Defense Federal Acquisition Regulation Supplement: Restriction on Certain Metal Products (DFARS Case 2021-D015), 46816-46821 [2024-11513]

Agencies

• Defense Acquisition Regulations System
• DEPARTMENT OF DEFENSE

[Federal Register Volume 89, Number 105 (Thursday, May 30, 2024)]
[Rules and Regulations]
[Pages 46816-46821]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-11513]


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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 225 and 252

[Docket DARS-2023-0018]
RIN 0750-AL33


Defense Federal Acquisition Regulation Supplement: Restriction on 
Certain Metal Products (DFARS Case 2021-D015)

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

ACTION: Final rule.

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SUMMARY: DoD is issuing a final rule amending the Defense Federal 
Acquisition Regulation Supplement (DFARS) to implement a section of the 
National Defense Authorization Act of Fiscal Year 2021 that provides 
restrictions on the acquisition of certain covered materials from The 
Democratic People's Republic of North Korea, The People's Republic of 
China, The Russian Federation, and The Islamic Republic of Iran.

DATES: Effective May 30, 2024.

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

SUPPLEMENTARY INFORMATION: 

I. Background

    DoD published a proposed rule in the Federal Register at 88 FR 
25609 on April 27, 2023, to implement section 844 of the National 
Defense Authorization Act (NDAA) for Fiscal Year (FY) 2021 (Pub. L. 
116-283). Section 844 amends 10 U.S.C. 2533c (redesignated 10 U.S.C. 
4872) and removes from the restriction ``material melted'' and replaces 
it with ``material mined, refined, separated, melted''. In addition, 
the reference to ``tungsten'' is removed and replaced with ``covered 
material'' in the exception for commercially available-off-the-shelf 
(COTS) items to the restriction of 50 percent or more by weight. The 
final rule also implements section 854 of the NDAA for FY 2024 (Pub. L. 
118-31) that amends the effective date in section 844(b) of the NDAA 
for FY 2021. Section 854 extends the effective date of the restriction 
from 5 years to 6 years. Nine respondents submitted public comments in 
response to the proposed 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 Proposed Rule

    Revisions were made at DFARS 225.7018-2 to implement the new 
effective date of the restriction in accordance with section 854 of the 
NDAA for FY 2024. Consequently, the dates of the current restrictions 
were revised to provide an effective date through December 31, 2026, 
and to reflect that the new restrictions will be effective on January 
1, 2027. Conforming revisions were also made in the DFARS clause at 
252.225-7052, Restriction on the Acquisition of Certain Magnets, 
Tantalum, and Tungsten.

B. Analysis of Public Comments

1. Support for the Rule
    Comment: Most respondents strongly supported the proposed rule. A 
few respondents stated that implementation of the restriction will help 
to strengthen domestic supply chains and help to establish secure 
domestic sourcing requirements. A respondent conveyed support for the 
rule and provided the restriction will contribute to the redevelopment 
of domestic rare earth production capacity.
    Response: DoD acknowledges the respondents' support for the rule.
2. Strengthen the Defense Industrial Base
    Comment: A respondent requested the opportunity to meet and 
strategize with DoD representatives of the Defense Acquisition 
Regulations System.
    Response: While undergoing the Title 48 CFR rulemaking process, 
information regarding a rule is pre-decisional, deliberative Government 
information that cannot be shared with the public. In the context of 
public notice and comment in the course of rulemaking, it would be 
inappropriate to meet with individual members of the public to 
strategize about a pending rule.

[[Page 46817]]

3. Availability of Domestic Sources or Suppliers
a. Disruption in the U.S. Supply Chain
    Comment: A few respondents shared concerns regarding the market 
dominance of Chinese rare earth metals, the impacts of the restriction, 
and the potential disruption in the U.S. domestic supply chains.
    Response: Implementation of the statutory sourcing requirements in 
accordance with 10 U.S.C. 2533c (now 10 U.S.C. 4872), as amended by 
section 844 of the NDAA for FY 2021, is a necessary step to support the 
development of secure suppliers and transition defense critical supply 
chains to secure sources. DoD has supported the effective 
implementation of the statutory sourcing requirements through existing 
and planned investments in compliant suppliers. If compliant suppliers 
are not available for specified applications, the statute authorizes 
DoD to issue a nonavailability determination until a compliant supplier 
becomes available.
b. Samarium-Cobalt (Sm-Co) Magnets
    Comment: A respondent specified that it is the only U.S.-based, 
vertically integrated domestic supplier of samarium cobalt magnets and 
discussed the impacts of their current rare earth metals supplier and 
its subsequent foreign ownership status. The respondent further states 
that they have spoken to potential domestic rare earth metal suppliers 
and their transition to becoming a domestic supplier is in its infancy 
at best.
    Response: Implementation of the statutory sourcing requirements, in 
coordination with existing and planned DoD investments in the rare 
earth magnet supply chain, will support the development of compliant 
suppliers for rare earth concentrates, oxides, metals, and magnets. If 
compliant suppliers are not available for specified applications, the 
statute authorizes DoD to issue a nonavailability determination until a 
compliant supplier becomes available. DoD notes that the statute 
permits sourcing from domestic suppliers as well as suppliers located 
in other countries that source outside of the four covered countries: 
North Korea, Russia, Iran, or the People's Republic of China.
4. National Security Risks
    Comment: Many respondents relayed their overall concerns with the 
Chinese rare earth metals market dominance and the associated national 
security risks.
    Response: The principal benefit of this rule is that it continues 
the transition of the defense industrial base toward sourcing strategic 
and critical materials from suppliers other than the covered countries 
of North Korea, Russia, Iran, and the People's Republic of China. This 
requirement, in combination with existing and planned DoD investments, 
demonstrates DoD's commitment to support secure suppliers and to reduce 
the national security risks associated with over-reliance on, and the 
dominance of, the Chinese market.
5. Effective Date of Restriction
    Comment: A few respondents expressed concern that domestic sources 
would not be available by the effective dates established in the rule. 
A respondent specifically recommended DoD advocate that Congress amend 
the statute to replace the specific effective dates with, instead, an 
effective date 180 days after the Secretary of Defense certifies to 
Congress that sufficient domestic sources are available to meet DoD's 
needs.
    Response: Section 844(b) of the NDAA for FY 2021, as amended by 
section 854 of the NDAA for FY 2024, expressly states the effective 
date of the restrictions. As such, DoD cannot implement any other 
effective dates. DoD notes that section 854 extends the effective date 
of the restriction by one additional year to January 1, 2027. The 
restriction at DFARS 225.7018-2 reflects the statutory effective date 
as a clear demand signal and timetable to DoD's industry partners. DoD 
encourages industry to diligently seek and develop compliant domestic 
sources by the stated effective dates.
6. Recycled Material Exception
    Comment: A respondent inquired about the applicability of the 
restriction to an end item containing a covered material that is a 
neodymium-iron-boron magnet manufactured from recycled material if the 
milling of the recycled material and sintering of the final magnet 
takes place in the United States. The respondent recommends DoD 
consider the same recycled material exception to be applied to the 
other magnets subject to the statutory restriction.
    Response: The statutory requirements for exceptions in 10 U.S.C. 
4872(c)(3)(C) state that the restriction under subsection (a) does not 
apply to the purchase by DoD of an end item containing a covered 
material that is a neodymium-iron-boron magnet manufactured from 
recycled material if the milling of the recycled material and sintering 
of the final magnet takes place in the United States. The section 844 
amendments to 10 U.S.C. 2533c (now 10 U.S.C. 4872) did not add 
exceptions for the remaining covered materials, defined in the statute.
7. Statutory Implementation
    Comment: A few respondents expressed support for the rule but 
highlighted specific areas for further consideration by DoD. A 
respondent welcomed the revision of the exception to the restriction to 
include COTS items that are 50 percent or more by weight to all covered 
items, including but no longer limited to only tungsten. However, the 
respondent opined that implementing this change would be problematic 
because of a lack of consistent methodology to determine whether an 
item qualifies for the exception. Another respondent expressed support 
for the proposed change because it would reduce foreign influence in 
America's critical mineral supply chain. However, the respondent also 
commented that the restriction should be expanded to include other 
critical mineral products, specifically cobalt metal powder and refined 
cobalt.
    Response: DoD understands that cobalt metal powder is part of the 
samarium-cobalt magnet supply chain and will be subject to this 
statutory restriction. The rule implements section 844 of the NDAA for 
FY 2021, which replaces the reference to ``tungsten'' with ``covered 
material'' in the exception for COTS items to the restriction of 50 
percent or more by weight. When identifying whether the COTS items 
exception applies to the end item, DoD encourages industry to consult 
the relevant procuring activity for the acquisition on how best to 
demonstrate compliance to the exception. DoD expects industry to use a 
reasonable and reliable process to determine an end item's composition 
and weight.
    In regard to further expanding the restriction to include cobalt 
metal powder and refined cobalt, the statutory restriction includes, 
for samarium-cobalt magnets, the entire supply chain from mining or 
production of a cobalt and samarium ore, through production of finished 
magnets. (Also see the response provided for the comment category at 
8b, Commercially Available Off-the-Shelf (COTS) Items Applicability.)
8. Recommended Revisions
a. Nonavailability Determination
    Comment: A respondent recommended implementation of the restriction 
with use of the authority for a class nonavailability determination 
until viable supplier sources in compliance with the new restrictions

[[Page 46818]]

are verified. Another respondent recommended use of the same process 
created for a nonavailability determination under the specialty metals 
requirements and the current waiver process to allow for the use of 
noncompliant materials in case of a shortage. Additionally, the 
respondent recommends the ability for contractors and subcontractors to 
request nonavailability determinations, a public notice of the 
requests, and a process for manufacturers to demonstrate compliance and 
the ability to supply materials.
    Response: The DFARS authorizes DoD to issue both individual and 
class nonavailability determinations if compliant materials are 
unavailable, as stated at DFARS 225.7018-4. The nonavailability 
determination process for this statute is largely aligned with the 
existing nonavailability determination process for specialty metals in 
accordance with 10 U.S.C. 4863 (see 225.7003-3).
    The statutory sourcing requirement is important to transition 
supply chains to secure suppliers of strategic and critical materials. 
The existing regulations authorize DoD to issue individual and class 
nonavailability determinations if needed for national security in cases 
where compliant materials are not available. The process for class 
nonavailability determinations also provides opportunity for interested 
parties and manufacturers to provide information to DoD regarding the 
availability of compliant materials that would be relevant to the 
decision.
    As provided at DFARS 225.7018-4, the Under Secretary of Defense for 
Acquisition and Sustainment (USD(A&S)) must issue a public notice of 
the intent to make a class nonavailability determination at least 30 
days prior to issuing the nonavailability determination, to the maximum 
extent practicable consistent with the protection of national security. 
Following the public notice, interested parties, including producers of 
covered materials, may provide relevant information. The USD(A&S) will 
take the information provided into consideration when determining 
whether to issue a class nonavailability determination. When issuing 
the final class nonavailability determination, the USD(A&S) will ensure 
that the class nonavailability determination and supporting rationale 
will be made publicly available, consistent with the protection of 
national security and confidential business information.
b. Commercially Available Off-the-Shelf (COTS) Items Applicability
    Comment: A respondent stated that it will be problematic to 
implement the COTS items exception to the restriction of 50 percent or 
more by weight that includes all ``covered material'' as now defined in 
10 U.S.C. 4872 in accordance with section 844 of the NDAA for FY 2021. 
The respondent further recommended that clarification in the rule is 
required to provide a consistent methodology for contractors to 
determine qualification criteria under the exception in the DFARS 
clause 252.225-7052 at paragraph (c)(1)(i)(A)(1), although a respondent 
acknowledged statutory changes would be required to effect this 
recommendation. Additionally, a respondent commented that removing the 
COTS items exception and including the entire and most remote aspects 
of the supply chain represents a nearly inexecutable burden for 
companies to manage.
    Response: Section 844 is silent on applicability to contracts and 
subcontracts for the acquisition of commercial products and commercial 
services. DoD has made a determination of applicability to acquisitions 
of commercial products including COTS items, except as exempted in the 
statute. See section III of this preamble.
9. Outside the Scope of the Rule
    Comment: A respondent provided information and data on their 
efforts to establish a tungsten mine in the United Kingdom and 
requested a point of contact to discuss government funding.
    Response: This rule is implementing restrictions in accordance with 
10 U.S.C. 4872, as amended by section 844 of the NDAA for FY 2021 and 
section 854 of the NDAA for FY 2024. Establishment of a tungsten mine 
and future investment is outside the scope of this rule.
    Comment: A respondent encouraged the Government to continue to 
support research and development on economical and sustainable 
processing technologies for rare earth elements as well as development 
of alternatives.
    Response: Government research and development efforts for future 
processing technologies are outside the scope of this rule.
    Comment: A respondent recommends creation of a centralized DoD 
certification process, a trusted marketplace of commercial suppliers, 
or a qualified list of compliant sources to facilitate the transition 
across the defense industrial base for future compliance with the 
statutory restriction.
    Response: The creation of a compliant supplier list is outside the 
scope of the rule. While DoD may explore the potential feasibility of 
developing a list for this application, in general, DoD does not 
support establishing a list of preferred sourcing.

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 rule amends the clause at DFARS 252.225-7052, Restriction on 
the Acquisition of Certain Magnets, Tantalum, and Tungsten. However, 
this final rule does not impose any new requirements on contracts at or 
below the SAT, for commercial products including COTS items. DFARS 
252.225-7052 does not apply to acquisitions below the SAT, in 
accordance with 41 U.S.C. 1905, but it applies to contracts for the 
acquisition of commercial products, including COTS items, except as 
provided in the statute at 10 U.S.C. 4872(c)(3).

IV. Expected Impact of the Rule

    This rule will impact the Government and industry because this rule 
significantly expands the scope of compliance in accordance with 
section 844 of the NDAA for FY 2021, section 854 of the FY 2024 NDAA, 
and 10 U.S.C. 4872.
    The current restriction at DFARS 225.7018-2 covers the melting of 
precursor metals (e.g., samarium metal and cobalt metal) to produce 
alloys (e.g., samarium-cobalt alloy) and other equivalent processes 
(e.g., atomization, calcination and reduction, or final consolidation 
of non-melt derived metals powders). One of the materials covered by 
this rule at 225.7018-2 and the clause at DFARS 252.225-7052, 
Restriction on the Acquisition of Certain Magnets, Tantalum, and 
Tungsten, is also covered by longstanding restrictions for the 
acquisition of specialty metals at 225.7003-2 (10 U.S.C. 4875) and 
under the clause at DFARS 252.225-7009, Restriction on Acquisition of 
Specialty Metals, that includes the same coverage of production steps 
(e.g., melt or produce).
    This rule expands the scope of product coverage to all upstream 
mining, refining, separation, and melting of covered materials. Taken 
together with the overlapping restriction requirement on specialty 
metals at 225.7003-2 and the clause at DFARS 252.225-7009, Restriction 
on Acquisition of Specialty Metals, covered materials that are 
compliant with the

[[Page 46819]]

specialty metals clause may not be compliant with the current 
restriction at DFARS 225.7018-2 or the clause at DFARS 252.225-7052, 
Restriction on the Acquisition of Certain Magnets, Tantalum, and 
Tungsten, nor are they likely to be compliant with this rule.
    For example, assume that a contractor purchases a component from a 
United Kingdom-based supplier, and the assembly contains a samarium-
cobalt magnet manufactured in China. This component would be compliant 
with the specialty metals clause, because the specialty metals clause 
exempts qualifying country components. However, this rule has no 
exemption for qualifying country components, and thus the assembly 
would be noncompliant with the current restriction at DFARS 225.7018-2 
and the clause at DFARS 252.225-7052, Restriction on the Acquisition of 
Certain Magnets, Tantalum, and Tungsten, in its current form and as 
amended by this rule.
    Further, assume that a company purchases a motor from a U.S. 
manufacturer, and that U.S. motor manufacturer purchases a magnet from 
a U.S. company. The U.S. magnet company purchases cobalt metal and 
samarium metal from China, and these metals are melted in the United 
States. This magnet would be compliant with both the restriction 
required by the specialty metals clause at DFARS 252.225-7009, 
Restriction on Acquisition of Specialty Metals, and the current 
restriction at 225.7018-2 and the clause at DFARS 252.225-7052, 
Restriction on the Acquisition of Certain Magnets, Tantalum, and 
Tungsten. However, this magnet would not be compliant with the 
requirements that will be effective on January 1, 2027.
    Further, assume that a company produces business jets and modifies 
them for military use. During a given year, the business jet 
manufacturer purchases 50 percent of its samarium-cobalt magnet needs 
from a U.S. source that mines and conducts all subsequent processing 
steps in the United States. The balance of the company's samarium-
cobalt magnets is procured from Chinese sources and the company 
commingles domestically and Chinese-produced magnets on its production 
line. In this scenario, the modified business jet is compliant with the 
restriction at DFARS 225.7003-2 and the clause at DFARS 252.225-7009, 
Restriction on Acquisition of Specialty Metals, because it is a 
commercial derivative military article, and the company procures 50 
percent of its total needs from a domestic source. However, the 
modified business jet is potentially noncompliant with the final rule, 
given the commingling of Chinese and U.S. samarium-cobalt magnets in 
each aircraft.
    Notwithstanding the significant change in scope, DoD notes that 
Congress enacted this requirement on January 1, 2021, through Public 
Law 116-283. This five-year phase-in period, now revised to six years 
by section 854 of the NDAA for FY 2024, provides a reasonable period 
for industry to develop alternative sources of supply for covered 
materials from sources other than the People's Republic of China, the 
Russian Federation, the Democratic People's Republic of North Korea, 
and the Islamic Republic of Iran.
    DoD also notes that it has invested and continues to invest in 
domestic supply chains for covered materials, such as light and heavy 
rare earth elements and rare earth magnet manufacture, using 
authorities under 50 U.S.C. 4533 and 10 U.S.C. 4817 among others. For 
those materials not currently covered by DoD investments, such as 
tantalum and tungsten, publicly-traded U.S. companies, including DoD 
contractors and their subcontractors, already are required to conduct 
supply chain due diligence on these minerals when they are necessary to 
the functionality or production of a product manufactured by that 
company. This requirement stems from section 1502 of Public Law 111-203 
(enacted at 17 CFR 240.13p-1) to ensure that such minerals are not 
supporting armed conflict in the Democratic Republic of Congo and 
adjoining countries.
    The principal benefit of this rule is that it continues to 
transition the defense industrial base towards the procurement of 
strategic and critical materials from sources other than North Korea, 
Russia, Iran, or the People's Republic of China, with the latter 
constituting the pacing challenge identified in the National Defense 
Strategy. Notwithstanding the current and long-term challenge posed by 
China, Russia continues to pose an acute threat. Russia is a major 
producer and exporter of a wide array of strategic and critical 
materials, and the extreme volatility in these markets since Russia's 
invasion of Ukraine demonstrates the national security imperative to 
build resilience into supply chains for covered materials of this rule.

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. 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 has been prepared 
consistent with the Regulatory Flexibility Act, 5 U.S.C. 601, et seq. 
and is summarized as follows:
    This rule is required to implement section 844 of the National 
Defense Authorization Act (NDAA) for Fiscal Year (FY) 2021 (Pub. L. 
116-283), which amends 10 U.S.C. 2533c (now 10 U.S.C. 4872), and 
section 854 of the NDAA for FY 2024 (Pub. L. 118-31). The objective of 
the rule is to implement the section 844 revisions to the restriction 
on the acquisition of covered materials melted or produced in any 
covered country (i.e., North Korea, the People's Republic of China, 
Russia, or Iran) to include mined, refined, separated, melted, or 
produced. In addition, section 844 revises the commercially available 
off-the-shelf (COTS) items exception to the restriction of 50 percent 
or more by weight to now include all covered material and remove the 
individual exception to only tungsten. The term ``covered materials,'' 
already defined in the statute and at DFARS 225.7018-1, means samarium-
cobalt magnets, neodymium-iron-boron magnets, tantalum metals and 
alloys, tungsten metal powder, and tungsten heavy alloy or any finished 
or semi-finished component containing tungsten heavy alloy. Section 854 
of the NDAA for FY 2024 extends the effective date of the revised 
requirements by one year.

[[Page 46820]]

    There were no significant issues raised by the public comments in 
response to the initial regulatory flexibility analysis.
    Based on data from the Federal Procurement Data System for FY 2021, 
2022, and 2023, DoD awarded in the United States 26,697 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 restricted metals (such as clothing 
and fabrics, books, or lumber products). These contracts were awarded 
to a total of 3,127 unique entities, of which 1,783 were unique small 
entities; contracts were awarded to a median of 611 unique small 
entities per year. It is not known what percentage of these awards 
involved the specific covered materials 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 in accordance with 41 U.S.C. 1905. 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 final 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 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. Add section 225.7018-0 to read as follows:


225.7018-0  Scope.

    This section implements 10 U.S.C. 4872.

0
3. Revise section 225.7018-2 to read as follows:


225.7018-2  Restriction.

    (a) General. Except as provided in 225.7018-3 and 225.7018-4--
    (1) Effective through December 31, 2026, do not acquire any covered 
material melted or produced in any covered country, or any end item, 
manufactured in any covered country, that contains a covered material; 
and
    (2) Effective January 1, 2027, do not acquire any covered material 
mined, refined, separated, melted, or produced in any covered country, 
or any end item, manufactured in any covered country, that contains a 
covered material. (Section 854, Pub. L. 118-31; 10 U.S.C. 4872.)
    (b) Samarium-cobalt magnets and neodymium-iron-boron magnets. (1) 
Effective through December 31, 2026, for samarium-cobalt magnets and 
neodymium-iron-boron magnets, this restriction includes--
    (i) Melting samarium with cobalt to produce the samarium-cobalt 
alloy or melting neodymium with iron and boron to produce the 
neodymium-iron-boron alloy; and
    (ii) All subsequent phases of production of the magnets, such as 
powder formation, pressing, sintering or bonding, and magnetization.
    (2) Effective January 1, 2027, for samarium-cobalt magnets this 
restriction includes the entire supply chain from mining or production 
of a cobalt and samarium ore or feedstock, including recycled material, 
through production of finished magnets, except as provided at 225.7018-
3.
    (3) The restriction on melting and producing of samarium-cobalt 
magnets is in addition to any applicable restrictions on melting of 
specialty metals at 225.7003 and the clause at 252.225-7009, 
Restriction on Acquisition of Certain Articles Containing Specialty 
Metals.
    (4) Effective January 1, 2027, for neodymium-iron-boron magnets, 
this restriction includes the entire supply chain from mining of 
neodymium, iron, and boron through production of finished magnets, 
except as provided at 225.7018-3.
    (c) Tantalum metals and alloys. (1) Effective through December 31, 
2026, 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.
    (2) Effective January 1, 2027, for production of tantalum metals of 
any kind and alloys, this restriction includes mining or production of 
a tantalum ore or feedstock, including recycled material, through 
production of metals of any kind and alloys, except as provided at 
225.7018-3.
    (d) Tungsten metal powder and tungsten heavy alloy. (1) Effective 
through December 31, 2026, for production of tungsten metal powder and 
tungsten heavy alloy, this restriction includes--
    (i) Atomization;
    (ii) Calcination and reduction into powder;
    (iii) Final consolidation of non-melt derived metal powders; and
    (iv) All subsequent phases of production of tungsten metal powder, 
tungsten heavy alloy, or any finished or semi-finished component 
containing tungsten heavy alloy.
    (2) Effective January 1, 2027, for production of tungsten metal 
powder, tungsten heavy alloy, or any finished or semi-finished 
component containing tungsten heavy alloy, this restriction includes 
mining or production of a tungsten ore or feedstock, including recycled 
material, through production of tungsten metal powders, except as 
provided at 225.7018-3.

0
4. Amend section 225.7018-3--
0
a. By revising paragraph (c)(1); and
0
b. In paragraph (d)(1) by removing ``this contract;'' and adding ``the 
contract;'' in its place.
    The revision reads as follows:


225.7018-3  Exceptions.

* * * * *
    (c) * * *
    (1) A commercially available off-the-shelf item (but see PGI 
225.7018-3(c)(1) with regard to commercially available samarium-cobalt 
magnets), other than--
    (i) A commercially available off-the-shelf item that is--
    (A) 50 percent or more tungsten by weight effective through 
December 31, 2026; or
    (B) 50 percent or more covered material by weight effective January 
1, 2027;
    (ii) Effective through December 31, 2026, a tantalum metal, 
tantalum alloy, or tungsten heavy alloy mill product, such as bar, 
billet, slab, wire, cube, sphere, block, blank, plate, or sheet, that 
has not been incorporated into an end item, subsystem, assembly, or 
component; or
    (iii) Effective January 1, 2027, a covered material that is a mill 
product such as bar, billet, slab, wire, cube, sphere, block, blank, 
plate, or sheet, that has not been incorporated into an end item, 
subsystem, assembly, or component;
* * * * *

[[Page 46821]]

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
5. Amend section 252.225-7052 by--
0
a. Revising the clause date; and
0
b. Revising paragraphs (b) and (c)(1).
    The revisions read as follows:


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

* * * * *

Restriction on the Acquisition of Certain Magnets, Tantalum, and 
Tungsten (May 2024)

* * * * *
    (b) Restriction. (1) Except as provided in paragraph (c) of this 
clause--
    (i) Effective through December 31, 2026, the Contractor 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; and
    (ii) Effective January 1, 2027, the Contractor shall not deliver 
under this contract any covered material mined, refined, separated, 
melted, or produced in any covered country, or any end item, 
manufactured in any covered country, that contains a covered material 
(section 854, Pub. L. 118-31; 10 U.S.C. 4872).
    (2)(i)(A) Effective through December 31, 2026, for samarium-cobalt 
magnets and neodymium-iron-boron magnets, this restriction includes--
    (1) Melting samarium with cobalt to produce the samarium-cobalt 
alloy or melting neodymium with iron and boron to produce the 
neodymium-iron-boron alloy; and
    (2) All subsequent phases of production of the magnets, such as 
powder formation, pressing, sintering or bonding, and magnetization.
    (B) Effective January 1, 2027, for samarium-cobalt magnets this 
restriction includes the entire supply chain from mining or production 
of a cobalt and samarium ore or feedstock, including recycled material, 
through production of finished magnets.
    (ii) The restriction on melting and producing of samarium-cobalt 
magnets is in addition to any applicable restrictions on melting of 
specialty metals if the clause at 252.225-7009, Restriction on 
Acquisition of Certain Articles Containing Specialty Metals, is 
included in the contract.
    (3) Effective January 1, 2027, for neodymium-iron-boron magnets, 
this restriction includes entire supply chain from mining of neodymium, 
iron, and boron through production of finished magnets.
    (4)(i) Effective through December 31, 2026, 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.
    (ii) Effective January 1, 2027, for production of tantalum metals 
of any kind and alloys, this restriction includes mining or production 
of a tantalum ore or feedstock, including recycled material, through 
production of metals of any kind and alloys.
    (5)(i) Effective through December 31, 2026, for production of 
tungsten metal powder and tungsten heavy alloy, this restriction 
includes--
    (A) Atomization;
    (B) Calcination and reduction into powder;
    (C) Final consolidation of non-melt derived metal powders; and
    (D) All subsequent phases of production of tungsten metal powder, 
tungsten heavy alloy, or any finished or semi-finished component 
containing tungsten heavy alloy.
    (ii) Effective January 1, 2027, for production of tungsten metal 
powder, tungsten heavy alloy, or any finished or semi-finished 
component containing tungsten heavy alloy, this restriction includes 
mining or production of a tungsten ore or feedstock, including recycled 
material, through production of tungsten metal powders, tungsten heavy 
alloy, or any finished or semi-finished component containing tungsten 
heavy alloy.
    (c) Exceptions. This clause does not apply--
    (1) To an end item containing a covered material that is--
    (i) A commercially available off-the-shelf item, other than--
    (A) A commercially available off-the-shelf item that is--
    (1) 50 percent or more tungsten by weight effective through 
December 31, 2026; or
    (2) 50 percent or more covered material by weight effective January 
1, 2027;
    (B) Effective through December 31, 2026, a tantalum metal, tantalum 
alloy, or tungsten heavy alloy mill product, such as bar, billet, slab, 
wire, cube, sphere, block, blank, plate, or sheet, that has not been 
incorporated into an end item, subsystem, assembly, or component;
    (ii) Effective January 1, 2027, a covered material that is a mill 
product such as bar, billet, slab, wire, cube, sphere, block, blank, 
plate, or sheet, that has not been incorporated into an end item, 
subsystem, assembly, or component;
    (iii) An electronic device, unless otherwise specified in the 
contract; or
    (iv) A neodymium-iron-boron magnet manufactured from recycled 
material if the milling of the recycled material and sintering of the 
final magnet takes place in the United States.
* * * * *
[FR Doc. 2024-11513 Filed 5-29-24; 8:45 am]
BILLING CODE 6820-FR-P