DEFENSE FAR SUPPLEMENT (DFARS) Change Notice 20021220

DoD published 1 proposed and 3 final DFARS rules in the Federal Register on December 20, 2002. The final rules apply to solicitations issued on or after December 20, 2002, except as otherwise permitted by FAR 1.108(d). The proposed rule solicits public comments, which are due by February 18, 2003. A summary of each rule follows:

Final Rules:

Extension of DoD Pilot Mentor-Protégé Program (DFARS Case 2002-D029)

Changes the DFARS to extend, through September 30, 2005, the period during which companies may enter into agreements under the DoD Pilot Mentor-Protégé Program; and to extend, through, September 30, 2008, the period during which mentor firms may incur costs that are eligible for reimbursement or credit under the Program. The Program provides incentives for DoD contractors to assist protégé firms in enhancing their capabilities and increasing their participation in Government and commercial contracts. The rule implements Section 812 of the National Defense Authorization Act for Fiscal Year 2002.

Affected subparts/sections: 219.71; Appendix I

The Federal Register notice for this rule is available here.

A Microsoft Word format document showing all additions and deletions made by this rule is here.

Trade Agreements Act - Exception for U.S.-Made End Products (DFARS Case 2002-D008)

Changes the DFARS to implement a determination of the Under Secretary of Defense (Acquisition, Technology, and Logistics) (USD(AT&L)) that it is inconsistent with the public interest to apply the restrictions of the Buy American Act to U.S.-made end products that are substantially transformed in the United States. The rule simplifies evaluation of offers in acquisitions subject to the Trade Agreements Act, because it eliminates the need to determine if a U.S.-made end product is also a domestic end product, i.e., the cost of domestic components exceeds the cost of all components by more than 50 percent. Additionally, the provision at DFARS 252.225-7006, Buy American Act-Trade Agreements-Balance of Payments Program Certificate, and the clause at DFARS 252.225-7007, Buy American Act-Trade Agreements-Balance of Payments Program, are no longer necessary, because the provision at DFARS 252.225-7020, Trade Agreements Certificate, and the clause at DFARS 252.225-7021, Trade Agreements, are now appropriate for all acquisitions subject to the Trade Agreements Act. This rule also applies the USD(AT&L) determination to acquisitions subject to the Balance of Payments Program, since the Balance of Payments Program is an extension of the Buy American Act restrictions to acquisitions of supplies for overseas use.

Affected subparts/sections: 225.0; 225.1; 225.4; 225.5; 225.11; 225.75; Part 252 Table of Contents; 252.212; 252.225

The Federal Register notice for this rule is available here.

A Microsoft Word format document showing all additions and deletions made by this rule is here.

Technical Amendments

Changes the DFARS to update titles, section numbers, and paragraph designations.

Affected subparts/sections: 208.0; 208.70; 252.242; Appendix G, Part 2

The Federal Register notice for this rule is available here.

A Microsoft Word format document showing all additions and deletions made by this rule is here.

Proposed Rule:

Purchase Card Internal Controls (DFARS Case 2002-D025)

Proposes to add DFARS policy on internal controls for proper use of the Governmentwide commercial purchase card and convenience checks. The rule implements recommendations made by the DoD Charge Card Task Force, in its final report dated June 27, 2002, to strengthen management of the purchase card program.

Extension of DoD Pilot Mentor-Protégé Program

DFARS Case 2002-D029

Final Rule

DEPARTMENT OF DEFENSE

48 CFR Part 219 and Appendix I to Chapter 2

[DFARS Case 2002-D029]

Defense Federal Acquisition Regulation Supplement; Extension of DoD Pilot Mentor-ProtEgE Program

AGENCY: Department of Defense (DoD).

ACTION: Final rule.

SUMMARY: DoD has issued a final rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to implement section 812 of the National Defense Authorization Act for Fiscal Year 2002. Section 812 extends, through September 30, 2005, the period during which companies may enter into agreements under the DoD Pilot Mentor-Proteg'E Program.

EFFECTIVE DATE: December 20, 2002.

FOR FURTHER INFORMATION CONTACT: Ms. Angelena Moy, Defense Acquisition

Regulations Council, OUSD(AT&L)DPAP(DAR), IMD 3C132, 3062 Defense Pentagon, Washington, DC 20301-3062. Telephone (703) 602-1302; facsimile (703) 602-0350. Please cite DFARS Case 2002-D029.

SUPPLEMENTARY INFORMATION:

A. Background This final rule amends DFARS 219.7104 and Appendix I to implement

section 812 of the National Defense Authorization Act for Fiscal Year 2002 (Pub. L. 107-107). Section 812 extends, through September 30, 2005, the period during which companies may enter into agreements under the DoD Pilot Mentor-Protege Program. In addition, section 812 extends, through September 30, 2008, the period during which mentor firms may incur costs that are eligible for reimbursement or credit under the Program.

This rule was not subject to Office of Management and Budget review under Executive Order 12866, dated September 30, 1993.

B. Regulatory Flexibility Act This rule will not have a significant cost or administrative impact on contractors or offerors, or a significant effect beyond the internal operating procedures of DoD. Therefore, publication for public comment is not required. However, DoD will consider comments from small entities concerning the affected DFARS subparts in accordance with 5 U.S.C. 610. Such comments should cite DFARS Case 2002-D029.

C. Paperwork Reduction Act The information collection requirements associated with the DoD Pilot Mentor Protege Program have been approved by the Office of Management and Budget, under Control Number 0704-0332, for use through March 31, 2004.

List of Subjects in 48 CFR Part 219 Government procurement.

Michele P. Peterson, Executive Editor, Defense Acquisition Regulations Council.

Therefore, 48 CFR part 219 and Appendix I to chapter 2 are amended as follows:

Authority: 41 U.S.C. 421 and 48 CFR chapter 1.

PART 219-SMALL BUSINESS PROGRAMS

* * * * *

219.7104 Developmental assistance costs eligible for reimbursement or credit.

* * * * *

* * * * *

* * * * *

APPENDIX I--POLICY AND PROCEDURES FOR THE DOD PILOT MENTOR-PROTEGE PROGRAM

* * * * *

I-102 General procedures.

I-103 Program duration.

Activities under the Program may occur only during the following periods:

* * * * *

I-109 Credit for unreimbursed developmental assistance costs.

* * * * *

* * * * *

Trade Agreements Act - Exception for U.S.-Made End Products

DFARS Case 2002-D008

Final Rule

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

DEPARTMENT OF DEFENSE

48 CFR Parts 225 and 252

[DFARS Case 2002-D008]

Defense Federal Acquisition Regulation Supplement; Trade Agreements Act--Exception for U.S.-Made End Products

AGENCY: Department of Defense (DoD).

ACTION: Final rule.

SUMMARY: DoD has issued a final rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to implement the determination of the Under Secretary of Defense (Acquisition, Technology, and Logistics) that, for procurements subject to the Trade Agreements Act, it would be inconsistent with the public interest to apply the Buy American Act to U.S.-made end products that are substantially transformed in the United States.

EFFECTIVE DATE: December 20, 2002.

FOR FURTHER INFORMATION CONTACT: Ms. Amy Williams, Defense Acquisition

Regulations Council, OUSD(AT&L)DPAP(DAR), IMD 3C132, 3062 Defense Pentagon, Washington, DC 20301-3062. Telephone (703) 602-0328; facsimile (703) 602-0350. Please cite DFARS Case 2002-D008.

SUPPLEMENTARY INFORMATION:

A. Background On March 14, 2002, the Under Secretary of Defense (Acquisition,

Technology, and Logistics) (USD(AT&L)) determined that, for procurements subject to the Trade Agreements Act, it would be inconsistent with the public interest to apply the Buy American Act to U.S.-made end products that are substantially transformed in the United States. This determination expands the May 16, 1997, USD(AT&L) determination (presently implemented in DFARS part 225) that it would be inconsistent with the public interest to apply the Buy American Act to U.S.-made information technology products in Federal Supply Group 70 or 74. The March 14, 2002, determination is consistent with Federal Acquisition Regulation policy applicable to civilian agencies with regard to the treatment of U.S.-made end products.

This DFARS rule implements the March 14, 2002, USD(AT&L) determination. The rule simplifies evaluation of offers in acquisitions subject to the Trade Agreements Act, because it is no longer necessary to determine if a U.S.-made end product is also a domestic end product, i.e., the cost of domestic components exceeds the cost of all

components by more than 50 percent. Additionally, the provision at DFARS 252.225-7006, Buy American Act--Trade Agreements--Balance of Payments Program Certificate, and the clause at DFARS 252.225-7007, Buy American Act--Trade Agreements--Balance of Payments Program, are no longer necessary, because the provision at DFARS 252.225-7020, Trade Agreements Certificate, and the clause at DFARS 252.225-7021, Trade

Agreements, are now appropriate for all acquisitions subject to the Trade Agreements Act. This rule also applies the March 14, 2002, USD(AT&L) determination to acquisitions subject to the Balance of Payments Program, since the Balance of Payments Program is an extension of the Buy American Act restrictions to acquisitions of supplies for overseas use.

DoD published a proposed rule at 67 FR 49278 on July 30, 2002. Two sources submitted comments on the proposed rule. Both sources supported the DFARS changes in the proposed rule. Therefore, DoD is adopting the proposed rule as a final rule without change.

This rule was not subject to Office of Management and Budget review under Executive Order 12866, dated September 30, 1993.

B. Regulatory Flexibility Act This rule may 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. A final regulatory flexibility analysis has been prepared and is summarized as follows:

The objective of the rule is to avoid treating products substantially transformed in the United States less favorably than products substantially transformed in a designated, Caribbean Basin, or NAFTA country. Under existing DFARS policy, offers of domestic end products are given a 50 percent price evaluation preference over offers of U.S.-made end products for which the cost of foreign components exceeds the cost of domestic components by 50 percent or more. However, for acquisitions subject to the Trade Agreements Act, an end product of a designated, Caribbean Basin, or NAFTA country is exempt from application of the 50 percent evaluation factor, regardless of the source of the components. Therefore, a company might be encouraged to manufacture a product in a designated, Caribbean Basin, or NAFTA country rather than in the United States. This DFARS rule revises evaluation procedures for acquisitions subject to the Trade Agreements Act to eliminate the 50 percent price advantage that DoD presently gives to domestic end products over U.S.-made end products with foreign component content of 50 percent or more. Therefore, the cost incentive to manufacture components in the United States is removed. However, for companies that provide U.S.-made end products containing foreign components, the incentive to move end product manufacturing facilities to a designated, Caribbean Basin, or NAFTA country is reduced. There

were no significant issues raised by the public comments in response to the initial regulatory flexibility analysis.

C. Paperwork Reduction Act The rule eliminates the requirement for offerors to track and document the origin of components of U.S.-made end products in acquisitions subject to the Trade Agreements Act. This reduces by 960 hours the annual paperwork burden requirements previously approved by the Office of Management and Budget under Control Number 0704-0229.

List of Subjects in 48 CFR Parts 225 and 252

Government procurement. Michele P. Peterson, Executive Editor, Defense Acquisition Regulations Council.

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

PART 225-FOREIGN ACQUISITION

* * * * *

225.001 General.

To apply the policies and procedures of this part, analyze and evaluate offers of foreign end products generally as follows:

* * * * *

* * * * *

225.003 Definitions.

As used in this part-

* * * * *

* * * * *

* * * * *

SUBPART 225.1-BUY AMERICAN ACT-SUPPLIES

225.103 Exceptions.

* * * * *

SUBPART 225.4-TRADE AGREEMENTS

* * * * *

225.402 General.

* * * * *

SUBPART 225.5-EVALUATING FOREIGN OFFERS-SUPPLY CONTRACTS

225.502 Application.

225.504 Evaluation examples.

* * * * *

Award on Domestic End Product. U.S. made end products which are not also domestic end products are evaluated the same as nonqualifying country end products. Adding the 50% evaluation factor yields an evaluated price of $1,200,000.

Award on U.S. Made End Product. Adding the 50% evaluation factor to the U.S. made end product would not result in the award of a domestic end product since the eligible product, which is evaluated the same as a qualifying country offer, is lower. All offers are evaluated without the factor.

* * * * *

SUBPART 225.11-SOLICITATION PROVISIONS AND CONTRACT CLAUSES

225.1101 Acquisition of supplies.

* * * * *

* * * * *

* * * * *

* * * * *

SUBPART 225.75-BALANCE OF PAYMENTS PROGRAM

* * * * *

225.7501 Policy.

Acquire only domestic end products for use outside the United States, and use only domestic construction material for construction to be performed outside the United States, including end products and construction material for foreign military sales, unless--

* * * * *

* * * * *

PART 252-SOLICITATION PROVISIONS AND CONTRACT CLAUSES

* * * * *

252.212-7001 Contract Terms and Conditions Required to Implement Statutes or Executive Orders Applicable to Defense Acquisitions of Commercial Items.

As prescribed in 212.301(f)(iii), use the following clause:

CONTRACT TERMS AND CONDITIONS REQUIRED TO IMPLEMENT STATUTES OR EXECUTIVE ORDERS APPLICABLE TO DEFENSE ACQUISITIONS OF COMMERCIAL ITEMS (NOV[DEC] 2002)

* * * * *

* * * * *

* * * * *

252.225-7006 Buy American Act-Trade Agreements-Balance of Payments Program Certificate [Reserved].

As prescribed in 225.1101(5), use the following provision:

BUY AMERICAN ACT-TRADE AGREEMENTS-

BALANCE OF PAYMENTS PROGRAM CERTIFICATE (MAR 1998)

(insert line item number)

(End of provision)

252.225-7007 Buy American Act-Trade Agreements-Balance of Payments Program [Reserved].

As prescribed in 225.1101(6), use the following clause:

BUY AMERICAN ACT-TRADE AGREEMENTS-

BALANCE OFPAYMENTS PROGRAM (OCT 2002)

Balance of Payments Program Certificate provision of the solicitation.

Balance of Payments Program Certificate provision of the solicitation, or the offered price of U.S. made end products that contain nonqualifying country components, must include all applicable duty. The award price will not include duty for end products or components that are to be accorded duty-free entry. Generally, each offer of a U.S. made end product that does not meet the definition of "domestic end product" is adjusted for the purpose of evaluation by adding 50 percent of the offered price, inclusive of duty.

(End of clause)

* * * * *

252.225-7008 Supplies to be Accorded Duty-Free Entry.

As prescribed in 225.1101(7[5]), use the following clause:

* * * * *

252.225-7009 Duty-Free Entry-Qualifying Country Supplies (End Products and Components).

As prescribed in 225.1101(8[6]), use the following clause:

* * * * *

252.225-7010 Duty-Free Entry-Additional Provisions.

As prescribed in 225.1101(9[7]), use the following clause:

* * * * *

252.225-7020 Trade Agreements Certificate.

As prescribed in 225.1101(10[8]), use the following provision:

* * * * *

252.225-7021 Trade Agreements.

As prescribed in 225.1101(11[9]), use the following clause:

* * * * *

252.225-7035 Buy American Act-North American Free Trade Agreement Implementation Act-Balance of Payments Program Certificate.

As prescribed in 225.1101(12[10]), use the following provision:

* * * * *

ALTERNATE I (MAR 1998)

As prescribed in 225.1101(12[10])(ii), substitute the phrase "Canadian end product" for the phrase "NAFTA country end product" in paragraph (a); and substitute the phrase "Canadian end products" for the phrase "NAFTA country end products" in paragraphs (b) and (c)(2)(ii) of the basic clause.

* * * * *

252.225-7036 Buy American Act-North American Free Trade Agreement Implementation Act-Balance of Payments Program.

As prescribed in 225.1101(13[11]), use the following clause:

* * * * *

ALTERNATE I (SEP 1999)

As prescribed in 225.1101(13[11])(i)(B), substitute the following paragraphs (a)(6), (c), and (d) for paragraphs (a)(6), (c), and (d) of the basic clause:

* * * * *

252.225-7037 Duty-Free Entry-Eligible End Products.

As prescribed in 225.1101(14[12]), use the following clause:

* * * * *

Technical Amendments

Final Rule

DEPARTMENT OF DEFENSE

48 CFR Part 208 and Appendix G to Chapter 2

Defense Federal Acquisition Regulation Supplement; Technical Amendments

AGENCY: Department of Defense (DoD).

ACTION: Final rule.

SUMMARY: DoD is making technical amendments to the Defense Federal Acquisition Regulation Supplement to update titles, section numbers, and paragraph designations.

EFFECTIVE DATE: December 20, 2002.

FOR FURTHER INFORMATION CONTACT: Ms. Michele Peterson, Defense

Acquisition Regulations Council, OUSD(AT&L)DPAP(DAR), IMD 3C132, 3062

Defense Pentagon, Washington, DC 20301-3062. Telephone (703) 602-0311;

facsimile (703) 602-0350.

List of Subjects in 48 CFR Part 208 Government procurement.

Michele P. Peterson, Executive Editor, Defense Acquisition Regulations Council.

Therefore, 48 CFR part 208 and Appendix G to chapter 2 are amended as follows:

PART 208-REQUIRED SOURCES OF SUPPLIES AND SERVICES

* * * * *

208.001[2] Priorities for use of Government supply sources.

* * * * *

208.002[3] Use of other Government supply sources.

* * * * *

208.7000 Scope of subpart.

* * * * *

* * * * *

PART 252-SOLICITATION PROVISIONS AND CONTRACT CLAUSES

* * * * *

252.242-7000 Postaward Conference.

As prescribed in 242.570, use the following clause:

POSTAWARD CONFERENCE (DEC 1991)

The Contractor agrees to attend any postaward conference convened by the contracting activity or contract administration office in accordance with Federal Acqu[i]sition Regulation Subpart 42.5.

(End of clause)

* * * * *

APPENDIX G-ACTIVITY ADDRESS NUMBERS

* * * * *

PART 2-ARMY ACTIVITY ADDRESS NUMBERS

* * * * *

DABK15 ACA, Fort Hood

1Q Directorate of Contracting [Command]

* * * * *

Purchase Card Internal Controls

DFARS Case 2002-D025

Proposed Rule

DEPARTMENT OF DEFENSE

48 CFR Part 213

[DFARS Case 2002-D025]

Defense Federal Acquisition Regulation Supplement; Purchase Card Internal Controls

AGENCY: Department of Defense (DoD).

ACTION: Proposed rule with request for comments.

SUMMARY: DoD is proposing to amend the Defense Federal Acquisition Regulation Supplement (DFARS) to add policy on internal controls for proper use of the Governmentwide commercial purchase card.

DATES: Comments on the proposed rule should be submitted in writing to the address shown below on or before February 18, 2003, to be considered in the formation of the final rule.

ADDRESSES: Respondents may submit comments directly on the World Wide Web at http://emissary.acq.osd.mil/dar/dfars.nsf/pubcomm. As an alternative, respondents may e-mail comments to: dfars@acq.osd.mil. Please cite DFARS Case 2002-D025 in the subject line of e-mailed comments.

Respondents that cannot submit comments using either of the above methods may submit comments to: Defense Acquisition Regulations Council, Attn: Ms. Angelena Moy, OUSD(AT&L)DPAP(DAR), IMD 3C132, 3062 Defense Pentagon, Washington, DC 20301-3062; facsimile (703) 602-0350. Please cite DFARS Case 2002-D025.

At the end of the comment period, interested parties may view public comments on the World Wide Web at http://emissary.acq.osd.mil/dar/dfars.nsf .

FOR FURTHER INFORMATION CONTACT: Ms. Angelena Moy, (703) 602-1302.

SUPPLEMENTARY INFORMATION:

A. Background This proposed rule revises DFARS subpart 213.3 to add policy on

internal controls for proper use of the Governmentwide commercial purchase card and convenience checks. The rule implements recommendations made by the DoD Charge Card Task Force, in its final report dated June 27, 2002, to strengthen management of the purchase card program.

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., because the rule pertains primarily to internal DoD procedures for use of the Governmentwide commercial purchase card and convenience checks. 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 subpart in accordance with 5 U.S.C. 610. Such comments should be submitted separately and should cite DFARS Case 2002-D025.

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 213

Government procurement. Michele P. Peterson, Executive Editor, Defense Acquisition Regulations Council.

Therefore, DoD proposes to amend 48 CFR part 213 as follows:

PART 213-SIMPLIFIED ACQUISITION PROCEDURES

* * * * *

213.301 Governmentwide commercial purchase card.

[(1) Only formally appointed and trained cardholders are authorized to use the purchase card.

(2) Do not split requirements exceeding the micro-purchase threshold or the cardholder's single purchase limit into several purchases that are less than the applicable threshold in order to use the purchase card (see FAR 13.003(c)).

(3) Do not use the purchase card to issue a task or delivery order that exceeds the cardholder's single purchase limit.

(4) When ordering against a Federal Supply Schedule-

(ii) Retain best value documentation with the cardholder's purchase card file.

(5) When ordering against a blanket purchase agreement, comply with the requirements of FAR 13.303-5.

(6) For each order exceeding $2,500, comply with the reporting requirements of Subpart 204.6.

213.301-70 DoD Governmentwide commercial purchase card program responsibilities.

(a) The DoD Purchase Card Program Management Office administers the DoD Governmentwide commercial purchase card program on behalf of the Director of Defense Procurement and Acquisition Policy. Specific procedures and guidelines for the program can be found in the following documents:

(c) The penalties for purchase card misuse or abuse by civilian or military members may include, but are not limited to, reprimand, dismissal, and/or imposition of fines or other criminal penalties.

213.301-71 Overseas use of the Governmentwide commercial purchase card.]

(1[a]) "United States," as used in this section, means the 50 States and the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, the Commonwealth of the Northern Mariana Islands, Guam, American Samoa, Wake Island, Johnston Island, Canton Island, the outer Continental Shelf lands, and any other place subject to the jurisdiction of the United States (but not including leased bases).

(2[b]) An individual appointed in accordance with 201.603-3(b) also may use the Governmentwide commercial purchase card to make a purchase that exceeds the micro-purchase threshold but does not exceed $25,000, if-

(i[1]) The purchase-

(ii[2]) The individual making the purchase-

(3[c]) A contracting officer supporting a contingency operation as defined in 10 U.S.C. 101(a)(13) or a humanitarian or peacekeeping operation as defined in 10 U.S.C. 2302(8) also may use the Governmentwide commercial purchase card to make a purchase that exceeds the micro-purchase threshold but does not exceed the simplified acquisition threshold, if--

(i[1]) The supplies or services being purchased are immediately available;

(ii[2]) One delivery and one payment will be made; and

(iii[3]) The requirements of paragraphs (2[b])(i[1]) and (ii[2]) of this [sub]section are met.

[213.301-72 Convenience checks.