DFARS CHANGE NOTICE 20061004

[Federal Register: October 4, 2006 (Volume 71, Number 192)]

DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 212 and 234

Defense Federal Acquisition Regulation Supplement; Acquisition of Major Weapon Systems as Commercial Items (DFARS Case 2006-D012)

AGENCY: Defense Acquisition Regulations System, 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 Section 803 of the National Defense Authorization Act for Fiscal Year 2006. Section 803 places limitations on the acquisition of a major weapon system as a commercial item.

DATES: Effective date: October 4, 2006.

Comment date: Comments on the interim rule should be submitted in writing to the address shown below on or before December 4, 2006, to be considered in the formation of the final rule.

ADDRESSES: You may submit comments, identified by DFARS Case 2006-D012, using any of the following methods:

Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments.

E-mail: dfars@osd.mil. Include DFARS Case 2006-D012 in the subject line of the message.

Fax: (703) 602-0350.

Mail: Defense Acquisition Regulations System, Attn: Mr. Bill Sain, OUSD(AT&L)DPAP(DARS), IMD 3C132, 3062 Defense Pentagon, Washington, DC 20301-3062.

Hand Delivery/Courier: Defense Acquisition Regulations System, Crystal

Square 4, Suite 200A, 241 18th Street, Arlington, VA 22202-3402.

Comments received generally will be posted without change to http://www.regulations.gov, including any personal information provided.

FOR FURTHER INFORMATION CONTACT: Mr. Bill Sain, (703) 602-0293.

SUPPLEMENTARY INFORMATION:

A. Background This interim rule adds DFARS policy to implement Section 803 of the National Defense Authorization Act for Fiscal Year 2006 (Pub. L. 109-163). Section 803 permits the treatment or acquisition of a major weapon system as a commercial item only if (1) the Secretary of Defense determines that the major weapon system meets the definition of commercial item at 41 U.S.C. 403(12) and such treatment is necessary to meet national security objectives; and (2) the congressional defense committees are notified at least 30 days before such treatment or acquisition occurs.

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 relates to internal DoD considerations regarding the acquisition of major weapons systems. 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 2006-D012.

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.

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 803 of the National Defense Authorization Act for Fiscal Year 2006 (Pub. L. 109-163), which requires that, before DoD may treat or acquire a major weapon system as a commercial item (1) the Secretary of Defense must determine that the major weapon system meets the definition of commercial item at 41 U.S.C. 403(12) and that such treatment is necessary to meet national security objectives; and (2) the congressional defense committees must be notified at least 30 days in advance. Comments received in response to this interim rule will be considered in the formation of the final rule.

List of Subjects in 48 CFR Parts 212 and 234

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

Therefore, 48 CFR Parts 212 and 234 are amended as follows:

1. The authority citation for 48 CFR Parts 212 and 234 continues to read as follows:

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

PART 212--ACQUISITION OF COMMERCIAL ITEMS

2. Section 212.270 is added to read as follows:

Sec. 212.270 Major weapon systems as commercial items.

The DoD policy for acquiring major weapon systems as commercial items is in Subpart 234.70.

PART 234--MAJOR SYSTEM ACQUISITION

3. Subpart 234.70 is added to read as follows:

Subpart 234.70--Acquisition of Major Weapon Systems as Commercial Items

Sec.

234.7000 Scope of subpart.

234.7001 Definition.

234.7002 Policy.

Subpart 234.70--Acquisition of Major Weapon Systems as Commercial Items

Sec. 234.7000 Scope of subpart.

This subpart--

(a) Implements 10 U.S.C. 2379; and

(b) Requires a determination by the Secretary of Defense and a notification to Congress before acquiring a major weapon system as a commercial item.

Sec. 234.7001 Definition.

Major weapon system, as used in this subpart, means a weapon system acquired pursuant to a major defense acquisition program, as defined in 10 U.S.C. 2430 to be a program that--

(1) Is not a highly sensitive classified program, as determined by the Secretary of Defense; and

(2)(i) Is designated by the Secretary of Defense as a major defense acquisition program; or

(ii) Is estimated by the Secretary of Defense to require an eventual total expenditure for research, development, test, and evaluation of more than $300,000,000 (based on fiscal year 1990 constant dollars) or an eventual total expenditures for procurement of more than $1,800,000,000 (based on fiscal year 1990 constant dollars).

Sec. 234.7002 Policy.

(a) A DoD major weapon system may be treated as a commercial item, or acquired under procedures established for the acquisition of commercial items, only if--

(1) The Secretary of Defense determines that--

(i) The major weapon system is a commercial item as defined in FAR 2.101; and

(ii) Such treatment is necessary to meet national security objectives; and

(2) The congressional defense committees are notified at least 30 days before such treatment or acquisition occurs. Follow the procedures at PGI 234.7002.

(b) A subsystem or component of a major weapon system that meets the definition of a commercial item--

(1) Shall be acquired under the procedures established for the acquisition of commercial items (see FAR Part 12); and

(2) Is not subject to the requirements of paragraph (a) of this section.

(c) The authority of the Secretary of Defense to make a determination under paragraph (a)(1) of this section may not be delegated below the level of Deputy Secretary of Defense.

[Federal Register: October 4, 2006 (Volume 71, Number 192)]

DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Part 225

Defense Federal Acquisition Regulation Supplement; Buy American Act Exemption for Commercial Information Technology (DFARS Case 2005-D011)

AGENCY: Defense Acquisition Regulations System, Department of Defense (DoD).

ACTION: Final rule.

SUMMARY: DoD has issued a final rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to implement provisions of annual appropriations acts that authorize an exemption from the Buy American Act for the acquisition of commercial information technology.

Dates: Effective Date: October 4, 2006.

FOR FURTHER INFORMATION CONTACT: Ms. Amy Williams, Defense Acquisition Regulations System, OUSD(AT&L)DPAP(DARS), IMD 3C132, 3062 Defense Pentagon, Washington, DC 20301-3062. Telephone (703) 602-0328; facsimile (703) 602-0350. Please cite DFARS Case 2005-D011.

SUPPLEMENTARY INFORMATION:

A. Background Section 535 of Division F of the Consolidated Appropriations Act, 2004 (Pub. L. 108-199); Section 517 of Division H of the Consolidated Appropriations Act, 2005 (Pub. L. 108-447); and Section 717 of the Consolidated Appropriations Act, 2006 (Pub. L. 109-115) provide an exemption from the Buy American Act for the acquisition of information technology that is a commercial item. This final rule amends the acquisition procedures in DFARS Part 225 to reflect the exemption, which previously had been implemented through the issuance of annual DoD-wide class deviations.

DoD published a proposed rule at 71 FR 18694 on April 12, 2006. Five sources submitted comments on the proposed rule. Three of the respondents supported the rule. A discussion of the other comments is provided below.

1. Comment. One respondent recommended that application of the Buy American Act restrictions to non-sensitive electrical and electronic products be reevaluated in the context of both the increasingly global economy and potential savings to the Government.

DoD Response. Revision of the application of the Buy American Act to electrical/electronic products would require statutory change and, therefore, is outside the scope of this DFARS case.

2. Comment. One respondent requested that the rule clearly apply as an exemption to the Berry Amendment requirements of the clause at DFARS 252.225-7014, Preference for Domestic Specialty Metals, for commercial information technology.

DoD Response. The appropriations act provisions contain authority only for an exemption from the Buy American Act (41 U.S.C. 10a-d). Therefore, DoD is unable to adopt this recommendation for an exemption from the Berry Amendment (10 U.S.C. 2533a).

3. Comment. One respondent disagreed with the rule, due to the security risk associated with foreign entities potentially gaining access to DoD information systems.

DoD Response. The policy in the rule is required by statute. The appropriations act provisions state that the restrictions of the Buy American Act ``shall not apply'' to the acquisition of information technology that is a commercial item. This policy has been in effect since May 2004, through the issuance of annual DoD-wide class deviations. Security of information technology is addressed in DFARS Subpart 239.71, which requires agencies to ensure that information assurance is provided for information technology in accordance with current policies, procedures, and statutes, to include--

(1) The National Security Act;

(2) The Clinger-Cohen Act;

(3) National Security Telecommunications and Information Systems Security Policy No. 11;

(4) Federal Information Processing Standards;

(5) DoD Directive 8500.1, Information Assurance; and

(6) DoD Instruction 8500.2, Information Assurance Implementation.

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 has prepared a final regulatory flexibility analysis consistent with 5 U.S.C. 604. A copy of the analysis may be obtained from the point of contact specified herein. The analysis is summarized as follows:

This final rule amends the DFARS to implement provisions of annual appropriations acts that authorize an exemption from the Buy American Act for the acquisition of information technology that is a commercial item. The objective of the rule is to promote Government access to commercial information technology, by eliminating the application of domestic source requirements to the acquisition of such information technology. The rule applies to (1) All offerors responding to DoD solicitations for commercial information technology where the Buy American Act previously applied (generally, acquisitions between the micropurchase threshold of $2,500 and the World Trade Organization Government Procurement Agreement (WTO GPA) threshold of $193,000); and (2) manufacturers of components of commercial information technology products. Based on DD Form 350, Individual Contracting Action Report, data for Product Service Codes 7010 through 7050, which include ADP Equipment Software, Supplies, and Support Equipment, DoD awarded approximately 8,170 contracts to small business concerns for the acquisition of commercial information technology during fiscal year 2005. Of those contracts, 7,850 were under $175,000, which was the WTO GPA threshold in 2005. The potential negative impact of increased competition from offerors of foreign products is expected to have minimal impact in the range of $2,500 to $100,000, because these awards are generally set aside for small business concerns. Furthermore, there will be a positive impact due to a reduction in administrative burden, since offerors and contractors will no longer need to track the origin of components to determine if an information technology product complies with Buy American Act requirements. The DD Form 350 system does not provide data at the subcontract level. However, manufacturers of domestic components of information technology products may face increased competition from manufacturers of foreign components as a result of this rule. There are no practical alternatives that would accomplish the objectives of the statutory requirements.

C. Paperwork Reduction Act This rule will reduce the information collection requirements that have been approved by the Office of Management and Budget, under Control Number 0704-0229, for use through May 31, 2007. Under this clearance, 36,175 annual burden hours have been approved for the provision at DFARS 252.225-7000, Buy American Act--Balance of Payments Program Certificate; and 1,000 annual burden hours have been approved for the provision at DFARS 252.225-7035, Buy American Act--Free Trade Agreements--Balance of Payments Program Certificate. DoD estimates that the rule will result in a 5 percent reduction in the burden hours for the provision at DFARS 252.225-7000 (1,800 hours) and a 50 percent reduction in the burden hours for the provision at DFARS 252.225-7035 (500 hours).

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 225.1101 is amended by revising paragraph (2)(iii), paragraph (10)(i) introductory text, and paragraph (10)(ii) to read as follows:

Sec. 225.1101 Acquisition of supplies.

* * * * *

(2) * * *

(iii) An exception to the Buy American Act or Balance of Payments Program applies (see FAR 25.103, 225.103, and 225.7501); or

* * * * *

(10)(i) Except as provided in paragraph (10)(ii) of this section, use the clause at 252.225-7036, Buy American Act--Free Trade Agreements--Balance of Payments Program, instead of the clause at FAR 52.225-3, Buy American Act--Free Trade Agreements--Israeli Trade Act, in solicitations and contracts for the items listed at 225.401-70, when the estimated value equals or exceeds $25,000, but is less than $193,000, and a Free Trade Agreement applies to the acquisition.* * * * *

(ii) Do not use the clause if--

(A) Purchase from foreign sources is restricted (see 225.401(a)(2)), unless the contracting officer anticipates a waiver of the restriction; or

(B) Acquiring information technology that is a commercial item, using fiscal year 2004 or subsequent funds (Section 535 of Division F of the Consolidated Appropriations Act, 2004 (Pub. L. 108-199), and the same provision in subsequent appropriations acts).

* * * * *

3. Section 225.7501 is amended by revising paragraphs (a)(2)(iv) and (v) and adding paragraph (a)(2)(vi) to read as follows:

Sec. 225.7501 Policy.

* * * * *

(a) * * *

(2) * * *

(iv) An industrial gas;

(v) A brand drug specified by the Defense Medical Materiel Board; or

(vi) Information technology that is a commercial item, using fiscal year 2004 or subsequent funds (Section 535 of Division F of the Consolidated Appropriations Act, 2004 (Pub. L. 108-199), and the same provision in subsequent appropriations acts);

* * * * *

[Federal Register: October 4, 2006 (Volume 71, Number 192)]

DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 205 and 225

Defense Federal Acquisition Regulation Supplement; Berry Amendment Notification Requirement (DFARS Case 2006-D006)

AGENCY: Defense Acquisition Regulations System, 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 Section 833(a) of the National Defense Authorization Act for Fiscal Year 2006. Section 833(a) requires the posting of a notice on the FedBizOps Internet site, when certain exceptions to domestic source requirements apply to an acquisition.

DATES: Effective Date: October 4, 2006.

Comment date: Comments on the interim rule should be submitted in writing to the address shown below on or before December 4, 2006, to be considered in the formation of the final rule.

ADDRESSES: You may submit comments, identified by DFARS Case 2006-D006, using any of the following methods:

Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments.

E-mail: dfars@osd.mil. Include DFARS Case 2006-D006 in the subject line of the message.

Fax: (703) 602-0350.

Mail: Defense Acquisition Regulations System, Attn: Ms. Amy Williams, OUSD(AT&L)DPAP(DARS), IMD 3C132, 3062 Defense Pentagon, Washington, DC 20301-3062.

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

Comments received generally will be posted without change to http://www.regulations.gov, including any personal information provided.

FOR FURTHER INFORMATION CONTACT: Ms. Amy Williams, (703) 602-0328.

SUPPLEMENTARY INFORMATION:

A. Background This interim rule adds DFARS policy to implement Section 833(a) of the National Defense Authorization Act for Fiscal Year 2006 (Pub. L. 109-163). Section 833(a) amended 10 U.S.C. 2533a to add a requirement for the posting of a notice on the FedBizOps Internet site, within 7 days after award of a contract exceeding the simplified acquisition threshold, for the acquisition of (1) certain clothing, fiber, yarn, or fabric items, when DoD has determined that adequate domestic items are not available; or (2) chemical warfare protective clothing, when an exception to domestic source requirements applies because the

acquisition furthers an agreement with a qualifying country.

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 relates to a notification requirement that is performed by the Government. 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 2006-D006.

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.

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 833(a) of the National Defense Authorization Act for Fiscal Year 2006 (Pub. L. 109-163). Section 833(a) requires DoD to post a notice on the FedBizOps Internet site, within 7 days after award of a contract exceeding the simplified acquisition threshold, when DoD has applied one of certain exceptions to domestic source requirements with respect to the contract. Comments received in response to this interim rule will be considered in the formation of the final rule.

List of Subjects in 48 CFR Parts 205 and 225

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

Therefore, 48 CFR parts 205 and 225 are amended as follows:

1. The authority citation for 48 CFR parts 205 and 225 continues to read as follows:

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

PART 205--PUBLICIZING CONTRACT ACTIONS

2. Section 205.301 is added to read as follows:

205.301 General.

(a)(S-70) Synopsis of exceptions to domestic source requirements.

(i) In accordance with 10 U.S.C. 2533a(k), contracting officers also must synopsize through the GPE, awards exceeding the simplified acquisition threshold that are for the acquisition of any clothing, fiber, yarn, or fabric items described in 225.7002-1(a)(2) through (10), if--

(A) The Secretary concerned has determined that domestic items are not available, in accordance with 225.7002-2(b); or

(B) The acquisition is for chemical warfare protective clothing, and the contracting officer has determined that an exception to domestic source requirements applies because the acquisition furthers an agreement with a qualifying country, in accordance with 225.7002-2(p).

(ii) The synopsis must be submitted in sufficient time to permit its publication not later than 7 days after contract award.

(iii) In addition to the information otherwise required in a synopsis of contract award, the synopsis must include one of the following statements as applicable:

(A) ``The exception at DFARS 225.7002-2(b) applies to this acquisition, because the Secretary concerned has determined that items grown, reprocessed, reused, or produced in the United States cannot be acquired as and when needed in satisfactory quality and sufficient quantity at U.S. market prices.''

(B) ``The exception at DFARS 225.7002-2(p) applies to this acquisition, because the contracting officer has determined that this acquisition of chemical warfare protective clothing furthers an agreement with a qualifying country identified in DFARS 225.872.''

PART 225--FOREIGN ACQUISITION

3. Section 225.7002-1 is amended in the introductory text by revising the first sentence to read as follows:

225.7002-1 Restrictions.

The following restrictions implement 10 U.S.C. 2533a (the ``Berry Amendment''). * * *

4. Section 225.7002-2 is amended by revising paragraphs (b) and (n) and by adding paragraph (p) to read as follows:

225.7002-2 Exceptions.

* * * * *

(b) Acquisitions of any of the items in 225.7002-1(a) or (b), if the Secretary concerned determines that items grown, reprocessed, reused, or produced in the United States cannot be acquired as and when needed in a satisfactory quality and sufficient quantity at U.S. market prices. (See the requirement in 205.301 for synopsis within 7 days after contract award when using this exception.)

* * * * *

(n) Acquisitions of specialty metals when the acquisition furthers an agreement with a qualifying country (see 225.872).

* * * * *

(p) Acquisitions of chemical warfare protective clothing when the acquisition furthers an agreement with a qualifying country. (See 225.872 and the requirement in 205.301 for synopsis within 7 days after contract award when using this exception.)

[Federal Register: October 4, 2006 (Volume 71, Number 192)]

DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Part 252

Defense Federal Acquisition Regulation Supplement; Free Trade Agreements--Guatemala and Bahrain (DFARS Case 2006-D028)

AGENCY: Defense Acquisition Regulations System, 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 the United States-Bahrain Free Trade Agreement and the Dominican Republic-Central America-United States Free Trade Agreement with respect to Guatemala. The Free Trade Agreements waive the applicability of the Buy American Act for some foreign supplies and construction materials and specify procurement procedures designed to ensure fairness.

DATES: Effective date: October 4, 2006.

Comment date: Comments on the interim rule should be submitted in writing to the address shown below on or before December 4, 2006, to be considered in the formation of the final rule.

ADDRESSES: You may submit comments, identified by DFARS Case 2006-D028, using any of the following methods:

Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments.

E-mail: dfars@osd.mil. Include DFARS Case 2006-D028 in the subject line of the message.

Fax: (703) 602-0350.

Mail: Defense Acquisition Regulations System, Attn: Ms. Amy Williams, OUSD(AT&L)DPAP(DARS), IMD 3C132, 3062 Defense Pentagon, Washington, DC 20301-3062.

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

Comments received generally will be posted without change to http://www.regulations.gov, including any personal information provided.

FOR FURTHER INFORMATION CONTACT: Ms. Amy Williams, (703) 602-0328.

SUPPLEMENTARY INFORMATION:

A. Background This interim rule amends DFARS provisions and clauses to implement the Dominican Republic-Central America-United States Free Trade Agreement, with respect to Guatemala, and the United States-Bahrain Free Trade Agreement. Congress approved these trade agreements in the Dominican Republic-Central America-United States Free Trade Agreement Implementation Act (Public Law 109-53) and the United States-Bahrain Free Trade Agreement Implementation Act (Public Law 109-169). The rule adds Bahrain and Guatemala to the definition of ``Free Trade Agreement country.'' In addition, the rule removes Guatemala from the definition of ``Caribbean Basin country'' because, in accordance with Section 201(a)(3) of Public Law 109-53, when the Dominican Republic-Central America-United States Free Trade Agreement enters into force with respect to a country, that country is no longer designated as a beneficiary country for purposes of the Caribbean Basin Economic Recovery Act.

The dollar thresholds for applicability of the Dominican Republic-Central America-United States Free Trade Agreement to Guatemala are the same as those for the other countries subject to the agreement. The dollar thresholds for applicability of the Bahrain Free Trade Agreement are $193,000 for supply and service contracts, and $8,422,165 for construction contracts.

Like the Morocco Free Trade Agreement, the Bahrain Free Trade Agreement threshold for supplies and services is higher than the thresholds for the other Free Trade Agreements. Therefore, Bahrainian end products are not covered by the Buy American Act-Free Trade Agreements-Balance of Payments Program provision and clause at DFARS 252.225-7035 and 252.225-7036, respectively.

Like the North American Free Trade Agreement, the Bahrain Free Trade Agreement threshold for construction is higher than the thresholds of the other Free Trade Agreements. Therefore, Bahrainian construction material is excluded from coverage under the Balance of Payments Program--Construction Materials Under Trade Agreements clause at DFARS 252.225-7045 for acquisitions less than $8,422,165.

In addition, this interim rule makes the following editorial changes:

Removal of the word ``instrumentality'' from the definitions of ``Caribbean Basin country end product,'' ``Free Trade Agreement country end product,'' ``least developed country end product,'' ``Moroccan end product,'' and ``Canadian end product,'' for consistency with the FAR definitions of ``end product.'' The term ``instrumentality,'' as used in trade agreements, applies to the European Union. The FAR and DFARS have separately listed each member country of the European Union, so it is unnecessary to continue to refer to instrumentalities in the end product definitions.

Amendment of the Trade Agreements clause at DFARS 252.225-7021 to add a definition of ``WTO GPA country end product'' and to update the Internet address for location of the Harmonized Tariff Schedule of the United States.

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. Although the rule opens up DoD procurement to the products of Guatemala and Bahrain, DoD does not believe there will be a significant economic impact on U.S. small businesses. DoD applies the trade agreements to only those non-defense items listed at DFARS 225.401-70, and procurements that are set aside for small businesses are exempt from application of the trade agreements. 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 2006-D028.

C. Paperwork Reduction Act This interim 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 for use through May 31, 2007. The impact, however, is negligible.

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 the Dominican Republic-Central America-United States Free Trade Agreement with respect to Guatemala, and the United States-Bahrain Free Trade Agreement, as approved by Congress in Public Laws 109-53 and 109-169. The agreement with Guatemala took effect on July 1, 2006, and the agreement with Bahrain took effect on August 1, 2006. 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 252

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

Therefore, 48 CFR Part 252 is amended as follows:

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

1. The authority citation for 48 CFR Part 252 continues to read as follows:

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

Sec. 252.212-7001 [Amended]

2. Section 252.212-7001 is amended as follows:

a. By revising the clause date to read ``(Oct 2006)'';

b. In paragraphs (b)(9) and (b)(12)(i) by removing ``(Jun 2006)'' and adding in its place ``(Oct 2006)''; and

c. In paragraph (b)(12)(ii) by removing ``(Jan 2005)'' and adding in its place ``(Oct 2006)''.

3. Section 252.225-7013 is amended by revising the clause date and paragraph (a)(2)(ii) to read as follows:

Sec. 252.225-7013 Duty-Free Entry

* * * * *

Duty-Free Entry (Oct 2006)

(a) * * *

(2) * * *

(ii) Free Trade Agreement country end product, other than a Bahrainian end product or a Moroccan end product, as defined in the Buy American Act-Free Trade Agreements-Balance of Payments Program clause of this contract; or

* * * * *

4. Section 252.225-7021 is amended as follows:a. By revising the clause date;

b. In paragraph (a)(1)(i)(B), in the first sentence, by removing ``or instrumentality'';

c. By revising paragraph (a)(3)(ii);

d. In paragraph (a)(3)(iv) by removing ``Guatemala,'';

e. In paragraph (a)(6)(ii) in the first sentence, and in paragraph (a)(7)(ii) in the first sentence, by removing ``or instrumentality'';

f. By adding paragraph (a)(13); and

g. In paragraph (e) introductory text by revising the first sentence. The revised and added text reads as follows:

Sec. 252.225-7021 Trade Agreements

* * * * *

Trade Agreements (Oct 2006)

(a) * * *

(3) * * *

* * * * *

(ii) A Free Trade Agreement country (Australia, Bahrain, Canada, Chile, El Salvador, Guatemala, Honduras, Mexico, Morocco, Nicaragua, or Singapore);

* * * * *

(13) WTO GPA country end product means an article that--

(i) Is wholly the growth, product, or manufacture of a WTO GPA country; or

(ii) In the case of an article that consists in whole or in part of materials from another country, has been substantially transformed in a WTO GPA country into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was transformed. The term refers to a product offered for purchase under a supply contract, but for purposes of calculating the value of the end product includes services (except transportation services) incidental to its supply, provided that the value of those incidental services does not exceed the value of the product itself.

* * * * *

(e) The HTSUS is available on the Internet at http://www.usitc.gov/tata/hts/bychapter/index.htm. * * *

* * * * *

5. Section 252.225-7035 is amended by revising the clause date and paragraphs (a), (b)(2), (c)(2)(ii), and Alternate I to read as follows:

Sec. 252.225-7035 Buy American Act--Free Trade Agreements--Balance of Payments Program Certificate

* * * * *

Buy American Act--Free Trade Agreements--Balance of Payments Program Certificate (Oct 2006)

(a) Definitions. Bahrainian end product, domestic end product, Free Trade Agreement country, Free Trade Agreement country end product, foreign end product, Moroccan end product, qualifying country end product, and United States have the meanings given in the Buy American Act--Free Trade Agreements--Balance of Payments Program clause of this solicitation.

(b) * * *

(2) For line items subject to Free Trade Agreements, will evaluate offers of qualifying country end products or Free Trade Agreement country end products other than Bahrainian end products or Moroccan end products without regard to the restrictions of the Buy American Act or the Balance of Payments Program.

(c) * * *

(2) * * *

(ii) The offeror certifies that the following supplies are Free Trade Agreement country end products other than Bahrainian end products or Moroccan end products:

(Line Item Number) (Country of Origin)

* * * * *

Alternate I (Oct 2006)

As prescribed in 225.1101(9), substitute the phrase Canadian end product for the phrases Bahrainian end product, Free Trade Agreement country, Free Trade Agreement country end product, and Moroccan end product in paragraph (a) of the basic provision; and substitute the phrase Canadian end products for the phrase Free Trade Agreement country end products other than Bahrainian end products or Moroccan end products in paragraphs (b) and (c)(2)(ii) of the basic provision.

6. Section 252.225-7036 is amended as follows:

a. By revising the clause date;

b. By redesignating paragraphs (a)(1) through (11) as paragraphs (a)(2) through (12) respectively;

c. By adding a new paragraph (a)(1);

d. By revising newly designated paragraph (a)(6);

e. In newly designated paragraphs (a)(7)(ii) and (a)(8)(ii), in the first sentence of each, by removing ``or instrumentality'';

f. By revising paragraph (c);

g. In Alternate I by revising the date to read ``(OCT 2006)''; and

h. In Alternate I, in paragraph (a)(4)(ii), in the first sentence, by removing ``or instrumentality''. The revised and added text reads as follows:

Sec. 252.225-7036 Buy American Act--Free Trade Agreements--Balance of Payments Program

* * * * *

Buy American Act--Free Trade Agreements--Balance of Payments Program (Oct 2006)

(a) * * *

(1) Bahrainian end product means an article that--

(i) Is wholly the growth, product, or manufacture of Bahrain; or

(ii) In the case of an article that consists in whole or in part of materials from another country, has been substantially transformed in Bahrain into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was transformed. The term refers to a product offered for purchase under a supply contract, but for purposes of calculating the value of the end product includes services (except transportation services) incidental to its supply, provided that the value of those incidental services does not exceed the value of the product itself.

* * * * *

(6) Free Trade Agreement country means Australia, Bahrain, Canada, Chile, El Salvador, Guatemala, Honduras, Mexico, Morocco, Nicaragua, or Singapore;

* * * * *

(c) The Contractor shall deliver under this contract only domestic end products unless, in its offer, it specified delivery of qualifying country end products, Free Trade Agreement country end products other than Bahrainian end products or Moroccan end products, or other foreign end products in the Buy American Act--Free Trade Agreements--Balance of Payments Program Certificate provision of the solicitation. If the Contractor certified in its offer that it will deliver a qualifying country end product or a Free Trade Agreement country end product other than a Bahrainian end product or a Moroccan end product, the Contractor shall deliver a qualifying country end product, a Free Trade Agreement country end product other than a Bahrainian end product or a Moroccan

end product, or, at the Contractor's option, a domestic end product.

* * * * *

7. Section 252.225-7045 is amended as follows:

a. By revising the clause date;

b. In paragraph (a), in the definition of ``Designated country'', by revising the parenthetical in paragraph (2) to read ``(Australia, Bahrain, Canada, Chile, El Salvador, Guatemala, Honduras, Mexico, Morocco, Nicaragua, or Singapore)'';

c. In paragraph (a), in the definition of ``Designated country'', by removing ``Guatemala,'' from paragraph (4); and

d. By revising Alternate I to read as follows:

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

* * * * *

Balance of Payments Program--Construction Material under Trade Agreements (Oct 2006)

* * * * *

Alternate I (Oct 2006)

As prescribed in 225.7503(b), add the following definition of Bahrainian or Mexican 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:

Bahrainian or Mexican construction material means a construction material that--

(1) Is wholly the growth, product, or manufacture of Bahrain or Mexico; 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 Bahrain or Mexico 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 designated country construction material other than Bahrainian or Mexican construction material.

(c) The Contractor shall use only domestic or designated country construction material other than Bahrainian or Mexican 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''].

[Federal Register: October 4, 2006 (Volume 71, Number 192)]

DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Part 236

Defense Federal Acquisition Regulation Supplement; Congressional Notification of Architect-Engineer Services/Military Family Housing Contracts (DFARS Case 2006-D015)

AGENCY: Defense Acquisition Regulations System, 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 Section 1031(a)(37) of the National Defense Authorization Act for Fiscal Year 2004. Section 1031(a)(37) amended the requirements for submission of a notification to Congress before the award of a contract for architectural and engineering services or construction design in connection with military construction, military family housing, or restoration or replacement of damaged or destroyed facilities.

DATES: Effective date: October 4, 2006.

Comment date: Comments on the interim rule should be submitted in writing to the address shown below on or before December 4, 2006, to be considered in the formation of the final rule.

ADDRESSES: You may submit comments, identified by DFARS Case 2006-D015, using any of the following methods:

Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments.

E-mail: dfars@osd.mil. Include DFARS Case 2006-D015 in the subject line of the message.

Fax: (703) 602-0350.

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

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

Comments received generally will be posted without change to http://www.regulations.gov, including any personal information provided.

FOR FURTHER INFORMATION CONTACT: Ms. Debra Overstreet, (703) 602-0310.

SUPPLEMENTARY INFORMATION:

A. Background This interim rule revises DFARS 236.601 to implement Section 1031(a)(37) of the National Defense Authorization Act for Fiscal Year 2004 (Public Law 108-136). Section 1031(a)(37) amended the requirements at 10 U.S.C. 2807, for submission of a notification to Congress before the award of a contract for architectural and engineering services or construction design in connection with military construction, military family housing, or restoration or replacement of damaged or destroyed facilities. The amendments increased the contract dollar threshold for submission from $500,000 to $1,000,000; and reduced the time period for submission, from 21 to 14 days before obligation of funds, when the notification is provided in electronic medium.

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 relates to reporting requirements that are internal to the Government. 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 2006-D015.

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.

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 1031(a)(37) of the National Defense Authorization Act for Fiscal Year 2004 (Public Law 108-136). Section 1031(a)(37) amended the statutory requirements for submission of a notification to Congress before the award of a contract for architectural and engineering services or construction design in connection with military construction, military family housing, or restoration or replacement of damaged or destroyed facilities. 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 236

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

Therefore, 48 CFR Part 236 is amended as follows:

PART 236--CONSTRUCTION AND ARCHITECT-ENGINEER CONTRACTS

1. The authority citation for 48 CFR Part 236 continues to read as follows:

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

2. Section 236.601 is revised to read as follows:

Sec. 236.601 Policy

(1) Written notification to the congressional defense committees is required if the total estimated contract price for architect-engineer services or construction design, in connection with military construction, military family housing, or restoration or replacement of damaged or destroyed facilities, exceeds $1,000,000. In accordance with 10 U.S.C. 480, unclassified notifications must be provided by electronic medium.

(i) For military construction or military family housing (10 U.S.C. 2807(b)), the notification--

(A) Must include the scope of the project and the estimated contract price; and

(B)(1) If provided by electronic medium, must be provided at least 14 days before the initial obligation of funds; or

(2) If provided by other than electronic medium, must be received by the congressional defense committees at least 21 days before the initial obligation of funds.

(ii) For restoration or replacement of damaged or destroyed facilities (10 U.S.C. 2854(b)), the notification--

(A) Must include the justification for the project, the estimated contract price, and the source of the funds for the project; and

(B)(1) If provided by electronic medium, must be provided at least 7 days before the initial obligation of funds; or

(2) If provided by other than electronic medium, must be received by the congressional defense committees at least 21 days before the initial obligation of funds.

(2) During the applicable notice period, synopsis of the proposed contract action and administrative actions leading to the award may be started.

[Federal Register: October 4, 2006 (Volume 71, Number 192)]

DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 207, 216, and 225

Defense Federal Acquisition Regulation Supplement; Technical Amendments

AGENCY: Defense Acquisition Regulations System, Department of Defense (DoD).

ACTION: Final rule.

SUMMARY: DoD is making technical amendments to the Defense Federal Acquisition Regulation Supplement (DFARS) to update reference numbers and correct typographical errors.

DATES: Effective Date: October 4, 2006.

FOR FURTHER INFORMATION CONTACT: Ms. Michele Peterson, Defense Acquisition Regulations System, OUSD(AT&L)DPAP(DARS), IMD 3C132, 3062 Defense Pentagon, Washington, DC 20301-3062. Telephone (703) 602-0311; facsimile (703) 602-0350.

SUPPLEMENTARY INFORMATION: This final rule amends DFARS text as follows:

Section 207.103. Corrects typographical errors.

Section 216.603-4. Updates a cross-reference.

Section 225.7013. Updates a statutory reference.

List of Subjects in 48 CFR Parts 207, 216, and 225

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

Therefore, 48 CFR parts 207, 216, and 225 are amended as follows:

1. The authority citation for 48 CFR parts 207, 216, and 225 continues to read as follows:

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

PART 207--ACQUISITION PLANNING

207.103 [Amended]

2. Section 207.103 is amended as follows:

a. In paragraph (h) introductory text by removing ``SCMA'' and adding in its place ``SMCA''; and

b. In paragraph (h)(ii), in the second sentence, by removing ``SCMA'' and adding in its place ``SMCA''.

PART 216--TYPES OF CONTRACTS

216.603-4 [Amended]

3. Section 216.603-4 is amended in paragraph (b)(2) by removing ``217.7406'' and adding in its place ``217.7405''.

PART 225--FOREIGN ACQUISITION

4. Section 225.7013 is amended by revising the introductory text to read as follows:

225.7013 Restrictions on construction or repair of vessels in foreign shipyards.

In accordance with 10 U.S.C. 7309 and 7310--

* * * * *