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###### Department of Defense

###### Defense Acquisition Regulations System

          - 48 CFR Part 225
          - RIN 0750-AH17

# AGENCY:

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

# ACTION:

Final rule.

# SUMMARY:

DoD is adopting an interim rule as a final rule with minor changes. The interim rule implemented part of the National Defense Authorization Act for Fiscal Year 2011, which provides a domestic nonavailability exception to the requirement known as the Berry Amendment to acquire only domestic hand or measuring tools.

# DATES:

*Effective date:*                             August 19, 2011.                        

# FOR FURTHER INFORMATION CONTACT:

Ms. Amy Williams, telephone 703-602-0328.

# SUPPLEMENTARY INFORMATION:

 

## I. Background

                        DoD published an interim rule in the                         **Federal Register**                         (76 FR 14588) on March 17, 2011, to implement section 847 of the National Defense Authorization Act for Fiscal Year 2011 (Pub. L. 111-383). Section 847 provides a domestic nonavailability exception to the requirement at 10 U.S.C. 2533a (Berry Amendment) to acquire only domestic hand or measuring tools. The domestic nonavailability exception was previously limited to the items covered in 10 U.S.C. 2533(b)(1) (food, clothing, fabrics, and fibers).                    

The public comment period closed on May 16, 2011. One respondent submitted comments on the interim rule.

## II. Discussion/Analysis

###  A. Public Comments

The respondent noted high unemployment and recommended that, in order to create more employment for U.S. workers, the Government should minimize (if not eliminate) purchases from outside the United States, if the purchases can be procured within the United States.

The respondent suggested that sometimes nonavailability of domestic hand or measuring tools may be a planning issue. The respondent suggested forecasting DoD needs 12-18 months in advance, providing acquisition history for the past 2 or 3 years, and posting all this data on a Web site open to all CCR-registered organizations. According to the respondent, U.S. companies could then do a better job of planning, including the ramp-up of supply to ensure availability. The respondent believes that this action could potentially eliminate the need for DoD to source hand or measuring tools from sources outside of the United States.

*Response:*                         As required by 10 U.S.C. 2533a, DoD does not purchase foreign hand or measuring tools, if domestically manufactured tools can be acquired.                    

There is definitely a need to interface with the industry about DoD requirements. Better forecasting for everything that DOD purchases clearly benefits all stakeholders. U.S. companies already have access to acquisition history for National Stock Numbers (NSNs) through such sources as FedBizOpps and DIBBS (Defense Logistics Agency Internet Bid Board System). For items that DoD manages and stocks, Government demand planners are able to produce a 12-month forecast in order to assist the industry in understanding its requirements. However, not all items are centrally managed.

DoD does not manage acquisition of hand or measuring tools. These items are assigned to GSA for supply management. This makes it difficult for DoD to predict and aggregate planned purchases across the entire DoD. In FY 2010, DoD had 3,850 contract actions for acquisition of hand or measuring tools, for a total dollar value of $347 million.

Furthermore, adequate planning and notification to industry of an annual forecast will not be effective in obtaining domestic hand or measuring tools if there is an insufficient domestic supplier base. The fact that DoD only received one response to the interim rule may indicate that an insufficient pool of domestic contractors is available to supply DoD's requirements for hand or measuring tools as and when needed, in a satisfactory quality and sufficient quantity. The reason for enactment of the legislation is that market research has indicated that some types of commercial hand or measuring tools are no longer manufactured in the United States. Many hand or measuring tools are commercially available off-the-shelf (COTS) items. Revenue derived from Government sales is generally a very small percentage of overall revenue for manufacturers of commercially available off-the-shelf items. To the extent that the commercial market has transitioned to purchase of foreign hand or measuring tools, DoD does not generally buy sufficient quantities of these tools to influence the industry to produce domestic tools, unless there is also a commercial market for them.

### B. Other Changes

The final rule includes a conforming change to 225.7002-2(c), which provides an exception to the restrictions of the Berry Amendment for acquisitions of items listed in FAR 25.104(a), Nonavailable articles. Previously, hand or measuring tools were excluded from this exception because the statute did not provide an exception based on domestic nonavailability. Now that domestic nonavailability is an authorized exception, there is no need to exclude them at 225.7002-2(c).

Additionally, the final rule includes language at 225.7002-1(b) that directs contracting officers to the corresponding site in DFARS Procedures, Guidance, and Information for additional guidance on interpretation of the Berry Amendment restriction on foreign acquisition of hand or measuring tools.

## III. Regulatory Flexibility Act

DoD certifies that this rule will not have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act because the rule only allows purchase of hand or measuring tools from foreign sources when such tools are not available from domestic sources. If no domestic sources produce the tools, then allowing purchase from a foreign source will not impact any U.S. small business.

## IV. Paperwork Reduction Act

The rule does not impose 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 225

      - Government procurement

Ynette R. Shelkin,

Editor, Defense Acquisition Regulations System.

Therefore, the interim rule published at 76 FR 14588 on March 17, 2011, is adopted as final with the following changes:

# PART 225—FOREIGN ACQUISITION

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.
      ( print page 52133)    
2. Amend section 225.7002-1 by revising paragraph (b) to read as follows: 

225.7002-1

* * * * *

(b) Hand or measuring tools, unless the tools were produced in the United States. For additional guidance, see PGI 225.7002-1(b).

3. Amend section 225-7002-2 by revising paragraph (c) to read as follows: 

225.7002-2 

* * * * *

(c) Acquisitions of items listed in FAR 25.104(a).

* * * * *

[FR Doc. 2011-20531 Filed 8-18-11; 8:45 am]

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