[Federal Register Volume 66, Number 176 (Tuesday, September 11, 2001)]
[Proposed Rules]
[Pages 47155-47158]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-22429]
[[Page 47155]]
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DEPARTMENT OF DEFENSE
48 CFR Parts 225 and 252
[DFARS Case 2000-D020]
Defense Federal Acquisition Regulation Supplement; Balance of
Payments Program
AGENCY: Department of Defense (DoD).
ACTION: Proposed rule with request for comments.
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SUMMARY: DoD is proposing to amend the Defense Federal Acquisition
Regulation Supplement (DFARS) to add policy pertaining to the Balance
of Payments Program. The DFARS policy would replace Federal Acquisition
Regulation (FAR) policy on this subject that has been proposed for
elimination.
DATES: Comments on the proposed rule should be submitted to the address
shown below on or before November 13, 2001, to be considered in the
formation of the final rule.
ADDRESSES: Respondents may submit comments directly on the World Wide
Web at http://emissary.acq.osd.mil/dar/dfars.nsf/pubcom. As an
alternative, respondents may e-mail comments to: [email protected].
Please cite DFARS Case 2000-D020 in the subject line of e-mail
comments.
Respondents that cannot submit comments using either of the above
methods may submit comments to: Defense Acquisition Regulations
Council, Attn: Ms. Amy Williams, OUSD (AT&L) DP(DAR), IMD 3C132, 3062
Defense Pentagon, Washington, DC 20301-3062; facsimile (703) 602-0350.
Please cite DFARS Case 2000-D020.
At the end of the comment period, interested parties may view
public comments on the World Wide Web at http://emissary.acq.osd.mil/dar/dfars.nsf.
FOR FURTHER INFORMATION CONTACT: Ms. Amy Williams, (703) 602-0288.
SUPPLEMENTARY INFORMATION:
A. Background
The proposed rule published at 65 FR 54936 on September 11, 2000,
requested comments on the removal of all FAR policy pertaining to the
Balance of Payments Program. This program applies to contracts for
supplies to be used, and construction to be performed, outside the
United States. Although the DFARS already contains policy that
implements the Balance of Payments Program for acquisition of supplies
for use outside the United States, DoD presently uses the FAR policy
for construction contracts performed outside the United States. This
DFARs rule proposes to add policy for application of the Balance of
Payments Program to construction contracts that would replace the
existing FAR policy for DoD.
DoD is also considering discontinuation of application of the
Balance of Payments Program to construction contracts. Therefore, in
addition to the request for comments on this proposed rule, DoD invites
comments on the advisability of discontinuing application of the
Balance of Payments Program to DoD construction contracts.
This proposed rule would streamline application of the Balance of
Payments Program to DoD construction contracts by--
(1) Exempting any particular construction material that is at or
below the simplified acquisition threshold;
(2) Authorizing the contracting officer to make pre-solicitation
determinations as to whether a requirement can best be filled by a
foreign end product or construction material; and
(3) Specifically authorizing an assessment, prior to issuance of a
solicitation, as to whether an exemption to the Balance of Payments
Program applies on the basis of the entire project.
In addition, this proposed rule updates the clause at DFARS
252.225-7005, Identification of Expenditures in the United States, to
implement the applicable requirements of the DoD Financial Management
Regulations, Vol. 6A, Chapter 13, International Balance of Payments
Reporting and Estimating.
This rule was not subject to Office of Management and Budget review
under Executive Order 12866, dated September 30, 1993.
B. Regulatory Flexibility Act
The proposed rule is not expected 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 the
Balance of Payments Program requirements in this rule are transferred
from existing FAR requirements, with streamlining changes that are not
expected to have a significant effect outside the Government.
Therefore, DoD has not performed an initial regulatory flexibility
analysis. DoD invites comments from small businesses and other
interested parties. DoD also will consider comments from small entities
concerning the affected DFARS subparts in accordance with 5 U.S.C. 610.
Such comments should be submitted separately and should cite DFARS Case
2000-D020.
C. Paperwork Reduction Act
This rule does not impose any information collection requirements
that require the approval of the Office of Management and Budget (OMB)
under 44 U.S.C. 3501, et seq. The information collection requirements
associated with the clause at 252.225-7005, Identification of
Expenditures in the United States, are already approved under OMB
Clearance Number 0704-0229 for use through March 31, 2004.
List of Subjects in 48 CFR Parts 225 and 252
Government procurement.
Michele P. Peterson,
Executive Editor, Defense Acquisition Regulations Council.
Therefore, DoD proposes to amend 48 CFR Parts 225 and 252 as
follows:
1. The authority citation for 48 CFR Parts 225 and 252 continues to
read as follows:
Authority: 41 U.S.C. 421 and 48 CFR Chapter 1.
PART 225--FOREIGN ACQUISITION
2. Section 225.003 is amended by revising paragraph (3) to read as
follows:
225.003 Definitions.
* * * * *
(3) ``Domestic concern'' means--
(i) A concern incorporated in the United States (including a
subsidiary that is incorporated in the United States, even if the
parent corporation is a foreign concern); or
(ii) An unincorporated concern having its principal place of
business in the United States.
* * * * *
Subpart 225.3--[Removed]
3. Subpart 225.3 is removed.
225.1101 [Amended]
4. Section 225.1101 is amended by removing the phrase ``--Balance
of Payments Program'' in the following places:
a. In paragraph (1), in the first sentence, the second time it
appears;
b. In paragraph (2) introductory text;
c. In paragraph (12) introductory text the second time it appears;
and
d. In paragraph (13) introductory text, in the first sentence, the
second time it appears.
5. Section 225.1103 is amended by revising paragraph (1) to read as
follows:
225.1103 Other provisions and clauses.
(1) Unless the contracting officer knows that the prospective
contractor is not a domestic concern, use the clause
[[Page 47156]]
at 252.225-7005, Identification of Expenditures in the United States,
in solicitations and contracts that--
(i) Exceed the simplified acquisition threshold; and
(ii) Are for the acquisition of--
(A) Supplies for use outside the United States;
(B) Construction to be performed outside the United States; or
(C) Services to be performed primarily outside the United States.
6. Subpart 225.75 is added to read as follows:
Subpart 225.75--Balance of Payments Program
Sec.
225.7500 Scope of subpart.
225.7501 Policy.
225.7502 Procedures.
225.7503 Contract clauses.
225.7500 Scope of subpart.
This subpart provides policies and procedures implementing the
Balance of Payments Program. It applies to contracts for the
acquisition of--
(a) Supplies for use outside the United States; and
(b) Construction to be performed outside the United States.
225.7501 Policy.
Acquire only domestic end products for use outside the United
States, and use only domestic construction material for construction to
be performed outside the United States, including end products and
construction material for foreign military sales, unless--
(a) Before issuing the solicitation--
(1) The estimated cost of the acquisition or the value of a
particular construction material is at or below the simplified
acquisition threshold;
(2) The end product or particular construction material is--
(i) Listed in FAR 25.104 or 225.104(a)(iii);
(ii) An end product or construction material that, by its nature or
as a practical matter, can best be acquired in the geographic area
concerned, e.g., ice or books; or bulk material, such as sand, gravel,
or other soil material, stone, concrete masonry units, or fired brick;
(iii) A petroleum product;
(iv) A spare part for foreign-manufactured vehicles, equipment,
machinery, or systems, provided the acquisition is restricted to the
original manufacturer or its supplier in accordance with DoD
standardization policy (see DoD Directive 4120.3, Defense
Standardization and Specification Program);
(v) An industrial gas; or
(vi) A brand drug specified by the Defense Medical Materiel Board;
(3) The acquisition of foreign end products or construction
material is required by a treaty or executive agreement between
governments;
(4) The end product is acquired for commissary resale; or
(5) The contracting officer determines that a requirement can best
be filled by a foreign end product or construction material, including
determinations that--
(i) A subsistence product is perishable and delivery from the
United States would significantly impair the quality at the point of
consumption;
(ii) A particular domestic construction material is not available;
(iii) The cost of domestic construction material would exceed the
cost of foreign construction material by more than 50 percent,
calculated on the basis of--
(A) A particular construction material; or
(B) The comparative cost of application of the Balance of Payments
to the total acquisition; or
(iv) Use of a particular domestic construction material is
impracticable.
(b) After receipt of offers--
(1) The evaluated low offer (see subpart 225.5) is an offer of an
end product that--
(i) Is a qualifying country end product;
(ii) Is an eligible product subject to the Trade Agreements Act,
NAFTA, or the Israeli Trade Act;
(iii) For acquisitions subject to the Trade Agreements Act, is an
information technology product in Federal Supply Group 70 or 74 that is
substantially transformed in the United States; or
(iv) Is a nonqualifying country end product, but application of the
Balance of Payments Program evaluation factor would not result in award
on a domestic offer; or
(2) The construction material is designated country construction
material or NAFTA country construction material, and the acquisition is
subject to the Trade Agreements Act or NAFTA respectively; or
(c) At any time during the acquisition process, the head of the
agency determines that it is not in the public interest to apply the
restrictions of the Balance of Payments Program to the end product or
construction material.
225.7502 Procedures.
(a) Solicitation of offers. Identify, in the solicitation, supplies
and construction material known in advance to be exempt from the
Balance of Payments Program.
(b) Evaluation of offers. (1) Supplies. Unless the entire
acquisition is exempt from the Balance of Payments Program, evaluate
offers for supplies that are subject to the Balance of Payments Program
using the evaluation procedures in subpart 225.5. However, treatment of
duty may differ when delivery is overseas.
(i) Duty may not be applicable to nonqualifying country offers.
(ii) The U.S. Government cannot guarantee the exemption of duty for
components or end products imported into foreign countries.
(iii) Foreign governments may impose duties. Evaluate offers
including such duties as offered.
(2) Construction. Because the contracting officer evaluates the
estimated cost of foreign and domestic construction material in
accordance with 225.7501(a)(5)(iii) before issuing the solicitation, no
special procedures are required for evaluation of construction offers.
(c) Postaward. For construction contracts, the procedures at FAR
25.206, for noncompliance under the Buy American Act, also apply to
noncompliance under the Balance of Payments Program.
225.7503 Contract clauses.
Unless the entire acquisition is exempt from the Balance of
Payments Program under 225.7501(a)(3), 225.7501(a)(5)(iii), or
225.7501(c)--
(a) Use the clause at 252.225-70XX, Balance of Payments Program--
Construction Material, in solicitations and contracts for construction
to be performed outside the United States with a value greater than the
simplified acquisition threshold but less than $6,806,000.
(b) Use the clause at 252.225-70YY, Balance of Payments Program--
Construction Material Under Trade Agreements, in solicitations and
contracts for construction to be performed outside the United States
with a value of $6,806,000 or more. For acquisitions with a value of
$6,806,000 or more, but less than $7,068,419, use the clause with its
Alternate I.
PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
7. Section 252.225-7005 is revised to read as follows:
252.225-7005 Identification of Expenditures in the United States.
As prescribed in 225.1103(1), use the following clause:
[[Page 47157]]
Identification of Expenditures in the United States (XXX 2001)
(a) This clause applies only if the Contractor is--
(1) A concern incorporated in the United States (including a
subsidiary that is incorporated in the United States, even if the
parent corporation is not incorporated in the United States); or
(2) An unincorporated concern having its principal place of
business in the United States.
(b) On each invoice, voucher, or other request for payment under
this contract, the Contractor shall identify that part of the
requested payment that represents estimated expenditures in the
United States.
(1) May be expressed either as dollar amounts or as percentages
of the total amount of the request for payment;
(2) Should be based on reasonable estimates; and
(3) Shall state the full amount of the payment requested,
subdivided into the following categories:
(i) U.S. products-expenditures for material and equipment
manufactured or produced in the United States, including end
products, components, or construction material, but excluding
transportation;
(ii) U.S. services-expenditures for services performed in the
United States, including all charges for overhead, other indirect
costs, and profit for construction or service contracts;
(iii) Transportation on U.S. carriers-expenditures for
transportation furnished by U.S. flag, ocean, surface, and air
carriers; and
(iv) Expenditures not identified under paragraphs (b)(3)(i)
through (iii) of this clause.
(c) Nothing in this clause requires the establishment or
maintenance of detailed accounting records or gives the U.S.
Government any right to audit the Contractor's books or records.
(End of clause)
8. Sections 252.225-70XX and 252.225-70YY are added to read as
follows:
252.225-70XX Balance of Payments Program--Construction Material.
As prescribed in 225.7503(a), use the following clause:
Balance of Payments Program--Construction Material (XXX 2001)
(a) Definitions. As used in this clause--
``Component'' means any article, material, or supply
incorporated directly into construction material.
``Construction material'' means an article, material, or supply
brought to the construction site by the Contractor or a
subcontractor for incorporation into the building or work. The term
also includes an item brought to the site preassembled from
articles, materials, or supplies. However, emergency life safety
systems, such as emergency lighting, fire alarm, and audio
evacuation systems, that are discrete systems incorporated into a
public building or work and that are produced as complete systems,
are evaluated as a single and distinct construction material
regardless of when or how the individual parts or components of
those systems are delivered to the construction site. Materials
purchased directly by the Government are supplies, not construction
material.
``Cost of components'' means--
(1) For components purchased by the Contractor, the acquisition
cost, including transportation costs to the place of incorporation
into the end product (whether or not such costs are paid to a
domestic firm), and any applicable duty (whether or not a duty-free
entry certificate is issued); or
(2) For components manufactured by the Contractor, all costs
associated with the manufactured of the component, including
transportation costs as described in paragraph (1) of this
definition, plus allocable overhead costs, but excluding profit.
Cost of components does not include any costs associated with the
manufacture of the end product.
``Domestic construction material'' means--
(1) An unmanufactured construction material mined or produced in
the United States; or
(2) A construction material manufactured in the United States,
if the cost of its components mined, produced, or manufactured in
the United States exceeds 50 percent of the cost of all its
components. Components of foreign origin of the same class or kind
for which nonavailability determinations have been made are treated
as domestic.
``United States'' means the 50 States and the District of
Columbia, U.S. territories and possessions, Puerto Rico, the
Northern Mariana Islands, and any other place subject to U.S.
jurisdiction, but does not include leased bases.
(b) Domestic preference. This clause implements the Balance of
Payments Program by providing a preference for domestic construction
material. The Contractor shall use only domestic construction
material in performing this contract, except for--
(1) Construction material valued at or below the simplified
acquisition threshold in part 2 of the Federal Acquisition
Regulation; or
(2) The construction material or components listed by the
Government as follows:
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[Contracting Officer to list applicable excepted materials or
indicate ``none'']
(End of clause)
252.225-70YY Balance of Payments Program--Construction Materials Under
Trade Agreements.
As prescribed in 225.7503(b), use the following clause:
Balance of Payments Program--Construction Material Under Trade
Agreements (XXX 2001)
(a) Definitions. As used in this clause--
``Component'' means any article, material, or supply
incorporated directly into construction material.
``Construction material'' means an article, material, or supply
brought to the construction site by the Contractor or a
subcontractor for incorporation into the building or work. The term
also includes an item brought to the site preassembled from
articles, materials, or supplies. However, emergency life safety
systems, such as emergency lighting, fire alarm, and audio
evacuation systems, that are discrete systems incorporated into a
public building or work and that are produced as complete systems,
are evaluated as a single and distinct construction material
regardless of when or how the individual parts or components of
those systems are delivered to the construction site. Materials
purchased directly by the Government are supplies, not construction
material.
``Cost of components'' means--
(1) For components purchased by the Contractor, the acquisition
cost, including transportation costs to the place of incorporation
into the end product (whether or not such costs are paid to a
domestic firm), and any applicable duty (whether or not a duty-free
entry certificate is issued); or
(2) For components manufactured by the Contractor, all costs
associated with the manufactured of the component, including
transportation costs as described in paragraph (1) of this
definition, plus allocable overhead costs, but excluding profit.
Cost of components does not include any costs associated with the
manufacture of the end product.
``Designated country'' means any of the following countries:
Aruba
Austria
Bangladesh
Belgium
Benin
Bhutan
Botswana
Burkina Faso
Burundi
Canada
Cape Verde
Central African Republic
Chad
Comoros
Denmark
Djibouti
Equatorial Guinea
Finland
France
Gambia
Germany
Greece
Guinea
Guinea-Bissau
Haiti
Hong Kong
Iceland
Ireland
Israel
Italy
Japan
Kiribati
Korea, Republic of
Lesotho
Liechtenstein
Luxembourg
Malawi
Maldives
[[Page 47158]]
Mali
Mozambique
Nepal
Netherlands
Niger
Norway
Portugal
Rwanda
Sao Tome and Principe
Sierra Leone
Singapore
Somalia
Spain
Sweden
Switzerland
Tanzania U.R.
Togo
Tuvalu
Uganda
United Kingdom
Vanuatu
Western Samoa
Yemen
``Designated country construction material'' means a
construction material that--
(1) Is wholly the growth, product, or manufacture of a
designated country; or
(2) In the case of a construction material that consists in
whole or in part of materials from another country, has been
substantially transformed in a designated country into a new and
different construction material distinct from the material from
which it was transformed.
``Domestic construction material'' means--
(1) An unmanufactured construction material mined or produced in
the United States; or
(2) A construction material manufactured in the United States,
if the cost of its components mined, produced, or manufactured in
the United States exceeds 50 percent of the cost of all its
components. Components of foreign origin of the same class or kind
for which nonavailability determinations have been made are treated
as domestic.
``North American Free Trade Agreement (NAFTA) country'' means
Canada or Mexico.
``North American Free Trade Agreement (NAFTA) country
construction material'' means a construction material that--
(1) Is wholly the growth, product, or manufacture of a NAFTA
country; or
(2) In the case of a construction material that consists in
whole or in part of materials from another country, has been
substantially transformed in a NAFTA country into a new and
different construction material distinct from the material distinct
from which it was transformed.
``United States'' means the 50 States and the District of
Columbia, U.S. territories and possessions, Puerto Rico, the
Northern Mariana Islands, and any other place subject to U.S.
jurisdiction, but does not include leased bases.
(b) This clause implements the Balance of Payments Program by
providing a preference for domestic construction material. In
addition, the Contracting Officer has determined that the Trade
Agreements Act and the North American Free Trade Agreement (NAFTA)
apply to this acquisition. Therefore, the Buy American Act and
Balance of Payments Program restrictions are waived for designated
country and NAFTA country construction materials.
(c) The Contractor shall use only domestic, designated country,
or NAFTA country construction material in performing this contract,
except for--
(1) Construction material valued at or below the simplified
acquisition threshold in part 2 of the Federal Acquisition
Regulation; or
(2) The construction materials or components listed by the
Government as follows:
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[Contracting Officer to list applicable excepted materials or
indicate ``none''.]
Alternate I (XXX 2001)
As prescribed in 225.7503(b), delete the definitions of ``North
American Free Trade Agreement country'' and ``North American Free
Trade Agreement country construction material'' from the definitions
in paragraph (a) of the basic clause and substitute the following
paragraphs (b) and (c) for paragraphs (b) and (c) of the basic
clause:
(b) This clause implements the Balance of Payments Program by
providing a preference for domestic construction material. In
addition, the Contracting Officer has determined that the Trade
Agreements Act applies to this acquisition. Therefore, the Balance
of Payments Program restrictions are waived for designated country
construction material.
(c) The Contractor shall use only domestic or designated country
construction material in performing this contract, except for)--
(1) Construction material valued at or below the simplified
acquisition threshold in part 2 of the Federal Acquisition
Regulation; or
(2) The construction materials or components listed by the
Government as follows:
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[Contracting Officer to list applicable excepted materials or
indicate ``none''.]
[FR Doc. 01-22429 Filed 9-10-01; 8:45 am]
BILLING CODE 5000-04-M