[Federal Register Volume 88, Number 205 (Wednesday, October 25, 2023)]
[Rules and Regulations]
[Pages 73240-73241]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-23432]


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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Part 225

[Docket DARS-2023-0006]
RIN 0750-AL39


Defense Federal Acquisition Regulation Supplement: Restrictions 
on Overhaul and Repair of Naval Vessels in Foreign Shipyards (DFARS 
Case 2021-D021)

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 implement a section of the 
National Defense Authorization Act for Fiscal Year 2021 that restricts 
overhaul and repair of a naval vessel in a shipyard outside the United 
States or Guam.

DATES: Effective October 30, 2023.

FOR FURTHER INFORMATION CONTACT: Kimberly Bass, telephone 703-717-3446.

SUPPLEMENTARY INFORMATION:

I. Background

    DoD is issuing a final rule amending the DFARS to implement section 
1025 of the National Defense Authorization Act (NDAA) for Fiscal Year 
(FY) 2021 (Pub. L. 116-283), which amends 10 U.S.C. 8680(a) to restrict 
the overhaul or repair of a naval vessel in a shipyard outside the 
United States or Guam. The restriction does not apply to voyage repairs 
or to repairs required for damage sustained due to hostile actions or 
interventions. In addition, the restriction does not apply to a naval 
vessel classified as a littoral combat ship operating on deployment for 
corrective and preventive maintenance or repair and facilities 
maintenance. The rule also establishes the criteria under which foreign 
workers or foreign contractors may be used to perform corrective and 
preventive maintenance or repair or facilities maintenance on a naval 
vessel.
    DoD published a proposed rule in the Federal Register at 88 FR 
17360 on March 22, 2023, to revise the DFARS to implement section 1025 
of the NDAA for FY 2021. One respondent submitted a public comment in 
response to the proposed rule.

II. Discussion and Analysis

    DoD reviewed the public comment in the development of the final 
rule. A discussion of the comment is provided, as follows:

A. Summary of Significant Changes

    No changes are made to the final rule as a result of public 
comments.

B. Analysis of Public Comment

    Comment: A respondent provided comments with overall support of the 
rule and stated it would save money and reduce the need for supplies 
and preventative maintenance on ships in foreign shipyards.
    Response: DoD acknowledges the respondent's support for the rule.

C. Other Changes

    Minor editorial changes are made in paragraph (b) of DFARS 
225.7013-2 to comply with drafting conventions.

III. Applicability to Contracts at or Below the Simplified Acquisition 
Threshold and for Commercial Products, Including Commercially Available 
Off-the-Shelf Items, and Commercial Services

    This rule does not create any new solicitation provisions or 
contract clauses. It does not impact any existing solicitation 
provisions or contract clauses or prescriptions for their use.

IV. Expected Impact of the Rule

    Currently, DFARS 225.7013 includes the restrictions on the 
construction or repair of vessels in foreign shipyards. This rule adds 
the exception for repairs necessary to correct damage sustained due to 
hostile actions or interventions and for corrective and preventive 
maintenance or repair and facilities maintenance on naval vessels 
classified as littoral combat ships operating on deployment. Under 
these exceptions, the repairs or maintenance described above may be 
performed in a shipyard outside the United States or Guam in accordance 
with 10 U.S.C. 8680(a). The rule also specifies the authorized use of 
foreign workers under certain conditions when a determination is made 
by the Secretary of the Navy, who cannot further delegate the authority 
to make such a determination.

V. 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, as amended.

VI. Congressional Review Act

    As required by the Congressional Review Act (5 U.S.C. 801-808) 
before an interim or final rule takes effect, DoD will submit a copy of 
the interim or final rule with the form, Submission of Federal Rules 
under the Congressional Review Act, to the U.S. Senate, the U.S. House 
of Representatives, and the Comptroller General of the United States. A 
major rule under the Congressional Review Act cannot take effect until 
60 days after it is published in the Federal Register. The Office of 
Information and Regulatory Affairs has determined that this rule is not 
a major rule as defined by 5 U.S.C. 804.

VII. 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 is issuing a final rule amending the DFARS to implement section 
1025 of the National Defense Authorization Act (NDAA) for Fiscal Year 
(FY) 2021 (Pub. L. 116-283). Section 1025 amends 10 U.S.C. 8680(a) to 
restrict the overhaul or repair of a naval vessel in a shipyard outside 
the United States or Guam, unless the repairs are: (1) voyage repairs 
or repairs necessary to correct damage sustained due to hostile actions 
or interventions; or (2) to a naval vessel classified as a littoral 
combat ship operating on deployment for corrective and preventive 
maintenance or repair and facilities maintenance. The final rule also 
establishes that: (1) foreign workers may not be used to perform 
corrective and preventive maintenance or repair on a naval vessel 
unless the

[[Page 73241]]

Secretary of the Navy (without further delegation) makes a 
determination; and (2) foreign contractors may not be used to perform 
facilities maintenance unless approved by the Secretary of the Navy. 
The objective of the rule is to implement the restrictions of section 
1025 of the NDAA for FY 2021 on the overhaul or repair of a naval 
vessel in a shipyard outside the United States or Guam, with exceptions 
as described in this paragraph.
    No public comments were received in response to the initial 
regulatory flexibility analysis.
    DoD reviewed data from the Federal Procurement Data System for 
fiscal years 2020, 2021, and 2022 for contracts for the repair or 
overhaul of naval vessels outside the United States or Guam that 
exceeded the simplified acquisition threshold. DoD awarded a total of 
383 contracts to an average of 76 unique small entities.
    It is expected that this rule will continue to provide small 
businesses the opportunity to participate in acquisitions for the 
overhaul or repair of a naval vessel in a shipyard outside the United 
States or Guam, since naval vessel overhaul restrictions currently 
exist, and this rule provides exceptions that allow for U.S. contractor 
personnel to perform certain repairs and maintenance in accordance with 
10 U.S.C. 8680(a).
    This rule does not include any new reporting, recordkeeping, or 
other compliance requirements for small entities.
    There are no known significant alternative approaches to the rule 
that would meet the requirements of the statute.

VIII. Paperwork Reduction Act

    This 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 225

    Government procurement.

Jennifer D. Johnson,
Editor/Publisher, Defense Acquisition Regulations System.

    Therefore, 48 CFR part 225 is amended as follows:

PART 225--FOREIGN ACQUISITION

0
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.


225.7013  [Amended]

0
2. Amend section 225.7013 by removing the introductory text and 
paragraphs (a) and (b).

0
3. Add sections 225.7013-0, 225.7013-1, and 225.7013-2 to read as 
follows:


225.7013-0  Scope.

    This section implements 10 U.S.C. 8679 and 10 U.S.C. 8680.


225.7013-1  Definitions.

    As used in this section--
    Corrective and preventive maintenance or repair means--
    (1) Maintenance or repair actions performed as a result of a 
failure in order to return or restore equipment to acceptable 
performance levels; and
    (2) Scheduled maintenance or repair actions to prevent or discover 
functional failures.
    Facilities maintenance means the effort required to--
    (1) Provide housekeeping services throughout the ship;
    (2) Perform coating maintenance and repair to exterior and interior 
surfaces due to normal environmental conditions; and
    (3) Clean mechanical spaces, mission zones, and topside spaces.


225.7013-2  Restrictions.

    (a) Contract award (10 U.S.C. 8679). Do not award a contract to 
construct in a foreign shipyard--
    (1) A vessel for any of the armed forces; or
    (2) A major component of the hull or superstructure of a vessel for 
any of the armed forces.
    (b) Overhaul, repair, or maintenance (10 U.S.C. 8680). (1) Do not 
overhaul, repair, or maintain, in a shipyard outside the United States 
or Guam, a naval vessel (or any other vessel under the jurisdiction of 
the Secretary of the Navy) homeported in the United States or Guam.
    (2) This restriction on overhaul, repair, or maintenance does not 
apply to--
    (i) Voyage repairs; or
    (ii) Repairs necessary to correct damage sustained due to hostile 
actions or interventions.
    (3) For a naval vessel classified as a littoral combat ship and 
operating on deployment--
    (i) Corrective and preventive maintenance or repair, whether 
intermediate or depot level, and facilities maintenance may be 
performed if the work is performed by U.S. Government personnel or U.S. 
contractor personnel--
    (A) In a foreign shipyard;
    (B) At a facility outside of a foreign shipyard; or
    (C) At any other facility convenient to the vessel;
    (ii) Foreign workers may be used to perform corrective and 
preventive maintenance or repair, only if the Secretary of the Navy, 
without power of delegation, determines that travel by U.S. Government 
or contractor personnel to perform the maintenance or repair is not 
advisable for health or safety reasons; and
    (iii) Foreign contractors may perform facilities maintenance only 
as approved by the Secretary of Navy.

[FR Doc. 2023-23432 Filed 10-24-23; 8:45 am]
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