(i)(B)(1) of this clause.
    (3) The procedures in paragraph (b)(4)(i)(B)(2) will no longer 
apply as of January 1, 2030.
* * * * *

0
29. Add section 52.225-XX to read as follows:


52.225-XX   Domestic Content Reporting Requirement--Supplies.

    As prescribed in 25.1101(g), insert the following clause:

Domestic Content Reporting Requirement--Supplies (DATE)

    (a) Definitions. As used in this clause--
    Critical item means a domestic construction material or domestic 
end product that is deemed critical to the U.S. supply chain. The 
list of critical items is at FAR 25.105.
    The terms Critical component, Domestic end product, and End 
product are defined in the clause of this solicitation entitled 
``Buy American-Supplies'' or ``Buy American-Free Trade Agreements-
Israeli Trade Act''.
    (b) Applicability. This clause does not apply to commercially 
available off-the-shelf (COTS) items.
    (c) Reporting requirement. Within 15 days of award, the 
Contractor shall provide the contract number, the amount of domestic 
content in each critical item, and the amount of domestic content in 
each domestic end product containing a critical component, to the 
Made in America Office under the Office of Management and Budget via 
[email protected]:

------------------------------------------------------------------------
                               Critical component/      Percentage of
        Line item No.             end  product        domestic  content
------------------------------------------------------------------------
 
------------------------------------------------------------------------
 
------------------------------------------------------------------------
 
------------------------------------------------------------------------

[List as necessary]

(End of clause)

0
30. Add section 52.225-YY to read as follows:


52.225-YY   Domestic Content Reporting Requirement--Construction 
Materials.

    As prescribed in 25.1102(f), insert the following clause:

Domestic Content Reporting Requirement--Construction Materials (DATE)

    (a) Definitions. As used in this clause--
    The terms Critical component, Critical item, and Domestic 
construction material, are defined in the clause of this contract 
entitled ``Buy American-Construction Materials'' or ``Buy American-
Construction Materials under Trade Agreements''.
    (b) Applicability. This clause does not apply to commercially 
available off-the-shelf (COTS) items.
    (c) Reporting requirement. Within 15 days of award, the 
Contractor shall provide the contract number, the amount of domestic 
content in each critical item, and the amount of domestic content in 
each domestic construction material containing a critical component, 
to the Made in America Office under the Office of Management and 
Budget via [email protected]:

------------------------------------------------------------------------
                               Critical component/      Percentage of
        Line item No.             end  product        domestic  content
------------------------------------------------------------------------
 
------------------------------------------------------------------------

[[Page 40996]]

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

[List as necessary]

(End of clause)

[FR Doc. 2021-15881 Filed 7-29-21; 8:45 am]
BILLING CODE 6820-EP-P