DFARS CHANGE NOTICE 20051209

[Federal Register: December 9, 2005 (Volume 70, Number 236)]

DEPARTMENT OF DEFENSE

48 CFR Parts 216 and 217

[DFARS Case 2003-D097/2004-D023]

Defense Federal Acquisition Regulation Supplement; Contract Period for Task and Delivery Order Contracts

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 843 of the National Defense Authorization Act for Fiscal Year 2004 and Section 813 of the National Defense Authorization Act for Fiscal Year 2005. Section 843 placed a 5-year limit on the period of task or delivery order contracts awarded under 10 U.S.C. 2304a. Section 813 further amended 10 U.S.C. 2304a to permit a total period of up to 10 years, which may be exceeded if the head of the agency determines in writing that exceptional circumstances require a longer contract period.

EFFECTIVE DATE: December 9, 2005.

FOR FURTHER INFORMATION CONTACT: Ms. Robin Schulze, Defense Acquisition Regulations System, 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-D097.

SUPPLEMENTARY INFORMATION:

A. Background This final rule implements Section 843 of the National Defense Authorization Act for Fiscal Year 2004 (Pub. L. 108-136) and Section 813 of the National Defense Authorization Act for Fiscal Year 2005 (Pub. L. 108-375). Section 843 amended the general authority for task and delivery order contracts at 10 U.S.C. 2304a to specify that a task or delivery order contact entered into under that section may cover a total period of not more than 5 years. Section 813 further amended 10 U.S.C. 2304a to permit a total contract period of not more than 10 years, unless the head of the agency determines in writing that exceptional circumstances require a longer contract period.

DoD published an interim rule implementing Section 843 of Public Law 108-136 at 69 FR 13478 on March 23, 2004. As a result of public comments received on the interim rule, and to implement the provisions of Section 813 of Public Law 108-375, DoD published a second interim rule at 69 FR 74992 on December 15, 2004. Four sources submitted comments on the second interim rule. A discussion of the comments is provided below.

1. Comment: Clarification of reporting requirement. One respondent recommended amendment of the rule to specify the frequency and ending date of the reporting requirement that applies to contracts with ordering periods exceeding 10 years.

DoD Response: Concur. The final rule amends DFARS 217.204(e)(ii) to specify that DoD must submit a report to Congress, annually through fiscal year 2009, when an ordering period is extended beyond 10 years.

2. Comment: Applicability to information technology contracts. One respondent recommended consolidation of the text addressing the types of contracts to which the rule does not apply. In addition, the respondent recommended deletion of text addressing the applicability of the rule to information technology contracts. The respondent did not believe it was necessary to call out a single type of contract with regard to the rule's applicability.

DoD Response: Partially concur. The final rule revises DFARS 217.204(e)(iii) to consolidate the text addressing the types of contracts to which the rule does not apply, and to remove the reference to information technology contracts. However, a parenthetical phrase emphasizing the applicability of the rule to information technology contracts has been added at 217.204(e)(i), since FAR 17.204(e) specifically exempts information technology contracts from the regulatory time limits being supplemented by this rule.

3. Comment: Period of performance for certain performance-based contracts. One respondent stated that some performance-based contracts require periods of performance of 15 to 20 years to obtain the desired end results and questioned how to award these contracts given the limits imposed by the rule.

DoD Response: The rule permits agencies to authorize longer performance periods when deemed necessary for exceptional circumstances.

4. Comment: Administrative error. One respondent requested clarification of the DoD Response to Comment 1 in the preamble to the interim rule published at 69 FR 74992 on December 15, 2004. The text contained an erroneous reference to DFARS 217.204(e)(iii) regarding the limit on period of performance for task and delivery orders.

DoD Response: Concur that the reference was in error. The correct reference is DFARS 217.204(e)(iv).

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.

This rule finalizes an interim DFARS rule published on December 15, 2004. The rule implements Section 843 of the National Defense Authorization Act for Fiscal Year 2004 (Pub. L. 108-136) and Section 813 of the National Defense Authorization Act for Fiscal Year 2005 (Pub. L. 108-375). Section 843 of Public Law 108-136 limited the period of a task or delivery order contract awarded under 10 U.S.C. 2304a to not more than 5 years. Section 813 of Public Law 108-375 revised the limitation to not more than 10 years, unless the head of the agency determines in writing that exceptional circumstances require a longer contract period. DoD received no comments on the initial regulatory flexibility analysis. As a result of comments received on the interim rule, the final rule clarifies the types of contracts that are subject to the rule and clarifies that the Congressional reporting requirement, applicable to contracts with ordering periods exceeding 10 years, expires at the end of fiscal year 2009. The rule applies to DoD task or delivery order contracts awarded under the authority of 10 U.S.C. 2304a. It may affect businesses interested in receiving such contracts. The impact on small entities is unknown at this time.

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 216 and 217

Government procurement. Michele P. Peterson, Editor, Defense Acquisition Regulations System.

Accordingly, the interim rule amending 48 CFR parts 216 and 217, which was published at 69 FR 13478 on March 23, 2004, and which was amended by the interim rule published at 69 FR 74992 on December 15, 2004, is adopted as a final rule with the following changes:

1. The authority citation for 48 CFR parts 216 and 217 continues to read as follows:

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

PART 217--SPECIAL CONTRACTING METHODS

2. Section 217.204 is revised to read as follows:

217.204 Contracts.

(e)(i) Notwithstanding FAR 17.204(e), the ordering period of a task order or delivery order contract (including a contract for information technology) awarded by DoD pursuant to 10 U.S.C. 2304a--

(A) May be for any period up to 5 years;

(B) May be subsequently extended for one or more successive periods in accordance with an option provided in the contract or a modification of the contract; and

(C) Shall not exceed 10 years unless the head of the agency determines in writing that exceptional circumstances require a longer ordering period.

(ii) DoD must submit a report to Congress, annually through fiscal year 2009, when an ordering period is extended beyond 10 years in accordance with paragraph (e)(i)(C) of this section. Follow the procedures at PGI 217.204(e) for reporting requirements.

(iii) Paragraph (e)(i) of this section does not apply to the following:

(A) Contracts, including task or delivery order contracts, awarded under other statutory authority.

(B) Advisory and assistance service task order contracts (authorized by 10 U.S.C. 2304b that are limited by statute to 5 years, with the authority to extend an additional 6 months (see FAR 16.505(c)).

(C) Definite-quantity contracts.

(D) GSA schedule contracts.

(E) Multi-agency contracts awarded by agencies other than NASA, DoD, or the Coast Guard.

(iv) Obtain approval from the senior procurement executive before issuing an order against a task or delivery order contract subject to paragraph (e)(i) of this section, if performance under the order is expected to extend more than 1 year beyond the 10-year limit or extended limit described in paragraph (e)(i)(C) of this section (see FAR 37.106 for funding and term of service contracts).

FR Doc 05-23729[Federal Register: December 9, 2005 (Volume 70, Number 236)] DEPARTMENT OF DEFENSE

48 CFR Parts 205, 226, and 252

[DFARS Case 2003-D029]

Defense Federal Acquisition Regulation Supplement; Socioeconomic Programs

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 socioeconomic considerations in DoD contracting. This rule is a result of a transformation initiative undertaken by DoD to dramatically change the purpose and content of the DFARS.

EFFECTIVE DATE: December 9, 2005.

FOR FURTHER INFORMATION CONTACT: Ms. Deborah Tronic, Defense Acquisition Regulations System, 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-D029.

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 DFARS changes include--

Deletion of text at 226.103 containing internal DoD procedures for funding of incentive payments to contractors under the clause at 252.226-7001, Utilization of Indian Organizations, Indian-Owned Economic Enterprises, and Native Hawaiian Small Business Concerns. This text has been relocated to the new DFARS companion resource, Procedures, Guidance, and Information (PGI), available at http://www.acq.osd.mil/dpap/dars/pgi.

Relocation of text on contracting with historically black colleges and universities and minority institutions (HBCU/MI) from Subpart 226.70 to Subpart 226.3, for consistency with the location of FAR policy on this subject. The relocated text is substantially unchanged, but excludes information on HBCU/MI percentage goals and infrastructure assistance (226.7000 and 226.7002) that is considered unnecessary for inclusion in the DFARS.

Deletion of Subpart 226.72, Base Closures and Realignments, as the text in this subpart unnecessarily duplicates text found elsewhere in the DFARS.

DoD published a proposed rule at 70 FR 19038 on April 12, 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 updates and streamlines DFARS text, but makes no significant change to DoD contracting policy.

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 205, 226, and 252

Government procurement. Michele P. Peterson, Editor, Defense Acquisition Regulations System.

Therefore, 48 CFR parts 205, 226, and 252 are amended as follows:

1. The authority citation for 48 CFR parts 205, 226, and 252 continues to read as follows:

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

PART 205--PUBLICIZING CONTRACT ACTIONS

205.207 [Amended]

2. Section 205.207 is amended in paragraph (d)(i) introductory text by removing ``226.7003'' and adding in its place ``226.370''.

PART 226--OTHER SOCIOECONOMIC PROGRAMS

3. Section 226.103 is revised to read as follows:

226.103 Procedures.

Follow the procedures at PGI 226.103 when submitting a request for funding of an Indian incentive.

4. Subpart 226.3 is added to read as follows:

Subpart 226.3--Historically Black Colleges and Universities and Minority Institutions

Sec.

226.370 Contracting with historically black colleges and universities and minority institutions.

226.370-1 General.

226.370-2 Definitions.

226.370-3 Policy.

226.370-4 Set-aside criteria.

226.370-5 Set-aside procedures.

226.370-6 Eligibility for award.

226.370-7 Protesting a representation.

226.370-8 Goals and incentives for subcontracting with HBCU/MIs.

226.370-9 Solicitation provision and contract clause.

Subpart 226.3--Historically Black Colleges and Universities and Minority Institutions

226.370 Contracting with historically black colleges and universities and minority institutions.

226.370-1 General.

This section implements the historically black college and university (HBCU) and minority institution (MI) provisions of 10 U.S.C. 2323.

226.370-2 Definitions.

Definitions of HBCUs and MIs are in the clause at 252.226-7000, Notice of Historically Black College or University and Minority Institution Set-Aside.

226.370-3 Policy.

DoD will use outreach efforts, technical assistance programs, advance payments, HBCU/MI set-asides, and evaluation preferences to meet its contract and subcontract goals for use of HBCUs and MIs.

226.370-4 Set-aside criteria.

Set aside acquisitions for exclusive HBCU and MI participation when the acquisition is for research, studies, or services of the type normally acquired from higher educational institutions and there is a reasonable expectation that--

(a) Offers will be submitted by at least two responsible HBCUs or MIs that can comply with the subcontracting limitations in the clause at FAR 52.219-14, Limitations on Subcontracting;

(b) Award will be made at not more than 10 percent above fair market price; and

(c) Scientific or technological talent consistent with the demands of the acquisition will be offered.

226.370-5 Set-aside procedures.

(a) As a general rule, use competitive negotiation for HBCU/MI set-asides.

(b) When using a broad agency announcement (FAR 35.016) for basic or applied research, make partial set-asides for HBCU/MIs as explained in 235.016.

(c) Follow the special synopsis instructions in 205.207(d). Interested HBCU/MIs must provide evidence of their capability to perform the contract, and a positive statement of their eligibility, within 15 days of publication of the synopsis in order for the acquisition to proceed as an HBCU/MI set-aside.

(d) Cancel the set-aside if the low responsible offer exceeds the fair market price (defined in FAR part 19) by more than 10 percent.

226.370-6 Eligibility for award.

(a) To be eligible for award as an HBCU or MI under the preference procedures of this subpart, an offeror must--

(1) Be an HBCU or MI, as defined in the clause at 252.226-7000, Notice of Historically Black College or University and Minority Institution Set-Aside, at the time of submission of its initial offer including price; and

(2) Provide the contracting officer with evidence of its HBCU or MI status upon request.

(b) The contracting officer shall accept an offeror's HBCU or MI status under the provision at FAR 52.226-2, Historically Black College or University and Minority Institution Representation, unless--

(1) Another offeror challenges the status; or

(2) The contracting officer has reason to question the offeror's HBCU/MI status. (A list of HBCU/MIs is published periodically by the Department of Education.)

226.370-7 Protesting a representation.

Any offeror or other interested party may challenge an offeror's HBCU or MI representation by filing a protest with the contracting officer. The protest must contain specific detailed evidence supporting the basis for the challenge. Such protests are handled in accordance with FAR 33.103 and are decided by the contracting officer.

226.370-8 Goals and incentives for subcontracting with HBCU/MIs.

(a) In reviewing subcontracting plans submitted under the clause at FAR 52.219-9, Small Business Subcontracting Plan, the contracting officer shall--

(1) Ensure that the contractor included anticipated awards to HBCU/MIs in the small disadvantaged business goal; and

(2) Consider whether subcontracts are contemplated that involve research or studies of the type normally performed by higher educational institutions.

(b) The contracting officer may, when contracting by negotiation, use in solicitations and contracts a clause similar to the clause at FAR 52.219-10, Incentive Subcontracting Program, when a subcontracting plan is required and inclusion of a monetary incentive is, in the judgment of the contracting officer, necessary to increase subcontracting opportunities for HBCU/MIs. The clause should include a separate goal for HBCU/MIs.

226.370-9 Solicitation provision and contract clause.

(a) Use the clause at 252.226-7000, Notice of Historically Black College or University and Minority Institution Set-Aside, in solicitations and contracts set aside for HBCU/MIs.

(b) Use the provision at FAR 52.226-2, Historically Black College or University and Minority Institution Representation, in solicitations set aside for HBCU/MIs.

Subpart 226.70--[Removed and Reserved]

5. Subpart 226.70 is removed and reserved.

Subpart 226.72--[Removed]

6. Subpart 226.72 is removed.

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

252.226-7000 [Amended]

7. Section 252.226-7000 is amended in the introductory text by removing ``226.7008'' and adding in its place ``226.370-9''.

[FR Doc. 05-23729 Filed 12-8-05; 8:45 am]

DEPARTMENT OF DEFENSE

48 CFR Parts 211, 223, and 252

[DFARS Case 2003-D039]

Defense Federal Acquisition Regulation Supplement; Environment, Occupational Safety, and Drug-Free Workplace

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 environment, occupational safety, and a drug-free workplace. This rule is a result of a transformation initiative undertaken by DoD to dramatically change the purpose and content of the DFARS.

EFFECTIVE DATE: December 9, 2005.

FOR FURTHER INFORMATION CONTACT: Ms. Debra Overstreet, Defense Acquisition Regulations System, OUSD(AT&L)DPAP(DARS), IMD 3C132, 3062 Defense Pentagon, Washington, DC 20301-3062. Telephone (703) 602-0296; facsimile (703) 602-0350. Please cite DFARS Case 2003-D039.

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 DFARS changes include--

Deletion of redundant or unnecessary text at 223.300, 223.302, 223.370-3(a), 223.570-1, and 223.570-3.

Deletion of text at 223.370-4 and 223.405 containing internal DoD procedures relating to safety precautions for ammunitions and explosives and use of recovered materials. This text has been relocated to the new DFARS companion resource, Procedures, Guidance, and Information (PGI), available at http://www.acq.osd.mil/dpap/dars/pgi

. Relocation of text on ozone-depleting substances, from Subpart 211.2 to Subpart 223.8, with retention of a cross-reference in Subpart 211.2.

DoD published a proposed rule at 70 FR 19039 on April 12, 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 updates and streamlines DFARS text, but makes no significant change to DoD contracting policy.

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 211, 223, and 252

Government procurement. Michele P. Peterson, Editor, Defense Acquisition Regulations System.

Therefore, 48 CFR parts 211, 223, and 252 are amended as follows:

1. The authority citation for 48 CFR parts 211, 223, and 252 continues to read as follows:

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

PART 211--DESCRIBING AGENCY NEEDS

2. Section 211.271 is revised to read as follows:

211.271 Elimination of use of class I ozone-depleting substances.

See subpart 223.8 for restrictions on contracting for ozone-depleting substances.

PART 223--ENVIRONMENT, ENERGY AND WATER EFFICIENCY, RENEWABLE ENERGY TECHNOLOGIES, OCCUPATIONAL SAFETY, AND DRUG-FREE WORKPLACE

3. The heading of part 223 is revised to read as set forth above.

223.300 [Removed]

4. Section 223.300 is removed.

5. Section 223.302 is revised to read as follows:

223.302 Policy.

(e) The contracting officer shall also provide hazard warning labels, that are received from apparent successful offerors, to the cognizant safety officer.

0

6. Section 223.370-3 is amended by revising paragraph (a) to read as follows:

223.370-3 Policy.

(a) DoD policy is to ensure that its contractors take reasonable precautions in handling ammunition and explosives so as to minimize the potential for mishaps.

* * * * *

7. Section 223.370-4 is revised to read as follows:

223.370-4 Procedures.

Follow the procedures at PGI 223.370-4.

8. Section 223.405 is revised to read as follows:

223.405 Procedures.

Follow the procedures at PGI 223.405.

223.570-1 [Removed]

9. Section 223.570-1 is removed.

223.570-2 [Redesignated as 223.570-1]0

10. Section 223.570-2 is redesignated as section 223.570-1.

223.570-3 [Removed]

11. Section 223.570-3 is removed.

223.570-4 [Redesignated as 223.570-2]

12. Section 223.570-4 is redesignated as section 223.570-2.

13. Section 223.803 is revised to read as follows:

223.803 Policy.

(1) Contracts. No DoD contract may include a specification or standard that requires the use of a class I ozone-depleting substance or that can be met only through the use of such a substance unless the inclusion of the specification or standard is specifically authorized at a level no lower than a general or flag officer or a member of the Senior Executive Service of the requiring activity in accordance with Section 326, Public Law 102-484 (10 U.S.C. 2301 (repealed) note). This restriction is in addition to any imposed by the Clean Air Act and applies after June 1, 1993, to all DoD contracts, regardless of place of performance.

(2) Modifications. (i) Contracts awarded before June 1, 1993, with a value in excess of $10 million, that are modified or extended (including option exercise) and, as a result of the modification or extension, will expire more than one year after the effective date of the modification or extension, must be evaluated in accordance with agency procedures for the elimination of ozone-depleting substances.

(A) The evaluation must be carried out within 60 days after the first modification or extension.

(B) No further modification or extension may be made to the contract until the evaluation is complete.

(ii) If, as a result of this evaluation, it is determined that an economically feasible substitute substance or alternative technology is available, the contracting officer shall modify the contract to require the use of the substitute substance or alternative technology.

(iii) If a substitute substance or alternative technology is not available, a written determination shall be made to that effect at a level no lower than a general or flag officer or a member of the Senior Executive Service of the requiring activity.

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

252.223-7004 [Amended]

14. Section 252.223-7004 is amended in the introductory text by removing ``223.570-4'' and adding in its place ``223.570-2''.

[FR Doc. 05-23730 Filed 12-8-05; 8:45 am

DEPARTMENT OF DEFENSE

48 CFR Parts 225 and 252

[DFARS Case 2003-D008]

Defense Federal Acquisition Regulation Supplement; Foreign Acquisition

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 supplies and services from foreign sources. This rule is a result of a transformation initiative undertaken by DoD to dramatically change the purpose and content of the DFARS.

DATES: Effective Date: December 9, 2005.

FOR FURTHER INFORMATION CONTACT: Ms. Amy Williams, Defense Acquisition Regulations System, 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 2003-D008.

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 DFARS changes include--

Deletion of redundant or unnecessary text at 225.000, 225.171, 225.871-1(b), 225.7301(a)(1) through (3), and 225.7306.

Deletion of text at 225.001, 225.504, 225.802, 225.870-1(d), 225.870-5, 225.870-7, 225.871-5(c), 225.872-4, 225.872-5, 225.872-6(c), 225.873-2, 225.902, 225.903, 225.7301, and 225.7302

containing internal DoD procedures, guidance, or information. This text has been relocated to the new DFARS companion resource, Procedures, Guidance, and Information (PGI), available at http://www.acq.osd.mil/dpap/dars/pgi

Clarification of DFARS text as follows:

225.401-70--Addition of a statutory reference and amendment of the section heading.

225.408--Clarification that the exception from FAR 25.408(a)(4) for overseas acquisitions applies only to the requirement for submission of offers in U.S. dollars.

225.701--Expansion of the cross-reference to restrictions on contracting with firms owned or controlled by foreign governments that support terrorism (from 209.104-1(g)(i) to 209.104-1(g)).

225.871-6--Clarification that property that is jointly acquired by the members of a NATO cooperative project may be disposed of in accordance with the terms of the cooperative project agreement, without regard to any laws of the United States applicable to the disposal of property owned by the United States.

225.7003--Clarification that the waiver procedures in 225.7003 apply only if specifically authorized by reference elsewhere in Subpart 225.70.

225.7303-2(a)(3) and (redesignated) 225.7306--Addition of cross-references.

225.7501(a)(2)(iii)--Deletion of a reference to DoD Directive, 4120.3, Defense Standardization and Specification Program, which was cancelled in 1991.

DoD published a proposed rule at 70 FR 14625 on March 23, 2005. DoD received no comments on the proposed rule. Therefore, DoD has adopted the proposed rule as a final rule, with an additional change at 225.7301 to reflect the text added to 225.7301 in the interim rule published at 70 FR 57191 on September 30, 2005. Also, the text proposed for addition to 225.802-70(c) has been excluded from this final rule, as this text was added to 225.7401(b) in the final rule published at 70 FR 23790 on May 5, 2005.

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 updates, streamlines, and clarifies DFARS text, but makes no significant change to DoD contracting policy.

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 225 and 252

Government procurement. Michele P. Peterson, Editor, Defense Acquisition Regulations System.

Therefore, 48 CFR parts 225 and 252 are amended as follows:0

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

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

PART 225--FOREIGN ACQUISITION

225.000 [Removed]

2. Section 225.000 is removed.

3. Section 225.001 is revised to read as follows:

225.001 General.

For guidance on evaluating offers of foreign end products, see PGI 225.001.

225.171 [Removed]

4. Section 225.171 is removed.

5. Section 225.401-70 is amended by revising the section heading and the last sentence of the introductory text to read as follows:

225.401-70 End products subject to trade agreements.

* * * However, 225.003 expands the definition of Caribbean Basin country end products to include petroleum and any product derived from petroleum, in accordance with Section 8094 of Pub. L. 103-139.

* * * * *

6. Section 225.408 is revised to read as follows:

225.408 Procedures.

(a)(4) The requirements of FAR 25.408(a)(4), on submission of offers in U.S. dollars, do not apply to overseas acquisitions or to Defense Energy Support Center post, camp, or station overseas requirements.

7. Section 225.504 is revised to read as follows:

225.504 Evaluation examples.

For examples that illustrate the evaluation procedures in 225.502(c)(ii), see PGI 225.504.

8. Section 225.701 is revised to read as follows:

225.701 Restrictions.

See 209.104-1(g) for restrictions on contracting with firms owned or controlled by foreign governments.

9. Section 225.802 is revised to read as follows:

225.802 Procedures.

(b) Information on memoranda of understanding and other international agreements is available at PGI 225.802(b).

10. Section 225.870-1 is amended by revising paragraph (d) and removing paragraph (e). The revised text reads as follows:

225.870-1 General.

* * * * *

(d) For additional information on production rights, data, and information; services provided by Canadian Commercial Corporation; audit; and inspection, see PGI 225.870-1(d).

11. Section 225.870-5 is revised to read as follows:

225.870-5 Contract administration.

Follow the contract administration procedures at PGI 225.870-5.

12. Section 225.870-7 is revised to read as follows:

225.870-7 Acceptance of Canadian supplies.

For information on the acceptance of Canadian supplies, see PGI 225.870-7.

13. Section 225.871 is revised to read as follows:

225.871 North Atlantic Treaty Organization (NATO) cooperative projects.

14. Section 225.871-1 is revised to read as follows:

225.871-1 Scope.

This section implements 22 U.S.C. 2767 and 10 U.S.C. 2350b.15. Section 225.871-5 is amended by revising paragraph (b) and removing paragraph (c). The revised text reads as follows:

225.871-5 Directed subcontracting.

* * * * *

(b) In some instances, it may not be feasible to name specific subcontractors at the time the agreement is concluded. However, the agreement shall clearly state the general provisions for work sharing at the prime and subcontract level. For additional information on cooperative project agreements, see PGI 225.871-5.

16. Section 225.871-6 is revised to read as follows:

225.871-6 Disposal of property.

Dispose of property that is jointly acquired by the members of a cooperative project under the procedures established in the agreement or in a manner consistent with the terms of the agreement, without regard to any laws of the United States applicable to the disposal of property owned by the United States.0

17. Section 225.872-4 is revised to read as follows:

225.872-4 Individual determinations.

If the offer of an end product from a qualifying country source listed in 225.872-1(b), as evaluated, is low or otherwise eligible for award, prepare a determination and findings exempting the acquisition from the Buy American Act and the Balance of Payments Program as inconsistent with the public interest, unless another exception such as the Trade Agreements Act applies. Follow the procedures at PGI 225.872-

18. Section 225.872-5 is amended by revising paragraphs (b) and (c) and by removing paragraph (d). The revised text reads as follows:

225.872-5 Contract administration.

* * * * *

(b) Follow the contract administration procedures at PGI 225.872-5(b).

(c) Information on quality assurance delegations to foreign governments is in Subpart 246.4, Government Contract Quality Assurance.

19. Section 225.872-6 is amended by revising paragraph (c) to read as follows:

225.872-6 Audit.

* * * * *

(c) Handle requests for audits in qualifying countries in accordance with 215.404-2(c), but follow the additional procedures at PGI 225.872-6(c).

20. Section 225.873-2 is revised to read as follows:

225.873-2 Procedures.

When an offeror or a contractor identifies a levy included in an offered or contract price, follow the procedures at PGI 225.873-2.

21. Sections 225.902 and 225.903 are revised to read as follows:

225.902 Procedures.

Follow the entry and release procedures at PGI 225.902.

225.903 Exempted supplies.

(b)(i) For an explanation of the term ``supplies,'' see PGI 225.903(b)(i).

(ii) The duty-free certificate shall be printed, stamped, or typed on the face of, or attached to, Customs Form 7501. A duly designated officer or civilian official of the appropriate department or agency shall execute the certificate in the format provided at PGI 225.903(b)(ii).

22. Section 225.7003 is amended in paragraph (a) by revising the introductory text to read as follows:

225.7003 Waiver of restrictions of 10 U.S.C. 2534.

(a) The waiver procedures of this section apply only if specifically authorized by reference elsewhere in this subpart. The restrictions on certain foreign purchases under 10 U.S.C. 2534(a) may be waived as follows:

* * * * *

23. Sections 225.7301 and 225.7302 are revised to read as follows:

225.7301 General.

(a) The U.S. Government sells defense articles and services to foreign governments or international organizations through FMS agreements. The agreement is documented in a Letter of Offer and Acceptance (LOA) (see DoD 5105.38-M, Security Assistance Management Manual).

(b) Conduct FMS acquisitions under the same acquisition and contract management procedures used for other defense acquisitions.

(c) Follow the additional procedures at PGI 225.7301(c) for preparation of solicitations and contracts that include FMS requirements.

(d) 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.

225.7302 Guidance.

For guidance on the role of the contracting officer in FMS programs that will require an acquisition, see PGI 225.7302.

24. Section 225.7303-2 is amended in paragraph (a)(3) by revising the introductory text to read as follows:

225.7303-2 Cost of doing business with a foreign government or an international organization.

(a) * * *

(3) Offset costs (also see 225.7306).

* * * * *

225.7303-4 [Amended]

25. Section 225.7303-4 is amended in paragraph (b)(1) by revising the last parenthetical to read ``(see 225.7307(a))''.

225.7306 [Removed]

26. Section 225.7306 is removed.

225.7307 and 225.7308 [Redesignated]

27. Sections 225.7307 and 225.7308 are redesignated as sections 225.7306 and 225.7307, respectively.

28. Newly designated section 225.7306 is revised to read as follows:

225.7306 Offset arrangements.

In accordance with the Presidential policy statement of April 16, 1990, DoD does not encourage, enter into, or commit U.S. firms to FMS offset arrangements. The decision whether to engage in offsets, and the responsibility for negotiating and implementing offset arrangements, resides with the companies involved. (Also see 225.7303-2(a)(3).)

29. Section 225.7501 is amended by revising paragraph (a)(2)(iii) to read as follows:

225.7501 Policy.

* * * * *

(a) * * *

(2) * * *

(iii) A spare part for foreign-manufactured vehicles, equipment, machinery, or systems, provided the acquisition is restricted to the original manufacturer or its supplier;

* * * * *

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

252.225-7027 and 252.225-7028 [Amended]

30. Sections 252.225-7027 and 252.225-7028 are amended in the introductory text by removing ``225.7308'' and adding in its place ``225.7307''.

[Federal Register: December 9, 2005 (Volume 70, Number 236)]

DEPARTMENT OF DEFENSE

48 CFR Parts 225 and 252

[DFARS Case 2004-D013]

Defense Federal Acquisition Regulation Supplement; Free Trade Agreements--Australia and Morocco

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 new Free Trade Agreements with Australia and Morocco. The Free Trade Agreements were scheduled to become effective on or after January 1, 2005. However, the Morocco Free Trade Agreement has not yet entered into force and is therefore removed from this final rule.

DATES: Effective Date: December 9, 2005.

FOR FURTHER INFORMATION CONTACT: Ms. Amy Williams, Defense Acquisition Regulations System, 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 2004-D013.

SUPPLEMENTARY INFORMATION:

A. Background DoD published an interim rule at 70 FR 2361 on January 13, 2005, to implement new Free Trade Agreements with Australia and Morocco, as approved by Congress in the United States-Australia Free Trade Agreement Implementation Act (Public Law 108-286) and the United States-Morocco Free Trade Agreement Implementation Act (Public Law 108-302). The Free Trade Agreements were scheduled to become effective on or after January 1, 2005. However, the United States Trade Representative has informed DoD that the Morocco Free Trade Agreement has not yet entered into force. Therefore, implementation of the Morocco Free Trade Agreement is excluded from this final rule. In addition, for consistency with the Federal Acquisition Regulation and other changes made by the interim rule, this final rule amends the definition of ``eligible product'' at 225.003 to include foreign construction material.

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. DoD applies the trade agreements to only those non-defense items listed at DFARS 225.401-70; and acquisitions that are set aside for small business concerns are exempt from application of the trade agreements.

C. Paperwork Reduction Act This rule affects the certification and information collection requirements in the provisions at DFARS 252.225-7020 and 252.225-7035, currently approved under Office of Management and Budget Control Number 0704-0229. The impact, however, is negligible.

List of Subjects in 48 CFR Parts 225 and 252

Government procurement. Michele P. Peterson, Editor, Defense Acquisition Regulations System.

Accordingly, the interim rule amending 48 CFR parts 225 and 252, which was published at 70 FR 2361 on January 13, 2005, is adopted as a final rule with the following changes:

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

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

PART 225--FOREIGN ACQUISITION

2. Section 225.003 is amended as follows:0

a. In paragraph (5)(i)(B), by removing ``or'';0

b. By redesignating paragraph (5)(ii) as paragraph (5)(iii); and0

c. By adding a new paragraph (5)(ii) to read as follows:

225.003 Definitions.

* * * * *

(5) * * *

(ii) A foreign construction material that is not subject to discriminatory treatment, due to the applicability of a trade agreement to a particular acquisition; or

* * * * *

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

252.212-7001 [Amended]

3. Section 252.212-7001 is amended as follows:

a. By revising the clause date to read ``(DEC 2005)''; and

b. In paragraph (b), in entry ``252.225-7021'', by removing ``(JUN 2005)'' and adding in its place ``(DEC 2005)''.

252.225-7021 [Amended]

4. Section 252.225-7021 is amended as follows:

a. By revising the clause date to read ``(DEC 2005)''; and

b. In paragraph (a)(3)(ii), by removing ``Morocco,''.

5. Section 252.225-7045 is amended as follows:

a. By revising the clause date to read ``(DEC 2005)'';

b. In paragraph (a), in the definition of ``Designated country'', in paragraph (2), by removing ``Morocco,''; and0

c. By revising Alternate I to read as follows:

252.225-7045 Balance of Payments Program--Construction Material Under Trade Agreements.

* * * * *

Alternate I (DEC 2005). As prescribed in 225.7503(b), delete the definitions of ``designated country'' and ``designated country construction material'' from the definitions in paragraph (a) of the basic clause, add the following definition of ``Australian or Chilean construction material'' to paragraph (a) of the basic clause, and substitute the following paragraphs (b) and (c) for paragraphs (b) and (c) of the basic clause:

Australian or Chilean construction material means a construction material that--

(1) Is wholly the growth, product, or manufacture of Australia or Chile; or

(2) In the case of a construction material that consists in whole or in part of materials from another country, has been substantially transformed in Australia or Chile into a new and different construction material distinct from the materials from which it was transformed.

(b) This clause implements the Balance of Payments Program by providing a preference for domestic construction material. In addition, the Contracting Officer has determined that the WTO GPA and all Free Trade Agreements except NAFTA apply to this acquisition. Therefore, the Balance of Payments Program restrictions are waived for WTO GPA country, Australian or Chilean, least developed country, or Caribbean Basin country construction material.

(c) The Contractor shall use only domestic, WTO GPA country, Australian or Chilean, least developed country, or Caribbean Basin country construction material in performing this contract, except for--

(1) Construction material valued at or below the simplified acquisition threshold in Part 2 of the Federal Acquisition Regulation; or

(2) The construction material or components listed by the Government as follows:

[Contracting Officer to list applicable excepted materials or indicate ``none'']

END OF DCN 20051209