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[Federal Register Volume 79, Number 198 (Tuesday, October 14, 2014)]
[Rules and Regulations]
[Pages 61584-61585]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-24402]

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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Part 252

RIN 0750-AI30

Defense Federal Acquisition Regulation Supplement: Flowdown of 
Specialty Metals Restrictions (DFARS Case 2014-D011)

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 clarify the flowdown 
requirements for the DFARS clause entitled ``Restriction on Acquisition 
of Certain Articles Containing Specialty Metals.''

DATES: Effective October 14, 2014.

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

SUPPLEMENTARY INFORMATION: 

I. Background

    DoD published a proposed rule in the Federal Register at 79 FR 
35507 on June 23, 2014, to clarify the flowdown requirements for the 
DFARS clause entitled ``Restriction on Acquisition of Certain Articles 
Containing Specialty Metals.'' In order to prevent misinterpretation of 
the current flowdown requirement to insert the ``substance of the 
clause'' in subcontracts, the flowdown requirement has been rewritten 
to specify that the only modifications allowed when flowing down the 
clause are as follows:
     Exclude and reserve paragraph (d) of the clause.
     Modify paragraph (c)(6) of the clause only as necessary to 
facilitate management of the allowance for up to 2 percent otherwise 
noncompliant specialty metal content in the end product, while 
recognizing that the minimal content exception does not apply to 
specialty metals contained in high-performance magnets.
     Not further alter the clause, other than to identify the 
appropriate parties.
    One respondent submitted public comments in response to the 
proposed rule.

II. Discussion and Analysis

    DoD reviewed the public comments in the development of the final 
rule. No changes were made to the rule as a result of those comments.
    Comment: The respondent noted that the proposed clarification may 
well be necessary and welcomed DoD's willingness to minimize 
misinterpretations of laws and regulations.
    Response: Noted.
    Comment: The respondent expressed concern about the number of 
national security waivers issued to accept noncompliant specialty 
metals from China and other noncompliant sources.
    Response: The granting of national security waivers is outside the 
scope of this case.

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. 604, and is 
summarized as follows:
    The reason for issuance of this rule is to clarify the flowdown 
requirements for DFARS clause 252.225-7009, Restriction on Acquisition 
of Certain Articles Containing Specialty Metals. The objective of the 
rule is to more fully implement the requirements of 10 U.S.C. 2533b, 
which restricts the acquisition of specialty metals not melted in the 
United States, its outlying areas, or a qualifying country, in order to 
strengthen the United States industrial base.
    There were no significant issues raised by the public comments in 
response to the initial regulatory flexibility analysis.
    This rule applies to DoD contractors and subcontractors that are 
providing aircraft, missile or space systems, ships, tank or automotive 
items, weapon systems, ammunition, or components thereof that contain 
specialty metals.
    Based on Fiscal Year 2013 data in the Federal Procurement Data 
System (FPDS), DoD awarded 1,566 contracts that exceeded the simplified 
acquisition threshold for aircraft, missile or space systems, ships, 
tank or automotive items, weapon systems, ammunition, or components 
thereof. Of those awards, 642 were to 533 unique small business 
entities (83%). FPDS does not contain data on subcontracts. If we 
estimate an average of 20 subcontracts per contract for items 
containing specialty metals, and that 35 percent of those subcontracts 
are awarded to small businesses, 2 second-tier subcontracts with small 
business entities per subcontract with a small business entity, then 
this rule may apply to approximately 27,828 small business entities 
subject to DFARS 52.225-7009.

(1,566 contracts x 2031,320 subcontracts x .3510,962 1st tier 
subcontracts with small entities x 2 = 21,924 second-tier subcontracts 
with small entities. Total small business entities = .83(642 + 10,962 + 
21,924) = 27,828)

    There are no reporting or recordkeeping requirements associated 
with this rule. With some exceptions, the rule requires contractors to 
provide certain end products containing specialty metals melted or 
produced in the United States, its outlying areas, or a qualifying 
country. However, end items may contain a minimal amount of otherwise 
noncompliant specialty metals, if the total weight of such noncompliant 
metals does not exceed 2 percent of the total of all specialty

[[Page 61585]]

metals in the end item. Therefore, the contractor has some discretion 
in flowing down the requirement to subcontractors to the extent 
necessary to ensure compliance of the end products the contractor will 
deliver to the Government.
    This rule does not impose any significant new burdens on small 
entities, because it only clarifies what was intended by the 
conventional statement to insert ``the substance of the clause'' in 
subcontracts for items containing specialty metals.

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.

Manuel Quinones,
Editor, Defense Acquisition Regulations System.

    Therefore, 48 CFR part 252 is amended as follows:

PART 252--SOLICITATION PROVISIONS AND CONTACT CLAUSES

0
1. The authority citation for 48 CFR part 252 continues to read as 
follows:

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

0
2. Amend section 252.225-7009 by--
0
a. Removing the clause date ``(JUN 2013)'' and adding ``(OCT 2014)'' in 
its place; and
0
b. Revising paragraph (e) to read as follows:

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

* * * * *
    (e) Subcontracts. (1) The Contractor shall exclude and reserve 
paragraph (d) and this paragraph (e)(1) when flowing down this clause 
to subcontracts.
    (2) The Contractor shall insert paragraphs (a) through (c) and this 
paragraph (e)(2) of this clause in subcontracts, including subcontracts 
for commercial items, that are for items containing specialty metals to 
ensure compliance of the end products that the Contractor will deliver 
to the Government. When inserting this clause in subcontracts, the 
Contractor shall--
    (i) Modify paragraph (c)(6) of this clause only as necessary to 
facilitate management of the minimal content exception at the prime 
contract level. The minimal content exception does not apply to 
specialty metals contained in high-performance magnets; and
    (ii) Not further alter the clause other than to identify the 
appropriate parties.

[FR Doc. 2014-24402 Filed 10-10-14; 8:45 am]
BILLING CODE 5001-06-P
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