[Federal Register Volume 66, Number 153 (Wednesday, August 8, 2001)]
[Notices]
[Pages 41561-41562]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-19915]
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DEPARTMENT OF DEFENSE
Proposed Buy American Act Exemption for Commercial U.S.-Made End
Products
AGENCY: Department of Defense (DoD).
ACTION: Request for public comments.
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SUMMARY: The Office of the Under Secretary of Defense (Acquisition,
Technology, and Logistics) is seeking information that will assist it
in evaluating a proposed public interest exception to the Buy American
Act (BAA) in procurements subject to the Trade Agreements Act (TAA) for
commercial U.S.-made end products, substantially transformed in the
United States, that do not qualify as domestic end products under the
BAA. A similar exception was issued for U.S.-made information
technology products on May 16, 1997. Interested parties are invited to
submit written comments or recommendations relative to this proposed
public interest exception.
DATES: Comments must be received no later than September 24, 2001.
ADDRESSES: Send all comments to Domenico C. Cipicchio, Deputy Director,
Defense Procurement, Contract
[[Page 41562]]
Policy & Administration, OUSD (AT&L), 3060 Defense Pentagon,
Washington, DC 20301-3060.
FOR FURTHER INFORMATION CONTACT: Susan M. Hildner, Procurement Analyst,
Defense Procurement, Defense Systems Procurement Strategies, OUSD
(AT&L), 3060 Defense Pentagon, Washington, DC 20301-3060, (703) 695-
4258, or e-mail to [email protected].
SUPPLEMENTARY INFORMATION: The BAA requires the Government to purchase
for public use only domestic end products. For a manufactured end
product, this means a product that has been manufactured in the United
States substantially all from articles, materials, or supplies in mind,
produced, or manufactured in the United States. DoD considers a product
to be ``substantially all from articles, materials, or supplies mined,
produced, manufactured in the United States'' if the cost of its
qualifying country components and its components that are mined,
produced, or manufactured in the United States exceeds 50 percent of
the cost of all its components. Under the TAA, the BAA is waived for
eligible products from certain designated countries. The country of
origin for eligible products is the country in which the articles/
components (wherever the origin) have been substantially transformed
into an article of commerce with a name, character, or use distinct
from that of the articles from which it was transformed. Since the TAA
applies only to products of foreign countries, the BAA is not waived
for products substantially transformed in the United States from mostly
foreign components, i.e., U.S.-made end products that do not qualify as
domestic end products. This results in treating such U.S.-made end
products less favorably than designated country end products, which
might encourage companies to manufacture products or locate
manufacturing facilities in a designated foreign country rather than in
the United States. Because of the different rules of origin, U.S.-made
end products that do not qualify as domestic end products are at a
competitive disadvantage against designated foreign countries when
competing for DoD procurements (because of the application of the 50
percent evaluation factor to U.S.-made end products that do not qualify
as domestic end products). Additionally, the different rules of origin
result in a disproportionately burdensome record-keeping requirement on
firms offering both domestic and U.S.-made end products. Because of the
component content requirement of the BAA, vendors must determine,
control, and track the source of components. In today's global economy,
this has become an extremely difficult, if not impossible, task and
create a disincentive for commercial companies to sell to DoD. On the
other hand, this burden does not apply to vendors from designated
countries, because the TAA substantial transformation rule of origin
does not require tracking the origin of components. This is especially
true for commercial items. Given the impact of the different rules of
origin, it seems appropriate to determine that application of the BAA
to commercial U.S.-made end products is inconsistent with the public
interest in procurements subject to the TAA. The proposed exception
will eliminate the burdensome record-keeping requirements for U.S.
companies, allow DoD to procure U.S.-made commercial items if they are
lower in cost, allow DoD access to state-of-the-art commercial
technology, and reduce the incentive to move end product manufacturing
facilities to a designated foreign country.
Michele P. Peterson,
Executive Editor, Defense Acquisition Regulations Council.
[FR Doc. 01-19915 Filed 8-7-01; 8:45 am]
BILLING CODE 5000-04-M