DFARS Change Notice 20050930

[Federal Register: September 30, 2005 (Volume 70, Number 189)]

DEPARTMENT OF DEFENSE

48 CFR Part 237

[DFARS Case 2003-D042]

Defense Federal Acquisition Regulation Supplement; Advisory and Assistance Services

AGENCY: Department of Defense (DoD).

ACTION: Final rule.

SUMMARY: DoD has issued a final rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to update text pertaining to the acquisition of advisory and assistance services. This rule is a result of a transformation initiative undertaken by DoD to dramatically change the purpose and content of the DFARS.

EFFECTIVE DATE: September 30, 2005.

FOR FURTHER INFORMATION CONTACT: Ms. Robin Schulze, Defense Acquisition Regulations Council, OUSD (AT&L) DPAP (DAR), IMD 3C132, 3062 Defense Pentagon, Washington, DC 20301-3062. Telephone (703) 602-0326; facsimile (703) 602-0350. Please cite DFARS Case 2003-D042.

SUPPLEMENTARY INFORMATION:

A. Background

DFARS Transformation is a major DoD initiative to dramatically change the purpose and content of the DFARS. The objective is to improve the efficiency and effectiveness of the acquisition process, while allowing the acquisition workforce the flexibility to innovate. The transformed DFARS will contain only requirements of law, DoD-wide policies, delegations of FAR authorities, deviations from FAR requirements, and policies/procedures that have a significant effect beyond the internal operating procedures of DoD or a significant cost or administrative impact on contractors or offerors. Additional information on the DFARS Transformation initiative is available at http://www.acq.osd.mil/dpap/dars/dfars/transformation/index.htm.

This final rule is a result of the DFARS Transformation initiative.

The rule--

Deletes the definition of ``advisory and assistance services'' at DFARS 237.201. The definition is used primarily for budget reporting under 10 U.S.C. 2212, and is adequately addressed in financial management regulations.

Deletes obsolete text on contracting for engineering and technical services at DFARS 237.203. This text was based on DoD Directive 1130.2, Engineering and Technical Sevices--Management Control, which was cancelled in 1990.

Deletes a reference listing of DoD publications that govern the conduct of audits at DFARS 237.270. This list has been relocated to the new DFARS companion resource, Procedures, Guidance, and Information (PGI). Additional information on PGI is available at http://www.acq.osd.mil/dpap/dars/pgi.

Deletes obsolete text on management controls and requesting activity responsibilities at DFARS 237.271 and 237.272. This text was based on OMB Circular A-120, Guidelines for the Use of Advisory and Assistance Services, which was rescinded in 1993. OMB Circular A-120 was replaced by OFPP Policy Letter 93-1, Management Oversight of Service Contracting, which is implemented in FAR Subpart 37.5.

DoD published a proposed rule at 70 FR 8562 on February 22, 2005. DoD received no comments on the proposed rule. Therefore, DoD has adopted 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

DoD certifies that 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., because the rule makes no significant change to DoD policy for the acquisition of advisory and assistance services.

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 237

Government procurement.

Michele P. Peterson,

Editor, Defense Acquisition Regulations System.

Therefore, 48 CFR Part 237 is amended as follows:

PART 237--SERVICE CONTRACTING

1. The authority citation for 48 CFR Part 237 continues to read as follows:

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

237.201 and 237.203 [Removed]

2. Sections 237.201 and 237.203 are removed.

3. Section 237.270 is revised to read as follows:

237.270 Acquisition of audit services.

(a) General policy. (1) Do not contract for audit services unless--

(i) The cognizant DoD audit organization determines that expertise required to perform the audit is not available within the DoD audit organization; or

(ii) Temporary audit assistance is required to meet audit reporting requirements mandated by law or DoD regulation.

(2) See PGI 237.270 for a list of DoD publications that govern the conduct of audits.

(b) Contract period. Except in unusual circumstances, award contracts for recurring audit services for a 1-year period with at least 2 option years.

(c) Approvals. Do not issue a solicitation for audit services unless the requiring activity provides evidence that the cognizant DoD audit organization has approved the statement of work. The requiring agency shall obtain the same evidence of approval for subsequent material changes to the statement of work.

(d) Solicitation provisions and contract clauses. (1) Use the provision at

252.237-7000, Notice of Special Standards of Responsibility, in solicitations for audit services.

(2) Use the clause at 252.237-7001, Compliance with Audit Standards, in solicitations and contracts for audit services.

237.271 and 237.272 [Removed]

4. Sections 237.271 and 237.272 are removed.

[FR Doc. 05-19458 Filed 9-29-05; 8:45 am]

BILLING CODE 5001-08-P

[Federal Register: September 30, 2005 (Volume 70, Number 189)]

DEPARTMENT OF DEFENSE

48 CFR Parts 209, 217, and 246

[DFARS Case 2003-D101]

Defense Federal Acquisition Regulation Supplement; Quality Control of Aviation Critical Safety Items and Related Services

AGENCY: Department of Defense (DoD).

ACTION: Final rule.

SUMMARY: DoD has adopted as final, with changes, an interim rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to implement Section 802 of the National Defense Authorization Act for Fiscal Year 2004. Section 802 requires DoD to establish a quality control policy for the procurement of aviation critical safety items and the modification, repair, and overhaul of those items.

EFFECTIVE DATE: September 30, 2005.

FOR FURTHER INFORMATION CONTACT: Ms. Robin Schulze, Defense Acquisition Regulations Council, OUSD (AT&L) DPAP (DAR), IMD 3C132, 3062 Defense Pentagon, Washington, DC 20301-3062. Telephone (703) 602-0326; facsimile (703) 602-0350. Please cite DFARS Case 2003-D101.

SUPPLEMENTARY INFORMATION:

A. Background

DoD published an interim rule at 69 FR 55987 on September 17, 2004, to implement Section 802 of the National Defense Authorization Act for Fiscal Year 2004 (Pub. L. 108-136). Section 802 requires DoD to prescribe in regulations a quality control policy for the procurement of aviation critical safety items and the modification, repair, and overhaul of those items. The interim rule identified the responsibilities of the head of the design control activity with regard to quality control of aviation critical safety items and related services.

Six respondents submitted comments on the interim rule. A discussion of the comments is provided below.

1. Comment: One respondent suggested there might be confusion between the head of the contracting activity for the procuring activity of an aviation critical safety item and the head of the contracting activity for the design control activity. A proposed change was suggested to clarify this issue.

DoD Response: The final rule amends DFARS 209.270-3(a) to clarify that the policy in that paragraph applies to the head of the contracting activity responsible for procuring an aviation critical safety item.

2. Comment: Two respondents recommended clarification as to who has responsibility for identifying and determining aviation critical safety items.

DoD Response: The final rule adds a paragraph at DFARS 209.270-4(a)(1) to clarify that the head of the design control activity is responsible for identifying items that meet the criteria for designation as aviation critical safety items.

3. Comment: Six respondents requested clarification as to whether the authority to disposition minor nonconformances in aviation critical safety items can be delegated, and recommended that the DFARS state that delegation can be authorized.

DoD Response: The final rule amends DFARS 246.407(S-70) to state that acceptance of minor nonconformances in aviation critical safety items may be delegated as determined appropriate by the design control activity.

4. Comment: Two respondents requested clarification as to whether the rule applies only to Government contract awards or if prime contractors must obtain design control activity approval of subcontracts for aviation critical safety items.

DoD Response: Clarification of this issue in the DFARS rule is considered unnecessary. Unless otherwise stated, DFARS policy applies to contracts awarded by the Government.

5. Comment: One respondent recommended clarification of the connection between the DFARS rule and qualified products list policies.

DoD Response: Clarification of this issue in the DFARS rule is considered unnecessary. However, DoD is presently drafting a joint service/agency instruction that will address this issue.

6. Comment: One respondent asked whether the rule would apply to commercial items acquired under FAR Part 12 or commercial aviation systems and components governed by Federal Aviation Administration (FAA) regulations.

DoD Response: The draft joint service/agency instruction will make it clear that aviation critical safety item policies do not apply to commercial aircraft or subsystems purchased and maintained in accordance with FAA regulations unless specifically required by the military department.

7. Comment: Three respondents questioned whether there would be drawing changes and new reporting requirements as a result of the rule and how the costs associated with these changes would be reimbursed. DoD Response: The rule contains no requirements for drawing changes or new reporting. Such changes would be determined on a case-by-case basis or would be addressed in policy issued by the requirements community.

8. Comment: Two respondents expressed concern that the rule would result in changes to approved quality systems, additional requirements for disposal of critical safety items, and additional acceptance testing.

DoD Response: The rule does not address these issues. Such changes would be determined on a case-by-case basis or would be addressed in policy issued by the requirements community.

9. Comment: One respondent recommended that DoD look for synergy between the unique item identification policy and aviation critical safety item policy.

DoD Response: DoD is looking at unique item identification as a facilitator for product identification, serialization, and tracking.

10. Comment: Two respondents expressed concern that the rule could have a significant economic impact on small businesses due to (1) new qualification standards established by the heads of the design control activities, and (2) significant differences that exist between contractor/original equipment manufacturer critical component designations and DoD critical safety item designations.

DoD Response: These issues are addressed in the final regulatory flexibility analysis.

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 has prepared a final regulatory flexibility analysis consistent with 5 U.S.C. 604. The analysis is summarized below. A copy of the analysis may be obtained from the point of contact specified herein. The objective of the rule is to give the head of the design control activity responsibility for the quality control of aviation critical safety items, including identifying and designating these items, and approval of sources, products, and offerors prior to contract award. Two respondents expressed concern that there could be significant economic impact on small businesses or original equipment manufacturers (OEMs) due to (1) new qualification standards established by the heads of design control activities, and (2) significant differences that exist between contractor/OEM critical component designations and DoD critical safety item designations. If a small business has previously been approved to furnish an aviation critical safety item, has furnished the item within the past 3 years, and has a good quality track record, there should be no impact on that business. Many small businesses fall into this category. If a small business did not go through the approval process but furnished the aviation critical safety item within the past 3 years, the Government will check the company's quality track record and test samples from DoD inventory to ensure conformity. When the company next receives a contract for the aviation critical safety item, the Government will request commonly generated manufacturing, quality, and inspection information. The 3-year timeframe is consistent with established Government and nongovernment qualification requirements, particularly those relating to the aerospace sector. DoD Qualified Products List and Qualified Manufacturers List procedures require revalidation every 2 years. The Society of Automotive Engineers standard AS9102 on Aerospace First Article Inspection requires reinspection of an aerospace part if there has been a lapse in production for 2 years or as specified by the customer. The Federal Aviation Administration's Advisory Circular 00-56A, Voluntary Industry Distributor Accreditation Program, establishes that civil aerospace parts distributors may not exceed the 24-month requirement if they were accredited prior to revision of the circular and that accredited distributors shall be audited at least once every 36 months. The Aviation Suppliers Association Quality System Standard ASA-100 requires an accreditation audit every 36 months and a surveillance audit during the 36-month period. The National Aerospace and Defense Contractors Accreditation Program (NADCAP)--Performance Review Institute (PRI) establishes product qualification to be generally valid for 3 years or as determined by the specific Qualified Products Group.

In calendar year 2003, the year before the interim rule took effect, 62.8% of Defense Logistics Agency (DLA) contracts for currently identified aviation critical safety items were awarded to small businesses. During the first 8 months of calendar year 2005 (the year after the interim rule became effective), 62.9% of DLA contracts for critical safety items were awarded to small businesses. There has been no significant impact on contract awards to small businesses as a result of the DFARS rule.

Regardless of whether the contractor or DoD designates an item as a critical safety item, the contractor is required to deliver conforming products. This is especially important when the consequences of item failure could be catastrophic. Small businesses that understand the design intent of a critical safety item, and the item's application in the weapon system, its critical attributes, and its failure implications, should have high-performing manufacturing, supplier management, and quality control processes. While the contractor/OEM and DoD may have different methods of categorizing parts, the critical safety item designation is not expected to have a significant cost impact on small businesses with approved quality systems.

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 Parts 209, 217, and 246

Government procurement.

Michele P. Peterson,

Editor, Defense Acquisition Regulations System.

Accordingly, the interim rule amending 48 CFR parts 209, 217, and 246, which was published at 69 FR 55987 on September 17, 2004, is adopted as a final rule with the following changes:

PART 209--CONTRACTOR QUALIFICATIONS

1. The authority citation for 48 CFR parts 209 and 246 continues to read as follows:

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

2. Section 209.270-3 is amended by revising paragraph (a) to read as

follows:

209.270-3 Policy.

(a) The head of the contracting activity responsible for procuring an aviation critical safety item may enter into a contract for the procurement, modification, repair, or overhaul of such an item only with a source approved by the head of the design control activity.

* * * * *

3. Section 209.270-4 is amended by removing the introductory text and revising paragraph (a) to read as follows:

209.270-4 Procedures.

(a) The head of the design control activity shall--

(1) Identify items that meet the criteria for designation as aviation critical safety items. See additional information at PGI 209.270-4;

(2) Approve qualification requirements in accordance with procedures established by the design control activity; and

(3) Qualify and identify aviation critical safety item suppliers and products.

* * * * *

PART 246--QUALITY ASSURANCE

4. Section 246.407 is amended by revising paragraph (S-70) to read as follows:

246.407 Nonconforming supplies or services.

* * * * *

(S-70) The head of the design control activity is the approval authority for acceptance of any nonconforming aviation critical safety items or nonconforming modification, repair, or overhaul of such items (see 209.270). Authority for acceptance of minor nonconformances in aviation critical safety items may be delegated as determined appropriate by the design control activity. See additional information at PGI 246.407.

[FR Doc. 05-19462 Filed 9-29-05; 8:45 am]

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[Federal Register: September 30, 2005 (Volume 70, Number 189)]

DEPARTMENT OF DEFENSE

48 CFR Parts 204, 212, 213, and 252

[DFARS Case 2003-D040]

Defense Federal Acquisition Regulation Supplement; Central

Contractor Registration

AGENCY: Department of Defense (DoD).

ACTION: Final rule.

SUMMARY: DoD has adopted as final, with changes, an interim rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to remove policy on Central Contractor Registration (CCR) that duplicated policy found in the Federal Acquisition Regulation (FAR). The rule also addresses requirements for use of Commercial and Government Entity (CAGE) codes in DoD contracts.

EFFECTIVE DATE: September 30, 2005.

FOR FURTHER INFORMATION CONTACT: Ms. Deborah Tronic, Defense Acquisition Regulations Council, OUSD(AT&L)DPAP(DAR), IMD 3C132, 3062 Defense Pentagon, Washington, DC 20301-3062. Telephone (703) 602-0289; facsimile (703) 602-0350. Please cite DFARS Case 2003-D040.

SUPPLEMENTARY INFORMATION:

A. Background

DoD published an interim rule at 68 FR 64557 on November 14, 2003, to remove DFARS requirements for contractors to register in the CCR database, since policy on this subject had been added to the FAR. The interim rule also addressed requirements for inclusion of CAGE codes on contracts and in the CCR database to accommodate DoD payment systems.

Three sources submitted comments on the interim DFARS rule. A discussion of the comments is provided below.

1. Comment: Provision of DUNS numbers and CAGE codes. One respondent stated that the interim rule appeared to require contracting officers to provide both a DUNS number and a CAGE code on contractual documents submitted to the payment office, whereas the previous DFARS coverage required either a DUNS number or a CAGE code.

DoD Response: The final rule revises DFARS 204.1103(e) to clarify that contracting officers must include the contractor's CAGE code on contractual documents transmitted to the payment office, instead of the DUNS number.

2. Comment: Timely assignment of CAGE codes. One respondent recommended adding a statement to the rule to address the need for the Defense Logistics Information Service to assign CAGE codes in a timely manner, to avoid payment delays and payment of interest.

DoD Response: DoD agrees that timely assignment of CAGE codes is important. However, such a statement is considered unnecessary for inclusion in the DFARS.

3. Comment: Contractor failure to provide correct or current CCR information. One respondent provided an example of a contractor's failure to maintain current information in the CCR database.

DoD Response: Contractors are responsible for maintaining CCR information and are required to review and update their information annually to ensure it is current, accurate, and complete.

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 certifies that 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., because the rule adds no new requirements for contractors. The rule removes DFARS text on Central Contractor Registration that has become obsolete as a result of policy that was added to the FAR, and retains existing requirements for use of Commercial and Government Entity codes in DoD contracts.

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 204, 212, 213, and 252

Government procurement.

Michele P. Peterson,

Editor, Defense Acquisition Regulations System.

Accordingly, the interim rule amending 48 CFR parts 204, 212, 213, and 252, which was published at 68 FR 64557 on November 14, 2003, is adopted as a final rule with the following change:

PART 204-ADMINISTRATIVE MATTERS

1. The authority citation for 48 CFR part 204 continues to read as

follows:

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

2. Section 204.1103 is revised to read as follows:

204.1103 Procedures.

(e) On contractual documents transmitted to the payment office, provide the Commercial and Government Entity code, instead of the DUNS number or DUNS+4 number, in accordance with agency procedures.

[FR Doc. 05-19464 Filed 9-29-05; 8:45 am]

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[Federal Register: September 30, 2005 (Volume 70, Number 189)]

DEPARTMENT OF DEFENSE

48 CFR Part 225

[DFARS Case 2005-D019]

Defense Federal Acquisition Regulation Supplement; Defense Logistics Agency Waiver Authority

AGENCY: Department of Defense (DoD).

ACTION: Final rule.

SUMMARY: DoD has issued a final rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to authorize the Defense Logistics Agency Component Acquisition Executive to waive domestic source restrictions on the acquisition of ball and roller bearings, when adequate domestic supplies are not available to meet DoD requirements on a timely basis.

EFFECTIVE DATE: September 30, 2005.

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 2005-D019.

SUPPLEMENTARY INFORMATION:

A. Background

The annual DoD appropriations acts restrict the acquisition of ball and roller bearings to those produced by a domestic source and of domestic origin (Section 8064 of the Fiscal Year 2001 DoD Appropriations Act (Public Law 106-259) and similar sections in subsequent DoD appropriations acts). The appropriations acts provide that the Secretary of the military department responsible for the procurement may waive the restriction on a case-by-case basis by certifying in writing to the Committees on Appropriations of the House of Representatives and the Senate, that adequate domestic supplies are not available to meet DoD requirements on a timely basis, and that such an acquisition must be made in order to acquire capability for national security purposes. This final rule revises DFARS 225.7009-3(c) to delegate this waiver authority to the Defense Logistics Agency (DLA) Component Acquisition Executive, for DLA acquisitions that meet the specified criteria.

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 subpart in accordance with 5 U.S.C. 610. Such comments should cite DFARS Case 2005-D019.

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 225

Government procurement.

Michele P. Peterson,

Editor, Defense Acquisition Regulations System.

Therefore, 48 CFR part 225 is amended as follows:

PART 225--FOREIGN ACQUISITION

1. The authority citation for 48 CFR part 225 continues to read as follows:

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

2. Section 225.7009-3 is amended by revising paragraph (c) introductory text to read as follows:

225.7009-3 Waiver.

* * * * *

(c) The Secretary of the department responsible for acquisition or, for the Defense Logistics Agency, the Component Acquisition Executive, may waive the restriction in 225.7009-1(b), on a case-by-case basis, by certifying to the House and Senate Committees on Appropriations that--

* * * * *

[FR Doc. 05-19457 Filed 9-29-05; 8:45 am]

BILLING CODE 5001-08-P

[Federal Register: September 30, 2005 (Volume 70, Number 189)]

DEPARTMENT OF DEFENSE

48 CFR Parts 225, 229, and 252

[DFARS Case 2004-D012]

Defense Federal Acquisition Regulation Supplement; Prohibition of Foreign Taxation on U.S. Assistance Programs

AGENCY: Department of Defense (DoD).

ACTION: Interim rule with request for comments.

SUMMARY: DoD has issued an interim rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to implement a statutory prohibition on foreign taxation under contracts funded by U.S. assistance programs. The rule addresses the responsibilities of the contractor and the contracting officer regarding the prohibition.

DATES: This interim rule is effective September 30, 2005. Comments on the interim rule should be submitted in writing to the address shown below on or before November 29, 2005, to be considered in the formation of the final rule.

ADDRESSES: You may submit comments, identified by DFARS Case 2004-D012, using any of the following methods:

Federal eRulemaking Portal: http://www.regulations.gov.

Follow the instructions for submitting comments.

Defense Acquisition Regulations Web site: http://emissary.acq.osd.mil/dar/dfars.nsf/pubcomm.

Follow the instructions for

submitting comments.

E-mail: dfars@osd.mil. Include DFARS Case 2004-D012 in the subject line of the message.

Fax: (703) 602-0350.

Mail: Defense Acquisition Regulations Council, Attn: Ms. Debra Overstreet, OUSD (AT&L) DPAP (DAR), IMD 3C132, 3062 Defense Pentagon, Washington, DC 20301-3062.

Hand Delivery/Courier: Defense Acquisition Regulations Council, Crystal Square 4, Suite 200A, 241 18th Street, Arlington, VA 22202-3402.

All comments received will be posted to http://emissary.acq.osd.mil/dar/dfars.nsf

FOR FURTHER INFORMATION CONTACT: Ms. Debra Overstreet, (703) 602-0296.

SUPPLEMENTARY INFORMATION:

A. Background

This interim rule adds policy and a contract clause to implement Section 579 of Division E of the Consolidated Appropriations Act, 2003 (Pub. L. 108-7), Section 506 of Division D of the Consolidated Appropriations Act, 2004 (Pub. L. 108-199), and Section 506 of Division D of the Consolidated Appropriations Act, 2005 (Pub. L. 108-447). These statutes require that a bilateral agreement providing for U.S. assistance to a foreign country must specify that the U.S. assistance shall be exempt from taxation by the foreign government. Therefore, the foreign government is prohibited from imposing taxes on commodities acquired under contracts funded by such U.S. assistance. The interim rule addresses the responsibilities of the contractor and the contracting officer regarding the prohibition.

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 interim 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 the administrative notification requirements of the rule are expected to affect less than 10 contracts per year. 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 subparts in accordance with 5 U.S.C. 610. Such comments should be submitted separately and should cite DFARS Case 2004-D012.

C. Paperwork Reduction Act

The information collection requirements of the rule do not reach the threshold for requiring Office of Management and Budget approval under 44 U.S.C. 3501, et seq.

D. Determination to Issue an Interim Rule

A determination has been made under the authority of the Secretary of Defense that urgent and compelling reasons exist to publish an interim rule prior to affording the public an opportunity to comment. This interim rule implements Section 579 of Division E of the Consolidated Appropriations Act, 2003 (Pub. L. 108-7), Section 506 of Division D of the Consolidated Appropriations Act, 2004 (Pub. L. 108-199), and Section 506 of Division D of the Consolidated Appropriations Act, 2005 (Pub. L. 108-447). These statutes prohibit a government of a foreign country from imposing taxes on the United States under contracts funded by U.S. assistance provided to that country. The rule is needed for effective implementation of the statutory prohibition, as it addresses requirements for prompt notification to the appropriate parties if a foreign government imposes such taxes, so that corrective action can be taken. Comments received in response to this interim rule will be considered in the formation of the final rule.

List of Subjects in 48 CFR part 225, 229, and 252

Government procurement.

Michele P. Peterson,

Editor, Defense Acquisition Regulations System.

Therefore, 48 CFR parts 225, 229, and 252 are amended as follows:

PART 225--FOREIGN ACQUISITION

1. The authority citation for 48 CFR parts 225, 229, and 252 continues to read as follows:

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

2. Section 225.7301 is amended by adding paragraph (e) to read as follows:

225.7301 General.

* * * * *

(e) See 229.170 for policy on contracts financed under U.S. assistance programs that involve payment of foreign country value added taxes or customs duties.

PART 229--TAXES

3. Sections 229.170 through 229.170-4 are added to read as follows:

229.170 Reporting of foreign taxation on U.S. assistance programs.

229.170-1 Definition.

Commodities, as used in this section, means any materials, articles, supplies, goods, or equipment.

229.170-2 Policy.

(a) By law, bilateral agreements with foreign governments must include a provision that commodities acquired under contracts funded by U.S. assistance programs shall be exempt from taxation by the foreign government. If taxes or customs duties nevertheless are imposed, the foreign government must reimburse the amount of such taxes to the U.S. Government (Section 579 of Division E of the Consolidated Appropriations Act, 2003 (Pub. L. 108-7), as amended by Section 506 of Division D of the Consolidated Appropriations Act, 2004 (Pub. L. 108-199), and similar sections in subsequent acts).

(b) This foreign tax exemption--

(1) Applies to a contract or subcontract for commodities when--

(i) The funds are appropriated by the annual foreign operations appropriations act; and

(ii) The value of the contract or subcontract is $500 or more;

(2) Does not apply to the acquisition of services;

(3) Generally is implemented through letters of offer and acceptance, other country-to-country agreements, or Federal interagency agreements; and

(4) Requires reporting of noncompliance for effective implementation.

229.170-3 Reports.

The contracting officer shall submit a report to the designated Security Assistance Office when a foreign government or entity imposes tax or customs duties on commodities acquired under contracts or subcontracts meeting the criteria of 229.170-2(b)(1). Follow the procedures at PGI 229.170-3 for submission of reports.

229.170-4 Contract clause.

Use the clause at 252.229-7011, Reporting of Foreign Taxes--U.S. Assistance Programs, in solicitations and contracts funded with U.S. assistance appropriations provided in the annual foreign operations appropriations act.

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

4. Section 252.229-7011 is added to read as follows:

252.229-7011 Reporting of Foreign Taxes--U.S. Assistance Programs.

As prescribed in 229.170-4, use the following clause:

Reporting of Foreign Taxes--U.S. Assistance Programs (SEP 2005)

(a) Definition. Commodities, as used in this clause, means any materials, articles, supplies, goods, or equipment.

(b) Commodities acquired under this contract shall be exempt from all value added taxes and customs duties imposed by the recipient country. This exemption is in addition to any other tax exemption provided through separate agreements or other means.

(c) The Contractor shall inform the foreign government of the tax exemption, as documented in the Letter of Offer and Acceptance, country-to-country agreement, or interagency agreement.

(d) If the foreign government or entity nevertheless imposes taxes, the Contractor shall promptly notify the Contracting Officer and shall provide documentation showing that the foreign government was apprised of the tax exemption in accordance with paragraph (c) of this clause.

(e) The Contractor shall insert the substance of this clause, including this paragraph (e), in all subcontracts for commodities that exceed $500.

(End of clause)

[FR Doc. 05-19463 Filed 9-29-05; 8:45 am]

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[Federal Register: September 30, 2005 (Volume 70, Number 189)]

DEPARTMENT OF DEFENSE

48 CFR Part 219

[DFARS Case 2005-D020]

Defense Federal Acquisition Regulation Supplement; Extension of Partnership Agreement--8(a) 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 reflect an extension in the expiration date of a partnership agreement between DoD and the Small Business Administration (SBA). The partnership agreement permits DoD to award contracts to 8(a) Program participants on behalf of SBA.

EFFECTIVE DATE: September 30, 2005.

FOR FURTHER INFORMATION CONTACT: Ms. Deborah Tronic, Defense Acquisition Regulations Council, OUSD (AT&L) DPAP (DAR), IMD 3C132, 3062 Defense Pentagon, Washington, DC 20301-3062. Telephone (703) 602-0289; facsimile (703) 602-0350. Please cite DFARS Case 2005-D020.

SUPPLEMENTARY INFORMATION:

A. Background

By partnership agreement dated February 1, 2002, between the SBA and DoD, the SBA delegated to DoD its authority to enter into contracts under Section 8(a) of the Small Business Act (15 U.S.C. 637(a)). The expiration date of the partnership agreement has been extended from September 30, 2005, to September 30, 2006. This final rule amends DFARS 219.800 to reflect the extension.

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 subpart in accordance with 5 U.S.C. 610. Such comments should cite DFARS Case 2005-D020.

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 219

Government procurement.

Michele P. Peterson,

Editor, Defense Acquisition Regulations System.

Therefore, 48 CFR part 219 is amended as follows:

PART 219--SMALL BUSINESS PROGRAMS

1. The authority citation for 48 CFR part 219 continues to read as follows:

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

219.800 [Amended]

2. Section 219.800 is amended in paragraph (a), in the last sentence, by removing ``2005'' and adding in its place ``2006''.

[FR Doc. 05-19456 Filed 9-29-05; 8:45 am]

BILLING CODE 5001-08-P