Defense Federal Acquisition Regulation Supplement: Restriction on Acquisition of Tantalum (DFARS Case 2020-D007), 52342-52348 [2022-18224]

Agencies

• Defense Acquisition Regulations System
• DEPARTMENT OF DEFENSE

[Federal Register Volume 87, Number 164 (Thursday, August 25, 2022)]
[Rules and Regulations]
[Pages 52342-52348]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-18224]


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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 212, 225, and 252

[Docket DARS-2020-0035]
RIN 0750-AK94


Defense Federal Acquisition Regulation Supplement: Restriction on 
Acquisition of Tantalum (DFARS Case 2020-D007)

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

[[Page 52343]]


ACTION: Final rule.

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SUMMARY: DoD has adopted as final, with changes, an interim rule 
amending the Defense Federal Acquisition Regulation Supplement (DFARS) 
to implement a section of the National Defense Authorization Act for 
Fiscal Year 2020 that prohibits acquisition of tantalum metals and 
alloys from North Korea, China, Russia, and Iran.

DATES: Effective August 25, 2022.

FOR FURTHER INFORMATION CONTACT: Ms. Kimberly Bass, telephone 703-717-
3446.

SUPPLEMENTARY INFORMATION:

I. Background

    This final rule finalizes an interim rule that revised the DFARS to 
implement section 849 of the National Defense Authorization Act (NDAA) 
for Fiscal Year (FY) 2020 (Pub. L. 116-92) (10 U.S.C. 2533c). Section 
849 adds tantalum to the definition of ``covered materials'' in 10 
U.S.C. 2533c. With some exceptions, 10 U.S.C. 2533c prohibits the 
acquisition of any covered material melted or produced in any covered 
country (North Korea, China, Russia, or Iran), or any end item, 
manufactured in any covered country, that contains a covered material.
    DoD published an interim rule in the Federal Register at 85 FR 
61500 on September 29, 2020, to implement section 849 of the NDAA for 
FY 2020. Nine respondents submitted public comments in response to the 
interim rule.

II. Discussion and Analysis

    DoD reviewed the public comments in the development of the final 
rule. A discussion of the comments and the changes made to the rule as 
a result of those comments is provided, as follows:

A. Summary of Significant Changes From the Interim Rule

    DoD made the following changes in the interim rule:
    1. At DFARS 225.7018-2(c), the applicability of the production 
phases for tantalum metals and alloys is revised to provide clarity by 
removing the reference to the inclusion of the reduction of tantalum 
chemicals such as oxides, chlorides, or potassium salts, to metal 
powder. A reference to the applicability of tantalum metals of any kind 
and alloys to the production processing steps includes the reduction or 
melting of any form of tantalum is also added. Additionally, the 
paragraph is revised to convey that the restriction includes the 
subsequent production steps for the reduction or melting of any form of 
tantalum to create tantalum metals including unwrought, powder, mill 
products, and alloys.
    2. For consistency with the plain language of the exact statutory 
text in accordance with section 849 of the NDAA for FY 2020 and 10 
U.S.C. 2533c, at DFARS 225.7018-3(c) and DFARS 252.225-7052(c)(1), the 
phrase ``of an end item that is'' is replaced with the phrase ``of an 
end item containing a covered material that is''.
    3. References to tantalum ``metal and alloys'' in the definition of 
covered material in the interim rule are revised to ``metals and 
alloys'' in the final rule for consistency with the exact statutory 
text at 10 U.S.C. 2533c.

B. Analysis of Public Comments

1. Strong Support for the Rule
    Comment: Two respondents strongly supported the interim rule. A 
respondent noted that the quantity of tantalum going into the defense 
industry is a manageable quantity and will have a negligible impact on 
U.S. businesses while affording the U.S. military a protection 
similarly enjoyed by the People's Republic of China with respect to 
tantalum products that are of U.S. origin. A respondent applauded the 
comprehensive scope of the rule regarding tantalum production, which is 
necessary to shield DoD weapon systems from unreliable sources.
    Response: DoD acknowledges the support for the rule.
2. Impact on Business
a. Impact on Customers
    Comment: A respondent commented that this rule will not be a 
problem. Tantalum going into the U.S. defense industry annually is a 
perfectly manageable quantity to make sure that Chinese material does 
not enter the U.S. defense industries final applications. Another 
respondent commented that this policy would bleed into civilian U.S. 
manufacturing supply chains. As a result of this rule and other non-
conflict material restrictions on tantalum from Africa, there will be 
insufficient alternative acceptable tantalum units for the U.S. 
industry in the global market. The respondent further stated this will 
lead to a higher price, potential raw material shortfalls, and reduced 
profits and competitiveness for U.S. manufacturers and end products 
exported.
    Response: The rule is required to implement section 849 of the NDAA 
for FY 2020. It is a matter of national security to reduce U.S. 
dependence on the covered countries specified in 10 U.S.C. 2533c, 
because tantalum is an important element in the supply chain for the 
production of both DoD military systems and nonmilitary systems that 
DoD uses.
b. Impact on Manufacturers
    Comment: A respondent stated this rule only focuses on defense 
applications; the amount of overall tantalum is manageable. Another 
respondent expects an initial period of higher pricing and supply chain 
impacts after which the tantalum markets will adjust. One respondent 
conveyed concerns that damage to competitiveness and efficiency due to 
the rule could lead to a relocation of manufacturing outside the United 
States and thereby reduce U.S. strength in critical manufacturing 
sectors. Members of the respondent's organization supported a 
retaliatory approach to China on tantalum policy, while the other half 
of the members believed it was counterproductive, as it would 
negatively impact U.S. civilian-use manufacturers and exporters.
    Response: DoD acknowledges the respondent's concern with initial 
impacts to U.S. manufacturers. The implementation of this prohibition 
is expected to decrease DoD's dependence on covered materials that 
originate in covered countries as a matter of national security. 
Tantalum is an important element in the supply chain for the production 
of both U.S. military systems and nonmilitary systems that DoD uses.
3. Metals Trade Industry
    Comment: A respondent stated that they did not see the interim rule 
affecting the metals trade and metals industry generally, either 
domestically or internationally. The respondent further stated the 
price of tantalum will not increase since the amount of tantalum in 
question is minimal annually. Accordingly, the orders placed would 
separate defense and commercial consumer applications, will be 
balanced, and will not negatively impact consumers financially. The 
respondent also stated that U.S. companies are not allowed to sell 
tantalum to China and this interim rule is exactly the same.
    Response: DoD acknowledges the respondent's position and agrees 
that the impact of the rule on the metals industry will have minor 
impacts both domestically and internationally.
4. Broader International Trade
a. Potential Future U.S.-Wide Restriction
    Comment: A respondent discussed the overall impact of the interim 
rule on broader international trade and a

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potential U.S.-wide restriction on the acquisition of tantalum in the 
future, from the designated regions or a potential change to consumer 
purchasing policy. The respondent also stated the importance of 
ensuring the scope of the rule remained only for tantalum for defense 
applications, since the defense tantalum market is small and 
manageable, and it should not be expanded further since U.S. companies 
do sell tantalum finished products to Chinese customers. The respondent 
further stated that China does not allow tantalum of U.S. origin.
    Response: The defense industry consumption of tantalum units is a 
small portion of the tantalum market with regard to global consumption. 
This rule is not going to impact the tantalum market as a whole.
b. Potential Price Increases for Tantalum in the U.S. Supply Chain
    Comment: Several respondents discussed the impact on broader 
international trade as a result of the more restrictive implementation 
of the statute with regard to the criteria for the exception 
applicability to the entire end item versus the covered material within 
the end item. These respondents further stated the interim rule will 
have negative impacts to international trade, increased administrative 
burden on industry, and increased costs to the Government. A respondent 
stated that tantalum prices from non-covered countries have increased 
and may continue to do so. The respondent further stated the interim 
rule's applicability to DoD products may increase costs due to 
manufacturer's dual use of tantalum in the commercial and defense 
industries and the subsequent requirement for segregation of products 
to track the defense products in accordance with the statutory 
requirements.
    Response: The rule implements section 849 of the NDAA for FY 2020. 
Since the defense tantalum market is a small portion of the overall 
global market, DoD anticipates minimal impacts to international trade 
and minimal increased administrative burden on industry.
5. Exception
a. Entire End Item and Electronic Device
    Comment: A few respondents argued that the interim rule incorrectly 
applied an exception to the prohibition on procurement of covered 
materials found at 10 U.S.C. 2533c(c)(3). The interim rule provides an 
exception for end items that are also an electronic device. The 
respondents argued that this misapplies the statute, narrows the 
exception beyond what the statute intended, and makes part of the 
language of the statute superfluous.
    Response: DoD does agree that the omission of ``containing a 
covered material'' changes the underlying intent or application of the 
rule. Of note, the restriction in 10 U.S.C. 2533c is modeled on the 
domestic preference in 10 U.S.C. 2533b, with similar exceptions related 
to commercially available off-the-shelf (COTS) items and electronic 
components and devices. Based on the similar construction of these 
statutes, DoD interprets the exception for ``electronic devices'' 
pursuant to DFARS 225.7018-3 to include components embedded in other 
end items. For example, a missile or munition purchased by DoD may 
contain tantalum units in a capacitor. The same missile or munition may 
contain tantalum or tungsten units in an explosively-formed penetrator. 
The tantalum units embedded in the capacitor would be covered by the 
``electronic devices'' exception, but the tantalum or tungsten units in 
the explosively-formed penetrator would not be covered by the 
exception. DoD believes that the application of the exception provided 
in this example aligns with congressional intent, providing an 
exception for those products with significant commercial market 
exposure (e.g., a capacitor) while maintaining coverage for military-
unique products (e.g., an explosively-formed penetrator). DoD further 
addresses the respondents' feedback on these specific aspects of the 
rule in the category of comments at paragraph 8c, entitled 
clarification of the rule.
b. Prior Melting Production of Tantalum Raw Materials
    Comment: A respondent asked that the interim rule be amended to 
clarify that the prohibition on procuring any covered material melted 
or produced in any covered country applies only to the melting or 
production of tantalum metals and alloys that immediately precedes 
delivery to the DoD customer or a supplier's higher-tier contractor 
customer. Two respondents stated that because tantalum may be melted or 
produced or re-melted or reproduced multiple times in the supply chain 
life cycle, the only rational reading of 10 U.S.C. 2533c is to conclude 
that the most recent melting or manufacture of the covered material 
prior to transfer to DoD or to a higher-tier contractor customer does 
not occur in a covered country. In addition, another respondent further 
stated the interim rule did not contain the phrase ``and melting'' with 
regard to the prohibition of the production of tantalum metal and 
alloys, including the reduction of tantalum chemicals such as oxides, 
chlorides, or potassium salts, to metal powder and all subsequent 
phases of the production of tantalum metal and alloys, such as 
consolidation of metal powders and melting. The respondent requested 
the rationale for the omission of ``and melting'' in the implementation 
of section 849 of the NDAA for FY 2020 in the interim rule.
    Response: DoD acknowledges that at the time the interim rule was 
issued, 10 U.S.C. 2533c was meant to apply to melting or manufacture of 
the covered material. However, section 844 of the NDAA for FY 2021 
(Pub. L. 116-283) passed subsequent to the publication of the interim 
rule. In section 844, Congress amended 10 U.S.C. 2533c(a)(1) from ``. . 
. procuring any covered material melted or produced in any covered 
nation. . .'' to ``. . . procuring any covered material mined, refined, 
separated, melted or produced in any covered nation. . .''. The current 
rulemaking effort applies only to the changes mandated by section 849 
of the NDAA for FY 2020. Section 844 of the NDAA for FY 2021 has an 
effective date five years after the date of enactment and will be 
implemented via future rulemaking under DFARS Case 2021-D015. DoD has 
deleted the reference to ``chemicals such as oxides, chlorides, or 
potassium salts, to metal powder'' and simplified the language to 
include ``reduction or melting of any form''. DoD has also clarified 
the final forms of tantalum metals as ``including unwrought, powder, 
mill products, and alloys.''
c. Tantalum Powder/Raw Materials
    Comment: A respondent requested that the draft rule be revised to 
exclude tantalum powder from the definition of ``covered material.'' 
The respondent argued that Congress did not intend to place 
restrictions on tantalum powder as neither 10 U.S.C. 2533c nor section 
849 of the NDAA for FY 2020 mention tantalum powder specifically, but 
rather refer to ``tantalum metals and alloys.''
    Response: DoD concurs that the statute at 10 U.S.C. 2533c on its 
face does not include tantalum powder as a covered material. The final 
rule clarifies that tantalum powder is included in the rule to further 
explain that tantalum powder is also considered a metal and therefore, 
tantalum powder also would be restricted. In addition, the rule applies 
the restriction to cover all subsequent phases of production of 
tantalum metals and alloys.

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6. Tantalum Capacitors
    Comment: A respondent noted that tantalum is a key component of 
capacitors used in military and commercial applications, and that the 
United States is dependent on foreign countries, including China, to 
acquire tantalum and tantalum capacitors. Therefore, any implementation 
of supply constraints should be considered judiciously to guarantee the 
availability of tantalum capacitors for U.S. applications.
    Response: DoD is aware of U.S. dependence on foreign countries to 
acquire tantalum and tantalum capacitors for military and commercial 
use. DoD continues to work with allied nations to strengthen this part 
of the foreign supply chain for strategic and critical materials such 
as tantalum. Additionally, DoD has mandated programs in place to 
strengthen the industrial base by funding projects to increase domestic 
capability to produce products, including strategic and critical 
materials such as tantalum, for military use.
7. Statutory Implementation and Interpretation
    Comment: A respondent asked that the final rule be revised to 
correct an error within the interim rule implemented in DFARS clause 
252.225-7052, specifically the omission of the 10 U.S.C. 2533c(c)(3) 
statutory phrase ``containing a covered material.'' The respondent 
proposed two options to correct the interim rule. Another respondent 
stated that the interim rule unreasonably interprets 10 U.S.C. 2533c 
and ``is likely to have a significant impact on acquisitions by the DoD 
of end items that include high performance, low weight tantalum 
capacitors.'' In summary, the respondent stated the interim rule 
disregards language that makes the prohibitions and exceptions created 
by the statute apply to both prime contracts and subcontracts at any 
tier.
    Response: As to the respondent's concerns regarding omission of the 
10 U.S.C. 2533c(c)(3) statutory phrase ``containing a covered 
material,'' as stated in DFARS 225.7018-5, unless an acquisition of 
certain magnets, tantalum, and tungsten is completed outside the United 
States for use outside the United States, or an official 
nonavailability determination has been made, DFARS clause 252.225-7052, 
Restriction on the Acquisition of Certain Magnets, Tantalum, and 
Tungsten, shall be included in solicitations and contracts, to include 
Federal Acquisition Regulation (FAR) part 12 commercial item 
acquisitions, that exceed the simplified acquisition threshold. DFARS 
252.225-7052(b)(1) identifies that the restrictions listed apply to the 
contractor, who ``shall not deliver under this contract any covered 
material melted or produced in any covered country, or any end item, 
manufactured in any covered country, that contains a covered material 
(10 U.S.C. 2533c).'' Moreover, DFARS 252.225-7052(d) directs the 
contractor to insert the substance of the clause, including paragraph 
(d), in subcontracts and other contractual instruments that are for 
items containing a covered material, including subcontracts and other 
contractual instruments for commercial products and commercial 
services, unless an exception in paragraph (c) of this clause applies. 
Therefore, DFARS clause 252.225-7052 does apply restrictions and 
exceptions to both contractors and subcontractors.
8. Recommended Revisions
a. One-Time Waiver
    Comment: A respondent recommended a one-time waiver to address 
material on hand and in process including alloy already processed. The 
respondent further stated that manufacturers normally procure tantalum 
one year in advance for forecasted usage and may purchase multiple 
years of supply at that time that may contain tantalum from covered 
countries. The respondent further stated that if the Government does 
not permit manufacturers to use in-process tantalum from covered 
countries for military products, the costs to the Government will 
likely rise in order to compensate manufacturers for the noncompliant 
tantalum procured prior to the implementation of the prohibition.
    Response: The interim rule was published on September 29, 2020, 
implementing section 849 of the NDAA for FY 2020. Implementation of 
this prohibition was urgent, because decreasing DoD's dependence on 
covered materials that originate in covered countries is a matter of 
national security. Tantalum is an important element in the supply chain 
for production of both U.S. military systems and nonmilitary systems 
that DoD uses. A shortage of supply of these covered materials would 
therefore hinder maintenance and replacement of many DoD military 
systems and would also have a negative impact on the broader industrial 
base upon which DoD depends. Section 849 of the NDAA for FY 2020 
mandates compliance with this prohibition as implemented in the interim 
rule published on September 29, 2020, and in effect on October 1, 2020. 
In addition, FAR and DFARS changes apply to solicitations issued on or 
after the effective date of the change unless otherwise specified (see 
FAR 1.108(d)).
b. Add Compliance Incentive
    Comment: A respondent recommended the addition of a compliance 
incentive for proposals priced with compliant materials versus 
noncompliant materials for the purposes of proposal evaluations.
    Response: Section 849 of the NDAA for FY 2020 does not include a 
compliance incentive requirement for the prohibition; therefore, none 
is included in the rule.
c. Clarification of the Rule
    Comment: Several respondents recommended revisions to clarify the 
interim rule. A respondent commented that the interim rule is costly to 
implement and requested the interim rule be modified to clarify that 
end items supplied to DoD containing a covered material that is an 
electronic device are excepted from the prohibition.
    A respondent also recommended that DoD modify the interim rule at 
DFARS clause 252.225-7052, paragraph (c)(1) and DFARS 225.7018-3(c). 
Specifically, the respondent recommended that DoD replace the phrase 
``an end item that is'' with the phrase ``a covered material (as an end 
item or incorporated into an end item) that is.'' As an alternative, 
the respondent further recommended that the phrase ``an end item that 
is'' be replaced with language to match the exact statutory text ``an 
end item containing a covered material that is.''
    Additionally, a respondent recommended that DoD clarify that DFARS 
clause 252.225-7052 applies only to the melting and production of 
tantalum metal and alloys as part of the DoD supply chain and not to 
prior melting or production or to tantalum raw materials.
    Another respondent stated that the prohibition in the interim rule 
applies with regard to a prime contractor and prohibits contractors 
from incorporating a COTS item or an electronic device from a 
subcontractor into an end item delivered to DoD, unless that item is a 
COTS item or an electronic device. Subsequently, the respondent stated 
as an example, the rule as implemented prohibits a subcontractor from 
acquiring a tantalum capacitor made in China, and a prime contractor 
could not incorporate that capacitor into an end item delivered to DoD. 
The respondent recommended a revision to the interim

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rule at DFARS 225.7018-2 and the clause 252.225-7052, paragraph (a) to 
clarify that DoD would neither be acquiring a covered material melted 
or produced in a covered country, nor an end item manufactured in any 
covered country, that contains a covered material, unless the end item 
is itself manufactured in a covered country. Another respondent stated 
that the statute prohibits the Government from procuring ``any end item 
that contains a covered material manufactured in any covered nation, 
except as provided by the clause 252.225-7052(c).''
    A respondent indicated the language of the statute at 10 U.S.C. 
2533c states that an end item cannot contain a covered material 
manufactured in any covered nation; however, the clause 252.225-7052 
prohibits a contractor from delivering any end item, manufactured in 
any covered country, that contains a covered material (10 U.S.C. 
2533c). According to the respondent the clause suggests that a 
contractor may deliver an end item containing covered material so long 
as that end item is not manufactured in a covered country, creating an 
inconsistency with the clause and the statute. The respondent 
recommended a revision to clarify whether the phrase ``manufactured in 
any covered country'' modifies ``end item'' or ``covered material.''
    The respondents further requested that the interim rule be 
rewritten to comply with the statute such that the term ``electronic 
device'' modifies the term ``covered material'', not ``end item'', to 
ensure that in the event an end item contains a covered material and 
the covered material is an electronic device, the end item will not be 
subject to the general restriction contained in the draft rule.
    Response: DoD acknowledges and concurs with the following 
recommended revision at DFARS clause 252.225-7052, paragraph (c)(1) and 
225.7018-3(c): to remove the phrase ``of an end item that is'' and 
replace it with the phrase ``of an end item containing a covered 
material that is.'' DoD interprets the exception for ``electronic 
devices'' pursuant to DFARS 225.7018-3 to include components embedded 
in other end items and does not see the need to clarify further that 
end items supplied to DoD containing a covered material that is an 
electronic device are excepted from the prohibition in accordance with 
10 U.S.C. 2533c(c)(3). As the current rulemaking effort applies only to 
the changes mandated by section 849 of the NDAA for FY 2020, any 
additional expansion, on the prohibition to clarify that the clause 
252.225-7052 applies only to the melting and production of tantalum 
metals and alloys as part of the DoD supply chain and not to prior 
melting or production or to tantalum raw materials, would be out of 
scope.
    DoD does not concur with the recommendation to revise DFARS 
225.7018-2 and the clause 252.225-7052, paragraph (a), to clarify that 
unless the end item is itself manufactured in a covered country, DoD 
would be acquiring neither a covered material melted or produced in a 
covered country nor an end item manufactured in any covered country 
that contains a covered material, unless the end item is itself 
manufactured in a covered country. DoD also does not concur with the 
recommendation for a revision to clarify whether the phrase 
``manufactured in any covered country'' modifies ``end item'' or 
``covered material.'' The interim rule as implemented at 225.7018-2(a), 
in accordance with section 849 of the NDAA for FY 2020 and 10 U.S.C. 
2533c, specifically mandates not acquiring any covered material melted 
or produced in any covered country, or any end item, manufactured in 
any covered country, that contains a covered material.
d. Extension for Comment Due Date
    Comment: A respondent requested an extension to the comment period 
for 30 days due to further analysis required and the holiday season.
    Response: DoD acknowledges the extension request; however, the 
public comment period was not extended.
9. Outside the Scope of the Rule
    Comment: A respondent inquired what documentation is required to 
import tantalum into the United States and proof of origin.
    Response: This final rule is implementing restrictions on the 
acquisition of tantalum in accordance with section 849 of the NDAA for 
FY 2020. Instructions on documentation for importing tantalum and proof 
of origin are outside the scope of this rule.

C. Other Changes

    At DFARS 212.505, Applicability of certain laws to contracts for 
the acquisition of COTS items, paragraph (b) is added to state that 
paragraph (a)(1) of 10 U.S.C. 2533c is not applicable to contracts and 
subcontracts for the acquisition of commercially available off-the-
shelf items, except as provided at 225.7018-3(c)(1). The previously 
undesignated paragraph at 212.505 is designated as paragraph (a).

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

    This rule amends the clause at DFARS 252.225-7052, Restriction on 
Acquisition of Certain Magnets, Tantalum, and Tungsten, to implement 
section 849 of the NDAA for FY 2020. DFARS 252.225-7052 does not apply 
to acquisitions at or below the simplified acquisition threshold but 
applies to contracts for the acquisition of commercial items, except as 
provided in the statute at 10 U.S.C. 2533c(c)(3). Therefore, DoD has 
signed a determination of applicability to acquisitions of commercial 
items, except for COTS items to the extent exempted in the statute.

IV. Expected Impact of the Rule

    This final rule adds tantalum ``metals'' to the restriction at 
DFARS 225.7018 and also incorporates the term into the definition of 
``covered material.'' This rule further explains the applicability of 
the restriction on the production of tantalum metals of any kind and 
alloys in addition to the reduction or melting of any form of tantalum 
metal. Moreover, the restriction includes the subsequent production 
steps for the reduction or melting of any form of tantalum to create 
tantalum metals including unwrought, powder, mill products, and alloys.
    In addition, the rule provides an explanation of the exceptions at 
DFARS 225.7018-3, paragraph (c)(1)(ii) exception for commercially 
available off-the-shelf (COTS) items, which is not applicable to a mill 
product that has not been incorporated into an end item, subsystem, 
assembly, or component and paragraph (d)(1) meaning of nonavailability 
of a covered material in the required form. Although 10 U.S.C. 2533c 
provides that the exception to the restriction on tungsten for COTS 
items does not apply to a COTS item that is 50 percent or more tungsten 
by weight, section 849 does not add a similar condition with regard to 
tantalum metal and alloys.
    It is a matter of national security to reduce U.S. dependence on 
the covered countries in accordance with the section 849 restriction, 
because tantalum is an important element in the supply chain for 
production of both U.S. military systems and nonmilitary systems that 
DoD uses. A shortage of supply of these covered materials would 
therefore hinder maintenance and replacement of

[[Page 52347]]

many DoD military systems and would also have a negative impact on the 
broader industrial base upon which DoD depends. Implementation of this 
prohibition will decrease DoD's dependence on covered materials that 
originate in covered countries in support of national security.

V. Executive Orders 12866 and 13563

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

VII. Regulatory Flexibility Act

    A final regulatory flexibility analysis (FRFA) has been prepared 
consistent with the Regulatory Flexibility Act, 5 U.S.C. 601, et seq. 
The FRFA is summarized as follows:
    This rule is required to implement section 849 of the National 
Defense Authorization act (NDAA) for Fiscal Year (FY) 2020 (Pub. L. 
116-92) (10 U.S.C. 2533c). The objective of the rule is to implement 
the section 849 prohibition on the acquisition of tantalum metals and 
alloys from North Korea, China, Russia, or Iran.
    There were no significant issues raised by the public comments in 
response to the initial regulatory flexibility analysis.
    This rule will apply to an annual average of approximately 697 
small entities. Based on data from the Federal Procurement Data System 
for FY 2019, FY 2020, and FY 2021, DoD awarded in the United States 
13,204 contracts that exceeded the simplified acquisition threshold of 
$250,000 and were for the acquisition of manufactured end products 
(excluding those categories that could not include tantalum such as 
clothing and fabrics, books, or lumber products). These contracts were 
awarded to 3,447 unique entities, of which 2,090 were small entities. 
It is not known what percentage of these awards involved tantalum, or 
what lesser percentage might involve tantalum from China, North Korea, 
Russia, or Iran.
    There are no projected reporting or recordkeeping requirements. 
However, there may be compliance costs to track the origin of covered 
materials.
    DoD is exempting acquisitions equal to or less than the simplified 
acquisition threshold. DoD was unable to identify any other 
alternatives that would reduce burden on small businesses and still 
meet the objectives of the statute.

VIII. Paperwork Reduction Act

    This 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 212, 225, and 252

    Government procurement.

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

    Accordingly, the interim rule amending 48 CFR parts 212, 225, and 
252, which was published in the Federal Register at 85 FR 61500 on 
September 29, 2020, is adopted as a final rule with the following 
changes:

0
1. The authority citation for 48 CFR parts 212, 225, and 252 continues 
to read as follows:

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

PART 212--ACQUISITION OF COMMERCIAL ITEMS

0
2. Amend section 212.301 by revising paragraph (f)(x)(FF) to read as 
follows:


212.301  Solicitation provisions and contract clauses for the 
acquisition of commercial items.

    (f) * * *
    (x) * * *
    (FF) Use the clause at 252.225-7052, Restriction on the Acquisition 
of Certain Magnets, Tantalum, and Tungsten, as prescribed in 225.7018-
5, to comply with 10 U.S.C. 2533c.
* * * * *

0
3. Amend section 212.505 by--
0
a. Designating the section text as paragraph (a); and
0
b. Adding paragraph (b).
    The addition reads as follows:


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

* * * * *
    (b) Paragraph (a)(1) of 10 U.S.C. 2533c, Prohibition on acquisition 
of sensitive materials from non-allied foreign nations, is not 
applicable to contracts and subcontracts for the acquisition of 
commercially available off-the-shelf items, except as provided at 
225.7018-3(c)(1).

PART 225--FOREIGN ACQUISITION


225.7018-1  [Amended]

0
4. Amend section 225.7018-1 in paragraph (3) of the definition of 
``Covered material'' by removing ``metal'' and adding ``metals'' in its 
place.

0
5. Amend section 225.7018-2 by revising paragraph (c) to read as 
follows:


225.7018-2   Restriction.

* * * * *
    (c) For production of tantalum metals of any kind and alloys, this 
restriction includes the reduction or melting of any form of tantalum 
to create tantalum metal including unwrought, powder, mill products, 
and alloys. The restriction also covers all subsequent phases of 
production of tantalum metals and alloys.
* * * * *


225.7018-3   [Amended]

0
6. Amend section 225.7018-3--
0
a. In the paragraph (c) introductory text, by removing ``Of an end 
item'' and adding ``Of an end item containing a covered material'' in 
its place; and
0
b. In the paragraph (c)(1) introductory text, by removing ``PGI 
225.7018-3(c)(1)(i)'' and adding ``PGI 225.7018-3(c)(1)'' in its place.

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
7. Amend section 252.225-7052 by--
0
a. Adding introductory text;
0
b. Revising the clause date;
0
c. In paragraph (a), in paragraph (3) of the definition of ``Covered 
material'', removing ``metal'' and adding ``metals'' in its place;
0
d. Revising paragraph (b)(3); and
0
e. In the paragraph (c)(1) introductory text, removing ``To an end 
item'' and

[[Page 52348]]

adding ``To an end item containing a covered material'' in its place.
    The addition and revisions read as follows:


252.225-7052  Restriction on the Acquisition of Certain Magnets, 
Tantalum, and Tungsten.

    As prescribed in 225.7018-5, use the following clause:

Restriction on the Acquisition of Certain Magnets, Tantalum, and 
Tungsten (Aug 2022)

* * * * *
    (b) * * *
    (3) For production of tantalum metals of any kind and alloys, 
this restriction includes the reduction or melting of any form of 
tantalum to create tantalum metal including unwrought, powder, mill 
products, and alloys. The restriction also covers all subsequent 
phases of production of tantalum metals and alloys.
* * * * *
[FR Doc. 2022-18224 Filed 8-24-22; 8:45 am]
BILLING CODE 5001-06-P