2422 Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Rules and Regulations 

publication for public comment under 

41 U.S.C. 418b is not required. 

However, DoD will consider comments 

from small entities concerning the 

affected DFARS subpart in accordance 

with 5 U.S.C. 610. Such comments 

should cite DFARS Case 2008–D036. 

C. Paperwork Reduction Act 

The Paperwork Reduction Act does 

not apply, because the rule does not 

impose any 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 Part 252 

Government procurement. 

Michele P. Peterson, 

Editor, Defense Acquisition Regulations 

System. 

■ Therefore, 48 CFR part 252 is 

amended as follows: 

PART 252—SOLICITATION 

PROVISIONS AND CONTRACT 

CLAUSES 

■ 1. The authority citation for 48 CFR 

Part 252 continues to read as follows: 

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

Chapter 1. 

252.209–7001 [Amended] 

■ 2. Section 252.209–7001 is amended 

as follows: 

■ a. By revising the clause date to read 

‘‘(JAN 2009)’’; and 

■ b. In paragraph (a)(2), in the second 

sentence, by removing ‘‘North Korea,’’. 

[FR Doc. E9–662 Filed 1–14–09; 8:45 am] 

BILLING CODE 5001–08–P 

DEPARTMENT OF DEFENSE 

Defense Acquisition Regulations 

System 

48 CFR Part 252 

RIN 0750–AG12 

Defense Federal Acquisition 

Regulation Supplement; Statutory 

Waiver for Commercially Available Offthe-Shelf Items (DFARS Case 2008– 

D009) 

AGENCY: Defense Acquisition 

Regulations System, Department of 

Defense (DoD). 

ACTION: Interim rule with request for 

comments. 

SUMMARY: DoD has issued an interim 

rule amending the Defense Federal 

Acquisition Regulation Supplement 

(DFARS) to implement a determination 

made by the Administrator for Federal 

Procurement Policy, that the Buy 

American Act ‘‘component test’’ is 

inapplicable to acquisitions of 

commercially available off-the-shelf 

items. The rule is consistent with 

changes made to the Federal 

Acquisition Regulation. 

DATES: Effective date: January 15, 2009. 

Comment date: Comments on the 

interim rule should be submitted in 

writing to the address shown below on 

or before March 16, 2009, to be 

considered in the formation of the final 

rule. 

ADDRESSES: You may submit comments, 

identified by DFARS Case 2008–D009, 

using any of the following methods: 

• Federal eRulemaking Portal: 

http://www.regulations.gov. Follow the 

instructions for submitting comments. 

• E-mail: dfars@osd.mil. Include 

DFARS Case 2008–D009 in the subject 

line of the message. 

• Fax: 703–602–7887. 

• Mail: Defense Acquisition 

Regulations System, Attn: Ms. Amy 

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

IMD 3D139, 3062 Defense Pentagon, 

Washington, DC 20301–3062. 

• Hand Delivery/Courier: Defense 

Acquisition Regulations System, Crystal 

Square 4, Suite 200A, 241 18th Street, 

Arlington, VA 22202–3402. 

Comments received generally will be 

posted without change to http:// 

www.regulations.gov, including any 

personal information provided. 

FOR FURTHER INFORMATION CONTACT: Ms. 

Amy Williams, 703–602–0328. 

SUPPLEMENTARY INFORMATION: 

A. Background 

This interim rule amends DFARS 

provisions and clauses addressing the 

Buy American Act/Balance of Payments 

Program to implement a determination 

made by the Administrator for Federal 

Procurement Policy, on February 14, 

2008, regarding laws applicable to the 

acquisition of commercially available 

off-the-shelf (COTS) items. The 

determination included a partial waiver 

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

and 10b), limited to the Act’s domestic 

component test. The waiver allows a 

COTS item to be treated as a domestic 

end product if it is manufactured in the 

United States, without tracking the 

origin of the item’s components. 

Changes were made to the Federal 

Acquisition Regulation in Federal 

Acquisition Circular 2005–30 to 

implement the Administrator’s 

determination. This interim rule makes 

corresponding changes to the DFARS. 

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 does not expect this rule to have 

a significant economic impact on a 

substantial number of small entities 

within the meaning of the Regulatory 

Flexibility Act, 5 U.S.C. 601, et seq. 

Although the rule eliminates 

requirements for suppliers of U.S.-made 

items to track the origin of the item’s 

components, the economic impact is not 

expected to be substantial. DoD has 

already waived the component test for 

U.S.-made items in acquisitions that are 

subject to the World Trade Organization 

Government Procurement Agreement 

(DFARS 225.103(a)(i)(B)). Additionally, 

contractors generally pass on the costs 

of such administrative requirements to 

the Government. Therefore, DoD has not 

performed an initial regulatory 

flexibility analysis. DoD invites 

comments from small businesses and 

other interested parties. DoD also will 

consider comments from small entities 

concerning the affected DFARS subparts 

in accordance with 5 U.S.C. 610. Such 

comments should be submitted 

separately and should cite DFARS Case 

2008–D009. 

C. Paperwork Reduction Act 

This rule will result in a reduction of 

the information collection requirements 

previously approved under Office of 

Management and Budget Control 

Number 0704–0229, DFARS part 225 

and associated clauses. DoD anticipates 

a 5 percent reduction in the burden 

hours associated with the provisions at 

DFARS 252.225–7000 and 252.225– 

7035, from 34,875 to 33,130 hours, 

because offerors of U.S.-made items 

with foreign components will no longer 

need to respond to these provisions. 

D. Determination To Issue an Interim 

Rule 

A determination has been made under 

the authority of the Secretary of Defense 

that urgent and compelling reasons exist 

to publish an interim rule prior to 

affording the public an opportunity to 

comment. This interim rule implements 

a determination made by the 

Administrator for Federal Procurement 

Policy on February 14, 2008, in 

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

Buy American Act domestic component 

test is inapplicable to acquisitions of 

COTS items. The rule will permit a 

COTS item to be treated as a domestic 

end product if it is manufactured in the 

United States, without the need to track 

the origin of the item’s components. The 

rule will reduce administrative burdens 

for suppliers of COTS items and is 

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Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Rules and Regulations 2423 

consistent with changes made to the 

Federal Acquisition Regulation. 

Comments received in response to this 

interim rule will be considered in the 

formation of the final rule. 

List of Subjects in 48 CFR Part 252 

Government procurement. 

Michele P. Peterson, 

Editor, Defense Acquisition Regulations 

System. 

■ Therefore, 48 CFR part 252 is 

amended as follows: 

PART 252—SOLICITATION 

PROVISIONS AND CONTRACT 

CLAUSES 

■ 1. The authority citation for 48 CFR 

part 252 continues to read as follows: 

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

Chapter 1. 

■ 2. Section 252.225–7000 is amended 

by revising the clause date and 

paragraphs (a), (c)(1)(ii), and (c)(3) to 

read as follows: 

252.225–7000 Buy American Act—Balance 

of Payments Program Certificate. 

* * * * * 

BUY AMERICAN ACT—BALANCE OF 

PAYMENTS PROGRAM CERTIFICATE 

(JAN 2009) 

(a) Definitions. Commercially available offthe-shelf (COTS) item, domestic end product, 

foreign end product, qualifying country, 

qualifying country end product, and United 

States have the meanings given in the Buy 

American Act and Balance of Payments 

Program clause of this solicitation. 

* * * * * 

(c) * * * 

(1) * * * 

(ii) For end products other than COTS 

items, components of unknown origin are 

considered to have been mined, produced, or 

manufactured outside the United States or a 

qualifying country. 

* * * * * 

(3) The following end products are other 

foreign end products, including 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 (ii) 

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

(Line Item Number) lllllllllll

(Country of Origin (If known)) llllll

■ 3. Section 252.225–7001 is amended 

as follows: 

■ a. By revising the clause date; 

■ b. By redesignating paragraphs (a)(1) 

through (8) as paragraphs (a)(2) through 

(9) respectively; 

■ c. By adding a new paragraph (a)(1); 

■ d. By revising newly designated 

paragraph (a)(3)(ii); and 

■ e. By revising paragraph (b) to read as 

follows: 

252.225–7001 Buy American Act and 

Balance of Payments Program. 

* * * * * 

BUY AMERICAN ACT AND BALANCE 

OF PAYMENTS PROGRAM (JAN 2009) 

(a) * * * 

(1) Commercially available off-the-shelf 

(COTS) item— 

(i) Means any item of supply (including 

construction material) that is— 

(A) A commercial item (as defined in 

paragraph (1) of the definition of 

‘‘commercial item’’ in section 2.101 of the 

Federal Acquisition Regulation); 

(B) Sold in substantial quantities in the 

commercial marketplace; and 

(C) 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 

(ii) Does not include bulk cargo, as defined 

in section 3 of the Shipping Act of 1984 (46 

U.S.C. 40102), such as agricultural products 

and petroleum products. 

* * * * * 

(3) * * * 

(ii) An end product manufactured in the 

United States if— 

(A) The cost of its qualifying country 

components and its components that are 

mined, produced, or manufactured in the 

United States exceeds 50 percent of the cost 

of all its components. The cost of 

components includes transportation costs to 

the place of incorporation into the end 

product and U.S. duty (whether or not a 

duty-free entry certificate is issued). Scrap 

generated, collected, and prepared for 

processing in the United States is considered 

domestic. A component is considered to have 

been mined, produced, or manufactured in 

the United States (regardless of its source in 

fact) if the end product in which it is 

incorporated is manufactured in the United 

States and the component is of a class or kind 

for which the Government has determined 

that— 

(1) Sufficient and reasonably available 

commercial quantities of a satisfactory 

quality are not mined, produced, or 

manufactured in the United States; or 

(2) It is inconsistent with the public 

interest to apply the restrictions of the Buy 

American Act; or 

(B) The end product is a COTS item. 

* * * * * 

(b) This clause implements the Buy 

American Act (41 U.S.C. Section 10a–d). 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 section 12.505(a)(1) of the Federal 

Acquisition Regulation). Unless otherwise 

specified, this clause applies to all line items 

in the contract. 

* * * * * 

■ 4. Section 252.225–7035 is amended 

by revising the clause date and 

paragraphs (a) and (c)(2)(iii) to read as 

follows: 

252.225–7035 Buy American Act—Free 

Trade Agreements—Balance of Payments 

Program Certificate. 

* * * * * 

BUY AMERICAN ACT—FREE TRADE 

AGREEMENTS—BALANCE OF 

PAYMENTS PROGRAM CERTIFICATE 

(JAN 2009) 

(a) Definitions. Bahrainian end product, 

commercially available off-the-shelf (COTS) 

item, domestic end product, Free Trade 

Agreement country, Free Trade Agreement 

country end product, foreign end product, 

Moroccan end product, qualifying country 

end product, and United States have the 

meanings given in the Buy American Act— 

Free Trade Agreements—Balance of 

Payments Program clause of this solicitation. 

* * * * * 

(c) * * * 

(2) * * * 

(iii) The following supplies are other 

foreign end products, including 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 (ii) 

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

(Line Item Number) lllllllllll

(Country of Origin (If known)) llllll

* * * * * 

■ 5. Section 252.225–7036 is amended 

as follows: 

■ a. By revising the clause date; 

■ b. By redesignating paragraphs (a)(2) 

through (12) as paragraphs (a)(3) 

through (13) respectively; 

■ c. By adding a new paragraph (a)(2); 

and 

■ d. By revising newly designated 

paragraph (a)(4)(ii) to read as follows: 

252.225–7036 Buy American Act—Free 

Trade Agreements—Balance of Payments 

Program. 

* * * * * 

BUY AMERICAN ACT—FREE TRADE 

AGREEMENTS—BALANCE OF 

PAYMENTS PROGRAM (JAN 2009) 

(a) * * * 

(2) Commercially available off-the-shelf 

(COTS) item— 

(i) Means any item of supply (including 

construction material) that is— 

(A) A commercial item (as defined in 

paragraph (1) of the definition of 

‘‘commercial item’’ in section 2.101 of the 

Federal Acquisition Regulation); 

(B) Sold in substantial quantities in the 

commercial marketplace; and 

(C) 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 

(ii) Does not include bulk cargo, as defined 

in section 3 of the Shipping Act of 1984 (46 

U.S.C. 40102), such as agricultural products 

and petroleum products. 

* * * * * 

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2424 Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Rules and Regulations 

(4) * * * 

(ii) An end product manufactured in the 

United States if— 

(A) The cost of its qualifying country 

components and its components that are 

mined, produced, or manufactured in the 

United States exceeds 50 percent of the cost 

of all its components. The cost of 

components includes transportation costs to 

the place of incorporation into the end 

product and U.S. duty (whether or not a 

duty-free entry certificate is issued). Scrap 

generated, collected, and prepared for 

processing in the United States is considered 

domestic. A component is considered to have 

been mined, produced, or manufactured in 

the United States (regardless of its source in 

fact) if the end product in which it is 

incorporated is manufactured in the United 

States and the component is of a class or kind 

for which the Government has determined 

that— 

(1) Sufficient and reasonably available 

commercial quantities of a satisfactory 

quality are not mined, produced, or 

manufactured in the United States; or 

(2) It is inconsistent with the public 

interest to apply the restrictions of the Buy 

American Act; or 

(B) The end product is a COTS item. 

* * * * * 

■ 6. Section 252.225–7044 is amended 

as follows: 

■ a. By revising the clause date; and 

■ b. In paragraph (a), by adding, in 

alphabetical order, a definition of 

‘‘Commercially available off-the-shelf 

(COTS) item’’, and by revising the 

definition of ‘‘Domestic construction 

material’’ to read as follows: 

252.225–7044 Balance of Payments 

Program—Construction Material. 

* * * * * 

BALANCE OF PAYMENTS 

PROGRAM—CONSTRUCTION 

MATERIAL (JAN 2009) 

(a) * * * 

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 of 

‘‘commercial item’’ in section 2.101 of the 

Federal Acquisition Regulation); 

(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. 40102), such as agricultural products 

and petroleum products. 

* * * * * 

Domestic construction material means— 

(1) An unmanufactured construction 

material mined or produced in the United 

States; or 

(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. 

* * * * * 

■ 7. Section 252.225–7045 is amended 

as follows: 

■ a. By revising the clause date; and 

■ b. In paragraph (a), by adding, in 

alphabetical order, a definition of 

‘‘Commercially available off-the-shelf 

(COTS) item’’, and by revising the 

definition of ‘‘Domestic construction 

material’’ to read as follows: 

252.225–7045 Balance of Payments 

Program—Construction Material Under 

Trade Agreements. 

* * * * * 

BALANCE OF PAYMENTS 

PROGRAM—CONSTRUCTION 

MATERIAL UNDER TRADE 

AGREEMENTS (JAN 2009) 

(a) * * * 

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 of 

‘‘commercial item’’ in section 2.101 of the 

Federal Acquisition Regulation); 

(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. 40102), such as agricultural products 

and petroleum products. 

* * * * * 

Domestic construction material means— 

(1) An unmanufactured construction 

material mined or produced in the United 

States; or 

(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. 

* * * * * 

[FR Doc. E9–669 Filed 1–14–09; 8:45 am] 

BILLING CODE 5001–08–P 

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