Vol. 79 Tuesday, 

No. 150 August 5, 2014 

Part IV 

Department of Defense 

Defense Acquisition Regulations System 

48 CFR Parts 204, et al. 

Federal Acquisition Regulations; Final Rule and Proposed Rule 


emcdonald on DSK67QTVN1PROD with RULES3
45662 Federal Register / Vol. 79, No. 150 / Tuesday, August 5, 2014 / Rules and Regulations 

DEPARTMENT OF DEFENSE 

Defense Acquisition Regulations 

System 

48 CFR Parts 204, 212, 225, and 252 

RIN 0750–AI32 

Defense Federal Acquisition 

Regulation Supplement: Foreign 

Commercial Satellite Services (DFARS 

Case 2014–D010) 

AGENCY: Defense Acquisition 

Regulations System, Department of 

Defense (DoD). 

ACTION: Interim rule. 

SUMMARY: DoD is issuing an interim rule 

amending the Defense Federal 

Acquisition Regulation Supplement 

(DFARS) to implement a section of the 

National Defense Authorization Act 

(NDAA) for Fiscal Year (FY) 2014 that 

prohibits acquisition of commercial 

satellite services from certain foreign 

entities. 

DATES: Effective August 5, 2014. 

Comment Date: Comments on the 

interim rule should be submitted in 

writing to the address shown below on 

or before October 6, 2014, to be 

considered in the formation of a final 

rule. 

ADDRESSES: Submit comments 

identified by DFARS Case 2014–D010, 

using any of the following methods: 

Æ Regulations.gov: http://

www.regulations.gov. Submit comments 

via the Federal eRulemaking portal by 

entering ‘‘DFARS Case 2014–D010’’ 

under the heading ‘‘Enter keyword or 

ID’’ and selecting ‘‘Search.’’ Select the 

link ‘‘Submit a Comment’’ that 

corresponds with ‘‘DFARS Case 2014– 

D010.’’ Follow the instructions provided 

at the ‘‘Submit a Comment’’ screen. 

Please include your name, company 

name (if any), and ‘‘DFARS Case 2014– 

D010’’ on your attached document. 

Æ Email: osd.dfars@mail.mil. Include 

DFARS Case 2014–D010 in the subject 

line of the message. 

Æ Fax: 571–372–6094. 

Æ Mail: Defense Acquisition 

Regulations System, Attn: Ms. Amy G. 

Williams, OUSD(AT&L)DPAP/DARS, 

Room 3B941, 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 www.regulations.gov, 

approximately two to three days after 

submission to verify posting (except 

allow 30 days for posting of comments 

submitted by mail). 

FOR FURTHER INFORMATION CONTACT: Ms. 

Amy G. Williams, Defense Acquisition 

Regulations System, 

OUSD(AT&L)DPAP/DARS, Room 

3B941, 3060 Defense Pentagon, 

Washington, DC 20301–3060. 

Telephone 571–372–6106. 

SUPPLEMENTARY INFORMATION: 

I. Background 

This interim rule amends the DFARS 

to implement section 1602 of the NDAA 

for FY 2014 (Pub. L. 113–66). Section 

1602 prohibits award of a contract for 

commercial satellite services to a foreign 

entity if the Secretary of Defense 

reasonably believes that the foreign 

entity— 

• Is an entity in which the 

government of a covered foreign country 

has an ownership interest that enables 

the government to affect satellite 

operations; or 

• Plans to, or is expected to, provide 

or use launch or other satellite services 

under the contract from a covered 

foreign country. 

A covered foreign country means the 

People’s Republic of China, North 

Korea, or any country that is a state 

sponsor of terrorism, as described in 

section 1261(c)(2) of the NDAA for FY 

2013 (Pub. L. 112–239). State sponsors 

of terrorism, as determined by the 

Secretary of State, currently include 

Cuba, Iran, Sudan, and Syria. 

II. Discussion and Analysis 

This interim rule adds a new section 

at DFARS 225.772 that addresses the 

prohibition on acquisition of 

commercial satellite services from 

certain foreign entities and adds a 

provision at DFARS 252.225–7049 that 

requires offerors to represent whether 

they are foreign entities that fall within 

the prohibition, or whether they are 

offering commercial satellite services 

provided by such a foreign entity. If the 

offeror responds affirmatively to any of 

the representations, then the offeror 

must provide further disclosure 

regarding the circumstances. 

The prohibition on award to such 

foreign entities does not apply if the 

Secretary of Defense for Acquisition, 

Technology, and Logistics or the Under 

Secretary of Defense for Policy, without 

power of redelegation, determines that it 

is in the national security interest of the 

United States to enter into such contract 

and, not later than seven days before 

entering into such contract, the Under 

Secretary of Defense making the 

determination, in consultation with the 

Director of National Intelligence, 

submits to the congressional defense 

committees a national security 

assessment in accordance with 10 

U.S.C. 2279. 

There are conforming changes to 

DFARS 204.1202 and 252.205–7007 to 

include the new representations in the 

annual representations and 

certifications, and changes to DFARS 

212.301(f) to add the new provision to 

the list of provisions and clauses that 

are applicable to the acquisition of 

commercial items. 

III. Applicability to Acquisitions Not 

Greater Than the Simplified 

Acquisition Threshold (SAT) and 

Commercial Items 

10 U.S.C. 2279 is silent on 

applicability to contracts and 

subcontracts in amounts not greater 

than the SAT or for the acquisition of 

commercial items. Also, the statute does 

not provide for criminal or civil 

penalties. Therefore, it does not apply to 

the acquisition of contracts and 

subcontracts in amounts not greater 

than the SAT or the acquisition of 

commercial items unless the Director, 

DPAP, makes a written determination as 

provided in 41 U.S.C. 1905. 

There is a potential risk to national 

security if DoD uses commercial 

satellite services for DoD 

communications and the government of 

a covered foreign country has an 

ownership interest that enables the 

government to affect satellite operations, 

regardless of the dollar value of the 

contract or order. Likewise, if launch or 

other satellite services under the 

contract are occurring in a covered 

country, the government of that country 

could impact the ability of the foreign 

entity to adequately provide those 

services. Furthermore, although 10 

U.S.C. 2279 does not specifically 

reference 41 U.S.C. 1906, the statute 

only applies to the acquisition of 

commercial satellite services, so 

exempting commercial items from 

application of the statute would negate 

the intended effect of the statute. 

Therefore, consistent with 41 U.S.C. 

1905 and 1906, the Director, Defense 

Procurement and Acquisition Policy, 

has determined that it would not be in 

the best interest of the United States to 

exempt acquisitions not greater than the 

SAT and acquisitions of commercial 

items from the applicability of 10 U.S.C. 

2279. 

IV. 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, 


emcdonald on DSK67QTVN1PROD with RULES3
Federal Register / Vol. 79, No. 150 / Tuesday, August 5, 2014 / Rules and Regulations 45663 

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. 

V. Regulatory Flexibility Act 

DoD does not expect this interim 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. 

However, an initial regulatory flexibility 

analysis has been performed and is 

summarized as follows: 

DoD is issuing an interim rule 

amending the Defense Federal 

Acquisition Regulation Supplement 

(DFARS) to implement section 1602 of 

the National Defense Authorization Act 

(NDAA) for Fiscal Year (FY) 2014. 

Section 1602 added 10 U.S.C. 2279, 

which prohibits acquisition of 

commercial satellite services from 

certain foreign entities. 

The objective of the rule is to 

implement 10 U.S.C. 2279, which is the 

legal basis for the rule. The statute 

prohibits award of contracts for 

commercial satellite services to a foreign 

entity that— 

• Is an entity in which the 

government of a covered foreign country 

(i.e., the People’s Republic of China, 

North Korea, Cuba, Iran, Sudan, or 

Syria) has an ownership interest that 

enables the government to affect 

satellite operations; or 

• Plans to, or is expected to, provide 

or use launch or other satellite services 

under the contract from a covered 

foreign country. 

DoD estimates that this rule will 

apply to less than 111 small entities. 

According to Federal Procurement Data 

System data for FY 2013, 111 small 

entities were awarded contracts or 

orders for services in PSC D304 (ADP 

Telecommunications and Transmission 

Services), of which commercial satellite 

services are a subset. Although the focus 

of the Regulatory Flexibility Act is 

protection of domestic small business 

entities that are eligible for assistance 

from the Small Business 

Administration, there may be domestic 

small business entities in the United 

States that offer the satellite services of 

a foreign entity that would be restricted 

by this rule. 

This rule requires an annual 

representation as to whether the offeror 

is, or is not, a foreign entity subject to 

the prohibitions of the statute or is, or 

is not, offering commercial satellite 

services provided by such a foreign 

entity. Further information is required if 

the offeror provides an affirmative 

response to any of the representations, 

but such affirmative response and 

further submission of information is 

expected to be extremely rare. 

The rule does not duplicate, overlap, 

or conflict with any other Federal rules. 

This rule will not have a significant 

economic impact on any small entities, 

unless they are offering commercial 

satellite services provided by a foreign 

entity that is subject to the restrictions 

of this rule. DoD was not able to identify 

any alternatives that would reduce the 

burden on small entities and meet the 

objectives of the rule. 

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 2014–D010), in 

correspondence. 

VI. Paperwork Reduction Act 

The rule contains information 

collection requirements that required 

the approval of the Office of 

Management and Budget under the 

Paperwork Reduction Act (44 U.S.C. 

chapter 35). This information collection 

requirement is entitled Foreign 

Commercial Satellite Services. 

A. Public reporting burden for this 

collection of information is estimated to 

average .25 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 

estimated as follows: 

Respondents: 380. 

Responses per respondent: 1. 

Total annual responses: 380. 

Preparation hours per response: .25 

hours. 

Total response Burden Hours: 95. 

B. Request for Comments Regarding 

Paperwork Burden. 

Written comments and 

recommendations on the proposed 

information collection, including 

suggestions for reducing this burden, 

should be sent to Ms. Jasmeet Seehra at 

the Office of Management and Budget, 

Desk Officer for DoD, Room 10236, New 

Executive Office Building, Washington, 

DC 20503, or email Jasmeet_K._Seehra@

omb.eop.gov, with a copy to the Defense 

Acquisition Regulations System, Attn: 

(Amy G. Williams), OUSD(AT&L)DPAP/ 

DARS, Room 3B941, 3060 Defense 

Pentagon, Washington, DC 20301–3060. 

Comments can be received from 30 to 60 

days after the date of this notice, but 

comments to OMB will be most useful 

if received by OMB within 30 days after 

the date of this notice. 

Public comments are particularly 

invited on: Whether this collection of 

information is necessary for the proper 

performance of functions of the DFARS, 

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. 

To request more information on this 

proposed information collection or to 

obtain a copy of the proposal and 

associated collection instruments, 

please write to the Defense Acquisition 

Regulations System, Attn: Ms. Amy G. 

Williams, OUSD(AT&L)DPAP/DARS, 

Room 3B941, 3060 Defense Pentagon, 

Washington, DC 20301–3060, or email 

osd.dfars@mail.mil. Include DFARS 

Case 2014–D010 in the subject line of 

the message. 

VII. Determination To Issue an Interim 

Rule 

A determination has been made under 

the authority of the Secretary of Defense 

that urgent and compelling reasons exist 

to promulgate this interim rule without 

prior opportunity for public comment. 

This action is necessary because to 

implement 10 U.S.C. 2279, as added by 

section 1602 of the National Defense 

Authorization Act for FY 2014 (Pub. L. 

113–66), which was effective upon 

enactment (December 26, 2013). 10 

U.S.C. 2279 restricts acquisition of 

commercial satellite services from 

certain foreign entities. Until this statute 

is implemented in the DFARS, there is 

risk that contracting officers may 

acquire commercial satellite services in 

violation of the law, and can create risk 

to the U.S. military and lost 

opportunities for the U.S. industrial 

base. 

However, pursuant to 41 U.S.C. 1707 

and FAR 1.501–3(b), DoD will consider 

public comments received in response 

to this interim rule in the formation of 

the final rule. 


emcdonald on DSK67QTVN1PROD with RULES3
45664 Federal Register / Vol. 79, No. 150 / Tuesday, August 5, 2014 / Rules and Regulations 

List of Subjects in 48 CFR Parts 204, 

212, 225, and 252 

Government procurement. 

Amy G. Williams, 

Deputy, Defense Acquisition Regulations 

System. 

Therefore, 48 CFR parts 204, 212, 225, 

and 252 are amended as follows: 

■ 1. The authority citation for 48 CFR 

parts 204, 212, 225, and 252 continues 

to read as follows: 

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

chapter 1. 

PART 204—ADMINISTRATIVE 

MATTERS 

■ 2. Amend section 204.1202 by— 

■ a. Removing, in paragraph (2) 

introductory text, ‘‘Central Contractor 

Registration’’ and adding ‘‘System for 

Award Management’’ in its place; 

■ b. Redesignating paragraph (2)(xi) 

through (xiii) as (2)(xii) through (xiv), 

respectively; and 

■ c. Adding a new paragraph (2)(xi) to 

read as follows: 

204.1202 Solicitation provision. 

* * * * * 

(2) * * * 

(xi) 252.225–7049, Prohibition on 

Acquisition of Commercial Satellite 

Services from Certain Foreign Entities— 

Representations. 

* * * * * 

PART 212—ACQUISITION OF 

COMMERCIAL ITEMS 

■ 3. Amend section 212.301 by— 

■ a. Redesignating paragraphs (f)(xlviii) 

through (lxxii) as (f)(xlix) through 

(lxxiii); and 

■ b. Adding a new paragraph (f)(xlviii) 

to read as follows: 

212.301 Solicitation provisions and 

contract clauses for the acquisition of 

commercial items. 

(f) * * * 

(xlviii) Use the provision at 252.225– 

7049, Prohibition on Acquisition of 

Commercial Satellite Services from 

Certain Foreign Entities— 

Representations, as prescribed at 

225.772–5. 

* * * * * 

PART 225—FOREIGN ACQUISITION 

225.771 [Added and reserved] 

■ 4. Add and reserve section 225.771. 

■ 5. Add sections 225.772, 225.772–0, 

225.772–1, 225.772–2, 225.772–3, 

225.772–4, and 225.772–5 to read as 

follows: 

225.772 Prohibition on acquisition of 

commercial satellite services from certain 

foreign entities. 

225.772–0 Scope. 

This section implements 10 U.S.C. 

2279. 

225.772–1 Definitions. 

As used in this section, covered 

foreign country, foreign entity, 

government of a covered foreign 

country, satellite services, and state 

sponsor of terrorism are defined in the 

provision at 252.225–7049, Prohibition 

on Acquisition of Commercial Satellite 

Services from Certain Foreign Entities— 

Representations. 

225.772–2 Prohibition. 

The contracting officer shall not 

award a contract for commercial 

satellite services to— 

(a) A foreign entity if the Under 

Secretary of Defense for Acquisition, 

Technology, and Logistics or the Under 

Secretary of Defense for Policy 

reasonably believes that the foreign 

entity— 

(1) Is an entity in which the 

government of a covered foreign country 

has an ownership interest that enables 

the government to affect satellite 

operations; or 

(2) Plans to or is expected to provide 

or use launch or other satellite services 

under the contract from a covered 

foreign country; or 

(b) An offeror that is offering 

commercial satellite services provided 

by a foreign entity as described in 

paragraph (a) of this section. 

225.772–3 Procedures. 

(a) If an offeror discloses information 

in accordance with paragraph (d) of the 

provision 252.225–7049, Prohibition on 

Acquisition of Commercial Satellite 

Services from Certain Foreign Entities— 

Representations, the contracting 

officer— 

(1) Shall forward the information 

regarding the offeror through agency 

channels to the address at PGI 225.772– 

3; and 

(2) Shall not award to that offeror, 

unless an exception is determined to 

apply in accordance with 225.772–4. 

(b)(1) If the otherwise successful 

offeror provides negative responses to 

all representations in the provision at 

252.225–7049, the contracting officer 

may rely on the representations, unless 

the contracting officer has an 

independent reason to question the 

representations. 

(2) If the contracting officer has an 

independent reason to question a 

negative representation of the otherwise 

successful offeror, the contracting 

officer shall consult with the office 

specified in PGI 225.772–3, prior to 

deciding whether to award to that 

offeror. 

225.772–4 Exception. 

(a) The prohibition in 225.772–2 does 

not apply if— 

(1) The Under Secretary of Defense for 

Acquisition, Technology, and Logistics, 

or the Under Secretary of Defense for 

Policy, without power of redelegation, 

determines that it is in the national 

security interest of the United States to 

enter into such contract; and 

(2) Not later than seven days before 

entering into such contract, the Under 

Secretary of Defense making the 

determination in paragraph (a)(1) of this 

section, in consultation with the 

Director of National Intelligence, 

submits to the congressional defense 

committees a national security 

assessment, in accordance with 10 

U.S.C. 2279. 

(b) If requesting an exception 

pursuant to paragraph (a) of this section, 

the contracting officer shall forward the 

request through agency channels to the 

address at PGI 225.772–3, providing any 

available information necessary for the 

Under Secretary of Defense making the 

determination in paragraph (a)(1) of this 

section to evaluate the request and 

perform a national security assessment, 

in accordance with 10 U.S.C. 2279. 

225.772–5 Solicitation provision. 

Use the provision at 252.225–7049, 

Prohibition on Acquisition of 

Commercial Satellite Services from 

Certain Foreign Entities— 

Representations, in solicitations for the 

acquisition of commercial satellite 

services. If the solicitation includes the 

provision at FAR 52.204–7, do not 

separately list the provision 252.225– 

7049 in the solicitation. 

PART 252—SOLICITATION 

PROVISIONS AND CONTRACT 

CLAUSES 

■ 6. Amend section 252.204–7007 by— 

■ a. Removing the clause date ‘‘(MAR 

2014)’’ and adding ‘‘(AUG 2014)’’ in its 

place; 

■ b. Redesignating paragraphs (d)(1)(v) 

through (vii) as (d)(1)(vi) through (viii); 

and 

■ c. Adding a new paragraph (d)(1)(v) to 

read as follows: 

252.204–7007 Alternate A, Annual 

Representations and Certifications. 

* * * * * 

(d)(1) * * * 

(v) 252.225–7049, Prohibition on 

Acquisition of Commercial Satellite 

Services from Certain Foreign Entities— 


emcdonald on DSK67QTVN1PROD with RULES3
Federal Register / Vol. 79, No. 150 / Tuesday, August 5, 2014 / Rules and Regulations 45665 

Representations. Applies to solicitations 

for the acquisition of commercial 

satellite services. 

* * * * * 

■ 7. Add section 252.225–7049 to read 

as follows: 

252.225–7049 Prohibition on Acquisition 

of Commercial Satellite Services From 

Certain Foreign Entities—Representations. 

As prescribed in 225.772–5, use the 

following provision: 

Prohibition on Acquisition of 

Commercial Satellite Services From 

Certain Foreign Entities— 

Representations (Aug 2014) 

(a) Definitions. As used in this provision— 

Covered foreign country means— 

(i) The People’s Republic of China; 

(ii) North Korea; or 

(iii) Any country that is a state sponsor of 

terrorism. (10 U.S.C. 2279) 

Foreign entity means— 

(i) Any branch, partnership, group or subgroup, association, estate, trust, corporation 

or division of a corporation, or organization 

organized under the laws of a foreign state if 

either its principal place of business is 

outside the United States or its equity 

securities are primarily traded on one or 

more foreign exchanges. 

(ii) Notwithstanding paragraph (i) of this 

definition, any branch, partnership, group or 

sub-group, association, estate, trust, 

corporation or division of a corporation, or 

organization that demonstrates that a 

majority of the equity interest in such entity 

is ultimately owned by U.S. nationals is not 

a foreign entity. (31 CFR 800.212) 

Government of a covered foreign country 

includes the state and the government of a 

covered foreign country, as well as any 

political subdivision, agency, or 

instrumentality thereof. 

Satellite services means communications 

capabilities that utilize an on-orbit satellite 

for transmitting the signal from one location 

to another. 

State sponsor of terrorism means a country 

determined by the Secretary of State, under 

section 6(j)(1)(A) of the Export 

Administration Act of 1979 (50 U.S.C. App. 

2405(j)(i)(A)), to be a country the government 

of which has repeatedly provided support for 

acts of international terrorism. As of the date 

of this provision, state sponsors of terrorism 

subject to this provision are Cuba, Iran, 

Sudan, and Syria. (10 U.S.C. 2327) 

(b) Prohibition on award. In accordance 

with 10 U.S.C. 2279, unless an exception is 

determined to apply in accordance with 

DFARS 225.71–4, no contract for commercial 

satellite services may be awarded to— 

(1) A foreign entity if the Under Secretary 

of Defense for Acquisition, Technology, and 

Logistics or the Under Secretary of Defense 

for Policy reasonably believes that the foreign 

entity— 

(i) Is an entity in which the government of 

a covered foreign country has an ownership 

interest that enables the government to affect 

satellite operations; or 

(ii) Plans to, or is expected to, provide or 

use launch or other satellite services under 

the contract from a covered foreign country; 

or 

(2) An offeror that is offering to provide the 

commercial satellite services of a foreign 

entity as described in paragraph (b)(1) of this 

section. 

(c) Representations. The Offeror represents 

that— 

(1) It [ ] is, [ ] is not a foreign entity in 

which the government of a covered foreign 

country has an ownership interest that 

enables the government to affect satellite 

operations; 

(2) It [ ] is, [ ] is not a foreign entity that 

plans to provide or use launch or other 

satellite services under the contract from a 

covered foreign country; 

(3) It [ ] is, [ ] is not offering commercial 

satellite services provided by a foreign entity 

in which the government of a covered foreign 

country has an ownership interest that 

enables the government to affect satellite 

operations; and 

(4) It [ ] is, [ ] is not offering commercial 

satellite services provided by a foreign entity 

that plans to or is expected to provide or use 

launch or other satellite services under the 

contract from a covered foreign country. 

(d) Disclosure. If the Offeror has responded 

affirmatively to any of the above 

representations, provide the following 

information, as applicable: 

(1) Identification of the foreign entity 

proposed to provide the commercial satellite 

services, if other than the Offeror. 

(2) To the extent practicable, a description 

of any ownership interest that the 

government of a covered foreign country has 

in the foreign entity proposed to provide the 

satellite services, including identification of 

the covered foreign country. 

(3) Identification of any covered foreign 

country in which launch or other satellite 

services will be provided or used, and a 

description of any satellite services planned 

to be provided or used in that country. 

(e) The representations in paragraph (c) of 

this provision are a material representation of 

fact upon which reliance will be placed 

when making award. If it is later determined 

that the Offeror knowingly rendered an 

erroneous representation, in addition to other 

remedies available to the Government, the 

Contracting Officer may terminate the 

contract resulting from this solicitation for 

default. 

(End of provision) 

[FR Doc. 2014–18204 Filed 8–4–14; 8:45 am] 

BILLING CODE 5001–06–P 


emcdonald on DSK67QTVN1PROD with RULES3