66920 Federal Register / Vol. 65, No. 216 / Tuesday, November 7, 2000 / Proposed Rules

DEPARTMENT OF DEFENSE

GENERAL SERVICES

ADMINISTRATION

NATIONAL AERONAUTICS AND

SPACE ADMINISTRATION

48 CFR Parts 2, 12, 32, 47, and 52

[FAR Case 1999–024]

RIN 9000–AI97

Federal Acquisition Regulation;

Preference for U.S.-Flag Vessels

AGENCIES: Department of Defense (DoD),

General Services Administration (GSA),

and National Aeronautics and Space

Administration (NASA).

ACTION: Proposed rule.

SUMMARY: The Civilian Agency

Acquisition Council and the Defense

Acquisition Regulations Council

(Councils) are proposing to amend the

Federal Acquisition Regulation (FAR)

regarding the applicability of statutory

requirements for use of U.S.-flag vessels

in the transportation of supplies by sea.

The FAR presently waives these

requirements for subcontracts for the

acquisition of commercial items.

DATES: Interested parties should submit

comments in writing on or before

January 8, 2001 to be considered in the

formulation of a final rule.

ADDRESSES: Submit written comments

to: General Services Administration,

FAR Secretariat (MVRS), 1800 F Street,

NW, Room 4035, ATTN: Laurie Duarte,

Washington, DC 20405. Submit

electronic comments via the Internet to:

farcase.1999–024@gsa.gov.

Please submit comments only and cite

FAR case 1999–024 in all

correspondence related to this case.

FOR FURTHER INFORMATION CONTACT: The

FAR Secretariat, Room 4035, GS

Building, Washington, DC, 20405, at

(202) 501–4755 for information

pertaining to status or publication

schedules. For clarification of content,

contact Ms. Linda Klein, Procurement

Analyst, at (202) 501–3775. Please cite

FAR case 1999–024.

SUPPLEMENTARY INFORMATION:

A. Background

10 U.S.C. 2631 and 46 U.S.C. 1241(b)

provide a preference for use of U.S.-flag

vessels for ocean transportation of

supplies purchased under Government

contracts. FAR Part 12 presently waives

the requirements of 46 U.S.C. 1241(b)

for subcontracts for the acquisition of

commercial items. This rule proposes to

amend FAR Part 12 by adding 10 U.S.C.

2631 to the list of laws inapplicable to

subcontracts for the acquisition of

commercial items, since civilian

agencies may buy supplies for use of

military departments. However, this

rule modifies FAR Parts 12, 47, and

associated clauses, to limit the types of

subcontracts for which the waiver of

cargo preference statutes is applicable.

The rule is intended to ensure

compliance with cargo preference

statutes if ocean cargoes are clearly

destined for Government use, while

avoiding disruption of commercial

delivery systems.

This rule also deletes the existing

Alternate II of the clause, 52.247–64, as

unnecessary and replaces it with a new

Alternate II. The rule adds two

definitions, i.e., ‘‘contingency

operation’’ and ‘‘humanitarian or

peacekeeping operation’’ to define terms

used in the definition of ‘‘simplified

acquisition threshold’’, Part 32, Subpart

47.5, and the clause at 52.247–64. These

changes are consistent with previously

issued guidance from OFPP.

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 Councils do not expect this

proposed rule 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 most

entities providing ocean transportation

are not small business concerns. An

Initial Regulatory Flexibility Analysis

has, therefore, not been performed. We

invite comments from small businesses

and other interested parties. The

Councils will consider comments from

small entities concerning the affected

FAR Parts 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. (FAR case 1999–024),

in correspondence.

C. Paperwork Reduction Act

The Paperwork Reduction Act (Pub.

L. 104–13) applies because the proposed

rule will increase the flowdown of FAR

clause 52.247–64, Preference for

Privately Owned U.S.-Flag Commercial

Vessels, to certain commercial

subcontracts. This information

collection requirement is currently

approved by the Office of Management

and Budget under OMB Control Number

9000–0061, which also covers other

transportation related information

collection requirements. We anticipate

an increase of 9,000 responses per year

as a result of this proposed rule, and a

corresponding increase of 900 burden

hours per year.

Annual Reporting Burden

Public reporting burden for this

collection of information is estimated to

average .05 hours per response,

including the time for reviewing

instructions, searching existing data

sources, gathering and maintaining the

data needed, and completing and

reviewing the collection of information.

The annual reporting burden is

estimated as follows:

Respondents: 65,000.

Responses per respondent: 21.

Total annual responses: 1,385,990.

Preparation hours per response: .05

hours.

Total response burden hours: 65,870.

D. Request for Comments Regarding

Paperwork Burden

Submit comments, including

suggestions for reducing this burden,

not later than January 8, 2001 to: FAR

Desk Officer, OMB, Room 10102, NEOB,

Washington, DC 20503, and a copy to

the General Services Administration,

FAR Secretariat (MVR), 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 (MVR),

Room 4035, Washington, DC 20405,

telephone (202) 208–7312. Please cite

OMB Control Number 9000–0061, FAR

Case 1999–024, Preference for U.S.-Flag

Vessels, in all correspondence.

List of Subjects in 48 CFR Parts 2, 12,

32, 47, and 52

Government procurement.

Federal Register / Vol. 65, No. 216 / Tuesday, November 7, 2000 / Proposed Rules 66921

Dated: November 2, 2000.

Al Matera,

Acting Director, Federal Acquisition Policy

Division.

Therefore, DoD, GSA, and NASA

propose that 48 CFR parts 2, 12, 32, 47,

and 52 be amended as set forth below:

1. The authority citation for 48 CFR

parts 2, 12, 32, 47, and 52 continues to

read as follows:

Authority: 40 U.S.C. 486(c); 10 U.S.C.

chapter 137; and 42 U.S.C. 2473(c).

PART 2—DEFINITIONS OF WORDS

AND TERMS

2. Amend section 2.101 by adding the

definitions ‘‘Contingency operation’’

and ‘‘Humanitarian or peacekeeping

operation’’, and by revising the

definition ‘‘Simplified acquisition

threshold’’ to read as follows:

2.101 Definitions.

* * * * *

Contingency operation means a

military operation that—

(1) Is designated by the Secretary of

Defense as an operation in which

members of the armed forces are or may

become involved in military actions,

operations, or hostilities against an

enemy of the United States or against an

opposing military force; or

(2) Results in the call or order to, or

retention on, active duty of members of

the uniformed services under 10 U.S.C.

688, 12301(a), 12302, 12304, 12305, or

12406; chapter 15 of 10 U.S.C.; or any

other provision of law during a war or

during a national emergency declared

by the President or Congress (10 U.S.C.

101(a)(13)).

* * * * *

Humanitarian or peacekeeping

operation means a military operation in

support of the provision of

humanitarian or foreign disaster

assistance or in support of a

peacekeeping operation under chapter

VI or VII of the Charter of the United

Nations. The term does not include

routine training, force rotation, or

stationing (10 U.S.C. 2302(8) and 41

U.S.C. 259(d)(2)(B)).

* * * * *

Simplified acquisition threshold

means $100,000, except that in the case

of any contract to be awarded and

performed, or purchase to be made,

outside the United States in support of

a contingency operation or a

humanitarian or peacekeeping

operation, the term means $200,000.

* * * * *

PART 12—ACQUISITION OF

COMMERCIAL ITEMS

3. Amend section 12.504 by

redesignating paragraphs (a)(1) through

(a)(11) as (a)(2) through (a)(12),

respectively; by adding a new paragraph

(a)(1); and by revising newly designated

paragraph (a)(11) to read as follows:

12.504 Applicability of certain laws to

subcontracts for the acquisition of

commercial items.

(a) * * *

(1) 10 U.S.C. 2631, Transportation of

Supplies by Sea (except for the types of

subcontracts listed at 47.504(d)).

* * * * *

(11) 46 U.S.C. 1241(b), Transportation

in American Vessels of Government

Personnel and Certain Cargo (see

subpart 47.5) (except for the types of

subcontracts listed at 47.504(d)).

* * * * *

PART 32—CONTRACT FINANCING

32.1103 [Amended]

4. Amend section 32.1103 in

paragraph (e) by removing ‘‘10 U.S.C.

101(a)(13)’’ and adding ‘‘2.101’’ in its

place.

PART 47—TRANSPORTATION

5. Amend section 47.504 by revising

paragraph (d) to read as follows:

47.504 Exceptions.

* * * * *

(d) Subcontracts for the acquisition of

commercial items or commercial

components (see 12.504(a)(1) and

(a)(11)). This exception does not apply

to—

(1) Grants-in-aid shipments, such as

agricultural and food-aid shipments;

(2) Shipments covered under 46 App.

U.S.C. 1241–1, such as those generated

by Export-Import Bank loans or

guarantees;

(3) Subcontracts under—

(i) Government contracts or

agreements for ocean transportation

services; or

(ii) Construction contracts; or

(4) Shipments of commercial items

that are—

(i) Items the contractor is reselling or

distributing to the Government without

adding value (see FAR 12.501(b)).

Generally, the contractor does not add

value to the items when it subcontracts

items for f.o.b. destination shipment; or

(ii) Shipped in direct support of U.S.

military—

(A) Contingency operations;

(B) Exercises; or

(C) Forces deployed in connection

with United Nations or North Atlantic

Treaty Organization humanitarian or

peacekeeping operations.

6. Revise section 47.507 to read as

follows:

47.507 Contract clauses.

(a)(1) Insert the clause at 52.247–64,

Preference for Privately Owned U.S.-

Flag Commercial Vessels, in

solicitations and contracts that may

involve ocean transportation of supplies

subject to the Cargo Preference Act of

1954. (For application of the Cargo

Preference Act of 1954, see 47.502(a)(3),

47.503(a), and 47.504.)

(2) If an applicable statute requires, or

if it has been determined under agency

procedures, that the supplies to be

furnished under the contract must be

transported exclusively in privately

owned U.S.-flag commercial vessels (see

47.502(a)(1) and 47.503(b)), use the

clause with its Alternate I.

(3) Except for contracts or agreements

for ocean transportation services or

construction contracts, use the clause

with its Alternate II if any of the

supplies to be transported are

commercial items that are shipped in

direct support of U.S. military—

(i) Contingency operations;

(ii) Exercises; or

(iii) Forces deployed in connection

with United Nations or North Atlantic

Treaty Organization humanitarian or

peacekeeping operations.

(b) The contracting officer may insert

in solicitations and contracts, under

agency procedures, additional

appropriate clauses concerning the

vessels to be used.

PART 52—SOLICITATION PROVISIONS

AND CONTRACT CLAUSES

7. Amend section 52.212–5 by

revising the date of the clause, the

introductory text of paragraph (e), and

paragraph (e)(4) to read as follows:

52.212–5 Contract Terms and Conditions

Required to Implement Statutes or

Executive Orders—Commercial Items.

* * * * *

Contract Terms and Conditions Required to

Implement Statutes or Executive Orders—

Commercial Items (Date)

* * * * *

(e) Notwithstanding the requirements of

the clauses in paragraphs (a), (b), (c), and (d)

of this clause, the Contractor is not required

to include any FAR clause, other than those

listed below (and as may be required by

addenda to this paragraph to establish the

reasonableness of prices under part 15), in a

subcontract for commercial items or

commercial components—

* * * * *

(4) 52.247–64, Preference for Privately

Owned U.S.-Flag Commercial Vessels (46

U.S.C. 1241 and 10 U.S.C. 2631). (Flowdown

66922 Federal Register / Vol. 65, No. 216 / Tuesday, November 7, 2000 / Proposed Rules

required in accordance with paragraph (d) of

the clause in the contract entitled

‘‘Preference for Privately Owned U.S.-Flag

Commercial Vessels’’ (FAR 52.247–64)); and

* * * * *

(End of clause)

8. Amend section 52.244–6 by

revising the date of the clause and

paragraph (c)(4) to read as follows:

52.244–6 Subcontracts for Commercial

Items and Commercial Components.

* * * * *

Subcontracts for Commercial Items and

Commercial Components (Date)

* * * * *

(c) * * *

(4) 52.247–64, Preference for Privately

Owned U.S.-Flag Commercial Vessels (46

U.S.C. 1241 and 10 U.S.C. 2631). (Flowdown

required in accordance with paragraph (d) of

the clause in this contract entitled

‘‘Preference for Privately Owned U.S.-Flag

Commercial Vessels’’ (FAR 52.247–64).)

* * * * *

(End of clause)

9. Amend section 52.247–64 by—

a. Revising the date of the clause;

b. Removing ‘‘The’’ from the

beginning of the introductory text of

paragraph (a) and adding ‘‘Except as

provided in paragraph (e) of this clause,

the’’ in its place;

c. Removing the period at the end of

paragraph (d) and adding ‘‘, except

those described in paragraph (e)(4).’’ in

its place;

d. Removing ‘‘and’’ at the end of

paragraph (e)(2);

e. Removing the period at the end of

paragraph (e)(3) and adding ‘‘; and’’ in

its place;

f. Adding paragraph (e)(4); and

g. Revising Alternates I and II to read

as follows:

52.247–64 Preference for Privately Owned

U.S.-Flag Commercial Vessels.

* * * * *

Preference for Privately Owned U.S.-Flag

Commercial Vessels (Date)

* * * * *

(e) * * *

(4) Subcontracts or purchase orders for the

acquisition of commercial items unless—

(i) This contract is—

(A) A contract or agreement for ocean

transportation services; or

(B) A construction contract; or

(ii) The supplies being transported are—

(A) Items the Contractor is reselling or

distributing to the Government without

adding value. (Generally, the Contractor does

not add value to the items when it

subcontracts items for f.o.b. destination

shipment); or

(B) Shipped in direct support of U.S.

military—

(1) Contingency operations;

(2) Exercises; or

(3) Forces deployed in connection with

United Nations or North Atlantic Treaty

Organization humanitarian or peacekeeping

operations.

* * * * *

Alternate I (Date). As prescribed in

47.507(a)(2), substitute the following

paragraphs (a) and (b) for paragraphs (a) and

(b) of the basic clause:

(a) Except as provided in paragraphs (b)

and (e) of this clause, the Contractor shall use

privately owned U.S.-flag commercial

vessels, and no others, in the ocean

transportation of any supplies to be furnished

under this contract.

(b) If such vessels are not available for

timely shipment at rates that are fair and

reasonable for privately owned U.S.-flag

commercial vessels, the Contractor shall

notify the Contracting Officer and request (1)

authorization to ship in foreign-flag vessels,

or (2) designation of available U.S.-flag

vessels. If the Contractor is authorized in

writing by the Contracting Officer to ship the

supplies in foreign-flag vessels, the contract

price shall be equitably adjusted to reflect the

difference in costs of shipping the supplies

in privately owned U.S.-flag commercial

vessels and in foreign-flag vessels.

Alternate II (Date). As prescribed in

47.507(a)(3), substitute the following

paragraph (e) for paragraph (e) of the basic

clause:

(e) The requirement in paragraph (a) does

not apply to—

(1) Cargoes carried in vessels of the

Panama Canal Commission or as required or

authorized by law or treaty;

(2) Ocean transportation between foreign

countries of supplies purchased with foreign

currencies made available, or derived from

funds that are made available, under the

Foreign Assistance Act of 1961 (22 U.S.C.

2353);

(3) Shipments of classified supplies when

the classification prohibits the use of nonGovernment vessels; and

(4) Subcontracts or purchase orders under

this contract for the acquisition of

commercial items unless the supplies being

transported are—

(i) Items the Contractor is reselling or

distributing to the Government without

adding value. (Generally, the Contractor does

not add value to the items when it

subcontracts items for f.o.b. destination

shipment); or

(ii) Shipments in direct support of U.S.

military—

(A) Contingency operations;

(B) Exercises; or

(C) Forces deployed in connection with

United Nations or North Atlantic Treaty

Organization humanitarian or peacekeeping

operations. (Note: This contract requires

shipment of commercial items in direct

support of U.S. military contingency

operations, exercises, or forces deployed in

connection with United Nations or North

Atlantic Treaty Organization humanitarian or

peacekeeping operations.)

[FR Doc. 00–28562 Filed 11–6–00; 8:45 am]

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