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###### Department of Defense

###### Defense Acquisition Regulations System 

          - 48 CFR Parts 204 and 252 
          - RIN 0750-AF98 

# AGENCY:

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

# ACTION:

Final rule. 

# SUMMARY:

DoD has issued a final rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to add a contract clause requiring a contractor to notify DoD if the contractor is required to report its activities under the U.S.-International Atomic Energy Agency Additional Protocol. The clause will be included in contracts for research and development or major defense acquisition programs involving fissionable materials, other radiological source materials, or technologies directly related to nuclear power production. 

# DATES:

*Effective Date:*                         January 15, 2009.                     

# FOR FURTHER INFORMATION CONTACT:

                        Ms. Michele Peterson, Defense Acquisition Regulations System, OUSD (AT&L)                               ( print page 2412)                            DPAP (DARS), IMD 3D139, 3062 Defense Pentagon, Washington, DC 20301-3062. Telephone 703-602-0311; facsimile 703-602-7887. Please cite DFARS Case 2004-D003.                     

# SUPPLEMENTARY INFORMATION:

## A. Background 

Under the U.S.-International Atomic Energy Agency Additional Protocol (U.S.-IAEA AP), the United States is required to declare a wide range of public and private nuclear-related activities to the IAEA and potentially provide access to IAEA inspectors for verification purposes. The Department of Commerce issued a final rule at 73 FR 65120 on October 31, 2008, to implement the U.S.-IAEA AP. 

The U.S.-IAEA AP permits the United States unilaterally to declare exclusions from inspection requirements for activities with direct national security significance. This DFARS rule contains a contract clause requiring a contractor to notify the applicable DoD program manager if the contractor is required to report any of its activities under the U.S.-IAEA AP. Upon such a notification, DoD will determine if access may be granted to IAEA inspectors, or if a national security exclusion should be applied. 

DoD published a proposed rule at 73 FR 48185 on August 18, 2008. DoD received no comments on the proposed rule. DoD has adopted the proposed rule as a final rule with minor changes to clarify the text and to update references to a related DoD publication. 

This rule was not subject to Office of Management and Budget review under Executive Order 12866, dated September 30, 1993. 

## B. Regulatory Flexibility Act 

                    DoD certifies 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 the rule applies only to those DoD contractors involved in certain nuclear-related activities. The rule provides for exceptions to inspection requirements that might otherwise apply to such contractors, if DoD determines that an exception is necessary in the interest of national security.                 

## C. Paperwork Reduction Act 

This final rule contains a new information collection requirement. The Office of Management and Budget has approved the information collection under Control Number 0704-0454. 

# List of Subjects in 48 CFR Parts 204 and 252

      - Government procurement

Michele P. Peterson, 

Editor, Defense Acquisition Regulations System.

Therefore, 48 CFR parts 204 and 252 are amended as follows: 

1. The authority citation for 48 CFR parts 204 and 252 continues to read as follows: 

Authority:41 U.S.C. 421 and 48 CFR Chapter 1. 

# PART 204—ADMINISTRATIVE MATTERS 

2. Sections 204.470 through 204.470-3 are added to read as follows: 

204.470 

204.470-1 

Under the U.S.-International Atomic Energy Agency Additional Protocol (U.S.-IAEA AP), the United States is required to declare a wide range of public and private nuclear-related activities to the IAEA and potentially provide access to IAEA inspectors for verification purposes. 

204.470-2 

(a) The U.S.-IAEA AP permits the United States unilaterally to declare exclusions from inspection requirements for activities, or locations or information associated with such activities, with direct national security significance. 

(b) In order to ensure that all relevant activities are reviewed for direct national security significance, both current and former activities, and associated locations or information, are to be considered for applicability for a national security exclusion. 

(c) If a DoD program manager receives notification from a contractor that the contractor is required to report any of its activities in accordance with the U.S.-IAEA AP, the program manager will—

(1) Conduct a security assessment to determine if, and by what means, access may be granted to the IAEA; or 

(2) Provide written justification to the component or agency treaty office for application of the national security exclusion at that location to exclude access by the IAEA, in accordance with DoD Instruction 2060.03, Application of the National Security Exclusion to the Agreements Between the United States of America and the International Atomic Energy Agency for the Application of Safeguards in the United States of America. 

204.470-3 

Use the clause at 252.204-7010, Requirement for Contractor to Notify DoD if the Contractor's Activities are Subject to Reporting Under the U.S.-International Atomic Energy Agency Additional Protocol, in solicitations and contracts for research and development or major defense acquisition programs involving—

(a) Any fissionable materials (e.g., uranium, plutonium, neptunium, thorium, americium); 

(b) Other radiological source materials; or 

(c) Technologies directly related to nuclear power production, including nuclear or radiological waste materials.

# PART 252—SOLICITATION PROVISIONS AND CONTRACT CLAUSES 

3. Section 252.204-7010 is added to read as follows: 

252.204-7010 

As prescribed in 204.470-3, use the following clause: 

#### REQUIREMENT FOR CONTRACTOR TO NOTIFY DOD IF THE CONTRACTOR'S ACTIVITIES ARE SUBJECT TO REPORTING UNDER THE U.S.-INTERNATIONAL ATOMIC ENERGY AGENCY ADDITIONAL PROTOCOL (JAN 2009) 

                                (a) If the Contractor is required to report any of its activities in accordance with Department of Commerce regulations (15 CFR part 781*et seq.*) or Nuclear Regulatory Commission regulations (10 CFR part 75) in order to implement the declarations required by the U.S.-International Atomic Energy Agency Additional Protocol (U.S.-IAEA AP), the Contractor shall—                            

(1) Immediately provide written notification to the following DoD Program Manager: 

*[Contracting Officer to insert Program Manager's name, mailing address, e-mail address, telephone number, and facsimile number];*

(2) Include in the notification—

(i) Where DoD contract activities or information are located relative to the activities or information to be declared to the Department of Commerce or the Nuclear Regulatory Commission; and 

(ii) If or when any current or former DoD contract activities and the activities to be declared to the Department of Commerce or the Nuclear Regulatory Commission have been or will be co-located or located near enough to one another to result in disclosure of the DoD activities during an IAEA inspection or visit; and 

                                (3) Provide a copy of the notification to the Contracting Officer.                                       ( print page 2413)    

(b) After receipt of a notification submitted in accordance with paragraph (a) of this clause, the DoD Program Manager will—

(1) Conduct a security assessment to determine if and by what means access may be granted to the IAEA; or 

(2) Provide written justification to the component or agency treaty office for a national security exclusion, in accordance with DoD Instruction 2060.03, Application of the National Security Exclusion to the Agreements Between the United States of America and the International Atomic Energy Agency for the Application of Safeguards in the United States of America. DoD will notify the Contractor if a national security exclusion is applied at the Contractor's location to prohibit access by the IAEA. 

(c) If the DoD Program Manager determines that a security assessment is required—

(1) DoD will, at a minimum—

(i) Notify the Contractor that DoD officials intend to conduct an assessment of vulnerabilities to IAEA inspections or visits; 

(ii) Notify the Contractor of the time at which the assessment will be conducted, at least 30 days prior to the assessment; 

(iii) Provide the Contractor with advance notice of the credentials of the DoD officials who will conduct the assessment; and 

(iv) To the maximum extent practicable, conduct the assessment in a manner that does not impede or delay operations at the Contractor's facility; and 

(2) The Contractor shall provide access to the site and shall cooperate with DoD officials in the assessment of vulnerabilities to IAEA inspections or visits. 

(d) Following a security assessment of the Contractor's facility, DoD officials will notify the Contractor as to—

(1) Whether the Contractor's facility has any vulnerabilities where potentially declarable activities under the U.S.-IAEA AP are taking place; 

(2) Whether additional security measures are needed; and 

(3) Whether DoD will apply a national security exclusion. 

(e) If DoD applies a national security exclusion, the Contractor shall not grant access to IAEA inspectors. 

(f) If DoD does not apply a national security exclusion, the Contractor shall apply managed access to prevent disclosure of program activities, locations, or information in the U.S. declaration. 

(g) The Contractor shall not delay submission of any reports required by the Department of Commerce or the Nuclear Regulatory Commission while awaiting a DoD response to a notification provided in accordance with this clause. 

(h) The Contractor shall incorporate the substance of this clause, including this paragraph (h), in all subcontracts that are subject to the provisions of the U.S.-IAEA AP.

(End of clause)

[FR Doc. E9-671 Filed 1-14-09; 8:45 am] 

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