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[Federal Register Volume 79, Number 238 (Thursday, December 11, 2014)]
[Rules and Regulations]
[Pages 73490-73492]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-28813]

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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 204, 212, 225, and 252

RIN 0750-AI32

Defense Federal Acquisition Regulation Supplement: Foreign 
Commercial Satellite Services (DFARS Case 2014-D010)

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

ACTION: Final rule.

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SUMMARY: DoD has adopted as final, with minor editorial changes, an 
interim rule that amended the Defense Federal Acquisition Regulation 
Supplement (DFARS) to implement a section of the National Defense 
Authorization Act (NDAA) for Fiscal Year (FY) 2014 that prohibits 
acquisition of commercial satellite services from certain foreign 
entities.

DATES: Effective December 11, 2014.

FOR FURTHER INFORMATION CONTACT: Ms. Amy G. Williams, telephone 571-
372-6106.

SUPPLEMENTARY INFORMATION:

I. Background

    DoD published an interim rule in the Federal Register at 79 FR 
45662 on August 5, 2014, to implement section 1602 of the NDAA for FY 
2014 (Pub. L. 113-66). Section 1602 prohibits award of a contract for 
commercial satellite services to a foreign entity if the Secretary of 
Defense reasonably believes that the foreign entity--
     Is an entity in which the government of a covered foreign 
country has an ownership interest that enables the government to affect 
satellite operations; or

[[Page 73491]]

     Plans to, or is expected to, provide or use launch or 
other satellite services under the contract from a covered foreign 
country.
    A covered foreign country means the People's Republic of China, 
North Korea, or any country that is a state sponsor of terrorism, as 
described in section 1261(c)(2) of the NDAA for FY 2013 (Pub. L. 112-
239). State sponsors of terrorism, as determined by the Secretary of 
State, currently include Cuba, Iran, Sudan, and Syria.
    No public comments were received in response to the proposed rule.

II. Discussion and Analysis

    This rule converts the interim rule, with only minor editorial 
changes, to a final rule.

III. Applicability to Acquisitions Not Greater Than the Simplified 
Acquisition Threshold (SAT) and Commercial Items

    10 U.S.C. 2279 is silent on applicability to contracts and 
subcontracts in amounts not greater than the SAT or for the acquisition 
of commercial items. Also, the statute does not provide for criminal or 
civil penalties. Therefore, it does not apply to the acquisition of 
contracts and subcontracts in amounts not greater than the SAT or the 
acquisition of commercial items unless the Director, DPAP, makes a 
written determination as provided in 41 U.S.C. 1905.
    There is a potential risk to national security if DoD uses 
commercial satellite services for DoD communications and the government 
of a covered foreign country has an ownership interest that enables the 
government to affect satellite operations, regardless of the dollar 
value of the contract or order. Likewise, if launch or other satellite 
services under the contract are occurring in a covered country, the 
government of that country could impact the ability of the foreign 
entity to adequately provide those services. Furthermore, although 10 
U.S.C. 2279 does not specifically reference 41 U.S.C. 1906, the statute 
only applies to the acquisition of commercial satellite services, so 
exempting commercial items from application of the statute would negate 
the intended effect of the statute. Therefore, consistent with 41 
U.S.C. 1905 and 1906, the Director, Defense Procurement and Acquisition 
Policy, determined that it would not be in the best interest of the 
United States to exempt acquisitions not greater than the SAT and 
acquisitions of commercial items from the applicability of 10 U.S.C. 
2279.

IV. Executive Orders 12866 and 13563

    Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess 
all costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). E.O. 
13563 emphasizes the importance of quantifying both costs and benefits, 
of reducing costs, of harmonizing rules, and of promoting flexibility. 
This is not a significant regulatory action and, therefore, was not 
subject to review under section 6(b) of E.O. 12866, Regulatory Planning 
and Review, dated September 30, 1993. This rule is not a major rule 
under 5 U.S.C. 804.

V. Regulatory Flexibility Act

    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. However, a final 
regulatory flexibility analysis has been performed and is summarized as 
follows:
    DoD is converting to a final rule, without change, an interim rule 
that amended the Defense Federal Acquisition Regulation Supplement 
(DFARS) to implement section 1602 of the National Defense Authorization 
Act (NDAA) for FY 2014. Section 1602 added 10 U.S.C. 2279, which 
prohibits acquisition of commercial satellite services from certain 
foreign entities.
    The objective of the rule is to implement 10 U.S.C. 2279, which is 
the legal basis for the rule. The statute prohibits award of contracts 
for commercial satellite services to a foreign entity that--
     Is an entity in which the government of a covered foreign 
country (i.e., the People's Republic of China, North Korea, Cuba, Iran, 
Sudan, or Syria) has an ownership interest that enables the government 
to affect satellite operations; or
     Plans to, or is expected to, provide or use launch or 
other satellite services under the contract from a covered foreign 
country.
    There were no public comments in response to the initial regulatory 
flexibility analysis.
    DoD estimates that this rule will apply to less than 111 small 
entities. According to Federal Procurement Data System data for FY 
2013, 111 small entities were awarded contracts or orders for services 
in PSC D304 (ADP Telecommunications and Transmission Services), of 
which commercial satellite services are a subset. Although the focus of 
the Regulatory Flexibility Act is protection of domestic small business 
entities that are eligible for assistance from the Small Business 
Administration, there may be domestic small business entities in the 
United States that offer the satellite services of a foreign entity 
that would be restricted by this rule.
    This rule requires an annual representation as to whether the 
offeror is, or is not, a foreign entity subject to the prohibitions of 
the statute or is, or is not, offering commercial satellite services 
provided by such a foreign entity. Further information is required if 
the offeror provides an affirmative response to any of the 
representations, but such affirmative response and further submission 
is expected to be extremely rare.
    This rule will not have a significant economic impact on any small 
entities, unless they are offering commercial satellite services 
provided by a foreign entity that is subject to the restrictions of 
this rule. DoD was not able to identify any alternatives that would 
reduce the burden on small entities and meet the objectives of the 
rule.

VI. Paperwork Reduction Act

    The rule contains information collection requirements that have 
been approved by the Office of Management and Budget under the 
Paperwork Reduction Act (44 U.S.C. chapter 35). This information 
collection requirement has been assigned OMB Control Number 0704-0525, 
titled: Foreign Commercial Satellite Services.

List of Subjects in 48 CFR Parts 204, 212, 225, and 252

    Government procurement.

Manuel Quinones,
Editor, Defense Acquisition Regulations System.

    Accordingly, the interim rule amending 48 CFR parts 204, 212, 225, 
and 252, which was published at 79 FR 45662 on August 5, 2014, is 
adopted as a final rule with the following changes:

0
1. The authority citation for 48 CFR parts 212 and 252 continues to 
read as follows:

    Authority:  41 U.S.C. 1303 and 48 CFR chapter 1.

PART 212--ACQUISITION OF COMMERCIAL ITEMS

212.301   [Amended]

0
2. Amend section 212.301 in paragraph (f)(xlviii) by removing 
``225.772-5'' and adding ``225.772-5, to

[[Page 73492]]

comply with 10 U.S.C. 2279'' in its place.

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

252.225-7049   [Amended]

0
3. Amending section 252.225-7049 by--
0
a. Removing the clause date of ``(AUG 2014)'' and adding ``(DEC 2014)'' 
in its place; and
0
b. In paragraph (b) introductory text, removing ``DFARS 225.71-4'' and 
adding ``DFARS 225.772-4'' in its place.

[FR Doc. 2014-28813 Filed 12-10-14; 8:45 am]
BILLING CODE 5001-06-P
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