Defense Federal Acquisition Regulation Supplement: Maximizing the Use of American-Made Goods (DFARS Case 2019-D045), 48370-48384 [2021-18338]

Download as PDF 48370 Federal Register / Vol. 86, No. 165 / Monday, August 30, 2021 / Proposed Rules List of Subjects in 48 CFR Parts 215 and 242 Government procurement. Jennifer D. Johnson, Editor/Publisher, Defense Acquisition Regulations System. Therefore, 48 CFR parts 215 and 242 are proposed to be amended as follows: ■ 1. The authority citation for parts 215 and 242 continues to read as follows: Authority: 41 U.S.C. 1303 and 48 CFR chapter 1. PART 215—CONTRACTING BY NEGOTIATION 2. Amend section 215.403–3 by adding paragraph (a) to read as follows: ■ § 215.403–3 Requiring data other than certified cost or pricing data. khammond on DSKJM1Z7X2PROD with PROPOSALS * * * * * (a)(1) Contracting officers shall not determine the price of a contract to be fair and reasonable based solely on historical prices paid by the Government (see PGI 215.403–3(4)) (10 U.S.C. 2306a(d)). (4) In accordance with 10 U.S.C. 2306a(d) and in lieu of the factors for consideration listed in FAR 15.403– 3(a)(4), a determination by the head of the contracting activity that it is in the best interest of the Government to make the award to an offeror that does not comply with a requirement to submit data other than certified cost or pricing data shall be based on consideration of pertinent factors, including the following: (A) The effort to obtain the data. (B) Availability of other sources of supply of the item or service. (C) The urgency or criticality of the Government’s need for the item or service. (D) Reasonableness of the price of the contract, subcontract, or modification of the contract or subcontract based on information available to the contracting officer. (E) Rationale or justification made by the offeror for not providing the requested data. (F) Risk to the Government if award is not made. * * * * * ■ 3. Amend section 215.404–1 by revising paragraphs (b)(ii) and (v) introductory text to read as follows: § 215.404–1 Proposal analysis techniques. * * * * * (b) * * * (ii) If the contracting officer determines that the information obtained through market research is insufficient to determine the VerDate Sep<11>2014 16:31 Aug 27, 2021 Jkt 253001 reasonableness of price, the contracting officer shall consider information submitted by the offeror of recent purchase prices paid by the Government and commercial customers for the same or similar commercial items under comparable terms and conditions in establishing price reasonableness on a subsequent purchase if the contracting officer is satisfied that the prices previously paid remain a valid reference for comparison. Price reasonableness shall not be based solely on historical prices paid by the Government (see 215.403–3(a)(1)). The contracting officer shall consider the totality of other relevant factors such as the time elapsed since the prior purchase and any differences in the quantities purchased (10 U.S.C. 2306a(b)(5)). * * * * * (v) When evaluating pricing data, the contracting officer shall consider materially differing terms and conditions, quantities, and market and economic factors (see PGI 215.404– 1(b)(v)). For similar items, the contracting officer shall also consider material differences between the similar item and the item being procured (see FAR 15.404–1(b)(2)(ii)(B)). Material differences are those that could reasonably be expected to influence the contracting officer’s determination of price reasonableness. The contracting officer shall consider the following factors when evaluating the relevance of the information available: * * * * * PART 242—CONTRACT ADMINISTRATION AND AUDIT SERVICES 4. Revise section 242.1502 to read as follows: ■ § 242.1502 Policy. (g) Past performance evaluations in the Contractor Performance Assessment Reporting System— (i) Shall include an assessment of the contractor’s performance against, and efforts to achieve, the goals identified in its comprehensive small business subcontracting plan when the contract contains the clause at 252.219–7004, Small Business Subcontracting Plan (Test Program); and (ii) Shall, unless exempted by the head of the contracting activity, include a notation on contractors that have denied multiple requests for submission of data other than certified cost or pricing data over the preceding 3-year period, but nevertheless received an award (10 U.S.C. 2306a(d)(2)(B)(ii)). [FR Doc. 2021–18339 Filed 8–27–21; 8:45 am] BILLING CODE 5001–06–P PO 00000 Frm 00026 Fmt 4702 Sfmt 4702 DEPARTMENT OF DEFENSE Defense Acquisition Regulations System 48 CFR Parts 225 and 252 [Docket DARS–2021–0012] RIN 0750–AK85 Defense Federal Acquisition Regulation Supplement: Maximizing the Use of American-Made Goods (DFARS Case 2019–D045) Defense Acquisition Regulations System, Department of Defense (DoD). ACTION: Proposed rule. AGENCY: DoD is proposing to amend the Defense Federal Acquisition Regulation Supplement (DFARS) to implement an Executive order regarding maximizing the use of American-made goods, products, and materials. DATES: Comments on the proposed rule should be submitted in writing to the address shown below on or before October 29, 2021, to be considered in the formation of a final rule. ADDRESSES: Submit comments identified by DFARS Case 2019–D045, using any of the following methods: Æ Federal eRulemaking Portal: https://www.regulations.gov. Search for ‘‘DFARS Case 2019–D045’’ in the search box and select ‘‘Search.’’ Select ‘‘Comment’’ and follow the instructions to submit a comment. Please include your name, company name (if any), and ‘‘DFARS Case 2019–D045’’ on any attached document. Æ Email: osd.dfars@mail.mil. Include DFARS Case 2019–D045 in the subject line of the message. Comments received generally will be posted without change to https:// www.regulations.gov, including any personal 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. FOR FURTHER INFORMATION CONTACT: Ms. Kimberly Bass, telephone 571–372– 6174. SUMMARY: SUPPLEMENTARY INFORMATION: I. Background DoD is proposing to amend the DFARS to implement section 2(a)(i) of Executive Order (E.O.) 13881, Maximizing Use of American-Made Goods, Products, and Materials, which changes the percentages used to determine whether a product is E:\FR\FM\30AUP1.SGM 30AUP1 Federal Register / Vol. 86, No. 165 / Monday, August 30, 2021 / Proposed Rules khammond on DSKJM1Z7X2PROD with PROPOSALS domestic or foreign under the Buy American statute (41 U.S.C. chapter 83). Section 2(a)(i) of E.O. 13881 is not inconsistent with E.O. 14005, Ensuring the Future Is Made in All of America by All of America’s Workers, which supersedes E.O. 13881 to the extent that it is inconsistent with E.O. 14005. E.O. 13881 calls for more aggressive implementation of the Buy American statute to maximize the Government’s procurement of American-made goods, products, and materials. The Buy American statute requires the purchase of domestic products (both end products and construction materials), except for instances when the domestic product is not available, the domestic product is only available at an unreasonable cost, or it would not be in the public interest to buy the domestic product. E.O. 13881 supersedes E.O. 10582, Prescribing Procedures for Certain Determinations under the Buy American Act, to the extent that it is inconsistent with E.O. 13881, by establishing that under the Buy American statute a product is foreign if the cost of the foreign components used in such end product constitutes 45 percent or more of the cost of all products used in such end products, except that iron and steel products are foreign if the cost of foreign iron and steel equals or constitutes 5 percent of the cost of all products used in iron and steel end products. In order to promote economic and national security, stimulate economic growth, and create jobs, this rule proposes to strengthen domestic preferences under the Buy American statute by changing how a domestic product is defined, while also maintaining the exception to the statutory requirement for qualifying countries. II. Discussion and Analysis The Buy American statute is implemented in Federal Acquisition Regulation (FAR) part 25. Revisions to the FAR to implement E.O. 13881 have been accomplished under FAR Case 2019–016, published in the Federal Register on January 19, 2021 (86 FR 6180). This rule proposes revisions to DFARS part 225 and the associated clauses to implement the DoD-unique requirements and conforming changes associated with implementation of E.O. 13881. Revisions are proposed to the definitions of ‘‘domestic end product’’ and ‘‘domestic construction material.’’ Specifically, these definitions are each broken into two paragraphs to differentiate between end products and construction material that consist wholly or predominantly of iron or steel VerDate Sep<11>2014 16:31 Aug 27, 2021 Jkt 253001 or a combination of both, and those that do not. Per the revised definition of ‘‘domestic end product,’’ an end product that consists wholly or predominantly of iron or steel, or a combination of both, is only considered a domestic end product if the end product is manufactured in the United States, and the cost of iron and steel not produced in the United States, or a qualifying country, constitutes less than 5 percent of the cost of all the materials used in the end product. For ‘‘domestic construction material,’’ if the construction material consists wholly or predominantly of iron or steel, or a combination of both, then the cost of iron and steel not produced in the United States (excluding fasteners) must constitute less than 5 percent of the cost of all the components used in the construction material. As explained in the definition of ‘‘foreign iron and steel’’ at FAR 25.003, ‘‘produced in the United States’’ means that all manufacturing processes of the iron or steel must take place in the United States, from the initial melting stage through the application of coatings, except metallurgical processes involving refinement of steel additives. The definition of a ‘‘domestic end product’’ is further revised to stipulate that if the end product does not consist wholly or predominantly of iron or steel, or a combination of both, then it is only considered a domestic end product if the end product is manufactured in the United States, and the cost of its qualifying country components and its components that are mined, produced, or manufactured in the United States exceeds 55 percent (an increase from 50 percent) of the cost of all its components. Similarly, for ‘‘domestic construction material’’ that does not consist wholly or predominantly of iron or steel, or a combination of both, the cost of its components mined, produced, or manufactured in the United States must exceed 55 percent (an increase from 50 percent) of the cost of all its components. In both cases, components of unknown origin are treated as foreign. Conforming changes are made throughout the DFARS to implement the revised definitions, to include revisions to the description of the two-part test for domestic end products at DFARS 225.101. This rule also proposes definitions for the terms ‘‘predominantly of iron or steel or a combination of both’’ and ‘‘steel,’’ which are used in the revised definitions of ‘‘domestic end product’’ and ‘‘domestic construction material.’’ Conforming changes are also made to redesignate paragraph numbers to PO 00000 Frm 00027 Fmt 4702 Sfmt 4702 48371 reflect current drafting conventions in definitions for a number of clauses that are being updated. No changes are proposed in this rule to implement the E.O. 13881 change to the percentage factor used to determine whether the offered price of material of domestic origin is unreasonable or inconsistent with public interest. E.O. 13881 increases the percentage factor from 6 percent to 20 percent for entities other than small businesses, and from 12 percent to 30 percent for small businesses. However, DoD already uses a 50 percent factor for both large and small businesses, so no change is necessary for DoD to comply with the increased percentage factors in E.O. 13881. In addition, E.O. 13881 does not remove any existing exemptions to the Buy American statute for products of qualifying countries; therefore, this rule does not include any proposed changes to the exemptions. III. Applicability to Contracts at or Below the Simplified Acquisition Threshold and for Commercial Items, Including Commercially Available OffThe-Shelf Items This proposed rule does not add any new provisions or clauses, nor change the applicability of existing provisions or clauses to contracts at or below the simplified acquisition threshold and contracts for the acquisition of commercial items, including commercially available off-the-shelf items. IV. Expected Impact of the Rule The current FAR contract clauses implementing the Buy American statute apply to a narrow set of procurements. In addition, because the Federal Acquisition Regulatory Council retained the commercially available off-the-shelf (COTS) items exception for most COTS items in its implementation of the E.O. in the FAR, the heightened domestic content requirements will not be applicable to those procurements. (See the final rule for FAR Case 2019–016 published at 86 FR 6180 on January 19, 2021.) This proposed DFARS rule takes the same approach. Domestic industries supplying domestic end products are likely to benefit from a competitive advantage as a result of the FAR and DFARS implementation. Based on the E.O., it is unclear if the pool of qualified suppliers would be reduced, resulting in less competition and a possible increase in prices that the Government will pay to procure these products. At least three arguments point to the likelihood that any increase in burden on contractors would be small, if not de minimis: E:\FR\FM\30AUP1.SGM 30AUP1 khammond on DSKJM1Z7X2PROD with PROPOSALS 48372 Federal Register / Vol. 86, No. 165 / Monday, August 30, 2021 / Proposed Rules (1) Familiarization costs should be low. (2) Some, if not many, contractors may already be able to meet the more stringent threshold. (3) Costs incurred by contractors who adjust their supply chains, so that their end products qualify as domestic, will enjoy a larger price preference that should help to offset these costs over time. Each of these arguments is explained below. First, DoD does not anticipate significant costs from contractor familiarization with the rule given the recent publication of the FAR final rule implementing E.O. 13881 and the history of rulemaking and E.O.s in general in this area. The basic mechanics of the Buy American statute (e.g., how and when the price preference is used to favor domestic end products, certifications required of offerors to demonstrate end products are domestic) continue to reflect processes that have been in place for decades and are not new to contractors. Second, some, if not many, contractors may already be able to comply with the lower foreign content requirement needed to meet the definition of domestic end product under E.O. 13881 and the proposed rule. Laws such as the SECURE Technology Act (Pub. L. 115–390), which requires a series of actions to strengthen the Federal infrastructure for managing supply chain risks, are placing significantly increased emphasis on Federal agencies and Federal Government contractors to identify and reduce risk in their supply chains. One way to reduce supply chain risk is to increase domestic sourcing of content. In addition, in the context of iron and steel, many laws already in place call for more stringent accounting of domestic sourcing of content. For example, the Recovery Act required that all construction material for a project for the construction, alteration, maintenance, or repair of a public building or a public work in the United States, consisting wholly or predominantly of iron or steel, had to be produced in the United States when using Recovery Act funds, to the extent consistent with trade agreements (see FAR 25.602–1, implementing section 1605 of the Recovery Act). In addition, Federal contractors who also work on contracts funded under Federal grants may, in some cases, find that the steel, iron, and manufactured goods used in the project must be produced in the United States, as is the case for certain funding administered by the Federal Transit Administration for VerDate Sep<11>2014 16:31 Aug 27, 2021 Jkt 253001 public transportation projects (see 49 U.S.C. 5323(j)). 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 DoD contracts but will no longer enjoy a price preference. Accordingly, it is likely that the Federal market for iron and steel has already completed significant retooling and could meet the requirements of E.O. 13881 without too much additional effort. This rule proposes to amend clauses that implement the Buy American statute. There are 4 clauses affected by the changes in this rule: (1) 252.225–7001, Buy American and Balance of Payments Program (Basic and Alternate I). (2) 252.225–7036, Buy American— Free Trade Agreements—Balance of Payments Program (Basic and Alternates I–V). (3) 252.225–7044, Balance of Payments Program—Construction Material (Basic and Alternate I). (4) 252.225–7045, Balance of Payments Program—Construction Material (Basic and Alternates I–III). This rule changes the definitions of ‘‘domestic end product’’ and ‘‘domestic construction material.’’ The rule also adds the definitions of ‘‘steel’’ and ‘‘predominantly of iron or steel or a combination of both’’ in the clauses to conform the DFARS with the FAR implementation of E.O. 13881. According to the Federal Procurement Data System (FPDS) data for fiscal year (FY) 2017, FY 2018, and FY 2019 for new awards with a foreign place of performance for construction valued over the micro-purchase threshold and for awards for supplies, DoD awarded an average of 3,222 construction contracts with a foreign place of performance per year. In addition, DoD awarded an average of 332,607 supply contracts per year during FY 2017 through FY 2019. In summary, the rule will strengthen domestic preferences under the Buy American statute and provide both large and small businesses the opportunity and incentive to deliver U.S. manufactured products from domestic suppliers. It is expected that this rule will benefit large and small U.S. manufacturers, including those of iron or steel. PO 00000 Frm 00028 Fmt 4702 Sfmt 4702 Therefore, it is estimated that any increase in implementation costs associated with this rule is de minimis. V. Executive Orders 12866 and 13563 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. VI. 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 will submit a copy of the interim or final rule with the form, Submission of Federal Rules under the Congressional Review Act, to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States. A major rule under the Congressional Review Act 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. VII. Regulatory Flexibility Act DoD does not expect this proposed 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, et seq. However, an initial regulatory flexibility analysis has been performed and is summarized as follows: The rule proposes to amend the Defense Federal Acquisition Regulation Supplement (DFARS) to implement section 2(a)(i) of Executive Order (E.O.) 13881, Maximizing Use of AmericanMade Goods, Products, and Materials, and also makes conforming changes to the applicable clauses as a result of implementation of this E.O. in the Federal Acquisition Regulation (FAR). The objective of this rule is to strengthen domestic preferences under the Buy American statute, as required by E.O. 13881, by changing how a domestic product and domestic construction material are defined. Data was obtained from the Federal Procurement Data System (FPDS) on awards valued over the micro-purchase threshold in fiscal year (FY) 2017, FY E:\FR\FM\30AUP1.SGM 30AUP1 khammond on DSKJM1Z7X2PROD with PROPOSALS Federal Register / Vol. 86, No. 165 / Monday, August 30, 2021 / Proposed Rules 2018, and FY 2019 that had a foreign place of performance and were for construction. DoD awarded an average of 3,222 construction contracts with a foreign place of performance per year during FY 2017 through FY 2019. Of those construction contracts, approximately 65 were awarded to 32 unique small entities per year. Data was also obtained from FPDS for FY 2017 through FY 2019 on awards valued over the micro-purchase threshold for supplies made in the United States. DoD awarded an average of 332,607 supply contracts per year during FY 2017 through FY 2019. Of those supply contracts, approximately 154,422 supply contracts were awarded to 13,480 unique small entities per year. The rule will strengthen domestic preferences under the Buy American statute and provide small businesses the opportunity and incentive to deliver U.S. manufactured products from domestic suppliers. It is expected that this rule generally will benefit U.S. small business manufacturers, including those of iron or steel. Small business manufacturers who do not already meet the increased domestic content requirements of this proposed rule may need to adjust their supply chains. DoD does not have data on how many small business manufacturers may decide to make such adjustments. This rule does not include any new reporting, recordkeeping, or other compliance requirements for small businesses. This rule only changes the definitions of ‘‘domestic end product’’ and ‘‘domestic construction material’’ and adds the definitions of ‘‘predominantly of iron or steel or a combination of both’’ and ‘‘steel’’ to conform the DFARS with the FAR revisions as a result of E.O. 13881 implementation. Overall, the rule does not impose any additional compliance requirements on contractors or process procedures for the Government, other than to increase the percentages for use in the domestic content test applied to offers of manufactured end products. The rule does not duplicate, overlap, or conflict with any other Federal rules. There are no known significant alternative approaches to the proposed rule that would meet the requirements of E.O. 13881. DoD invites comments from small business concerns and other interested parties on the expected impact of this rule on small entities. DoD will also consider comments from small entities concerning the existing regulations in subparts affected by this rule in accordance with 5 U.S.C. 610. Interested parties must submit such comments separately and should cite 5 VerDate Sep<11>2014 16:31 Aug 27, 2021 Jkt 253001 U.S.C. 610 (DFARS Case 2019–D045), in correspondence. VII. Paperwork Reduction Act The rule does not contain any information collection requirements that require the approval of the Office of Management and Budget under the Paperwork Reduction Act (44 U.S.C. chapter 35). List of Subjects in 48 CFR Parts 225 and 252 Government procurement. Jennifer D. Johnson, Editor/Publisher, Defense Acquisition Regulations System. Therefore, 48 CFR parts 225 and 252 are proposed to be amended as follows: ■ 1. The authority citation for parts 225 and 252 continues to read as follows: Authority: 41 U.S.C. 1303 and 48 CFR chapter 1. PART 225—FOREIGN ACQUISITION 2. Amend section 225.003 by: a. Revising the definition of ‘‘Domestic end product’’; ■ b. Removing the definition ‘‘Qualifying country component and qualifying country end product’’; and ■ c. Adding definitions for ‘‘Qualifying country component’’ and ‘‘Qualifying country end product’’ in alphabetical order. The revision and additions read as follows: ■ ■ 225.003 Definitions. * * * * * Domestic end product means— (1) For an end product that does not consist wholly or predominantly of iron or steel or a combination of both— (i) An unmanufactured end product mined or produced in the United States; or (ii) An end product manufactured in the United States if— (A) The cost of its qualifying country components and its components that are mined, produced, or manufactured in the United States exceeds 55 percent of the cost of all its components. The cost of components includes transportation costs to the place of incorporation into the end product and U.S. duty (whether or not a duty-free entry certificate is issued). Components of unknown origin are treated as foreign. Scrap generated, collected, and prepared for processing in the United States is considered domestic. A component is considered to have been mined, produced, or manufactured in the United States (regardless of its source in fact) if the end product in which it is incorporated PO 00000 Frm 00029 Fmt 4702 Sfmt 4702 48373 is manufactured in the United States and the component is of a class or kind for which the Government has determined that— (1) Sufficient and reasonably available commercial quantities of a satisfactory quality are not mined, produced, or manufactured in the United States; or (2) It is inconsistent with the public interest to apply the restrictions of the Buy American statute; or (B) The end product is a commercially available off-the-shelf (COTS) item; or (2) For an end product that consists wholly or predominantly of iron or steel or a combination of both, an end product manufactured in the United States, if the cost of iron and steel not produced in the United States or a qualifying country constitutes less than 5 percent of the cost of all the components used in the end product (produced in the United States or a qualifying country means that all manufacturing processes of the iron or steel must take place in the United States or a qualifying country, except metallurgical processes involving refinement of steel additives). The cost of iron and steel not produced in the United States or a qualifying country includes but is not limited to the cost of iron or steel mill products (such as bar, billet, slab, wire, plate, or sheet), castings, or forgings, not produced in the United States or a qualifying country, utilized in the manufacture of the end product and a good faith estimate of the cost of all iron or steel components not produced in the United States or a qualifying country, excluding COTS fasteners. Iron or steel components of unknown origin are treated as foreign. If the end product contains multiple components, the cost of all the materials used in such end product is calculated in accordance with the explanation of cost of components in paragraph (1)(ii)(A) of this definition. * * * * * Qualifying country component means a component mined, produced, or manufactured in a qualifying country. Qualifying country end product means— (1) An unmanufactured end product mined or produced in a qualifying country; or (2) An end product manufactured in a qualifying country if— (i) The cost of the following types of components exceeds 50 percent of the cost of all its components: (A) Components mined, produced, or manufactured in a qualifying country. (B) Components mined, produced, or manufactured in the United States. E:\FR\FM\30AUP1.SGM 30AUP1 48374 Federal Register / Vol. 86, No. 165 / Monday, August 30, 2021 / Proposed Rules (C) Components of foreign origin of a class or kind for which the Government has determined that sufficient and reasonably available commercial quantities of a satisfactory quality are not mined, produced, or manufactured in the United States. Components of unknown origin are treated as foreign; or (ii) The end product is a COTS item. * * * * * ■ 3. Revise the subpart 225.1 heading to read as follows: SUBPART 225.1—BUY AMERICAN— SUPPLIES 4. Amend section 225.101 by revising paragraph (a)(ii) to read as follows: ■ 225.101 General. (a) * * * (ii)(A) Except for an end product that consists wholly or predominantly of iron or steel or a combination of both, the cost of its U.S. and qualifying country components exceeds 55 percent of the cost of all its components. This test is applied to end products only and not to individual components. (B) For an end product that consists wholly or predominantly of iron or steel or a combination of both, the cost of iron and steel not produced in the United States or a qualifying country must constitute less than 5 percent of the cost of all the components used in the end product. The cost of iron and steel not produced in the United States or a qualifying country includes but is not limited to the cost of iron or steel mill products (such as bar, billet, slab, wire, plate, or sheet), castings, or forgings, not produced in the United States or a qualifying country, utilized in the manufacture of the end product and a good faith estimate of the cost of all iron or steel components not produced in the United States or a qualifying country, excluding commercially available off-the-shelf (COTS) fasteners. The domestic content test of the Buy American statute has not been waived for acquisitions of COTS items in this category, except for COTS fasteners. * * * * * khammond on DSKJM1Z7X2PROD with PROPOSALS 225.502 [Amended] 5. Amend section 225.502 by— a. In paragraph (c)(ii)(B), removing ‘‘225.504(1)’’ and adding ‘‘PGI 225.504(1)’’ in its place; ■ b. In paragraph (c)(ii)(D), removing ‘‘225.504(2)’’ and adding ‘‘PGI 225.504(2)’’ in its place; ■ c. In paragraph (c)(ii)(E)(1), removing ‘‘225.504(3)’’ and adding ‘‘PGI 225.504(3)’’ in its place; and ■ ■ VerDate Sep<11>2014 16:31 Aug 27, 2021 Jkt 253001 d. In paragraph (c)(ii)(E)(2), removing ‘‘225.504(4)’’ and adding ‘‘PGI 225.504(4)’’ in its place. ■ PART 252—SOLICITATION PROVISIONS AND CONTRACT CLAUSES 6. Amend section 252.225–7001 by— a. Removing the clause date of ‘‘(DEC 2017)’’ and adding ‘‘(DATE)’’ in its place; ■ b. In paragraph (a)— ■ i. In the definition of ‘‘Commercially available off-the-shelf (COTS) item’’, redesignating paragraphs (i) introductory text, (i)(A), (B), and (C), and (ii) as paragraphs (1) introductory text, (1)(i), (ii), and (iii), and (2), respectively; ■ ii. Revising the definition of ‘‘Domestic end product’’; ■ iii. Adding, in alphabetical order, the definition of ‘‘Predominantly of iron or steel or a combination of both’’; ■ iv. Revising the definition of ‘‘Qualifying country end product’’; and ■ v. Adding, in alphabetical order, the definition of ‘‘Steel’’; and ■ c. In Alternate I— ■ i. Removing the clause date of ‘‘(DEC 2017)’’ and adding ‘‘(DATE)’’ in its place; and ■ ii. In paragraph (a)— ■ A. In the definition of ‘‘Commercially available off-the-shelf (COTS) item’’, redesignating paragraphs (i) introductory text, (i)(A), (B), and (C), and (ii) as paragraphs (1) introductory text, (1)(i), (ii), and (iii), and (2), respectively; ■ B. Revising the definition of ‘‘Domestic end product’’; ■ C. Adding, in alphabetical order, the definition of ‘‘Predominantly of iron or steel or a combination of both’’; ■ D. Revising the definition of ‘‘Qualifying country end product’’; ■ E. In the definition of ‘‘South Caucasus/Central and South Asian (SC/ CASA) state end product’’, redesignating paragraphs (i) and (ii) as paragraphs (1) and (2), respectively; and ■ F. Adding, in alphabetical order, the definition of ‘‘Steel’’. The revisions and additions read as follows: ■ ■ 252.225–7001 Buy American and Balance of Payments Program. * * * * * (a) * * * Domestic end product means— (1) For an end product that does not consist wholly or predominantly of iron or steel or a combination of both— (i) An unmanufactured end product mined or produced in the United States; or (ii) An end product manufactured in the United States if— PO 00000 Frm 00030 Fmt 4702 Sfmt 4702 (A) The cost of its qualifying country components and its components that are mined, produced, or manufactured in the United States exceeds 55 percent of the cost of all its components. The cost of components includes transportation costs to the place of incorporation into the end product and U.S. duty (whether or not a duty-free entry certificate is issued). Components of unknown origin are treated as foreign. Scrap generated, collected, and prepared for processing in the United States is considered domestic. A component is considered to have been mined, produced, or manufactured in the United States (regardless of its source in fact) if the end product in which it is incorporated is manufactured in the United States and the component is of a class or kind for which the Government has determined that— (1) Sufficient and reasonably available commercial quantities of a satisfactory quality are not mined, produced, or manufactured in the United States; or (2) It is inconsistent with the public interest to apply the restrictions of the Buy American statute; or (B) The end product is a COTS item; or (2) For an end product that consists wholly or predominantly of iron or steel or a combination of both, an end product manufactured in the United States, if the cost of iron and steel not produced in the United States or a qualifying country constitutes less than 5 percent of the cost of all the components used in the end product (produced in the United States or a qualifying country means that all manufacturing processes of the iron or steel must take place in the United States or a qualifying country, except metallurgical processes involving refinement of steel additives). The cost of iron and steel not produced in the United States or a qualifying country includes but is not limited to the cost of iron or steel mill products (such as bar, billet, slab, wire, plate, or sheet), castings, or forgings, not produced in the United States or a qualifying country, utilized in the manufacture of the end product and a good faith estimate of the cost of all iron or steel components not produced in the United States or a qualifying country, excluding COTS fasteners. Iron or steel components of unknown origin are treated as foreign. If the end product contains multiple components, the cost of all the materials used in such end product is calculated in accordance with the explanation of cost of E:\FR\FM\30AUP1.SGM 30AUP1 Federal Register / Vol. 86, No. 165 / Monday, August 30, 2021 / Proposed Rules components in paragraph (1)(ii)(A) of this definition. * * * * * Predominantly of iron or steel or a combination of both means that the cost of the iron and steel content exceeds 50 percent of the total cost of all its components. The cost of iron and steel is the cost of the iron or steel mill products (such as bar, billet, slab, wire, plate, or sheet), castings, or forgings utilized in the manufacture of the product and a good faith estimate of the cost of iron or steel components excluding COTS fasteners. * * * * * Qualifying country end product means— (1) An unmanufactured end product mined or produced in a qualifying country; or (2) An end product manufactured in a qualifying country if— (i) The cost of the following types of components exceeds 50 percent of the cost of all its components: (A) Components mined, produced, or manufactured in a qualifying country. (B) Components mined, produced, or manufactured in the United States. (C) Components of foreign origin of a class or kind for which the Government has determined that sufficient and reasonably available commercial quantities of a satisfactory quality are not mined, produced, or manufactured in the United States. Components of unknown origin are treated as foreign; or (ii) The end product is a COTS item. Steel means an alloy that includes at least 50 percent iron, between 0.02 and 2 percent carbon, and may include other elements. * * * * * khammond on DSKJM1Z7X2PROD with PROPOSALS Alternate I. * * * (a) * * * Domestic end product means— (1) For an end product that does not consist wholly or predominantly of iron or steel or a combination of both— (i) An unmanufactured end product mined or produced in the United States; or (ii) An end product manufactured in the United States if— (A) The cost of its qualifying country components and its components that are mined, produced, or manufactured in the United States exceeds 55 percent of the cost of all its components. The cost of components includes transportation costs to the place of incorporation into the end product and U.S. duty (whether or not a duty-free entry certificate is issued). Components of unknown origin are treated as foreign. Scrap generated, VerDate Sep<11>2014 16:31 Aug 27, 2021 Jkt 253001 collected, and prepared for processing in the United States is considered domestic. A component is considered to have been mined, produced, or manufactured in the United States (regardless of its source in fact) if the end product in which it is incorporated is manufactured in the United States and the component is of a class or kind for which the Government has determined that— (1) Sufficient and reasonably available commercial quantities of a satisfactory quality are not mined, produced, or manufactured in the United States; or (2) It is inconsistent with the public interest to apply the restrictions of the Buy American statute; or (B) The end product is a COTS item; or (2) For an end product that consists wholly or predominantly of iron or steel or a combination of both, an end product manufactured in the United States, if the cost of iron and steel not produced in the United States or a qualifying country constitutes less than 5 percent of the cost of all the components used in the end product (produced in the United States or a qualifying country means that all manufacturing processes of the iron or steel must take place in the United States or a qualifying country, except metallurgical processes involving refinement of steel additives). The cost of iron and steel not produced in the United States or a qualifying country includes but is not limited to the cost of iron or steel mill products (such as bar, billet, slab, wire, plate, or sheet), castings, or forgings, not produced in the United States or a qualifying country, utilized in the manufacture of the end product and a good faith estimate of the cost of all iron or steel components not produced in the United States or a qualifying country, excluding COTS fasteners. Iron or steel components of unknown origin are treated as foreign. If the end product contains multiple components, the cost of all the materials used in such end product is calculated in accordance with the explanation of cost of components in paragraph (1)(ii)(A) of this definition. * * * * * Predominantly of iron or steel or a combination of both means that the cost of the iron and steel content exceeds 50 percent of the total cost of all its components. The cost of iron and steel is the cost of the iron or steel mill products (such as bar, billet, slab, wire, plate, or sheet), castings, or forgings utilized in the manufacture of the product and a good faith estimate of the PO 00000 Frm 00031 Fmt 4702 Sfmt 4702 48375 cost of iron or steel components excluding COTS fasteners. * * * * * Qualifying country end product means— (1) An unmanufactured end product mined or produced in a qualifying country; or (2) An end product manufactured in a qualifying country if— (i) The cost of the following types of components exceeds 50 percent of the cost of all its components: (A) Components mined, produced, or manufactured in a qualifying country. (B) Components mined, produced, or manufactured in the United States. (C) Components of foreign origin of a class or kind for which the Government has determined that sufficient and reasonably available commercial quantities of a satisfactory quality are not mined, produced, or manufactured in the United States. Components of unknown origin are treated as foreign; or (ii) The end product is a COTS item. * * * * * Steel means an alloy that includes at least 50 percent iron, between 0.02 and 2 percent carbon, and may include other elements. * * * * * ■ 7. Amend section 252.225–7036 by— ■ a. Removing the clause date of ‘‘(DEC 2017)’’ and adding ‘‘(DATE)’’ in its place. ■ b. In paragraph (a)— ■ i. In the definition of ‘‘Bahrainian end product’’, redesignating paragraphs (i) and (ii) as paragraphs (1) and (2) respectively; ■ ii. In the definition of ‘‘Commercially available off-the-shelf (COTS) item’’, redesignating paragraphs (i) introductory text, (i)(A), (B), and (C), and (ii) as paragraphs (1) introductory text, (1)(i), (ii), and (iii), and (2) respectively; ■ iii. Revising the definition of ‘‘Domestic end product’’; ■ iv. In the definition of ‘‘Free Trade Agreement country’’, removing the semicolon and adding a period in its place; ■ v. In the definitions of ‘‘Free Trade Agreement country end product’’, ‘‘Moroccan end product’’, ‘‘Panamanian end product’’, and ‘‘Peruvian end product’’, redesignating paragraphs (i) and (ii) as paragraphs (1) and (2) respectively; ■ vi. Adding, in alphabetical order, the definition of ‘‘Predominantly of iron or steel or a combination of both’’; ■ vii. Revising the definition of ‘‘Qualifying country end product’’; and ■ viii. Adding, in alphabetical order, the definition of ‘‘Steel’’. E:\FR\FM\30AUP1.SGM 30AUP1 48376 Federal Register / Vol. 86, No. 165 / Monday, August 30, 2021 / Proposed Rules c. In Alternate I— i. Removing the clause date of ‘‘(DEC 2017)’’ and adding ‘‘(DATE)’’ in its place; and ■ ii. In paragraph (a)— ■ A. In the definitions of ‘‘Bahrainian end product’’ and ‘‘Canadian end product’’, redesignating paragraphs (i) and (ii) as paragraphs (1) and (2), respectively; ■ B. In the definition of ‘‘Commercially available off-the-shelf (COTS) item’’, redesignating paragraphs (i) introductory text, (i)(A), (B), and (C), and (ii) as paragraphs (1) introductory text, (1)(i), (ii), and (iii), and (2), respectively; ■ C. Revising the definition of ‘‘Domestic end product’’; ■ D. In the definition of ‘‘Free Trade Agreement country’’, removing the semicolon and adding a period in its place; ■ E. In the definitions of ‘‘Free Trade Agreement country end product’’, ‘‘Moroccan end product’’, ‘‘Panamanian end product’’, and ‘‘Peruvian end product’’, redesignating paragraphs (i) and (ii) as paragraphs (1) and (2), respectively; ■ F. Adding, in alphabetical order, the definition of ‘‘Predominantly of iron or steel or a combination of both’’; ■ G. Revising the definition of ‘‘Qualifying country end product’’; and ■ H. Adding, in alphabetical order, the definition of ‘‘Steel’’. ■ d. In Alternate II— ■ i. Removing the clause date of ‘‘(DEC 2017)’’ and adding ‘‘(DATE)’’ in its place; and ■ ii. In paragraph (a)— ■ A. In the definition of ‘‘Bahrainian end product’’, redesignating paragraphs (i) and (ii) as paragraphs (1) and (2), respectively; ■ B. In the definition of ‘‘Commercially available off-the-shelf (COTS) item’’, redesignating paragraphs (i) introductory text, (i)(A), (B), and (C), and (ii) as paragraphs (1) introductory text, (1)(i), (ii), and (iii), and (2), respectively; ■ C. Revising the definitions of ‘‘Domestic end product’’; ■ D. In the definition of ‘‘Free Trade Agreement country’’, removing the semicolon and adding a period in its place; ■ E. In the definitions of ‘‘Free Trade Agreement country end product’’, ‘‘Moroccan end product’’, ‘‘Panamanian end product’’, and ‘‘Peruvian end product’’, redesignating paragraphs (i) and (ii) as paragraphs (1) and (2), respectively; ■ F. Adding, in alphabetical order, the definition of ‘‘Predominantly of iron or steel or a combination of both’’; khammond on DSKJM1Z7X2PROD with PROPOSALS ■ ■ VerDate Sep<11>2014 16:31 Aug 27, 2021 Jkt 253001 G. Revising the definition of ‘‘Qualifying country end product’’; ■ H. In the definition of ‘‘South Caucasus/Central and South Asian (SC/ CASA) state end product’’, redesignating paragraphs (i) and (ii) as paragraphs (1) and (2), respectively; and ■ I. Adding, in alphabetical order, the definition of ‘‘Steel’’. ■ e. In Alternate III— ■ i. Removing the clause date of ‘‘(DEC 2017)’’ and adding ‘‘(DATE)’’ in its place; and ■ ii. In paragraph (a)— ■ A. In the definitions of ‘‘Bahrainian end product’’ and ‘‘Canadian end product’’, redesignating paragraphs (i) and (ii) as paragraphs (1) and (2), respectively; ■ B. In the definition of ‘‘Commercially available off-the-shelf (COTS) item’’, redesignating paragraphs (i) introductory text, (i)(A), (B), and (C), and (ii) as paragraphs (1) introductory text, (1)(i), (ii), and (iii), and (2), respectively; ■ C. Revising the definition of ‘‘Domestic end product’’; ■ D. In the definition of ‘‘Free Trade Agreement country’’, removing the semicolon and adding a period in its place; ■ E. In the definitions of ‘‘Free Trade Agreement country end product’’, ‘‘Moroccan end product’’, ‘‘Panamanian end product’’, and ‘‘Peruvian end product’’, redesignating paragraphs (i) and (ii) as paragraphs (1) and (2), respectively; ■ F. Adding, in alphabetical order, the definition of ‘‘Predominantly of iron or steel or a combination of both’’; ■ G. Revising the definition of ‘‘Qualifying country end product’’; ■ H. In the definition of ‘‘South Caucasus/Central and South Asian (SC/ CASA) state end product’’, redesignating paragraphs (i) and (ii) as paragraphs (1) and (2), respectively; and ■ I. Adding, in alphabetical order, the definition of ‘‘Steel’’. ■ f. In Alternate IV— ■ i. Removing the clause date of ‘‘(DEC 2017)’’ and adding ‘‘(DATE)’’ in its place; and ■ ii. In paragraph (a)— ■ A. In the definition of ‘‘Bahrainian end product’’, redesignating paragraphs (i) and (ii) as paragraphs (1) and (2), respectively; ■ B. In the definition of ‘‘Commercially available off-the-shelf (COTS) item’’, redesignating paragraphs (i) introductory text, (i)(A), (B), and (C), and (ii) as paragraphs (1) introductory text, (1)(i), (ii), and (iii), and (2), respectively; ■ C. Revising the definition of ‘‘Domestic end product’’; ■ PO 00000 Frm 00032 Fmt 4702 Sfmt 4702 D. In the definition of ‘‘Free Trade Agreement country’’, removing the semicolon and adding a period in its place; ■ E. In definitions of ‘‘Free Trade Agreement country end product’’, ‘‘Korean end product’’, ‘‘Moroccan end product’’, ‘‘Panamanian end product’’, and ‘‘Peruvian end product’’, redesignating paragraphs (i) and (ii) as paragraphs (1) and (2), respectively; ■ F. Adding, in alphabetical order, the definition of ‘‘Predominantly of iron or steel or a combination of both’’; ■ G. Revising the definition of ‘‘Qualifying country end product’’; and ■ H. Adding, in alphabetical order, the definition of ‘‘Steel’’. ■ g. In Alternate V— ■ i. Removing the clause date of ‘‘(DEC 2017)’’ and adding ‘‘(DATE)’’ in its place; and ■ ii. In paragraph (a)— ■ A. In the definition of ‘‘Bahrainian end product’’, redesignating paragraphs (i) and (ii) as paragraphs (1) and (2), respectively; ■ B. In the definition of ‘‘Commercially available off-the-shelf (COTS) item’’, redesignating paragraphs (i) introductory text, (i)(A), (B), and (C), and (ii) as paragraphs (1) introductory text, (1)(i), (ii), and (iii), and (2), respectively; ■ C. Revising the definition of ‘‘Domestic end product’’; ■ D. In the definition of ‘‘Free Trade Agreement country’’, removing the semicolon and adding a period in its place; ■ E. In the definitions of ‘‘Free Trade Agreement country end product’’, ‘‘Korean end product’’, ‘‘Moroccan end product’’, ‘‘Panamanian end product’’, and ‘‘Peruvian end product’’, redesignating paragraphs (i) and (ii) as paragraphs (1) and (2), respectively; ■ F. Adding, in alphabetical order, the definition of ‘‘Predominantly of iron or steel or a combination of both’’; ■ G. Revising the definition of ‘‘Qualifying country end product’’; ■ H. In the definition of ‘‘South Caucasus/Central and South Asian (SC/ CASA) state end product’’, redesignating paragraphs (i) and (ii) as paragraphs (1) and (2), respectively; and ■ I. Adding, in alphabetical order, the definition of ‘‘Steel’’. The revisions and additions read as follows: ■ 252.225–7036 Buy American—Free Trade Agreements—Balance of Payments Program. * * * * * (a) * * * Domestic end product means— E:\FR\FM\30AUP1.SGM 30AUP1 khammond on DSKJM1Z7X2PROD with PROPOSALS Federal Register / Vol. 86, No. 165 / Monday, August 30, 2021 / Proposed Rules (1) For an end product that does not consist wholly or predominantly of iron or steel or a combination of both— (i) An unmanufactured end product mined or produced in the United States; or (ii) An end product manufactured in the United States if— (A) The cost of its qualifying country components and its components that are mined, produced, or manufactured in the United States exceeds 55 percent of the cost of all its components. The cost of components includes transportation costs to the place of incorporation into the end product and U.S. duty (whether or not a duty-free entry certificate is issued). Components of unknown origin are treated as foreign. Scrap generated, collected, and prepared for processing in the United States is considered domestic. A component is considered to have been mined, produced, or manufactured in the United States (regardless of its source in fact) if the end product in which it is incorporated is manufactured in the United States and the component is of a class or kind for which the Government has determined that— (1) Sufficient and reasonably available commercial quantities of a satisfactory quality are not mined, produced, or manufactured in the United States; or (2) It is inconsistent with the public interest to apply the restrictions of the Buy American statute; or (B) The end product is a COTS item; or (2) For an end product that consists wholly or predominantly of iron or steel or a combination of both, an end product manufactured in the United States, if the cost of iron and steel not produced in the United States or a qualifying country constitutes less than 5 percent of the cost of all the components used in the end product (produced in the United States or a qualifying country means that all manufacturing processes of the iron or steel must take place in the United States or a qualifying country, except metallurgical processes involving refinement of steel additives). The cost of iron and steel not produced in the United States or a qualifying country includes but is not limited to the cost of iron or steel mill products (such as bar, billet, slab, wire, plate, or sheet), castings, or forgings, not produced in the United States or a qualifying country, utilized in the manufacture of the end product and a good faith estimate of the cost of all iron or steel components not produced in the United States or a qualifying country, excluding COTS fasteners. Iron or steel components of unknown origin are VerDate Sep<11>2014 16:31 Aug 27, 2021 Jkt 253001 treated as foreign. If the end product contains multiple components, the cost of all the materials used in such end product is calculated in accordance with the explanation of cost of components in paragraph (1)(ii)(A) of this definition. * * * * * Predominantly of iron or steel or a combination of both means that the cost of the iron and steel content exceeds 50 percent of the total cost of all its components. The cost of iron and steel is the cost of the iron or steel mill products (such as bar, billet, slab, wire, plate, or sheet), castings, or forgings utilized in the manufacture of the product and a good faith estimate of the cost of iron or steel components excluding COTS fasteners. * * * * * Qualifying country end product means— (1) An unmanufactured end product mined or produced in a qualifying country; or (2) An end product manufactured in a qualifying country if— (i) The cost of the following types of components exceeds 50 percent of the cost of all its components: (A) Components mined, produced, or manufactured in a qualifying country. (B) Components mined, produced, or manufactured in the United States. (C) Components of foreign origin of a class or kind for which the Government has determined that sufficient and reasonably available commercial quantities of a satisfactory quality are not mined, produced, or manufactured in the United States. Components of unknown origin are treated as foreign; or (ii) The end product is a COTS item. Steel means an alloy that includes at least 50 percent iron, between 0.02 and 2 percent carbon, and may include other elements. * * * * * Alternate I. * * * (a) * * * Domestic end product means— (1) For an end product that does not consist wholly or predominantly of iron or steel or a combination of both— (i) An unmanufactured end product mined or produced in the United States; or (ii) An end product manufactured in the United States if— (A) The cost of its qualifying country components and its components that are mined, produced, or manufactured in the United States exceeds 55 percent of the cost of all its components. The cost of components includes transportation PO 00000 Frm 00033 Fmt 4702 Sfmt 4702 48377 costs to the place of incorporation into the end product and U.S. duty (whether or not a duty-free entry certificate is issued). Components of unknown origin are treated as foreign. Scrap generated, collected, and prepared for processing in the United States is considered domestic. A component is considered to have been mined, produced, or manufactured in the United States (regardless of its source in fact) if the end product in which it is incorporated is manufactured in the United States and the component is of a class or kind for which the Government has determined that— (1) Sufficient and reasonably available commercial quantities of a satisfactory quality are not mined, produced, or manufactured in the United States; or (2) It is inconsistent with the public interest to apply the restrictions of the Buy American statute; or (C) The end product is a COTS item; or (2) For an end product that consists wholly or predominantly of iron or steel or a combination of both, an end product manufactured in the United States, if the cost of iron and steel not produced in the United States or a qualifying country constitutes less than 5 percent of the cost of all the components used in the end product (produced in the United States or a qualifying country means that all manufacturing processes of the iron or steel must take place in the United States or a qualifying country, except metallurgical processes involving refinement of steel additives). The cost of iron and steel not produced in the United States or a qualifying country includes but is not limited to the cost of iron or steel mill products (such as bar, billet, slab, wire, plate, or sheet), castings, or forgings, not produced in the United States or a qualifying country, utilized in the manufacture of the end product and a good faith estimate of the cost of all iron or steel components not produced in the United States or a qualifying country, excluding COTS fasteners. Iron or steel components of unknown origin are treated as foreign. If the end product contains multiple components, the cost of all the materials used in such end product is calculated in accordance with the explanation of cost of components in paragraph (1)(ii)(A) of this definition. * * * * * Predominantly of iron or steel or a combination of both means that the cost of the iron and steel content exceeds 50 percent of the total cost of all its components. The cost of iron and steel E:\FR\FM\30AUP1.SGM 30AUP1 48378 Federal Register / Vol. 86, No. 165 / Monday, August 30, 2021 / Proposed Rules is the cost of the iron or steel mill products (such as bar, billet, slab, wire, plate, or sheet), castings, or forgings utilized in the manufacture of the product and a good faith estimate of the cost of iron or steel components excluding COTS fasteners. * * * * * Qualifying country end product means— (1) An unmanufactured end product mined or produced in a qualifying country; or (2) An end product manufactured in a qualifying country if— (i) The cost of the following types of components exceeds 50 percent of the cost of all its components: (A) Components mined, produced, or manufactured in a qualifying country. (B) Components mined, produced, or manufactured in the United States. (C) Components of foreign origin of a class or kind for which the Government has determined that sufficient and reasonably available commercial quantities of a satisfactory quality are not mined, produced, or manufactured in the United States. Components of unknown origin are treated as foreign; or (ii) The end product is a COTS item. Steel means an alloy that includes at least 50 percent iron, between 0.02 and 2 percent carbon, and may include other elements. * * * * * khammond on DSKJM1Z7X2PROD with PROPOSALS Alternate II. * * * (a) * * * Domestic end product means— (1) For an end product that does not consist wholly or predominantly of iron or steel or a combination of both— (i) An unmanufactured end product mined or produced in the United States; or (ii) An end product manufactured in the United States if— (A) The cost of its qualifying country components and its components that are mined, produced, or manufactured in the United States exceeds 55 percent of the cost of all its components. The cost of components includes transportation costs to the place of incorporation into the end product and U.S. duty (whether or not a duty-free entry certificate is issued). Components of unknown origin are treated as foreign. Scrap generated, collected, and prepared for processing in the United States is considered domestic. A component is considered to have been mined, produced, or manufactured in the United States (regardless of its source in fact) if the end product in which it is incorporated is manufactured in the United States VerDate Sep<11>2014 16:31 Aug 27, 2021 Jkt 253001 and the component is of a class or kind for which the Government has determined that— (1) Sufficient and reasonably available commercial quantities of a satisfactory quality are not mined, produced, or manufactured in the United States; or (2) It is inconsistent with the public interest to apply the restrictions of the Buy American statute; or (B) The end product is a COTS item; or (2) For an end product that consists wholly or predominantly of iron or steel or a combination of both, an end product manufactured in the United States, if the cost of iron and steel not produced in the United States or a qualifying country constitutes less than 5 percent of the cost of all the components used in the end product (produced in the United States or a qualifying country means that all manufacturing processes of the iron or steel must take place in the United States or a qualifying country, except metallurgical processes involving refinement of steel additives). The cost of iron and steel not produced in the United States or a qualifying country includes but is not limited to the cost of iron or steel mill products (such as bar, billet, slab, wire, plate, or sheet), castings, or forgings, not produced in the United States or a qualifying country, utilized in the manufacture of the end product and a good faith estimate of the cost of all iron or steel components not produced in the United States or a qualifying country, excluding COTS fasteners. Iron or steel components of unknown origin are treated as foreign. If the end product contains multiple components, the cost of all the materials used in such end product is calculated in accordance with the explanation of cost of components in paragraph (1)(ii)(A) of this definition. * * * * * Predominantly of iron or steel or a combination of both means that the cost of the iron and steel content exceeds 50 percent of the total cost of all its components. The cost of iron and steel is the cost of the iron or steel mill products (such as bar, billet, slab, wire, plate, or sheet), castings, or forgings utilized in the manufacture of the product and a good faith estimate of the cost of iron or steel components excluding COTS fasteners. * * * * * Qualifying country end product means— (1) An unmanufactured end product mined or produced in a qualifying country; or PO 00000 Frm 00034 Fmt 4702 Sfmt 4702 (2) An end product manufactured in a qualifying country if— (i) The cost of the following types of components exceeds 50 percent of the cost of all its components: (A) Components mined, produced, or manufactured in a qualifying country. (B) Components mined, produced, or manufactured in the United States. (C) Components of foreign origin of a class or kind for which the Government has determined that sufficient and reasonably available commercial quantities of a satisfactory quality are not mined, produced, or manufactured in the United States. Components of unknown origin are treated as foreign; or (ii) The end product is a COTS item. * * * * * Steel means an alloy that includes at least 50 percent iron, between 0.02 and 2 percent carbon, and may include other elements. * * * * * Alternate III. * * * (a) * * * Domestic end product means— (1) For an end product that does not consist wholly or predominantly of iron or steel or a combination of both— (i) An unmanufactured end product mined or produced in the United States; or (ii) An end product manufactured in the United States if— (A) The cost of its qualifying country components and its components that are mined, produced, or manufactured in the United States exceeds 55 percent of the cost of all its components. The cost of components includes transportation costs to the place of incorporation into the end product and U.S. duty (whether or not a duty-free entry certificate is issued). Components of unknown origin are treated as foreign. Scrap generated, collected, and prepared for processing in the United States is considered domestic. A component is considered to have been mined, produced, or manufactured in the United States (regardless of its source in fact) if the end product in which it is incorporated is manufactured in the United States and the component is of a class or kind for which the Government has determined that— (1) Sufficient and reasonably available commercial quantities of a satisfactory quality are not mined, produced, or manufactured in the United States; or (2) It is inconsistent with the public interest to apply the restrictions of the Buy American statute; or (C) The end product is a COTS item; or E:\FR\FM\30AUP1.SGM 30AUP1 khammond on DSKJM1Z7X2PROD with PROPOSALS Federal Register / Vol. 86, No. 165 / Monday, August 30, 2021 / Proposed Rules (2) For an end product that consists wholly or predominantly of iron or steel or a combination of both, an end product manufactured in the United States, if the cost of iron and steel not produced in the United States or a qualifying country constitutes less than 5 percent of the cost of all the components used in the end product (produced in the United States or a qualifying country means that all manufacturing processes of the iron and steel must take place in the United States or a qualifying country, except metallurgical processes involving refinement of steel additives). The cost of iron and steel not produced in the United States or a qualifying country includes but is not limited to the cost of iron or steel mill products (such as bar, billet, slab, wire, plate, or sheet), castings, or forgings, not produced in the United States or a qualifying country, utilized in the manufacture of the end product and a good faith estimate of the cost of all iron or steel components not produced in the United States or a qualifying country, excluding COTS fasteners. Iron or steel components of unknown origin are treated as foreign. If the end product contains multiple components, the cost of all the materials used in such end product is calculated in accordance with the explanation of cost of components in paragraph (1)(ii)(A) of this definition. * * * * * Predominantly of iron or steel or a combination of both means that the cost of the iron and steel content exceeds 50 percent of the total cost of all its components. The cost of iron and steel is the cost of the iron or steel mill products (such as bar, billet, slab, wire, plate, or sheet), castings, or forgings utilized in the manufacture of the product and a good faith estimate of the cost of iron or steel components excluding COTS fasteners. * * * * * Qualifying country end product means— (1) An unmanufactured end product mined or produced in a qualifying country; or (2) An end product manufactured in a qualifying country if— (i) The cost of the following types of components exceeds 50 percent of the cost of all its components: (A) Components mined, produced, or manufactured in a qualifying country. (B) Components mined, produced, or manufactured in the United States. (C) Components of foreign origin of a class or kind for which the Government has determined that sufficient and VerDate Sep<11>2014 16:31 Aug 27, 2021 Jkt 253001 reasonably available commercial quantities of a satisfactory quality are not mined, produced, or manufactured in the United States. Components of unknown origin are treated as foreign; or (ii) The end product is a COTS item. * * * * * Steel means an alloy that includes at least 50 percent iron, between 0.02 and 2 percent carbon, and may include other elements. * * * * * Alternate IV. * * * (a) * * * Domestic end product means— (1) For an end product that does not consist wholly or predominantly of iron or steel or a combination of both— (i) An unmanufactured end product mined or produced in the United States; or (ii) An end product manufactured in the United States if— (A) The cost of its qualifying country components and its components that are mined, produced, or manufactured in the United States exceeds 55 percent of the cost of all its components. The cost of components includes transportation costs to the place of incorporation into the end product and U.S. duty (whether or not a duty-free entry certificate is issued). Components of unknown origin are treated as foreign. Scrap generated, collected, and prepared for processing in the United States is considered domestic. A component is considered to have been mined, produced, or manufactured in the United States (regardless of its source in fact) if the end product in which it is incorporated is manufactured in the United States and the component is of a class or kind for which the Government has determined that— (1) Sufficient and reasonably available commercial quantities of a satisfactory quality are not mined, produced, or manufactured in the United States; or (2) It is inconsistent with the public interest to apply the restrictions of the Buy American statute; or (B) The end product is a COTS item; or (2) For an end product that consists wholly or predominantly of iron or steel or a combination of both, an end product manufactured in the United States, if the cost of iron and steel not produced in the United States or a qualifying country constitutes less than 5 percent of the cost of all the components used in the end product (produced in the United States or a qualifying country means that all manufacturing processes of the iron or PO 00000 Frm 00035 Fmt 4702 Sfmt 4702 48379 steel must take place in the United States or a qualifying country, except metallurgical processes involving refinement of steel additives). The cost of iron and steel not produced in the United States or a qualifying country includes but is not limited to the cost of iron or steel mill products (such as bar, billet, slab, wire, plate, or sheet), castings, or forgings, not produced in the United States or a qualifying country, utilized in the manufacture of the end product and a good faith estimate of the cost of all iron or steel components not produced in the United States or a qualifying country, excluding COTS fasteners. Iron or steel components of unknown origin are treated as foreign. If the end product contains multiple components, the cost of all the materials used in such end product is calculated in accordance with the explanation of cost of components in paragraph (1)(ii)(A) of this definition. * * * * * Predominantly of iron or steel or a combination of both means that the cost of the iron and steel content exceeds 50 percent of the total cost of all its components. The cost of iron and steel is the cost of the iron or steel mill products (such as bar, billet, slab, wire, plate, or sheet), castings, or forgings utilized in the manufacture of the product and a good faith estimate of the cost of iron or steel components excluding COTS fasteners. * * * * * Qualifying country end product means— (1) An unmanufactured end product mined or produced in a qualifying country; or (2) An end product manufactured in a qualifying country if— (i) The cost of the following types of components exceeds 50 percent of the cost of all its components: (A) Components mined, produced, or manufactured in a qualifying country. (B) Components mined, produced, or manufactured in the United States. (C) Components of foreign origin of a class or kind for which the Government has determined that sufficient and reasonably available commercial quantities of a satisfactory quality are not mined, produced, or manufactured in the United States. Components of unknown origin are treated as foreign; or (ii) The end product is a COTS item. Steel means an alloy that includes at least 50 percent iron, between 0.02 and 2 percent carbon, and may include other elements. * * * * * E:\FR\FM\30AUP1.SGM 30AUP1 48380 Federal Register / Vol. 86, No. 165 / Monday, August 30, 2021 / Proposed Rules khammond on DSKJM1Z7X2PROD with PROPOSALS Alternate V. * * * (a) * * * Domestic end product means— (1) For an end product that does not consist wholly or predominantly of iron or steel or a combination of both— (i) An unmanufactured end product mined or produced in the United States; or (ii) An end product manufactured in the United States if— (A) The cost of its qualifying country components and its components that are mined, produced, or manufactured in the United States exceeds 55 percent of the cost of all its components. The cost of components includes transportation costs to the place of incorporation into the end product and U.S. duty (whether or not a duty-free entry certificate is issued). Components of unknown origin are treated as foreign. Scrap generated, collected, and prepared for processing in the United States is considered domestic. A component is considered to have been mined, produced, or manufactured in the United States (regardless of its source in fact) if the end product in which it is incorporated is manufactured in the United States and the component is of a class or kind for which the Government has determined that— (1) Sufficient and reasonably available commercial quantities of a satisfactory quality are not mined, produced, or manufactured in the United States; or (2) It is inconsistent with the public interest to apply the restrictions of the Buy American statute; or (B) The end product is a COTS item; or (2) For an end product that consists wholly or predominantly of iron or steel or a combination of both, an end product manufactured in the United States, if the cost of iron and steel not produced in the United States or a qualifying country constitutes less than 5 percent of the cost of all the components used in the end product (produced in the United States or a qualifying country means that all manufacturing processes of the iron or steel must take place in the United States or a qualifying country, except metallurgical processes involving refinement of steel additives). The cost of iron and steel not produced in the United States or a qualifying country includes but is not limited to the cost of iron or steel mill products (such as bar, billet, slab, wire, plate, or sheet), castings, or forgings, not produced in the United States or a qualifying country, utilized in the manufacture of the end product and a good faith estimate of the cost of all iron or steel VerDate Sep<11>2014 16:31 Aug 27, 2021 Jkt 253001 components not produced in the United States or a qualifying country, excluding COTS fasteners. Iron or steel components of unknown origin are treated as foreign. If the end product contains multiple components, the cost of all the materials used in such end product is calculated in accordance with the explanation of cost of components in paragraph (1)(ii)(A) of this definition. * * * * * Predominantly of iron or steel or a combination of both means that the cost of the iron and steel content exceeds 50 percent of the total cost of all its components. The cost of iron and steel is the cost of the iron or steel mill products (such as bar, billet, slab, wire, plate, or sheet), castings, or forgings utilized in the manufacture of the product and a good faith estimate of the cost of iron or steel components excluding COTS fasteners. * * * * * Qualifying country end product means— (1) An unmanufactured end product mined or produced in a qualifying country; or (2) An end product manufactured in a qualifying country if— (i) The cost of the following types of components exceeds 50 percent of the cost of all its components: (A) Components mined, produced, or manufactured in a qualifying country. (B) Components mined, produced, or manufactured in the United States. (C) Components of foreign origin of a class or kind for which the Government has determined that sufficient and reasonably available commercial quantities of a satisfactory quality are not mined, produced, or manufactured in the United States. Components of unknown origin are treated as foreign; or (ii) The end product is a COTS item. * * * * * Steel means an alloy that includes at least 50 percent iron, between 0.02 and 2 percent carbon, and may include other elements. * * * * * ■ 8. Amend section 252.225–7044 by— ■ a. Removing the clause date of ‘‘(NOV 2014)’’ and adding ‘‘(DATE)’’ in its place. ■ b. In paragraph (a)— ■ i. In the definition of ‘‘Commercially available off-the-shelf (COTS) item’’, redesignating paragraphs (i) introductory text, (i)(A), (B), and (C), and (ii) as paragraphs (1) introductory text, (1)(i), (ii), and (iii), and (2), respectively; PO 00000 Frm 00036 Fmt 4702 Sfmt 4702 ii. In the definition of ‘‘Cost of components’’, redesignating paragraphs (i) and (ii) as paragraphs (1) and (2), respectively; ■ iii. Revising the definition of ‘‘Domestic construction material’’; and ■ iv. Adding, in alphabetical order, the definitions of ‘‘Predominantly of iron or steel or a combination of both’’ and ‘‘Steel’’. ■ c. In Alternate I— ■ i. Removing the clause date of ‘‘(NOV 2014)’’ and adding ‘‘(DATE)’’ in its place; and ■ ii. In paragraph (a)— ■ A. In the definition of ‘‘Commercially available off-the-shelf (COTS) item’’, redesignating paragraphs (i) introductory text, (i)(A), (B), and (C), and (ii) as paragraphs (1) introductory text, (1)(i), (ii), and (iii), and (2), respectively; ■ B. In the definition of ‘‘Cost of components’’, redesignating paragraphs (i) and (ii) as paragraphs (1) and (2), respectively; ■ C. Revising the definition of ‘‘Domestic construction material’’; ■ D. Adding, in alphabetical order, the definition of ‘‘Predominantly of iron or steel or a combination of both’’; ■ E. In the definition of ‘‘SC/CASA state construction material’’, redesignating paragraphs (i) and (ii) as paragraphs (1) and (2), respectively; and ■ F. Adding, in alphabetical order, the definition of ‘‘Steel’’. The revisions and additions read as follows: ■ § 252.225–7044 Balance of Payments Program—Construction Material. * * * * * (a) * * * Domestic construction material means— (1) For construction material that does not consist wholly or predominantly of iron or steel or a combination of both— (i) An unmanufactured construction material mined or produced in the United States; or (ii) A construction material manufactured in the United States, if— (A) The cost of its components mined, produced, or manufactured in the United States exceeds 55 percent of the cost of all its components. Components of foreign origin of the same class or kind for which nonavailability determinations have been made are treated as domestic. Components of unknown origin are treated as foreign; or (B) The construction material is a COTS item; or (2) For construction material that consists wholly or predominantly of iron or steel or a combination of both, E:\FR\FM\30AUP1.SGM 30AUP1 Federal Register / Vol. 86, No. 165 / Monday, August 30, 2021 / Proposed Rules khammond on DSKJM1Z7X2PROD with PROPOSALS a construction material manufactured in the United States if the cost of iron and steel not produced in the United States (excluding fasteners) as estimated in good faith by the contractor, constitutes less than 5 percent of the cost of all the components used in such construction material (produced in the United States means that all manufacturing processes of the iron or steel must take place in the United States, except metallurgical processes involving refinement of steel additives). The cost of iron and steel not produced in the United States includes but is not limited to the cost of iron or steel mill products (such as bar, billet, slab, wire, plate, or sheet), castings, or forgings, not produced in the United States, utilized in the manufacture of the end product and a good faith estimate of the cost of all iron or steel components not produced in the United States, excluding COTS fasteners. Iron or steel components of unknown origin are treated as foreign. If the construction material contains multiple components, the cost of all the materials used in such construction material is calculated in accordance with the explanation of cost of components in paragraph (1)(ii)(A) of this definition. Predominantly of iron or steel or a combination of both means that the cost of the iron and steel content exceeds 50 percent of the total cost of all its components. The cost of iron and steel is the cost of the iron or steel mill products (such as bar, billet, slab, wire, plate, or sheet), castings, or forgings utilized in the manufacture of the product and a good faith estimate of the cost of iron or steel components excluding COTS fasteners. Steel means an alloy that includes at least 50 percent iron, between 0.02 and 2 percent carbon, and may include other elements. * * * * * Alternate I. * * * (a) * * * Domestic construction material means— (1) For construction material that does not consist wholly or predominantly of iron or steel or a combination of both— (i) An unmanufactured construction material mined or produced in the United States; or (ii) A construction material manufactured in the United States, if— (A) The cost of its components mined, produced, or manufactured in the United States exceeds 55 percent of the cost of all its components. Components of foreign origin of the same class or kind for which nonavailability determinations have been made are treated as domestic. Components of VerDate Sep<11>2014 16:31 Aug 27, 2021 Jkt 253001 unknown origin are treated as foreign; or (B) The construction material is a COTS item; or (2) For construction material that consists wholly or predominantly of iron or steel or a combination of both, a construction material manufactured in the United States if the cost of iron or steel not produced in the United States (excluding fasteners) as estimated in good faith by the contractor, constitutes less than 5 percent of the cost of all the components used in such construction material (produced in the United States means that all manufacturing processes of the iron or steel must take place in the United States, except metallurgical processes involving refinement of steel additives). The cost of iron and steel not produced in the United States includes but is not limited to the cost of iron or steel mill products (such as bar, billet, slab, wire, plate, or sheet), castings, or forgings, not produced in the United States, utilized in the manufacture of the construction material and a good faith estimate of the cost of all iron or steel components not produced in the United States, excluding COTS fasteners. Iron or steel components of unknown origin are treated as foreign. If the construction material contains multiple components, the cost of all the materials used in such construction material is calculated in accordance with the explanation of cost of components in paragraph (1)(ii)(A) of this definition. Predominantly of iron or steel or a combination of both means that the cost of the iron and steel content exceeds 50 percent of the total cost of all its components. The cost of iron and steel is the cost of the iron or steel mill products (such as bar, billet, slab, wire, plate, or sheet), castings, or forgings utilized in the manufacture of the product and a good faith estimate of the cost of iron or steel components excluding COTS fasteners. * * * * * Steel means an alloy that includes at least 50 percent iron, between 0.02 and 2 percent carbon, and may include other elements. * * * * * ■ 9. Amend section 252.225–7045 by— ■ a. Removing the clause date of ‘‘(AUG 2019)’’ and adding ‘‘(DATE)’’ in its place. ■ b. In paragraph (a)— ■ i. In the definition of ‘‘Caribbean Basin country construction material’’, redesignating paragraphs (i) and (ii) as paragraphs (1) and (2), respectively; ■ ii. In the definition of ‘‘Commercially available off-the-shelf (COTS) item’’, PO 00000 Frm 00037 Fmt 4702 Sfmt 4702 48381 redesignating paragraphs (i) introductory text, (i)(A), (B), and (C), and (ii) as paragraphs (1) introductory text, (1)(i), (ii), and (iii), and (2), respectively; ■ iii. In the definition of ‘‘Cost of components’’, redesignating paragraphs (i) and (ii) as paragraphs (1) and (2), respectively; ■ iv. In the definition of ‘‘Designated country’’, redesignating paragraphs (i), (ii), (iii), and (iv) as paragraphs (1), (2), (3), and (4), respectively; ■ v. Revising the definition of ‘‘Domestic construction material’’; ■ vi. In the definitions of ‘‘Free Trade Agreement country construction material’’ and ‘‘Least developed country construction material’’, redesignating paragraphs (i) and (ii) as paragraphs (1) and (2), respectively; ■ vii. Adding, in alphabetical order, the definitions of ‘‘Predominantly of iron or steel or a combination of both’’ and ‘‘Steel’’; and ■ viii. In the definition of ‘‘WTO GPA country construction material’’, redesignating paragraphs (i) and (ii) as paragraphs (1) and (2), respectively. ■ c. In Alternate I— ■ i. Removing the clause date of ‘‘(AUG 2019)’’ and adding ‘‘(DATE)’’ in its place; and ■ ii. In paragraph (a)— ■ A. In the definitions of ‘‘Bahrainian or Mexican construction material’’ and ‘‘Caribbean Basin country construction material’’, redesignating paragraphs (i) and (ii) as paragraphs (1) and (2), respectively; ■ B. In the definition of ‘‘Commercially available off-the-shelf (COTS) item’’, redesignating paragraphs (i) introductory text, (i)(A), (B), and (C), and (ii) as paragraphs (1) introductory text, (1)(i), (ii), and (iii), and (2), respectively; ■ C. In the definition of ‘‘Cost of components’’, redesignating paragraphs (i) and (ii) as paragraphs (1) and (2), respectively; ■ D. In the definition of ‘‘Designated country’’, redesignating paragraphs (i), (ii), (iii), and (iv) as paragraphs (1), (2), (3), and (4), respectively; ■ E. Revising the definition of ‘‘Domestic construction material’’; ■ F. In the definition of ‘‘Free Trade Agreement country construction material’’ and ‘‘Least developed country construction material’’, redesignating paragraphs (i) and (ii) as paragraphs (1) and (2), respectively; ■ G. Adding, in alphabetical order, the definitions of ‘‘Predominantly of iron or steel or a combination of both’’ and ‘‘Steel’’; and ■ H. In the definition of ‘‘WTO GPA country construction material’’, E:\FR\FM\30AUP1.SGM 30AUP1 khammond on DSKJM1Z7X2PROD with PROPOSALS 48382 Federal Register / Vol. 86, No. 165 / Monday, August 30, 2021 / Proposed Rules redesignating paragraphs (i) and (ii) as paragraphs (1) and (2), respectively. ■ d. In Alternate II— ■ i. Removing the clause date of ‘‘(AUG 2019)’’ and adding ‘‘(DATE)’’ in its place; and ■ ii. In paragraph (a)— ■ A. In the definition of ‘‘Caribbean Basin country construction material’’, redesignating paragraphs (i) and (ii) as paragraphs (1) and (2), respectively; ■ B. In the definition of ‘‘Commercially available off-the-shelf (COTS) item’’, redesignating paragraphs (i) introductory text, (i)(A), (B), and (C), and (ii) as paragraphs (1) introductory text, (1)(i), (ii), and (iii), and (2), respectively; ■ C. In the definition of ‘‘Cost of components’’, redesignating paragraphs (i) and (ii) as paragraphs (1) and (2), respectively; ■ D. In the definition of ‘‘Designated country’’, redesignating paragraphs (i), (ii), (iii), and (iv) as paragraphs (1), (2), (3), and (4), respectively; ■ E. Revising the definition of ‘‘Domestic construction material’’; ■ F. In the definitions of ‘‘Free Trade Agreement country construction material’’ and ‘‘Least developed country construction material’’, redesignating paragraphs (i) and (ii) as paragraphs (1) and (2), respectively; ■ G. Adding, in alphabetical order, the definition of ‘‘Predominantly of iron or steel or a combination of both’’; ■ H. In the definition of ‘‘SC/CASA state construction material’’, redesignating paragraphs (i) and (ii) as paragraphs (1) and (2), respectively; ■ I. Adding, in alphabetical order, the definition of ‘‘Steel’’; and ■ J. In the definition of ‘‘WTO GPA country construction material’’, redesignating paragraphs (i) and (ii) as paragraphs (1) and (2), respectively. ■ e. In Alternate III— ■ i. Removing the clause date of ‘‘(AUG 2019)’’ and adding ‘‘(DATE)’’ in its place; and ■ ii. In paragraph (a)— ■ A. In the definition of ‘‘Caribbean Basin country construction material’’, redesignating paragraphs (i) and (ii) as paragraphs (1) and (2), respectively; ■ B. In the definition of ‘‘Commercially available off-the-shelf (COTS) item’’, redesignating paragraphs (i) introductory text, (i)(A), (B), and (C), and (ii) as paragraphs (1) introductory text, (1)(i), (ii), and (iii), and (2), respectively; ■ C. In the definition of ‘‘Cost of components’’, redesignating paragraphs (i) and (ii) as paragraphs (1) and (2), respectively; ■ D. In the definition of ‘‘Designated country’’, redesignating paragraphs (i), VerDate Sep<11>2014 16:31 Aug 27, 2021 Jkt 253001 (ii), (iii), and (iv) as paragraphs (1), (2), (3), and (4), respectively; ■ E. Revising the definition of ‘‘Domestic construction material’’; ■ F. In the definitions of ‘‘Free Trade Agreement country construction material’’ and ‘‘Least developed country construction material’’, redesignating paragraphs (i) and (ii) as paragraphs (1) and (2), respectively; ■ G. Adding, in alphabetical order, the definition of ‘‘Predominantly of iron or steel or a combination of both’’; ■ H. In the definition of ‘‘SC/CASA state construction material’’, redesignating paragraphs (i) and (ii) as paragraphs (1) and (2), respectively; ■ I. Adding, in alphabetical order, the definition of ‘‘Steel’’; and ■ J. In the definition of ‘‘WTO GPA country construction material’’, redesignating paragraphs (i) and (ii) as paragraphs (1) and (2), respectively. The revisions and additions read as follows: § 252.225–7045 Balance of Payments Program—Construction Material Under Trade Agreements. * * * * * (a) * * * Domestic construction material means— (1) For construction material that does not consist wholly or predominantly of iron or steel or a combination of both— (i) An unmanufactured construction material mined or produced in the United States; or (ii) A construction material manufactured in the United States, if— (A) The cost of its components mined, produced, or manufactured in the United States exceeds 55 percent of the cost of all its components. Components of foreign origin of the same class or kind for which nonavailability determinations have been made are treated as domestic. Components of unknown origin are treated as foreign; or (B) The construction material is a COTS item; or (2) For construction material that consists wholly or predominantly of iron or steel or a combination of both, a construction material manufactured in the United States if the cost of iron and steel not produced in the United States (excluding fasteners) as estimated in good faith by the contractor, constitutes less than 5 percent of the cost of all the components used in such construction material (produced in the United States means that all manufacturing processes of the iron or steel must take place in the United States, except metallurgical processes involving refinement of steel PO 00000 Frm 00038 Fmt 4702 Sfmt 4702 additives). The cost of iron and steel not produced in the United States includes but is not limited to the cost of iron or steel mill products (such as bar, billet, slab, wire, plate, or sheet), castings, or forgings, not produced in the United States, utilized in the manufacture of the construction material and a good faith estimate of the cost of all iron or steel components not produced in the United States, excluding COTS fasteners. Iron or steel components of unknown origin are treated as foreign. If the construction material contains multiple components, the cost of all the materials used in such construction material is calculated in accordance with the explanation of cost of components in paragraph (1)(ii)(A) of this definition. * * * * * Predominantly of iron or steel or a combination of both means that the cost of the iron and steel content exceeds 50 percent of the total cost of all its components. The cost of iron and steel is the cost of the iron or steel mill products (such as bar, billet, slab, wire, plate, or sheet), castings, or forgings utilized in the manufacture of the product and a good faith estimate of the cost of iron or steel components excluding COTS fasteners. Steel means an alloy that includes at least 50 percent iron, between 0.02 and 2 percent carbon, and may include other elements. * * * * * Alternate I. * * * (a) * * * Domestic construction material means— (1) For construction material that does not consist wholly or predominantly of iron or steel or a combination of both— (i) An unmanufactured construction material mined or produced in the United States; or (ii) A construction material manufactured in the United States, if— (A) The cost of its components mined, produced, or manufactured in the United States exceeds 55 percent of the cost of all its components. Components of foreign origin of the same class or kind for which nonavailability determinations have been made are treated as domestic. Components of unknown origin are treated as foreign; or (B) The construction material is a COTS item; or (2) For construction material that consists wholly or predominantly of iron or steel or a combination of both, a construction material manufactured in the United States if the cost of iron and E:\FR\FM\30AUP1.SGM 30AUP1 Federal Register / Vol. 86, No. 165 / Monday, August 30, 2021 / Proposed Rules steel not produced in the United States (excluding fasteners) as estimated in good faith by the contractor, constitutes less than 5 percent of the cost of all the components used in such construction material (produced in the United States means that all manufacturing processes of the iron or steel must take place in the United States, except metallurgical processes involving refinement of steel additives). The cost of iron and steel not produced in the United States includes but is not limited to the cost of iron or steel mill products (such as bar, billet, slab, wire, plate, or sheet), castings, or forgings, not produced in the United States, utilized in the manufacture of the construction material and a good faith estimate of the cost of all iron or steel components not produced in the United States, excluding COTS fasteners. Iron or steel components of unknown origin are treated as foreign. If the construction material contains multiple components, the cost of all the materials used in such construction material is calculated in accordance with the explanation of cost of components in paragraph (1)(ii)(A) of this definition. * * * * * Predominantly of iron or steel or a combination of both means that the cost of the iron and steel content exceeds 50 percent of the total cost of all its components. The cost of iron and steel is the cost of the iron or steel mill products (such as bar, billet, slab, wire, plate, or sheet), castings, or forgings utilized in the manufacture of the product and a good faith estimate of the cost of iron or steel components excluding COTS fasteners. Steel means an alloy that includes at least 50 percent iron, between 0.02 and 2 percent carbon, and may include other elements. * * * * * khammond on DSKJM1Z7X2PROD with PROPOSALS Alternate II. * * * (a) * * * Domestic construction material means— (1) For construction material that does not consist wholly or predominantly of iron or steel or a combination of both— (i) An unmanufactured construction material mined or produced in the United States; or (ii) A construction material manufactured in the United States, if— (A) The cost of its components mined, produced, or manufactured in the United States exceeds 55 percent of the cost of all its components. Components of foreign origin of the same class or kind for which nonavailability VerDate Sep<11>2014 16:31 Aug 27, 2021 Jkt 253001 determinations have been made are treated as domestic. Components of unknown origin are treated as foreign; or (B) The construction material is a COTS item; or (2) For construction material that consists wholly or predominantly of iron or steel or a combination of both, a construction material manufactured in the United States if the cost of iron and steel not produced in the United States (excluding fasteners) as estimated in good faith by the contractor, constitutes less than 5 percent of the cost of all the components used in such construction material (produced in the United States means that all manufacturing processes of the iron or steel must take place in the United States, except metallurgical processes involving refinement of steel additives). The cost of iron and steel not produced in the United States includes but is not limited to the cost of iron or steel mill products (such as bar, billet, slab, wire, plate, or sheet), castings, or forgings, not produced in the United States, utilized in the manufacture of the construction material and a good faith estimate of the cost of all iron or steel components not produced in the United States, excluding COTS fasteners. Iron or steel components of unknown origin are treated as foreign. If the construction material contains multiple components, the cost of all the materials used in such construction material is calculated in accordance with the explanation of cost of components in paragraph (1)(ii)(A) of this definition. * * * * * Predominantly of iron or steel or a combination of both means that the cost of the iron and steel content exceeds 50 percent of the total cost of all its components. The cost of iron and steel is the cost of the iron or steel mill products (such as bar, billet, slab, wire, plate, or sheet), castings, or forgings utilized in the manufacture of the product and a good faith estimate of the cost of iron or steel components excluding COTS fasteners. * * * * * Steel means an alloy that includes at least 50 percent iron, between 0.02 and 2 percent carbon, and may include other elements. * * * * * Alternate III. * * * (a) * * * Domestic construction material means— (1) For construction material that does not consist wholly or predominantly of iron or steel or a combination of both— PO 00000 Frm 00039 Fmt 4702 Sfmt 4702 48383 (i) An unmanufactured construction material mined or produced in the United States; or (ii) A construction material manufactured in the United States, if— (A) The cost of its components mined, produced, or manufactured in the United States exceeds 55 percent of the cost of all its components. Components of foreign origin of the same class or kind for which nonavailability determinations have been made are treated as domestic. Components of unknown origin are treated as foreign; or (B) The construction material is a COTS item; or (2) For construction material that consists wholly or predominantly of iron or steel or a combination of both, a construction material manufactured in the United States if the cost of iron and steel not produced in the United States (excluding fasteners) as estimated in good faith by the contractor, constitutes less than 5 percent of the cost of all the components used in such construction material (produced in the United States means that all manufacturing processes of the iron or steel must take place in the United States, except metallurgical processes involving refinement of steel additives). The cost of iron and steel not produced in the United States includes but is not limited to the cost of iron or steel mill products (such as bar, billet, slab, wire, plate, or sheet), castings, or forgings, not produced in the United States, utilized in the manufacture of the construction material and a good faith estimate of the cost of iron or steel components not produced in the United States, excluding COTS fasteners. Iron or steel components of unknown origin are treated as foreign. If the construction material contains multiple components, the cost of all the materials used in such construction material is calculated in accordance with the explanation of cost of components in paragraph (1)(ii)(A) of this definition. * * * * * Predominantly of iron or steel or a combination of both means that the cost of the iron and steel content exceeds 50 percent of the total cost of all its components. The cost of iron and steel is the cost of the iron or steel mill products (such as bar, billet, slab, wire, plate, or sheet), castings, or forgings utilized in the manufacture of the product and a good faith estimate of the cost of iron or steel components excluding COTS fasteners. * * * * * Steel means an alloy that includes at least 50 percent iron, between 0.02 and E:\FR\FM\30AUP1.SGM 30AUP1 48384 Federal Register / Vol. 86, No. 165 / Monday, August 30, 2021 / Proposed Rules 2 percent carbon, and may include other elements. * * * * * [FR Doc. 2021–18338 Filed 8–27–21; 8:45 am] khammond on DSKJM1Z7X2PROD with PROPOSALS BILLING CODE 5001–06–P VerDate Sep<11>2014 16:31 Aug 27, 2021 Jkt 253001 PO 00000 Frm 00040 Fmt 4702 Sfmt 9990 E:\FR\FM\30AUP1.SGM 30AUP1

Agencies

[Federal Register Volume 86, Number 165 (Monday, August 30, 2021)]
[Proposed Rules]
[Pages 48370-48384]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-18338]


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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 225 and 252

[Docket DARS-2021-0012]
RIN 0750-AK85


Defense Federal Acquisition Regulation Supplement: Maximizing the 
Use of American-Made Goods (DFARS Case 2019-D045)

AGENCY: Defense Acquisition Regulations System, Department of Defense 
(DoD).

ACTION: Proposed rule.

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SUMMARY: DoD is proposing to amend the Defense Federal Acquisition 
Regulation Supplement (DFARS) to implement an Executive order regarding 
maximizing the use of American-made goods, products, and materials.

DATES: Comments on the proposed rule should be submitted in writing to 
the address shown below on or before October 29, 2021, to be considered 
in the formation of a final rule.

ADDRESSES: Submit comments identified by DFARS Case 2019-D045, using 
any of the following methods:
    [cir] Federal eRulemaking Portal: https://www.regulations.gov. 
Search for ``DFARS Case 2019-D045'' in the search box and select 
``Search.'' Select ``Comment'' and follow the instructions to submit a 
comment. Please include your name, company name (if any), and ``DFARS 
Case 2019-D045'' on any attached document.
    [cir] Email: [email protected]. Include DFARS Case 2019-D045 in 
the subject line of the message.
    Comments received generally will be posted without change to 
https://www.regulations.gov, including any personal 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.

FOR FURTHER INFORMATION CONTACT: Ms. Kimberly Bass, telephone 571-372-
6174.

SUPPLEMENTARY INFORMATION:

I. Background

    DoD is proposing to amend the DFARS to implement section 2(a)(i) of 
Executive Order (E.O.) 13881, Maximizing Use of American-Made Goods, 
Products, and Materials, which changes the percentages used to 
determine whether a product is

[[Page 48371]]

domestic or foreign under the Buy American statute (41 U.S.C. chapter 
83). Section 2(a)(i) of E.O. 13881 is not inconsistent with E.O. 14005, 
Ensuring the Future Is Made in All of America by All of America's 
Workers, which supersedes E.O. 13881 to the extent that it is 
inconsistent with E.O. 14005. E.O. 13881 calls for more aggressive 
implementation of the Buy American statute to maximize the Government's 
procurement of American-made goods, products, and materials. The Buy 
American statute requires the purchase of domestic products (both end 
products and construction materials), except for instances when the 
domestic product is not available, the domestic product is only 
available at an unreasonable cost, or it would not be in the public 
interest to buy the domestic product.
    E.O. 13881 supersedes E.O. 10582, Prescribing Procedures for 
Certain Determinations under the Buy American Act, to the extent that 
it is inconsistent with E.O. 13881, by establishing that under the Buy 
American statute a product is foreign if the cost of the foreign 
components used in such end product constitutes 45 percent or more of 
the cost of all products used in such end products, except that iron 
and steel products are foreign if the cost of foreign iron and steel 
equals or constitutes 5 percent of the cost of all products used in 
iron and steel end products.
    In order to promote economic and national security, stimulate 
economic growth, and create jobs, this rule proposes to strengthen 
domestic preferences under the Buy American statute by changing how a 
domestic product is defined, while also maintaining the exception to 
the statutory requirement for qualifying countries.

II. Discussion and Analysis

    The Buy American statute is implemented in Federal Acquisition 
Regulation (FAR) part 25. Revisions to the FAR to implement E.O. 13881 
have been accomplished under FAR Case 2019-016, published in the 
Federal Register on January 19, 2021 (86 FR 6180). This rule proposes 
revisions to DFARS part 225 and the associated clauses to implement the 
DoD-unique requirements and conforming changes associated with 
implementation of E.O. 13881.
    Revisions are proposed to the definitions of ``domestic end 
product'' and ``domestic construction material.'' Specifically, these 
definitions are each broken into two paragraphs to differentiate 
between end products and construction material that consist wholly or 
predominantly of iron or steel or a combination of both, and those that 
do not. Per the revised definition of ``domestic end product,'' an end 
product that consists wholly or predominantly of iron or steel, or a 
combination of both, is only considered a domestic end product if the 
end product is manufactured in the United States, and the cost of iron 
and steel not produced in the United States, or a qualifying country, 
constitutes less than 5 percent of the cost of all the materials used 
in the end product. For ``domestic construction material,'' if the 
construction material consists wholly or predominantly of iron or 
steel, or a combination of both, then the cost of iron and steel not 
produced in the United States (excluding fasteners) must constitute 
less than 5 percent of the cost of all the components used in the 
construction material. As explained in the definition of ``foreign iron 
and steel'' at FAR 25.003, ``produced in the United States'' means that 
all manufacturing processes of the iron or steel must take place in the 
United States, from the initial melting stage through the application 
of coatings, except metallurgical processes involving refinement of 
steel additives.
    The definition of a ``domestic end product'' is further revised to 
stipulate that if the end product does not consist wholly or 
predominantly of iron or steel, or a combination of both, then it is 
only considered a domestic end product if the end product is 
manufactured in the United States, and the cost of its qualifying 
country components and its components that are mined, produced, or 
manufactured in the United States exceeds 55 percent (an increase from 
50 percent) of the cost of all its components. Similarly, for 
``domestic construction material'' that does not consist wholly or 
predominantly of iron or steel, or a combination of both, the cost of 
its components mined, produced, or manufactured in the United States 
must exceed 55 percent (an increase from 50 percent) of the cost of all 
its components. In both cases, components of unknown origin are treated 
as foreign.
    Conforming changes are made throughout the DFARS to implement the 
revised definitions, to include revisions to the description of the 
two-part test for domestic end products at DFARS 225.101. This rule 
also proposes definitions for the terms ``predominantly of iron or 
steel or a combination of both'' and ``steel,'' which are used in the 
revised definitions of ``domestic end product'' and ``domestic 
construction material.'' Conforming changes are also made to 
redesignate paragraph numbers to reflect current drafting conventions 
in definitions for a number of clauses that are being updated.
    No changes are proposed in this rule to implement the E.O. 13881 
change to the percentage factor used to determine whether the offered 
price of material of domestic origin is unreasonable or inconsistent 
with public interest. E.O. 13881 increases the percentage factor from 6 
percent to 20 percent for entities other than small businesses, and 
from 12 percent to 30 percent for small businesses. However, DoD 
already uses a 50 percent factor for both large and small businesses, 
so no change is necessary for DoD to comply with the increased 
percentage factors in E.O. 13881. In addition, E.O. 13881 does not 
remove any existing exemptions to the Buy American statute for products 
of qualifying countries; therefore, this rule does not include any 
proposed changes to the exemptions.

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

    This proposed rule does not add any new provisions or clauses, nor 
change the applicability of existing provisions or clauses to contracts 
at or below the simplified acquisition threshold and contracts for the 
acquisition of commercial items, including commercially available off-
the-shelf items.

IV. Expected Impact of the Rule

    The current FAR contract clauses implementing the Buy American 
statute apply to a narrow set of procurements. In addition, because the 
Federal Acquisition Regulatory Council retained the commercially 
available off-the-shelf (COTS) items exception for most COTS items in 
its implementation of the E.O. in the FAR, the heightened domestic 
content requirements will not be applicable to those procurements. (See 
the final rule for FAR Case 2019-016 published at 86 FR 6180 on January 
19, 2021.) This proposed DFARS rule takes the same approach.
    Domestic industries supplying domestic end products are likely to 
benefit from a competitive advantage as a result of the FAR and DFARS 
implementation. Based on the E.O., it is unclear if the pool of 
qualified suppliers would be reduced, resulting in less competition and 
a possible increase in prices that the Government will pay to procure 
these products. At least three arguments point to the likelihood that 
any increase in burden on contractors would be small, if not de 
minimis:

[[Page 48372]]

    (1) Familiarization costs should be low.
    (2) Some, if not many, contractors may already be able to meet the 
more stringent threshold.
    (3) Costs incurred by contractors who adjust their supply chains, 
so that their end products qualify as domestic, will enjoy a larger 
price preference that should help to offset these costs over time.
    Each of these arguments is explained below.
    First, DoD does not anticipate significant costs from contractor 
familiarization with the rule given the recent publication of the FAR 
final rule implementing E.O. 13881 and the history of rulemaking and 
E.O.s in general in this area. The basic mechanics of the Buy American 
statute (e.g., how and when the price preference is used to favor 
domestic end products, certifications required of offerors to 
demonstrate end products are domestic) continue to reflect processes 
that have been in place for decades and are not new to contractors.
    Second, some, if not many, contractors may already be able to 
comply with the lower foreign content requirement needed to meet the 
definition of domestic end product under E.O. 13881 and the proposed 
rule. Laws such as the SECURE Technology Act (Pub. L. 115-390), which 
requires a series of actions to strengthen the Federal infrastructure 
for managing supply chain risks, are placing significantly increased 
emphasis on Federal agencies and Federal Government contractors to 
identify and reduce risk in their supply chains.
    One way to reduce supply chain risk is to increase domestic 
sourcing of content. In addition, in the context of iron and steel, 
many laws already in place call for more stringent accounting of 
domestic sourcing of content. For example, the Recovery Act required 
that all construction material for a project for the construction, 
alteration, maintenance, or repair of a public building or a public 
work in the United States, consisting wholly or predominantly of iron 
or steel, had to be produced in the United States when using Recovery 
Act funds, to the extent consistent with trade agreements (see FAR 
25.602-1, implementing section 1605 of the Recovery Act).
    In addition, Federal contractors who also work on contracts funded 
under Federal grants may, in some cases, find that the steel, iron, and 
manufactured goods used in the project must be produced in the United 
States, as is the case for certain funding administered by the Federal 
Transit Administration for public transportation projects (see 49 
U.S.C. 5323(j)).
    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 DoD contracts but will no longer 
enjoy a price preference.
    Accordingly, it is likely that the Federal market for iron and 
steel has already completed significant retooling and could meet the 
requirements of E.O. 13881 without too much additional effort.
    This rule proposes to amend clauses that implement the Buy American 
statute. There are 4 clauses affected by the changes in this rule:
    (1) 252.225-7001, Buy American and Balance of Payments Program 
(Basic and Alternate I).
    (2) 252.225-7036, Buy American--Free Trade Agreements--Balance of 
Payments Program (Basic and Alternates I-V).
    (3) 252.225-7044, Balance of Payments Program--Construction 
Material (Basic and Alternate I).
    (4) 252.225-7045, Balance of Payments Program--Construction 
Material (Basic and Alternates I-III).
    This rule changes the definitions of ``domestic end product'' and 
``domestic construction material.'' The rule also adds the definitions 
of ``steel'' and ``predominantly of iron or steel or a combination of 
both'' in the clauses to conform the DFARS with the FAR implementation 
of E.O. 13881.
    According to the Federal Procurement Data System (FPDS) data for 
fiscal year (FY) 2017, FY 2018, and FY 2019 for new awards with a 
foreign place of performance for construction valued over the micro-
purchase threshold and for awards for supplies, DoD awarded an average 
of 3,222 construction contracts with a foreign place of performance per 
year. In addition, DoD awarded an average of 332,607 supply contracts 
per year during FY 2017 through FY 2019.
    In summary, the rule will strengthen domestic preferences under the 
Buy American statute and provide both large and small businesses the 
opportunity and incentive to deliver U.S. manufactured products from 
domestic suppliers. It is expected that this rule will benefit large 
and small U.S. manufacturers, including those of iron or steel.
    Therefore, it is estimated that any increase in implementation 
costs associated with this rule is de minimis.

V. Executive Orders 12866 and 13563

    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.

VI. 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 will submit a copy of 
the interim or final rule with the form, Submission of Federal Rules 
under the Congressional Review Act, to the U.S. Senate, the U.S. House 
of Representatives, and the Comptroller General of the United States. A 
major rule under the Congressional Review Act 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.

VII. Regulatory Flexibility Act

    DoD does not expect this proposed 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, et seq. 
However, an initial regulatory flexibility analysis has been performed 
and is summarized as follows:
    The rule proposes to amend the Defense Federal Acquisition 
Regulation Supplement (DFARS) to implement section 2(a)(i) of Executive 
Order (E.O.) 13881, Maximizing Use of American-Made Goods, Products, 
and Materials, and also makes conforming changes to the applicable 
clauses as a result of implementation of this E.O. in the Federal 
Acquisition Regulation (FAR).
    The objective of this rule is to strengthen domestic preferences 
under the Buy American statute, as required by E.O. 13881, by changing 
how a domestic product and domestic construction material are defined.
    Data was obtained from the Federal Procurement Data System (FPDS) 
on awards valued over the micro-purchase threshold in fiscal year (FY) 
2017, FY

[[Page 48373]]

2018, and FY 2019 that had a foreign place of performance and were for 
construction. DoD awarded an average of 3,222 construction contracts 
with a foreign place of performance per year during FY 2017 through FY 
2019. Of those construction contracts, approximately 65 were awarded to 
32 unique small entities per year.
    Data was also obtained from FPDS for FY 2017 through FY 2019 on 
awards valued over the micro-purchase threshold for supplies made in 
the United States. DoD awarded an average of 332,607 supply contracts 
per year during FY 2017 through FY 2019. Of those supply contracts, 
approximately 154,422 supply contracts were awarded to 13,480 unique 
small entities per year.
    The rule will strengthen domestic preferences under the Buy 
American statute and provide small businesses the opportunity and 
incentive to deliver U.S. manufactured products from domestic 
suppliers. It is expected that this rule generally will benefit U.S. 
small business manufacturers, including those of iron or steel. Small 
business manufacturers who do not already meet the increased domestic 
content requirements of this proposed rule may need to adjust their 
supply chains. DoD does not have data on how many small business 
manufacturers may decide to make such adjustments.
    This rule does not include any new reporting, recordkeeping, or 
other compliance requirements for small businesses. This rule only 
changes the definitions of ``domestic end product'' and ``domestic 
construction material'' and adds the definitions of ``predominantly of 
iron or steel or a combination of both'' and ``steel'' to conform the 
DFARS with the FAR revisions as a result of E.O. 13881 implementation. 
Overall, the rule does not impose any additional compliance 
requirements on contractors or process procedures for the Government, 
other than to increase the percentages for use in the domestic content 
test applied to offers of manufactured end products.
    The rule does not duplicate, overlap, or conflict with any other 
Federal rules.
    There are no known significant alternative approaches to the 
proposed rule that would meet the requirements of E.O. 13881.
    DoD invites comments from small business concerns and other 
interested parties on the expected impact of this rule on small 
entities.
    DoD will also consider comments from small entities concerning the 
existing regulations in subparts affected by this rule in accordance 
with 5 U.S.C. 610. Interested parties must submit such comments 
separately and should cite 5 U.S.C. 610 (DFARS Case 2019-D045), in 
correspondence.

VII. Paperwork Reduction Act

    The rule does not contain any information collection requirements 
that require the approval of the Office of Management and Budget under 
the Paperwork Reduction Act (44 U.S.C. chapter 35).

List of Subjects in 48 CFR Parts 225 and 252

    Government procurement.

Jennifer D. Johnson,
Editor/Publisher, Defense Acquisition Regulations System.

    Therefore, 48 CFR parts 225 and 252 are proposed to be amended as 
follows:

0
1. The authority citation for parts 225 and 252 continues to read as 
follows:

    Authority: 41 U.S.C. 1303 and 48 CFR chapter 1.

PART 225--FOREIGN ACQUISITION

0
2. Amend section 225.003 by:
0
a. Revising the definition of ``Domestic end product'';
0
b. Removing the definition ``Qualifying country component and 
qualifying country end product''; and
0
c. Adding definitions for ``Qualifying country component'' and 
``Qualifying country end product'' in alphabetical order.
    The revision and additions read as follows:


225.003  Definitions.

* * * * *
    Domestic end product means--
    (1) For an end product that does not consist wholly or 
predominantly of iron or steel or a combination of both--
    (i) An unmanufactured end product mined or produced in the United 
States; or
    (ii) An end product manufactured in the United States if--
    (A) The cost of its qualifying country components and its 
components that are mined, produced, or manufactured in the United 
States exceeds 55 percent of the cost of all its components. The cost 
of components includes transportation costs to the place of 
incorporation into the end product and U.S. duty (whether or not a 
duty-free entry certificate is issued). Components of unknown origin 
are treated as foreign. Scrap generated, collected, and prepared for 
processing in the United States is considered domestic. A component is 
considered to have been mined, produced, or manufactured in the United 
States (regardless of its source in fact) if the end product in which 
it is incorporated is manufactured in the United States and the 
component is of a class or kind for which the Government has determined 
that--
    (1) Sufficient and reasonably available commercial quantities of a 
satisfactory quality are not mined, produced, or manufactured in the 
United States; or
    (2) It is inconsistent with the public interest to apply the 
restrictions of the Buy American statute; or
    (B) The end product is a commercially available off-the-shelf 
(COTS) item; or
    (2) For an end product that consists wholly or predominantly of 
iron or steel or a combination of both, an end product manufactured in 
the United States, if the cost of iron and steel not produced in the 
United States or a qualifying country constitutes less than 5 percent 
of the cost of all the components used in the end product (produced in 
the United States or a qualifying country means that all manufacturing 
processes of the iron or steel must take place in the United States or 
a qualifying country, except metallurgical processes involving 
refinement of steel additives). The cost of iron and steel not produced 
in the United States or a qualifying country includes but is not 
limited to the cost of iron or steel mill products (such as bar, 
billet, slab, wire, plate, or sheet), castings, or forgings, not 
produced in the United States or a qualifying country, utilized in the 
manufacture of the end product and a good faith estimate of the cost of 
all iron or steel components not produced in the United States or a 
qualifying country, excluding COTS fasteners. Iron or steel components 
of unknown origin are treated as foreign. If the end product contains 
multiple components, the cost of all the materials used in such end 
product is calculated in accordance with the explanation of cost of 
components in paragraph (1)(ii)(A) of this definition.
* * * * *
    Qualifying country component means a component mined, produced, or 
manufactured in a qualifying country.
    Qualifying country end product means--
    (1) An unmanufactured end product mined or produced in a qualifying 
country; or
    (2) An end product manufactured in a qualifying country if--
    (i) The cost of the following types of components exceeds 50 
percent of the cost of all its components:
    (A) Components mined, produced, or manufactured in a qualifying 
country.
    (B) Components mined, produced, or manufactured in the United 
States.

[[Page 48374]]

    (C) Components of foreign origin of a class or kind for which the 
Government has determined that sufficient and reasonably available 
commercial quantities of a satisfactory quality are not mined, 
produced, or manufactured in the United States. Components of unknown 
origin are treated as foreign; or
    (ii) The end product is a COTS item.
* * * * *
0
3. Revise the subpart 225.1 heading to read as follows:

SUBPART 225.1--BUY AMERICAN--SUPPLIES

0
4. Amend section 225.101 by revising paragraph (a)(ii) to read as 
follows:


225.101  General.

    (a) * * *
    (ii)(A) Except for an end product that consists wholly or 
predominantly of iron or steel or a combination of both, the cost of 
its U.S. and qualifying country components exceeds 55 percent of the 
cost of all its components. This test is applied to end products only 
and not to individual components.
    (B) For an end product that consists wholly or predominantly of 
iron or steel or a combination of both, the cost of iron and steel not 
produced in the United States or a qualifying country must constitute 
less than 5 percent of the cost of all the components used in the end 
product. The cost of iron and steel not produced in the United States 
or a qualifying country includes but is not limited to the cost of iron 
or steel mill products (such as bar, billet, slab, wire, plate, or 
sheet), castings, or forgings, not produced in the United States or a 
qualifying country, utilized in the manufacture of the end product and 
a good faith estimate of the cost of all iron or steel components not 
produced in the United States or a qualifying country, excluding 
commercially available off-the-shelf (COTS) fasteners. The domestic 
content test of the Buy American statute has not been waived for 
acquisitions of COTS items in this category, except for COTS fasteners.
* * * * *


225.502  [Amended]

0
5. Amend section 225.502 by--
0
a. In paragraph (c)(ii)(B), removing ``225.504(1)'' and adding ``PGI 
225.504(1)'' in its place;
0
b. In paragraph (c)(ii)(D), removing ``225.504(2)'' and adding ``PGI 
225.504(2)'' in its place;
0
c. In paragraph (c)(ii)(E)(1), removing ``225.504(3)'' and adding ``PGI 
225.504(3)'' in its place; and
0
d. In paragraph (c)(ii)(E)(2), removing ``225.504(4)'' and adding ``PGI 
225.504(4)'' in its place.

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
6. Amend section 252.225-7001 by--
0
a. Removing the clause date of ``(DEC 2017)'' and adding ``(DATE)'' in 
its place;
0
b. In paragraph (a)--
0
i. In the definition of ``Commercially available off-the-shelf (COTS) 
item'', redesignating paragraphs (i) introductory text, (i)(A), (B), 
and (C), and (ii) as paragraphs (1) introductory text, (1)(i), (ii), 
and (iii), and (2), respectively;
0
ii. Revising the definition of ``Domestic end product'';
0
iii. Adding, in alphabetical order, the definition of ``Predominantly 
of iron or steel or a combination of both'';
0
iv. Revising the definition of ``Qualifying country end product''; and
0
v. Adding, in alphabetical order, the definition of ``Steel''; and
0
c. In Alternate I--
0
i. Removing the clause date of ``(DEC 2017)'' and adding ``(DATE)'' in 
its place; and
0
ii. In paragraph (a)--
0
A. In the definition of ``Commercially available off-the-shelf (COTS) 
item'', redesignating paragraphs (i) introductory text, (i)(A), (B), 
and (C), and (ii) as paragraphs (1) introductory text, (1)(i), (ii), 
and (iii), and (2), respectively;
0
B. Revising the definition of ``Domestic end product'';
0
C. Adding, in alphabetical order, the definition of ``Predominantly of 
iron or steel or a combination of both'';
0
D. Revising the definition of ``Qualifying country end product'';
0
E. In the definition of ``South Caucasus/Central and South Asian (SC/
CASA) state end product'', redesignating paragraphs (i) and (ii) as 
paragraphs (1) and (2), respectively; and
0
F. Adding, in alphabetical order, the definition of ``Steel''.
    The revisions and additions read as follows:


252.225-7001  Buy American and Balance of Payments Program.

* * * * *
    (a) * * *
    Domestic end product means--
    (1) For an end product that does not consist wholly or 
predominantly of iron or steel or a combination of both--
    (i) An unmanufactured end product mined or produced in the United 
States; or
    (ii) An end product manufactured in the United States if--
    (A) The cost of its qualifying country components and its 
components that are mined, produced, or manufactured in the United 
States exceeds 55 percent of the cost of all its components. The cost 
of components includes transportation costs to the place of 
incorporation into the end product and U.S. duty (whether or not a 
duty-free entry certificate is issued). Components of unknown origin 
are treated as foreign. Scrap generated, collected, and prepared for 
processing in the United States is considered domestic. A component is 
considered to have been mined, produced, or manufactured in the United 
States (regardless of its source in fact) if the end product in which 
it is incorporated is manufactured in the United States and the 
component is of a class or kind for which the Government has determined 
that--
    (1) Sufficient and reasonably available commercial quantities of a 
satisfactory quality are not mined, produced, or manufactured in the 
United States; or
    (2) It is inconsistent with the public interest to apply the 
restrictions of the Buy American statute; or
    (B) The end product is a COTS item; or
    (2) For an end product that consists wholly or predominantly of 
iron or steel or a combination of both, an end product manufactured in 
the United States, if the cost of iron and steel not produced in the 
United States or a qualifying country constitutes less than 5 percent 
of the cost of all the components used in the end product (produced in 
the United States or a qualifying country means that all manufacturing 
processes of the iron or steel must take place in the United States or 
a qualifying country, except metallurgical processes involving 
refinement of steel additives). The cost of iron and steel not produced 
in the United States or a qualifying country includes but is not 
limited to the cost of iron or steel mill products (such as bar, 
billet, slab, wire, plate, or sheet), castings, or forgings, not 
produced in the United States or a qualifying country, utilized in the 
manufacture of the end product and a good faith estimate of the cost of 
all iron or steel components not produced in the United States or a 
qualifying country, excluding COTS fasteners. Iron or steel components 
of unknown origin are treated as foreign. If the end product contains 
multiple components, the cost of all the materials used in such end 
product is calculated in accordance with the explanation of cost of

[[Page 48375]]

components in paragraph (1)(ii)(A) of this definition.
* * * * *
    Predominantly of iron or steel or a combination of both means that 
the cost of the iron and steel content exceeds 50 percent of the total 
cost of all its components. The cost of iron and steel is the cost of 
the iron or steel mill products (such as bar, billet, slab, wire, 
plate, or sheet), castings, or forgings utilized in the manufacture of 
the product and a good faith estimate of the cost of iron or steel 
components excluding COTS fasteners.
* * * * *
    Qualifying country end product means--
    (1) An unmanufactured end product mined or produced in a qualifying 
country; or
    (2) An end product manufactured in a qualifying country if--
    (i) The cost of the following types of components exceeds 50 
percent of the cost of all its components:
    (A) Components mined, produced, or manufactured in a qualifying 
country.
    (B) Components mined, produced, or manufactured in the United 
States.
    (C) Components of foreign origin of a class or kind for which the 
Government has determined that sufficient and reasonably available 
commercial quantities of a satisfactory quality are not mined, 
produced, or manufactured in the United States. Components of unknown 
origin are treated as foreign; or
    (ii) The end product is a COTS item.
    Steel means an alloy that includes at least 50 percent iron, 
between 0.02 and 2 percent carbon, and may include other elements.
* * * * *

Alternate I. * * *

    (a) * * *
    Domestic end product means--
    (1) For an end product that does not consist wholly or 
predominantly of iron or steel or a combination of both--
    (i) An unmanufactured end product mined or produced in the United 
States; or
    (ii) An end product manufactured in the United States if--
    (A) The cost of its qualifying country components and its 
components that are mined, produced, or manufactured in the United 
States exceeds 55 percent of the cost of all its components. The cost 
of components includes transportation costs to the place of 
incorporation into the end product and U.S. duty (whether or not a 
duty-free entry certificate is issued). Components of unknown origin 
are treated as foreign. Scrap generated, collected, and prepared for 
processing in the United States is considered domestic. A component is 
considered to have been mined, produced, or manufactured in the United 
States (regardless of its source in fact) if the end product in which 
it is incorporated is manufactured in the United States and the 
component is of a class or kind for which the Government has determined 
that--
    (1) Sufficient and reasonably available commercial quantities of a 
satisfactory quality are not mined, produced, or manufactured in the 
United States; or
    (2) It is inconsistent with the public interest to apply the 
restrictions of the Buy American statute; or
    (B) The end product is a COTS item; or
    (2) For an end product that consists wholly or predominantly of 
iron or steel or a combination of both, an end product manufactured in 
the United States, if the cost of iron and steel not produced in the 
United States or a qualifying country constitutes less than 5 percent 
of the cost of all the components used in the end product (produced in 
the United States or a qualifying country means that all manufacturing 
processes of the iron or steel must take place in the United States or 
a qualifying country, except metallurgical processes involving 
refinement of steel additives). The cost of iron and steel not produced 
in the United States or a qualifying country includes but is not 
limited to the cost of iron or steel mill products (such as bar, 
billet, slab, wire, plate, or sheet), castings, or forgings, not 
produced in the United States or a qualifying country, utilized in the 
manufacture of the end product and a good faith estimate of the cost of 
all iron or steel components not produced in the United States or a 
qualifying country, excluding COTS fasteners. Iron or steel components 
of unknown origin are treated as foreign. If the end product contains 
multiple components, the cost of all the materials used in such end 
product is calculated in accordance with the explanation of cost of 
components in paragraph (1)(ii)(A) of this definition.
* * * * *
    Predominantly of iron or steel or a combination of both means that 
the cost of the iron and steel content exceeds 50 percent of the total 
cost of all its components. The cost of iron and steel is the cost of 
the iron or steel mill products (such as bar, billet, slab, wire, 
plate, or sheet), castings, or forgings utilized in the manufacture of 
the product and a good faith estimate of the cost of iron or steel 
components excluding COTS fasteners.
* * * * *
    Qualifying country end product means--
    (1) An unmanufactured end product mined or produced in a qualifying 
country; or
    (2) An end product manufactured in a qualifying country if--
    (i) The cost of the following types of components exceeds 50 
percent of the cost of all its components:
    (A) Components mined, produced, or manufactured in a qualifying 
country.
    (B) Components mined, produced, or manufactured in the United 
States.
    (C) Components of foreign origin of a class or kind for which the 
Government has determined that sufficient and reasonably available 
commercial quantities of a satisfactory quality are not mined, 
produced, or manufactured in the United States. Components of unknown 
origin are treated as foreign; or
    (ii) The end product is a COTS item.
* * * * *
    Steel means an alloy that includes at least 50 percent iron, 
between 0.02 and 2 percent carbon, and may include other elements.
* * * * *
0
7. Amend section 252.225-7036 by--
0
a. Removing the clause date of ``(DEC 2017)'' and adding ``(DATE)'' in 
its place.
0
b. In paragraph (a)--
0
i. In the definition of ``Bahrainian end product'', redesignating 
paragraphs (i) and (ii) as paragraphs (1) and (2) respectively;
0
ii. In the definition of ``Commercially available off-the-shelf (COTS) 
item'', redesignating paragraphs (i) introductory text, (i)(A), (B), 
and (C), and (ii) as paragraphs (1) introductory text, (1)(i), (ii), 
and (iii), and (2) respectively;
0
iii. Revising the definition of ``Domestic end product'';
0
iv. In the definition of ``Free Trade Agreement country'', removing the 
semicolon and adding a period in its place;
0
v. In the definitions of ``Free Trade Agreement country end product'', 
``Moroccan end product'', ``Panamanian end product'', and ``Peruvian 
end product'', redesignating paragraphs (i) and (ii) as paragraphs (1) 
and (2) respectively;
0
vi. Adding, in alphabetical order, the definition of ``Predominantly of 
iron or steel or a combination of both'';
0
vii. Revising the definition of ``Qualifying country end product''; and
0
viii. Adding, in alphabetical order, the definition of ``Steel''.

[[Page 48376]]

0
c. In Alternate I--
0
i. Removing the clause date of ``(DEC 2017)'' and adding ``(DATE)'' in 
its place; and
0
ii. In paragraph (a)--
0
A. In the definitions of ``Bahrainian end product'' and ``Canadian end 
product'', redesignating paragraphs (i) and (ii) as paragraphs (1) and 
(2), respectively;
0
B. In the definition of ``Commercially available off-the-shelf (COTS) 
item'', redesignating paragraphs (i) introductory text, (i)(A), (B), 
and (C), and (ii) as paragraphs (1) introductory text, (1)(i), (ii), 
and (iii), and (2), respectively;
0
C. Revising the definition of ``Domestic end product'';
0
D. In the definition of ``Free Trade Agreement country'', removing the 
semicolon and adding a period in its place;
0
E. In the definitions of ``Free Trade Agreement country end product'', 
``Moroccan end product'', ``Panamanian end product'', and ``Peruvian 
end product'', redesignating paragraphs (i) and (ii) as paragraphs (1) 
and (2), respectively;
0
F. Adding, in alphabetical order, the definition of ``Predominantly of 
iron or steel or a combination of both'';
0
G. Revising the definition of ``Qualifying country end product''; and
0
H. Adding, in alphabetical order, the definition of ``Steel''.
0
d. In Alternate II--
0
i. Removing the clause date of ``(DEC 2017)'' and adding ``(DATE)'' in 
its place; and
0
ii. In paragraph (a)--
0
A. In the definition of ``Bahrainian end product'', redesignating 
paragraphs (i) and (ii) as paragraphs (1) and (2), respectively;
0
B. In the definition of ``Commercially available off-the-shelf (COTS) 
item'', redesignating paragraphs (i) introductory text, (i)(A), (B), 
and (C), and (ii) as paragraphs (1) introductory text, (1)(i), (ii), 
and (iii), and (2), respectively;
0
C. Revising the definitions of ``Domestic end product'';
0
D. In the definition of ``Free Trade Agreement country'', removing the 
semicolon and adding a period in its place;
0
E. In the definitions of ``Free Trade Agreement country end product'', 
``Moroccan end product'', ``Panamanian end product'', and ``Peruvian 
end product'', redesignating paragraphs (i) and (ii) as paragraphs (1) 
and (2), respectively;
0
F. Adding, in alphabetical order, the definition of ``Predominantly of 
iron or steel or a combination of both'';
0
G. Revising the definition of ``Qualifying country end product'';
0
H. In the definition of ``South Caucasus/Central and South Asian (SC/
CASA) state end product'', redesignating paragraphs (i) and (ii) as 
paragraphs (1) and (2), respectively; and
0
I. Adding, in alphabetical order, the definition of ``Steel''.
0
e. In Alternate III--
0
i. Removing the clause date of ``(DEC 2017)'' and adding ``(DATE)'' in 
its place; and
0
ii. In paragraph (a)--
0
A. In the definitions of ``Bahrainian end product'' and ``Canadian end 
product'', redesignating paragraphs (i) and (ii) as paragraphs (1) and 
(2), respectively;
0
B. In the definition of ``Commercially available off-the-shelf (COTS) 
item'', redesignating paragraphs (i) introductory text, (i)(A), (B), 
and (C), and (ii) as paragraphs (1) introductory text, (1)(i), (ii), 
and (iii), and (2), respectively;
0
C. Revising the definition of ``Domestic end product'';
0
D. In the definition of ``Free Trade Agreement country'', removing the 
semicolon and adding a period in its place;
0
E. In the definitions of ``Free Trade Agreement country end product'', 
``Moroccan end product'', ``Panamanian end product'', and ``Peruvian 
end product'', redesignating paragraphs (i) and (ii) as paragraphs (1) 
and (2), respectively;
0
F. Adding, in alphabetical order, the definition of ``Predominantly of 
iron or steel or a combination of both'';
0
G. Revising the definition of ``Qualifying country end product'';
0
H. In the definition of ``South Caucasus/Central and South Asian (SC/
CASA) state end product'', redesignating paragraphs (i) and (ii) as 
paragraphs (1) and (2), respectively; and
0
I. Adding, in alphabetical order, the definition of ``Steel''.
0
f. In Alternate IV--
0
i. Removing the clause date of ``(DEC 2017)'' and adding ``(DATE)'' in 
its place; and
0
ii. In paragraph (a)--
0
A. In the definition of ``Bahrainian end product'', redesignating 
paragraphs (i) and (ii) as paragraphs (1) and (2), respectively;
0
B. In the definition of ``Commercially available off-the-shelf (COTS) 
item'', redesignating paragraphs (i) introductory text, (i)(A), (B), 
and (C), and (ii) as paragraphs (1) introductory text, (1)(i), (ii), 
and (iii), and (2), respectively;
0
C. Revising the definition of ``Domestic end product'';
0
D. In the definition of ``Free Trade Agreement country'', removing the 
semicolon and adding a period in its place;
0
E. In definitions of ``Free Trade Agreement country end product'', 
``Korean end product'', ``Moroccan end product'', ``Panamanian end 
product'', and ``Peruvian end product'', redesignating paragraphs (i) 
and (ii) as paragraphs (1) and (2), respectively;
0
F. Adding, in alphabetical order, the definition of ``Predominantly of 
iron or steel or a combination of both'';
0
G. Revising the definition of ``Qualifying country end product''; and
0
H. Adding, in alphabetical order, the definition of ``Steel''.
0
g. In Alternate V--
0
i. Removing the clause date of ``(DEC 2017)'' and adding ``(DATE)'' in 
its place; and
0
ii. In paragraph (a)--
0
A. In the definition of ``Bahrainian end product'', redesignating 
paragraphs (i) and (ii) as paragraphs (1) and (2), respectively;
0
B. In the definition of ``Commercially available off-the-shelf (COTS) 
item'', redesignating paragraphs (i) introductory text, (i)(A), (B), 
and (C), and (ii) as paragraphs (1) introductory text, (1)(i), (ii), 
and (iii), and (2), respectively;
0
C. Revising the definition of ``Domestic end product'';
0
D. In the definition of ``Free Trade Agreement country'', removing the 
semicolon and adding a period in its place;
0
E. In the definitions of ``Free Trade Agreement country end product'', 
``Korean end product'', ``Moroccan end product'', ``Panamanian end 
product'', and ``Peruvian end product'', redesignating paragraphs (i) 
and (ii) as paragraphs (1) and (2), respectively;
0
F. Adding, in alphabetical order, the definition of ``Predominantly of 
iron or steel or a combination of both'';
0
G. Revising the definition of ``Qualifying country end product'';
0
H. In the definition of ``South Caucasus/Central and South Asian (SC/
CASA) state end product'', redesignating paragraphs (i) and (ii) as 
paragraphs (1) and (2), respectively; and
0
I. Adding, in alphabetical order, the definition of ``Steel''.
    The revisions and additions read as follows:


252.225-7036  Buy American--Free Trade Agreements--Balance of Payments 
Program.

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

[[Page 48377]]

    (1) For an end product that does not consist wholly or 
predominantly of iron or steel or a combination of both--
    (i) An unmanufactured end product mined or produced in the United 
States; or
    (ii) An end product manufactured in the United States if--
    (A) The cost of its qualifying country components and its 
components that are mined, produced, or manufactured in the United 
States exceeds 55 percent of the cost of all its components. The cost 
of components includes transportation costs to the place of 
incorporation into the end product and U.S. duty (whether or not a 
duty-free entry certificate is issued). Components of unknown origin 
are treated as foreign. Scrap generated, collected, and prepared for 
processing in the United States is considered domestic. A component is 
considered to have been mined, produced, or manufactured in the United 
States (regardless of its source in fact) if the end product in which 
it is incorporated is manufactured in the United States and the 
component is of a class or kind for which the Government has determined 
that--
    (1) Sufficient and reasonably available commercial quantities of a 
satisfactory quality are not mined, produced, or manufactured in the 
United States; or
    (2) It is inconsistent with the public interest to apply the 
restrictions of the Buy American statute; or
    (B) The end product is a COTS item; or
    (2) For an end product that consists wholly or predominantly of 
iron or steel or a combination of both, an end product manufactured in 
the United States, if the cost of iron and steel not produced in the 
United States or a qualifying country constitutes less than 5 percent 
of the cost of all the components used in the end product (produced in 
the United States or a qualifying country means that all manufacturing 
processes of the iron or steel must take place in the United States or 
a qualifying country, except metallurgical processes involving 
refinement of steel additives). The cost of iron and steel not produced 
in the United States or a qualifying country includes but is not 
limited to the cost of iron or steel mill products (such as bar, 
billet, slab, wire, plate, or sheet), castings, or forgings, not 
produced in the United States or a qualifying country, utilized in the 
manufacture of the end product and a good faith estimate of the cost of 
all iron or steel components not produced in the United States or a 
qualifying country, excluding COTS fasteners. Iron or steel components 
of unknown origin are treated as foreign. If the end product contains 
multiple components, the cost of all the materials used in such end 
product is calculated in accordance with the explanation of cost of 
components in paragraph (1)(ii)(A) of this definition.
* * * * *
    Predominantly of iron or steel or a combination of both means that 
the cost of the iron and steel content exceeds 50 percent of the total 
cost of all its components. The cost of iron and steel is the cost of 
the iron or steel mill products (such as bar, billet, slab, wire, 
plate, or sheet), castings, or forgings utilized in the manufacture of 
the product and a good faith estimate of the cost of iron or steel 
components excluding COTS fasteners.
* * * * *
    Qualifying country end product means--
    (1) An unmanufactured end product mined or produced in a qualifying 
country; or
    (2) An end product manufactured in a qualifying country if--
    (i) The cost of the following types of components exceeds 50 
percent of the cost of all its components:
    (A) Components mined, produced, or manufactured in a qualifying 
country.
    (B) Components mined, produced, or manufactured in the United 
States.
    (C) Components of foreign origin of a class or kind for which the 
Government has determined that sufficient and reasonably available 
commercial quantities of a satisfactory quality are not mined, 
produced, or manufactured in the United States. Components of unknown 
origin are treated as foreign; or
    (ii) The end product is a COTS item.
    Steel means an alloy that includes at least 50 percent iron, 
between 0.02 and 2 percent carbon, and may include other elements.
* * * * *

Alternate I. * * *

    (a) * * *
    Domestic end product means--
    (1) For an end product that does not consist wholly or 
predominantly of iron or steel or a combination of both--
    (i) An unmanufactured end product mined or produced in the United 
States; or
    (ii) An end product manufactured in the United States if--
    (A) The cost of its qualifying country components and its 
components that are mined, produced, or manufactured in the United 
States exceeds 55 percent of the cost of all its components. The cost 
of components includes transportation costs to the place of 
incorporation into the end product and U.S. duty (whether or not a 
duty-free entry certificate is issued). Components of unknown origin 
are treated as foreign. Scrap generated, collected, and prepared for 
processing in the United States is considered domestic. A component is 
considered to have been mined, produced, or manufactured in the United 
States (regardless of its source in fact) if the end product in which 
it is incorporated is manufactured in the United States and the 
component is of a class or kind for which the Government has determined 
that--
    (1) Sufficient and reasonably available commercial quantities of a 
satisfactory quality are not mined, produced, or manufactured in the 
United States; or
    (2) It is inconsistent with the public interest to apply the 
restrictions of the Buy American statute; or
    (C) The end product is a COTS item; or
    (2) For an end product that consists wholly or predominantly of 
iron or steel or a combination of both, an end product manufactured in 
the United States, if the cost of iron and steel not produced in the 
United States or a qualifying country constitutes less than 5 percent 
of the cost of all the components used in the end product (produced in 
the United States or a qualifying country means that all manufacturing 
processes of the iron or steel must take place in the United States or 
a qualifying country, except metallurgical processes involving 
refinement of steel additives). The cost of iron and steel not produced 
in the United States or a qualifying country includes but is not 
limited to the cost of iron or steel mill products (such as bar, 
billet, slab, wire, plate, or sheet), castings, or forgings, not 
produced in the United States or a qualifying country, utilized in the 
manufacture of the end product and a good faith estimate of the cost of 
all iron or steel components not produced in the United States or a 
qualifying country, excluding COTS fasteners. Iron or steel components 
of unknown origin are treated as foreign. If the end product contains 
multiple components, the cost of all the materials used in such end 
product is calculated in accordance with the explanation of cost of 
components in paragraph (1)(ii)(A) of this definition.
* * * * *
    Predominantly of iron or steel or a combination of both means that 
the cost of the iron and steel content exceeds 50 percent of the total 
cost of all its components. The cost of iron and steel

[[Page 48378]]

is the cost of the iron or steel mill products (such as bar, billet, 
slab, wire, plate, or sheet), castings, or forgings utilized in the 
manufacture of the product and a good faith estimate of the cost of 
iron or steel components excluding COTS fasteners.
* * * * *
    Qualifying country end product means--
    (1) An unmanufactured end product mined or produced in a qualifying 
country; or
    (2) An end product manufactured in a qualifying country if--
    (i) The cost of the following types of components exceeds 50 
percent of the cost of all its components:
    (A) Components mined, produced, or manufactured in a qualifying 
country.
    (B) Components mined, produced, or manufactured in the United 
States.
    (C) Components of foreign origin of a class or kind for which the 
Government has determined that sufficient and reasonably available 
commercial quantities of a satisfactory quality are not mined, 
produced, or manufactured in the United States. Components of unknown 
origin are treated as foreign; or
    (ii) The end product is a COTS item.
    Steel means an alloy that includes at least 50 percent iron, 
between 0.02 and 2 percent carbon, and may include other elements.
* * * * *

Alternate II. * * *

    (a) * * *
    Domestic end product means--
    (1) For an end product that does not consist wholly or 
predominantly of iron or steel or a combination of both--
    (i) An unmanufactured end product mined or produced in the United 
States; or
    (ii) An end product manufactured in the United States if--
    (A) The cost of its qualifying country components and its 
components that are mined, produced, or manufactured in the United 
States exceeds 55 percent of the cost of all its components. The cost 
of components includes transportation costs to the place of 
incorporation into the end product and U.S. duty (whether or not a 
duty-free entry certificate is issued). Components of unknown origin 
are treated as foreign. Scrap generated, collected, and prepared for 
processing in the United States is considered domestic. A component is 
considered to have been mined, produced, or manufactured in the United 
States (regardless of its source in fact) if the end product in which 
it is incorporated is manufactured in the United States and the 
component is of a class or kind for which the Government has determined 
that--
    (1) Sufficient and reasonably available commercial quantities of a 
satisfactory quality are not mined, produced, or manufactured in the 
United States; or
    (2) It is inconsistent with the public interest to apply the 
restrictions of the Buy American statute; or
    (B) The end product is a COTS item; or
    (2) For an end product that consists wholly or predominantly of 
iron or steel or a combination of both, an end product manufactured in 
the United States, if the cost of iron and steel not produced in the 
United States or a qualifying country constitutes less than 5 percent 
of the cost of all the components used in the end product (produced in 
the United States or a qualifying country means that all manufacturing 
processes of the iron or steel must take place in the United States or 
a qualifying country, except metallurgical processes involving 
refinement of steel additives). The cost of iron and steel not produced 
in the United States or a qualifying country includes but is not 
limited to the cost of iron or steel mill products (such as bar, 
billet, slab, wire, plate, or sheet), castings, or forgings, not 
produced in the United States or a qualifying country, utilized in the 
manufacture of the end product and a good faith estimate of the cost of 
all iron or steel components not produced in the United States or a 
qualifying country, excluding COTS fasteners. Iron or steel components 
of unknown origin are treated as foreign. If the end product contains 
multiple components, the cost of all the materials used in such end 
product is calculated in accordance with the explanation of cost of 
components in paragraph (1)(ii)(A) of this definition.
* * * * *
    Predominantly of iron or steel or a combination of both means that 
the cost of the iron and steel content exceeds 50 percent of the total 
cost of all its components. The cost of iron and steel is the cost of 
the iron or steel mill products (such as bar, billet, slab, wire, 
plate, or sheet), castings, or forgings utilized in the manufacture of 
the product and a good faith estimate of the cost of iron or steel 
components excluding COTS fasteners.
* * * * *
    Qualifying country end product means--
    (1) An unmanufactured end product mined or produced in a qualifying 
country; or
    (2) An end product manufactured in a qualifying country if--
    (i) The cost of the following types of components exceeds 50 
percent of the cost of all its components:
    (A) Components mined, produced, or manufactured in a qualifying 
country.
    (B) Components mined, produced, or manufactured in the United 
States.
    (C) Components of foreign origin of a class or kind for which the 
Government has determined that sufficient and reasonably available 
commercial quantities of a satisfactory quality are not mined, 
produced, or manufactured in the United States. Components of unknown 
origin are treated as foreign; or
    (ii) The end product is a COTS item.
* * * * *
    Steel means an alloy that includes at least 50 percent iron, 
between 0.02 and 2 percent carbon, and may include other elements.
* * * * *

Alternate III. * * *

    (a) * * *
    Domestic end product means--
    (1) For an end product that does not consist wholly or 
predominantly of iron or steel or a combination of both--
    (i) An unmanufactured end product mined or produced in the United 
States; or
    (ii) An end product manufactured in the United States if--
    (A) The cost of its qualifying country components and its 
components that are mined, produced, or manufactured in the United 
States exceeds 55 percent of the cost of all its components. The cost 
of components includes transportation costs to the place of 
incorporation into the end product and U.S. duty (whether or not a 
duty-free entry certificate is issued). Components of unknown origin 
are treated as foreign. Scrap generated, collected, and prepared for 
processing in the United States is considered domestic. A component is 
considered to have been mined, produced, or manufactured in the United 
States (regardless of its source in fact) if the end product in which 
it is incorporated is manufactured in the United States and the 
component is of a class or kind for which the Government has determined 
that--
    (1) Sufficient and reasonably available commercial quantities of a 
satisfactory quality are not mined, produced, or manufactured in the 
United States; or
    (2) It is inconsistent with the public interest to apply the 
restrictions of the Buy American statute; or
    (C) The end product is a COTS item; or

[[Page 48379]]

    (2) For an end product that consists wholly or predominantly of 
iron or steel or a combination of both, an end product manufactured in 
the United States, if the cost of iron and steel not produced in the 
United States or a qualifying country constitutes less than 5 percent 
of the cost of all the components used in the end product (produced in 
the United States or a qualifying country means that all manufacturing 
processes of the iron and steel must take place in the United States or 
a qualifying country, except metallurgical processes involving 
refinement of steel additives). The cost of iron and steel not produced 
in the United States or a qualifying country includes but is not 
limited to the cost of iron or steel mill products (such as bar, 
billet, slab, wire, plate, or sheet), castings, or forgings, not 
produced in the United States or a qualifying country, utilized in the 
manufacture of the end product and a good faith estimate of the cost of 
all iron or steel components not produced in the United States or a 
qualifying country, excluding COTS fasteners. Iron or steel components 
of unknown origin are treated as foreign. If the end product contains 
multiple components, the cost of all the materials used in such end 
product is calculated in accordance with the explanation of cost of 
components in paragraph (1)(ii)(A) of this definition.
* * * * *
    Predominantly of iron or steel or a combination of both means that 
the cost of the iron and steel content exceeds 50 percent of the total 
cost of all its components. The cost of iron and steel is the cost of 
the iron or steel mill products (such as bar, billet, slab, wire, 
plate, or sheet), castings, or forgings utilized in the manufacture of 
the product and a good faith estimate of the cost of iron or steel 
components excluding COTS fasteners.
* * * * *
    Qualifying country end product means--
    (1) An unmanufactured end product mined or produced in a qualifying 
country; or
    (2) An end product manufactured in a qualifying country if--
    (i) The cost of the following types of components exceeds 50 
percent of the cost of all its components:
    (A) Components mined, produced, or manufactured in a qualifying 
country.
    (B) Components mined, produced, or manufactured in the United 
States.
    (C) Components of foreign origin of a class or kind for which the 
Government has determined that sufficient and reasonably available 
commercial quantities of a satisfactory quality are not mined, 
produced, or manufactured in the United States. Components of unknown 
origin are treated as foreign; or
    (ii) The end product is a COTS item.
* * * * *
    Steel means an alloy that includes at least 50 percent iron, 
between 0.02 and 2 percent carbon, and may include other elements.
* * * * *

Alternate IV. * * *

    (a) * * *
    Domestic end product means--
    (1) For an end product that does not consist wholly or 
predominantly of iron or steel or a combination of both--
    (i) An unmanufactured end product mined or produced in the United 
States; or
    (ii) An end product manufactured in the United States if--
    (A) The cost of its qualifying country components and its 
components that are mined, produced, or manufactured in the United 
States exceeds 55 percent of the cost of all its components. The cost 
of components includes transportation costs to the place of 
incorporation into the end product and U.S. duty (whether or not a 
duty-free entry certificate is issued). Components of unknown origin 
are treated as foreign. Scrap generated, collected, and prepared for 
processing in the United States is considered domestic. A component is 
considered to have been mined, produced, or manufactured in the United 
States (regardless of its source in fact) if the end product in which 
it is incorporated is manufactured in the United States and the 
component is of a class or kind for which the Government has determined 
that--
    (1) Sufficient and reasonably available commercial quantities of a 
satisfactory quality are not mined, produced, or manufactured in the 
United States; or
    (2) It is inconsistent with the public interest to apply the 
restrictions of the Buy American statute; or
    (B) The end product is a COTS item; or
    (2) For an end product that consists wholly or predominantly of 
iron or steel or a combination of both, an end product manufactured in 
the United States, if the cost of iron and steel not produced in the 
United States or a qualifying country constitutes less than 5 percent 
of the cost of all the components used in the end product (produced in 
the United States or a qualifying country means that all manufacturing 
processes of the iron or steel must take place in the United States or 
a qualifying country, except metallurgical processes involving 
refinement of steel additives). The cost of iron and steel not produced 
in the United States or a qualifying country includes but is not 
limited to the cost of iron or steel mill products (such as bar, 
billet, slab, wire, plate, or sheet), castings, or forgings, not 
produced in the United States or a qualifying country, utilized in the 
manufacture of the end product and a good faith estimate of the cost of 
all iron or steel components not produced in the United States or a 
qualifying country, excluding COTS fasteners. Iron or steel components 
of unknown origin are treated as foreign. If the end product contains 
multiple components, the cost of all the materials used in such end 
product is calculated in accordance with the explanation of cost of 
components in paragraph (1)(ii)(A) of this definition.
* * * * *
    Predominantly of iron or steel or a combination of both means that 
the cost of the iron and steel content exceeds 50 percent of the total 
cost of all its components. The cost of iron and steel is the cost of 
the iron or steel mill products (such as bar, billet, slab, wire, 
plate, or sheet), castings, or forgings utilized in the manufacture of 
the product and a good faith estimate of the cost of iron or steel 
components excluding COTS fasteners.
* * * * *
    Qualifying country end product means--
    (1) An unmanufactured end product mined or produced in a qualifying 
country; or
    (2) An end product manufactured in a qualifying country if--
    (i) The cost of the following types of components exceeds 50 
percent of the cost of all its components:
    (A) Components mined, produced, or manufactured in a qualifying 
country.
    (B) Components mined, produced, or manufactured in the United 
States.
    (C) Components of foreign origin of a class or kind for which the 
Government has determined that sufficient and reasonably available 
commercial quantities of a satisfactory quality are not mined, 
produced, or manufactured in the United States. Components of unknown 
origin are treated as foreign; or
    (ii) The end product is a COTS item.
    Steel means an alloy that includes at least 50 percent iron, 
between 0.02 and 2 percent carbon, and may include other elements.
* * * * *

[[Page 48380]]

Alternate V. * * *

    (a) * * *
    Domestic end product means--
    (1) For an end product that does not consist wholly or 
predominantly of iron or steel or a combination of both--
    (i) An unmanufactured end product mined or produced in the United 
States; or
    (ii) An end product manufactured in the United States if--
    (A) The cost of its qualifying country components and its 
components that are mined, produced, or manufactured in the United 
States exceeds 55 percent of the cost of all its components. The cost 
of components includes transportation costs to the place of 
incorporation into the end product and U.S. duty (whether or not a 
duty-free entry certificate is issued). Components of unknown origin 
are treated as foreign. Scrap generated, collected, and prepared for 
processing in the United States is considered domestic. A component is 
considered to have been mined, produced, or manufactured in the United 
States (regardless of its source in fact) if the end product in which 
it is incorporated is manufactured in the United States and the 
component is of a class or kind for which the Government has determined 
that--
    (1) Sufficient and reasonably available commercial quantities of a 
satisfactory quality are not mined, produced, or manufactured in the 
United States; or
    (2) It is inconsistent with the public interest to apply the 
restrictions of the Buy American statute; or
    (B) The end product is a COTS item; or
    (2) For an end product that consists wholly or predominantly of 
iron or steel or a combination of both, an end product manufactured in 
the United States, if the cost of iron and steel not produced in the 
United States or a qualifying country constitutes less than 5 percent 
of the cost of all the components used in the end product (produced in 
the United States or a qualifying country means that all manufacturing 
processes of the iron or steel must take place in the United States or 
a qualifying country, except metallurgical processes involving 
refinement of steel additives). The cost of iron and steel not produced 
in the United States or a qualifying country includes but is not 
limited to the cost of iron or steel mill products (such as bar, 
billet, slab, wire, plate, or sheet), castings, or forgings, not 
produced in the United States or a qualifying country, utilized in the 
manufacture of the end product and a good faith estimate of the cost of 
all iron or steel components not produced in the United States or a 
qualifying country, excluding COTS fasteners. Iron or steel components 
of unknown origin are treated as foreign. If the end product contains 
multiple components, the cost of all the materials used in such end 
product is calculated in accordance with the explanation of cost of 
components in paragraph (1)(ii)(A) of this definition.
* * * * *
    Predominantly of iron or steel or a combination of both means that 
the cost of the iron and steel content exceeds 50 percent of the total 
cost of all its components. The cost of iron and steel is the cost of 
the iron or steel mill products (such as bar, billet, slab, wire, 
plate, or sheet), castings, or forgings utilized in the manufacture of 
the product and a good faith estimate of the cost of iron or steel 
components excluding COTS fasteners.
* * * * *
    Qualifying country end product means--
    (1) An unmanufactured end product mined or produced in a qualifying 
country; or
    (2) An end product manufactured in a qualifying country if--
    (i) The cost of the following types of components exceeds 50 
percent of the cost of all its components:
    (A) Components mined, produced, or manufactured in a qualifying 
country.
    (B) Components mined, produced, or manufactured in the United 
States.
    (C) Components of foreign origin of a class or kind for which the 
Government has determined that sufficient and reasonably available 
commercial quantities of a satisfactory quality are not mined, 
produced, or manufactured in the United States. Components of unknown 
origin are treated as foreign; or
    (ii) The end product is a COTS item.
* * * * *
    Steel means an alloy that includes at least 50 percent iron, 
between 0.02 and 2 percent carbon, and may include other elements.
* * * * *
0
8. Amend section 252.225-7044 by--
0
a. Removing the clause date of ``(NOV 2014)'' and adding ``(DATE)'' in 
its place.
0
b. In paragraph (a)--
0
i. In the definition of ``Commercially available off-the-shelf (COTS) 
item'', redesignating paragraphs (i) introductory text, (i)(A), (B), 
and (C), and (ii) as paragraphs (1) introductory text, (1)(i), (ii), 
and (iii), and (2), respectively;
0
ii. In the definition of ``Cost of components'', redesignating 
paragraphs (i) and (ii) as paragraphs (1) and (2), respectively;
0
iii. Revising the definition of ``Domestic construction material''; and
0
iv. Adding, in alphabetical order, the definitions of ``Predominantly 
of iron or steel or a combination of both'' and ``Steel''.
0
c. In Alternate I--
0
i. Removing the clause date of ``(NOV 2014)'' and adding ``(DATE)'' in 
its place; and
0
ii. In paragraph (a)--
0
A. In the definition of ``Commercially available off-the-shelf (COTS) 
item'', redesignating paragraphs (i) introductory text, (i)(A), (B), 
and (C), and (ii) as paragraphs (1) introductory text, (1)(i), (ii), 
and (iii), and (2), respectively;
0
B. In the definition of ``Cost of components'', redesignating 
paragraphs (i) and (ii) as paragraphs (1) and (2), respectively;
0
C. Revising the definition of ``Domestic construction material'';
0
D. Adding, in alphabetical order, the definition of ``Predominantly of 
iron or steel or a combination of both'';
0
E. In the definition of ``SC/CASA state construction material'', 
redesignating paragraphs (i) and (ii) as paragraphs (1) and (2), 
respectively; and
0
F. Adding, in alphabetical order, the definition of ``Steel''.
    The revisions and additions read as follows:


Sec.  252.225-7044  Balance of Payments Program--Construction Material.

* * * * *
    (a) * * *
    Domestic construction material means--
    (1) For construction material that does not consist wholly or 
predominantly of iron or steel or a combination of both--
    (i) An unmanufactured construction material mined or produced in 
the United States; or
    (ii) A construction material manufactured in the United States, 
if--
    (A) The cost of its components mined, produced, or manufactured in 
the United States exceeds 55 percent of the cost of all its components. 
Components of foreign origin of the same class or kind for which 
nonavailability determinations have been made are treated as domestic. 
Components of unknown origin are treated as foreign; or
    (B) The construction material is a COTS item; or
    (2) For construction material that consists wholly or predominantly 
of iron or steel or a combination of both,

[[Page 48381]]

a construction material manufactured in the United States if the cost 
of iron and steel not produced in the United States (excluding 
fasteners) as estimated in good faith by the contractor, constitutes 
less than 5 percent of the cost of all the components used in such 
construction material (produced in the United States means that all 
manufacturing processes of the iron or steel must take place in the 
United States, except metallurgical processes involving refinement of 
steel additives). The cost of iron and steel not produced in the United 
States includes but is not limited to the cost of iron or steel mill 
products (such as bar, billet, slab, wire, plate, or sheet), castings, 
or forgings, not produced in the United States, utilized in the 
manufacture of the end product and a good faith estimate of the cost of 
all iron or steel components not produced in the United States, 
excluding COTS fasteners. Iron or steel components of unknown origin 
are treated as foreign. If the construction material contains multiple 
components, the cost of all the materials used in such construction 
material is calculated in accordance with the explanation of cost of 
components in paragraph (1)(ii)(A) of this definition.
    Predominantly of iron or steel or a combination of both means that 
the cost of the iron and steel content exceeds 50 percent of the total 
cost of all its components. The cost of iron and steel is the cost of 
the iron or steel mill products (such as bar, billet, slab, wire, 
plate, or sheet), castings, or forgings utilized in the manufacture of 
the product and a good faith estimate of the cost of iron or steel 
components excluding COTS fasteners.
    Steel means an alloy that includes at least 50 percent iron, 
between 0.02 and 2 percent carbon, and may include other elements.
* * * * *

Alternate I. * * *

    (a) * * *
    Domestic construction material means--
    (1) For construction material that does not consist wholly or 
predominantly of iron or steel or a combination of both--
    (i) An unmanufactured construction material mined or produced in 
the United States; or
    (ii) A construction material manufactured in the United States, 
if--
    (A) The cost of its components mined, produced, or manufactured in 
the United States exceeds 55 percent of the cost of all its components. 
Components of foreign origin of the same class or kind for which 
nonavailability determinations have been made are treated as domestic. 
Components of unknown origin are treated as foreign; or
    (B) The construction material is a COTS item; or
    (2) For construction material that consists wholly or predominantly 
of iron or steel or a combination of both, a construction material 
manufactured in the United States if the cost of iron or steel not 
produced in the United States (excluding fasteners) as estimated in 
good faith by the contractor, constitutes less than 5 percent of the 
cost of all the components used in such construction material (produced 
in the United States means that all manufacturing processes of the iron 
or steel must take place in the United States, except metallurgical 
processes involving refinement of steel additives). The cost of iron 
and steel not produced in the United States includes but is not limited 
to the cost of iron or steel mill products (such as bar, billet, slab, 
wire, plate, or sheet), castings, or forgings, not produced in the 
United States, utilized in the manufacture of the construction material 
and a good faith estimate of the cost of all iron or steel components 
not produced in the United States, excluding COTS fasteners. Iron or 
steel components of unknown origin are treated as foreign. If the 
construction material contains multiple components, the cost of all the 
materials used in such construction material is calculated in 
accordance with the explanation of cost of components in paragraph 
(1)(ii)(A) of this definition.
    Predominantly of iron or steel or a combination of both means that 
the cost of the iron and steel content exceeds 50 percent of the total 
cost of all its components. The cost of iron and steel is the cost of 
the iron or steel mill products (such as bar, billet, slab, wire, 
plate, or sheet), castings, or forgings utilized in the manufacture of 
the product and a good faith estimate of the cost of iron or steel 
components excluding COTS fasteners.
* * * * *
    Steel means an alloy that includes at least 50 percent iron, 
between 0.02 and 2 percent carbon, and may include other elements.
* * * * *
0
9. Amend section 252.225-7045 by--
0
a. Removing the clause date of ``(AUG 2019)'' and adding ``(DATE)'' in 
its place.
0
b. In paragraph (a)--
0
i. In the definition of ``Caribbean Basin country construction 
material'', redesignating paragraphs (i) and (ii) as paragraphs (1) and 
(2), respectively;
0
ii. In the definition of ``Commercially available off-the-shelf (COTS) 
item'', redesignating paragraphs (i) introductory text, (i)(A), (B), 
and (C), and (ii) as paragraphs (1) introductory text, (1)(i), (ii), 
and (iii), and (2), respectively;
0
iii. In the definition of ``Cost of components'', redesignating 
paragraphs (i) and (ii) as paragraphs (1) and (2), respectively;
0
iv. In the definition of ``Designated country'', redesignating 
paragraphs (i), (ii), (iii), and (iv) as paragraphs (1), (2), (3), and 
(4), respectively;
0
v. Revising the definition of ``Domestic construction material'';
0
vi. In the definitions of ``Free Trade Agreement country construction 
material'' and ``Least developed country construction material'', 
redesignating paragraphs (i) and (ii) as paragraphs (1) and (2), 
respectively;
0
vii. Adding, in alphabetical order, the definitions of ``Predominantly 
of iron or steel or a combination of both'' and ``Steel''; and
0
viii. In the definition of ``WTO GPA country construction material'', 
redesignating paragraphs (i) and (ii) as paragraphs (1) and (2), 
respectively.
0
c. In Alternate I--
0
i. Removing the clause date of ``(AUG 2019)'' and adding ``(DATE)'' in 
its place; and
0
ii. In paragraph (a)--
0
A. In the definitions of ``Bahrainian or Mexican construction 
material'' and ``Caribbean Basin country construction material'', 
redesignating paragraphs (i) and (ii) as paragraphs (1) and (2), 
respectively;
0
B. In the definition of ``Commercially available off-the-shelf (COTS) 
item'', redesignating paragraphs (i) introductory text, (i)(A), (B), 
and (C), and (ii) as paragraphs (1) introductory text, (1)(i), (ii), 
and (iii), and (2), respectively;
0
C. In the definition of ``Cost of components'', redesignating 
paragraphs (i) and (ii) as paragraphs (1) and (2), respectively;
0
D. In the definition of ``Designated country'', redesignating 
paragraphs (i), (ii), (iii), and (iv) as paragraphs (1), (2), (3), and 
(4), respectively;
0
E. Revising the definition of ``Domestic construction material'';
0
F. In the definition of ``Free Trade Agreement country construction 
material'' and ``Least developed country construction material'', 
redesignating paragraphs (i) and (ii) as paragraphs (1) and (2), 
respectively;
0
G. Adding, in alphabetical order, the definitions of ``Predominantly of 
iron or steel or a combination of both'' and ``Steel''; and
0
H. In the definition of ``WTO GPA country construction material'',

[[Page 48382]]

redesignating paragraphs (i) and (ii) as paragraphs (1) and (2), 
respectively.
0
d. In Alternate II--
0
i. Removing the clause date of ``(AUG 2019)'' and adding ``(DATE)'' in 
its place; and
0
ii. In paragraph (a)--
0
A. In the definition of ``Caribbean Basin country construction 
material'', redesignating paragraphs (i) and (ii) as paragraphs (1) and 
(2), respectively;
0
B. In the definition of ``Commercially available off-the-shelf (COTS) 
item'', redesignating paragraphs (i) introductory text, (i)(A), (B), 
and (C), and (ii) as paragraphs (1) introductory text, (1)(i), (ii), 
and (iii), and (2), respectively;
0
C. In the definition of ``Cost of components'', redesignating 
paragraphs (i) and (ii) as paragraphs (1) and (2), respectively;
0
D. In the definition of ``Designated country'', redesignating 
paragraphs (i), (ii), (iii), and (iv) as paragraphs (1), (2), (3), and 
(4), respectively;
0
E. Revising the definition of ``Domestic construction material'';
0
F. In the definitions of ``Free Trade Agreement country construction 
material'' and ``Least developed country construction material'', 
redesignating paragraphs (i) and (ii) as paragraphs (1) and (2), 
respectively;
0
G. Adding, in alphabetical order, the definition of ``Predominantly of 
iron or steel or a combination of both'';
0
H. In the definition of ``SC/CASA state construction material'', 
redesignating paragraphs (i) and (ii) as paragraphs (1) and (2), 
respectively;
0
I. Adding, in alphabetical order, the definition of ``Steel''; and
0
J. In the definition of ``WTO GPA country construction material'', 
redesignating paragraphs (i) and (ii) as paragraphs (1) and (2), 
respectively.
0
e. In Alternate III--
0
i. Removing the clause date of ``(AUG 2019)'' and adding ``(DATE)'' in 
its place; and
0
ii. In paragraph (a)--
0
A. In the definition of ``Caribbean Basin country construction 
material'', redesignating paragraphs (i) and (ii) as paragraphs (1) and 
(2), respectively;
0
B. In the definition of ``Commercially available off-the-shelf (COTS) 
item'', redesignating paragraphs (i) introductory text, (i)(A), (B), 
and (C), and (ii) as paragraphs (1) introductory text, (1)(i), (ii), 
and (iii), and (2), respectively;
0
C. In the definition of ``Cost of components'', redesignating 
paragraphs (i) and (ii) as paragraphs (1) and (2), respectively;
0
D. In the definition of ``Designated country'', redesignating 
paragraphs (i), (ii), (iii), and (iv) as paragraphs (1), (2), (3), and 
(4), respectively;
0
E. Revising the definition of ``Domestic construction material'';
0
F. In the definitions of ``Free Trade Agreement country construction 
material'' and ``Least developed country construction material'', 
redesignating paragraphs (i) and (ii) as paragraphs (1) and (2), 
respectively;
0
G. Adding, in alphabetical order, the definition of ``Predominantly of 
iron or steel or a combination of both'';
0
H. In the definition of ``SC/CASA state construction material'', 
redesignating paragraphs (i) and (ii) as paragraphs (1) and (2), 
respectively;
0
I. Adding, in alphabetical order, the definition of ``Steel''; and
0
J. In the definition of ``WTO GPA country construction material'', 
redesignating paragraphs (i) and (ii) as paragraphs (1) and (2), 
respectively.
    The revisions and additions read as follows:


Sec.  252.225-7045  Balance of Payments Program--Construction Material 
Under Trade Agreements.

* * * * *
    (a) * * *
    Domestic construction material means--
    (1) For construction material that does not consist wholly or 
predominantly of iron or steel or a combination of both--
    (i) An unmanufactured construction material mined or produced in 
the United States; or
    (ii) A construction material manufactured in the United States, 
if--
    (A) The cost of its components mined, produced, or manufactured in 
the United States exceeds 55 percent of the cost of all its components. 
Components of foreign origin of the same class or kind for which 
nonavailability determinations have been made are treated as domestic. 
Components of unknown origin are treated as foreign; or
    (B) The construction material is a COTS item; or
    (2) For construction material that consists wholly or predominantly 
of iron or steel or a combination of both, a construction material 
manufactured in the United States if the cost of iron and steel not 
produced in the United States (excluding fasteners) as estimated in 
good faith by the contractor, constitutes less than 5 percent of the 
cost of all the components used in such construction material (produced 
in the United States means that all manufacturing processes of the iron 
or steel must take place in the United States, except metallurgical 
processes involving refinement of steel additives). The cost of iron 
and steel not produced in the United States includes but is not limited 
to the cost of iron or steel mill products (such as bar, billet, slab, 
wire, plate, or sheet), castings, or forgings, not produced in the 
United States, utilized in the manufacture of the construction material 
and a good faith estimate of the cost of all iron or steel components 
not produced in the United States, excluding COTS fasteners. Iron or 
steel components of unknown origin are treated as foreign. If the 
construction material contains multiple components, the cost of all the 
materials used in such construction material is calculated in 
accordance with the explanation of cost of components in paragraph 
(1)(ii)(A) of this definition.
* * * * *
    Predominantly of iron or steel or a combination of both means that 
the cost of the iron and steel content exceeds 50 percent of the total 
cost of all its components. The cost of iron and steel is the cost of 
the iron or steel mill products (such as bar, billet, slab, wire, 
plate, or sheet), castings, or forgings utilized in the manufacture of 
the product and a good faith estimate of the cost of iron or steel 
components excluding COTS fasteners.
    Steel means an alloy that includes at least 50 percent iron, 
between 0.02 and 2 percent carbon, and may include other elements.
* * * * *

Alternate I. * * *

    (a) * * *
    Domestic construction material means--
    (1) For construction material that does not consist wholly or 
predominantly of iron or steel or a combination of both--
    (i) An unmanufactured construction material mined or produced in 
the United States; or
    (ii) A construction material manufactured in the United States, 
if--
    (A) The cost of its components mined, produced, or manufactured in 
the United States exceeds 55 percent of the cost of all its components. 
Components of foreign origin of the same class or kind for which 
nonavailability determinations have been made are treated as domestic. 
Components of unknown origin are treated as foreign; or
    (B) The construction material is a COTS item; or
    (2) For construction material that consists wholly or predominantly 
of iron or steel or a combination of both, a construction material 
manufactured in the United States if the cost of iron and

[[Page 48383]]

steel not produced in the United States (excluding fasteners) as 
estimated in good faith by the contractor, constitutes less than 5 
percent of the cost of all the components used in such construction 
material (produced in the United States means that all manufacturing 
processes of the iron or steel must take place in the United States, 
except metallurgical processes involving refinement of steel 
additives). The cost of iron and steel not produced in the United 
States includes but is not limited to the cost of iron or steel mill 
products (such as bar, billet, slab, wire, plate, or sheet), castings, 
or forgings, not produced in the United States, utilized in the 
manufacture of the construction material and a good faith estimate of 
the cost of all iron or steel components not produced in the United 
States, excluding COTS fasteners. Iron or steel components of unknown 
origin are treated as foreign. If the construction material contains 
multiple components, the cost of all the materials used in such 
construction material is calculated in accordance with the explanation 
of cost of components in paragraph (1)(ii)(A) of this definition.
* * * * *
    Predominantly of iron or steel or a combination of both means that 
the cost of the iron and steel content exceeds 50 percent of the total 
cost of all its components. The cost of iron and steel is the cost of 
the iron or steel mill products (such as bar, billet, slab, wire, 
plate, or sheet), castings, or forgings utilized in the manufacture of 
the product and a good faith estimate of the cost of iron or steel 
components excluding COTS fasteners.
    Steel means an alloy that includes at least 50 percent iron, 
between 0.02 and 2 percent carbon, and may include other elements.
* * * * *

Alternate II. * * *

    (a) * * *
    Domestic construction material means--
    (1) For construction material that does not consist wholly or 
predominantly of iron or steel or a combination of both--
    (i) An unmanufactured construction material mined or produced in 
the United States; or
    (ii) A construction material manufactured in the United States, 
if--
    (A) The cost of its components mined, produced, or manufactured in 
the United States exceeds 55 percent of the cost of all its components. 
Components of foreign origin of the same class or kind for which 
nonavailability determinations have been made are treated as domestic. 
Components of unknown origin are treated as foreign; or
    (B) The construction material is a COTS item; or
    (2) For construction material that consists wholly or predominantly 
of iron or steel or a combination of both, a construction material 
manufactured in the United States if the cost of iron and steel not 
produced in the United States (excluding fasteners) as estimated in 
good faith by the contractor, constitutes less than 5 percent of the 
cost of all the components used in such construction material (produced 
in the United States means that all manufacturing processes of the iron 
or steel must take place in the United States, except metallurgical 
processes involving refinement of steel additives). The cost of iron 
and steel not produced in the United States includes but is not limited 
to the cost of iron or steel mill products (such as bar, billet, slab, 
wire, plate, or sheet), castings, or forgings, not produced in the 
United States, utilized in the manufacture of the construction material 
and a good faith estimate of the cost of all iron or steel components 
not produced in the United States, excluding COTS fasteners. Iron or 
steel components of unknown origin are treated as foreign. If the 
construction material contains multiple components, the cost of all the 
materials used in such construction material is calculated in 
accordance with the explanation of cost of components in paragraph 
(1)(ii)(A) of this definition.
* * * * *
    Predominantly of iron or steel or a combination of both means that 
the cost of the iron and steel content exceeds 50 percent of the total 
cost of all its components. The cost of iron and steel is the cost of 
the iron or steel mill products (such as bar, billet, slab, wire, 
plate, or sheet), castings, or forgings utilized in the manufacture of 
the product and a good faith estimate of the cost of iron or steel 
components excluding COTS fasteners.
* * * * *
    Steel means an alloy that includes at least 50 percent iron, 
between 0.02 and 2 percent carbon, and may include other elements.
* * * * *

Alternate III. * * *

    (a) * * *
    Domestic construction material means--
    (1) For construction material that does not consist wholly or 
predominantly of iron or steel or a combination of both--
    (i) An unmanufactured construction material mined or produced in 
the United States; or
    (ii) A construction material manufactured in the United States, 
if--
    (A) The cost of its components mined, produced, or manufactured in 
the United States exceeds 55 percent of the cost of all its components. 
Components of foreign origin of the same class or kind for which 
nonavailability determinations have been made are treated as domestic. 
Components of unknown origin are treated as foreign; or
    (B) The construction material is a COTS item; or
    (2) For construction material that consists wholly or predominantly 
of iron or steel or a combination of both, a construction material 
manufactured in the United States if the cost of iron and steel not 
produced in the United States (excluding fasteners) as estimated in 
good faith by the contractor, constitutes less than 5 percent of the 
cost of all the components used in such construction material (produced 
in the United States means that all manufacturing processes of the iron 
or steel must take place in the United States, except metallurgical 
processes involving refinement of steel additives). The cost of iron 
and steel not produced in the United States includes but is not limited 
to the cost of iron or steel mill products (such as bar, billet, slab, 
wire, plate, or sheet), castings, or forgings, not produced in the 
United States, utilized in the manufacture of the construction material 
and a good faith estimate of the cost of iron or steel components not 
produced in the United States, excluding COTS fasteners. Iron or steel 
components of unknown origin are treated as foreign. If the 
construction material contains multiple components, the cost of all the 
materials used in such construction material is calculated in 
accordance with the explanation of cost of components in paragraph 
(1)(ii)(A) of this definition.
* * * * *
    Predominantly of iron or steel or a combination of both means that 
the cost of the iron and steel content exceeds 50 percent of the total 
cost of all its components. The cost of iron and steel is the cost of 
the iron or steel mill products (such as bar, billet, slab, wire, 
plate, or sheet), castings, or forgings utilized in the manufacture of 
the product and a good faith estimate of the cost of iron or steel 
components excluding COTS fasteners.
* * * * *
    Steel means an alloy that includes at least 50 percent iron, 
between 0.02 and

[[Page 48384]]

2 percent carbon, and may include other elements.
* * * * *
[FR Doc. 2021-18338 Filed 8-27-21; 8:45 am]
BILLING CODE 5001-06-P