Defense Federal Acquisition Regulation Supplement: Assuring Integrity of Overseas Fuel Supplies (DFARS Case 2022-D013), 11800-11803 [2024-02742]

Agencies

• Defense Acquisition Regulations System
• DEPARTMENT OF DEFENSE

[Federal Register Volume 89, Number 32 (Thursday, February 15, 2024)]
[Proposed Rules]
[Pages 11800-11803]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-02742]


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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 212, 215, 225, and 252

[Docket DARS-2024-0002]
RIN 0750-AL64


Defense Federal Acquisition Regulation Supplement: Assuring 
Integrity of Overseas Fuel Supplies (DFARS Case 2022-D013)

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 a section of the National 
Defense Authorization Act for Fiscal Year 2022 that requires offerors 
to certify that they will not provide fuel from a prohibited source and 
that they will comply with certain export control and anticorruption 
regulations and statutes for contracts awarded for the acquisition of 
fuel in support of overseas contingency operations.

DATES: Comments on the proposed rule should be submitted in writing to 
the address shown below on or before April 15, 2024, to be considered 
in the formation of a final rule.

ADDRESSES: Submit comments identified by DFARS Case 2022-D013, using 
either of the following methods:
    [cir] Federal eRulemaking Portal: https://www.regulations.gov. 
Search for DFARS Case 2022-D013. Select ``Comment'' and follow the 
instructions to submit a comment. Please include ``DFARS Case 2022-
D013'' on any attached documents.
    [cir] Email: [email protected]. Include DFARS Case 2022-D013 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: Mr. Jon Snyder, telephone 703-945-
5341.

SUPPLEMENTARY INFORMATION:

I. Background

    DoD is proposing to revise the DFARS to implement section 843 of 
the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2022 
(Pub. L. 117-81). Section 843 requires offerors to certify that fuel to 
be provided for a contract in support of an overseas contingency 
operation is not sourced from a prohibited nation or region and to 
furnish such records as are necessary to verify their compliance with 
applicable export control and anticorruption regulations and statutes. 
Section 843 requires contracting officers, when conducting a source 
selection for such contracts, to consider using tradeoff processes and 
certain evaluation factors. If the contracting officer does not 
consider a tradeoff process prior to issuing the solicitation, the 
contracting officer is required to justify in writing why a tradeoff 
process was not considered. Section 843 also requires the contracting 
officer to ensure, prior to contract award, that the offeror is not 
disqualified based upon an unsupported denial of access to a facility 
or equipment by the host nation.

II. Discussion and Analysis

    DoD proposes to add to the DFARS a new section 225.70WW, 
Restriction on acquisition of fuel for overseas contingency operations. 
Section 225.70WW provides the scope, prohibition, and procedures for 
contracting officers to use for the acquisition of fuel that is for 
overseas contingency operations and is expected to exceed the 
simplified acquisition threshold. This proposed rule requires that fuel 
is not sourced from a nation or region prohibited from selling 
petroleum to the United States. The proposed rule allows contracting 
officers to request records from the apparent successful offeror to 
verify compliance with certain regulations and statutes when the head 
of the contracting activity determines in writing that it is necessary. 
In addition, the proposed rule precludes contracting officers from 
disqualifying an offeror based on an unsupported denial of access to a 
facility or equipment by a host-nation government.
    This proposed rule includes a new section 215.101-71, Tradeoff 
process when acquiring fuel for overseas contingency operations, which 
requires contracting officers to consider using a tradeoff process 
during a source selection. When using a tradeoff process, contracting 
officers are required to consider the use of certain evaluation 
factors. This proposed rule also provides procedures for a contracting 
officer to justify when a tradeoff process is not considered.
    A new solicitation provision is proposed at DFARS 252.225-70XX, 
Restriction on Acquisition of Fuel for Overseas Contingency Operations, 
for

[[Page 11801]]

use in solicitations expected to exceed the simplified acquisition 
threshold, including solicitations using FAR part 12 procedures for the 
acquisition of commercial products, including commercially available 
off-the-shelf (COTS) items, and commercial services, for the 
procurement of fuel for overseas contingency operations. DFARS 252.225-
70XX requires an offeror to certify that the fuel, in whole or in part, 
or derivatives of such fuel, to be provided under the resulting 
contract will not be sourced from a nation or region prohibited from 
selling petroleum to the United States. This proposed provision 
requires the apparent successful offeror to furnish records verifying 
compliance upon contracting officer request. The provision also 
requires an offeror, prior to award, to promptly report to the 
contracting officer any instance of unsupported denial of access to a 
facility or equipment by a host nation government that may prevent it 
from complying with the terms and conditions of the solicitation.
    Since DoD plans to apply the requirements of this proposed rule to 
acquisitions using FAR part 12 procedures, cross references to the new 
subpart are added at new paragraphs 212.203(5) and 212.301(f)(ix)(OO).

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

    This proposed rule includes a new provision at DFARS 252.225-70XX, 
Restriction on Acquisition of Fuel for Overseas Contingency Operations, 
to implement the requirements of section 843 of the NDAA for FY 2022. 
The provision at DFARS 252.225-70XX is prescribed at DFARS 225.70WW-4 
for use in solicitations, including solicitations using FAR part 12 
procedures for the acquisition of commercial products and commercial 
services, that are for the procurement of fuel for overseas contingency 
operations and are expected to exceed the simplified acquisition 
threshold. DoD does not intend to apply the proposed rule to contracts 
at or below the SAT. DoD does intend to apply the proposed rule to 
contracts for the acquisition of commercial products including COTS 
items and for the acquisition of commercial services.

A. Applicability to Contracts at or Below the Simplified Acquisition 
Threshold

    41 U.S.C. 1905 governs the applicability of laws to contracts or 
subcontracts in amounts not greater than the simplified acquisition 
threshold. It is intended to limit the applicability of laws to such 
contracts or subcontracts. 41 U.S.C. 1905 provides that if a provision 
of law contains criminal or civil penalties, or if the Federal 
Acquisition Regulatory Council makes a written determination that it is 
not in the best interest of the Federal Government to exempt contracts 
or subcontracts at or below the SAT, the law will apply to them. The 
Principal Director, Defense Pricing and Contracting (DPC), is the 
appropriate authority to make comparable determinations for regulations 
to be published in the DFARS, which is part of the Federal Acquisition 
Regulation system of regulations. DoD does not intend to make that 
determination. Therefore, this proposed rule will not apply at or below 
the simplified acquisition threshold.

B. Applicability to Contracts for the Acquisition of Commercial 
Products Including COTS Items and for the Acquisition of Commercial 
Services

    10 U.S.C. 3452 exempts contracts and subcontracts for the 
acquisition of commercial products including COTS items, and commercial 
services from provisions of law enacted after October 13, 1994, unless 
the Under Secretary of Defense (Acquisition and Sustainment) (USD(A&S)) 
makes a written determination that it would not be in the best interest 
of DoD to exempt contracts for the procurement of commercial products 
and commercial services from the applicability of the provision or 
contract requirement, except for a provision of law that--
     Provides for criminal or civil penalties;
     Requires that certain articles be bought from American 
sources pursuant to 10 U.S.C. 4862 (previously 10 U.S.C. 2533c), or 
that strategic materials critical to national security be bought from 
American sources pursuant to 10 U.S.C. 4863 (previously 10 U.S.C. 
2533b); or
     Specifically refers to 10 U.S.C. 3452 and states that it 
shall apply to contracts and subcontracts for the acquisition of 
commercial products (including COTS items) and commercial services.
    The statute implemented in this proposed rule does not impose 
criminal or civil penalties, does not require purchase pursuant to 10 
U.S.C. 4862 or 4863, and does not refer to 10 U.S.C. 3452. Therefore, 
section 843 of the NDAA for FY 2022 will not apply to the acquisition 
of commercial services or commercial products including COTS items 
unless a written determination is made. Due to delegations of 
authority, the Principal Director, DPC is the appropriate authority to 
make this determination. DoD intends to make that determination to 
apply this statute to the acquisition of commercial products including 
COTS items and to the acquisition of commercial services. Therefore, 
this proposed rule will apply to the acquisition of commercial products 
including COTS items and to the acquisition of commercial services.

C. Determination

    Given that the requirements of section 843 of the NDAA for FY 2022 
were enacted to ensure that fuel for overseas contingency operations is 
not procured from prohibited sources, and since fuel is generally a 
commercial product or COTS item, it is in the best interest of the 
Federal Government to apply the rule to contracts for the acquisition 
of commercial services and commercial products, including COTS items, 
as defined at Federal Acquisition Regulation 2.101. An exception for 
contracts for the acquisition of commercial services and commercial 
products, including COTS items, would exclude the contracts intended to 
be covered by the law, thereby undermining the overarching public 
policy purpose of the law.

IV. Expected Impact of the Rule

    This proposed rule includes a requirement for offerors for a 
contract for the procurement of fuel that is for an overseas 
contingency operation and is expected to exceed the SAT, to certify 
that the proposed fuel, in whole or in part, or derivatives of such 
fuel, will not be sourced from a nation or region prohibited from 
selling petroleum to the United States. Offerors will also be required 
to comply with certain export control and anticorruption statutes and 
regulations. The apparent successful offeror may be requested to 
provide records to verify such compliance upon contracting officer 
request.
    This proposed rule also includes new requirements for contracting 
officers. Contracting officers must not disqualify an offeror based on 
an unsupported denial of access to a facility or equipment by a host 
nation government. When conducting a source selection for such 
acquisitions, contracting officers will be required to consider the use 
of a tradeoff process and the use of certain evaluation factors. If the 
contracting officer does not consider a tradeoff process, the 
contracting officer must justify and obtain approval of the rationale 
for not considering a tradeoff process.

[[Page 11802]]

    Analysis of data from the Federal Procurement Data System for 
fiscal years 2021, 2022, and 2023, for DoD contracts awarded to procure 
fuel for overseas operations revealed there was an average of five 
awards per fiscal year. These five awards were made to three 
contractors. Across the three fiscal years, a total of three companies 
received awards for the procurement of liquid fuels supporting overseas 
operations. During this period, no awards were made to small entities.

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, as amended.

VI. Regulatory Flexibility Act

    DoD does not expect this proposed rule, when finalized, 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., because during recent fiscal years there were no contracts 
awarded to small entities for supplying fuel for overseas contingency 
operations. However, an initial regulatory flexibility analysis has 
been performed and is summarized as follows:
    This proposed rule is necessary to implement section 843 of the 
National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2022 
(Pub. L. 117-81). Section 843 requires offerors to certify that the 
fuel procured for an overseas contingency operation is not sourced from 
a prohibited nation or region and to furnish such records as are 
necessary to verify their compliance with certain export control and 
anticorruption statutes and regulations. Section 843 requires 
contracting officers to consider a tradeoff process and the use of 
certain evaluation factors when procuring fuel for an overseas 
contingency operation. If the contracting officer does not consider a 
tradeoff process, section 843 requires the contracting officer to 
justify, before issuing the solicitation, why a tradeoff process was 
not considered.
    The objective of the proposed rule is to implement section 843 of 
the NDAA for FY 2022, which is the legal basis for the rule.
    Data from the Federal Procurement Data System was analyzed for 
fiscal years 2021, 2022, and 2023 for DoD contracts awarded to procure 
fuel for overseas operations. The data revealed there was an average of 
five awards per fiscal year for the procurement of fuel supporting 
overseas operations. These awards were made to three unique entities, 
of which none were small entities. Therefore, DoD does not anticipate 
that this proposed rule will have an impact on small entities.
    The proposed rule does not impose any new reporting, recordkeeping, 
or other compliance requirements for small entities.
    The proposed rule does not duplicate, overlap, or conflict with any 
other Federal rules.
    There are no known alternatives to the proposed rule that would 
accomplish the stated objectives of the applicable statute.
    DoD invites comments from small business concerns and other 
interested parties on the expected impact of this proposed rule on 
small entities.
    DoD will also consider comments from small entities concerning the 
existing regulations in subparts affected by this proposed 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 2022-
D013), in correspondence.

VII. Paperwork Reduction Act

    This proposed 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, 215, 225, and 252

    Government procurement.

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

    Therefore, 48 CFR parts 212, 215, 225, and 252 are proposed to be 
amended as follows:

0
1. The authority citation for parts 212, 215, 225, and 252 continues to 
read as follows:

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

PART 212--ACQUISITION OF COMMERCIAL PRODUCTS AND COMMERCIAL 
SERVICES

0
2. Amend section 212.203 by adding paragraph (5) to read as follows:


212.203   Procedures for solicitation, evaluation, and award.

* * * * *
    (5) See 215.101-71 and 225.70WW for the acquisition of fuel for 
overseas contingency operations.
0
3. Amend section 212.301 by adding paragraph (f)(x)(OO) to read as 
follows:


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

* * * * *
    (f) * * *
    (x) * * *
    (OO) Use the provision at 252.225-70XX, Restriction on Acquisition 
of Fuel for Overseas Contingency Operations, as prescribed in 225.70WW-
4, to comply with section 843 of the National Defense Authorization Act 
for Fiscal Year 2022 (Pub. L. 117-81).

PART 215--CONTRACTING BY NEGOTIATION

0
4. Add section 215.101-71 to subpart 215.1 to read as follows:


215.101-71   Tradeoff process when acquiring fuel for overseas 
contingency operations.

    (a) When conducting a source selection for the acquisition of fuel 
that is for an overseas contingency operation and is expected to exceed 
the simplified acquisition threshold, the contracting officer shall 
consider using a tradeoff process in accordance with FAR 15.101-1 
(section 843 of the National Defense Authorization Act for Fiscal Year 
2022 (Pub. L. 117-81)). The contracting officer should consider using 
the following evaluation factors in any such tradeoff process:
    (1) Past performance.
    (2) Cost.
    (3) Anticorruption training.
    (4) Anticorruption compliance.
    (b) If a tradeoff process was not considered, prior to the issuance 
of the solicitation, the contracting officer shall justify in writing 
why a tradeoff process was not considered and obtain approval by an 
official one level above the contracting officer. This authority is not 
delegable. The contracting officer shall include the justification in 
the contract file.

[[Page 11803]]

PART 225--FOREIGN ACQUISITION

0
5. Add sections 225.70WW, 225.70WW-1, 225.70WW-2, 225.70WW-3, and 
225.70WW-4 to subpart 225.70 to read as follows:
* * * * *
Sec.
225.70WW Restriction on acquisition of fuel for overseas contingency 
operations.
225.70WW-1 Scope.
225.70WW-2 Prohibition.
225.70WW-3 Procedures.
225.70WW-4 Solicitation provision.
* * * * *


225.70WW   Restriction on acquisition of fuel for overseas contingency 
operations.


225.70WW-1   Scope.

    This section implements section 843 of the National Defense 
Authorization Act for Fiscal Year 2022 (Pub. L. 117-81), for the 
acquisition of fuel for overseas contingency operations.


225.70WW-2   Prohibition.

    Contracting officers shall not award, for an overseas contingency 
operation, a contract for fuel, in whole or in part, or derivatives of 
such fuel, that is sourced from nations or regions prohibited from 
selling petroleum to the United States. See FAR subpart 25.7 for 
prohibited sources.


225.70WW-3   Procedures.

    (a) For contracts for the acquisition of fuel for overseas 
contingency operations, including contracts using FAR part 12 
procedures, expected to exceed the simplified acquisition threshold, 
the contracting officer--
    (1) May request records from the apparent successful offeror to 
verify compliance with the following statutes and regulations only when 
the head of the contracting activity determines in writing that it is 
necessary:
    (i) The Foreign Corrupt Practices Act (15 U.S.C. 78dd-1 et seq.).
    (ii) International Traffic in Arms Regulations at 22 CFR 120 
through 130 (see PGI 225.7901-2).
    (iii) Export Administration Regulations at 15 CFR 730 through 774 
(see PGI 225.7901-2).
    (iv) Relevant regulations promulgated by the Office of Foreign 
Assets Control of the Department of the Treasury. Sanction information 
for specific countries and programs is available at https://ofac.treasury.gov/sanctions-programs-and-country-information.
    (2) To the maximum extent practicable, shall not disqualify an 
otherwise responsible offeror on the basis of an unsupported denial of 
access to a facility or equipment by a host-nation government. The 
provision at 252.225-70XX, Restriction on Acquisition of Fuel for 
Overseas Contingency Operations, requires offerors to report promptly 
to the contracting officer, prior to award, any instance of unsupported 
denial of access to a facility or equipment by a host-nation government 
that may prevent it from complying with the terms and conditions of the 
solicitation.
    (b) See 215.101-71 for the requirement to consider using a tradeoff 
process.


225.70WW-4   Solicitation provision.

    Use the provision at 252.225-70XX, Restriction on Acquisition of 
Fuel for Overseas Contingency Operations, in solicitations, including 
solicitations using FAR part 12 procedures for the acquisition of 
commercial products and commercial services, that are for the 
acquisition of fuel for overseas contingency operations and are 
expected to exceed the simplified acquisition threshold.

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
6. Add section 252.225-70XX to read as follows:


252.225-70XX   Restriction on Acquisition of Fuel for Overseas 
Contingency Operations.

    As prescribed in 225.70WW-4, use the following provision:

Restriction on Acquisition of Fuel for Overseas Contingency Operations 
(Date)

    (a) Prohibition. For an overseas contingency operation, DoD may 
not procure fuel in whole or in part, or derivatives of such fuel, 
that is sourced from nations or regions prohibited from selling 
petroleum to the United States. See Federal Acquisition Regulation 
subpart 25.7 for prohibited sources.
    (b) Certification. Offerors shall complete the certification in 
paragraph (b)(1) of this provision and submit the certification with 
their offer.
    (1) The Offeror does [ ] does not [ ] certify that the fuel, in 
whole or in part, or derivatives of such fuel, to be provided under 
any contract resulting from this solicitation is not sourced from a 
nation or region prohibited from selling petroleum to the United 
States.
    (2) Only Offerors who certify that the fuel to be provided is 
not sourced from a prohibited nation or region will be eligible for 
award.
    (c) Compliance.
    (1) When requested by the Contracting Officer, the apparent 
successful Offeror shall submit records necessary to demonstrate 
compliance with applicable laws and regulations regarding export-
controlled items and anticorruption statutes and regulations 
including--
    (i) The Foreign Corrupt Practices Act (15 U.S.C. 78dd-1 et 
seq.);
    (ii) International Traffic in Arms Regulations (ITAR) at 22 CFR 
120 through 130 (also see Defense Federal Acquisition Regulation 
Supplement (DFARS) clause 252.225-7048, Export-Controlled Items);
    (iii) Export Administration Regulations (EAR) at 15 CFR 730 
through 774 (also see DFARS clause 252.225-7048); and
    (iv) Relevant regulations promulgated by the Office of Foreign 
Assets Control of the Department of the Treasury. Sanction 
information for specific countries and programs is available at 
https://ofac.treasury.gov/sanctions-programs-and-country-information.
    (2) The Offeror shall contact the Department of State regarding 
ITAR compliance and the Department of Commerce regarding EAR 
compliance.
    (d) Reporting requirement. The Offeror shall, prior to contract 
award, promptly report to the Contracting Officer any instance of 
unsupported denial of access to a facility or equipment by a host-
nation government that may prevent it from complying with the terms 
and conditions of the solicitation.


(End of provision)

[FR Doc. 2024-02742 Filed 2-14-24; 8:45 am]
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