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[Federal Register Volume 79, Number 150 (Tuesday, August 5, 2014)]
[Rules and Regulations]
[Pages 45661-45665]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-18204]

[[Page 45661]]

Vol. 79

Tuesday,

No. 150

August 5, 2014

Part IV

Department of Defense

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Defense Acquisition Regulations System

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48 CFR Parts 204, et al.

Federal Acquisition Regulations; Final Rule and Proposed Rule

Federal Register / Vol. 79 , No. 150 / Tuesday, August 5, 2014 / 
Rules and Regulations

[[Page 45662]]

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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 204, 212, 225, and 252

RIN 0750-AI32

Defense Federal Acquisition Regulation Supplement: Foreign 
Commercial Satellite Services (DFARS Case 2014-D010)

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

ACTION: Interim rule.

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SUMMARY: DoD is issuing an interim rule amending the Defense Federal 
Acquisition Regulation Supplement (DFARS) to implement a section of the 
National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2014 
that prohibits acquisition of commercial satellite services from 
certain foreign entities.

DATES: Effective August 5, 2014.
    Comment Date: Comments on the interim rule should be submitted in 
writing to the address shown below on or before October 6, 2014, to be 
considered in the formation of a final rule.

ADDRESSES: Submit comments identified by DFARS Case 2014-D010, using 
any of the following methods:
    [cir] Regulations.gov: http://www.regulations.gov. Submit comments 
via the Federal eRulemaking portal by entering ``DFARS Case 2014-D010'' 
under the heading ``Enter keyword or ID'' and selecting ``Search.'' 
Select the link ``Submit a Comment'' that corresponds with ``DFARS Case 
2014-D010.'' Follow the instructions provided at the ``Submit a 
Comment'' screen. Please include your name, company name (if any), and 
``DFARS Case 2014-D010'' on your attached document.
    [cir] Email: osd.dfars@mail.mil. Include DFARS Case 2014-D010 in 
the subject line of the message.
    [cir] Fax: 571-372-6094.
    [cir] Mail: Defense Acquisition Regulations System, Attn: Ms. Amy 
G. Williams, OUSD(AT&L)DPAP/DARS, Room 3B941, 3060 Defense Pentagon, 
Washington, DC 20301-3060.
    Comments received generally will be posted without change to http://www.regulations.gov, including any personal information provided. To 
confirm receipt of your comment(s), please check www.regulations.gov, 
approximately two to three days after submission to verify posting 
(except allow 30 days for posting of comments submitted by mail).

FOR FURTHER INFORMATION CONTACT: Ms. Amy G. Williams, Defense 
Acquisition Regulations System, OUSD(AT&L)DPAP/DARS, Room 3B941, 3060 
Defense Pentagon, Washington, DC 20301-3060. Telephone 571-372-6106.

SUPPLEMENTARY INFORMATION: 

I. Background

    This interim rule amends the DFARS to implement section 1602 of the 
NDAA for FY 2014 (Pub. L. 113-66). Section 1602 prohibits award of a 
contract for commercial satellite services to a foreign entity if the 
Secretary of Defense reasonably believes that the foreign entity--
     Is an entity in which the government of a covered foreign 
country has an ownership interest that enables the government to affect 
satellite operations; or
     Plans to, or is expected to, provide or use launch or 
other satellite services under the contract from a covered foreign 
country.
    A covered foreign country means the People's Republic of China, 
North Korea, or any country that is a state sponsor of terrorism, as 
described in section 1261(c)(2) of the NDAA for FY 2013 (Pub. L. 112-
239). State sponsors of terrorism, as determined by the Secretary of 
State, currently include Cuba, Iran, Sudan, and Syria.

II. Discussion and Analysis

    This interim rule adds a new section at DFARS 225.772 that 
addresses the prohibition on acquisition of commercial satellite 
services from certain foreign entities and adds a provision at DFARS 
252.225-7049 that requires offerors to represent whether they are 
foreign entities that fall within the prohibition, or whether they are 
offering commercial satellite services provided by such a foreign 
entity. If the offeror responds affirmatively to any of the 
representations, then the offeror must provide further disclosure 
regarding the circumstances.
    The prohibition on award to such foreign entities does not apply if 
the Secretary of Defense for Acquisition, Technology, and Logistics or 
the Under Secretary of Defense for Policy, without power of 
redelegation, determines that it is in the national security interest 
of the United States to enter into such contract and, not later than 
seven days before entering into such contract, the Under Secretary of 
Defense making the determination, in consultation with the Director of 
National Intelligence, submits to the congressional defense committees 
a national security assessment in accordance with 10 U.S.C. 2279.
    There are conforming changes to DFARS 204.1202 and 252.205-7007 to 
include the new representations in the annual representations and 
certifications, and changes to DFARS 212.301(f) to add the new 
provision to the list of provisions and clauses that are applicable to 
the acquisition of commercial items.

III. Applicability to Acquisitions Not Greater Than the Simplified 
Acquisition Threshold (SAT) and Commercial Items

    10 U.S.C. 2279 is silent on applicability to contracts and 
subcontracts in amounts not greater than the SAT or for the acquisition 
of commercial items. Also, the statute does not provide for criminal or 
civil penalties. Therefore, it does not apply to the acquisition of 
contracts and subcontracts in amounts not greater than the SAT or the 
acquisition of commercial items unless the Director, DPAP, makes a 
written determination as provided in 41 U.S.C. 1905.
    There is a potential risk to national security if DoD uses 
commercial satellite services for DoD communications and the government 
of a covered foreign country has an ownership interest that enables the 
government to affect satellite operations, regardless of the dollar 
value of the contract or order. Likewise, if launch or other satellite 
services under the contract are occurring in a covered country, the 
government of that country could impact the ability of the foreign 
entity to adequately provide those services. Furthermore, although 10 
U.S.C. 2279 does not specifically reference 41 U.S.C. 1906, the statute 
only applies to the acquisition of commercial satellite services, so 
exempting commercial items from application of the statute would negate 
the intended effect of the statute. Therefore, consistent with 41 
U.S.C. 1905 and 1906, the Director, Defense Procurement and Acquisition 
Policy, has determined that it would not be in the best interest of the 
United States to exempt acquisitions not greater than the SAT and 
acquisitions of commercial items from the applicability of 10 U.S.C. 
2279.

IV. 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,

[[Page 45663]]

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 a significant regulatory action and, 
therefore, was subject to review under section 6(b) of E.O. 12866, 
Regulatory Planning and Review, dated September 30, 1993. This rule is 
not a major rule under 5 U.S.C. 804.

V. Regulatory Flexibility Act

    DoD does not expect this interim rule 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. 
However, an initial regulatory flexibility analysis has been performed 
and is summarized as follows:
    DoD is issuing an interim rule amending the Defense Federal 
Acquisition Regulation Supplement (DFARS) to implement section 1602 of 
the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 
2014. Section 1602 added 10 U.S.C. 2279, which prohibits acquisition of 
commercial satellite services from certain foreign entities.
    The objective of the rule is to implement 10 U.S.C. 2279, which is 
the legal basis for the rule. The statute prohibits award of contracts 
for commercial satellite services to a foreign entity that--
     Is an entity in which the government of a covered foreign 
country (i.e., the People's Republic of China, North Korea, Cuba, Iran, 
Sudan, or Syria) has an ownership interest that enables the government 
to affect satellite operations; or
     Plans to, or is expected to, provide or use launch or 
other satellite services under the contract from a covered foreign 
country.
    DoD estimates that this rule will apply to less than 111 small 
entities. According to Federal Procurement Data System data for FY 
2013, 111 small entities were awarded contracts or orders for services 
in PSC D304 (ADP Telecommunications and Transmission Services), of 
which commercial satellite services are a subset. Although the focus of 
the Regulatory Flexibility Act is protection of domestic small business 
entities that are eligible for assistance from the Small Business 
Administration, there may be domestic small business entities in the 
United States that offer the satellite services of a foreign entity 
that would be restricted by this rule.
    This rule requires an annual representation as to whether the 
offeror is, or is not, a foreign entity subject to the prohibitions of 
the statute or is, or is not, offering commercial satellite services 
provided by such a foreign entity. Further information is required if 
the offeror provides an affirmative response to any of the 
representations, but such affirmative response and further submission 
of information is expected to be extremely rare.
    The rule does not duplicate, overlap, or conflict with any other 
Federal rules.
    This rule will not have a significant economic impact on any small 
entities, unless they are offering commercial satellite services 
provided by a foreign entity that is subject to the restrictions of 
this rule. DoD was not able to identify any alternatives that would 
reduce the burden on small entities and meet the objectives of the 
rule.
    DoD will also consider comments from small entities concerning the 
existing regulations in subparts affected by this rule in accordance 
with 5 U.S.C. 610. Interested parties must submit such comments 
separately and should cite 5 U.S.C. 610 (DFARS Case 2014-D010), in 
correspondence.

VI. Paperwork Reduction Act

    The rule contains information collection requirements that required 
the approval of the Office of Management and Budget under the Paperwork 
Reduction Act (44 U.S.C. chapter 35). This information collection 
requirement is entitled Foreign Commercial Satellite Services.
    A. Public reporting burden for this collection of information is 
estimated to average .25 hours per response, including the time for 
reviewing instructions, searching existing data sources, gathering and 
maintaining the data needed, and completing and reviewing the 
collection of information.
    The annual reporting burden estimated as follows:
    Respondents: 380.
    Responses per respondent: 1.
    Total annual responses: 380.
    Preparation hours per response: .25 hours.
    Total response Burden Hours: 95.
    B. Request for Comments Regarding Paperwork Burden.
    Written comments and recommendations on the proposed information 
collection, including suggestions for reducing this burden, should be 
sent to Ms. Jasmeet Seehra at the Office of Management and Budget, Desk 
Officer for DoD, Room 10236, New Executive Office Building, Washington, 
DC 20503, or email Jasmeet_K._Seehra@omb.eop.gov, with a copy to the 
Defense Acquisition Regulations System, Attn: (Amy G. Williams), 
OUSD(AT&L)DPAP/DARS, Room 3B941, 3060 Defense Pentagon, Washington, DC 
20301-3060. Comments can be received from 30 to 60 days after the date 
of this notice, but comments to OMB will be most useful if received by 
OMB within 30 days after the date of this notice.
    Public comments are particularly invited on: Whether this 
collection of information is necessary for the proper performance of 
functions of the DFARS, and will have practical utility; whether our 
estimate of the public burden of this collection of information is 
accurate, and based on valid assumptions and methodology; ways to 
enhance the quality, utility, and clarity of the information to be 
collected; and ways in which we can minimize the burden of the 
collection of information on those who are to respond, through the use 
of appropriate technological collection techniques or other forms of 
information technology.
    To request more information on this proposed information collection 
or to obtain a copy of the proposal and associated collection 
instruments, please write to the Defense Acquisition Regulations 
System, Attn: Ms. Amy G. Williams, OUSD(AT&L)DPAP/DARS, Room 3B941, 
3060 Defense Pentagon, Washington, DC 20301-3060, or email 
osd.dfars@mail.mil. Include DFARS Case 2014-D010 in the subject line of 
the message.

VII. Determination To Issue an Interim Rule

    A determination has been made under the authority of the Secretary 
of Defense that urgent and compelling reasons exist to promulgate this 
interim rule without prior opportunity for public comment. This action 
is necessary because to implement 10 U.S.C. 2279, as added by section 
1602 of the National Defense Authorization Act for FY 2014 (Pub. L. 
113-66), which was effective upon enactment (December 26, 2013). 10 
U.S.C. 2279 restricts acquisition of commercial satellite services from 
certain foreign entities. Until this statute is implemented in the 
DFARS, there is risk that contracting officers may acquire commercial 
satellite services in violation of the law, and can create risk to the 
U.S. military and lost opportunities for the U.S. industrial base.
    However, pursuant to 41 U.S.C. 1707 and FAR 1.501-3(b), DoD will 
consider public comments received in response to this interim rule in 
the formation of the final rule.

[[Page 45664]]

List of Subjects in 48 CFR Parts 204, 212, 225, and 252

    Government procurement.

Amy G. Williams,
Deputy, Defense Acquisition Regulations System.
    Therefore, 48 CFR parts 204, 212, 225, and 252 are amended as 
follows:

0
1. The authority citation for 48 CFR parts 204, 212, 225, and 252 
continues to read as follows:

    Authority:  41 U.S.C 1303 and 48 CFR chapter 1.

PART 204--ADMINISTRATIVE MATTERS

0
2. Amend section 204.1202 by--
0
a. Removing, in paragraph (2) introductory text, ``Central Contractor 
Registration'' and adding ``System for Award Management'' in its place;
0
b. Redesignating paragraph (2)(xi) through (xiii) as (2)(xii) through 
(xiv), respectively; and
0
c. Adding a new paragraph (2)(xi) to read as follows:

204.1202  Solicitation provision.

* * * * *
    (2) * * *
    (xi) 252.225-7049, Prohibition on Acquisition of Commercial 
Satellite Services from Certain Foreign Entities--Representations.
* * * * *

PART 212--ACQUISITION OF COMMERCIAL ITEMS

0
3. Amend section 212.301 by--
0
a. Redesignating paragraphs (f)(xlviii) through (lxxii) as (f)(xlix) 
through (lxxiii); and
0
b. Adding a new paragraph (f)(xlviii) to read as follows:

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

    (f) * * *
    (xlviii) Use the provision at 252.225-7049, Prohibition on 
Acquisition of Commercial Satellite Services from Certain Foreign 
Entities--Representations, as prescribed at 225.772-5.
* * * * *

PART 225--FOREIGN ACQUISITION

225.771  [Added and reserved]

0
4. Add and reserve section 225.771.

0
5. Add sections 225.772, 225.772-0, 225.772-1, 225.772-2, 225.772-3, 
225.772-4, and 225.772-5 to read as follows:

225.772  Prohibition on acquisition of commercial satellite services 
from certain foreign entities.

225.772-0  Scope.

    This section implements 10 U.S.C. 2279.

225.772-1  Definitions.

    As used in this section, covered foreign country, foreign entity, 
government of a covered foreign country, satellite services, and state 
sponsor of terrorism are defined in the provision at 252.225-7049, 
Prohibition on Acquisition of Commercial Satellite Services from 
Certain Foreign Entities--Representations.

225.772-2  Prohibition.

    The contracting officer shall not award a contract for commercial 
satellite services to--
    (a) A foreign entity if the Under Secretary of Defense for 
Acquisition, Technology, and Logistics or the Under Secretary of 
Defense for Policy reasonably believes that the foreign entity--
    (1) Is an entity in which the government of a covered foreign 
country has an ownership interest that enables the government to affect 
satellite operations; or
    (2) Plans to or is expected to provide or use launch or other 
satellite services under the contract from a covered foreign country; 
or
    (b) An offeror that is offering commercial satellite services 
provided by a foreign entity as described in paragraph (a) of this 
section.

225.772-3  Procedures.

    (a) If an offeror discloses information in accordance with 
paragraph (d) of the provision 252.225-7049, Prohibition on Acquisition 
of Commercial Satellite Services from Certain Foreign Entities--
Representations, the contracting officer--
    (1) Shall forward the information regarding the offeror through 
agency channels to the address at PGI 225.772-3; and
    (2) Shall not award to that offeror, unless an exception is 
determined to apply in accordance with 225.772-4.
    (b)(1) If the otherwise successful offeror provides negative 
responses to all representations in the provision at 252.225-7049, the 
contracting officer may rely on the representations, unless the 
contracting officer has an independent reason to question the 
representations.
    (2) If the contracting officer has an independent reason to 
question a negative representation of the otherwise successful offeror, 
the contracting officer shall consult with the office specified in PGI 
225.772-3, prior to deciding whether to award to that offeror.

225.772-4  Exception.

    (a) The prohibition in 225.772-2 does not apply if--
    (1) The Under Secretary of Defense for Acquisition, Technology, and 
Logistics, or the Under Secretary of Defense for Policy, without power 
of redelegation, determines that it is in the national security 
interest of the United States to enter into such contract; and
    (2) Not later than seven days before entering into such contract, 
the Under Secretary of Defense making the determination in paragraph 
(a)(1) of this section, in consultation with the Director of National 
Intelligence, submits to the congressional defense committees a 
national security assessment, in accordance with 10 U.S.C. 2279.
    (b) If requesting an exception pursuant to paragraph (a) of this 
section, the contracting officer shall forward the request through 
agency channels to the address at PGI 225.772-3, providing any 
available information necessary for the Under Secretary of Defense 
making the determination in paragraph (a)(1) of this section to 
evaluate the request and perform a national security assessment, in 
accordance with 10 U.S.C. 2279.

225.772-5  Solicitation provision.

    Use the provision at 252.225-7049, Prohibition on Acquisition of 
Commercial Satellite Services from Certain Foreign Entities--
Representations, in solicitations for the acquisition of commercial 
satellite services. If the solicitation includes the provision at FAR 
52.204-7, do not separately list the provision 252.225-7049 in the 
solicitation.

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
6. Amend section 252.204-7007 by--
0
a. Removing the clause date ``(MAR 2014)'' and adding ``(AUG 2014)'' in 
its place;
0
b. Redesignating paragraphs (d)(1)(v) through (vii) as (d)(1)(vi) 
through (viii); and
0
c. Adding a new paragraph (d)(1)(v) to read as follows:

252.204-7007  Alternate A, Annual Representations and Certifications.

* * * * *
    (d)(1) * * *
    (v) 252.225-7049, Prohibition on Acquisition of Commercial 
Satellite Services from Certain Foreign Entities--

[[Page 45665]]

Representations. Applies to solicitations for the acquisition of 
commercial satellite services.
* * * * *

0
7. Add section 252.225-7049 to read as follows:

252.225-7049  Prohibition on Acquisition of Commercial Satellite 
Services From Certain Foreign Entities--Representations.

    As prescribed in 225.772-5, use the following provision:

Prohibition on Acquisition of Commercial Satellite Services From 
Certain Foreign Entities--Representations (Aug 2014)

    (a) Definitions. As used in this provision--
    Covered foreign country means--
    (i) The People's Republic of China;
    (ii) North Korea; or
    (iii) Any country that is a state sponsor of terrorism. (10 
U.S.C. 2279)
    Foreign entity means--
    (i) Any branch, partnership, group or sub-group, association, 
estate, trust, corporation or division of a corporation, or 
organization organized under the laws of a foreign state if either 
its principal place of business is outside the United States or its 
equity securities are primarily traded on one or more foreign 
exchanges.
    (ii) Notwithstanding paragraph (i) of this definition, any 
branch, partnership, group or sub-group, association, estate, trust, 
corporation or division of a corporation, or organization that 
demonstrates that a majority of the equity interest in such entity 
is ultimately owned by U.S. nationals is not a foreign entity. (31 
CFR 800.212)
    Government of a covered foreign country includes the state and 
the government of a covered foreign country, as well as any 
political subdivision, agency, or instrumentality thereof.
    Satellite services means communications capabilities that 
utilize an on-orbit satellite for transmitting the signal from one 
location to another.
    State sponsor of terrorism means a country determined by the 
Secretary of State, under section 6(j)(1)(A) of the Export 
Administration Act of 1979 (50 U.S.C. App. 2405(j)(i)(A)), to be a 
country the government of which has repeatedly provided support for 
acts of international terrorism. As of the date of this provision, 
state sponsors of terrorism subject to this provision are Cuba, 
Iran, Sudan, and Syria. (10 U.S.C. 2327)
    (b) Prohibition on award. In accordance with 10 U.S.C. 2279, 
unless an exception is determined to apply in accordance with DFARS 
225.71-4, no contract for commercial satellite services may be 
awarded to--
    (1) A foreign entity if the Under Secretary of Defense for 
Acquisition, Technology, and Logistics or the Under Secretary of 
Defense for Policy reasonably believes that the foreign entity--
    (i) Is an entity in which the government of a covered foreign 
country has an ownership interest that enables the government to 
affect satellite operations; or
    (ii) Plans to, or is expected to, provide or use launch or other 
satellite services under the contract from a covered foreign 
country; or
    (2) An offeror that is offering to provide the commercial 
satellite services of a foreign entity as described in paragraph 
(b)(1) of this section.
    (c) Representations. The Offeror represents that--
    (1) It [ ] is, [ ] is not a foreign entity in which the 
government of a covered foreign country has an ownership interest 
that enables the government to affect satellite operations;
    (2) It [ ] is, [ ] is not a foreign entity that plans to provide 
or use launch or other satellite services under the contract from a 
covered foreign country;
    (3) It [ ] is, [ ] is not offering commercial satellite services 
provided by a foreign entity in which the government of a covered 
foreign country has an ownership interest that enables the 
government to affect satellite operations; and
    (4) It [ ] is, [ ] is not offering commercial satellite services 
provided by a foreign entity that plans to or is expected to provide 
or use launch or other satellite services under the contract from a 
covered foreign country.
    (d) Disclosure. If the Offeror has responded affirmatively to 
any of the above representations, provide the following information, 
as applicable:
    (1) Identification of the foreign entity proposed to provide the 
commercial satellite services, if other than the Offeror.
    (2) To the extent practicable, a description of any ownership 
interest that the government of a covered foreign country has in the 
foreign entity proposed to provide the satellite services, including 
identification of the covered foreign country.
    (3) Identification of any covered foreign country in which 
launch or other satellite services will be provided or used, and a 
description of any satellite services planned to be provided or used 
in that country.
    (e) The representations in paragraph (c) of this provision are a 
material representation of fact upon which reliance will be placed 
when making award. If it is later determined that the Offeror 
knowingly rendered an erroneous representation, in addition to other 
remedies available to the Government, the Contracting Officer may 
terminate the contract resulting from this solicitation for default.

(End of provision)

[FR Doc. 2014-18204 Filed 8-4-14; 8:45 am]
BILLING CODE 5001-06-P
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