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[Federal Register Volume 76, Number 108 (Monday, June 6, 2011)]
[Proposed Rules]
[Pages 32845-32846]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-13367]

Federal Register / Vol. 76, No. 108 / Monday, June 6, 2011 / Proposed 
Rules

[[Page 32845]]

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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Part 252

RIN 0750-AH21

Defense Federal Acquisition Regulation Supplement; Definition of 
``Qualifying Country End Product'' (DFARS Case 2011-D028)

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

ACTION: Proposed rule.

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SUMMARY: DoD is issuing a proposed rule to amend the definition of 
``qualifying country end product'' by eliminating the component test 
for qualifying country end products that are commercially available 
off-the-shelf items.

DATES: Comments on the proposed rule should be submitted in writing to 
the address shown below on or before August 5, 2011, to be considered 
in the formation of the final rule.

ADDRESSES: Submit comments identified by DFARS Case 2011-D028, using 
any of the following methods:
    [cir] Regulations.gov: http://www.regulations.gov.
    Submit comments via the Federal eRulemaking portal by inputting 
``DFARS Case 2011-D028'' under the heading ``Enter keyword or ID'' and 
selecting ``Search.'' Select the link ``Submit a Comment'' that 
corresponds with ``DFARS Case 2011-D028.'' Follow the instructions 
provided at the ``Submit a Comment'' screen. Please include your name, 
company name (if any), and ``DFARS Case 2011-D028'' on your attached 
document.
    [cir] E-mail: dfars@osd.mil. Include DFARS Case 2011-D028 in the 
subject line of the message.
    [cir] Fax: 703-602-0350.
    [cir] Mail: Defense Acquisition Regulations System, Attn: Amy G. 
Williams, OUSD (AT&L) DPAP/DARS, Room 3B855, 3060 Defense Pentagon, 
Washington, DC 20301-3060.
    Comments received generally will be posted without change to http://www.regulations.gov, including any personal information provided. To 
confirm receipt of your comment(s), please check http://www.regulations.gov approximately two to three days after submission to 
verify posting (except allow 30 days for posting of comments submitted 
by mail).

SUPPLEMENTARY INFORMATION:

I. Background

    This rule proposes to amend the definition of ``qualifying country 
end product'' to remove the component test for qualifying country end 
products that are commercially available off-the-shelf items.
    Under the Buy American Act, there is a two-part test to define a 
domestic end product. The product must be manufactured in the United 
States and there is a formula based on the cost of foreign components 
compared to the cost of all components. Under FAR Case 2000-305, the 
component test was waived for the acquisition of commercially available 
off-the-shelf (COTS) items (see FAR 25.001(c)(1)). Likewise, the 
component test for the DFARS definition of ``domestic end product'' was 
waived by the interim rule of DFARS Case 2008-D009 (74 FR 2422, January 
15, 2009) and final rule published December 24, 2009 (74 FR 68384). 
These changes were based on a determination signed by the Administrator 
for Federal Procurement Policy on February 14, 2008, regarding laws 
applicable to the acquisition of COTS items. According to the 
determination, the component test of the Buy American Act (41 U.S.C. 
chapter 83) does not apply to COTS items.
    The definition of ``qualifying country end product'' is not 
statutory, but it was modeled after the definition of ``domestic end 
product'' as a matter of policy. Therefore, it is within the authority 
of DoD to change this definition as a matter of policy, to waive the 
component test for qualifying country end products that are COTS items, 
so that it will not be necessary to try to track the origin of 
components of COTS items that are manufactured in a qualifying country, 
in order to determine that an end product is a qualifying country end 
product.

II. 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 a significant regulatory action and, therefore, was 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.

III. Regulatory Flexibility Act

    DoD does not expect this rule to have a significant impact on a 
substantial number of small entities within the meaning of the 
Regulatory Flexibility Act, 5 U.S.C. 601, et seq., because the rule 
only affects manufacturers of COTS items in qualifying countries, 
removing an administrative burden for the qualifying country 
manufacturer and the Government personnel acquiring the items. The 
Regulatory Flexibility Act is intended to protect small entities in the 
United States, not foreign entities, regardless of size. For the 
definition of ``small business'', the Regulatory Flexibility Act refers 
to the Small Business Act, which in turn allows the SBA Administrator 
to specify detailed definitions or standards. 5 U.S.C. 601(3) and 15 
U.S.C. 632(a). The SBA regulations at 13 CFR 121.105 discuss who is a 
small business: '' (a)(1) Except for small agricultural cooperatives, a 
business concern eligible for assistance from SBA as a small business 
is a business entity organized for profit, with a place of business 
located in the United States, and which operates primarily within the 
United States or which makes a significant contribution to the U.S. 
economy through payment of taxes or use of American products, materials 
or labor.'' The comparable change has already been enacted for the 
benefit of U.S. manufacturers of COTS items in the DFARS which aligns 
with the FAR. Therefore, an initial regulatory flexibility analysis has 
not been performed. DoD invites comments from small business concerns 
and other interested parties on the expected impact of this rule on 
small entities.
    DoD will also consider comments from small entities concerning the 
existing regulations in subparts affected by this rule in accordance 
with 5 U.S.C. 610. Interested parties must submit such comments 
separately and should cite 5 U.S.C. 610 (DFARS Case 2011-D029) in 
correspondence.

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).

[[Page 32846]]

List of Subjects in 48 CFR Part 252

    Government procurement.

Ynette R. Shelkin,
Editor, Defense Acquisition Regulations System.

    Therefore, 48 CFR part 252 is proposed to be amended as follows:

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

    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.

    2. Amend section 252.212-7001 by revising the clause date, and 
paragraphs (b)(5)(i), (b)(11)(i), (b)(14)(i), (b)(20), and (b)(21) to 
read as as follows:

252.212-7001  Contract terms and conditions required to implement 
statutes or executive orders applicable to defense acquisitions of 
commercial items.

* * * * *

CONTRACT TERMS AND CONDITIONS REQUIRED TO IMPLEMENT STATUTES OR 
EXECUTIVE ORDERS APPLICABLE TO DEFENSE ACQUISITIONS OF COMMERCIAL ITEMS 
(DATE)

* * * * *
    (b) * * *
    (5)(i)--------252.225-7001, Buy American Act and Balance of 
Payments Program (DATE) (41 U.S.C. chapter 83, E.O. 10582).
* * * * *
    (11)(i)--------252.225-7021, Trade Agreements (DATE) (19 U.S.C. 
2501-2518 and 19 U.S.C. 3301 note)
* * * * *
    (14)(i)-------- 252.225-7036, Buy American Act--Free Trade 
Agreements--Balance of Payments Program (DATE) (41 U.S.C. chapter 83 
and 19 U.S.C. 3301 note)
* * * * *
    (20)--------252.237-7010, Prohibition on Interrogation of 
Detainees by Contractor Personnel (NOV 2010) (Section 1038 of Pub. 
L. 111-84).
    (21)--------252.237-7019, Training for Contractor Personnel 
Interacting with Detainees (SEP 2006) (Section 1092 of Public Law 
108-375).
* * * * *
    3. Amend section 252.225-7001 by revising the clause date, 
paragraph (a)(8), and paragraph (b) to read as follows:

252.225-7001  Buy American Act and Balance of Payments Program.

* * * * *

BUY AMERICAN ACT AND BALANCE OF PAYMENTS PROGRAM (DATE)

    (a) * * *
    (8) Qualifying country end product means--
    (i) An unmanufactured end product mined or produced in a 
qualifying country; or
    (ii) An end product manufactured in a qualifying country if--
    (A) The cost of the following types of components exceeds 50 
percent of the cost of all its components:
    (1) Components mined, produced, or manufactured in a qualifying 
country.
    (2) Components mined, produced, or manufactured in the United 
States.
    (3) Components of foreign origin of a class or kind for which 
the Government has determined that sufficient and reasonably 
available commercial quantities of a satisfactory quality are not 
mined, produced, or manufactured in the United States; or
    (B) The end product is a COTS item.
* * * * *
    (b) This clause implements the Buy American Act (41 U.S.C. 
chapter 83). In accordance with 41 U.S.C. 1907, the component test 
of the Buy American Act is waived for an end product that is a COTS 
item (see section 12.505(a)(1) of the Federal Acquisition 
Regulation). Unless otherwise specified, this clause applies to all 
line items in the contract.
* * * * *
    4. Amend section 252.225-7021 by revising the clause date and 
paragraph (a)(10) to read as follows:

252.225-7021  Trade agreements.

* * * * *

TRADE AGREEMENTS (DATE)

    (a) * * *
    (10) Qualifying country end product means--
    (i) An unmanufactured end product mined or produced in a 
qualifying country; or
    (ii) An end product manufactured in a qualifying country if--
    (A) The cost of the following types of components exceeds 50 
percent of the cost of all its components:
    (1) Components mined, produced, or manufactured in a qualifying 
country.
    (2) Components mined, produced, or manufactured in the United 
States.
    (3) Components of foreign origin of a class or kind for which 
the Government has determined that sufficient and reasonably 
available commercial quantities of a satisfactory quality are not 
mined, produced, or manufactured in the United States; or
    (B) The end product is a COTS item.
* * * * *
    5. Amend section 252.225-7036 by revising the clause date and 
paragraph (a)(13) to read as follows:

252.225-7036  Buy American Act--Free Trade Agreements--Balance of 
Payments Program.

* * * * *

BUY AMERICAN ACT--FREE TRADE AGREEMENTS--BALANCE OF PAYMENTS PROGRAM 
(DATE)

    (a) * * *
    (13) Qualifying country end product means--
    (i) An unmanufactured end product mined or produced in a 
qualifying country; or
    (ii) An end product manufactured in a qualifying country if--
    (A) The cost of the following types of components exceeds 50 
percent of the cost of all its components:
    (1) Components mined, produced, or manufactured in a qualifying 
country.
    (2) Components mined, produced, or manufactured in the United 
States.
    (3) Components of foreign origin of a class or kind for which 
the Government has determined that sufficient and reasonably 
available commercial quantities of a satisfactory quality are not 
mined, produced, or manufactured in the United States; or
    (B) The end product is a COTS item.
* * * * *
[FR Doc. 2011-13367 Filed 6-3-11; 8:45 am]
BILLING CODE 5001-08-P
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