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[Federal Register Volume 75, Number 88 (Friday, May 7, 2010)]
[Proposed Rules]
[Pages 25167-25169]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-10766]

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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

[DFARS Case 2006-D029]

48 CFR Part 225

RIN 0750-AG57

Defense Federal Acquisition Regulation Supplement; Department of 
Defense (DoD); Restriction on Ball and Roller Bearings

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 revise the domestic source restriction 
on acquisition of ball and roller bearings. The current DFARS 
restriction on ball and roller bearings requires that the bearings and 
the main bearing components be manufactured in the U.S. or Canada. This 
requirement was based on the restriction at 10 U.S.C. 2534(a)(5), which 
expired on October 1, 2005. The proposed revision interprets the annual 
defense appropriations act domestic source restriction on acquisition 
of ball and roller bearings in a manner similar to the domestic source 
restriction of the Buy American Act.

DATES: Comments on the proposed rule should be submitted to the address 
shown below on or before July 6, 2010, to be considered in the 
formulation of the final rule.

ADDRESSES: You may submit comments, identified by DFARS Case 2006-D029, 
using any of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     E-mail: dfars@osd.mil. Include DFARS Case 2006-D029 in the 
subject line of the message.
     Fax: 703-602-0350.
     Mail: Defense Acquisition Regulations Council, Attn: Ms. 
Amy Williams, OUSD(AT&L)DPAP(DARS), Room 3B855, 3060 Defense Pentagon, 
Washington, DC 20301-3060.
    All comments received will be posted to http://emissary.acq.osd.mil/dar/dfars.nsf.

FOR FURTHER INFORMATION CONTACT: Ms. Amy Williams, 703-602-0328.

SUPPLEMENTARY INFORMATION:

A. Background

    The current DFARS restriction on ball and roller bearings 
(225.7009) implemented two statutory restrictions: 10 U.S.C. 2534(a)(5) 
and annual appropriations act restrictions. 10 U.S.C.

[[Page 25168]]

2534(a)(5) required that all ball and roller bearings and bearing 
components, either as end items or components of end items, be wholly 
manufactured in the United States or Canada. The annual defense 
appropriations act restrictions require that all ball and roller 
bearings be produced by a domestic source and be of domestic origin. 
This restriction does not apply to the acquisition of commercial items 
(either as components or end products), unless the commercial bearings 
themselves are purchased as the end products.
    In the context of DFARS Part 225, the DAR Council always interprets 
the term ``domestic'' to include Canada, unless the statute 
specifically provides otherwise. Canada is part of the national 
technology and industrial base as defined at 10 U.S.C. 2500. Congress 
has never objected to this interpretation of the term ``domestic.''
    Since the restriction at 10 U.S.C. 2534(a)(5) was considered to be 
more stringent than the annual defense appropriations act restriction, 
the DFARS requirements that the bearing and the main bearing components 
must be 100 percent manufactured in the U.S. or Canada was based on 10 
U.S.C. 2534(a)(5). 10 U.S.C 2534(a)(5) expired on October 1, 2005.
    It is more and more difficult to acquire commercial bearings in 
which all the main bearing components are 100 percent manufactured in 
the U.S. or Canada. U.S. and Canadian manufacturers of commercial 
bearings are increasingly going offshore for components, such as 
retainers, that do not represent the core competency of the bearing 
manufacturer. It is often not possible to obtain domestic commercial 
bearings that do not contain some nondomestic components. The 
Government does not constitute a large enough share of the market to 
influence significantly this decision by manufacturers of commercial 
bearings.
    Therefore, this rule proposes to revise the restriction to 
implement the annual defense appropriations act restriction in a way 
that will allow more flexibility with regard to the source of bearing 
components.
    The DAR Council interprets the phrase ``produced by a domestic 
source and of domestic origin'' to mean that a ball or roller bearing 
must be manufactured in the U.S. or Canada (domestic source) and the 
cost of its U.S. and Canadian components must exceed 50 percent of the 
cost of all its components (of domestic origin). This interpretation is 
comparable to implementation of the Buy American Act and to some of the 
other domestic source restrictions in the DFARS. For example, anchor 
and mooring chain is an appropriations act restriction that also 
requires the item to be manufactured in the U.S. with the cost of the 
components manufactured in the U.S. required to exceed 50 percent of 
the total cost of components. It is reasonable to apply the component 
test similarly to ball and roller bearings to establish that the 
bearing is of domestic origin.
    This rule was subject to Office of Management and Budget review 
under Executive Order 12866, dated September 30, 1993.

B. 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, because this 
rule has impact on the application of domestic source restrictions, DoD 
has performed an initial regulatory flexibility analysis, which is 
summarized as follows:
    The objective of the rule is to allow more flexibility to domestic 
bearings manufacturers in the acquisition of nondomestic components. 
The legal basis for the rule is Section 8065 of the Fiscal Year 2002 
DoD Appropriations Act (Pub. L. 107-117) and the same restriction in 
subsequent DoD appropriations acts.
    The final rule affects manufacturers of bearings, bearing 
components, and noncommercial products that incorporate bearings.
     Bearings. This rule applies only to bearings purchased as 
end products or noncommercial bearings incorporated in noncommercial 
end products or noncommercial components of noncommercial end products 
(see TAB A). Because this rule allows some element of nondomestic 
content in ball and roller bearing components, as long as the U.S. or 
Canadian manufactured bearing contains less than 50 percent nondomestic 
bearing components, both large and small businesses may find greater 
numbers of sources from which to obtain ball and roller bearing 
components. Greater sourcing choices may enable small businesses to 
compete more successfully for DOD ball and roller bearing acquisitions.
     Bearing components. Manufacturers of domestic bearing 
components may face increased competition from manufacturers of 
nondomestic bearing components. However, many of the bearing components 
that are being outsourced are no longer readily available from domestic 
sources.
     Manufacturers of noncommercial products incorporating 
bearings. Manufacturers of noncommercial products incorporating 
bearings (both large and small businesses) will find it easier to 
acquire domestic bearings and will less frequently need to request 
nonavailability determinations (see TAB B).
    The proposed rule imposes no reporting, recordkeeping, or other 
information collection requirements. The rule does not duplicate, 
overlap, or conflict with any other Federal rules. There are no known 
significant alternatives to the rule that would meet the requirements 
of the statute and minimize any significant economic impact of the rule 
on small entities. The impact of this rule on small business is 
expected to be predominantly positive.
    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 
2006-D029.

C. Paperwork Reduction Act

    This proposed rule does not impose any new or modified information 
collection requirements that require the approval of the Office of 
Management and Budget under 44 U.S.C. 3501, et seq.

List of Subjects in 48 CFR Part 225

    Government procurement.

Ynette R. Shelkin,
Editor, Defense Acquisition Regulations System.

    Therefore, DoD proposes to amend 48 CFR part 225 as follows:
    1. The authority citation for 48 CFR part 225 continues to read as 
follows:

    Authority: 41 U.S.C. 421 and 48 CFR chapter 1.

PART 225--FOREIGN ACQUISITION

    2. Revise section 225.7009-2 to read as follows:

225.7009-2  Restriction.

    (a) Do not acquire ball and roller bearings unless--
    (1) The bearings are manufactured in the United States or Canada; 
and
    (2) For each ball or roller bearing, the cost of the bearing 
components mined, produced, or manufactured in the United States or 
Canada exceeds 50 percent of the total cost of the bearing components 
of that ball or roller bearing.
    (b) The restriction at 225.7002-1(b) may also apply to bearings 
that are made from specialty metals, such as high carbon chrome steel 
(bearing steel).

[[Page 25169]]

    3. Revise section 252.225-7016 to read as follows:

252.225-7016  Restriction on Acquisition of Ball and Roller Bearings.

    As prescribed in 225.7009-5, use the following clause:

RESTRICTION ON ACQUISITION OF BALL AND ROLLER BEARINGS (DATE)

    (a) Definitions. As used in this clause--
    (1) Bearing component means the bearing element, retainer, inner 
race, or outer race.
    (2) Component, other than a bearing component, means any item 
supplied to the Government as part of an end product or of another 
component.
    (3) End product means supplies delivered under a line item of 
this contract.
    (b) Except as provided in paragraph (c) of this clause--
    (1) Each ball and roller bearing delivered under this contract 
shall be manufactured in the United States, its outlying areas, or 
Canada; and
    (2) For each ball or roller bearing, the cost of the bearing 
components mined, produced, or manufactured in the United States or 
Canada shall exceed 50 percent of the total cost of the bearing 
components of that ball or roller bearing.
    (c) The restriction in paragraph (b) of this clause does not 
apply to ball or roller bearings that are acquired as--
    (1) Commercial components of a noncommercial end product; or
    (2) Commercial or noncommercial components of a commercial 
component of a noncommercial end product.
    (d) The restriction in paragraph (b) of this clause may be 
waived upon request from the Contractor in accordance with 
subsection 225.7009-4 of the Defense Federal Acquisition Regulation 
Supplement.
    (e) If this contract includes DFARS clause 252.225-7009, 
Restriction on Acquisition of Certain Articles Containing Specialty 
Metals, all bearings that contain specialty metals, as defined in 
that clause, must meet the requirements of that clause.
    (f) The Contractor shall insert the substance of this clause, 
including this paragraph (f), in all subcontracts, except those 
for--
    (1) Commercial items; or
    (2) Items that do not contain ball or roller bearings.

(End of clause)

[FR Doc. 2010-10766 Filed 5-6-10; 8:45 am]
BILLING CODE 5001-08-P
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