Defense Federal Acquisition Regulation Supplement: Assuring Integrity of Overseas Fuel Supplies (DFARS Case 2022-D013), 78997-78999 [2024-21093]

Agencies

• Defense Acquisition Regulations System
• DEPARTMENT OF DEFENSE

[Federal Register Volume 89, Number 187 (Thursday, September 26, 2024)]
[Rules and Regulations]
[Pages 78997-78999]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-21093]



[[Page 78997]]

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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: 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 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: Effective October 1, 2024.

FOR FURTHER INFORMATION CONTACT: Mr. Jon Snyder, telephone 703-945-
5341.

SUPPLEMENTARY INFORMATION:

I. Background

    DoD published a proposed rule in the Federal Register at 89 FR 
11800 on February 15, 2024, 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. One respondent 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

    There are no significant changes from the proposed rule.

B. Analysis of Public Comments

1. Support for the Rule
    Comment: The respondent expressed support for the rule.
    Response: DoD acknowledges the respondent's support for the rule.
2. Clarifications
    Comment: The respondent recommended the rule include Russia as a 
prohibited source and questioned how a contracting officer would know 
if an offeror is proposing fuel from Russia or not. The respondent 
suggested that the rule should better clarify the definition and 
identification of prohibited sources of fuel and include Russia among 
them.
    Response: This rule implements section 843 of the NDAA for FY 2022, 
which does not establish a specific list of prohibited countries, 
entities, or individuals. This rule specifies, at DFARS 225.7024-2, a 
prohibition on procuring fuel sourced from nations or regions that are 
prohibited from selling petroleum to the United States (i.e., 
prohibited sources). These prohibited sources are identified in FAR 
subpart 25.7 and at https://ofac.treasury.gov/sanctions-programs-and-country-information; therefore, it is not necessary to identify Russia 
as a prohibited source in this rule. The website is added to the final 
rule at DFARS 225.7024-2.
    Comment: The respondent expressed concerns regarding the 
fungibility of fuel and the possibility of laundering fuel from a 
prohibited source through an allowable fuel storage system. The 
respondent suggests that the rule require offerors to provide 
documentation or evidence of the origin and quality of the fuel they 
supply, such as bills of lading, certificates of origin, or laboratory 
tests.
    Response: The rule adds a new solicitation provision at DFARS 
252.225-7065, Restriction on Acquisition of Fuel for Overseas 
Contingency Operations, which requires offerors to 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. This rule implements section 843 of the NDAA for FY 2022, which 
does not require offerors to provide documentation to support such 
certifications.
    Comment: The respondent suggested that the rule might leverage the 
logistics information technologies to track and monitor the fuel supply 
chain to identify any anomalies or discrepancies and enforce more 
strictly the applicability of certain laws and regulations, such as the 
Foreign Corrupt Practices Act and the Export Administration 
Regulations, to deter and punish any violations or corruption in the 
fuel acquisition process.
    Response: Section 843 specifies that the contracting officer will 
obtain certain certifications from offerors regarding their compliance 
with certain preaward requirements prior to awarding a contract. As a 
result of this rule, the offeror is required to certify the fuel to be 
provided under the resulting contract is not sourced from nations or 
regions prohibited from selling petroleum to the United States.
    There are several mandatory solicitation provisions and contract 
clauses that require contractors to comply with all applicable laws and 
regulations regarding export-controlled items, e.g., International 
Traffic in Arms Regulations and Export Administration Regulations. This 
responsibility exists independent of, and is not established or limited 
by, this rule.

C. Other Changes

    At DFARS 225.7024-3 and 252.225-7065, editorial changes are made to 
use the term ``prospective contractor'' in place of ``apparent 
successful offeror'' to comply with drafting conventions. The terms 
have the same meaning.

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

    The provision at DFARS 252.225-7065 is prescribed at DFARS 
225.7024-4 for use in solicitations, including solicitations using FAR 
part 12 procedures for the acquisition of commercial products and 
commercial services, that are for the acquisition of fuel for overseas 
contingency operations and are expected to exceed the simplified 
acquisition threshold. Consistent with the analysis that DoD provided 
in the proposed rule with regard to the application of the requirements 
of section 843 of the

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NDAA for FY 2022, DoD has made the determination to apply the statute, 
as implemented in the provision at DFARS 252.225-7065, to contracts for 
the acquisition of commercial products including COTS items and to the 
acquisition of commercial services, as defined at Federal Acquisition 
Regulation 2.101.

IV. Expected Impact of the Rule

    As a result of this final rule, offerors responding to a 
solicitation for fuel, that is for an overseas contingency operation 
and that is expected to exceed the SAT, are now required 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 prospective contractor may be requested to provide 
records to verify such compliance upon contracting officer request.
    This final rule also imposes new requirements on 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.

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 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 rule is to implement section 843 
of the NDAA for FY 2022.
    There were no significant issues raised by the public in response 
to the initial regulatory flexibility analysis.
    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 final rule will impact any small entities.
    The rule does not impose any new reporting, recordkeeping, or other 
compliance requirements for small entities.
    There are no known alternatives that would accomplish the stated 
objectives of the applicable statute. The rule is not expected to have 
a significant economic impact on small entities.

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 212, 215, 225, and 252

    Government procurement.

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

    Therefore, the Defense Acquisition Regulations System amends 48 CFR 
parts 212, 215, 225, and 252 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 225.7024 for the acquisition of fuel for 
overseas contingency operations.

0
3. Amend section 212.301 by adding paragraph (f)(x)(PP) to read as 
follows:


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

* * * * *
    (f) * * *
    (x) * * *
    (PP) Use the provision at 252.225-7065, Restriction on Acquisition 
of Fuel for Overseas Contingency Operations, as prescribed in 225.7024-
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 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

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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.

PART 225--FOREIGN ACQUISITION

0
5. Add sections 225.7024, 225.7024-1, 225.7024-2, 225.7024-3, and 
225.7024-4 to read as follows:
* * * * *
Sec.
225.7024 Restriction on acquisition of fuel for overseas contingency 
operations.
225.7024-1 Scope.
225.7024-2 Prohibition.
225.7024-3 Procedures.
225.7024-4 Solicitation provision.
* * * * *


225.7024  Restriction on acquisition of fuel for overseas contingency 
operations.


225.7024-1  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.


225.7024-2  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 and the 
Office of Foreign Assets Control website at https://ofac.treasury.gov/sanctions-programs-and-country-information for prohibited sources.


225.7024-3  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 prospective contractor 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 parts 120 
through 130 (see PGI 225.7901-2).
    (iii) Export Administration Regulations at 15 CFR parts 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 252.225-7065, 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.


225.7024-4  Solicitation provision.

    Use the provision at 252.225-7065, 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 252.225-7065 to read as follows:


252.225-7065  Restriction on Acquisition of Fuel for Overseas 
Contingency Operations.

    As prescribed in 225.7024-4, use the following provision:

Restriction on Acquisition of Fuel for Overseas Contingency Operations 
(Oct 2024)

    (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 and the Office of Foreign Assets Control website at 
https://ofac.treasury.gov/sanctions-programs-and-country-information 
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 prospective 
Contractor 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 
parts 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 parts 
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. 2024-21093 Filed 9-25-24; 8:45 am]
BILLING CODE 6001-FR-P