Source: http://www.fedgovcontracts.com/pe02-195.htm
Timestamp: 2018-08-20 22:36:57
Document Index: 257370131

Matched Legal Cases: ['art 225', 'art 252', 'art 25', 'art 25', 'arts 225', 'art 225']

12/20/02 Dispatch: Defense FAR Supplement - Trade Agreements Act -- Exception for U.S.-Made End Products
SOURCE: Federal Register, December 20, 2002, Vol. 67, No. 245, page 77937
SYNOPSIS: DOD is finalizing, without change, the July 30, 2002, proposed rule to revise DFARS Part 225, Foreign Acquisition, and the corresponding provisions and clauses in DFARS Part 252, to implement the determination of Under Secretary of Defense for Acquisition, Technology, and Logistics E.C. "Pete" Aldridge (USD(AT&L)) that, for procurements subject to the Trade Agreements Act (TAA), it would be inconsistent with the public interest to apply the Buy American Act (BAA) to U.S.-made end products that are substantially transformed in the United States.
EDITOR'S NOTE: For more on the proposed rule being finalized, see the July 30, 2002, FEDERAL CONTRACTS DISPATCH "Defense Federal Acquisition Regulation Supplement (DFARS); Trade Agreements Act -- Exception for U.S.-Made End Products."
For more on the BAA, see Federal Acquisition Regulation (FAR) Subpart 25.1, Buy American Act - Supplies, FAR Subpart 25.2, Buy American Act -- Construction Materials, and the corresponding DFARS Subparts 225.1 and 225.2.
EFFECTIVE DATE: December 20, 2002.
FOR FURTHER INFORMATION CONTACT: Amy Williams, Defense Acquisition Regulations Council, OUSD(AT&L)DPAP(DAR), IMD 3C132, 3062 Defense Pentagon, Washington, DC 20301-3062; 703-602-0328; fax: 703-602-0350.
SUPPLEMENTAL INFORMATION: On March 14, 2002, the USD(AT&L) determined that it would not be in the public interest to apply the BAA to U.S.-made end products that are substantially transformed in the U.S. in procurements subject to the TAA. This determination expands the May 16, 1997, USD(AT&L) determination that it would not be in the public interest to apply the BAA to U.S.-made information technology products in Federal Supply Group (FSG) 70 and FSG 74. The March 14, 2002, determination is consistent with paragraph (b)(2) of FAR 25.502, Application, which permits agencies to give the same consideration to offers of U.S.-made end products that are not domestic end products as given to eligible offers (for definitions of "domestic end products," "eligible offers," "U.S.-made end products," and other key terms applicable to the BAA and TAA, see FAR 25.003, Definiions, and DFARS 225.003).
The intent of the USD(AT&L) determination was to eliminate a conflict between the definition of "domestic end product" under the BAA and the definition of "U.S.-made end product" under the TAA. A Japanese firm can manufacture a computer with 60% of its components coming from Taiwan (a "non-designated country" under the TAA -- a non-signatory of the Agreement on Government Procurement, which produced the TAA) and still offer it under the TAA because those Taiwanese components have been "substantially transformed" in Japan into a "designated country end product." However, an American firm manufacturing the same computer with 60% of its components coming from Taiwan would be disqualified under the TAA: though the computer would be considered a "U.S.-made end product" because the Taiwanese components have been "substantially transformed" in the U.S., it would not be considered a "domestic end product" because it would flunk the 50% domestic component test under the BAA, so the computer would be considered a Taiwanese product, and Taiwanese products are not permitted under the TAA.
On July 30, 2002, a proposed rule was published to implement the USD(AT&L) determination by simplifying the evaluation of offers in acquisitions subject to the TAA since it was no longer be necessary for DOD contracting officers to determine if a U.S.-made end product is also a domestic end product.
The following changes were contained in the July 30, 2002, proposed rule:
DFARS 252.225-7006, Buy American Act -- Trade Agreements -- Balance of Payments Program Certificate, and DFARS 252.225-7007, Buy American Act -- Trade Agreements -- Balance of Payments Program, would be removed (along with all references to them in DFARS Part 225 because DFARS 252.225-7020, Trade Agreements Certificate, and DFARS 252.225-7021, Trade Agreements, would be appropriate for all acquisitions subject to the TAA.
References in DFARS 225 to the May 16, 1997, USD(AT&L) determination to exempt Federal Supply Group (FSG) 70 and 74 products that are substantially transformed in the U.S. from the application of the BAA would be replaced by references to the March 14, 2002, USD(AT&L) determination to exempt end products that are substantially transformed in the U.S. from the application of the BAA.
The text of DFARS 225.502, Application, would be redesignated as paragraph (c) and would apply only to acquisitions subject to the BAA and the Balance of Payments Act (which extends the BAA restrictions to acquisitions of supplies for overseas use), and new paragraph (b) would be added to provide the following evaluation procedures for acquisitions subject to the TAA: "(i) Consider only offers of U.S.-made, qualifying country, or eligible end products, except as permitted by [DFARS] 225.403 [Trade Agreements Act]; [and] (ii) If price is the determining factor, award on the low offer." In addition, paragraph (iii) which directs contracting officers to Example 4 of DFARS 225.504, Evaluation Examples, when U.S.-made end products that are not domestic end products, would be deleted.
Two respondents submitted comments in support of the proposed rule, so DOD is adopting the proposed rule as a final rule without change.