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[Federal Register Volume 80, Number 58 (Thursday, March 26, 2015)]
[Rules and Regulations]
[Pages 15909-15911]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2015-06759]

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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 225 and 236

RIN 0750-AI52

Defense Federal Acquisition Regulation Supplement: Use of 
Military Construction Funds (DFARS Case 2015-D006)

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 sections of the 
Military Construction and Veterans Affairs and Related Agencies 
Appropriations Act, 2015, that require offerors bidding on DoD military 
construction contracts to provide opportunity for competition to 
American steel producers, fabricators, and manufacturers; and restrict 
use of military construction funds in certain foreign countries, 
including countries that border the Arabian Gulf.

DATES: Effective March 26, 2015.
    Comment Date: Comments on the interim rule should be submitted in 
writing to the address shown below on or before May 26, 2015, to be 
considered in the formation of a final rule.

ADDRESSES: Submit comments identified by DFARS Case 2015-D006, using 
any of the following methods:
    [cir] Regulations.gov: http://www.regulations.gov. Submit comments 
via the Federal eRulemaking portal by entering ``DFARS Case 2015-D006'' 
under the heading ``Enter keyword or ID'' and selecting ``Search.'' 
Select the link ``Submit a Comment'' that corresponds with ``DFARS Case 
2015-D006.'' Follow the instructions provided at the ``Submit a 
Comment'' screen. Please include your name, company name (if any), and 
``DFARS Case 2015-D006'' on your attached document.

[[Page 15910]]

    [cir] Email: osd.dfars@mail.mil. Include DFARS Case 2015-D006 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, telephone 571-
372-6106.

SUPPLEMENTARY INFORMATION:

I. Background

    This interim rule implements sections 108, 111, and 112 of the 
Military Construction and Veterans Affairs and Related Agencies 
Appropriations Act, 2015 (Division I of the Consolidated and Further 
Continuing Resolution Appropriations Act, 2015, Pub. L. 113-235), 
enacted December 16, 2014.
     Section 108 provides that none of the funds made available 
in Title I may be used for the procurement of steel for any 
construction activity for which the requirement for competition 
opportunity has been denied to American steel producers, fabricators, 
and manufacturers who bid on DoD construction contracts.
     Section 111 provides that none of the funds made available 
in Title I may be obligated for architect and engineer contracts 
estimated by the Government to exceed $500,000 for projects to be 
accomplished in certain foreign countries, including countries 
bordering the Arabian Gulf, unless such contracts are awarded to U.S. 
firms or U.S. firms in a joint venture with a host nation firm.
     Section 112 provides, with some exceptions, that none of 
the funds made available in Title I for military construction in 
certain foreign countries, including countries bordering the Arabian 
Gulf, may be used to award any military construction contract estimated 
by the Government to exceed $1,000,000 to a foreign contractor.
    The restrictions in section 108 were first enacted in the annual 
military construction appropriations act in FY 2009 (Title I of the 
Military Construction and Veterans Affairs Appropriations Act, 2009, 
Pub. L. 110-329, Division E). This interim rule revises DFARS 236.274 
and 236.570(d)(1) to implement the same provision in subsequent 
military appropriations acts, including section 108 of Title I of the 
Military Construction and Veterans Affairs Appropriations Act, 2015, 
Pub. L. 113-235, Division I.
    This interim rule also implements section 111 by amending DFARS 
225.7015, 236.602-70, and 236.609-70(b)(3) to reflect that the current 
law now applies to the award of architect and engineering contracts 
that are estimated to exceed the $500,000 threshold for projects to be 
performed in certain foreign countries, including countries bordering 
the Arabian Gulf. The term ``Arabian Sea'' has been replaced with 
``Arabian Gulf'' in the clause prescription for DFARS 252.236-7011, 
Overseas Architect-Engineering Services--Restrictions to the United 
States.
    This interim rule likewise implements section 112 by amending DFARS 
225.7014, 236.273, and 236.570(c)(1) to reflect that the current law 
applies to military construction contracts estimated to exceed 
$1,000,000 that are performed in certain foreign countries, including 
countries bordering the Arabian Gulf. The term ``Arabian Sea'' has been 
replaced with ``Arabian Gulf'' in the clause prescription for DFARS 
252.236-7010, Overseas Military Construction--Preference for United 
States Firms.
    As further background on sections 111 and 112, these restrictions 
have also been in place since 1997, except that recently the military 
construction appropriations act restrictions have applied to countries 
bordering the Arabian Sea, rather than countries bordering the Arabian 
Gulf. The final rule under DFARS Case 2014-D016 was published in the 
Federal Register on December 11, 2014, finalizing the change from 
``Arabian Gulf'' to ``Arabian Sea.'' In the current statute, enacted on 
December 16, 2014, sections 111 and 112 have been corrected to refer to 
the Arabian Gulf again.

II. Discussion and Analysis

    In order to avoid any possible ambiguity as to the applicability of 
the rule, because there is not uniform agreement as to the correct name 
for the body of water located between Iran and the Arabian Peninsula 
(often referred to as the ``Persian Gulf''), the interim rule lists the 
countries bordering the Gulf in clockwise order (Iran, Oman, United 
Arab Emirates, Saudi Arabia, Qatar, Bahrain, Kuwait, and Iraq).

III. Executive Orders 12866 and 13563

    Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess 
all costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). E.O. 
13563 emphasizes the importance of quantifying both costs and benefits, 
of reducing costs, of harmonizing rules, and of promoting flexibility. 
This is not a significant regulatory action and, therefore, was not 
subject to review under section 6(b) of E.O. 12866, Regulatory Planning 
and Review, dated September 30, 1993. This rule is not a major rule 
under 5 U.S.C. 804.

IV. Regulatory Flexibility Act

    DoD does not expect this 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:
    This rule is necessary to require offerors bidding on DoD military 
construction contracts to provide opportunity for competition to 
American steel producers, fabricators, and manufacturers; and implement 
the preference for award only to U.S. firms when awarding certain 
military construction and architect-engineer contracts to be performed 
in countries bordering the Arabian Gulf.
    The objective of this rule is to implement sections 108, 111, and 
112 of the Military Construction and Veterans Affairs, and Related 
Agencies Appropriations Act, 2015 (Division I of Pub. L. 113-235). This 
rule extends the applicability of the requirement to provide 
opportunity for competition to American steel producers, fabricators, 
and manufacturers, and revises the preference for award to U.S. firms 
of military construction contracts that have an estimated value greater 
than $1,000,000 and the restriction requiring award only to U.S. firms 
for architect-engineer contracts that have an estimated value greater 
than $500,000, to make it applicable to contracts to be performed in a 
country bordering the Arabian Gulf, rather than a country bordering the 
Arabian Sea (as required in earlier statutes).
    Section 108 will benefit any small business entities involved in 
producing, fabricating, or manufacturing steel products to be used in 
military

[[Page 15911]]

construction. Sections 111 and 112 will only apply to a very limited 
number of small entities--those entities that submit offers in response 
to solicitations for military construction contracts that have an 
estimated value greater than $1,000,000 and architect-engineer 
contracts that have an estimated value greater than $500,000, when the 
contracts are to be performed in countries bordering the Arabian Gulf.
    This rule does not add any reporting or recordkeeping requirements. 
The rule does not duplicate, overlap, or conflict with any other 
Federal rules. This rule does not impose any significant economic 
burden on small firms. The rule primarily benefits U.S. firms (both 
small and large), by requiring offerors bidding on DoD military 
construction contracts to provide opportunity for competition to 
American steel producers, fabricators, and manufacturers; and providing 
a preference for U.S. firms competing for construction and architect-
engineer contracts in certain foreign countries, including countries 
bordering the Arabian Gulf. DoD did not identify any alternatives that 
could reduce the burden and still meet the objectives of the rule.
    DoD invites comments from small business concerns and other 
interested parties on the expected impact of this rule on small 
entities.
    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 2015-D006), in 
correspondence.

V. Paperwork Reduction Act

    The rule does not contain any information collection requirements 
that require the approval of the Office of Management and Budget under 
the Paperwork Reduction Act (44 U.S.C. chapter 35).

VI. 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 sections 108, 111, and 112 of Title I, Department 
of Defense, the Military Construction and Veterans Affairs, and Related 
Agencies Appropriations Act, 2015, Division I of Pub. L. 113-235, 
enacted December 16, 2014, became effective upon enactment. This 
interim rule is necessary so that contracting officers will not risk 
possible misuse of funds. The interim rule provides contracting 
officers with the appropriate clause and provision prescriptions for 
correct use of provisions and clauses that implement the statutory 
restrictions on use of military construction funds. 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.

List of Subjects in 48 CFR Parts 225 and 236

    Government procurement.

Manuel Quinones,
Editor, Defense Acquisition Regulations System.

    Therefore, 48 CFR parts 225 and 236 are amended as follows:

PART 225--FOREIGN ACQUISITION

0
1. The authority citation for 48 CFR part 225 continues to read as 
follows:

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

225.7014  [Amended]

0
2. In section 225.7014, amend paragraph (a) by removing ``Arabian Sea'' 
and adding ``Arabian Gulf'' in its place.

225.7015  [Amended]

0
3. Amend section 225.7015 by removing ``Arabian Sea'' and adding 
``Arabian Gulf'' in its place.

PART 236--CONSTRUCTION AND ARCHITECT-ENGINEER CONTRACTS

0
4. The authority citation for 48 CFR part 236 is revised to read as 
follows:

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

0
5. In section 236.273, revise paragraph (a) introductory text to read 
as follows:

236.273  Construction in foreign countries.

    (a) In accordance with section 112 of the Military Construction and 
Veterans Affairs and Related Agencies Appropriations Act, 2015 
(Division I of Pub. L. 113-235) and the same provision in subsequent 
military construction appropriations acts, military construction 
contracts funded with military construction appropriations, that are 
estimated to exceed $1,000,000 and are to be performed in the United 
States outlying areas in the Pacific and on Kwajalein Atoll, or in 
countries bordering the Arabian Gulf (i.e., Iran, Oman, United Arab 
Emirates, Saudi Arabia, Qatar, Bahrain, Kuwait, and Iraq), shall be 
awarded only to United States firms, unless--
* * * * *

236.274  [Amended]

0
6. Amend section 236.274 by removing ``(Pub. L. 110-329, Division E)'' 
and adding ``(Pub. L. 110-329, Division E) and the same provision in 
subsequent military construction appropriations acts'' in its place.

236.570  [Amended]

0
7. Amend section 236.570 by--
0
a. In paragraph (c)(1), removing ``Arabian Sea'' and adding ``Arabian 
Gulf'' in its place; and
0
b. In paragraph (d)(1), by removing ``by Title I of the Military 
Construction and Veterans Affairs Appropriations Act, 2009 (Pub. L. 
110-329, Division E)'' and adding ``for military construction'' in its 
place.

0
8. Revise section 236.602-70 to read as follows:

236.602-70  Restriction on award of overseas architect-engineer 
contracts to foreign firms.

    In accordance with section 111 of the Military Construction and 
Veterans Affairs and Related Agencies Appropriations Act, 2015 
(Division I of Pub. L. 113-235) and the same provision in subsequent 
military construction appropriations acts, architect-engineer contracts 
funded by military construction appropriations that are estimated to 
exceed $500,000 and are to be performed in Japan, in any North Atlantic 
Treaty Organization member country, or in countries bordering the 
Arabian Gulf (i.e., Iran, Oman, United Arab Emirates, Saudi Arabia, 
Qatar, Bahrain, Kuwait, and Iraq), shall be awarded only to United 
States firms or to joint ventures of United States and host nation 
firms.

236.609-70  [Amended]

0
9. In section 236.609-70, amend paragraph (b)(3) by removing ``Arabian 
Sea'' and adding ``Arabian Gulf'' in its place.

[FR Doc. 2015-06759 Filed 3-25-15; 8:45 am]
 BILLING CODE 5001-06-P
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