[Federal Register Volume 71, Number 188 (Thursday, September 28, 2006)]
[Rules and Regulations]
[Pages 57375-57378]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-8208]


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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 25 and 52

[FAC 2005-13; FAR Case 2005-034; Item VI; Docket 2006-0020, Sequence 9]
RIN 9000-AK52


Federal Acquisition Regulation; FAR Case 2005-034, Reporting of 
Purchases from Overseas Sources

AGENCIES: Department of Defense (DoD), General Services Administration 
(GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Interim rule with request for comments.

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SUMMARY: The Civilian Agency Acquisition Council and the Defense 
Acquisition Regulations Council (Councils) have agreed on an interim 
rule amending the Federal Acquisition Regulation (FAR) to implement 
Section 837 of Division A of the Transportation, Treasury, Housing and 
Urban Development, the Judiciary, the District of Columbia, and 
Independent Agencies Appropriations Act, 2006 (Pub. L. 109-115) and 
similar sections in subsequent appropriations acts. Section 837 
requires the head of each Federal agency to submit a report to Congress 
relating to acquisitions of articles, materials, or supplies that are 
manufactured outside the United States. This rule amends the FAR to 
request from offerors necessary data regarding place of manufacture.

DATES: Effective Date: September 28, 2006.
    Applicability Date: This amendment is mandatory for solicitations 
issued and contracts awarded on or after October 1, 2006. To meet the 
congressionally mandated reporting requirement, agencies may 
incorporate the new FAR provision 52.225-18 or corresponding 
requirement at 52.212-3 in solicitations issued or contracts awarded 
prior to October 1, 2006.
    Comment Date: Interested parties should submit written comments to 
the FAR Secretariat on or before November 27, 2006 to be considered in 
the formulation of a final rule.

ADDRESSES: Submit comments identified by FAC 2005-13, FAR case 2005-
034, by any of the following methods:
    <bullet> Federal eRulemaking Portal: http://www.regulations.gov. 
Search for this document at the ``Federal Acquisition

[[Page 57376]]

Regulation'' agency and review the ``Document Title'' column; click on 
the Document ID number. Click on ``Add Comments''.
    You may also search for any document using the ``Advanced search/
document search'' tab, selecting from the agency field ``Federal 
Acquisition Regulation'', and typing the FAR case number in the keyword 
field.
    <bullet> Fax: 202-501-4067.
    <bullet> Mail: General Services Administration, Regulatory 
Secretariat (VIR), 1800 F Street, NW, Room 4035, ATTN: Laurieann 
Duarte, Washington, DC 20405.
    Instructions: Please submit comments only and cite FAC 2005-13, FAR 
case 2005-034, in all correspondence related to this case. All comments 
received will be posted without change to http://www.regulations.gov, 
including any personal and/or business confidential information 
provided.

FOR FURTHER INFORMATION CONTACT: For clarification of content, contact 
Mr. Jeremy Olson at (202) 501-3221. Please cite FAC 2005-13, FAR case 
2005-034. For information pertaining to status or publication 
schedules, contact the FAR Secretariat at (202) 501-4755. Please cite 
FAR case 2005-034.

SUPPLEMENTARY INFORMATION:

A. Background

    Section 837 of Division A of the Fiscal Year 2006 Consolidated 
Appropriations Act (Pub. L. 109-115) requires the head of each Federal 
agency to submit a report to Congress on the dollar value of 
acquisitions made by the agency of articles, materials, or supplies 
that are manufactured outside the United States. The law also requests 
an itemized list of all waivers granted with respect to such articles, 
materials, or supplies under the Buy American Act and a summary of the 
total procurement funds spent on goods manufactured in the United 
States. Similar requirements were contained in the Fiscal Year 2004 and 
2005 Consolidated Appropriations Acts (Section 645 of Division F, Pub. 
L. 108-199 and Section 641 of Division H, Pub. L. 108-447, 
respectively), and the Councils anticipate that this requirement will 
continue for at least several years into the future.
    For purposes of this report, the criteria established in the law is 
only whether an end product is manufactured in the United States or 
outside the United States, without regard to the origin of the 
components (see 25.001(c)). FAR Part 25 defines the ``United States'' 
to include the 50 States, the District of Columbia, and the outlying 
areas. ``Outlying areas'' are defined in FAR Subpart 2.1 to include 
commonwealths, territories, and minor outlying islands of the United 
States.
    Agency reporting will be geared to collection of data at the 
acquisition level, rather than the line item level. All data in the 
Federal Procurement Data System is currently collected at the 
acquisition level. The Councils considered the possibility of requiring 
the reporting to be on a line item basis, but rejected this approach 
because the excessive reporting burden far outweighed any additional 
accuracy of reporting that might be achieved. Since reporting is to be 
provided at the level of each acquisition, over-reporting is avoided by 
reporting only those acquisitions that are predominantly for the 
acquisition of manufactured end products.
    Likewise, the offeror will report manufacture inside or outside the 
United States and its outlying areas based on the predominance of the 
manufactured goods offered, and the contracting officer will select the 
predominant reason for acquiring the foreign manufactured end products, 
if more than one reason applies.
    Using this total acquisition approach, the Councils therefore adopt 
the following minimum requirements for the report:
    1. Provide dollar value of acquisitions of predominantly 
manufactured end products, broken down into--
    a. Place of manufacture is outside the United States and its 
outlying areas;
    b. Place of manufacture is inside the United States or its outlying 
areas; and
    c. Total of a. and b.
    2. For acquisitions in paragraph 1.a., provide the number of 
acquisitions in each exception category, and the total number of such 
acquisitions. The exception categories are--
    <bullet> Use outside the United States;
    <bullet> Resale;
    <bullet> Commercial information technology;
    <bullet> Public interest determination;
    <bullet> Trade agreements;
    <bullet> Domestic nonavailability;
    <bullet> Unreasonable cost; and
    <bullet> Qualifying country - For DoD only, the foreign 
manufactured end products are predominantly qualifying country end 
products (DFARS 225.003 and 225.872-1).
    In order to fulfill these minimum reporting requirements, the 
agencies will need additional data--
    <bullet> From offerors, as to whether manufactured end products are 
predominantly manufactured in the United States or its outlying areas, 
or outside the United States and its outlying areas; and
    <bullet> From contracting officers, as to the predominant reason 
for acquisition of foreign manufactured end products.
    This interim rule adds a FAR provision 52.225-18, Place of 
Manufacture, in order to collect the necessary data on place of 
manufacture. A corresponding requirement has been added to FAR 52.212-
3, Offeror Representations and Certifications--Commercial Items. The 
contracting officer determines the use of 52.225-18 based on estimation 
of whether the solicitation is predominantly for the acquisition of 
manufactured end products (i.e., the estimated value of the 
manufactured end products equals or exceeds the estimated value of 
other items to be acquired as a result of the solicitation.) The 
provision defines a ``manufactured end product'' to include any product 
code purchased by the Government except for certain Federal Supply 
Groups or Classes that are excluded from the definition. The provision 
also defines ``place of manufacture'' to mean the place where an end 
product is assembled out of components, or otherwise made or processed 
from raw materials into the finished product that is to be provided to 
the Government. If a product is disassembled and reassembled, the place 
of reassembly is not the place of manufacture.
    The Councils will coordinate with Federal Procurement Data System 
(FPDS) personnel, so that the data system can accommodate the data set 
forth in this notice as necessary to meet the statutory reporting 
requirement. FPDS will provide a standardized report of purchases from 
sources outside the United States based on the required fields. It is 
anticipated that a standardized report will facilitate the ability of 
agencies to meet the reporting requirement.
    This is not a significant regulatory action and, therefore, was 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

    The interim rule is not expected 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 this 
interim rule does not change the rules for buying, it only adds an 
information collection requirement. It will not have a significant 
economic impact to ask offerors of manufactured end products to check 
off a box to indicate whether products offered to the

[[Page 57377]]

Government are predominantly manufactured in the United States or 
outside the United States. The offeror is not even required to identify 
the country of manufacture if the product is manufactured outside the 
United States. Therefore, an Initial Regulatory Flexibility Analysis 
has not been performed. The Councils will consider comments from small 
entities concerning the affected FAR Parts 25 and 52 in accordance with 
5 U.S.C. 610. Interested parties must submit such comments separately 
and should cite 5 U.S.C 601, et seq. (FAC 2005-13, FAR case 2005-034), 
in correspondence.

C. Paperwork Reduction Act

    The Paperwork Reduction Act (Pub. L. 104-13) applies because the 
interim rule contains information collection requirements. Accordingly, 
a request for approval of a new information collection requirement 
concerning FAR 52.225-18 was forwarded to the Office of Management and 
Budget under 44 U.S.C. 3501, et seq. Public comments concerning this 
request will be invited through a subsequent Federal Register notice.
    There will be an estimated 38,146 burden hours for the new 
provision 52.225-18, Place of Manufacture. Accordingly, in accordance 
with 5 CFR 1320.13, the FAR Secretariat has obtained an emergency 
approval of a new information collection requirement concerning OMB 
Control Number 9000-0161, FAR Case 2005-034, Reporting of Purchases 
from Overseas Sources, from the Office of Management and Budget under 
44 U.S.C. 3501, et seq.
    Annual Reporting Burden:
    We estimate the annual total burden hours as follows:
    Based on the FPDS data for Fiscal Year 2004 on number of contract 
actions for Federal supplies and equipment (summary by PSC group), we 
estimate the number of solicitations predominantly for manufactured 
supplies and equipment equals 762,920 and the number of responses to 
the solicitations equals 3,814,600 (average of 5 responses per 
solicitation). We further estimate the number of respondents at 95,365, 
based on an estimate of 40 responses per respondent. The total response 
burden hours equals 38,146 hours (3,814,600 responses x average of .01 
hours per response).
    Respondents: 95,365
    Responses per respondent: 40
    Total annual responses: 3,814,600
    Preparation hours per response: .01
    Total response burden hours: 38,146

D. Request for Comments Regarding Paperwork Burden

    Submit comments, including suggestions for reducing this burden, 
not later than November 27, 2006 to: FAR Desk Officer, OMB, Room 10102, 
NEOB, Washington, DC 20503, and a copy to the General Services 
Administration, FAR Secretariat (VIR), 1800 F Street, NW, Room 4035, 
Washington, DC 20405.
    Public comments are particularly invited on: whether this 
collection of information is necessary for the proper performance of 
functions of the FAR, and will have practical utility; whether our 
estimate of the public burden of this collection of information is 
accurate, and based on valid assumptions and methodology; ways to 
enhance the quality, utility, and clarity of the information to be 
collected; and ways in which we can minimize the burden of the 
collection of information on those who are to respond, through the use 
of appropriate technological collection techniques or other forms of 
information technology.
    Requester may obtain a copy of the justification from the General 
Services Administration, FAR Secretariat (VIR), Room 4035, Washington, 
DC 20405, telephone (202) 501-4755. Please cite OMB Control Number 
9000-0161, FAR Case 2005-034, Reporting of Purchases from Overseas 
Sources, in all correspondence.

D. Determination to Issue an Interim Rule

    A determination has been made under the authority of the Secretary 
of Defense (DoD), the Administrator of General Services (GSA), and the 
Administrator of the National Aeronautics and Space Administration 
(NASA) that urgent and compelling reasons exist to promulgate this 
interim rule without prior opportunity for public comment. This action 
is necessary because the report for Fiscal Year 2006 is due within 180 
days after the end of the fiscal year and it is particularly important 
that this rule be implemented before the beginning of the next fiscal 
year in order to start collecting data in this fiscal year and to have 
data covering the entire Fiscal Year 2007. However, pursuant to Public 
Law 98-577 and FAR 1.501, the Councils 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 25 and 52

    Government procurement.

    Dated: September 19, 2006
Ralph De Stefano,
Director, Contract Policy Division.

0
Therefore, DoD, GSA, and NASA amend 48 CFR parts 25 and 52 as set forth 
below:
0
1. The authority citation for 48 CFR parts 25 and 52 continues to read 
as follows:

    Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 42 
U.S.C. 2473(c).

PART 25--FOREIGN CONTRACTING

0
2. Revise section 25.001(c) to read as follows:


25.001  General.

* * * * *
    (c) The test to determine the country of origin for an end product 
under the Buy American Act (see the various country ``end product'' 
definitions in 25.003) is different from the test to determine the 
country of origin for an end product under the trade agreements, or the 
criteria for the report on end products manufactured outside the United 
States (see 25.004).
    (1) The Buy American Act uses a two-part test to define a 
``domestic end product'' (manufacture in the United States and a 
formula based on cost of domestic components).
    (2) Under the trade agreements, the test to determine country of 
origin is ``substantial transformation'' (i.e., transforming an article 
into a new and different article of commerce, with a name, character, 
or use distinct from the original article).
    (3) For the reporting requirement at 25.004, the only criterion is 
whether the place of manufacture of an end product is in the United 
States or outside the United States, without regard to the origin of 
the components.
0
3. Add section 25.004 to read as follows:


25.004  Reporting of acquisition of end products manufactured outside 
the United States.

    (a) In accordance with the requirements of Section 837 of Division 
A of the Transportation, Treasury, Housing and Urban Development, the 
Judiciary, the District of Columbia, and Independent Agencies 
Appropriations Act, 2006 (Pub. L. 109-115) and similar sections in 
subsequent appropriations acts, the head of each Federal agency must 
submit a report to Congress on the amount of the acquisitions made by 
the agency from entities that manufacture end products outside the 
United States in that fiscal year.
    (b) This report will be partially based on information collected 
from offerors

[[Page 57378]]

using solicitation provision 52.225-18, Place of Manufacture (and its 
commercial item equivalent in 52.212-3, Offeror Representations and 
Certifications-Commercial Items). For purposes of this report, the 
criteria established in the law is only whether the place of 
manufacture of an end product is in the United States or outside the 
United States, without regard to the origin of the components (see 
25.001(c)).
0
4. Amend section 25.1101 by adding paragraph (f) to read as follows:


25.1101  Acquisition of supplies.

* * * * *
    (f) Insert the provision at 52.225-18, Place of Manufacture, in 
solicitations that are predominantly for the acquisition of 
manufactured end products, as defined in the provision at 52.225-18 
(i.e., the estimated value of the manufactured end products exceeds the 
estimated value of other items to be acquired as a result of the 
solicitation).

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
5. Amend section 52.212-3 by--
0
a. Revising the date of the provision;
0
b. Amending the introductory paragraph of the provision by removing 
from the first sentence ``paragraph (j)'' and adding ``paragraph (k)'' 
in its place; and by removing from the second sentence ``paragraphs (b) 
through (i)'' and adding ``paragraphs (b) through (j)'' in its place;
0
c. Amending paragraph (a) by removing from the end of the introductory 
paragraph the colon and adding an em dash in its place; and by adding 
in alphabetical order, the definitions ``Manufactured end product'' and 
``Place of manufacture'';
0
d. Redesignating paragraph ``j'' as paragraph ``k''; and adding new 
paragraph ``j'';
0
e. In the newly designated paragraph (k)(1), removing ``paragraph (j)'' 
and adding ``paragraph (k)(2)'' in its place; and
0
f. In the newly designated paragraph (k)(2), in the bracketed 
paragraph, removing ``(b) through (i)'' and adding ``(b) through (j)'' 
in its place.
    The revised text reads as follows:


52.212-3  Offeror Representations and Certifications--Commercial Items.

* * * * *
    OFFEROR REPRESENTATIONS AND CERTIFICATIONS-COMMERCIAL ITEMS (SEP 
2006)
* * * * *
    (a) * * *
    Manufactured end product means any end product in Federal Supply 
Classes (FSC) 1000-9999, except--
    (1) FSC 5510, Lumber and Related Basic Wood Materials;
    (2) Federal Supply Group (FSG) 87, Agricultural Supplies;
    (3) FSG 88, Live Animals;
    (4) FSG 89, Food and Related Consumables;
    (5) FSC 9410, Crude Grades of Plant Materials;
    (6) FSC 9430, Miscellaneous Crude Animal Products, Inedible;
    (7) FSC 9440, Miscellaneous Crude Agricultural and Forestry 
Products;
    (8) FSC 9610, Ores;
    (9) FSC 9620, Minerals, Natural and Synthetic; and
    (10) FSC 9630, Additive Metal Materials.
    Place of manufacture means the place where an end product is 
assembled out of components, or otherwise made or processed from raw 
materials into the finished product that is to be provided to the 
Government. If a product is disassembled and reassembled, the place of 
reassembly is not the place of manufacture.
* * * * *
    (j) Place of manufacture. (Does not apply unless the solicitation 
is predominantly for the acquisition of manufactured end products.) For 
statistical purposes only, the offeror shall indicate whether the place 
of manufacture of the end products it expects to provide in response to 
this solicitation is predominantly--
    (1) [square] In the United States (Check this box if the total 
anticipated price of offered end products manufactured in the United 
States exceeds the total anticipated price of offered end products 
manufactured outside the United States); or
    (2) [square] Outside the United States.
* * * * *
    (End of provision)
0
6. Add section 52.225-18 to read as follows:


52.225-18  Place of Manufacture.

0
As prescribed in 25.1101(f), insert the following solicitation 
provision:
    PLACE OF MANUFACTURE (SEP 2006)
    (a) Definitions. As used in this clause--
    Manufactured end product means any end product in Federal Supply 
Classes (FSC) 1000-9999, except--
    (1) FSC 5510, Lumber and Related Basic Wood Materials;
    (2) Federal Supply Group (FSG) 87, Agricultural Supplies;
    (3) FSG 88, Live Animals;
    (4) FSG 89, Food and Related Consumables;
    (5) FSC 9410, Crude Grades of Plant Materials;
    (6) FSC 9430, Miscellaneous Crude Animal Products, Inedible;
    (7) FSC 9440, Miscellaneous Crude Agricultural and Forestry 
Products;
    (8) FSC 9610, Ores;
    (9) FSC 9620, Minerals, Natural and Synthetic; and
    (10) FSC 9630, Additive Metal Materials.
    Place of manufacture means the place where an end product is 
assembled out of components, or otherwise made or processed from raw 
materials into the finished product that is to be provided to the 
Government. If a product is disassembled and reassembled, the place of 
reassembly is not the place of manufacture.
    (b) For statistical purposes only, the offeror shall indicate 
whether the place of manufacture of the end products it expects to 
provide in response to this solicitation is predominantly--
    (1) [square] In the United States (Check this box if the total 
anticipated price of offered end products manufactured in the United 
States exceeds the total anticipated price of offered end products 
manufactured outside the United States); or
    (2) [square] Outside the United States.
    (End of provision)
[FR Doc. 06-8208 Filed 9-27-06; 8:45 am]
BILLING CODE 6820-EP-S