Federal Register / Vol. 75, No. 109 / Tuesday, June 8, 2010 / Rules and Regulations 32637 

DEPARTMENT OF DEFENSE 

Defense Acquisition Regulations 

System 

48 CFR Part 225 

RIN 0750–AG59 

Defense Federal Acquisition 

Regulation Supplement; Trade 

Agreements Thresholds (DFARS Case 

2009–D040) 

AGENCY: Defense Acquisition 

Regulations System; Department of 

Defense (DoD). 

ACTION: Interim rule with request for 

comments. 

SUMMARY: DoD is issuing an interim rule 

amending the Defense Federal 

Acquisition Regulation Supplement 

(DFARS) to incorporate increased 

thresholds for application of the World 

Trade Organization Government 

Procurement Agreement and the Free 

Trade Agreements, as determined by the 

United States Trade Representative. 

DATES: Effective Date: June 8, 2010. 

Comment Date: Comments on the 

interim rule should be submitted in 

writing to the address shown below on 

or before August 9, 2010 to be 

considered in the formulation of the 

final rule. 

ADDRESSSES: You may submit 

comments, identified by DFARS Case 

2009–D040, 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 2009–D040 in the subject 

line of the message. 

• Fax: 703–602–0350. 

• Mail: Defense Acquisition 

Regulations System, Attn: Ms. Amy 

Williams, OUSD (AT&L) DPAP (DARS), 

3060 Defense Pentagon, Room 3B855, 

Washington, DC 20301–3060. 

Comments received generally will be 

posted without change to http:// 

www.regulations.gov, including any 

personal information provided. 

FOR FURTHER INFORMATION CONTACT: Ms. 

Amy Williams, 703–602–0328. 

SUPPLEMENTARY INFORMATION: 

A. Background 

This interim rule amends the clause 

prescriptions at DFARS 225.1101 and 

225.7503 to reflect increased thresholds 

for application of the trade agreements. 

Every two years, the trade agreements 

thresholds are escalated according to a 

pre-determined formula set forth in the 

agreements. The United States Trade 

Representative has specified the 

following new thresholds (74 FR 68907, 

December 29, 2009): 

Trade Agreement 

Supply 

contract 

(equal to or 

exceeding) 

Construction 

contract 

(equal to or 

exceeding) 

WTO GPA ................................................................................................................................................................ $203,000 $7,804,000 

FTAs: 

Australia FTA .................................................................................................................................................... 70,079 7,804,000 

Bahrain FTA ..................................................................................................................................................... 203,000 9,110,318 

CAFTA–DR (Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua) ........... 70,079 7,804,000 

Chile FTA .......................................................................................................................................................... 70,079 7,804,000 

Morocco FTA .................................................................................................................................................... 203,000 7,804,000 

NAFTA: 

—Canada .......................................................................................................................................................... 25,000 9,110,318 

—Mexico ........................................................................................................................................................... 70,079 9,110,318 

Peru FTA .......................................................................................................................................................... 203,000 7,804,000 

Singapore FTA ................................................................................................................................................. 70,079 7,804,000 

This rule was subject to Office of 

Management and Budget review under 

Executive Order 12866, Regulatory 

Planning and Review, dated September 

30, 1993. 

B. 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., 

because the dollar threshold changes are 

designed to keep pace with inflation 

and thus maintain the status quo. 

Therefore, DoD has not performed an 

initial regulatory flexibility analysis. 

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 2009–D040) in 

correspondence. 

C. Paperwork Reduction Act 

This interim rule affects the 

certification and information collection 

requirements in the provisions at 

DFARS 252.225–7020 and 252.225– 

7035, currently approved under Office 

of Management and Budget Control 

Number 0704–0229. However, there is 

no impact on the estimated burden 

hours. The dollar threshold changes are 

in line with inflation and maintain the 

status quo. 

D. 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 publish an interim rule 

prior to affording the public an 

opportunity to comment. This interim 

rule incorporates increased dollar 

thresholds for application of the World 

Trade Organization Government 

Procurement Agreement and the Free 

Trade Agreements, as determined by the 

United States Trade Representative. 

This action is necessary because the 

increased thresholds were effective 

January 1, 2010. Comments received in 

response to this interim rule will be 

considered in the formation of the final 

rule. 

List of Subjects in 48 CFR Part 225 

Government procurement. 

Ynette R. Shelkin, 

Editor, Defense Acquisition Regulations 

System. 

■ Therefore, 48 CFR part 225 is 

amended as follows: 

PART 225—FOREIGN CONTRACTING 

■ 1. The authority citation for 48 CFR 

part 225 continues to read as follows: 


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32638 Federal Register / Vol. 75, No. 109 / Tuesday, June 8, 2010 / Rules and Regulations 

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

chapter 1. 

225.1101 [Amended] 

■ 2. Section 225.1101 is amended in 

paragraph (11)(i) introductory text by 

removing ‘‘$194,000’’ and adding in its 

place ‘‘$203,000’’; and in paragraphs 

(11)(i)(A) and (11)(i)(B) by removing 

‘‘$67,826’’ and adding in its place 

‘‘$70,079’’. 

225.7503 [Amended] 

■ 3. Section 225.7503 is amended in 

paragraph (a) by removing ‘‘$7,443,000’’ 

and adding in its place ‘‘$7,804,000’’; 

and in paragraph (b) by removing 

‘‘$7,443,000’’ and adding in its place 

‘‘$7,804,000’’, and by removing 

‘‘$8,817,449’’ and adding in its place 

‘‘$9,110,318’’. 

[FR Doc. 2010–13523 Filed 6–7–10; 8:45 am] 

BILLING CODE 5001–08–P 

DEPARTMENT OF DEFENSE 

Defense Acquisition Regulations 

System 

48 CFR Parts 217 and 234 

Defense Federal Acquisition 

Regulation Supplement; Contract 

Authority for Advanced Component 

Development or Prototype Units 

(DFARS Case 2009–D034) 

AGENCY: Defense Acquisition 

Regulations System, Department of 

Defense (DoD). 

ACTION: Interim rule with request for 

comments. 

SUMMARY: DoD is issuing an interim rule 

amending the Defense Federal 

Acquisition Regulation Supplement 

(DFARS) to implement section 819 of 

the National Defense Authorization Act 

for Fiscal Year 2010. Section 819 places 

limitations on certain types of line items 

and contract options that may be 

included in contracts initially awarded 

pursuant to competitive solicitations. 

When the prohibition applies, it limits 

the dollar value, period of performance, 

and time for exercise of such contract 

line items or contract options. 

DATES: Effective Date: June 8, 2010. 

Comment Date: Comments on the 

interim rule should be submitted in 

writing to the address shown below on 

or before August 9, 2010, to be 

considered in the formation of the final 

rule. 

ADDRESSES: Submit comments 

identified by DFARS Case 2009–D034, 

using any of the following methods: 

Æ Federal eRulemaking Portal: http: 

//www.regulations.gov. Follow the 

instructions for submitting comments. 

Æ E-mail: dfars@osd.mil. Include 

DFARS Case 2009–D034 in the subject 

line of the message. 

Æ Fax: 703–602–0350. 

Æ Mail: Defense Acquisition 

Regulations System, Attn: Ms. Meredith 

Murphy, OUSD(AT&L)DPAP(DARS), 

Room 3B855, 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. 

FOR FURTHER INFORMATION CONTACT: Ms. 

Meredith Murphy, 703–602–1302. 

SUPPLEMENTARY INFORMATION: 

A. Background 

This DFARS case implements section 

819 of the National Defense 

Authorization Act for Fiscal Year 2010 

(Pub. L. 111–84, enacted October 28, 

2009). Section 819 is entitled ‘‘Contract 

Authority for Advanced Component 

Development or Prototype Units.’’ 

Section 819 is intended to prevent a 

contract for new technology that is 

initially awarded as a result of 

competition from becoming a 

noncompetitive effort for the 

development of advanced components 

or the procurement of prototype units. 

To do so, section 819 places limitations 

on the (a) Dollar value, (b) period of 

performance, and (c) time for exercise of 

contract line items or contract options 

for advanced component development 

or procurement of prototype items. 

Specifically, the contract line item or 

contract option must be limited to the 

minimal amount of initial or additional 

prototype items that will allow for 

timely competitive solicitation and 

award of a follow-on development or 

production contract for those items. The 

term of the contract line item or contract 

option cannot be for a period longer 

than 12 months, and the dollar value of 

the work to be performed pursuant to 

the contract line item or contract option 

may not exceed the lesser of the amount 

that is three times the dollar value of the 

work previously performed under the 

contract or $20 million. 

Because the coverage is most likely to 

apply to major systems acquisitions, it 

has been added as a new DFARS 

subsection 234.005–1, entitled 

‘‘Competition.’’ However, because the 

language applies to the exercise and 

content of certain contract options, a 

reference to 234.005–1 has been added 

to DFARS 217.202, entitled ‘‘Use of 

Options.’’ 

This is not a significant regulatory 

action and, therefore, is not subject to 

review under section 6(b) of Executive 

Order 12866, Regulatory Planning and 

Review, dated September 30, 1993. This 

rule is not a major rule under 5 U.S.C. 

804. 

B. Regulatory Flexibility Act 

DoD does not expect that this interim 

rule will have a significant economic 

impact on a substantial number of small 

entities within the meaning of the 

Regulatory Flexibility Act, 5 U.S.C. 601, 

et seq., because the rule does not impose 

any additional requirements on small 

businesses. Therefore, an Initial 

Regulatory Flexibility Analysis has not 

been performed. 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 2009–D034) in 

correspondence. 

C. Paperwork Reduction Act 

The Paperwork Reduction Act does 

not apply because the interim rule does 

not contain any information collection 

requirements that require the approval 

of the Office of Management and Budget 

under 44 U.S.C., et seq. 

D. Determination To Issue an Interim 

Rule 

A determination has been made under 

the authority of the Secretary of Defense 

(DoD) that urgent and compelling 

circumstances exist to promulgate this 

interim rule without prior opportunity 

for public comments. This action is 

necessary because section 819 of the 

National Defense Authorization Act for 

Fiscal Year 2010 became effective upon 

enactment on October 28, 2009. Section 

819 places limitations on certain types 

of line items and contract options that 

may be included in contracts initially 

awarded pursuant to competitive 

solicitations. In order to prevent a 

contract for new technology that is 

initially awarded as a result of 

competition from becoming a 

noncompetitive effort for the 

development of advanced components 

or procurement of prototype units, it is 

necessary to publish this rule as an 

interim rule prior to affording the public 

an opportunity to comment. However, 

pursuant to 41 U.S.C. 418b and FAR 

1.501–3, DoD will consider public 

comments received in response to this 

interim rule in the formation of the final 

rule. 


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