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[Federal Register Volume 78, Number 60 (Thursday, March 28, 2013)]
[Rules and Regulations]
[Pages 18877-18879]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-07107]

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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Part 252

RIN 0750-AH78

Defense Federal Acquisition Regulation Supplement; Specialty 
Metals--Definition of ``Produce'' (DFARS Case 2012-D041)

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

ACTION: Final rule.

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SUMMARY: DoD is issuing a final rule amending the Defense Federal 
Acquisition Regulation Supplement (DFARS) to revise the definition of 
``produce'' as it applies to specialty metals. The National Defense 
Authorization Act for Fiscal Year 2011 directed DoD to review the 
definition of ``produce'' to ensure its compliance with the statutory 
restrictions on specialty metals and to determine if a revision to the 
current rule was necessary and appropriate.

DATES: Effective Date: March 28, 2013.

FOR FURTHER INFORMATION CONTACT: Ms. Amy Williams, Telephone 571-372-
6106.

SUPPLEMENTARY INFORMATION: 

I. Background

    DoD published a proposed rule in the Federal Register at 77 FR 
43474 on July 24, 2012. DoD proposed to amend the definition of 
``produce'' to eliminate the phrase ``quenching and tempering'' of 
armor steel plate, and to expand the application of the other listed 
technologies, currently restricted just to titanium and titanium 
alloys, to any specialty metal that could be formed by such 
technologies.
    DoD received comments on the proposed rule from 13 respondents.

II. Discussion and Analysis

    DoD reviewed the public comments in the development of the final 
rule. A discussion of the comments and the changes made to the rule as 
a result of those comments is provided, as follows:

A. Summary of Significant Changes

    The phrase ``gas atomization'' in the definition of ``produce'' has 
been revised to read ``atomization,'' in order to allow for other types 
of atomization (e.g., gas, water, centrifugal, plasma).

[[Page 18878]]

B. Analysis of Comments

1. Definition of ``Produce''
    Comment: All respondents strongly supported the proposed definition 
of ``produce.'' Some of the benefits of the revised definition noted by 
the respondents are as follows:
    Provides domestic control of material vital to protection of our 
troops is critical to national security interests, promotes self-
sufficiency of U.S. defense industry.
    Helps maintain a strong domestic armor steel plate industry and 
strengthens our defense industrial base, as well as the overall 
economic strength of the United States. Incentivizes investment in the 
manufacturing capacity, process technology, research and development 
necessary to meet the needs of the U.S. military, thereby reducing the 
possibility of supply shortages. Adds new U.S. steelmaking jobs, as 
well as jobs throughout the steelmaking supply chain.
    Is consistent with statutory language and legislative history.
    Response: Noted.
2. Impact of Changes in Production Capacity of Domestic Producers of 
Steel Plate
    Comment: Some respondents commented on the statement by DoD in the 
Federal Register preamble to the proposed rule, that there is now 
sufficient capacity to meet DoD requirements, if DoD were to remove 
``quenching and tempering of steel plate'' from the definition of 
``produce.'' One respondent expressed concern that by linking the 
regulatory definition of ``produce'' to changes in capacity, DoD is 
creating uncertainty and discourages potential investors from building 
or maintaining domestic production.
    Several respondents also commented that there are already existing 
statutory authorities (i.e., the nonavailability and national security 
exceptions), which should provide sufficient flexibility and make it 
unnecessary to revisit the issue of the definition of ``produce.''
    Response: Since these respondents are all strongly in support of 
the proposed rule, no change is necessary in the final rule.
3. Other Processes
    Comment: One respondent expressed support for DoD's decision to 
amend the definition of ``produce'' to create a uniform definition for 
all specialty metals. Several respondents noted that the definition now 
only includes those technologies that make a significant contribution 
equivalent to melting, and allows for flexibility and future technology 
advances that could replace the melt stage for certain specialty 
metals.
    Response: Noted.
    Comment: One respondent stated that atomization of metal is not 
always achieved by using a stream of gas. Atomization may also be 
achieved by rotating molten metal at high speeds. Therefore, the 
respondent recommended deletion of the word ``gas'' from the proposed 
definition of ``produce.''
    Response: DoD has removed the word ``gas'' from the final rule.
    Comment: The same respondent stated that the final consolidation of 
metal powders produced through atomization would not be sufficient to 
confer domestic origin on the resulting article, because the 
atomization process uses molten metal. Therefore, the metal powder 
produced through atomization is a melt-derived powder, rather than a 
non-melt derived powder. The respondent did not request a change to the 
rule with regard to this issue, but requested clarification in the 
preamble to the final rule that articles produced from melt-derived 
metal powders, including metal powders produced through atomization, 
would have to be consolidated from domestically melted metal powders in 
order to be considered products of the United States.
    Response: DoD has created a vertical list to improve the clarity 
with regard to the three processes that constitute production, and must 
therefore be performed in the United States: (i) Atomization; (ii); 
sputtering; or (iii) final consolidation of non-melt derived powders.
    It is very clear that final consolidation only constitutes 
production with regard to metal powders that are derived by non-melt 
processes (such as mechanical or chemical processes). It is acceptable 
for non-melt processes to occur outside the United States, as long as 
final consolidation occurs in the United States, but any processes 
involving melting must occur in the United States.

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

    A final regulatory flexibility analysis has been prepared 
consistent with the Regulatory Flexibility Act, 5 U.S.C. 601, et seq., 
and is summarized as follows:
    DoD has issued a final rule amending the Defense Federal 
Acquisition Regulation Supplement (DFARS) to revise the definition of 
``produce'' as it applies to specialty metals. The National Defense 
Authorization Act for Fiscal Year 2011 directed DoD to review the 
definition of ``produce'' to ensure its compliance with 10 U.S.C. 2533b 
and to determine if a revision to the current rule was necessary and 
appropriate.
    The objective of the proposed rule is to revise the definition of 
``produce'' as it applies to production of specialty metals, in 
response to comments received and consideration of current technologies 
for production of specialty metals other than titanium. The legal basis 
for the rule is 10 U.S.C. 2533b. No significant issues were raised by 
the public comments in response to the initial regulatory flexibility 
analysis. There were no comments filed by the Chief Counsel for 
Advocacy of the Small Business Administration.
    The final rule affects primarily producers of specialty metal steel 
armor plate, and manufacturers that supply steel armor plate that will 
be incorporated into end items to be acquired by DoD. Producers of 
specialty metals are generally large businesses. There is a high 
capitalization requirement to establish a business that can melt or 
produce specialty metals. The small business size standard for primary 
metal manufacturing ranges from 500 to 1,000 employees. All the 
specialty metals producers reviewed had more than 500 employees. There 
are numerous manufacturers of products containing specialty metals, 
either as prime contractors or subcontractors. DoD does not have the 
data to determine the total number of these manufacturers, or the 
number that are small businesses, because the Federal Procurement Data 
System only collects data on prime contractors and end items, not 
subcontractors and components of end items.
    There are no projected reporting, recordkeeping, or other 
compliance requirements.
    DoD did not identify any significant alternatives to the rule which 
would minimize any impact of the rule on

[[Page 18879]]

small entities and still meet the requirements of the statute 10 U.S.C. 
2533b.

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).

List of Subjects in 48 CFR Part 252

    Government procurement.

Kortnee Stewart,
Editor, Defense Acquisition Regulations System.

    Therefore, DoD amends 48 CFR part 252 as follows:

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
1. The authority citation for part 252 continues to read as follows:

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

252.212-7001  [Amended]

0
2. Section 252.212-7001 is amended by--
0
a. Removing clause date ``(FEB 2013)'' and adding ``(MAR 2013)'' in its 
place; and
0
b. In paragraph (b)(7), by removing the clause date ``(JUL 2009)'' and 
adding ``(MAR 2013)'' in its place; and
0
c. In paragraph (b)(8), by removing the clause date ``(JUN 2012)'' and 
adding ``(MAR 2013)'' in its place.

0
3. Section 252.225-7008 is amended by--
0
a. Removing clause date ``(JUL 2009)'' and adding ``(MAR 2013)'' in its 
place; and
0
b. Removing the numerical designations preceding the definition 
headings of ``Alloy''; ``Produce''; ``Specialty metal''; and ``Steel''.
0
c. Revising the definition of ``Produce'' in paragraph (a) to read as 
follows:

252.225-7008  Restriction on Acquisition of Specialty Metals.

* * * * *
    (a) * * *
    Produce means--
    (i) Atomization;
    (ii) Sputtering; or
    (iii) Final consolidation of non-melt derived metal powders.
* * * * *

0
4. Section 252.225-7009 is amended by--
0
a. Removing clause date ``(JUN 2012)'' and adding ``(MAR 2013)'' in its 
place; and
0
b. Removing the numerical designations preceding the definition 
headings of ``Alloy''; ``Assembly''; ``Commercial derivative military 
article''; ``Commercially available off-the-shelf item''; 
``Component''; ``Electronic component''; ``End item''; ``High 
performance magnet''; ``Produce''; ``Qualifying country''; ``Required 
form''; ``Specialty metal''; ``Steel''; and ``Subsystem''.
0
c. Revising the definition of ``Produce'' in paragraph (a) to read as 
follows:

252.225-7009  Restriction on Acquisition of Certain Articles Containing 
Specialty Metals.

* * * * *
    (a) * * *
    Produce means--
    (i) Atomization;
    (ii) Sputtering; or
    (iii) Final consolidation of non-melt derived metal powders.
* * * * *

252.244-7000  [Amended]

0
5. Section 252.244-7000 is amended by--
0
a. Removing clause date ``(JUN 2012)'' and adding ``(MAR 2013)'' in its 
place; and
0
b. In paragraph (b), by removing the clause date ``(JUN 2012)'' and 
adding ``(MAR 2013)'' in its place.

[FR Doc. 2013-07107 Filed 3-27-13; 8:45 am]
BILLING CODE 5001-06-P
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