Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Rules and Regulations 2713 

Program Office. It should be noted that 

reporting non-appropriated funds may 

impact certain reports generated using 

FPDS data regarding appropriated 

funds. FAR language remains 

unchanged. 

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 Department of Defense, the 

General Services Administration, and 

the National Aeronautics and Space 

Administration certify that this final 

rule will not 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 

contract reporting is not accomplished 

by the vendor community, only by 

Government contracting entities. 

C. Paperwork Reduction Act 

The Paperwork Reduction Act does 

not apply because the changes to the 

FAR do not impose information 

collection requirements that require the 

approval of the Office of Management 

and Budget under 44 U.S.C. 3501, et 

seq. 

List of Subjects in 48 CFR Parts 1, 2, 4, 

12, and 52 

Government procurement. 

Dated: December 24, 2008 

Edward Loeb, 

Acting Director, Office of Acquisition Policy. 

■ Accordingly, DoD, GSA, and NASA 

adopt the interim rule amending 48 CFR 

parts 1, 2, 4, 12, and 52, which was 

published in the Federal Register at 73 

FR 21773, April 22, 2008, as a final rule 

with the following change: 

PART 4—ADMINISTRATIVE MATTERS 

■ 1. The authority citation for 48 CFR 

part 4 continues to read as follows: 

Authority: 40 U.S.C. 121(c); 10 U.S.C. 

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

4.601 [Amended] 

■ 2. Amend section 4.601 by removing 

from the introductory paragraph of the 

definition ‘‘Indefinite delivery vehicle 

(IDV)’’ the word ‘‘contract’’ and adding 

‘‘contract or agreement’’ in its place. 

[FR Doc. E9–556 Filed 1–14–09; 8:45 am] 

BILLING CODE 6820–EP–S 

DEPARTMENT OF DEFENSE 

GENERAL SERVICES 

ADMINISTRATION 

NATIONAL AERONAUTICS AND 

SPACE ADMINISTRATION 

48 CFR Parts 2, 3, 12, 23, 25, and 52 

[FAC 2005–30; FAR Case 2000–305; Item 

II; Docket 2009-0001; Sequence 1] 

RIN 9000–AJ55 

Federal Acquisition Regulation; FAR 

Case 2000–305, Commercially 

Available Off-the-Shelf (COTS) Items 

AGENCIES: Department of Defense (DoD), 

General Services Administration (GSA), 

and National Aeronautics and Space 

Administration (NASA). 

ACTION: Final rule. 

SUMMARY: The Civilian Agency 

Acquisition Council and the Defense 

Acquisition Regulations Council 

(Councils) have agreed on a final rule 

amending the Federal Acquisition 

Regulation (FAR) to implement Section 

4203 of the Clinger-Cohen Act of 1996 

(41 U.S.C. 431) (the Act) with respect to 

the inapplicability of certain laws to 

contracts and subcontracts for the 

acquisition of commercially available 

off-the-shelf (COTS) items. 

DATES: Effective Date: February 17, 

2009. 

FOR FURTHER INFORMATION CONTACT: Mr. 

Michael Jackson, Procurement Analyst, 

at (202) 208–4949 for clarification of 

content. For information pertaining to 

status or publication schedules, contact 

the FAR Secretariat at (202) 501–4755. 

Please cite FAC 2005–30, FAR case 

2000–305. 

SUPPLEMENTARY INFORMATION: 

A. Background 

Section 35 of the Office of Federal 

Procurement Policy (OFPP) Act (41 

U.S.C. 431) requires that the Federal 

Acquisition Regulation (FAR) include a 

list of provisions of law that are 

inapplicable to contracts for the 

acquisition of commercially available 

off-the-shelf (COTS) items. Certain laws 

cannot be exempt from the acquisition 

of COTS and they include laws that— 

• Provide for criminal or civil 

penalties; 

• Specifically refer to 41 U.S.C. 431 

and the laws state that it applies to 

COTS; 

• Provide for a bid protest procedure 

or small business preference listed at 41 

U.S.C. 431(a)(3); or 

• Are applicable because the 

Administrator of OFPP makes a written 

determination that it would not be in 

the best interest of the United States to 

exempt such COTS contracts from the 

applicability of the laws. 

In order to implement section 4203 of 

the Clinger-Cohen Act of 1996, DoD, 

GSA, and NASA published an advanced 

notice of proposed rule (ANPR) in the 

Federal Register at 68 FR 4874, January 

30, 2003. The ANPR listed provisions 

that may be inapplicable to the 

acquisition of COTS items, and 

requested public comment. (A prior 

ANPR had been issued under FAR Case 

96–308.) The Councils published a 

proposed rule at 69 FR 2448, January 15, 

2004. The comment period closed on 

March 15, 2004. The Councils received 

comments from 56 respondents, of 

which 3 were duplicates. The comments 

were thoroughly examined by the FAR 

Acquisition Law Team, Civilian Agency 

Acquisition Council (CAAC), and 

Defense Acquisition Regulations 

Council (DARC). 

B. Definition of COTS. 

The Councils received several 

comments on the definition of COTS. 

1. Include services/IT in the 

definition. One respondent suggested 

that the definition of COTS item should 

delete the words ‘‘of supply’’ from the 

definition. The respondent states that 

this is not part of the statutory 

definition. Further, three respondents 

commented that definition of COTS 

should specifically include services. 

Another respondent suggested 

additional language in the definition of 

COTS to address software and other 

information technology products. 

Response: The statute defines ‘‘COTS 

item’’ as an item that ‘‘Is a commercial 

item as described in section 4(12)(A).’’ 

‘‘Commercial item’’ is defined at 41 

U.S.C. 403(12). Paragraph (A) of that 

definition reads as follows: 

‘‘Any item, other than real property, 

that is of a type customarily used by the 

general public or by non-governmental 

purposes, and that— 

(i) Has been sold, leased, or licensed 

to the general public; or 

(ii) Has been offered for sale, lease or 

license to the general public.’’ 

Paragraphs (F) and (G) of the 

definition deal with commercial 

services. These paragraphs were not 

referenced in the statutory definition of 

a COTS item. Services are therefore 

necessarily excluded from the 

definition. To make the definition 

clearer, the reference to the definition of 

commercial item has been revised to 

point to the first paragraph of the 

definition of commercial item. 

The Councils have clarified that the 

words ‘‘of supply’’ include 


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‘‘construction material’’. Although the 

definition of ‘‘construction materials’’ 

states that they are ‘‘supplies’’, FAR Part 

25 distinguishes between Buy American 

Act—Supplies (FAR Subpart 25.1) and 

Buy American Act—Construction 

materials (FAR Subpart 25.2). Therefore, 

this clarification is beneficial. The OFPP 

memorandum, dated February 14, 2008, 

specifically mentions waiver of the 

component test at 41 U.S.C. 10a 

(supply) and 10b (construction.) 

Since the only laws waived are the 

component test of the Buy American 

Act and the recycled material estimate 

and certification, and no laws relating to 

FAR Part 27 have been waived, it is 

unnecessary to specifically mention 

information technology (IT) or software 

in the definition of COTS item. 

2. ‘‘Without modification’’. One 

respondent considers the phrase 

‘‘without modification’’ to be too 

restrictive. Some COTS products may 

require some type of modification to 

suit the intended use of the product. 

Response: The phrase ‘‘without 

modification’’ is required by statute. 

However, the Councils have added 

‘‘under a contract or subcontract at any 

tier’’ to clarify that whether an item is 

a COTS item is determined at the point 

of sale to the next higher tier 

subcontractor. This is consistent with 

the DoD definition of ‘‘COTS item’’ as 

applied to the waiver of specialty metals 

restrictions when acquiring COTS items. 

If a COTS item is accepted by the next 

high tier without modification, then any 

waiver applicable to COTS items is 

applicable to this item at the time of 

acceptance, even if it is subsequently 

modified. Although this distinction is 

not necessary in this particular rule, 

because both laws being waived apply 

only at the level of the prime contract, 

it is beneficial to keep this definition 

clear and consistent, in case a law is 

waived in the future that applies at the 

subcontract level. This intent to address 

COTS items at the subcontract level is 

demonstrated in section 804 of the 

National Defense Authorization Act for 

Fiscal Year 2008 (Pub. L. 110–181), 

which states in paragraph (b) (10 U.S.C. 

2533b(h)) that ‘‘This section does not 

apply to contracts or subcontracts for 

the acquisition of commercially 

available off-the-shelf items, as defined 

in section 35(c) of the Office of Federal 

Procurement Policy Act (41 U.S.C. 

431(c))...’’. 

3. ‘‘Sold in substantial quantities.’’ 

One respondent requests that this 

should be clarified, that it is not 

necessary that the contractor itself sells 

substantial quantities. Multiple vendors 

may sell the item in substantial 

quantities in the commercial 

marketplace. 

Response: This definition is statutory. 

There is nothing in the definition that 

implies that it is the contractor that 

must sell the item in substantial 

quantities in the commercial 

marketplace. The way the definition 

reads, the substantial quantities test 

does apply to the item, as suggested by 

the respondent. 

4. Incorporate definition of COTS 

into FAR 52.202–1, Definitions. One 

respondent recommended that the 

definition of COTS item should be 

incorporated into FAR 52.202–1, 

Definitions, because the proposed rule 

added a cross reference in FAR 52.244– 

6 to the definition of COTS item at FAR 

52.202–1. 

Response: This comment was correct 

at the time, but has been overtaken by 

events. First, the final rule does not 

make the proposed change to FAR 

52.244–6. In addition, the clause at FAR 

52.202–1 was rewritten under another 

case, so that it no longer contains a list 

of definitions. Rather, it refers to where 

definitions can be found and provides 

guidance as to which definitions apply, 

when a term is defined in more than one 

place. 

5. Subset of commercial items. The 

proposed rule included in the definition 

of COTS item the statement that COTS 

items are a subset of commercial items. 

Although no public comments were 

received on this issue, the Councils 

decided that it is redundant to state that 

COTS items are a subset of commercial 

items when the definition itself requires 

that COTS items meet the definition of 

the first paragraph of the definition of 

commercial item. This information that 

COTS items are a subset of commercial 

items is now provided at FAR 12.505, 

rather than in the definition. 

C. Implementation of COTS in FAR Part 

12. 

The draft final rule modifies FAR 

Subparts 12.1, 12.3, and 12.5 as 

proposed, to address COTS items, and 

adds the section 12.505. However, 

because only 2 laws are being waived, 

section 12.505 has been modified to 

include only those 2 laws, while stating 

that all laws waived for contracts or 

subcontracts for the acquisition of 

commercial items are also waived for 

COTS (because it is a subset). This more 

clearly identifies the differences that 

apply to COTS items. 

The rule does not make any change to 

FAR 12.504, based on the 

recommendation of SBA. An extraneous 

proposal to delete 15 U.S.C. 644(d), not 

directly related to this case, has been 

removed. SBA states that, although 

FASA attempted to eliminate labor 

surplus areas for purposes of 

subcontracting, the drafters of FASA 

missed the reference to subcontracting 

in 15(d) of the Small Business Act. 

Therefore, until this error is corrected, 

it is better to leave it on the list of laws 

that are inapplicable to subcontracts for 

the acquisition of COTS items. 

D. Determination by OFPP. 

After considering the analysis and 

recommendations as to laws that should 

be waived for the acquisition of COTS 

items, the Administrator for the Office 

of Federal Procurement Policy, made a 

determination on February 14, 2008, of 

the laws applicable and laws 

inapplicable to the acquisition of COTS 

items. 

1. Laws Waived. The Administrator of 

OFPP exercised the authority to wholly 

or partially waive the following laws: 

a. Buy American Act. A partial 

waiver of the Buy American Act 

(BAA)(41 U.S.C. 10a and 10b), limited 

to the Act’s domestic components test 

was granted. 

b. Estimate of Percentage of 

Recovered Material Act. The Estimate 

of Percentage of Recovered Material Act 

(42 U.S.C. 6962(c)(3)(A)) was waived in 

its entirety. 

2. Waiver still under consideration. A 

partial waiver of the following law is 

under consideration and a 

determination and findings will be 

made on this law at a later date: 

Rights in Technical Data (41 U.S.C. 

418a and 10 U.S.C. 2520), specifically 

waiver of— 

•Unlimited Government rights in data 

for operation, maintenance, installation, 

or training; and 

• The Government’s right to make 

unlimited copies. 

3. Laws already inapplicable or 

modified for the acquisition of 

commercial items. No further 

modification was made to any of the 

following laws, which have already 

been determined inapplicable or 

modified for the acquisition of 

commercial items: 

a. Walsh-Healey, 41 U.S.C. 43. 

b. Contingent Fees, 41 U.S.C. 254(a) 

and 10 U.S.C. 2306(b). 

c. Minimum response time, 41 U.S.C. 

416(a) (3) and (6). 

d. Drug Free Workplace, 41 U.S.C. 

701. 

e. Limitation on the use of 

appropriated funds, 31 U.S.C. 1354(a). 

f. Contract Work Hours and Safety 

Standards Act, 40 U.S.C. 3701. 

g. Anti-Kickback Act of 1986, 41 

U.S.C. 57 (a) and (b), and 58. 

h. Truth in Negotiations Act, 41 

U.S.C. 254(d) and 10 U.S.C. 2306a. 


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i. Cost Accounting Standards, 41 

U.S.C. 422. 

4. Law not subject to waiver. 

Limitation on appropriated funds to 

influence certain Federal contracting 

and financial transactions (31 U.S.C. 

1352). 

5. Laws that will not be waived 

because it is not in the best interest of 

the Government. A determination was 

made that the following laws will not be 

waived for the acquisition of COTS 

because it is not in the best interest of 

the Government: 

a. Trade Agreements Act (19 U.S.C. 

2501 and 19 U.S.C. 2512); 

b. Restrictions on Advance Payments 

(31 U.S.C. 3324). 

c. Employment Reports for Veterans 

(38 U.S.C. 4212(d)(l)). 

d. Validation of Proprietary Data 

Restrictions (41 U.S.C. 253d and 10 

U.S.C. 2321). 

e. Prohibition on Limiting 

Subcontractor Direct Sales (41 U.S.C. 

253g and 10 U.S.C. 2402). 

f. Cargo Preference, 10 U.S.C. 2631(a) 

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

g. Affirmative Action for Workers 

with Disabilities, 29 U.S.C. 793. 

h. Equal opportunity for Special 

Disabled Veterans, 38 U.S.C. 4212. 

i. Examination of records by the 

Comptroller General, 41 U.S.C. 254d(c) 

and 10 U.S.C. 2313(c). 

j. Fly American Act, 49 U.S.C. 40118 

(but see 12.503). 

E. Discussion and analysis of laws 

considered for waiver. 

1. Laws Waived. 

a. Buy American Act (41 U.S.C. 10a 

and 10b), component test. Ten 

respondents specifically endorse waiver 

of the application of the Buy American 

Act (BAA) to COTS and 4 respondents 

endorse the waiver as part of a broad 

endorsement of the waivers in general, 

without specific identification or 

comment. Two respondents oppose the 

waiver of the BAA as a whole. 

Some respondents state that the BAA 

makes it increasingly difficult for U.S. 

companies to compete for Federal 

business. These laws are out of place in 

the contemporary international market 

for commercial items. Companies must 

source products globally in order to be 

competitive in the worldwide 

marketplace. Therefore, companies must 

choose between being competitive in 

the global market and being competitive 

in the Government market. The BAA 

usually does not influence COTS 

manufacturers because revenue derived 

from Government sales is typically a 

very small percentage of overall revenue 

for COTS. 

• Therefore, Federal agencies are often 

denied access to the most productive, 

cost-effective technology. 

• BAA restrictions may also hamper 

the Government’s ability to fully 

implement federal policies. It may 

hinder Government access to technology 

compliant with Section 508 of the 

Rehabilitation Act of 1973 (accessible to 

employees with disabilities) and the 

most energy-efficient products, as 

required by E.O. 13101 and 13123. 

Some respondents are concerned that 

the Government-unique requirement to 

track where components are being 

manufactured imposes a severe 

administrative burden, especially on 

small business. It requires contractors to 

establish and maintain costly and labor 

intensive management systems. 

Tracking the place of manufacture and 

component value is not necessary for 

the general origin labeling requirements 

applicable generally in the U.S. 

commercial market place. BAA 

compliance is a major procurement 

requirement that adds complexity and 

cost to the delivery of goods to the 

Government. The increased cost of 

ensuring compliance with the BAA 

keeps some firms out of the market 

completely and affects the price of 

products sold to the Government. 

Another issue for respondents is that 

application of the regulations relating to 

the BAA is very complex and difficult. 

The certification requirements 

potentially expose manufacturers to 

civil false claims and other legal 

sanctions, even when they have taken 

extraordinary steps to comply with the 

BAA. 

Some respondents contend that 

Congress mandates the elimination, 

where possible, of barriers to the 

Government’s ability to procure 

commercial items. 

Federal agencies contend that it is 

difficult and causes delay to try to 

obtain case-by-case waivers of the BAA. 

On the other hand, two respondents 

were concerned that a permanent 

waiver of the BAA should not be 

granted without reciprocity. These 

respondents believed that the 

Government needs these provisions to 

stay in general effect so that possibility 

of waiver will provide incentive to 

encourage other countries to provide 

reciprocal access. Agencies can waive 

the BAA on a case-by-case basis or for 

a class of items when it is in the public 

interest to do so. 

Response: The Councils concur with 

the respondents on the especially 

burdensome nature of the component 

test. Today’s markets are globally 

integrated with foreign components 

often indistinguishable from domestic 

components. Manufacturers’ component 

purchasing decisions are based on 

factors such as cost, quality, availability, 

and maintaining the state of the art, not 

the country of origin, making it much 

more difficult in today’s market for a 

manufacturer to guarantee the source of 

its components over the term of a 

contract. It is even more difficult for a 

dealer to determine and guarantee the 

source of the components included in 

products on the shelf. The difficulty in 

tracking the country of origin of 

components is a disincentive for firms 

to become defense contractors, limiting 

the ability of the Government to 

purchase products already in the 

commercial distribution systems. In 

today’s globally integrated market, it is 

expensive for manufacturers to 

distinguish between foreign and 

domestic components. Requiring them 

to do so results in increased costs of 

procurements and impedes the ability to 

obtain the latest advances in 

commercial technology. 

The rationale provided against waiver 

of the BAA as a whole is resolved by 

waiving only the component test of the 

BAA. The component test of the BAA 

has already been waived for all 

acquisitions subject to the World Trade 

Organization Government Procurement 

Agreement (WTO GPA). By waiving 

only the component test of the BAA for 

COTS items, but still requiring 

manufacture in the United States, the 

Government can preserve an incentive 

to encourage other countries to provide 

reciprocal access, while reducing the 

significant administrative burden on 

contractors and the associated increased 

cost to the Government. 

A determination was made that a 

waiver of the components test would 

allow a COTS item to be treated as a 

domestic end product if it is 

manufactured in the U.S., without 

tracking the origin of the components. 

Waiving only the component test of the 

BAA for COTS items and still requiring 

the end product to be manufactured in 

the U.S., reduces significantly the 

administrative burden on contractors 

and the associated cost to the 

Government. The U.S. Trade 

Representative’s Office was consulted 

and did not oppose the partial waiver of 

the BAA. The component test of the 

BAA was waived because it is in the 

best interest of the U.S. to do so. 

The draft final rule modifies FAR Part 

25 and associated clauses to implement 

waiver of the component test of the 

BAA: 

• Indication of the new waiver at FAR 

25.101 (Buy American Act—Supplies, 

General) and FAR 25.201, (Buy 


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American Act—Construction Materials, 

Policy). 

• Changes to the definition of 

‘‘domestic end product’’ and ‘‘domestic 

construction material’’ at FAR 25.003 

and in the associated clauses, to include 

COTS end products or construction 

materials manufactured in the United 

States for which the component test of 

the Buy American Act has been waived; 

and 

• The following FAR provisions and 

clauses need only minor modifications, 

to incorporate the new definitions, make 

discussions of components applicable 

only to items other than COTS items, 

and clarify that now a United States end 

product that does not qualify as a 

domestic end product is an end product 

that is not a COTS item and does not 

meet the component test in paragraph 

(2) of the definition of ‘‘domestic end 

product’’: 

• 52.225–1 Buy American Act— 

Supplies. 

• 52.225–2 Buy American Act 

Certificate. 

• 52.225–3 Buy American Act—Free 

Trade Agreements—Israeli Trade Act. 

• 52.225–4 Buy American Act—Free 

Trade Agreements—Israeli Trade Act 

Certificate. 

• 52.225–9 Buy American Act— 

Construction Materials. 

• 52.225–10 Notice of Buy American 

Act Requirement—Construction 

Materials. 

• 52.225–11 Buy American Act— 

Construction Materials under Trade 

Agreements, and Alternate I. 

• 52.225–12 Notice of Buy American 

Act Requirement—Construction 

Materials Under Trade Agreements. 

Conforming changes are also required 

for— 

• 52.212–3 Offeror Representations 

and Certifications—Commercial Items; 

• 52.212–5 Contract Terms and 

Conditions Required to Implement 

Statutes or Executive Orders— 

Commercial Items; and 

• 52.213–4 Terms and Conditions— 

Simplified Acquisitions (Other Than 

Commercial Items). 

b. Certification and Estimate of 

Percentage of Recovered Material (42 

U.S.C. 6962 (c)(3)(A)). There were no 

specific comments supporting waiver of 

the Estimate of Percentage of Recovered 

Materials. However, ten respondents 

supported waiver as part of broad 

general support for the proposed rule. 

One respondent specifically opposed to 

waiver of 42 U.S.C. 6962(c)(3)(A), 

Estimate of Percentage of Recovered 

Material, because the respondent feels 

that it may preclude contractors from 

having to indicate on their products the 

percent of recycled materials contained 

therein. Information on the recovered 

material content is necessary in order 

for agencies to carry out the intent of the 

Resource Conservation and Recovery 

Act (RCRA) and Executive order (E.O.) 

13101. 

Response: Both the Environmental 

Protection Agency (EPA) and the Office 

of the Federal Environmental Executive 

(OFEE) agree that requiring pre-award 

certification from offerors and a written 

estimate of percentage of recovered 

materials from the contractor after 

contract completion are unnecessary 

requirements for COTS. These 

requirements are a paperwork exercise 

and are not consistent with buying 

COTS items from the commercial 

market place. The recycled content 

statement on the product packaging 

serves as the certification and the 

estimate. The Chief Acquisition Officer 

and Senior Procurement Executive at 

EPA and the OFEE were not opposed to 

waiving the requirement for certification 

and estimation for COTS items. This 

does not waive any of the other RCRA 

requirements. The Government will still 

acquire competitively, in a cost-effective 

manner, products that meet reasonable 

performance requirements and that are 

composed of the highest percentage of 

recovered materials practicable. 

A determination was made that 

waiver of this law is in the best interest 

of the Government because the law’s 

requirements are not consistent with the 

acquisition of COTS items in the 

commercial marketplace. 

The only necessary changes to 

implement this waiver are— 

i. Modification of the clause 

prescription at FAR 23.406 to exclude 

application to COTS items (as 

proposed); and 

ii. Modification of FAR 52.212– 

5(b)(25)(i) and (ii), to indicate that FAR 

52.223–9 is not applicable to the 

acquisition of COTS items. 

2. Waiver still under consideration. 

Rights in Technical Data (41 U.S.C. 

§ 418a and 10 U.S.C. § 2320). 

Ten respondents supported waiver as 

part of broad general support for the 

proposed rule (Respondents No. 9, 11, 

19, 20, 26, 28, 32, 34, 38, and 40). No 

respondents opposed the waiver. 

However, the Councils did not reach 

consensus on this waiver. The 

Department of the Treasury opposed 

waiver of this provision. The proposed 

waiver of the data rights statutes is 

based on the premise that, because 

COTS items are developed at private 

expense, there would be no Government 

rights in technical data associated 

therewith. The Councils do not agree 

entirely with this premise. For example, 

FAR 52.227–14 provides for unlimited 

rights in form, fit and function data; and 

in manuals and training materials 

necessary for installation, operation, 

maintenance, and repair; regardless of 

whether such data is developed at 

Government expense. The fact that 

items delivered under a contract are 

COTS does not diminish the 

Government’s need to operate and 

repair them, and form, fit, and function 

data could be critical if a COTS item is 

integrated into a Government system 

and must subsequently be replaced. 

The Councils agree that the relevant 

statutes do not focus only on data 

related to technologies developed 

exclusively at the Government’s 

expense - they also cover development 

in whole or in part at private expense, 

including commercial item technologies 

(this is especially clear in the DoD 

statute, 10 U.S.C. 2320). Further, it is 

not accurate to conclude that the 

possibility of Government funding for 

(elements of) COTS technologies is 

always ‘‘irrelevant.’’ The statutory 

schemes have numerous elements that 

are designed to protect important rights 

and proprietary interests of contractors 

(and subcontractors), especially in cases 

of privately developed or commercial 

technologies. 

For example, the Government is 

prohibited from requiring contractors to 

provide the Government with detailed 

design data, and from requiring the 

contractors to relinquish proprietary 

rights in data related to proprietary or 

commercial technologies, as a condition 

of contract award (see 418a(a), and 

2320(a)(2)(F)). Additionally, the DoD 

scheme specifically and expressly 

addresses the rights in data related to 

technologies developed in whole or in 

part at private expense (2320(a)(2)(B) & 

(C)), and the civilian statutes requires 

the regulations to address these funding 

scenarios (418a(c)(1)). Both statutory 

schemes also recognize the special 

requirements under the Small Business 

Innovation Research (SBIR) program, 

which allow the small business to treat 

even 100 percent Government-funded 

technologies as proprietary for certain 

periods. 

Similarly, the schemes identify and 

protect the interests of the Government 

in acquiring and using data for certain 

important purposes, such as operation 

and maintenance, or emergency repair 

and overhaul, of the item. These 

protections of interests, both for the 

contractors/subcontractors and the 

Government, are equally applicable to 

COTS items as for other commercial 

items or noncommercial items (as the 

Department of Treasury notes). 

All of these considerations 

demonstrate that the statutory schemes 


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are designed to balance Government and 

private interests in all such acquisitions, 

and thus should not be waived in their 

entirety for COTS item acquisitions. 

3. Laws already inapplicable or 

modified for the acquisition of 

commercial items. None of the 

respondents commented specifically on 

any of these laws that are already 

inapplicable or modified for the 

acquisition of commercial items, as 

identified in section C.3. of this notice. 

4. Law not subject to waiver. 

Limitation on appropriated funds to 

influence certain Federal contracting 

and financial transactions (31 U.S.C. 

1352). After publication of the proposed 

rule, the Councils determined that this 

statute is not eligible for waiver because 

it provides for criminal or civil 

penalties. 

5. Laws that will not be waived 

because it is not in the best interest of 

the Government. 

a. Trade Agreements Act (TAA)(19 

U.S.C. 2501 and 19 U.S.C. 2512). Many 

of the respondents (21) endorse waiver 

of the application of the trade 

agreements prohibitions to COTS. 

On the other hand, 4 respondents 

(including the United States Trade 

Representative (USTR) and the 

Department of Commerce) opposed the 

waiver. 

The proponents of waiver of the 

purchase restrictions of the Trade 

Agreements Act (TAA) contend that— 

i. The TAA makes it increasingly 

difficult for U.S. companies to compete 

for Federal business. These laws are out 

of place in the contemporary 

international market for commercial 

items. Companies must source products 

globally in order to be competitive in 

the worldwide marketplace. Therefore, 

companies must choose between being 

competitive in the global market and 

being competitive in the Government 

market. The trade agreements 

procurement restriction usually does 

not influence COTS manufacturers 

because revenue derived from 

Government sales is typically a very 

small percentage of overall revenue for 

COTS. 

• Therefore, Federal agencies are often 

denied access to the most productive, 

cost-effective technology. 

• TAA restrictions may also hamper 

the Government’s ability to fully 

implement Federal policies. It may 

hinder Government access to technology 

compliant with Section 508 of the 

Rehabilitation Act of 1973 (accessible to 

employees with disabilities) and the 

most energy-efficient products, as 

required by E.O. 13101 and 13123. 

• Although most IT and electronics 

manufacturing now occurs in Asia, only 

4 Asian countries have signed the GPA 

– Hong Kong, Japan, Singapore, and the 

Republic of Korea. Asian countries not 

signatories include China, Indonesia, 

Malaysia, the Philippines, and Taiwan. 

ii. The Government-unique 

requirement to track where products are 

being manufactured imposes a severe 

administrative burden. It requires 

contractors to establish and maintain 

costly and labor intensive management 

systems. TAA compliance is a major 

procurement requirement that adds 

complexity and cost to the delivery of 

goods to the Government. The increased 

cost of ensuring compliance with the 

TAA keeps some firms out of the market 

completely. 

iii. Application of the regulations 

relating to trade agreements is very 

complex and difficult. It is often 

difficult to determine ‘‘substantial 

transformation’’ for purposes of the 

TAA. The certification requirements 

potentially expose manufacturers to 

civil False Claims and other legal 

sanctions, even when they have taken 

extraordinary steps to comply with the 

TAA. 

iv. Congress mandates the 

elimination, where possible, of barriers 

to the Government’s ability to procure 

commercial items. 

v. Barring access to the U.S. 

Government market has not provided 

the leverage to open foreign government 

markets that U.S. trade negotiators may 

have envisioned when the TAA was 

passed. Several commenters state that of 

the 145 WTO member countries, only 28 

countries have signed the GPA in 25 

years, 23 of the signatories being 

original signatories. 

vi. The restrictions of the TAA are not 

required by any treaty of international 

agreement, including the GPA. The 

commenters believe that the U.S. is the 

only GPA signatory to enact such 

market restrictions. 

vii. It is difficult and causes delay to 

try to obtain case-by-case waivers of the 

trade agreements. 

The opponents of waiver of the 

purchase restrictions of the TAA 

contend that— 

i. A permanent waiver would 

significantly disadvantage U.S. 

suppliers, especially small businesses, 

without providing reciprocal market 

access for them. China, Malaysia, and 

the Philippines have not joined the GPA 

or provided benefits in a bilateral 

agreement. 

ii. USTR’s ability to waive the TAA 

purchasing restriction on a case-by-case 

basis has been a key element in its 

ability to negotiate reciprocal market 

access for U.S. suppliers in the 

government procurement markets of 

foreign countries, through bilateral 

FTAs, as well as accession to the GPA. 

In recent years, USTR has concluded 

new FTAs with Chile, Australia, 

Morocco, and more agreements are 

pending. A permanent waiver for COTS 

would severely undermine leverage that 

is critical to USTR’s ability to negotiate 

such agreements. 

iii. There is no need for a permanent 

waiver, because waivers can be granted 

on a case-by-case basis when in the 

national interest. 

Response: The TAA essentially 

outlines a process for approval of trade 

agreements, and the relationship of 

trade agreements to U.S. law. A 

determination was made that a waiver 

of the prohibition on acquisitions of 

products from countries that have not 

entered into trade agreements with the 

United States would put U.S. suppliers, 

especially small businesses, at a 

significant disadvantage without 

providing reciprocal market access for 

them. China, Malaysia, and the 

Philippines have not joined the GPA or 

provided benefits in a bilateral 

agreement. USTR’s ability to waive the 

TAA purchasing restriction on a caseby-case basis has been a key element in 

its ability to negotiate reciprocal market 

access for U.S. suppliers in the 

government procurement markets of 

foreign countries, through bilateral Free 

Trade Agreements (FTA), as well as 

consent to the GPA. In recent years, 

USTR has concluded new FTAs with 

Chile, Australia, Morocco, Bahrain, 

Dominican Republic-Central America, 

and more agreements are pending. 

Therefore, a permanent waiver is not in 

the best interests of the Government 

because it would severely undermine 

leverage that is critical to USTR’s ability 

to negotiate such agreements. USTR can 

grant waivers on a case-by-case basis 

when in the national interest. 

b. Restrictions on Advance Payments 

(31 U.S.C. 3324). The Councils received 

10 comments that supported waiver as 

part of broad general support for the 

proposed rule and two comments 

specifically supporting the waiver of the 

restriction on advance payments, 

whereas one respondent specifically 

opposed the waiver of the restriction on 

advance payments. 

One respondent supported waiving 

the restriction on the basis that it would 

permit the Government to follow the 

common business practice of ‘‘payment 

due upon receipt.’’ Another respondent 

supported waiving the restriction 

because it also believes that it is 

common business practice to make 

payment for IT support packages at the 

beginning of the term. The respondent 

that opposed the waiver of the statute 


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was concerned that contracting officers 

will be faced with demands for advance 

payments for routine COTS purchases. 

Response: In addition to permitting 

invoicing upon delivery to the ‘‘point of 

first receipt by the Government,’’ the 

proposed rule would also have allowed 

invoicing upon delivery of supplies to a 

post office or common carrier. 

Consequently, the Government might be 

obligated to make payment before 

receipt. 

This statute prohibits, except in 

certain circumstances, payment in 

excess of the value of supplies or 

services already delivered or provided. 

31 U.S.C. 3324(b) provides that an 

advance of public money may be made 

only if it is authorized by a specific 

appropriation or other law or as 

authorized by the President in some 

circumstances. 41 U.S.C. 255(f) and 10 

U.S.C. 2307(f) provide some authority 

for advance payments for commercial 

items, but treat this as Government 

financing and require the Government 

to obtain adequate security. It was 

determined that a permanent waiver is 

not necessary because 41 U.S.C. § 255(f) 

(as implemented by FAR 32.2, 

Commercial Item Purchase Financing, 

specifically FAR 32.202–4(a)(2)) already 

authorizes advance payments for 

commercial item acquisitions, and 

agencies have the authority to waive, if 

it is in the best of the Government. 

c. Employment Reports for Veterans 

(38 U.S.C. 4212(d)(l)). The Councils 

received one comment specifically in 

favor of waiving the statute and 10 

respondents supported waiver as part of 

broad general support for the proposed 

rule. The Councils also received 2 

responses specifically opposed to the 

waiver. 

The respondents who favored waiver 

contended that waiving the statute only 

affects the submission of a report and 

data gathering. By waiving the statute, 

an administrative function would be 

eliminated but the intent to continue 

with the regulations to promote veteran 

employment would remain unchanged. 

Respondents who objected to waiver 

of the statute feared that veteran 

programs would be impacted. 

Response: This statute requires that 

each contractor that enters into a 

contract in excess of $100,000 for 

personal property and non-personal 

services, including construction, 

provide an annual report to the 

Secretary of Labor that includes specific 

information about their contractor 

workforce. The report requires Federal 

contractors and subcontractors to ‘‘take 

affirmative action’’ to hire and promote 

qualified special disabled veterans, 

veterans of the Vietnam-era and any 

veteran who served on active duty 

during a war or in a campaign or 

expedition for which a campaign badge 

has been authorized. Congress has taken 

a keen interest in the VETS 100 Report, 

as evidenced by Section 1354 of Public 

Law 105–339, Veterans Employment 

Opportunities Act of 1998, which 

supports this reporting requirement. A 

determination was made not to waive 

the requirement for contractors to file 

employment reports because it is not in 

the best interest of the Government to 

do so. 

d. Validation of Proprietary Data 

Restrictions (41 U.S.C. 253d and 10 

U.S.C. 2321). 10 respondents supported 

waiver as part of broad general support 

for the proposed rule. No respondents 

opposed the waiver. 

Response: This statute provides an 

extensive procedure for due process for 

a Government contractor when the 

Government has a suspicion that 

technical data the contractor is claiming 

to be proprietary was, in fact, produced 

under a Government contract and was 

not produced at private expense. The 

validation scheme is also carefully 

structured to balance the interest of all 

parties, and create a uniform 

mechanism to determine the 

appropriate allocation of rights in the 

data. These statutes establish 

procedures, rights, and legal remedies 

regarding the validation of the asserted 

proprietary restrictions. A 

determination was made that these 

statutes should be available to balance 

the interest of all parties involved in an 

acquisition, including COTS. 

e. Prohibition on Limiting 

Subcontractor Direct Sales (41 U.S.C. 

253g and 10 U.S.C. 2402). Nine 

respondents supported waiver as part of 

broad general support for the proposed 

rule. One respondent opposed the 

waiver.This respondent stated that this 

exemption has some potential for 

harming small business and the Federal 

Government itself. 

Response: This statute was enacted as 

part of Pub. L. 98–577, which was 

intended by Congress as a 

comprehensive solution to ‘‘$600 toilet 

seats and $400 hammers.’’ This 

provision answered the practice of 

major defense contractors prohibiting 

their subcontractors from selling 

directly to the Government. In the past, 

when the prime contractor wanted to be 

the source to the Government, they 

would charge at least a material 

overhead to any cost or price from the 

subcontractor/supplier. Waiving this 

Act would allow prime contractors to 

restrict their subcontractors from selling 

directly to the Government and limit 

opportunities for small businesses, 

including women-owned and minorityowned businesses. A determination was 

made not to waive this Act so as to 

ensure competition is preserved for all 

sectors of the economy. 

f. Cargo Preference, 10 U.S.C. 2631(a) 

and 46 U.S.C. 1241(b). The Councils did 

not receive any comments specifically 

supporting waiver of the cargo 

preference laws for acquisition of COTS. 

10 respondents supported waiver as part 

of broad general support for the 

proposed rule. 14 respondents 

specifically opposed a waiver of Cargo 

Preference laws for COTS, including the 

following Government agencies: 

• U.S. Maritime Administration 

(MARAD)(Department of 

Transportation) 

• MARAD, Division of Maritime 

Programs 

• Under Secretary of Defense 

(Acquisition, Technology, and Logistics) 

• United States Transportation 

Command (Department of Defense) 

Opponents of the waiver of Cargo 

Preference laws when acquiring COTS 

items present the following rationale: 

i. The Cargo Preference laws are vital 

to maintaining a viable merchant 

marine, including both vessels and 

mariners. 

ii. The proposed waiver is contrary to 

the Government’s maritime policy. The 

Secretary of Transportation stated in 

March 2004 that ‘‘cargo preference laws 

are essential elements of America’s 

national maritime policy.’’ 

iii. Many respondents state that the 

COTS category represents the vast 

preponderance of cargo that is carried 

for or sponsored by the U.S. 

Government. The MARAD 

Administrator states that waiver could 

result in the potential loss of nearly $1.2 

billion in revenue to U.S. flag vessel 

operators and further loss to the 

economy through job loss. The 

American Maritime Congress believes 

that finalization of this waiver will 

eventually result in more than 100 U.S.- 

flag vessels in the international trades 

leaving the U.S. flag, and points out 

further adverse impact on foreign 

exchange, and reduced Federal tax 

revenues. 

iv. Weakening of the U.S. maritime 

industry will adversely impact our 

country’s ability to respond to 

international crises. We need U.S.-flag 

vessels to transport troops, machinery, 

and medical and other critical supplies 

throughout the world during 

contingencies or war. 

v. The waiver will put at risk two DoD 

programs (the Voluntary Intermodal 

Sealift Agreement and the Maritime 

Security Program) that are essential to 

U.S. security interests. Through these 


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programs, DoD has immediate access to 

reliable commercial maritime assets at a 

fraction of the cost it would incur if it 

had to replicate those assets 

(Transportation Institute). Shippers 

cannot dedicate valuable assets to the 

defense and other governmental needs 

of the United States unless they can rely 

on a steady flow of cargoes. 

vi. DoD needs a viable merchant 

marine to provide a pool of trained 

mariners from which DoD crews 

Defense reserve ships. 

vii. U.S.-flag commercial vessels are 

forced to operate in an international 

shipping arena that is dominated by 

state owned and controlled merchant 

fleets. They are financially 

disadvantaged due to higher labor costs, 

vessel standards, and tax disadvantages. 

Therefore, the U.S.-flag vessels require 

the help of the U.S. Government to 

compete. 

viii. Waiving the Cargo Preference 

laws at this time would be inequitable, 

because shipping companies have relied 

upon the present laws to take 

irrevocable business actions. 

ix. The American Shipbuilding 

Association is further concerned that 

this waiver would adversely impact the 

defense shipbuilding industry, which in 

turn, will threaten America’s ability to 

build a Navy and impact the national 

security of the United States. 

x. The FAR Council already made the 

determination that waiver of Cargo 

Preference laws for all commercial 

subcontracts was not in the best interest 

of the Government. 41 U.S.C. 430 

requires that provisions of law 

described in 41 U.S.C. 430(c) shall be 

included on the list of inapplicable 

provisions of law to subcontracts for the 

procurement of commercial items 

unless the FAR Council makes a written 

determination that such exemption 

would not be in the best interest of the 

Government. On May 1, 1996, the 

Administrator of OFPP signed a 

memorandum stating the policy that the 

waiver of Cargo preference for 

commercial subcontracts ‘‘is not 

intended to waive compliance with the 

Cargo Preference Laws for ocean cargos 

clearly destined for eventual military or 

Government use.’’ This memorandum 

was the result of extensive negotiations 

between representatives from the 

national Economic Council, OFPP, DoD, 

MARAD, and the maritime industry. In 

2002, a formal determination was signed 

by all members of the FAR Council that 

it would be in the best interest of the 

Government to limit the waiver of the 

Cargo preference laws, in accordance 

with the OFPP memorandum, dated 

May 1, 1996, as implemented in the 

FAR through FAR Case 1999–024. 

Response: 10 U.S.C. 2631(a), 

Transportation of Supplies by Sea (The 

Cargo Preference Act of 1904), requires 

the use of only U.S.-flag vessels for 

ocean transportation of supplies owned 

by, or destined for use by for the Army, 

Navy, Air Force, or Marine Corps unless 

those vessels are not available at fair 

and reasonable rates. 46 U.S.C. 1241(b), 

Transportation in American Vessels of 

Government Personnel and Certain 

Cargo (The Cargo Preference Act of 

1954), requires that Government 

agencies acquiring, either within or 

outside the United States, supplies that 

may require ocean transportation shall 

ensure that at least 50 percent of the 

gross tonnage of these supplies 

(computed separately for dry bulk 

carriers, dry cargo liners, and tankers) is 

transported on privately owned U.S.- 

flag commercial vessels to the extent 

that such vessels are available at rates 

that are fair and reasonable for U.S.-flag 

commercial vessels. The Cargo 

Preference laws are vital to maintaining 

a viable merchant marine, including 

both vessels and mariners and are 

essential elements of America’s national 

maritime policy. Therefore, a 

determination was made that it is not in 

the best interest of the Government to 

waive this Act. 

g. Affirmative Action for Workers 

with Disabilities, 29 U.S.C. 793. The 

Councils did not receive any specific 

comments in favor of waiving the 

statute. 10 respondents supported 

waiver as part of broad general support 

for the proposed rule. The Councils 

received 2 responses specifically 

opposed to waiver, i.e.— 

•Department of Veterans Affairs 

• U.S. Department of Labor 

ANALYSIS: The Department of 

Veterans Affairs (VA) objected to waiver 

on the grounds that, in meeting its 

mission to support veterans, including 

those who with service related 

disabilities, the VA purchases mostly 

COTS items and would consider it 

unfair for the VA to purchase supplies 

from companies that would not be 

required to comply with the statute. 

The Department of Labor stated that 

‘‘The relatively minor burdens imposed 

on contractors by Section 503 of the 

Rehabilitation Act of 1973, (29 U.S.C. 

§ 793) are justified by the significant 

benefits the law provides for disabled 

job applicants and workers. The Census 

Bureau estimates that approximately 

18.6 million American workers have 

disabilities. Section 503 requires, for 

example, that contractors recruit 

qualified applicants with disabilities for 

job openings, develop anti-disability 

harassment policies, and refrain from 

discriminating against qualified 

individuals with disabilities. Reducing 

protections for qualified job applicants 

and workers with disabilities would not 

be consistent with the President’s New 

Freedom Initiative, designed to ensure 

that Americans with disabilities have 

the opportunity to learn and develop 

skills and to engage in productive 

work.’’ 

Response: A determination was made 

that the requirements of the affirmative 

action provision are justified by the 

significant benefits the law provides for 

disabled job applicants and workers. 

Reducing protections for qualified job 

applicants and workers with disabilities 

would not be consistent with the 

President’s New Freedom Initiative. 

h. Equal opportunity for Special 

Disabled Veterans, 38 U.S.C. 4212. The 

Councils did not receive any specific 

comments in favor of waiving the 

statute. 10 respondents supported 

waiver as part of broad general support 

for the proposed rule. The Councils 

received 3 responses specifically 

opposed to waiver, including— 

• Department of Veterans Affairs 

• U.S. Department of Labor 

The Department of Veterans Affairs 

raised objections to waiver on the 

grounds that, in meeting its mission to 

support veterans, including those with 

service related disabilities, the VA 

purchases mostly COTS items and 

would consider it unfair for the VA to 

purchase supplies from companies that 

would not be required to comply with 

the statute. 

The Department of Labor objects to 

waiving the statute on the basis that the 

relatively minor burdens imposed by 

the affirmative action provision are 

justified by the significant direct 

benefits for individual protected 

veterans. Waiving the law would reduce 

possible job opportunities for veterans. 

Another respondent stated that ‘‘At a 

time when our nation is at war and our 

veterans are returning home...every 

effort should be made to ensure their 

employment rather than limit their 

opportunities’’. 

Response : It was determined that the 

affirmative action provision is justified 

by the significant direct benefits for 

individual protected veterans, and we 

must make every effort to ensure their 

employment. 

i. Examination of records by the 

Comptroller General, 41 U.S.C. 254d(c) 

and 10 U.S.C. 2313(c). The Councils did 

not receive any comments specifically 

supporting waiver of the examination of 

records by the Comptroller General for 

acquisition of COTS. 10 respondents 

supported waiver as part of broad 

general support for the proposed rule. 


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2720 Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Rules and Regulations 

The Councils received comments from 2 

respondents opposed the waiver. 

One respondent objected to waiver of 

the examination of records by the 

Comptroller General because this is the 

last remaining general contractual audit 

authority applicable to commercial 

items. If this authority is removed, the 

Government will have no routine audit 

authority. The respondent cites 

legislative history that Congress did not 

intend to eliminate this authority. 

Another respondent also strongly 

objects to waiver of this authority, 

stating that removal would improperly 

restrict the authority of the Comptroller 

General’s ability to review and examine 

contractor records related to the 

expenditure of public funds. 

Response: This is the only general 

contractual audit authority applicable to 

commercial items. Thus it was 

determined that although access to 

contractor records will not generally be 

necessary because of the protection 

provided by competitive procedures of 

the marketplace, the Comptroller 

General should have the ability to 

examine records if the need arises. 

j. Fly American Act, 49 U.S.C. 40118. 

The Councils did not receive any 

comments specifically supporting 

waiver of the cargo preference laws for 

acquisition of COTS. 10 respondents 

supported waiver as part of broad 

general support for the proposed rule. 

The Councils received 2 responses 

specifically opposed to the waiver of the 

Fly American Act for acquisition of 

COTS, i.e.— 

• United States Transportation 

Command 

• Under Secretary of Defense 

(Acquisition, Technology, and Logistics) 

Opponents of the waiver of the Fly 

American Act when acquiring COTS 

items present the following rationale: 

i. The Fly American Act is vital to 

maintaining a viable U.S. air carrier 

industry, which is heavily relied on by 

DoD during contingencies or war. 

ii. Weakening of the U.S. air industry 

will adversely impact our country’s 

ability to move forces and equipment 

during contingencies or war. 

Response: The Fly American Act is 

not applicable to subcontracts for the 

acquisition of commercial items. The 

requirement for use of a clause is not 

applicable to prime contracts for the 

acquisition of commercial items, but the 

requirements of the Act still apply. A 

determination was made that the Fly 

American Act is vital for maintaining a 

viable U.S. air carrier industry, which is 

heavily relied upon by DoD during 

contingencies or war. 

F. Other public comments. 

1. Recommend an Alternate I to 

proposed clause 52.212–XX, for 

paperless writing systems. DoD uses a 

process called Automatic Clause 

Selection, rather than having the 

contracting officer check off applicable 

clauses from the list. 

Response: The final rule will not 

include the new clause 52.212–XX, but 

will continue to use FAR clause 52.212– 

5. Furthermore, DoD already has a 

deviation in place for this clause that 

meets the needs of a paperless system. 

2. Limit the imposition of noncommercial terms and conditions. 

Multiple respondents were concerned 

about the proliferation of Governmentunique clauses in contracts for the 

acquisition of COTS items, and want 

limitations imposed on the authority of 

the contracting officer to include clauses 

that are not commonly used with COTS 

items being procured in the 

marketplace. 

Response: This suggestion is outside 

the scope of the case. 

3. DFARS 212.504 still applies for 

DoD procurements. This respondent 

wants to ensure that for DoD COTS 

procurement, 10 U.S.C. 2320 and 2321 

(dealing with technical data rights), 

which are listed at DFARS 212.504, are 

still waived. 

Response: This is outside the scope of 

this case. 

4. Use of ‘‘et seq.’’. Several 

respondents were concerned that in 

some cases the statutory references 

followed by ‘‘et seq.’’ were too broad. 

Response: This issue has been 

resolved in the final rule. The term ‘‘et 

seq.’’ is not used in the statutory 

references for laws to be waived in the 

final rule. 

5. Significant rule. Several 

respondents were concerned that the 

proposed rule would satisfy the 

economic impact threshold for a major 

rule and clearly meets the threshold 

requirements to be classified as a 

significant rule. 

Response: The statutes that were of 

particular concern to these respondents 

(Cargo Preference) have not been 

waived. Therefore, the comments are no 

longer relevant. 

6. Comments no longer applicable. 

There are several comments not 

specifically addressed in this Federal 

Register notice, because they are no 

longer applicable, due to other changes 

in the final rule. 

7. E-verify. The councils note that the 

FAR 2.101 definition of ‘‘Commercially 

available off the shelf (COTS) item’’ 

differs from the COTS definition in 

22.1801. Pursuant to the FAR treatment 

of definitions, the COTS definition is 

22.1801 is solely applicable to issues 

arising under Subpart 22.18 and 

associated clause (FAR case 2007–013). 

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. 

G. Regulatory Flexibility Act 

The Department of Defense, the 

General Services Administration, and 

the National Aeronautics and Space 

Administration certify that this final 

rule will not 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 this 

rule relieves burdens rather than 

imposes burdens. Only 2 laws have 

been waived, and the relief to small 

business is not considered to be of 

significant economic impact. 

H. Paperwork Reduction Act 

The Paperwork Reduction Act (44 

U.S.C. Chapter 35) applies because the 

final rule will result in reduced burdens 

under OMB Control number 9000–0024 

(52.225–2), 9000–0130 (52.225–4), 

9000–0134 (52.223–9), and 9000–0141 

(52.225–9 and 52.225–11). The Councils 

anticipate the following reductions: 

OMB Control No. Current 

respondents Current responses Current hours Revised respondents Revised responses Revised hours 

9000–0024 3,707 x 15 = 55,605 x 0.109 = 6,061 3,521 x 15 52,815 x .109 5,757 hrs 

9000–0130 1,140 x 5 = 5,700 x .117 = 667 1083 x 5 = 5415 x .117 = 634 hrs 

9000–0134 64,350 x 1 = 64,350 x .325 = 20,913 64 x 1 64 x .325 21 hrs 

9000–0141 500 x 2 = 1,000 x 2.5 = 2,500 450 x 2 = 900 x 2.5 = 2,250 hrs 


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Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Rules and Regulations 2721 

A Paperwork Burden Act Change to 

pertinent existing burdens has been 

submitted to the Office of Management 

and Budget under 44 U.S.C. Chapter 35, 

et seq. 

List of Subjects in 48 CFR Parts 2, 3, 12, 

23, 25, and 52 

Government procurement. 

Dated: December 24, 2008 

Edward Loeb, 

Acting Director, Office of Acquisition Policy. 

■ Therefore, DoD, GSA, and NASA 

amend 48 CFR parts 2, 3, 12, 23, 25, and 

52 as set forth below: 

■ 1. The authority citation for 48 CFR 

parts 2, 3, 12, 23, 25, and 52 continues 

to read as follows: 

Authority: 40 U.S.C. 121(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 in paragraph 

(b)(2) by adding, in alphabetical order, 

the definition ‘‘Commercially available 

off-the-shelf (COTS) item’’ to read as 

follows: 

2.101 Definitions. 

* * * * * 

(b) * * * 

(2) * * * 

Commercially available off-the-shelf 

(COTS) item (1) Means any item of 

supply (including construction material) 

that is— 

(i) A commercial item (as defined in 

paragraph (1) of the definition in this 

section); 

(ii) Sold in substantial quantities in 

the commercial marketplace; and 

(iii) Offered to the Government, under 

a contract or subcontract at any tier, 

without modification, in the same form 

in which it is sold in the commercial 

marketplace; and 

(2) Does not include bulk cargo, as 

defined in section 3 of the Shipping Act 

of 1984 (46 U.S.C. App. 1702), such as 

agricultural products and petroleum 

products. 

* * * * * 

PART 3—IMPROPER BUSINESS 

PRACTICES AND PERSONAL 

CONFLICTS OF INTEREST 

■ 3. Revise section 3.503–2 to read as 

follows: 

3.503–2 Contract clause. 

The contracting officer shall insert the 

clause at 52.203–6, Restrictions on 

Subcontractor Sales to the Government, 

in solicitations and contracts exceeding 

the simplified acquisition threshold, 

except when contracts are for the 

acquisition of commercially available 

off-the-shelf items. For the acquisition 

of commercial items, the contracting 

officer shall use the clause with its 

Alternate I. 

PART 12—ACQUISITION OF 

COMMERCIAL ITEMS 

■ 4. Add section 12.103 to read as 

follows: 

12.103 Commercially available off-theshelf (COTS) items. 

COTS items are defined in 2.101. 

Unless indicated otherwise, all of the 

policies that apply to commercial items 

also apply to COTS. Section 12.505 lists 

the laws that are not applicable to COTS 

(in addition to 12.503 and 12.504); the 

components test of the Buy American 

Act, and the two recovered materials 

certifications in Subpart 23.4, do not 

apply to COTS. 

12.301 [Amended] 

■ 5. Amend section 12.301 in the first 

sentence of paragraph (b)(4) by 

removing ‘‘executive orders’’ and 

adding ‘‘Executive orders’’ in its place; 

■ 6. Revise the heading of Subpart 12.5 

to read as follows. 

Subpart 12.5—Applicability of Certain 

Laws to the Acquisition of Commercial 

Items and Commercially Available OffThe-Shelf Items 

■ 7. Revise section 12.500 to read as 

follows: 

12.500 Scope of subpart. 

(a) As required by sections 34 and 35 

of the Office of Federal Procurement 

Policy Act (41 U.S.C. 430 and 431), this 

subpart lists provisions of law that are 

not applicable to— 

(1) Contracts for the acquisition of 

commercial items; 

(2) Subcontracts, at any tier, for the 

acquisition of commercial items; and 

(3) Contracts and subcontracts, at any 

tier, for the acquisition of COTS items. 

(b) This subpart also lists provisions 

of law that have been amended to 

eliminate or modify their applicability 

to either contracts or subcontracts for 

the acquisition of commercial items. 

■ 8. Amend section 12.502 by adding 

paragraph (c) to read as follows: 

12.502 Procedures. 

* * * * * 

(c) The FAR prescription for the 

provision or clause for each of the laws 

listed in 12.505 has been revised in the 

appropriate part to reflect its proper 

application to contracts and 

subcontracts for the acquisition of COTS 

items. 

■ 9. Add section 12.505 to read as 

follows: 

12.505 Applicability of certain laws to 

contracts for the acquisition of COTS items. 

COTS items are a subset of 

commercial items. Therefore, any laws 

listed in sections 12.503 and 12.504 are 

also inapplicable or modified in their 

applicability to contracts or 

subcontracts for the acquisition of COTS 

items. In addition, the following laws 

are not applicable to contracts for the 

acquisition of COTS items: 

(a)(1) 41 U.S.C. 10a, portion of first 

sentence that reads ‘‘substantially all 

from articles, materials, or supplies 

mined, produced, or manufactured, as 

the case may be, in the United States,’’ 

Buy American Act—Supplies, 

component test (see 52.225–1 and 

52.225–3). 

(2) 41 U.S.C. 10b, portion of first 

sentence that reads ‘‘substantially all 

from articles, materials, or supplies 

mined, produced, or manufactured, as 

the case may be, in the United States,’’ 

Buy American Act—Construction 

Materials, component test (see 52.225– 

9 and 52.225–11). 

(b) 42 U.S.C. 6962(c)(3)(A), 

Certification and Estimate of Percentage 

of Recovered Material. 

PART 23—ENVIRONMENT, ENERGY 

AND WATER EFFICIENCY, 

RENEWABLE ENERGY 

TECHNOLOGIES, OCCUPATIONAL 

SAFETY, AND DRUG-FREE 

WORKPLACE 

■ 10. Amend section 23.406 by revising 

the introductory text of paragraph (c); 

and removing from paragraph (d) 

‘‘Insert’’ and adding ‘‘Except for the 

acquisition of commercially available 

off-the-shelf items, insert’’, in its place. 

The revised text reads as follows: 

23.406 Solicitation provisions and 

contract clauses. 

* * * * * 

(c) Except for the acquisition of 

commercially available off-the-shelf 

items, insert the provision at 52.223–4, 

Recovered Material Certification, in 

solicitations that— 

* * * * * 

PART 25—FOREIGN ACQUISITION 

■ 11. Amend section 25.003 by revising 

the definitions ‘‘Domestic construction 

material’’ and ‘‘Domestic end product’’ 

to read as follows: 

25.003 Definitions. 

* * * * * 

Domestic construction material 

means— 


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2722 Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Rules and Regulations 

(1) An unmanufactured construction 

material mined or produced in the 

United States; 

(2) A construction material 

manufactured in the United States, if— 

(i) The cost of its components mined, 

produced, or manufactured in the 

United States exceeds 50 percent of the 

cost of all its components. Components 

of foreign origin of the same class or 

kind for which nonavailability 

determinations have been made are 

treated as domestic; or 

(ii) The construction material is a 

COTS item. 

Domestic end product means— 

(1) An unmanufactured end product 

mined or produced in the United States; 

(2) An end product manufactured in 

the United States, if— 

(i) The cost of its components mined, 

produced, or manufactured in the 

United States exceeds 50 percent of the 

cost of all its components. Components 

of foreign origin of the same class or 

kind as those that the agency determines 

are not mined, produced, or 

manufactured in sufficient and 

reasonably available commercial 

quantities of a satisfactory quality are 

treated as domestic. Scrap generated, 

collected, and prepared for processing 

in the United States is considered 

domestic; or 

(ii) The end product is a COTS item. 

* * * * * 

■ 12. Revise section 25.100 to read as 

follows: 

25.100 Scope of subpart. 

(a) This subpart implements— 

(1) The Buy American Act (41 U.S.C. 

10a - 10d); 

(2) Executive Order 10582, December 

17, 1954; and 

(3) Waiver of the component test of 

the Buy American Act for acquisitions 

of commercially available off-the-shelf 

(COTS) items in accordance with 41 

U.S.C 431. 

(b) It applies to supplies acquired for 

use in the United States, including 

supplies acquired under contracts set 

aside for small business concerns, if— 

(1) The supply contract exceeds the 

micro-purchase threshold; or 

(2) The supply portion of a contract 

for services that involves the furnishing 

of supplies (e.g., lease) exceeds the 

micro-purchase threshold. 

■ 13. Amend section 25.101 by revising 

paragraph (a)(2) to read as follows: 

25.101 General. 

(a) * * * 

(2) The cost of domestic components 

must exceed 50 percent of the cost of all 

the components. In accordance with 41 

U.S.C. 431, this component test of the 

Buy American Act has been waived for 

acquisitions of COTS items (see 

12.505(a)). 

* * * * * 

■ 14. Revise section 25.200 to read as 

follows: 

25.200 Scope of subpart. 

(a) This subpart implements— 

(1) The Buy American Act (41 U.S.C. 

10a - 10d); 

(2) Executive Order 10582, December 

17, 1954; and 

(3) Waiver of the component test of 

the Buy American Act for acquisitions 

of commercially available off-the-shelf 

(COTS) items in accordance with 41 

U.S.C. 431. 

(b) It applies to contracts for the 

construction, alteration, or repair of any 

public building or public work in the 

United States. 

PART 52—SOLICITATION PROVISIONS 

AND CONTRACT CLAUSES 

■ 15. Amend section 52.212–3 by— 

■ a. Revising the date of clause; 

■ b. Revising paragraph (f)(1); and 

■ c. Revising paragraph (g)(1)(i) and the 

last sentence of paragraph (g)(1)(iii). 

The revised text reads as follows: 

52.212–3 Offeror Representations and 

Certifications—Commercial Items. 

* * * * * 

OFFEROR REPRESENTATIONS AND 

CERTIFICATIONS—COMMERCIAL 

ITEMS (FEB 2009) 

* * * * * 

(f) * * * 

(1) The offeror certifies that each end 

product, except those listed in paragraph 

(f)(2) of this provision, is a domestic end 

product and that for other than COTS items, 

the offeror has considered components of 

unknown origin to have been mined, 

produced, or manufactured outside the 

United States. The offeror shall list as foreign 

end products those end products 

manufactured in the United States that do 

not qualify as domestic end products, i.e., an 

end product that is not a COTS item and does 

not meet the component test in paragraph (2) 

of the definition of ‘‘domestic end product.’’ 

The terms ‘‘commercially available off-theshelf (COTS) item,’’ ‘‘component,’’ ‘‘domestic 

end product,’’ ‘‘end product,’’ ‘‘foreign end 

product,’’ and ‘‘United States’’ are defined in 

the clause of this solicitation entitled ‘‘Buy 

American Act—Supplies.’’ 

* * * * * 

(g)(1) * * * 

(i) The offeror certifies that each end 

product, except those listed in paragraph 

(g)(1)(ii) or (g)(1)(iii) of this provision, is a 

domestic end product and that for other than 

COTS items, the offeror has considered 

components of unknown origin to have been 

mined, produced, or manufactured outside 

the United States. The terms ‘‘Bahrainian or 

Moroccan end product,’’ ‘‘commercially 

available off-the-shelf (COTS) item,’’ 

‘‘component,’’ ‘‘domestic end product,’’ ‘‘end 

product,’’ ‘‘foreign end product,’’ ‘‘Free Trade 

Agreement country,’’ ‘‘Free Trade Agreement 

country end product,’’ ‘‘Israeli end product,’’ 

and ‘‘United States’’ are defined in the clause 

of this solicitation entitled ‘‘Buy American 

Act-Free Trade Agreements-Israeli Trade 

Act.’’ 

* * * * * 

(iii) * * * The offeror shall list as other 

foreign end products those end products 

manufactured in the United States that do 

not qualify as domestic end products, i.e., an 

end product that is not a COTS item and does 

not meet the component test in paragraph (2) 

of the definition of ‘‘domestic end product.’’ 

* * * * * 

(End of provision) 

■ 16. Amend section 52.212–5 by 

revising the date of the clause and 

paragraph (b)(27); by removing from 

paragraph (b)(30) ‘‘(June 2003)’’ and 

adding ‘‘(FEB 2009)’’ in its place; and by 

removing from paragraph (b)(31)(i) 

‘‘(Aug 2007)’’ and adding ‘‘(FEB 2009)’’ 

in its place. The revised text reads 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 (FEB 2009) 

* * * * * 

ll (b)(27)(i) 52.223–9, Estimate of 

Percentage of Recovered Material Content for 

EPA-Designated Items (May 2008) (42 U.S.C. 

6962(c)(3)(A)(ii)). (Not applicable to the 

acquisition of commercially available off-theshelf items.) 

ll (ii) Alternate I (May 2008) of 52.223– 

9 (42 U.S.C. 6962(i)(2)(C)). (Not applicable to 

the acquisition of commercially available offthe-shelf items.) 

* * * * * 

(End of clause) 

52.213–4 [Amended] 

■ 17. Amend section 52.213–4 by 

removing from the clause heading ‘‘(Dec 

2008)’’ and adding ‘‘(FEB 2009)’’ in its 

place; and by removing from paragraph 

(b)(1)(ix) ‘‘(June 2003)’’ and adding 

‘‘(FEB 2009)’’ in its place. 

■ 18. Amend section 52.225–1 by 

revising the date of the clause; by 

adding in paragraph (a), in alphabetical 

order, the definition ‘‘Commercially 

available off-the-shelf (COTS) item’’ and 

revising the definition ‘‘Domestic end 

product’’; and by revising paragraph (b) 

to read as follows: 

52.225–1 Buy American Act—Supplies. 

* * * * * 


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Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Rules and Regulations 2723 

BUY AMERICAN ACT—SUPPLIES 

(FEB 2009) 

(a) Definitions. * * * 

Commercially available off-the-shelf 

(COTS) item— (1) Means any item of supply 

(including construction material) that is— 

(i) A commercial item (as defined in 

paragraph (1) of the definition at FAR 2.101); 

(ii) Sold in substantial quantities in the 

commercial marketplace; and 

(iii) Offered to the Government, under a 

contract or subcontract at any tier, without 

modification, in the same form in which it 

is sold in the commercial marketplace; and 

(2) Does not include bulk cargo, as defined 

in section 3 of the Shipping Act of 1984 (46 

U.S.C. App. 1702), such as agricultural 

products and petroleum products. 

* * * * * 

Domestic end product means— 

(1) An unmanufactured end product mined 

or produced in the United States; 

(2) An end product manufactured in the 

United States, if— 

(i) The cost of its components mined, 

produced, or manufactured in the United 

States exceeds 50 percent of the cost of all 

its components. Components of foreign origin 

of the same class or kind as those that the 

agency determines are not mined, produced, 

or manufactured in sufficient and reasonably 

available commercial quantities of a 

satisfactory quality are treated as domestic. 

Scrap generated, collected, and prepared for 

processing in the United States is considered 

domestic; or 

(ii) The end product is a COTS item. 

* * * * * 

(b) The Buy American Act (41 U.S.C. 10a 

- 10d) provides a preference for domestic end 

products for supplies acquired for use in the 

United States. In accordance with 41 U.S.C. 

431, the component test of the Buy American 

Act is waived for an end product that is a 

COTS item (See 12.505(a)(1)). 

* * * * * 

(End of clause) 

■ 19. Amend section 52.225–2 by 

revising the date of the provision and 

paragraph (a) to read as follows: 

52.225–2 Buy American Act Certificate. 

* * * * * 

BUY AMERICAN ACT CERTIFICATE 

(FEB 2009) 

(a) The offeror certifies that each end 

product, except those listed in paragraph (b) 

of this provision, is a domestic end product 

and that for other than COTS items, the 

offeror has considered components of 

unknown origin to have been mined, 

produced, or manufactured outside the 

United States. The offeror shall list as foreign 

end products those end products 

manufactured in the United States that do 

not qualify as domestic end products, i.e., an 

end product that is not a COTS item and does 

not meet the component test in paragraph (2) 

of the definition of ‘‘domestic end product.’’ 

The terms ‘‘commercially available off-theshelf (COTS) item, ’’ ‘‘component,’’ 

‘‘domestic end product,’’ ‘‘end product,’’ 

‘‘foreign end product,’’ and ‘‘United States’’ 

are defined in the clause of this solicitation 

entitled ‘‘Buy American Act—Supplies.’’ 

* * * * * 

(End of provision) 

■ 20. Amend section 52.225–3 by 

revising the date of the clause; in 

paragraph (a), by adding, in alphabetical 

order, the definition ‘‘Commercially 

available off-the-shelf (COTS) item’’ and 

revising the definition ‘‘Domestic end 

product’’; and by revising paragraph (c) 

to read as follows: 

52.225–3 Buy American Act—Free Trade 

Agreements—Israeli Trade Act. 

* * * * * 

BUY AMERICAN ACT—FREE TRADE 

AGREEMENTS—ISRAELI TRADE ACT 

(FEB 2009) 

(a) Definitions. * * * 

* * * * * 

Commercially available off-the-shelf 

(COTS) item— (1) Means any item of supply 

(including construction material) that is— 

(i) A commercial item (as defined in 

paragraph (1) of the definition at FAR 2.101); 

(ii) Sold in substantial quantities in the 

commercial marketplace; and 

(iii) Offered to the Government, under a 

contract or subcontract at any tier, without 

modification, in the same form in which it 

is sold in the commercial marketplace; and 

(2) Does not include bulk cargo, as defined 

in section 3 of the Shipping Act of 1984 (46 

U.S.C. App. 1702), such as agricultural 

products and petroleum products. 

* * * * * 

Domestic end product means— 

(1) An unmanufactured end product mined 

or produced in the United States; 

(2) An end product manufactured in the 

United States, if— 

(i) The cost of its components mined, 

produced, or manufactured in the United 

States exceeds 50 percent of the cost of all 

its components. Components of foreign origin 

of the same class or kind as those that the 

agency determines are not mined, produced, 

or manufactured in sufficient and reasonably 

available commercial quantities of a 

satisfactory quality are treated as domestic. 

Scrap generated, collected, and prepared for 

processing in the United States is considered 

domestic; or 

(ii) The end product is a COTS item. 

* * * * * 

(c) Delivery of end products. The Buy 

American Act (41 U.S.C. 10a - 10d) provides 

a preference for domestic end products for 

supplies acquired for use in the United 

States. In accordance with 41 U.S.C. 431, the 

component test of the Buy American Act is 

waived for an end product that is a COTS 

item (See 12.505(a)(1)). In addition, the 

Contracting Officer has determined that FTAs 

(except the Bahrain and Morocco FTAs) and 

the Israeli Trade Act apply to this 

acquisition. Unless otherwise specified, these 

trade agreements apply to all items in the 

Schedule. The Contractor shall deliver under 

this contract only domestic end products 

except to the extent that, in its offer, it 

specified delivery of foreign end products in 

the provision entitled ‘‘Buy American Act— 

Free Trade Agreements—Israeli Trade Act 

Certificate.’’ If the Contractor specified in its 

offer that the Contractor would supply a Free 

Trade Agreement country end product (other 

than a Bahrainian or Moroccan end product) 

or an Israeli end product, then the Contractor 

shall supply a Free Trade Agreement country 

end product (other than a Bahrainian or 

Moroccan end product), an Israeli end 

product or, at the Contractor’s option, a 

domestic end product. 

* * * * * 

(End of clause) 

■ 21. Amend section 52.225–4 by 

revising the date of the provision and 

paragraphs (a) and (c) to read as follows: 

52.225–4 Buy American Act—Free Trade 

Agreements—Israeli Trade Act Certificate. 

* * * * * 

BUY AMERICAN ACT—FREE TRADE 

AGREEMENTS—ISRAELI TRADE ACT 

CERTIFICATE (FEB 2009) 

(a) The offeror certifies that each end 

product, except those listed in paragraph (b) 

or (c) of this provision, is a domestic end 

product and that for other than COTS items, 

the offeror has considered components of 

unknown origin to have been mined, 

produced, or manufactured outside the 

United States. The terms ‘‘Bahrainian or 

Moroccan end product,’’ ‘‘commercially 

available off-the-shelf (COTS) item,’’ 

‘‘component,’’ ‘‘domestic end product,’’ ‘‘end 

product,’’ ‘‘foreign end product,’’ ‘‘Free Trade 

Agreement country,’’ ‘‘Free Trade Agreement 

country end product,’’ ‘‘Israeli end product,’’ 

and ‘‘United States’’ are defined in the clause 

of this solicitation entitled ‘‘Buy American 

Act—Free Trade Agreements—Israeli Trade 

Act.’’ 

* * * * * 

(c) The offeror shall list those supplies that 

are foreign end products (other than those 

listed in paragraph (b) of this provision) as 

defined in the clause of this solicitation 

entitled ‘‘Buy American Act—Free Trade 

Agreements—Israeli Trade Act.’’ The offeror 

shall list as other foreign end products those 

end products manufactured in the United 

States that do not qualify as domestic end 

products, i.e., an end product that is not a 

COTS item and does not meet the component 

test in paragraph (2) of the definition of 

‘‘domestic end product.’’ 

Other Foreign End Products: 

LINE ITEM NO. COUNTRY OF ORIGIN 

llllllll llllllll 

llllllll llllllll 

llllllll llllllll 

[List as necessary] 

* * * * * 

(End of provision) 

■ 22. Amend section 52.225–9 by 

revising the date of the clause; in 

paragraph (a), by adding, in alphabetical 

order, the definition ‘‘Commercially 

available off-the-shelf (COTS) item’’ and 

revising the definition ‘‘Domestic 

construction material’’; and by revising 

paragraph (b)(1) to read as follows: 


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2724 Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Rules and Regulations 

52.225–9 Buy American Act—Construction 

Materials. 

* * * * * 

BUY AMERICAN ACT— 

CONSTRUCTION MATERIALS (FEB 

2009) 

(a) Definitions. * * * 

Commercially available off-the-shelf 

(COTS) item— (1) Means any item of supply 

(including construction material) that is— 

(i) A commercial item (as defined in 

paragraph (1) of the definition at FAR 2.101); 

(ii) Sold in substantial quantities in the 

commercial marketplace; and 

(iii) Offered to the Government, under a 

contract or subcontract at any tier, without 

modification, in the same form in which it 

is sold in the commercial marketplace; and 

(2) Does not include bulk cargo, as defined 

in section 3 of the Shipping Act of 1984 (46 

U.S.C. App. 1702), such as agricultural 

products and petroleum products. 

* * * * * 

Domestic construction material means— 

(1) An unmanufactured construction 

material mined or produced in the United 

States; 

(2) A construction material manufactured 

in the United States, if— 

(i) The cost of its components mined, 

produced, or manufactured in the United 

States exceeds 50 percent of the cost of all 

its components. Components of foreign origin 

of the same class or kind for which 

nonavailability determinations have been 

made are treated as domestic; or 

(ii) The construction material is a COTS 

item. 

* * * * * 

(b) Domestic preference. (1) This clause 

implements the Buy American Act (41 U.S.C. 

10a–10d) by providing a preference for 

domestic construction material. In 

accordance with 41 U.S.C. 431, the 

component test of the Buy American Act is 

waived for construction material that is a 

COTS item (See FAR 12.505(a)(2)). The 

Contractor shall use only domestic 

construction material in performing this 

contract, except as provided in paragraphs 

(b)(2) and (b)(3) of this clause. 

* * * * * 

(End of clause) 

■ 23. Amend section 52.225–10 by 

revising the date of the provision and 

paragraph (a) to read as follows: 

52.225–10 Notice of Buy American Act 

Requirement—Construction Materials. 

* * * * * 

NOTICE OF BUY AMERICAN ACT 

REQUIREMENT—CONSTRUCTION 

MATERIALS (FEB 2009) 

(a) Definitions. ‘‘Commercially available 

off-the-shelf (COTS) item,’’ ‘‘construction 

material,’’ ‘‘domestic construction material,’’ 

and ‘‘foreign construction material,’’ as used 

in this provision, are defined in the clause of 

this solicitation entitled ‘‘Buy American 

Act—Construction Materials’’ (Federal 

Acquisition Regulation (FAR) clause 52.225– 

9). 

* * * * * 

(End of provision) 

■ 24. Amend section 52.225–11 by— 

■ a. Revising the date of the clause; 

■ b. In paragraph (a), by adding, in 

alphabetical order, the definition 

‘‘Commercially available off-the-shelf 

(COTS) item’’ and revising the 

definition ‘‘Domestic construction 

material’’; 

■ c. Revising paragraph (b)(1); and 

■ d. Revising the date of Alternate I and 

in paragraph (b)(1) adding a new second 

sentence to read as follows: 

52.225–11 Buy American Act— 

Construction Materials Under Trade 

Agreements. 

* * * * * 

BUY AMERICAN ACT— 

CONSTRUCTION MATERIALS UNDER 

TRADE AGREEMENTS (FEB 2009) 

(a) Definitions. * * * 

* * * * * 

Commercially available off-the-shelf 

(COTS) item— (1) Means any item of supply 

(including construction material) that is— 

(i) A commercial item (as defined in 

paragraph (1) of the definition at FAR 2.101); 

(ii) Sold in substantial quantities in the 

commercial marketplace; and 

(iii) Offered to the Government, under a 

contract or subcontract at any tier, without 

modification, in the same form in which it 

is sold in the commercial marketplace; and 

(2) Does not include bulk cargo, as defined 

in section 3 of the Shipping Act of 1984 (46 

U.S.C. App. 1702), such as agricultural 

products and petroleum products. 

* * * * * 

Domestic construction material means— 

(1) An unmanufactured construction 

material mined or produced in the United 

States; 

(2) A construction material manufactured 

in the United States, if— 

(i) The cost of its components mined, 

produced, or manufactured in the United 

States exceeds 50 percent of the cost of all 

its components. Components of foreign origin 

of the same class or kind for which 

nonavailability determinations have been 

made are treated as domestic; or 

(ii) The construction material is a COTS 

item. 

* * * * * 

(b) Construction materials. (1) This clause 

implements the Buy American Act (41 U.S.C. 

10a–10d) by providing a preference for 

domestic construction material. In 

accordance with 41 U.S.C. 431, the 

component test of the Buy American Act is 

waived for construction material that is a 

COTS item (See FAR 12.505(a)(2)). In 

addition, the Contracting Officer has 

determined that the WTO GPA and Free 

Trade Agreements (FTAs) apply to this 

acquisition. Therefore, the Buy American Act 

restrictions are waived for designated county 

construction materials. 

* * * * * 

Alternate I (FEB 2009). * * * 

* * * * * 

(b) Construction materials. (1) * * * In 

accordance with 41 U.S.C. 431, the 

component test of the Buy American 

Act is waived for construction material 

that is a COTS item (See FAR 

12.505(a)(2)). * * * 

* * * * * 

■ 25. Amend section 52.225–12 by 

revising the date of the provision and 

revising paragraph (a) to read as follows: 

52.225–12 Notice of Buy American Act 

Requirement—Construction Materials 

Under Trade Agreements. 

* * * * * 

NOTICE OF BUY AMERICAN ACT 

REQUIREMENT—CONSTRUCTION 

MATERIALS UNDER TRADE 

AGREEMENTS (FEB 2009) 

(a) Definitions. ‘‘Commercially available 

off-the-shelf (COTS) item,’’ ‘‘construction 

material,’’ ‘‘designated country construction 

material,’’ ‘‘domestic construction material,’’ 

and ‘‘foreign construction material,’’ as used 

in this provision, are defined in the clause of 

this solicitation entitled ‘‘Buy American 

Act—Construction Materials Under Trade 

Agreements’’ (Federal Acquisition Regulation 

(FAR) clause 52.225–11). 

* * * * * 

(End of provision) 

[FR Doc. E9–551 Filed 1–14–09; 8:45 am] 

BILLING CODE 6820–EP–S 

DEPARTMENT OF DEFENSE 

GENERAL SERVICES 

ADMINISTRATION 

NATIONAL AERONAUTICS AND 

SPACE ADMINISTRATION 

48 CFR Parts 4, 15, 17, 22, and 52 

[FAC 2005–30; FAR Case 2001–004; Item 

III; Docket 2007–0001, Sequence 6] 

RIN 9000–AK82 

Federal Acquisition Regulation; FAR 

Case 2001–004, Exemption of Certain 

Service Contracts from the Service 

Contract Act (SCA) 

AGENCIES: Department of Defense (DoD), 

General Services Administration (GSA), 

and National Aeronautics and Space 

Administration (NASA). 

ACTION: Final rule. 

SUMMARY: The Civilian Agency 

Acquisition Council and the Defense 

Acquisition Regulations Council 

(Councils) have adopted as final, with 

changes, the interim rule which 

amended the Federal Acquisition 

Regulation (FAR) to revise the current 

SCA exemption and to add an SCA 

exemption for contracts for certain 


sroberts on PROD1PC70 with RULES