67028 Federal Register / Vol. 60, No. 248 / Wednesday, December 27, 1995 / Proposed Rules

DEPARTMENT OF DEFENSE

GENERAL SERVICES

ADMINISTRATION

NATIONAL AERONAUTICS AND

SPACE ADMINISTRATION

48 CFR Parts 25 and 52

[FAR Case 91–119]

RIN 9000–AG81

Federal Acquisition Regulation; Buy

American Act—Construction

(Grimberg Decision)

AGENCIES: Department of Defense (DOD),

General Services Administration (GSA),

and National Aeronautics and Space

Administration (NASA).

ACTION: Proposed rule.

SUMMARY: The Civilian Agency

Acquisition Council and the Defense

Acquisition Regulations Council are

considering changes to the Federal

Acquisition Regulation (FAR) to amend

FAR Parts 25 and 52 to add guidance on

requests for exceptions to the Buy

American Act for construction. This

regulatory action was not subject to

Office of Management and Budget

review under Executive Order 12866,

dated September 30, 1993.

DATES: Comment due date: To be

considered in the formulation of a final

rule, comments should be submitted on

or before February 26, 1996.

ADDRESSES: Comments should be

submitted to: General Services

Administration, FAR Secretariat (VRS),

18th & F Streets NW., Room 4037,

Washington, DC 20405.

FOR FURTHER INFORMATION CONTACT: Mr.

Edward Loeb at (202) 501–4547 in

reference to this FAR case. For general

information, contact the FAR

Secretariat, Room 4037, GS Building,

Washington, DC 20405 (202) 501–4755.

Please cite FAR case 91–119.

SUPPLEMENTARY INFORMATION:

A. Background

In its decision in John C. Grimberg

Co., Inc. v. U.S., 869 F.2d 1475 (Fed.

Cir. 1989), the Court of Appeals for the

Federal Circuit in effect ruled that the

current Department of Defense practice

of generally denying post-award waivers

of the Buy American Act for

construction contracts is unreasonable.

In light of this decision, FAR revisions

are proposed to add guidance on

exceptions to the Buy American Act.

B. Regulatory Flexibility Act

The proposed rule is not expected 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.,

because contractors are required to

either comply with the Buy American

Act or seek exceptions. An Initial

Regulatory Flexibility Analysis has,

therefore, not been performed.

Comments are invited from small

businesses and other interested parties.

Comments from small entities

concerning the affected FAR subpart

will also be considered in accordance

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

be submitted separately and should cite

5 U.S.C. 601, et seq. (FAR case 91–119),

in correspondence.

C. Paperwork Reduction Act

The Paperwork Reduction Act (Pub.

L. 96–511) applies because the proposed

revisions impose additional recordkeeping requirements or information

collection requirements or collection of

information from offerors, contractors or

members of the public which require

the approval of the Office of

Management and Budget (OMB) under

44 U.S.C. 3501, et seq. The proposed

rule requires contractors proposing to

use foreign construction materials to

submit information on the foreign and

domestic construction materials, as well

as a justification for use of foreign

materials. This information will be

evaluated by the Government in

determining if a request for a waiver of

the Buy American Act should be

granted. A request for approval of the

new information collection requirement

has been submitted to OMB.

DATES: Comments may be submitted on

or before February 26, 1996.

ADDRESSES: Send comments regarding

the burden estimate or any other aspect

of the information collection

requirement to Mr. Peter Weiss, FAR

Desk Officer, OMB, Room 10102, NEOB,

Washington, DC 20503, and a copy to

the FAR Secretariat.

Annual Reporting Burden

Public reporting burden for this

collection of information is estimated to

average .5 hours per response, including

the time for reviewing instructions,

searching existing data sources,

gathering and maintaining the data

needed, and completing and reviewing

the collection of information.

The annual reporting burden is

estimated to be $37,500 as a result of the

following estimated number of hours of

labor for compliance: Respondents,

1,000; responses per respondent, 5; total

annual responses, 5,000; preparation

hours per response, .5; and total

response burden hours, 2,500.

List of Subjects in 48 CFR Parts 25 and

52

Government procurement.

Dated: December 18, 1995.

Edward C. Loeb,

Acting Director, Office of Federal Acquisition

Policy.

Therefore, it is proposed that48 CFR

parts 25 and 52 be amended as set forth

below:

PART 25—FOREIGN ACQUISITION

1. The authority citation for 48 CFR

Parts 25 and 52 continues to read as

follows:

Authority: 40 U.S.C. 486(c); 10 U.S.C.

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

25.200 [Amended]

2. Section 25.200 is amended to revise

the cite ‘‘41 U.S.C. 10’’ to read ‘‘41

U.S.C. 10a–10d’’.

3. Section 25.202 is amended by

revising paragraph (a)(1), redesignating

paragraphs (b) through (c) as paragraphs

(c) through (d), and adding a new

paragraph (b) to read as follows:

25.202 Policy.

(a) * * *

(1) The cost would be unreasonable

(the cost of a particular domestic

construction material shall be

determined to be unreasonable when

the cost of such material exceeds the

cost of foreign material by more than 6

percent, unless the agency head

determines a higher percentage to be

appropriate; see Executive Order

10582);

* * * * *

(b) Offerors should request an

exception to the Buy American Act in

time to allow determination before

submission of offers so that, through

competition, economic benefits of the

exception are passed along to the

Government. Officials making these

determinations shall consider the

feasibility of foregoing the acquisition or

of acquiring a domestic substitute.

* * * * *

25.203, 25.204, and 25.205 [Redesignated

as 25.204, 25.206, and 25.207]

4. Sections 25.203, 25.204, and 25.205

are redesignated as 25.204, 25.206, and

25.207, respectively.

4A. A new 25.203 is added to read as

follows:

25.203 Exceptions requested before

submission of offers.

(a) Any request for exception to the

Buy American Act made before receipt

of offers shall be evaluated based on the

information in the applicable clause at

52.225–5, Buy American Act—
Federal Register / Vol. 60, No. 248 / Wednesday, December 27, 1995 / Proposed Rules 67029

Construction Materials, paragraph (c)

and (d) or 52.225–15, Buy American

Act—Construction Materials under

European Community and North

American Free Trade Agreements,

paragraphs (c) and (d) and may be

supplemented by other information

readily available to the contracting

officer.

(b) If an exception to the Buy

American Act is granted before receipt

of offers, the excepted material shall be

identified in the clause at 52.225–5 or

52.225–15.

5. Newly designated 25.204 is revised

to read as follows:

25.204 Evaluating offers of foreign

construction material.

(a) Offerors proposing to use foreign

construction material other than that

listed in the applicable clause at

52.225–5(b)(2) or 52.225–15(b)(3) must

provide the information required by

paragraphs (c) and (d) of the respective

clauses.

(b) Unless agency regulations specify

a higher percentage, the Government

will add to the offer price 6 percent of

the cost of any foreign construction

material proposed for exception from

the requirements of the Buy American

Act based on the unreasonable cost of

domestic construction materials. If the

evaluation of offers results in a tie

between an offer including foreign

construction material, as evaluated, and

an offer including solely domestic

material, award shall be made on the

offer including solely domestic material.

This procedure does not apply to

foreign construction material whose use

is excepted by the Government under

the clause at 52.225–5(b)(2) or 52.225–

15(b)(3).

(c) Offerors also may submit alternate

offers based on use of domestic

construction material to avoid the

possibility that denial of an exception

permitting use of foreign construction

material shall cause rejection of the

entire offer.

(d) If an exception to the Buy

American Act is granted, the excepted

material shall be listed in the contract.

6. A new 25.205 is added to read as

follows:

25.205 Post award exceptions.

(a) If a contractor requests an

exception to the Buy American Act after

contract award, the contractor shall

explain why the exception could not

have been requested before contract

award or otherwise was not reasonably

foreseeable. If the contractor does not

submit a satisfactory explanation, an

exception should not be granted unless

it is in the Government’s best interests.

(b) Any request for exception to the

Buy American Act made after contract

award shall be evaluated based on

information similar to that required

before award by the applicable clause at

52.225–5(c) and (d) or 52.225–15(c) and

(d) and/or other information readily

available to the contracting officer.

(c) If an exception to the Buy

American Act is granted after contract

award, the contract shall be modified to

allow use of the foreign construction

material, and adequate consideration

shall be negotiated. However, when the

basis for the exception is the

unreasonable price of a domestic

construction material, adequate

consideration shall not be less than the

differential established in 25.202(a)(1)

or agency procedures.

7. Newly designated Section 25.206 is

revised to read as follows:

25.206 Noncompliance.

(a) The contracting officer is

responsible for conducting Buy

American Act investigations when

available information indicates such

action is warranted.

(b) Unless fraud is suspected, the

contracting officer shall notify the

contractor of the apparent unauthorized

use of foreign construction material and

request a reply, to include proposed

corrective action.

(c) If an investigation reveals that a

contractor or subcontractor has used

foreign construction material without

authorization, the contracting officer

shall take appropriate action, including

one or more of the following:

(1) If granting an exception to the Buy

American Act is appropriate, the

contracting officer may process an

exception in accordance with 25.205.

(2) If an exception to the Buy

American Act is not appropriate:

(i) The contracting officer should

consider requiring removal and

replacement of the unauthorized foreign

construction material.

(ii) If removal and replacement of

foreign construction material

incorporated in a building or work

would be impracticable, cause undue

delay, or otherwise be detrimental to the

interests of the Government, the

contracting officer may determine in

writing that the foreign construction

material need not be removed and

replaced. Such a determination does not

constitute approval of an exception and

should be so stated in the

determination. Further, such a

determination does not affect the

Government’s right to suspend and/or

debar a contractor, subcontractor or

supplier for violation of the Buy

American Act, or to exercise other

contractual rights and remedies, such as

reducing the contract price or

terminating the contract for default.

(iii) If the noncompliance is

sufficiently serious, the contracting

officer should consider exercising

appropriate contractual remedies, such

as terminating the contract for default.

The contracting officer should also

consider preparing and forwarding a

report for suspension and/or debarment,

including findings and supporting

evidence in accordance with FAR

subpart 9.4, Debarment, Suspension,

and Ineligibility. In addition, if the

noncompliance appears to be

fraudulent, the contracting officer

should consider referring the matter to

other appropriate agency officials, such

as the officer responsible for criminal

investigation and prosecution.

8. Newly designated Section 25.207 is

revised to read as follows:

25.207 Solicitation provision and contract

clause.

(a) The contracting officer shall insert

the provision at 52.225–X, Notice of Buy

American Act—Construction Materials,

in solicitations for construction when

the clause at 52.225–5, Buy American

Act—Construction Materials, is

prescribed.

(b) The contracting officer shall insert

the clause at 52.225–5, Buy American

Act—Construction Materials, in

solicitations and contracts for

construction inside the United States,

except when the clause at 52.225–15,

Buy American Act—Construction

Materials under European Community

and North American Free Trade

Agreements, is prescribed.

(c) The contracting officer shall insert

the provision at 52.225–XX, Notice of

Buy American Act Requirement—

Construction Materials under European

Community and North American Free

Trade Agreements, in solicitations for

construction when the clause at 52.225–

15, Buy American Act—Construction

Materials under European Community

and North American Free Trade

Agreements, is prescribed.

(d) The contracting officer shall insert

the clause at 52.225–15, Buy American

Act—Construction Materials under

European Community and North

American Free Trade Agreements, in

solicitations and contracts for

construction inside the United States

with an estimated acquisition value of

$6,500,000 ($8,000,000 for the Power

Marketing Administrations) or more, to

be awarded by agencies listed in 25.407.
67030 Federal Register / Vol. 60, No. 248 / Wednesday, December 27, 1995 / Proposed Rules

PART 52—SOLICITATION PROVISIONS

AND CONTRACT CLAUSES

9. Section 52.225–X is added to read

as follows:

52.225–X Notice of Buy American Act

requirement—construction materials.

As prescribed in 25.207(a), insert the

following provision:

Notice of Buy American Act Requirement—

Construction Materials (Date)

(a) Offerors are required to comply with the

requirements of FAR clause 52.225–5, Buy

American Act—Construction Materials, of

this solicitation. The terms ‘‘construction

material’’ and ‘‘domestic construction

material’’ as used in this provision, have the

meanings set forth in FAR clause 52.225–

5(a), Definitions.

(b) Offerors should request an exception to

the Buy American Act in time to allow

determination before submission of offers.

For evaluation of a request for an exception

to the requirements of the Buy American Act

prior to bid opening, the information and

applicable supporting data required by FAR

clause 52.225–5(c) and (d) shall be included

in the request. If a request has not been made

before the time set for receipt of offers or a

response has not been received to a request

made prior to receipt of offers, the

information and supporting data shall be

included in the offer.

(c) Evaluation of offers. (1) For evaluation

of offers, (unless agency regulations specify

a higher percentage) the Government will

add to the offer price 6 percent of the cost

of any foreign construction material proposed

for exception from the requirements of the

Buy American Act based on claimed

unreasonable cost of domestic construction

materials.

(2) If the evaluation of offers results in a

tie between an offer including foreign

construction material, as evaluated, and an

offer including solely domestic material,

award shall be made on the offer including

solely domestic material.

(3) This procedure does not apply to

foreign construction material whose use is

excepted by the Government under FAR

clause 52.225–5(b)(2) of the solicitation.

(d) Alternate offerors. (1) When an offer

includes foreign construction material,

offerors also may submit alternate offers

based on use of domestic construction

material.

(2) If alternate offers are submitted, a

separate SF 1442 shall be submitted for each

alternate offer, and a separate price

comparison table prepared in accordance

with FAR clause 52.225–5(c) and (d) shall be

submitted for each offer that is based on the

use of any foreign construction material.

(3) If a particular exception requested

under FAR clause 52.225–5(c), is not

approved—

(i) The Government will evaluate only

offers based on use of the equivalent

domestic construction material, and the

offeror shall be required to furnish such

domestic construction material;

(ii) In sealed bid procurements, any offer

based on use of that particular foreign

construction material must be rejected as

nonresponsive; and

(iii) In negotiated procurements, any offer

based on use of that particular foreign

construction material may not be accepted

unless revised during negotiations.

(End of provision)

10. Section 52.225–5 is amended by

revising the introductory paragraph;

revising the clause date; revising

paragraph (a) introductory text; by

removing the phrase ‘‘as used in this

clause’’ from the definitions of

‘‘Components’’, ‘‘Construction

materials’’ and ‘‘Domestic construction

materials’’; by revising paragraph (b);

and adding paragraphs (c) and (d) to

read as follows:

52.225–5 Buy American Act—construction

materials.

As prescribed in 25.207(b), insert the

following clause:

Buy American Act—Construction Materials

(Date)

(a) Definitions. As used in this clause

* * * * *

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

10(a)-10(d)) requires that only domestic

construction material be used in performing

this contract, except as provided in

subparagraphs (b)(2) or (b)(3) of this clause.

(2) This requirement does not apply to the

excepted construction material or

components listed by the Government below:

lllllllllllllllllllll

(list applicable accepted materials or indicate

‘‘none’’.)

(3) Other foreign construction material may

be used if the Government determines that—

(i) The cost would be unreasonable (the

cost of a particular domestic construction

material shall be determined to be

unreasonable when the cost of such material

exceeds the cost of foreign material by more

than 6 percent, unless the agency head

determines a higher percentage to be

appropriate);

(ii) The use of a particular domestic

construction material would be

impracticable; or

(iii) The construction material is not

mined, produced, or manufactured in the

United States in sufficient and reasonably

available commercial quantities of a

satisfactory quality.

(4) The Contractor agrees that only

domestic construction material will be used

by the Contractor, subcontractors, material

men, and suppliers in the performance of this

contract, except for foreign construction

materials, if any—

(i) Listed in paragraph (b)(2) of this clause;

or

(ii) Proposed by the Contractor and

approved by the Government in accordance

with paragraphs (c) and (d) of this clause.

(c) Request for exceptions. (1) Contractors

proposing to use foreign construction

material shall provide adequate information

for Government evaluation of the request for

exception to the Buy American Act. Each

submission shall include a description of the

foreign and domestic construction materials,

including unit of measure, quantity, prices

and time of delivery or availability, location

of the construction project, name and address

of the proposed contractor, and a detailed

justification of the reason for use of foreign

materials cited in accordance with

subparagraph (b)(3) of this clause. A

submission based on unreasonable cost shall

include a reasonable survey of the market

and a completed price comparison table in

the format in paragraph (d) of this clause.

The price of construction material shall

include all delivery costs to the construction

site and any applicable duty (whether or not

a duty-free certificate may be issued).

(2) If an exception to the Buy American Act

is granted after contract award, the contract

shall be modified to allow use of the foreign

construction material, and adequate

consideration shall be negotiated. However,

when the basis for the exception is the

unreasonable price of a domestic

construction material, adequate

consideration shall not be less than the

differential established in subparagraph

(b)(3)(i) of this clause.

(3) If a request for an exception to the Buy

American Act is not granted, the use of that

particular foreign construction material will

be a failure to comply with the Act.

(d) For evaluation of requests under

paragraph (c) of this clause, the following

information and any applicable supporting

data based on the canvas of suppliers shall

be included in the request.

FOREIGN AND DOMESTIC CONSTRUCTION MATERIALS PRICE COMPARISON

Construction material description Unit of

measure Quantity Price(dollars)

Item 1:

Foreign construction material ............................................................................................................... .................... .................... ....................

Domestic construction material ............................................................................................................ .................... .................... ....................

Item 2:

Foreign construction material ............................................................................................................... .................... .................... ....................

Domestic construction material ............................................................................................................ .................... .................... ....................
Federal Register / Vol. 60, No. 248 / Wednesday, December 27, 1995 / Proposed Rules 67031

FOREIGN AND DOMESTIC CONSTRUCTION MATERIALS PRICE COMPARISON—Continued

Construction material description Unit of

measure Quantity Price(dollars)

List name, address, telephone number and contact for suppliers surveyed. Attach copy of response; if oral, attach summary.

Include other applicable supporting information.

Include all delivery costs to the construction site and any applicable duty (whether or not a duty-free entry certificate is issued).

(End of clause)

11. Section 52.225–XX is added to

read as follows:

52.225–XX Notice of Buy American Act

requirement—construction materials under

European Community and North American

Free Trade Agreements.

As prescribed in 25.207(c), insert the

following provision:

Notice of Buy American Act Requirement—

Construction Materials Under European

Community and North American Free Trade

Agreements (Date)

(a) Offerors are required to comply with the

requirements of Federal Acquisition

Regulation (FAR) clause 52.225–15 of this

solicitation. The definitions set forth at

52.225–15(a) have the same meaning in this

provision.

(b) Offerors should request an exception to

the Buy American Act in time to allow

determination before receipt of offers. For

evaluation of a request for an exception to the

requirements of the Buy American Act prior

to bid opening, the information and

applicable supporting data required by

52.225–15 (c) and (d) shall be included in the

request. If a request has not been made before

the time set for receipt of offers or a response

has not been received to a request made prior

to receipt of offers, the information and

supporting data shall be included in the

offer.

(c) Evaluation of offers. (1) For evaluation

of offers, (unless agency regulations specify

a higher percentage) the Government will

add to the offer price 6 percent of the cost

of any foreign construction material proposed

for exception from the requirements of the

Buy American Act based on claimed

unreasonable cost of domestic construction

materials.

(2) If the evaluation of offers results in a

tie between an offer including foreign

construction material, as evaluated, and an

offer including solely domestic material,

award shall be made on the offer including

solely domestic material.

(3) This procedure does not apply to

foreign construction material whose use is

excepted by the Government under 52.225–

15(b)(3) of the solicitation.

(d) Alternate offers. (1) When an offer

includes foreign construction material,

offerors also may submit alternate offers

based on use of domestic construction

material.

(2) If alternate offers are submitted, a

separate SF 1442 shall be submitted for each

alternate offer, and a separate price

comparison table prepared in accordance

with 52.225–15 (c) and (d) shall be submitted

for each alternate offer that is based on the

use of any foreign construction material.

(3) If a particular exception requested

under 52.225 15(c) is not approved—

(i) The Government will evaluate only

offers based on use of the equivalent

domestic construction material, and the

offeror shall be required to furnish such

domestic construction material;

(ii) In sealed bid procurements, any offer

based on use of that particular foreign

construction material must be rejected as

nonresponsive; and.

(iii) In negotiated procurements, any offer

based on use of that particular foreign

construction material may not be accepted

unless revised during negotiations.

(End of provision)

12. Section 52.225–15 is amended by

revising the introductory paragraph, the

clause date, and paragraphs (b) and (c);

and adding paragraph (d) to read as

follows:

52.225–15 Buy American Act—

Construction Materials under European

Community and North American Free Trade

Agreements.

As prescribed in 25.207(d), insert the

following clause:

Buy American Act—Construction Materials

Under European Community and North

American Free Trade Agreements (Date)

(a) Definitions. As used in this clause—

* * * * *

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

10(a)–10(d)) requires that only domestic

construction material be used in performing

this contract, except as provided in

subparagraphs (b)(2), (b)(3), or (b)(4) of this

clause.

(2) The Memorandum of Understanding

between the United States of America and

the European Economic Community on

Government Procurement, and the North

American Free Trade Agreement (NAFTA),

provide that EC and NAFTA construction

materials are exempted from application of

the Buy American Act.

(3) This requirement does not apply to the

excepted construction material or

components listed by the Government below:

lllllllllllllllllllll

(list applicable accepted materials or indicate

‘‘none’’.)

(4) Other foreign construction material may

be used if the Government determines that—

(i) The cost would be unreasonable (the

cost of a particular domestic construction

material shall be determined to be

unreasonable when the cost of such material

exceeds the cost of foreign material by more

than 6 percent, unless the agency head

determines a higher percentage to be

appropriate);

(ii) The use of a particular domestic

construction material would be

impracticable; or

(iii) The construction material is not

mined, produced, or manufactured in the

United States in sufficient and reasonably

available commercial quantities of a

satisfactory quality.

(5) The Contractor agrees that only

domestic construction material will be used

by the Contractor, subcontractors, material

men, and suppliers in the performance of this

contract, except for foreign construction

materials, if any—

(i) Listed in paragraph (b)(3) of this clause;

or

(ii) Proposed by the Contractor and

approved by the Government in accordance

with paragraphs (c) and (d) of this clause.

(c) Request for exceptions. (1) Contractors

proposing to use foreign construction

material shall provide adequate information

for Government evaluation of the request for

exception to the Buy American Act. Each

submission shall include a description of the

foreign and domestic construction materials,

including unit of measure, quantity, prices

and time of delivery or availability, location

of the construction project, name and address

of the proposed contractor, and a detailed

justification or the reason for use of foreign

materials cited in accordance with

subparagraph (b)(3) of this clause. A

submission based on unreasonable cost shall

include a reasonable survey of the market

and a completed price comparison table in

the format in paragraph (d) of this clause.

The price of construction material shall

include all delivery costs to the construction

site and any applicable duty (whether or not

a duty-free certificate may be issued).

(2) If an exception to the Buy American Act

is granted after contract award, the contract

shall be modified to allow use of the foreign

construction material, and adequate

consideration shall be negotiated. However,

when the basis for the exception is the

unreasonable price of a domestic

construction material, adequate

consideration shall not be less than the

differential established in subparagraph

(b)(4)(i) of this clause.

(3) If a request for an exception to the Buy

American Act is not granted, the use of that

particular foreign construction material will

be a failure to comply with the Act.

(d) For evaluation of requests under

paragraph (c) of this clause, the following

information and any applicable supporting

data based on the canvas of suppliers shall

be included in the request.
67032 Federal Register / Vol. 60, No. 248 / Wednesday, December 27, 1995 / Proposed Rules

FOREIGN AND DOMESTIC CONSTRUCTION MATERIALS PRICE COMPARISON

Construction material description Unit of

measure Quantity Price(dollars)*

Item 1:

Foreign construction material ............................................................................................................. .................... .................... $

Domestic construction material .......................................................................................................... .................... .................... $

Item 2:

Foreign construction material ............................................................................................................. .................... .................... $

Domestic construction material .......................................................................................................... .................... .................... $

List name, address, telephone number and contact for suppliers surveyed. Attach copy of response; if oral, attach summary.

Include other applicable supporting information.

* Include all delivery costs to the construction site and any applicable duty (whether or not a duty-free entry certificate is issued).

[End of clause]

[FR Doc. 95–31205 Filed 12–26–95; 8:45 am]

BILLING CODE 6820–EP–P