[Federal Register Volume 87, Number 82 (Thursday, April 28, 2022)]
[Rules and Regulations]
[Pages 25146-25147]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-08813]



[[Page 25146]]

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DEPARTMENT OF DEFENSE

48 CFR Parts 225 and 252

[Docket DARS-2021-0018]
RIN 0750-AL29


Defense Federal Acquisition Regulation Supplement: Modification 
of Small Purchase Threshold Exceptions (DFARS Case 2021-D010)

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

ACTION: Final rule

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SUMMARY: DoD is issuing a final rule amending the Defense Federal 
Acquisition Regulation Supplement (DFARS) to implement a section of the 
National Defense Authorization Act for Fiscal Year 2021.

DATES: Effective April 28, 2022.

FOR FURTHER INFORMATION CONTACT: Ms. Kimberly R. Ziegler, Telephone 
571-372-6095.

SUPPLEMENTARY INFORMATION: 

I. Background

    DoD published a proposed rule in the Federal Register at 86 FR 
53931 on September 29, 2021, to implement section 817 of the National 
Defense Authorization Act (NDAA) of Fiscal Year (FY) 2021 (Pub. L. 116-
283). Section 817 amends 10 U.S.C. 2533a (commonly known as the ``Berry 
Amendment''), by reducing the dollar threshold at which an acquisition 
is excepted from the source restrictions of the Berry Amendment from 
the simplified acquisition threshold (SAT) to an amount not to exceed 
$150,000.
    DFARS 225.7002 identifies the domestic source restrictions of 10 
U.S.C. 2533a on food, clothing, fabrics, fibers, hand or measuring 
tools, and flags, unless an exception applies. DFARS 225.7002-2, 
Exceptions, has historically referred to ``actions at or below the 
small purchase threshold,'' rather than a specific dollar value, as an 
exception to the domestic source restrictions of the Berry Amendment. 
As a result, each time the SAT increased, the exception threshold also 
increased to align with the new SAT, to include the most recent SAT 
increase to $250,000. Federal Acquisition Regulation (FAR) Case 2018-
004, published July 2, 2020 (85 FR 40064) raised the SAT at FAR 2.101 
from $150,000 to $250,000.
    Three respondents submitted public comments in response to the 
proposed rule.

II. Discussion and Analysis

    DoD reviewed the public comments in the development of the final 
rule. One respondent provided a comment that did not support the rule 
for reasons that were outside of the scope of this rule. A discussion 
of the comments is provided, as follows:

A. Summary of Significant Changes From the Proposed Rule

    There are no changes from the proposed rule as a result of public 
comments.

B. Analysis of Public Comments

1. Support for the Rule
    Comment: Some respondents supported the rule.
    Response: DoD acknowledges the support.
2. Splitting Requirements
    Comment: Respondents are concerned that without expressly stating 
that contracts cannot be broken into smaller contract actions, 
contracting officers will split requirements to avoid applying the 
restrictions set forth in 10 U.S.C. 2533a.
    Response: Basic contracting officer training already provides 
direction to the contracting workforce about splitting contract actions 
to avoid application of regulatory requirements. Additional direction 
is unnecessary to ensure compliance with this rule.

C. Other Changes

    Minor changes are made in paragraph (m) of DFARS 225.7002-2 to 
remove text that is not necessary. In paragraph (c) of DFARS clause 
252.225-7012, Preference for Certain Domestic Commodities, minor 
changes are made to delete an acronym that is no longer needed and to 
clarify that the reference to ``225.7002-2(a)'' is a reference to DFARS 
225.7002-2(a).

III. Applicability to Contracts at or Below the Simplified Acquisition 
Threshold (SAT), for Commercial Products Including Commercially 
Available Off-the-Shelf (COTS) Items, and for Commercial Services

    This rule amends the applicability of the following DFARS clauses: 
(1) 252.225-7006, Acquisition of the American Flag; (2) 252.225-7012, 
Preference for Certain Domestic Commodities; and (3) 252.225-7015, 
Restriction on Acquisition of Hand or Measuring Tools. DoD does intend 
to apply the rule to contracts valued above $150,000 but at or below 
the SAT. The clauses impacted by the rule are already prescribed for 
use in solicitations and contracts using FAR part 12 procedures for the 
acquisition of commercial products including COTS items.

A. Applicability to Contracts at or Below the Simplified Acquisition 
Threshold

    41 U.S.C. 1905 governs the applicability of laws to contracts or 
subcontracts in amounts not greater than the simplified acquisition 
threshold. It is intended to limit the applicability of laws to such 
contracts or subcontracts. 41 U.S.C. 1905 provides that if a provision 
of law contains criminal or civil penalties, or if the Federal 
Acquisition Regulatory Council makes a written determination that it is 
not in the best interest of the Federal Government to exempt contracts 
or subcontracts at or below the SAT, the law will apply to them. The 
Principal Director, Defense Pricing and Contracting (DPC), is the 
appropriate authority to make comparable determinations for regulations 
to be published in the DFARS, which is part of the FAR system of 
regulations. DoD does intend to make that determination. Therefore, 
this rule will apply above $150,000 but at or below the simplified 
acquisition threshold.

B. Determination

    DoD plans to apply the rule to contracts valued above $150,000 but 
at or below the SAT for the following DFARS clauses: (1) 252.225-7006, 
Acquisition of the American Flag; (2) 252.225-7012, Preference for 
Certain Domestic Commodities; (3) 252.225-7015, Restriction on 
Acquisition of Hand or Measuring Tools.
    Not applying these clauses to contracts valued above $150,000 but 
at or below the SAT would exclude contracts intended to be covered by 
this rule and undermine the overarching purpose of the rule, which is 
to increase the number of acquisitions subject to the domestic source 
restrictions at DFARS 225.7002 by reducing the volume of procurements 
subject to the exception at DFARS 225.7002-2(a). The clauses already 
apply to commercial products including COTS items.

IV. Expected Impact of the Rule

    DFARS 225.7002 identifies the domestic source restrictions of 10 
U.S.C. 2533a on food, clothing, fabrics, fibers, hand or measuring 
tools, and flags, unless an exception at DFARS 225.7002-2 applies. 
Acquisitions valued below the SAT, currently defined at FAR 2.201 as 
$250,000, are excepted from the domestic source restrictions of the 
Berry Amendment.
    This rule implements section 817 of the NDAA for FY 2021 by 
reducing the exception threshold from the SAT to $150,000. DoD expects 
the reduction required by section 817 to result in an

[[Page 25147]]

increase in the number of procurements of domestically sourced end 
products that are subject to 10 U.S.C. 2533a.
    DoD estimates that approximately 970 procurements valued between 
$150,000 and the SAT of $250,000 are awarded to an estimated 400 
entities annually, based upon data obtained from the Federal 
Procurement Data System (FPDS) for fiscal years 2018 through 2020. 
Until the final rule for FAR case 2018-004 (85 FR 40064), which 
increased the SAT from $150,000 to $250,000, became effective on August 
31, 2020, these entities were required to comply with domestic source 
restrictions of the Berry Amendment, including the $150,000 exception 
threshold. It has only been since August 31, 2020, that these entities 
have had the benefit of the higher exception threshold (i.e., the SAT 
of $250,000). DoD assumes that some of these entities may have adjusted 
their procurement sources in the short time since the threshold was 
raised, while some may have continued with their established supply 
chains. There is currently no data source that would identify the 
entities that made adjustments and would have to return to their 
previous practices.

V. 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.

VI. Congressional Review Act

    As required by the Congressional Review Act (5 U.S.C. 801-808) 
before an interim or final rule takes effect, DoD will submit a copy of 
the interim or final rule with the form, Submission of Federal Rules 
Under the Congressional Review Act, to the U.S. Senate, the U.S. House 
of Representatives, and to the Comptroller General of the United 
States. A major rule under the Congressional Review Act cannot take 
effect until 60 days after it is published in the Federal Register. The 
Office of Information and Regulatory Affairs has determined that this 
rule is not a major rule as defined by 5 U.S.C. 804.

VII. Regulatory Flexibility Act

    A final regulatory flexibility analysis has been prepared 
consistent with the Regulatory Flexibility Act, 5 U.S.C. 601, et seq. 
The FRFA is summarized as follows:
    This rule amends the DFARS to implement section 817 of the National 
Defense Authorization Act (NDAA) for Fiscal Year (FY) 2021 (Pub. L. 
116-283). Section 817 reduces the dollar threshold exception at DFARS 
225.7002, which implements 10 U.S.C. 2533a (commonly known as the 
``Berry Amendment''), from the simplified acquisition threshold (SAT) 
to an amount not to exceed $150,000.
    The objective of the rule is to increase the number of procurements 
subject to the domestic source requirements at DFARS 225.7002 by 
reducing the number of procurements subject to the exception at DFARS 
225.7002-2(a).
    There were no significant issues raised by the public in response 
to the initial regulatory flexibility analysis.
    This rule is expected to affect small entities that participate in 
procurements subject to the domestic source restrictions at DFARS 
225.7002. However, DoD does not expect a significant change in the 
number of actions awarded to small entities resulting from the 
reduction in the threshold from the current SAT of $250,000 to 
$150,000. To assess the impact of this reduction, data was obtained 
from the Federal Procurement Data System (FPDS). According to FPDS for 
fiscal years 2018 through 2020, DoD awarded an average of approximately 
970 applicable actions valued above $150,000 but below the SAT. Of 
those actions, an average of 200 contract actions was awarded to 
approximately 72 unique small entities.
    The rule does not impose any new reporting, recordkeeping, or 
compliance requirements.
    There are no practical alternatives that will accomplish the 
objectives of the statute.

VIII. Paperwork Reduction Act

    This rule does not contain any information collection requirements 
that require the approval of the Office of Management and Budget (OMB) 
under the Paperwork Reduction Act (44 U.S.C. chapter 35).

List of Subjects in 48 CFR Parts 225 and 252

    Government procurement.

Jennifer D. Johnson,
Editor/Publisher, Defense Acquisition Regulations System.

    Therefore, 48 CFR parts 225 and 252 are amended as follows:

0
1. The authority citation for 48 CFR parts 225 and 252 continues to 
read as follows:

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

PART 225--FOREIGN ACQUISITION


225.7002-2   [Amended]

0
2. Amend section 225.7002-2:
0
a. In paragraph (a), by removing ``at or below the simplified 
acquisition threshold'' and adding ``not exceeding $150,000'' in its 
place;
0
b. In paragraph (j)(2), by removing ``simplified acquisition 
threshold'' and adding ``threshold at 225.7002-2(a)'' in its place;
0
c. In paragraphs (m)(1)(ii) and (iv), by removing ``Product or Service 
Group (PSG)'' and adding ``PSG'' in its place.


225.7002-3   [Amended]

0
3. Amend section 225.7002-3, in paragraphs (b) and (c), by removing 
``simplified acquisition threshold'' and adding ``threshold at 
225.7002-2(a)'' in its place.

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES


252.225-7012   [Amended]

0
4. Amend section 252.225-7012 by--
0
a. Removing the clause date ``(MAR 2022)'' and adding ``(APR 2022)'' in 
its place;
0
b. In paragraph (a), in the definition of ``Structural component of a 
tent'', redesignating paragraphs (i) and (ii) as paragraphs (1) and 
(2), respectively, and at the end of the newly redesignated paragraph 
(1) removing the semicolon and adding ``; and'' in its place;
0
c. In paragraph (c)(1), removing ``(FAR)''; and
0
d. In paragraph (c)(2)(ii), removing ``simplified acquisition threshold 
in FAR part 2'' and adding ``threshold at Defense Federal Acquisition 
Regulation Supplement 225.7002-2(a)'' in its place.

[FR Doc. 2022-08813 Filed 4-27-22; 8:45 am]
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