----------------------- -------------------------------------------------------- --------------------
                          Issue Date (revision): February 1998 (rev. 1)            

  [Section]{.underline}   [Topics in the Section]{.underline}                      [Page]{.underline}

  **A**                   **Foreign Acquisition**                                  

  1                       Buy American Act\--Supplies                              1

  2                       Buy American Act\--Construction Materials                4

  3                       Buy American Act\--Steel and Manufactured Products       5

  4                       Balance of Payments Program                              6

  5                       Payment in Local Foreign Currency                        8

  6                       Trade Agreements                                         9

  7                       Restrictions on Certain Foreign Purchases                11

  8                       Trade Sanctions                                          11

  9                       Customs and Duties                                       13

  10                      International Agreements and Coordination                13

  11                      Examination of Records by Comptroller General            14

  12                      Inconsistency Between English Version and Translation of 14
                          Contract                                                 

  13                      Definitions                                              15

  **B**                   **Clauses**                                              19

  **C**                   **Forms**                                                19
  ----------------------- -------------------------------------------------------- --------------------

A. FOREIGN ACQUISITION

1\. Buy American Act - supplies

a\. FAA acquisition of supplies, services involving supplies, and
construction, alteration or repair in the U.S. are subject to the
requirements of the Buy American Act (41 U.S.C. 10) and Executive Order
10582, dated December 17, 1954. The Buy American Act requires use of
only domestic end products.

b\. *Exemptions.* Products may be considered to be excepted from the
requirements of the Buy American Act when the Contracting Officer (CO)
determines that articles, materials, and supplies are:

\(1\) For use outside the United States;

\(2\) Unreasonable in terms of cost, in accordance with paragraph d.
below;

\(3\) Inconsistent with the public interest to obtain domestic products;
or

\(4\) Not mined, produced, or manufactured in the United States (U.S.)
in sufficient and reasonably available commercial quantities, of a
satisfactory quality (when a competitive acquisition results in no
offers of domestic end products, the end products can be considered
unavailable in the U.S.).

c\. *Documentation*. The CO should briefly document the file to
substantiate an exemption to the Buy American Act.

d\. *Evaluating Offers.*

\(1\) The CO may determine the offered price of a domestic product to be
unreasonable when the lowest acceptable domestic offer exceeds the
lowest acceptable foreign offer, inclusive of duty, by:

\(a\) More than 6 percent, if the domestic offer is from a large
business; or

\(b\) More than 12 percent, if the domestic offer is from a small
business concern.

\(2\) Evaluation specified in subparagraph (a) and (b) above should be
applied on an item by item basis to any group of items on which award
may be made, as provided in the SIR.

\(3\) If an award of more than \$250,000 would be made to a domestic
concern if the 12 percent factor were applied, but not if the 6 percent
factor were applied, the contracting officer should decide whether award
to the domestic concern would involve unreasonable cost.

\(4\) Under certain conditions (see discussion in "Trade Agreements"
section), the following are exempted from the Buy American Act
restrictions and may be treated as domestic end products for evaluation
purposes:

\(a\) Canadian and Mexican end products, pursuant to the North American
Free Trade Agreement (NAFTA) Implementation Act; and

\(b\) Civil aircraft and related supplies of countries that are parties
to the Agreement on Civil Aircraft.

e\. *Excepted Articles, Materials, and Supplies.* The following lists
articles, materials or supplies that one or more agencies have
determined are not mined, produced, or manufactured in the U.S in
sufficient and reasonably available commercial quantities of a
satisfactory quality. These items may be treated as domestic products
for purposes of the Buy American Act requirements.

+-----------------------+-----------------------+-----------------------+
| Acetylene, black.     | Emetine, bulk.        | > Pine needle oil.    |
|                       |                       | >                     |
| Agar, bulk.           | Ergot, crude.         | > Platinum and        |
|                       |                       | > related group       |
| Anise.                | Erythrityl            | > metals, refined, as |
|                       | tetranitrate.         | > sponge, powder,     |
| Antimony, as metal or |                       | > ingots, or cast     |
| oxide.                | Fair linen, altar.    | > bars.               |
|                       |                       | >                     |
| Asbestos, amosite,    | Fibers of the         | > Pyrethrum flowers.  |
| chrysotile, and       | following types:      | >                     |
| crocidolite.          | abaca, abace, agave,  | > Quartz crystals.    |
|                       | coir, flax, jute,     | >                     |
| Bananas.              | jute burlaps,         | > Quebracho.          |
|                       | palmyra, and sisal.   | >                     |
| Bauxite.              |                       | > Quinidine.          |
|                       | Goat and kidskins.    | >                     |
| Beef, corned, canned. |                       | > Quinine.            |
|                       | Graphite, natural,    | >                     |
| Beef extract.         | crystalline, crucible | > Rabbit fur felt.    |
|                       | grade.                | >                     |
| Bephenium             |                       | > Radium salts,       |
| hydroxynapthoate.     | Hand file sets (Swiss | > source and special  |
|                       | pattern).             | > nuclear materials.  |
| Bismuth.              |                       | >                     |
|                       | Handsewing needles.   | > Rosettes.           |
| Books, trade, text    |                       | >                     |
| technical, or         | Hemp yarn.            | > Rubber, crude and   |
| scientific;           |                       | > latex.              |
| newspapers;           | Hog bristles for      | >                     |
| pamphlets; magazines; | brushes.              | > Rutile.             |
| periodicals; printed  |                       | >                     |
| briefs and films; not | Hyoscine, bulk.       | > Santonin, crude.    |
| printed in the United |                       | >                     |
| States and for which  | Ipecac, root.         | > Secretin.           |
| domestic editions are |                       | >                     |
| not available.        | Iodine, crude.        | > Shellac.            |
|                       |                       | >                     |
| Brazil nuts,          | Kaurigum.             | > Silk, raw and       |
| unroasted.            |                       | > unmanufactured.     |
|                       | Lac.                  | >                     |
| Cadmium, ores and     |                       | > Spare and           |
| flue dust.            | Leather, sheepskin,   | > replacement parts   |
|                       | hair type.            | > for equipment of    |
| Calcium cyanamide.    |                       | > foreign             |
|                       | Lavender oil.         | > manufacture, and    |
| Capers.               |                       | > for which domestic  |
|                       | Manganese.            | > parts are not       |
| Cashew nuts.          |                       | > available.          |
|                       | Menthol, natural      | >                     |
| Castor beans and      | bulk.                 | > Spices and herbs,   |
| castor oil.           |                       | > in bulk.            |
|                       | Mica.                 | >                     |
| Chalk, English.       |                       | > Sugars, raw.        |
|                       | Microprocessor chips  | >                     |
| Chestnuts.            | (brought onto a       | > Swords and          |
|                       | Government            | > scabbards.          |
| Chicle.               | construction site as  | >                     |
|                       | separate units for    | > Talc, block,        |
| Chrome ore or         | incorporation into    | > steatite.           |
| chromite.             | building systems      | >                     |
|                       | during construction   | > Tantalum.           |
| Cinchona bark.        | or repair and         | >                     |
|                       | alteration of real    | > Tapioca flour and   |
| Cobalt, in cathodes,  | property).            | > cassava.            |
| rondelles, or other   |                       | >                     |
| primary ore and metal | Nickel, primary, in   | > Tartar, crude;      |
| forms.                | ingots, pigs, shots,  | > tartaric acid and   |
|                       | cathodes, or similar  | > cream of tartar in  |
| Cocoa beans.          | forms; nickel oxide   | > bulk.               |
|                       | and nickel salts.     | >                     |
| Coconut and coconut   | Nitroguanidine (also  | > Tea in bulk.        |
| meat, unsweetened, in | known as picrite).    | >                     |
| shredded, desiccated, |                       | > Thread, metallic    |
| or similarly prepared | Nux vomica, crude.    | > (gold).             |
| form.                 |                       | >                     |
|                       | Oiticica oil.         | > Thyme oil.          |
| Coffee, raw or green  |                       | >                     |
| bean.                 | Olive oil.            | > Tin in bars,        |
|                       |                       | > blocks, and pigs.   |
| Colchicine alkaloid,  | Olives (green),       | >                     |
| raw.                  | pitted or unpitted,   | > Triprolidine        |
|                       | or stuffed, in bulk.  | > hydrochloride.      |
| Copra.                |                       | >                     |
|                       | Opium, crude.         | > Tungsten.           |
| Cork, wood or bark    |                       | >                     |
| and waste.            | Oranges, mandarin,    | > Vanilla beans.      |
|                       | canned.               | >                     |
| Cover glass,          |                       | > Venom, cobra.       |
| microscope slide.     | Petroleum, crude oil, | >                     |
|                       | unfinished oils, and  | > Wax, carnauba.      |
| Crane rail (85-pound  | finished products     | >                     |
| per foot).            | (see definitions for  | > Wire glass.         |
|                       | further information   | >                     |
| Cryolite, natural.    | on petroleum terms).  | > Woods; logs,        |
|                       |                       | > veneer, and lumber  |
| Dammar gum.           |                       | > of the following    |
|                       |                       | > species: Alaskan    |
| Diamonds, industrial, |                       | > yellow cedar,       |
| stones and abrasives. |                       | > angelique, balsa,   |
|                       |                       | > ekki, greenheart,   |
|                       |                       | > lignum vitae,       |
|                       |                       | > mahogany, and teak. |
|                       |                       | >                     |
|                       |                       | > Yam, 50 Denier      |
|                       |                       | > rayon.              |
+-----------------------+-----------------------+-----------------------+

**2. BUY AMERICAN ACT - CONSTRUCTION MATERIALS**

a\. The Buy American Act requires that only domestic materials may be
used in construction, alteration, or repair in the U.S.

b\. *Exceptions*.

\(1\) The Buy American Act restrictions do not apply when the CO
determines that:

\(a\) It is unreasonable in terms of cost; i.e., the cost of domestic
construction material exceeds the cost of foreign construction material
by more than 6 percent, unless the agency head determines a higher
percentage to be appropriate (see Executive Order 10582);

\(b\) It is impracticable to use a particular domestic construction
material; or

\(c\) It is not mined, produced, or manufactured in the U.S. in
sufficient and reasonably available commercial quantities, of a
satisfactory quality.

\(d\) The agency head determines that application of the restrictions of
the Buy American Act to a particular construction material would be
inconsistent with the public interest. Under this authority, the FAA may
have agreements with foreign governments that provide blanket exceptions
to the Buy American Act (e.g., North American Free Trade Agreement
(NAFTA)).

\(2\) For construction contracts with an estimated acquisition value of
\$6,500,000, Canadian and Mexican construction materials may be treated
as domestic for purposes of Buy American Act restrictions, pursuant to
the NAFTA Implementation Act.

c\. *Documentation*. The CO should briefly document the file as to the
basis for exception taken.

d\. *Excepted Material*. When the CO determines for any of the reasons
in paragraph b. above that certain foreign construction materials may be
used, the excepted materials should be listed in the contract.
Documentation justifying the exception will be available for public
inspection.

e\. Offerors may submit alternate offers based on use of equivalent
domestic construction material to avoid possible rejection of the entire
offer, if the Government determines that an exception permitting use of
a particular foreign construction material does not apply.

f\. *Noncompliance*

\(1\) The contracting officer is responsible for conducting Buy American
Act investigations when available information indicates such action is
warranted.

\(2\) Unless fraud is suspected, the contracting officer shall notify
the contractor of the apparent unauthorized use of foreign construction
material and request a reply, to include proposed corrective action.

\(3\) If an investigation reveals that a contractor or subcontractor has
used foreign construction material without authorization, the
contracting officer shall take appropriate action, including one or more
of the following:

\(a\) Process a determination with regard to inapplicability of the Buy
American Act

\(b\) Consider requiring the removal and replacement of the unauthorized
foreign construction material.

\(c\) If removal and replacement of foreign construction material
incorporated in a building or work would be impracticable, cause undue
delay, or otherwise be detrimental to the interests of the Government,
the contracting officer may determine in writing that the foreign
construction material need not be removed and replaced. Such a
determination to retain foreign construction material does not
constitute a determination that an exception to the Buy American Act
applies, and this should be so stated in the determination. Further,
such a determination to retain foreign construction material does not
affect the Government\'s right to suspend and/or debar a contractor,
subcontractor, or supplier for violation of the Buy American Act, or to
exercise other contractual rights and remedies, such as reducing the
contract price or terminating the contract for default.

\(d\) If the noncompliance is sufficiently serious, consider exercising
appropriate contractual remedies, such as terminating the contract for
default. Also consider preparing and forwarding a report for suspension
and/or debarment, including findings and supporting evidence. If the
noncompliance appears to be fraudulent, consider referring the matter to
other appropriate agency officials, such as the officer responsible for
criminal investigation and prosecution.

**3. BUY AMERICAN - STEEL AND MANUFACTURED PRODUCTS**

a\. This section implements the Buy American provisions of the Aviation
Safety and Capacity Expansion Act of 1990 (Subtitle B of Title IX of
Pub. L. 101-508, the Omnibus Budget Reconciliation Act of 1990), and
Pub. L. 102-581, The Airport and Airway Safety, Capacity, Noise
Improvement, and Intermodal Transportation Act of 1992, Title I, Sec.
103 and 104, as these apply to the obligation of funds made available in
appropriations after November 5, 1990.

b\. Pursuant to Pub. L. 101-508, and notwithstanding any other provision
of law, the CO will not obligate any funds authorized to be appropriated
for any project unless steel and manufactured products used in such
projects are produced in the United States. Projects funded by the
Research, Engineering and Development appropriation are excluded from
this provision.

c\. The CO may waive paragraph b. above when finding, in coordination
with legal counsel and the integrated product team (IPT), that:

\(1\) Application would be inconsistent with the public interest;

\(2\) Such materials and products are not produced in the United States
in sufficient and reasonable available quantities and of a satisfactory
quality;

\(3\) In the case of the acquisition of facilities and equipment under
the Airport and Airway Improvement Act of 1982:

\(a\) The cost of components and subcomponents which are produced in the
United States is more than 60 percent of the cost of all components of
the facility or equipment used in the project; and

\(b\) Final assembly of the facility or equipment described in this
paragraph has taken place in the United States; or

\(4\) Inclusion of domestic material will increase the cost of the
overall project contract by more than 25 percent.

d\. There is no restriction against a company offering foreign steel or
manufactured products in its proposal. The FAA, however, may not award
to that company unless it is pursuant to one of the exceptions listed
under paragraph c. above.

e\. For the purposes of this section, in calculating components costs,
labor costs involved in final assembly will not be included in the
calculation.

f\. Any acquisition of steel or manufactured products of the FAA not
subject to Pub. L. 101-508 should be treated as covered under the Buy
American Act (unless a Buy American Act exception applies). In the event
of a conflict, the "Buy American-Steel and Manufactured Products" clause
will take precedence over other Buy American Act-related clauses.

4\. Balance of Payments program

a\. The Balance of Payments Program is applicable to contracts for
supplies, services, or construction for use *outside* the United States,
and provides for the use of excess or near-excess foreign currency. The
Balance of Payments Program restrictions have been waived under certain
circumstances under the North American Free Trade Agreement **(**NAFTA)
Implementation Act.

b\. *Acquiring Foreign End Products.* The FAA may acquire foreign end
products or services for use outside the U.S. if any of the following
conditions is met:

\(1\) The CO determines that a requirement can only be filled by a
foreign end product or service, and that it is not feasible to forgo
filling it or to provide a domestic substitute;

\(2\) The acquisition is for perishable subsistence items, ice, books,
utilities, communications, and other materials or services that, by
their nature or as a practical matter, can only be acquired or performed
in the country concerned and a U.S. Government capability does not
exist;

\(3\) The acquisition of foreign end products or services is required by
a treaty or executive agreement between governments;

\(4\) Petroleum supplies and their by-products are required;

\(5\) The end products or services are paid for with excess or
near-excess foreign currencies;

\(6\) The end products or services are mined, produced, or manufactured
in Panama and are required by and for the use of United States Forces in
Panama; or

c\. *Documentation.* The CO should briefly document the file if an
exception to the Balance of Payments Program is applied.

d\. *Construction Material*. Contracts will require use of domestic
construction materials for construction, repair, or maintenance of real
property outside the United States, except when the cost of these
materials (including transportation and handling costs) exceeds the cost
of foreign construction materials by more than 50 percent. A
differential greater than 50 percent may be used when specifically
authorized by the CO.

e\. *Procedures.*

\(1\) Screening Information Requests (SIRs) should specifically identify
articles, materials, supplies, and services that are excepted from the
Balance of Payments Program. When quotations are obtained orally,
vendors should be informed that only domestic end products or services
will be acceptable, except for those items that have been excepted or
when the price for the foreign end products or services meets the
evaluation criteria.

\(2\) For purposes of evaluation, each foreign offer will be adjusted by
increasing it 50 percent. If this adjustment results in a tie between a
foreign offer as evaluated and a domestic offer, the domestic offer
should be considered the successful offer. When this procedure results
in the acquisition of foreign end products or services, the CO may
conclude that acquisition of domestic end products or services is
unreasonable in cost or inconsistent with the public interest.

f\. *Foreign Excess Currency Program*

\(1\) DOT/M-60 distributes Office of Management and Budget (OMB)
bulletins on excess currencies held by the U.S. for certain countries.
The Department of the Treasury, Office of the Assistant Secretary for
International Affairs, Office of Development Policy also provides other
information that may be relevant.

\(2\) The CO may use excess and near-excess foreign currencies whenever
feasible in payment of contracts over \$1 million performed wholly or
partly in any of the countries listed in the bulletins referenced in
paragraph (1) above. Therefore, the CO should ascertain if the countries
where work will be performed are listed for excess currency because the
CO may make award, in some cases, to an offeror willing to accept
payment, in whole or part, in excess or near-excess foreign currency,
even though the offer, when compared to offers in United States dollars,
is not the lowest received. Price differentials may be funded from
excess or near-excess foreign currencies available without charge to FAA
appropriations, subject to OMB Circular No. A-20, May 21, 1966.

\(3\) Before issuing SIRs for work to be performed wholly or partly in
countries listed in the bulletins referenced in paragraph (1) above, the
CO should obtain a determination from the FAA budget officials as to the
feasibility of using excess or near-excess foreign currency.

\(4\) The CO should address the probability of using excess or
near-excess foreign currency in the SIRs as follows:

\(a\) Require that offers be stated in U.S. dollars;

\(b\) Request that offers also be stated, in whole or in part, in excess
or near-excess foreign currency; and

\(c\) Reserve the right to make the award to the responsive offeror (i)
that is willing to accept payment, in whole or in part, in excess or
near-excess foreign currency, and (ii) whose offer is most advantageous
to the FAA, even though the total price may be higher than offers in
U.S. dollars.

5\. Payment in Local Foreign Currency

a\. The FAA will pay local foreign contractors in local currency when
FAA contracts are entered into and performed outside the U.S. unless an
international agreement provides for payment in U.S. dollars or the
contracting officer determines the use of local currency to be
inequitable or inappropriate.

b\. When the local currency increases in value in relation to the
dollar, a violation of the Anti-Deficiency Act (31 U.S.C. 665) could
occur. To avoid this possibility, the FAA should ensure the availability
of adequate dollar appropriations to purchase local currency needed to
make payments against the contract.

**6. TRADE AGREEMENTS**

a\. FAA acquisitions are subject to the following trade-related acts:

\(1\) The NAFTA Implementation Act (Pub. L. 103-182, 107 Stat. 2057)
which involves offers of Canadian or Mexican end products; and

\(2\) The Agreement on Civil Aircraft (19 U.S.C. 2513) which involves
aircraft and related supplies from countries participating in the
Agreement.

b\. FAA acquisitions are *not* subject to the following trade-related
acts:

\(1\) The Government Procurement Agreement, as implemented by the Trade
Agreements Act of 1979 (19 U.S.C. 2501-2582) and as amended by the
Uruguay Round Agreements Act (Pub. L. 103-465);

\(2\) Eligible products from countries designated under the Caribbean
Basin Economic Recovery Act (19 U.S.C. 2701, *et seq*.); and

\(3\) Offers of Israeli end products under the United States-Israel Free
Trade Area Implementation Act of 1985 (19 U.S.C. 2112 note).

c\. *North American Free Trade Agreement.*

\(1\) As required by the NAFTA Implementation Act, the CO will evaluate
offers of the following NAFTA country end products without regard to the
restrictions of the Buy American Act or the Balance of Payments Program
as follows:

\(a\) NAFTA country construction materials under construction contracts
with an estimated acquisition value of \$6,500,000 or more.

\(b\) Canadian end products under supply contracts with an estimated
value above \$25,000 and Mexican end products under supply contracts
with an estimated value of \$50,000 or more.

\(2\) To determine whether NAFTA applies to the acquisition of products
by lease, rental, or lease-purchase contract (including
lease-to-ownership, or lease-with-option-to purchase), the CO should
calculate the estimated acquisition value as follows:

\(a\) If a fixed-term contract of 12 months or less is contemplated, use
the total estimated value of the acquisition.

\(b\) If a fixed-term contract of more than 12 months is contemplated,
use the total estimated value of the acquisition plus the estimated
residual value of the leased equipment at the conclusion of the
contemplated term of the contract.

\(c\) If an indefinite-term contract is contemplated, use the estimated
monthly payment multiplied by 48.

\(d\) If there is any doubt as to the contemplated term of the contract,
use the estimated monthly payment multiplied by 48.

\(e\) If a contemplated acquisition includes an option clause, when
calculating the threshold for application of NAFTA provisions include
the value of all options.

d\. *Civil Aircraft and Related Articles.* The Buy American Act does not
apply to acquiring civil aircraft and related articles of countries or
instrumentalities that are parties to the Agreement on Civil Aircraft
pursuant to a waiver from the U.S. Trade Representative, on February 19,
1980 (45 FR 12349, February 25, 1980). Countries and Instrumentalities
that a parties to the agreement (as of January 1, 1996) are Canada, the
European Union (Austria, Belgium, Denmark, Finland, France, Germany,
Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain,
Sweden, and the United Kingdom), Japan, Norway, Romania, and
Switzerland. The Office of the U.S. Trade Representative, Washington, DC
20506 can provide information on changes to the list of parties to the
agreement made since January 1, 1996. For the purpose of this waiver, an
article is a product of a country or instrumentality when:

\(1\) It is wholly the growth, product, or manufacture of that country
or instrumentality; or

\(2\) In the case of an article that consists in whole or in part of
materials from another country or instrumentality, it has been
substantially transformed into a new and different article of commerce
with a name, character, or use distinct from that of the article or
articles from which it was so transformed.

e\. This section "Trade Agreements" does not apply to:

\(1\) Purchases below an applicable dollar threshold cited in a trade
agreement;

\(2\) Purchases under small or small disadvantaged business programs;

\(3\) Purchases indispensable for national security or for national
defense purposes, subject to policies established by the U.S. Trade
Representative.

\(4\) Research and development contracts;

\(5\) Purchases of items for resale;

\(6\) Purchases from Federal Prison Industries, Inc. and nonprofit
agencies employing people who are blind or severely disabled.

7\. Restrictions on Certain Foreign Purchases

a\. The FAA, its contractors, and subcontractors will not acquire
supplies or services from foreign governments or their organizations
when these supplies or services cannot be imported lawfully into the
United States. The FAA, its contractors and subcontractors will not
acquire any supplies or services originating from sources within, or
that were located in or transported from or through: Cuba, Iran, Iraq,
Libya, or North Korea.

b\. The FAA, its contractors and subcontractors will not acquire any
supplies or services from entities controlled by the Government of Iraq
(Executive Order 12722 and 12724).

c\. Questions concerning these restrictions should be referred to the
Department of the Treasury, Office of Foreign Assets Control,
Washington, DC 20220 (Telephone No. (202) 622-2520).

d\. *Exceptions*. In unusual situations and for use outside of the U.S.,
it's possessions, or Puerto Rico, the CO may approve exceptions to
acquiring supplies or services from foreign governments or their
organizations when these supplies or services cannot be imported
lawfully into the U.S.. Examples of unusual situations include
emergencies or when the supplies or services are not available from
another source and a substitute is not acceptable. The CO should furnish
a copy of the written approval to the contractor.

**8. TRADE SANCTIONS**

a\. The FAA will not award contracts with countries for which trade
sanctions have been imposed, subject to the exceptions in paragraph b.
below. This prohibition applies to the following:

\(1\) Sanctioned European Union (EU) end products with an estimated
acquisition value of less than \$190,000;

\(2\) Sanctioned EU construction with an estimated acquisition value of
less than \$7,311,000;

\(3\) Sanctioned EU services as follows:

\(a\) Service contracts with an estimated acquisition value less than
\$190,000;

\(b\) Regardless of dollar value, contracts for:

\(i\) All transportation services, including launching services (all V
codes, J019, J998, J999, K019);

\(ii\) Dredging (Y216, Z216);

\(iii\) Management and operation contracts of certain government or
privately-owned facilities used for government purposes, including
federally-funded research and development centers (all M codes);

\(iv\) Development, production or co-production of program material for
broadcasting, such as motion pictures (T006, T016);

\(v\) Research and development (all A codes);

\(vi\) Airport concessions (S203);

\(vii\) Legal services (R418);

\(viii\) Hotel and restaurant services (S203);

\(ix\) Placement and supply of personnel services (V241, V251);

\(x\) Investigation and security services (S206, S211, R423);

\(xi\) Education and training services (all U codes, R419);

\(xii\) Health and social services (all O codes, all G codes);

\(xiii\) Recreational, cultural, and sporting services (G003); and

\(ix\) Telecommunications services (encompassing only voice telephony,
telex, radio telephony, paging, and satellite services) (S1, D304, D305,
D316, D317, D399).

b\. *Exceptions.* Sanctions do not apply to the following:

\(1\) Total small business set asides;

\(2\) Contracts in support of the U.S. national security interests;

\(3\) Contracts for goods or services awarded outside the U.S. and its
territories where the goods or services are to be used outside the
United States; or

\(4\) Contracts for essential spare, repair, or replacement parts not
otherwise available from non-sanctioned countries.

c\. *Determination.* The head of the agency (HOA), without the power of
redelegation, may authorize award of a contract or a class of contracts
for sanctioned EU end products, services, and construction, the purchase
of which is otherwise prohibited under paragraph a. above, if the HOA
determines that such action is necessary:

\(1\) In the public interest;

\(2\) To avoid the restriction of competition in a manner which would
limit the procurement in question to, or would establish a preference
for, the services, articles, materials, or supplies of a single
manufacturer or supplier; or

\(3\) Because there would be or are an insufficient number of potential
or actual offerors to assure the procurement of services, articles,
materials or supplies of requisite quality at competitive prices.

d\. When a determination is made according to paragraph c. above, the
HOA will notify the Chairman of the Committee on Banking, Finance and
Urban Affairs and the Chairman of the Committee on Governmental Affairs
of the United States Senate; the Chairman of the Committee on Ways and
Means and the Chairman of the Committee on Government Operations of the
United States House of Representatives:

\(1\) Not less than 30 days prior to the date of award of a contract or
the date of authorization of the award of a class of contracts; or

\(2\) Not more than 90 days after the award of a contract or
authorization where the FAA's need for the service, article, material or
supply is of such urgency that the United States would be seriously
injured by a delay.

\(3\) The HOA will also send a copy of the notification to the United
States Trade Representative.

**9. CUSTOMS AND DUTIES**

a\. Except as provided elsewhere in the Customs Regulations (see 19 CFR
10.100), all shipments of imported supplies purchased under Government
contracts are subject to the usual Customs entry and examination
requirements. However, DOT/FAA are not covered by the applicable
Treasury regulation/statute allowing entry of duty free goods.

10\. International Agreements and Coordination

a\. Treaties and agreements between the U.S. and foreign governments may
affect contracting within foreign countries. The CO should determine the
existence and applicability of any international agreement to contracts
being planned or processed, and ensure compliance with these agreements.

b\. When applicable, the CO should conduct the necessary advance
acquisition planning and coordination between the appropriate United
States executive agencies and foreign interests as required by these
agreements.

c\. Many international agreements are compiled in the "United States
Treaties and Other International Agreements" series published by the
Department of State. Copies of this publication are normally available
in overseas legal offices and United States diplomatic missions.

11\. Examination of Records by Comptroller General

a\. The CO should, whenever possible, include the clause "Audit and
Records" in negotiated contracts with foreign contractors.

b\. *Exceptions*. The clause may be omitted from contracts with foreign
contractors in the following instances (authority cited for the HOA is
not delegable):

\(1\) HOA, with concurrence of the Comptroller General, or designee,
determines that the omission will serve the best interests of the U.S.;
or

\(2\) The contractor or subcontractor is a foreign government or agency
thereof or is precluded by the laws of the country involved from making
its books, document, papers, or records available for examination and
the HOA determines, after taking into account the price and availability
of the property or services from the U.S. sources, that the public
interest would be best served by the omission of the clause.

c\. *Congressional Notification*. When the CO does not include clause
**"**Audit and Records," the CO will prepare and forward a determination
to DOT/M-60 for inclusion in a report to Congress explaining why the
omission of the clause will serve the interest of the United States. The
determination should:

\(1\) Identify the contract and its purpose, and whether it is a
contract with a foreign contractor or with a foreign government or
agency thereof;

\(2\) Describe the efforts to include the clause;

\(3\) When applicable, state the reasons for the contractor\'s refusal
to include the clause;

\(4\) Describe the price and availability of the property or services
from the United States and other sources; and

\(5\) Determine that it will serve the interest of the United States to
omit the clause.

12\. Inconsistency Between English Version and Translation of Contract

When translation of a contract from English into another language is
anticipated, the CO should include a statement indicating that the
English meaning will control in the event of an inconsistency between
the translated and English terms.

**13. DEFINITIONS**

a\. *"Canadian end product"* means an article that (a) is wholly the
growth, product, or manufacture of Canada, or (b) in the case of an
article which consists in whole or in part of materials from another
country or instrumentality, has been substantially transformed in Canada
into a new and different article of commerce with a name, character, or
use distinct from that of the article or articles from which it was
transformed. The term refers to a product offered for purchase under a
supply contract, but for purposes of calculating the value of the end
product includes services (except transportation services) incidental to
its supply; provided, that the value of those incidental services does
not exceed that of the product itself.

b\. *"Civil aircraft and related articles"* means (a) all aircraft other
than aircraft to be purchased for use by the Department of Defense or
the U.S. Coast Guard; (b) the engines (and parts and components for
incorporation into the engines) of these aircraft; (c) any other parts,
components, and subassemblies for incorporation into the aircraft; and
(d) any ground flight simulators, and parts and components of these
simulators, for use with respect to the aircraft, whether to be used as
original or replacement equipment in the manufacture, repair,
maintenance, rebuilding, modification, or conversion of the aircraft and
without regard to whether the aircraft or articles receive duty-free
treatment under section 601(a)(2) of the Trade Agreements Act of 1979.

c\. *"Components"* means those articles, materials, and supplies
incorporated directly into the end products, or in the case of
construction those articles, materials, and supplies incorporated
directly into construction materials.

d\. *"Construction"* means construction, alteration, or repair of any
public building or public work in the United States.

e\. *"Construction Materials*" means an article, material, or supply
brought to the construction site for incorporation into the building or
work. *"Construction Material*" also includes an item brought to the
site pre-assembled from articles, materials, and supplies. However,
emergency life safety systems, such as emergency lighting, fire alarm,
and audio evacuation systems, which are discrete systems incorporated
into a public building or work and which are produced as a complete
system, shall be evaluated as a single and distinct construction
material regardless of when or how the individual parts or components of
such systems are delivered to the construction site.

f\. *"Customs territory of the United States,"* as it applies to customs
and duties, means the States, the District of Columbia, and Puerto Rico.

g\. *"Domestic construction material"* means (a) an unmanufactured
construction material mined or produced in the United States, or (b) 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. (In determining
whether a construction material is domestic, only the construction
material and its components shall be considered.) The cost of each
component includes transportation costs to the place of incorporation
into the construction material and any applicable duty (whether or not a
duty-free entry certificate is issued).

h\. *"Domestic end product"* means (a) an unmanufactured end product
mined or produced in the United States, or (b) an end product
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. (In determining if an end product is
domestic, only the end product and its components shall be considered.)
The cost of each component includes transportation costs to the place of
incorporation into the end product and any applicable duty (whether or
not a duty-free entry certificate is issued). Scrap generated,
collected, and prepared for processing in the United States is
considered domestic.

i\. *"Domestic offer"* means an offered price for a domestic end
product, including transportation to destination.

j\. *"Domestic services"* means services performed in the United States.
If services provided under a single contract are performed both inside
and outside the United States, they shall be considered domestic if 25
percent or less of their total cost is attributable to services
(including incidental supplies used in connection with these services)
performed outside the United States.

k\. *"End product"* means those articles, materials, and supplies to be
acquired for public use under the contract.

l\. *"Foreign construction material"* means a construction material
other than a domestic construction material.

m\. *"Foreign contractor"* means a contractor or subcontractor organized
or existing under the laws of a country other than the United States,
its territories, or possessions.

n\. *"Foreign end product"* means an end product other than a domestic
end product.

o\. *"Foreign offer"* means an offered price for a foreign end product,
including transportation to destination and duty (whether or not a
duty-free entry certificate is issued).

p\. *"Foreign services"* means services other than domestic services.

q\. *"Instrumentality"* does not include an agency or division of the
government of a country, but may be construed to include arrangements
such as the European Union.

r\. *"Manufactured product"* as it applies to "Buy American-Steel and
Manufactured Products" means an item produced as a result of the
manufacturing process.

s\. *"Manufacturing process"* as it applies to "Buy American-Steel and
Manufactured Products" means the application of processes to alter the
form or function of materials or of elements of the product in a manner
adding value and transforming those materials or elements so that they
represent a new end product functionally different from that which would
result from mere assembly of the elements or materials.

t\. *"Mexican end product"* means an article that (a) is wholly the
growth, product, or manufacture of Mexico, or (b) in the case of an
article which consists in whole or in part of materials from another
country or instrumentality, has been substantially transformed in Mexico
into a new and different article of commerce with a name, character, or
use distinct from, that of the article or articles from which it was
transformed. The term refers to a product offered for purchase under a
supply contract, but for purposes of calculating the value of the end
product includes services (except transportation services) incidental to
its supply; provided, that the value of those incidental services does
not exceed that of the product itself.

u\. *"North American Free Trade Agreement (NAFTA) country"* means Canada
or Mexico.

v\. *"NAFTA country construction material"* means a construction
material that (a) is wholly the growth, product, or manufacture of a
NAFTA country or (b) in the case of a construction material which
consists in whole or in part of materials from another country or
instrumentality, has been substantially transformed in a NAFTA country
into a new and different construction material distinct from the
materials from which it was transformed.

w\. *"NAFTA country end product"* means a Canadian end product or a
Mexican end product.

x\. *"Sanctioned European Union (EU) construction"* means construction
to be performed in a sanctioned member state of the EU and the contract
is awarded by a contracting activity located in the United States or its
territories.

y\. *"Sanctioned EU end product"* means an article that (a) is wholly
the growth product or manufacture of a sanctioned member state of the EU
or (b) in the case of an article which consists in whole or in part of
materials from another country or instrumentality, has been
substantially transformed into a new and different article of commerce
with a name, character or use distinct form that from which it was so
transformed in a sanctioned member state of the EU. The term includes
services (except transportation services) incidental to its supply;
provided, that the value of these incidental services does not exceed
that of the product itself. It does not include service contracts as
such.

z\. *"Sanctioned EU services"* means services to be performed in a
sanctioned member state of the EU when the contract is awarded by a
contracting activity located in the United States or its territories.

aa. *"Sanctioned member state of the EU"* means Austria, Belgium,
Denmark, Finland, France, Ireland, Italy, Luxembourg, the Netherlands,
Sweden, and the United Kingdom.

bb. *"Petroleum terms"*

1\. *"Crude oil"* means crude petroleum, as it is produced at the
wellhead, and liquids (under atmospheric conditions) that have been
recovered from mixtures of hydrocarbons that existed in a vaporous phase
in a reservoir and that are not natural gas products.

2\. *"Finished products"* means any one or more of the following
petroleum oils, or a mixture or combination of these oils, to be used
without further processing except blending by mechanical means:

\(a\) *"Asphalt"***\--** a solid or semi-solid cementitious material
that (1) gradually liquefies when heated, (2) has bitumens as its
predominating constituents, and (3) is obtained in refining crude oil.

\(b\) *"Fuel oil"***\--**a liquid or liquefiable petroleum product
burned for lighting or for the generation of heat or power and derived
directly or indirectly from crude oil, such as kerosene, range oil,
distillate fuel oils, gas oil, diesel fuel, topped crude oil, or
residues.

\(c\) *"Gasoline"***\--**a refined petroleum distillate that, by its
composition, is suitable for use as a carburant in internal combustion
engines.

\(d\) *"Jet fuel"***\--**a refined petroleum distillate used to fuel jet
propulsion engines.

\(e\) *"Liquefied gases"***\--**hydrocarbon gases recovered from natural
gas or produced from petroleum refining and kept under pressure to
maintain a liquid state at ambient temperatures.

\(f\) *"Lubricating oil"***\--**a refined petroleum distillate or
specially treated petroleum residue used to lessen friction between
surfaces.

\(g\) *"Naphtha"***\--**a refined petroleum distillate falling within a
distillation range overlapping the higher gasoline and the lower
kerosenes.

\(h\) *"Natural gas products"***\--**liquids (under atmospheric
conditions), including natural gasoline, that\--

\(1\) Are recovered by a process of absorption, adsorption, compression,
refrigeration, cycling, or a combination of these processes, from
mixtures of hydrocarbons that existed in a vaporous phase in a
reservoir, and

\(2\) When recovered and without processing in a refinery, definitions
of products contained in subdivision (b), (c), (d), and (g) of this
definition.

\(i\) *"Residual fuel oil"***\--**a topped crude oil or viscous residuum
that, as obtained in refining or after blending with other fuel oil,
meets or is the equivalent of Military Specification MIL-F-859 for Navy
Special Fuel Oil and any more viscous fuel oil, such as No. 5 or Bunker
C.

*3. "Unfinished oils"* means one or more of the petroleum oils listed
under the definition of finished oils, or a mixture or combination of
these oils, that are to be further processed other than by blending by
mechanical means.

cc\. *"United States"* as it relates to the Buy American Act or the
Balance of Payments Program means the United States, its possessions,
Puerto Rico, and any other place subject to its jurisdiction, but does
not include leased bases or trust territories.

**B. CLAUSES**

See FAST Procurement Toolbox for applicable clauses**.**

**C. FORMS**

None applicable.