[Federal Register: March 9, 1998 (Volume 63, Number 45)]

Part III

Department of Defense

48 CFR Parts 201, et al.

Defense Federal Acquisition Regulation Supplement; Miscellaneous

Amendments; Interim and Final Rules

DEPARTMENT OF DEFENSE

48 CFR Parts 201, 202, 204, 209, 212, 214, 215, 216, 217, 219, 223,

225, 226, 227, 229, 231, 232, 233, 234, 235, 236, 237, 239, 241,

242, 243, 250, 252, 253, and Appendices G and I to Chapter 2

[Defense Acquisition Circular 91-13]

Defense Federal Acquisition Regulation Supplement; Miscellaneous

Amendments

AGENCY: Department of Defense (DoD).

ACTION: Interim and final rules.

SUMMARY: Defense Acquisition Circular 91-13 amends the Defense Federal Acquisition Regulation Supplement (DFARS) to revise, finalize, or add language on the Defense Acquisition Regulations System, acquisition of commercial items, multiyear contracting, interagency acquisitions under the Economy Act, small business programs, the environment, foreign acquisition, utilization of Indian organizations, foreign patent interchange agreements, taxes, contract cost principles and procedures, contract financing, disputes and appeals, major system acquisition, research and development contracting, construction and architect-engineer contracts, service contracting, acquisition of information technology, acquisition of utility services, contract administration, extraordinary contractual actions, and contract reporting.

DATES: Effective date: March 9, 1998.

Comment date: Comments on the interim rule (Item XXIII: Sections 236.102, 236.274, 236.570, 252.236-7010, and 252.236-7012) should be submitted in writing to the address shown below on or before May 8, 1998 to be considered in the formulation of the final rule.

ADDRESSES: Interested parties should submit written comments on the interim rule (Item XXII) to: Defense Acquisition Regulations Council, Attn: Ms. Amy Williams PDUSD(A&T)DP(DAR), IMD 3D139, 3062 Defense Pentagon, Washington, DC 20301-3062. Telefax number (703) 602-0350. E-mail comments submitted over the Internet should be addressed to: dfars@acq.osd.mil. Please cite DFARS Case 97-D307 in all correspondence related to this rule. E-mail comments should cite DFARS Case 97-D307 in the subject line.

FOR FURTHER INFORMATION CONTACT: Item XXIII-Ms. Amy Williams, (703)

602-0131.

SUPPLEMENTARY INFORMATION:

A. Background

Defense Acquisition Circular (DAC 91-13) includes 31 rules and miscellaneous editorial amendments. Eight of the rules (Items II, III, IV, V, XIII, XVI, XVII, and XXIX) were published previously in the Federal Register and thus are not included as part of this notice of amendments to the Code of Federal Regulations. These eight rules are included in the DAC to incorporate the previously published amendments into the loose-leaf edition of the DFARS.

B. Determination to Issue an Interim Rule

DAC 91-13, Item XXIII

A determination has been made under the authority of the Secretary of Defense that urgent and compelling reasons exist to publish this interim rule prior to affording the public an opportunity to comment. This rule amends the DFARS to implement Section 112 of the Military Construction Appropriations Act for Fiscal Year 1998 (Public Law 105-45). Section 112 provides that no military construction appropriations may be used to award, to a foreign contractor, any contract estimated to exceed $1,000,000 for military construction in the United States territories and possessions in the Pacific and on Kwajalein Atoll, or in countries bordering the Arabian Gulf; except for contract awards for which the lowest responsive and responsible bid of a United States firm exceeds the lowest responsive and responsible bid of a foreign firm by greater than 20 percent; and except for contract awards for military construction on Kwajalein Atoll for which the lowest responsive and responsible bid is submitted by a Marshallese firm. Section 112 was effective upon enactment on September 30, 1997. Comments received in response to the publication of this interim rule will be considered in formulating the final rule.

C. Regulatory Flexibility Act

DAC 91-13, Items I, VII, VIII, IX, XII, XV, XXI, XXII, XXV, XXVI, and

XXVII

These final rules do not constitute significant revisions within the meaning of Federal Acquisition Regulation 1.501 and Public Law 98-577, and publication for public comment is not required. However, comments from small entities concerning the affected DFARS subparts will be considered in accordance with Section 610 of the Regulatory Flexibility Act (5 U.S.C. 610). Please cite the applicable DFARS case number in correspondence.

DAC 91-13, Items VI, XI, XIV, XVIII, XX, XXIV, and XXXI

DoD certifies that these rules 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 primarily reorganizes and clarifies existing DFARS guidance pertaining to multiyear contracting, updates internal Government operating procedures for processing Economy Act orders, and makes minor amendments to reflect existing statutory and regulatory requirements.

Item XI, Duty-Free Entry-The rule does not constitute a change in policy but is a clarification of implementing procedures pertaining to duty-free entry of supplies and the North American Free Trade Agreement.

Item XIV, Contingent Fees-Foreign Military Sales-Most firms that pay or receive contingent fees on foreign military sales are not small business concerns.

Item XVIII, Cost Reimbursement Rules for Indirect Costs-Most contracts awarded to small entities use simplified acquisition procedures or are awarded on a competitive, fixed-price basis and do not require application of the FAR or DFARS cost principles.

Item XX, Earned Value Management Systems-The rule only applies to contractors for certain major defense programs, and eliminates the requirement that such contractors use a unique management control system for DoD contracts.

Item XXIV, Architect-Engineer Selection Process-The rule streamlines, but does not significantly alter, the process for selection of firms for architect-engineer contracts.

Item XXXI, Reporting of Contract Performance Outside the United States-Most contractors that submit reports of contract performance outside the United States are not small business concerns.

DAC 91-13, Item XXIII

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

DFARS changes contained in this rule apply only to contracts for

military construction on Kwajalein Atoll that are estimated to exceed

$1,000,000; DoD awards approximately two such

[[Page 11523]]

contracts annually. An initial regulatory flexibility analysis has therefore not been performed. Comments are invited from small businesses and other interested parties. Comments from small entities concerning the affected DFARS subparts also will be considered in accordance with 5 U.S.C. 610. Such comments should be submitted separately and should cite DFARS Case 97-D307 in correspondence.

DAC 91-13, Items X, XIX, XXVIII, and XXX

A final regulatory flexibility analysis has been performed for each of these rules. A copy of the analyses may be obtained from the address specified herein. Please cite the applicable DFARS case number in correspondence. The analyses are summarized as follows:

Item X, Buy American Act Exception for Information Technology Products (DFARS Case 97-D022)

This final rule implements the determination by the Under Secretary of Defense (Acquisition and Technology) (USD(A&T)) that it is not in the public interest to apply the restrictions of the Buy American Act to U.S. made information technology products, in acquisitions subject to the Trade Agreements Act. The legal basis for the rule is 41 U.S.C. 10a, which provides an exception to the requirements of the Buy American Act if the head of the agency determines that application of the restrictions is not in the public interest. The objective of the rule is to reduce burdensome recordkeeping and tracking requirements imposed on U.S. manufacturers of information technology products and to remove the competitive disadvantage imposed on some U.S. manufacturers of information technology products, when competing with foreign offerors of eligible information technology products against an offeror of an information technology product that qualifies as a domestic product under the Buy American Act. In acquisitions subject to the Trade Agreements Act, the rule provides that offers of U.S. made information technology products in Federal Supply Group 70 or 74 will be evaluated without regard to whether the product qualifies as a domestic product. The different rules of origin under the Buy American Act and the Trade Agreements Act result in disproportionately burdensome recordkeeping requirements on firms offering information technology products, because eligible offers under the Trade Agreements Act are exempt from the Buy American Act, but offers of U.S. made products are not exempt. This rule will relieve U.S. manufacturers of information technology products from the burden of researching and documenting the origin of components for information technology products, because the Buy American Act component test no longer applies. The rule will also simplify the evaluation of offers because, for acquisitions subject to the determination, there is only one class of U.S. made products, and no preference for domestic products. There were no public comments in response to the initial regulatory flexibility analysis prepared for the proposed rule published in the Federal Register at 62 FR 47407 on September 9, 1997. The rule will apply to all offerors/contractors offering information technology products in Federal Supply Group 70 or 74 to DoD, in acquisitions valued at $190,000 or more. Based on DD Form 350 data from the Washington Headquarters Services, in fiscal year 1996, DoD awarded 735 contracts meeting these criteria to 612 contractors, of which 214 were small businesses. The final rule does not impose any new reporting or recordkeeping requirements. The rule will result in a reduction of paperwork burden on offerors. There are no significant alternatives to the rule that would accomplish the stated objectives yet reduce any negative impact on small entities. This rule is expected to have a generally positive impact on small entities, because USD(A&T) has determined that removal of the competitive disadvantage for some U.S. made information technology end products, and the removal of burdensome requirements on U.S. manufacturers to separately track domestic and foreign components, outweighs the possible increase in use of foreign components.

Item XIX, Finance (DFARS Case 95-D710)

This final rule supplements the FAR rules published as Item VII of Federal Acquisition Circular 90-32 on September 18, 1995 (60 FR 48272), and Items I and IV of Federal Acquisition Circular 90-33 on September 26, 1995 (60 FR 49707 and 60 FR 49728). These DFARS revisions include the addition of 232.2, Commercial Item Purchase Financing, and 232.10, Performance-Based Payments; the deletion of 232.173, Reduction or Suspension of Contract Payments Upon Finding of Fraud, and 232.970, Payment of Subcontractors, since equivalent coverage is now provided in the FAR; and a number of editorial changes to reflect revisions made in the FAR. One of the issues raised by several respondents relates to the prompt payment periods specified in the rule: 30 days for commercial advance payments, and 14 days for commercial interim and performance-based payments. The respondents advocate the 7 days now allowed for progress payments. The DoD Contract Finance Committee made an assessment that no changes should be made to the prompt payment times in the DFARS rule. The payment period (14 days) for performance-based payments reflects the likely additional time required for verification of the contractor's claimed performance and analysis of what often will be a relatively extensive compilation of performance events. Thus, more time is allowed than for cost-based progress payments (7 days). The commercial advance payments period reflects the anticipated timing of most such requests. These requests for payment are expected to occur at the beginning of the contract, possibly being keyed to the actual contract signing date. Thus, a 30-day period has been allowed to enable the payment office to receive the contract, enter it into the payment office computer system, and process the contractor's request for payment. The commercial interim payment normally is expected to be submitted during the life of the contract, and after the payment office is prepared to process payment of such requests. A 14-day payment period has been adopted as a payment time reasonably capable of accommodating the wide diversity anticipated for commercial payment terms. The prompt payment periods established in the DFARS are shorter than the equivalent standard prompt payment periods (30 days) in FAR 32.906, and, thus, are more beneficial for small entities than the existing FAR policy. A second issue raised by several respondents concerns the provisions relating to the list of financial and other information that the Government must obtain to determine the financial responsibility of contractors. One respondent indicated its "concern with the substantial burdens that will be placed on the contracting officer and offeror." The requirement, stated in section 232.072 of the rule, was transferred verbatim from DFARS 232.172. This DFARS rule makes no policy change, only an editorial change to move the DFARS language to correspond to certain changes made to the FAR. In addition, the contracting officer is only required to obtain information sufficient to make a determination of the contractor's financial responsibility. The changes made to the DFARS by this rule will apply to large and small entities whose DoD contracts include performance-based or commercial (advance or interim) type of financing. For the 11 months of available fiscal year 1997 DD Form 350 data (October 1996 through August 1997), less than 0.5 percent of small business contracts (98 out of a total of 40,102) used commercial or performance-based financing. Accordingly, the final rule does not impact a significant number of small entities. The rule imposes no reporting, recordkeeping, or other compliance requirements. Various alternatives involving shorter prompt payment periods were considered, but, as previously explained, were rejected since their implementation would be exceptionally costly and burdensome on payment offices. Item XXVIII, Certification of Requests for Equitable Adjustment (DFARS Case 97-D302)

This rule finalizes, with changes, the interim rule published in the Federal Register on July 11, 1997 (62 FR 37146). The interim rule amended the DFARS to implement 10 U.S.C. 2410(a), which requires contractors to certify that requests for equitable adjustment that exceed the simplified acquisition threshold are made in good faith and that the supporting data are accurate and complete. There were no comments in response to the initial regulatory flexibility analysis prepared for the interim rule. The primary impact of the rule relates to requests in the range of $100,000 to $500,000, because requests in excess of $500,000 generally require submission of cost or pricing data and certification thereof. Many of the firms requesting equitable adjustment in amounts of $100,000 to $500,000 are construction contractors. It is estimated that the rule will affect approximately 330 small entities annually. Accounting skills will be necessary to provide the cost data to support the certification. The rule minimizes the economic impact on small entities, because the certification requirements of the rule apply only to requests exceeding the simplified acquisition threshold, and because the certification is limited to only that which is specifically required by 10 U.S.C. 2410(a). There is no other known alternative that would be consistent with the stated objective yet further reduce the burden on small entities.

Item XXX, Specialty Metals-Agreements With Qualifying Countries (DFARS Case 97-D007)

This final rule amends the clause at DFARS 252.225-7014 to make the exception in the clause consistent with the Berry Amendment (10 U.S.C. 2241 Note) and with the existing DFARS text at 225.7001-2(i). The objective of the rule is to clearly and accurately implement the Berry Amendment, which provides an exception to domestic source restrictions for the procurement of specialty metals, where such procurement is necessary in furtherance of agreements with foreign governments in which both governments agree to remove barriers to purchase of supplies produced in the other country. There were no public comments in response to the initial regulatory flexibility analysis or the proposed rule published in the Federal Register at 62 FR 23741 on May 1, 1997. The clause at DFARS 252.225-7014, Preference for Domestic Specialty Metals, is prescribed for use in all solicitations and contracts exceeding the simplified acquisition threshold that require delivery of an article containing specialty metals. The clause is prescribed for use with its Alternate I if the article containing specialty metals is for one of certain major programs. The basic clause only restricts the direct acquisition of specialty metals by the prime contractor, whereas Alternate I flows down the restriction to subcontractors at any tier. The rule does not affect the already unrestricted sources of specialty metals when acquiring qualifying country end products or when acquiring components including specialty metals for use in an end product for other than a major program. The rule does loosen the restriction on domestic specialty metals for prime contractors providing domestic or nonqualifying country end products, permitting them to incorporate specialty metals melted in a qualifying country (for both major and nonmajor programs); or qualifying country components containing specialty metals of unrestricted source for use in end products for major programs. Because the components subject to increased foreign competition are at a subcontract level, it is not possible to more specifically identify the items or whether they are produced by small business concerns. The rule imposes no new reporting, recordkeeping, or compliance requirements on offerors or contractors. One alternative considered was to require that the specialty metals incorporated in articles manufactured in a qualifying country also be melted in a qualifying country. This approach could slightly reduce the extent of foreign competition facing domestic entities. However, this approach appeared to go beyond the requirements of the statute being implemented.

D. Paperwork Reduction Act

DAC 91-13, Items I, VI, VII, VIII, IX, XII, XIV, XV, XVIII, XIX, XX,

XXI, XXII, XXIV, XXV, XXVI, XXVII, and XXX

The Paperwork Reduction Act does not apply, because these rules contain no information collection requirements that require the approval of the Office of Management and Budget under 44 U.S.C. 3501, et seq.

DAC 91-13, Items X, XI, XXIII, XXVIII, and XXXI

The Paperwork Reduction Act applies. The Office of Management and Budget (OMB) has approved the information collection requirements as follows:

X.................................. 0704-0187; 0704-0259

XI................................. 0704-0229

XXIII.............................. 0704-0255

XXVIII............................. 0704-0397

XXXI............................... 0704-0229

E. Summary of Amendments

Defense Acquisition Circular (DAC) 91-13 amends the Defense Federal Acquisition Regulation Supplement (DFARS) 1991 edition. The amendments are summarized as follows:

Item I-Approval of Nonstatutory Certification Requirements (DFARS Case 97-D301)

This final rule adds a new section at DFARS 201.107 and amends 201.304 to implement Section 29 of the Office of Federal Procurement Policy Act (41 U.S.C. 425), as amended by Section 4301 of the Clinger-Cohen Act of 1996 (Public Law 104-106). Section 29 provides that a requirement for a certification by a contractor or offeror may not be included in a procurement regulation of an executive agency unless the certification requirement is specifically imposed by statute or approved in writing by the head of the executive agency.

Item II-Contract Action Reporting (DFARS Case 97-D013)

This final rule was issued by Departmental Letter 97-016, effective October 1, 1997 (62 FR 44221, August 20, 1997). The rule amends DFARS 204.670-2, 253.204-70 and 253.204-71 to revise DD Form 350 and DD Form 1057 contract action reporting requirements for compliance with the Clinger-Cohen Act of 1996 (Public Law 104-106) and to enhance data collection procedures.

Item III-Data Universal Numbering System (DUNS) Number (DFARS Case 97-D019)

This final rule was issued by Departmental Letter 97-020, effective October 1, 1997 (62 FR 48181, September 15, 1997). The rule amends DFARS 204.72 and 253.204-70 to replace guidance on use of DUNS numbers with references to the FAR guidance on that subject, and to remove guidance on locally developed coding systems that are no longer used.

Item IV-Single Process Initiative (DFARS Case 97-D014)

This interim rule was issued by Departmental Letter 97-017, effective August 20, 1997 (62 FR 44223, August 20, 1997). The rule adds guidance at DFARS 211.273 and 242.302(a) (S-70), and a contract clause at 252.211-7005, to implement the policy set forth in OUSD(A&T) memorandum dated April 30, 1997, as it relates to the Single Process Initiative (SPI) and new contracts. The rule encourages offerors to propose the use of nongovernment specifications and industrywide practices that meet the intent of military or Federal specifications and standards, and establishes that, in procurements of previously developed items, SPI processes shall be considered valid replacements for military or Federal specifications or standards, absent a specific determination to the contrary.

Item V-Truth in Negotiations and Related Changes (DFARS Case 95-D708)

This final rule was issued by Departmental Letter 97-015, effective July 29, 1997 (62 FR 40471, July 29, 1997). The rule amends DFARS parts 204, 215, 216, 232, 239, and 252 to update requirements pertaining to the submission of cost or pricing data. The rule also removes requirements pertaining to work measurement systems, as Section 2201(b) of the Federal Acquisition Streamlining Act of 1994 (Public Law 103-355) repealed 10 U.S.C. 2406, which was the primary statute governing work measurement systems.

Item VI-Multiyear Contracting and Other Miscellaneous Provisions (DFARS Case 95-D703)

This final rule removes obsolete language at DFARS 216.301-3; revises subpart 217.1 to reorganize and clarify guidance on multiyear contracting; revises Subpart 217.5 to update guidance on processing interagency orders under the Economy Act; adds guidance at 233.204-70 and 250.102-70 pertaining to statutory limitations on Congressionally directed payment of a claim or request for equitable adjustment or relief; and amends subpart 237.2 to reflect the current numbering of FAR subpart 37.2.

Item VII-Qualified Nonprofit Agencies for the Blind or Severely Disabled (DFARS Case 97-D310)

This final rule amends DFARS 219.703 to implement Section 835 of the National Defense Authorization Act for Fiscal Year 1998 (Public Law 105-85). Section 835 amends 10 U.S.C. 2410d to extend, through September 30, 1999, the authority for contractors to claim credit toward their small business subcontracting goals for subcontracts awarded to qualified nonprofit agencies for the blind or severely disabled.

Item VIII-Pilot Mentor-Protege Program (DFARS Case 97-D322)

This final rule amends DFARS 219.7104 and Appendix I to implement Section 821 of the National Defense Authorization Act for Fiscal Year 1998 (Public Law 105-85). Section 821 extends to September 30, 1999, the date by which an interested company must apply for participation as a mentor firm under the DoD Pilot Mentor-Protege Program; and extends to September 30, 2000, the date by which a mentor firm must incur costs in order to be eligible for reimbursement under the Program.

Item IX-Recovered Material Certification (DFARS Case 97-D031)

This final rule amends DFARS 223.404 to reflect the FAR revisions that were published as Item V of Federal Acquisition Circular 97-01. The FAR revisions eliminated the requirement for agencies other than the Environmental Protection Agency (EPA) to specify minimum recovered material content standards for designated items, and eliminated the requirement for contractors to provide annual certifications under the clause at FAR 52.223-9, Certification and Estimate of Percentage of Recovered Material Content for EPA Designated Items.

Item X-Buy American Act Exception for Information Technology Products (DFARS Case 97-D022)

This final rule adds a new provision at DFARS 252.225-7020, Trade Agreements Certificate, and a new clause at 252.225-7021, Trade Agreements, and makes other amendments in parts 212, 225, and 252 to implement the determination made by the Under Secretary of Defense (Acquisition and Technology), on May 16, 1997, that it is not in the public interest to apply the restrictions of the Buy American Act to U.S. made information technology products, in acquisitions subject to the Trade Agreements Act.

Item XI-Duty-Free Entry (DFARS Case 96-D020)

This final rule amends DFARS Parts 225, 242, and 252 to clarify guidance regarding duty-free entry of supplies and implementation of the North American Free Trade Agreement.

Item XII-Trade Agreements Threshold (DFARS Case 97-D040)

This final rule amends DFARS 225.408(a) to increase, from $50,000 to $53,150, the threshold for use of the clause at 252.225-7036, North American Free Trade Agreement Implementation Act. The increase is based on the cumulative rate for the Producer Price Index for Finished Goods, as reported by the U.S. Bureau of Labor Statistics, and as notified to the NAFTA parties by the U.S. Department of State.

Item XIII-Application of Berry Amendment (DFARS Case 96-D333)

This final rule was issued by Departmental Letter 97-018, effective September 8, 1997 (62 FR 47153, September 8, 1997). The rule revises and finalizes the interim rule published as Item XXII of DAC 91-12, which implemented Section 8109 of the National Defense Appropriations Act for Fiscal Year 1997 (Public Law 104-208). Section 8109 provides that, in applying the domestic source restrictions of the Berry Amendment, the term "synthetic fabric and coated synthetic fabric" shall be deemed to include all textile fibers and yarns that are for use in such fabrics; and that the domestic source restrictions of the Berry Amendment shall apply to contracts and subcontracts for the procurement of commercial items. The final rule differs from the interim rule in that it amends DFARS 225.7002 and 252.225-7012 to expand the list of products that are exempt from the Berry Amendment restrictions on synthetic fabrics.

Item XIV-Contingent Fees-Foreign Military Sales (DFARS Case 96-D021)

The interim rule published as Item XXVII of DAC 91-12 is revised and finalized. The rule amends DFARS guidance pertaining to contingent fees for foreign military sales. The final rule differs from the interim rule in that it revises DFARS 225.7303-4 and 252.225-7027 to permit payment of contingent fees exceeding $50,000 under foreign military sales contracts if the foreign customer agrees to such fees in writing before contract award.

Item XV-Subcontracting Plans-Indian Incentives (DFARS Case 97-D309)

This final rule amends DFARS Subpart 226.1 to implement Section 8024 of the National Defense Appropriations Act for Fiscal Year 1998 (Public Law 105-56). Section 8024 provides that incentive payments under the Indian Incentive Program shall be available only to contractors that have submitted subcontracting plans pursuant to 15 U.S.C. 637, including comprehensive subcontracting plans submitted in accordance with the DoD test program.

Item XVI-Cost Principles (DFARS Case 95-D714)

This final rule was issued by Departmental Letter 97-019, effective September 8, 1997 (62 FR 47154, September 8, 1997). The rule amends DFARS Part 231 to implement Section 7202 of the Federal Acquisition Streamlining Act of 1994 (Public Law 103-355). Section 7202 prohibits the expenditure of funds to assist any DoD contractor in preparing any material, report, list, or analysis with respect to the actual or projected economic or employment impact in a particular State or congressional district of an acquisition program for which all research, development, testing, and evaluation has not been completed.

Item XVII-Allowability of Costs for Restructuring Bonuses (DFARS Case 97-D312)

This interim rule was issued by Departmental Letter 97-021, effective November 26, 1997 (62 FR 63035, November 26, 1997). The rule amends DFARS 231.205-6 to implement Section 8083 of the National Defense Appropriations Act for Fiscal Year 1998 (Public Law 105-56). Section 8083 prohibits the use of fiscal year 1998 funds to reimburse a contractor for costs paid by the contractor to an employee for a bonus or other payment in excess of the normal salary paid by the contractor to the employee, when such payment is part of restructuring costs associated with a business combination.

Item XVIII-Cost Reimbursement Rules for Indirect Costs (DFARS Case 96-D303)

This final rule removes the cost principle at DFARS 231.205-71 pertaining to defense capability preservation agreements. Section 1027 of the National Defense Authorization Act for Fiscal Year 1998 (Public Law 105-85) repealed the statute upon which this cost principle was based (Section 808 of Public Law 104-106).

Item XIX-Finance (DFARS Case 95-D710)

This final rule amends DFARS Part 232 to conform to the FAR revisions published as Item VII of FAC 90-32 and Items I and IV of FAC 90-33, which implemented provisions of the Federal Acquisition Streamlining Act of 1994 (Public Law 103-355). The rule adds a new subpart 232.2, Commercial Item Purchase Financing, and a new subpart 232.10, Performance-Based Payments; removes 232.173, Reduction or Suspension of Contract Payments Upon Finding of Fraud, and 232.970, Payment of Subcontractors, as equivalent guidance is now provided in FAR Part 32; and moves guidance pertaining to responsibility of contractors from 232.172 to 232.072, with no change in policy.

Item XX-Earned Value Management Systems (DFARS Case 96-D024)

The interim rule published in Item XXXIII of DAC 91-12 is revised and finalized. The rule amends DFARS Parts 234, 242, and 252 to recognize industry-standard guidelines for earned value management systems as an alternative to DoD-unique cost/schedule control systems under DoD contracts. The final rule differs from the interim rule in that it makes minor clarifying amendments at 234.005-70, 242.1107-70, and 252.234-7000; amends 252.234-7001 to clarify the timing of the initial application of the earned value management system and the integrated baseline reviews; and amends 252.242-7005 for consistency with the industry standard, Guidelines for Earned Value Management Systems.

Item XXI-Research and Development Definitions (DFARS Case 97-D021)

This final rule revises DFARS 235.001 to update the definitions pertaining to research and development, for consistency with the terms defined in DoD 7000.14-R, Financial Management Regulation.

Item XXII-Report of 10-Year Term Contracts (DFARS Case 97-D303)

This final rule removes DFARS 235.002, which required departments and agencies to notify Congress of any research and development contract with a period of performance exceeding 10 years. Section 1062© of the National Defense Authorization Act for Fiscal Year 1996 (Public Law 104-106) repealed the statute upon which this requirement was based (10 U.S.C. 2352).

Item XXIII-Construction in Foreign Countries (DFARS Case 97-D307)

This interim rule amends DFARS Part 236 and adds a new provision at 252.236-7012 to implement Section 112 of the Military Construction Appropriations Act for Fiscal Year 1998 (Public Law 105-45). Section 112 provides that no military construction appropriations may be used to award, to a foreign contractor, any contract estimated to exceed $1,000,000 for military construction in the United States territories and possessions in the Pacific and on Kwajalein Atoll, or in countries bordering the Arabian Gulf, except for: (1) Contract awards for which the lowest responsive and responsible bid of a United States firm exceeds the lowest responsive and responsible bid of a foreign firm by more than 20 percent, and (2) contract awards for military construction on Kwajalein Atoll for which the lowest responsive and responsible bid is submitted by a Marshallese firm.

Item XXIV-Architect-Engineer Selection Process (DFARS Case 97-D015)

This final rule revises DFARS 236.602 to streamline the process for selection of firms for architect-engineer contracts. The rule eliminates requirements for formal constitution and minimum size of preselection boards; eliminates special approval requirements for selection of firms for contracts exceeding $500,000; and changes the criteria for inclusion of firms on a preselection list from "the maximum practicable number of qualified firms" to "the qualified firms that have a reasonable chance of being considered as most highly qualified by the selection board."

Item XXV-Overseas Architect-Engineer Services (DFARS Case 97-D034)

This final rule amends DFARS 236.609-70 to clarify the prescription for use of the provision at 252.236.-7011, Overseas Architect-Engineer Services-Restriction to United States Firms. The provision is used in solicitations for architect-engineer contracts that are funded with military construction appropriations; estimated to exceed $500,000; and to be performed in Japan, in any North Atlantic Treaty Organization member country, or in countries bordering the Arabian Gulf.

[[Page 11527]]

Item XXVI-Uncompensated Overtime (DFARS Case 97-D037)

This final rule removes DFARS 237.102, 237.170, and 252.237-7019. This guidance has been superseded by the guidance on performance-based contracting and uncompensated overtime at FAR 37.102, 37.115, and 52.237-10. A related editorial change is made at DFARS 215.608(a)(1).

Item XXVII-Telecommunications Services (DFARS Case 97-D305)

This final rule revises the guidance on multiyear contracting for telecommunications resources at DFARS 239.7405 to reflect the elimination of the Federal Information Resources Management Regulations (FIRMR), and revisions made to the Federal Property Management Regulations (FPMR), as a result of the Information Technology Management Reform Act of 1996 (Public Law 104-106).

Item XXVIII-Certification of Requests for Equitable Adjustment (DFARS Case 97-D302)

The interim rule issued by Departmental Letter 97-014 on July 11, 1997, is revised and finalized. The rule implements 10 U.S.C. 2410(a), as amended by Section 2301 of the Federal Acquisition Streamlining Act of 1994 (Public Law 103-355). 10 U.S.C. 2410(a) requires contractors to certify that requests for equitable adjustment that exceed the simplified acquisition threshold are made in good faith and that the supporting data are accurate and complete. The final rule differs from the interim rule in that it amends DFARS 243.204-70 to clarify that the certification required by 10 U.S.C. 2410(a) is different from the certification of a claim under the Contract Disputes Act; and amends 252.243-7002 to clarify requirements for contractor disclosure of facts to support a certification of a request for equitable adjustment.

Item XXIX-Designation of Hong Kong (DFARS Case 97-D023)

This final rule was issued by Departmental Letter 97-013, effective July 11, 1997 (62 FR 37147, July 11, 1997). The rule amends DFARS 252.225-7007 to add Hong Kong as a designated country under the Trade Agreements Act of 1979, as directed by the U.S. Trade Representative.

Item XXX-Specialty Metals-Agreements with Qualifying Countries (DFARS Case 97-D007)

This final rule amends the clause at DFARS 252.225-7014, Preference for Domestic Specialty Metals, to specify that the requirements of the clause do not apply to specialty metals melted, or incorporated in articles manufactured, in a qualifying country listed in DFARS 225.872-1.

Item XXXI-Reporting of Contract Performance Outside the United States (DFARS Case 97-D029)

This final rule amends the clause at DFARS 252.225-7026, Reporting of Contract Performance Outside the United States, to increase the reporting threshold from $25,000 to the simplified acquisition threshold, under contracts exceeding $500,000. The rule also increases the threshold for incorporation of the clause in first-tier subcontracts from $100,000 to $500,000.

Editorial Revisions

5000.63, Defense Acquisition Regulations (DAR) System.

(2) DFARS 202.101 is amended to update the list of Army contracting activities and to show the correct title "Under Secretary of Defense (Acquisition & Technology)" in the definition of "Head of the agency."

(3) DFARS 204.7003(a)(1)(i) is amended to change the designation of the last paragraph from "(L)" to "(M)" (this revision is made only in the loose-leaf edition of the DFARS).

(4) DFARS 209.403 is amended to reflect the change in name of the "Defense Mapping Agency" to the "National Imagery and Mapping Agency."

(5) DFARS 214.202-5 is amended to show the correct number of the clause "Brand Name or Equal."

(6) DFARS Subparts 216.4 and 216.5 are amended to conform to the current numbering of the corresponding FAR subparts.

(7) DFARS 227.676 and 229.101 are amended to update the telephone and telefax numbers of the United States European Command.

(8) DFARS Part 241 is amended to conform to the current numbering of FAR Part 41 and to update other FAR references. Corresponding amendments are made at DFARS 252.241-7000 and 252.241-7001.

(9) DFARS 252.212-7001 is amended to remove references to DFARS 252.242-7002 and 252.249-7001, which were deleted in DAC 91-12.

(10) DFARS 252.229-7004 is amended to correct a typographical error in the clause title.

(11) DFARS Appendix G is amended to update activity and names and addresses.

Note: This DAC incorporates, into the loose-leaf edition of the DFARS, revisions previously issued by Departmental Letters 97-13 through 97-21. DFARS revisions contained in Departmental Letter 97-12 and departmental letters issued after 97-21 will be covered in a future DAC.

List of Subjects in 48 CFR Parts 201, 202, 204, 209, 212, 214, 215,

216, 217, 219, 223, 225, 226, 227, 229, 231, 232, 233, 234, 235, 236,

237, 239, 241, 242, 243, 250, 252, and 253

Michele P. Peterson,

Executive Editor, Defense Acquisition Regulations Council.

Interim Rules Adopted as Final With Changes

PARTS 225 AND 252--[AMENDED]

The interim rule that was published at 62 FR 30831 on June 5, 1997, is adopted as final with amendments at sections 225.7303-4 and 252.225-7027, as set forth below (see amendatory instructions 40 and 86).

PARTS 234, 242, AND 252--[AMENDED]

The interim rule that was published at 62 FR 9990 on March 5, 1997, is adopted as final with amendments at sections 234.005-70, 242.1107-70, 252.234-7000, 252.234-7001, and 252.242-7005, as set forth below (see amendatory instructions 53, 72, 90, 91, and 97).

PARTS 235, 243, AND 252--[AMENDED]

The interim rule that was published at 62 FR 37146 on July 11, 1997, is adopted as final with amendments at sections 243.204-70 and 252.243-7002, as set forth below (see amendatory instructions 73 and 98).

Amendments to 48 CFR Chapter 2 (Defense Federal Acquisition Regulation Supplement)

48 CFR Chapter 2 (the Defense Federal Acquisition Regulation Supplement) is amended as follows:

214, 215, 216, 217, 219, 223, 225, 226, 227, 229, 231, 232, 233, 234, 235, 236, 237, 239, 241, 242, 243, 250, 252, 253, and Appendices G and I to subchapter I continues to read as follows:

PART 201--FEDERAL ACQUISITION REGULATIONS SYSTEM

201.107 Certifications.

In accordance with Section 29 of the Office of Federal Procurement Policy Act (41 U.S.C. 425), a new requirement for a certification by a contractor or offeror may not be included in the DFARS unless-

statute; or

(2) Written justification for such certification is provided to the Secretary of Defense by the Under Secretary of Defense (Acquisition and Technology), and the Secretary of Defense approves in writing the inclusion of such certification requirement.

3. Section 201.201-1 is amended by revising paragraphs © and (d)(i)I. to read as follows:

201.201-1 The two councils.

* * * * *

Procurement Policy Act (41 U.S.C. 425), a new requirement for a certification by a contractor or offeror may not be included in a department/agency or component procurement regulation unless-

* * * * *

* * * * *

PART 202--DEFINITIONS OF WORDS AND TERMS

* * * * *

ARMY

* * * * *

PART 204--ADMINISTRATIVE MATTERS

204.805 [Amended]

6. Section 204.805 is amended in the first sentence of paragraph (5), in the parenthetical, by removing "15.804-2" and inserting in its place "15.403-4".

PART 209--CONTRACTOR QUALIFICATIONS

209.403 [Amended]

7. Section 209.403 is amended in the definition of "Debarring official", in paragraph (1), by removing the entry "Defense Mapping Agency-The General Counsel" and inserting in its place the entry "National Imagery and Mapping Agency-The General Counsel".

PART 212--ACQUISITION OF COMMERCIAL ITEMS

8. Section 212.301 is amended by redesigning paragraph (f)(i)© as paragraph (f)(i)(D) and by adding a new paragraph (f)(i)© to read as follows:

212.301 Solicitation provisions and contract clauses for the acquisition of commercial items.

* * * * *

PART 214--SEALED BIDDING

214.205-5 [Amended]

reference "252.210-7000" to read "252.211-7003".

PART 215--CONTRACTING BY NEGOTIATION

215.608 [Amended]

(a)(1), in the parenthetical, by removing the reference "237.170" and inserting in its place the reference "FAR 37.115".

215.805-5 [Amended]

(a)(1)(A)(2) by removing the reference "15.804-2(a)(1)" and inserting in its place the reference "15.403-4(a)(1)".

PART 216--TYPES OF CONTRACTS

216.203-4 [Amended]

12. Section 216.203-4 is amended in paragraph (d)(xvi) by removing the reference "15.804-1" and inserting in its place the reference "15.403-1".

216.301 and 216.301-3 [Removed]

216.403-70 [Removed]

216.404 Fixed-price contracts with award fees.

provided in 216.470

216.404-1 [Redesignated]

216.404-2 [Redesignated]

216.405 Cost-reimbursement incentive contracts.

19. Section 216.501 is amended in the introductory text of paragraph (a)(i) and in the first sentence of paragraph (a)(ii) by revising "indefinite delivery" to read "indefinite-delivery".

216.505 Ordering.

216.506 Solicitation provisions and contract clauses.

PART 217--SPECIAL CONTRACTING METHODS

Subpart 217.1--Multiyear Contracting

Sec.

Subpart 217.1--Mulityear Contracting

217.103 Definitions.

Advance procurement, as used in this subpart, means an exception to the full funding policy that allows acquisition of long lead time items (advance long lead acquisition) or economic order quantities (EOQ) of items (advance EOQ acquisition) in a fiscal year in advance of that in which the related end item is to be acquired. Advance procurements may include materials, parts, components, and effort that must be funded in advance to maintain a planned production schedule.

217.170 All multiyear contracts.

Committees on Appropriations and National Security in the House of Representatives and in the Senate at least 10 days before termination of any multiyear contract (Section 9021 of Pub. L. 101-165 and similar sections in subsequent Defense appropriations acts).

217.171 Multiyear contracts for services.

(e.g., training for pilots and other aircrew members or foreign language training).

(2) This authority may be used as long as the contract does not extend beyond 5 years.

United States by encouraging effective competition and promoting economical business operations (e.g., economic lot purchases and more efficient production rates).

217.172 Multiyear contracts for supplies.

(a) This section applies to all multiyear contracts for supplies, including weapon systems. For policies that apply only to multiyear contracts for weapon systems, see 217.173.

(b) A multiyear contract for supplies may be used if, in addition to the conditions listed in FAR 17.105-1(b), the use of such a contract will promote the national security of the United States.

© The head of the agency shall provide written notice to the Committees on Appropriations and National Security in the House of Representatives and in the Senate at least 30 days before the contracting officer awards a multiyear contractincluding an unfunded contingent liability in excess of $20 million (Section 9021 of Pub. L. 101-165 and similar sections in subsequent Defense appropriations acts).

(d) Agencies shall establish reporting procedures to meet the requirements of paragraph © of this section. Submit copies of the notifications to the Director of Defense Procurement, Office of the Under Secretary of Defense (Acquisition and Technology) (OUSD(A&T)DP), and to the Deputy Under Secretary of Defense (Comptroller) (Program/ Budget) (OUSD©(P/B)).

217.173 Multiyear contracts for weapon systems.

Management Regulation, are included in the agency's budget estimate submission and the President's budget request.

5-year defense program fully funds the support costs associated with the multiyear program (10 U.S.C. 2306b(i)(1)(A)). Information supporting this certification shall be submitted to USD©(P/B) for transmission to Congress through the Secretary of Defense.

217.174 Multiyear contracts that employ economic order quantity procurement.

(a) The head of the agency shall provide written notice to the Committees on Appropriations and National Security in the House of Representatives and in the Senate at least 30 days before awarding-

purchases in excess of $20 million in any year; or

(2) A contract for advance procurement leading to a mulityear contract that employs economic order quantity procurement in excess of $20 million in any year (Section 9021 of Pub. L. 101-165 and similar sections in subsequent Defense appropriations acts).

(b) Before initiating an advance procurement, the contracting officer shall verify that it is consistent with DoD policy (e.g., Part 3 of DoD 5000.2-R, Mandatory Procedures for Major Defense Acquisition Programs (MDAPs) and Major Automated Information System (MAIS) Acquisition Programs, and the full funding policy in Volume 2A, Chapter 1, of DoD 7000.14-R, Financial Management Regulation).

Subpart 217.5--Interagency Acquisitions Under the Economy Act

Sec.

217.503 Determinations and findings requirements.

217.504 Ordering procedures.

© If requested, the contracting officer who normally would contract for the requesting activity should advise in the determination process.

217.504 Ordering procedures.

291.703 Eligibility requirements for participating in the program.

(a) Qualified nonprofit agencies for the blind and other severely disabled, that have been approved by the Committee for Purchase from People Who Are Blind or Severely Disabled under the Javits-Wagner-O'Day Act (41 U.S.C. 46-48), are eligible to participate in the program as a result of 10 U.S.C. 2410d and Section 9077 of Pub. L. 102-396 and similar sections in subsequent Defense appropriations acts. Under this authority, subcontracts awarded to such entities may be counted toward the prime contractor's small business subcontracting goal through fiscal year 1999.

* * * * *

219.7104 [Amended]

24. Section 719.7104 is amended in the last sentence of paragraph (b) and in paragraph (d) by revising the date "October 1, 1999" to read "October 1, 2000".

PART 223--ENVIRONMENT, CONSERVATION, OCCUPATIONAL SAFETY, AND DRUG-

FREE WORKPLACE

25. Section 223.404 is amended by revising paragraph (b)(3) introductory text and paragraph (b)(4) to read as follows:

223.404 Procedures.

(b)(3) A contract for an EPA designated item that does not meet the EPA minimum recovered material standards shall not be awarded before approval of the written determination required by FAR 23.404(b)(3). The approving official shall be-

* * * * *

(4) Departments and agencies shall centrally collect information submitted in accordance with the clause at FAR 52.223-9 for reporting to the cognizant activity in the Office of the Secretary of Defense.

PART 225--FOREIGN ACQUISITION

* * * * *

© Domestic end product has the meaning given in the clauses at 252.225-7001, Buy American Act and Balance of Payments Program;

252.225-7007, Buy American Act-Trade Agreements-Balance of Payments Program; and 252.225-7036, Buy American Act-North American Free Trade Agreement Implementation Act-Balance of Payments Program, instead of the meaning in FAR 25.101.

* * * * *

(j) Qualifying country component and qualifying country end product are defined in the clauses at 252.225-7001, Buy American Act and Balance of Payments Program; 252.225-7007, Buy American Act-Trade Agreements-Balance of Payments Program; and 252.225-7036, Buy American Act-North American Free Trade Agreement Implementation Act-Balance of Payments Program. "Qualifying country end product" is also defined in the clause at 252.225-7021, Trade Agreements.

* * * * *

(m) U.S. made end product is defined in the clause at 252.225-7007, Buy American Act-Trade Agreements-Balance of Payments Program and;

252.225-7021, Trade Agreements.

* * * * *

225.70); or

* * * * *

* * * * *

(3)(A) Specific public interest exceptions for DoD for certain countries are in 225.872.

* * * * *

When applying the factor, evaluate based on the inclusion of duty, whether or not duty is to be exempted. If award is made on the nonqualifying country offer and duty is to be exempted through inclusion of the clause at FAR 52.225-10, Duty-Free Entry, award at the offered price minus the amount of duty identified in the provision at 252.225-7003, Information for Duty-Free Entry Evaluation. See Example 1, Alternate II, in Table 25-1, Evaluation.

(ii) When a nonqualifying country offer includes more than one line item, apply the 50 percent factor-

for award on a group basis.

(3) When application of the factor would not result in the award of a domestic end product, i.e., when no domestic offers are received (see Example 3 of Table 25-1, Evaluation) or when a qualifying country offer is lower than the domestic offer (see Example 2 of Table 25-1, Evaluation), evaluate nonqualifying country offers without the 50 percent factor.

(i) If duty is to be exempted through inclusion of the clause at FAR 52.225-10, Duty-Free Entry, evaluate the nonqualifying country offer exclusive of duty by reducing the offered price by the amount of duty identified in the clause at 252.225-7003, Information for Duty-Free Entry Evaluation (see Examples 2 and 3, Alternate II, of Table 25-1, Evaluation). If award is made on the nonqualifying country offer, award at the offered price minus duty.

(ii) If duty is not to be exempted, evaluate the nonqualifying country offer inclusive of duty. (See Examples 2 and 3, Alternate I, of Table 25-1, Evaluation.)

* * * * *

Alternate I: Duty Not Exempted for Nonqualifying Country Offers:

Nonqualifying Country Offer (including $100 duty)...... $6,000

Domestic Offer......................................... 8,500

Qualifying Country Offer............................... 7,800

Award on Nonqualifying Country Offer. Since the qualifying country offer is lower than the domestic offer, the nonqualifying country offer is evaluated without the factor. Since duty is not being exempted for nonqualifying country offers, the offer is evaluated and award is made at the price inclusive of duty ($6,000).

Alternate II: Duty Exempted:

Nonqualifying Country Offer (including $1,000 duty).... $880,500

Domestic Offer......................................... 950,000

Qualifying Country Offer............................... 880,000

Award on Nonqualifying Country Offer. Again, the qualifying country offer is lower than the domestic offer. The nonqualifying country offer is, therefore, evaluated without the factor. Since duty is being exempted for nonqualifying country offers, the duty identified by the offeror is subtracted from the offered price, which is evaluated and awarded at $879,500.

Alternate I: Duty Not Exempted for Nonqualifying Country Offers:

Nonqualifying Country Offer (including $150 duty)...... $9,600

Qualifying Country Offer............................... 9,500

Award on Qualifying Country Offer. Since no domestic offers are received, the nonqualifying country offer is evaluated without the evaluation factor. Since duty is not being exempted and would be paid by the Government, the nonqualifying country offer is evaluated inclusive of duty.

Alternate II: Duty Exempted:

Nonqualifying Country Offer (including $1,000 duty).... $880,500

Qualifying Country Offer............................... 880,000

Award on Nonqualifying Country Offer. Since no domestic offers are received, the nonqualifying country offer is evaluated without the evaluation factor. Since duty is being exempted, duty is subtracted from the nonqualifying country offer, which is evaluated and awarded at $879,500.

30. Section 225.109 is amended in paragraph (a) by revising the last sentence; in the introductory text of paragraph (d) by removing the word "which" and inserting in its place the word "that"; and by revising paragraph (d)(i) to read as follows:

225.109 Solicitation provisions and contract clauses.

(a) * * * Use the provision in any solicitation that includes the clause at 252.225-7001, Buy American Act and Balance of Payments Program.

* * * * *

or Balance of Payments Program is known to apply or if using the clause at 252.225-7007, Buy American Act-Trade Agreements-Balance of Payments Program; 252.225-7021, Trade Agreements; or 252.225-7036, Buy American Act-North American Free Trade Agreement Implementation Act-

Balance of Payments Program.

* * * * *

225.109-70 Additional provisions and clauses.

Subcontractors, in solicitations and contracts that include one of the following clauses:

Payments Program.

Implementation Act-Balance of Payments Program.

(a)(iv); by adding a new paragraph (a)(v); in paragraph (b)(i) under the heading "ARMY" by removing the entry "Deputy Chief of Staff for Procurement U.S. Army Material Command" and inserting in its place the entry "Deputy Chief of Staff for Research, Development and Acquisition, Headquarters, U.S. Army Material Command"; and in paragraph (b)(i) by removing the heading "DEFENSE MAPPING AGENCY" and inserting in its place the heading "NATIONAL IMAGERY AND MAPPING AGENCY". The revised and added text reads as follows:

225.302 Policy.

* * * * *

* * * * *

225.408 Solicitation provisions and contract clauses.

(a)(i) Use the provision at 252.225-7006, Buy American Act-Trade Agreements-Balance of Payments Program Certificate, instead of the provision at FAR 52.225-8, Buy American Act-Trade Agreements-Balance of Payments Program Certificate, in all solicitations that include the clause at 252.225-7007, Buy American Act-Trade Agreements-Balance of Payments Program.

Certificate, in all solicitations that include the clause at 252.225-7021, Trade Agreements.

252.225-7036 is used with its Alternate I.

(vi)(A) Use the clause at 252.225-7036, Buy American Act-North American Free Trade Agreement Implementation Act-Balance of Payments Program, instead of the clause at FAR 52.225-21, Buy American Act-

North American Free Trade Agreement Implementation Act-Balance of Payments Program. The clause need not be used where purchase from foreign sources is restricted (see 225.403©(1)(B)). The clause may be used where the contracting officer anticipates a waiver of the restriction.

(B)(1) Use the clause in all solicitations and contracts for the items listed at 225.403-70, when the estimated value is $53,150 or more and the Trade Agreements Act does not apply. Include the clause in solicitations for multiple line items if any line item is subject to NAFTA.

(2) Use the clause with its Alternate I when the estimated value is between $25,000 and $53,150.

© Application of the procedures in 225.402(a) and the acquisition of noneligible and eligible products under the same solicitation may result in the application of the North American Free Trade Agreement Implementation Act to only some of the items solicited. In such case, indicate in the schedule those items covered by the Act.

35. Section 225.602 is amended by revising the introductory text of paragraph (3) to read as follows:

225.602 Policy.

* * * * *

(3) Unless the supplies are entitled to duty-free treatment under a special category in the Harmonized Tariff Schedule of the United States (e.g., the Caribbean Basin Economic Recovery Act or NAFTA), or unless the supplies already have entered into the customs territory of the United States and duty already has been paid, DoD will issue duty-free entry certificates for-

* * * * *

225.603 Procedures.

Government or incorporated in Government-owned property or in an end

product to be furnished to the Government, and for which duty will be

paid if such supplies or any portion are used for other than the

performance of the Government contract or disposed of other than for

the benefit of the Government in accordance with the contract terms;

and

* * * * *

225.605-70 Additional solicitation provisions and contract clauses.

(a) Use the clause at 252.225-7009, Duty-Free Entry-Qualifying Country Supplies (End Products and Components), in solicitations and contracts for supplies and in solicitations and contracts for services involving the furnishing of supplies, except for solicitations and contracts for supplies for exclusive use outside the United States.

(b) Use the clause at 252.225-7037, Duty-Free Entry-Eligible End Products, in solicitations and contracts for supplies and services when the clause at 252.225-7007, Buy American Act-Trade Agreements-Balance of Payments Program; 252.225-7021, Trade Agreements; or 252.225-7036, Buy American Act-North American Free Trade Agreement Implementation Act-Balance of Payments Program, is used.

© Use the clause at 252.225-7010, Duty-Free Entry-Additional Provisions, in solicitations and contracts that include the clause at FAR 52.225-10, Duty-Free Entry.

(d) Use the provision at 252.225-7003, Information for Duty-Free Entry Evaluation, in solicitations that include the clause at FAR 52.225-10, Duty-Free Entry. Use the provision with its Alternate I when the clause at 252.225-7021, Trade Agreements, is used.

(e) Use the clause at 252.225-7008, Supplies to be Accorded Duty-Free Entry, in solicitations and contracts that provide for duty-free entry and that include the clause at FAR 52.225-10, Duty-Free Entry.

38. Section 225.872-4 is amended by revising the last sentence of the introductory text of paragraph ©, and paragraph ©(2)4, to read as follows:

225.872-4 Evaluation of offers.

* * * * *

© * * * If the offer, as evaluated, is low or otherwise eligible for award, the contracting officer shall request an exemption of the Buy American Act/Balance of Payments Program as inconsistent with the public interest, unless another exception such as the Trade Agreements Act applies.

* * * * *

4. To achieve the above objectives, the solicitation contained the (title and number of the Buy American Act clause contained in the contract). Offers were solicited from other sources and the offer received for (qualifying country end item) is found to be otherwise eligible for award.

* * * * *

225.7011-4 [Amended]

225.7303-4 Contingent fees.

(b)(1) Under DoD 5105.38-M, Security Assistance Management Manual, Letters of Offer and Acceptance for requirements for the governments of Australia, Taiwan, Egypt, Greece, Israel, Japan, Jordan, Republic of Korea, Kuwait, Pakistan, Philippines, Saudi Arabia, Turkey, Thailand, or Venezuela (Air Force) must provide that all U.S. Government contracts resulting from the Letters of Offer and Acceptance prohibit the reimbursement of contingent fees as an allowable cost under the contract, unless the payments have been identified and approved in writing by the foreign customer before contract award (see 225.7308(a)).

(2) For FMS to countries not listed in paragraph (b)(1) of this subsection, contingent fees exceeding $50,000 per FMS case shall be unallowable under DoD contracts, unless payment has been identified and approved in writing by the foreign customer before contract award.

PART 226--OTHER SOCIOECONOMIC PROGRAMS

226.103 Procedures.

226.104 Contract clause.

Organizations and Indian-Owned Economic Enterprises, in contracts-

PART 227--PATENTS, DATA, AND COPYRIGHTS

227.676 Foreign patent interchange agreements.

* * * * *

(b) Assistance with patent rights and royalty payments in the United States European Command (USEUCOM) area of responsibility is available from HQ USEUCOM, ATTN: ECLA, Unit 30400, Box 1000, APO AE 09128; Telephone: DSN 430-8001/7263, Commercial 49-0711-680-8001/7263;

Telefax: 49-0711-680-5732.

PART 229--TAXES

44. Section 229.101 is amended in paragraph (d)(i) by revising the last sentence to read as follows:

229.101 Resolving tax problems.

* * * * *

ECLA, Unit 30400, Box 1000, APO AE 09128; Telephone: DSN 430-8001/7263, Commercial 49-0711-680-8001/7263; Telefax. 49-0711-680-5732.

* * * * *

PART 231--CONTRACT COST PRINCIPLES AND PROCEDURES

231.205-71 [Removed]

PART 232--CONTRACT FINANCING

232.072-1, 232.072-2 and 232.072-3 are added to read as follows:

232.006 Reduction or suspension of contract payments upon finding of fraud.

232.006-5 Reporting.

Departments and agencies in accordance with department/agency procedures, shall prepare and submit to the Under Secretary of Defense (Acquisition and Technology), through the Director of Defense Procurement, annual reports (Report Control Symbol DD-ACQ(A) 1891) containing the information required by FAR 32.006-5.

232.070 Responsibilities.

Secretary of Defense (Acquisition and Technology) (OUSD(A&T)DP) is responsible for ensuring uniform administration of DoD contract financing, including DoD contract financing policies and important related procedures. Agency discretion under FAR Part 32 is at the DoD level and is not delegated to the departments and agencies. Proposals by the departments and agencies, to exercise agency discretion, shall be submitted to OUSD(A&T)DP through the DoD Contract Finance Committee (see 232.071).

Management);

Management and Comptroller), Office of Financial Operations;

232.071 Contract Finance Committee.

Defense;

(for matters pertaining to the FAR);

Administration (for matters pertaining to the FAR);

Logistics Agency (one representing contracting and one representing the contract finance office).

232.072 Financial responsibility of contractors.

Use the policies and procedures in this section in determining the financial capability of current or prospective contractors.

232.072-1 Required financial reviews.

The contracting officer shall perform a financial review when the contracting officer does not otherwise have sufficient information to make a positive determination of financial responsibility. In addition, the contracting officer shall consider performing a financial review-

Contractors Indebted to the Government (Hold-Up List), or is otherwise known to be indebted to the Government;

232.072-2 Appropriate information.

232.072-3 Cash flow forecasts.

(including progress payments), and customer payments;

Subpart 232.1--Non-Commercial Item Purchase Financing

Sec.

232.102 Description of contract financing methods.

232.102-70 Provisional delivery payments.

232.108 Financial consultation.

232.102 Description of contract financing methods.

(e)(2) Progress payments based on percentage or stage of completion are authorized only for contracts for construction (as defined in FAR 36.102), shipbuilding, and ship conversion, alteration, or repair. However, percentage or state of completion methods of measuring contractor performance may be used for performance-based payments in accordance with FAR Subpart 32.10.

232.102-70 Provisional delivery payments.

(a) The contracting officer may establish provisional delivery paymentsto pay contractors for the costs of supplies and services delivered to and accepted by the Government under the following contract actions if undefinitized:

with the Progress Payments clause.

or

232.108 Financial consultation.

See 232.070 for offices to be consulted regarding financial matters with DoD.

Subpart 232.2--Commercial Item Purchase Financing

Sec.

232.202-4 Security for Government financing.

(a)(2) When determining whether an offeror's financial condition is adequate security, see 232.072-2 and 232.072-3 for guidance. It should be noted that an offeror's financial condition may be sufficient to make the contractor responsible for award purposes, but may not be adequate security for commercial contract financing.

232.206 Solicitation provisions and contract clauses.

(b)(2) If the contract contains foreign military sales requirements, each approval shall specify the amount of contract financing to be charged to each country's account.

232.502-1-71 [Amended]

49. Section 232.502-1-71 is amended in paragraph (b)(3) by removing the reference "15.801" and inserting in its place the reference "15.401".

232.970 through 232.970-2 [Removed]

Subpart 232.10--Performance-Based Payments

Sec.

232.1001 Policy.

232.1004 Procedure.

232.1007 Administration and payment of performance-based payments.

232.1001 Policy.

232.1007 Administration and payment of performance-based payments.

(b)(2) If the contract contains foreign military sales requirements, each approval shall specify the amount of contract financing to be charged to each country's account.

PART 233--PROTESTS, DISPUTES, AND APPEALS

233.204-70 Limitations on payment.

See 10 U.S.C. 2410(b) for limitations on Congressionally directed payment of a claim under the Contract Disputes Act of 1978, a request for equitable adjustment to contract terms, or a request for relied under Pub. L. 85-804.

PART 234--MAJOR SYSTEM ACQUISITION

234.005-70 [Amended]

53. Section 234.005-70 is amended in the first sentence by inserting the phrase "paragraph (b) of" after the phrase "in accordance with".

PART 235--RESEARCH AND DEVELOPMENT CONTRACTING

235.001 Definitions.

As defined in DoD 7000.14-R, Financial Management Regulations, and as used in this part-

(h) Research and development ordinarily covers only the following categories:

235.002 [Removed]

PART 236--CONSTRUCTION AND ARCHITECT-ENGINEER CONTRACTS

(4) as paragraphs (4) and (5), respectively, and by adding a new paragraph (3) to read as follows:

236.102 Definitions.

* * * * *

Military Construction on Kwajalein Atoll-Evaluation Preference.

* * * * *

* * * * *

* * * * *

United States Firms, when contract performance will be in a United States territory or possession in the Pacific or in a country bordering the Arabian Gulf.

Evaluation Preference, when contract performance will be on Kwajalein Atoll.

* * * * *

236.602-4 Selection authority.

* * * * *

Services-Restriction to United States Firms, in solicitations for A-E contracts that are-

Organization member country, or in countries bordering the Arabian Gulf.

PART 237--SERVICE CONTRACTING

237.102 [Removed]

* * * * *

(f)(i) Payment to each expert or consultant for personal services under 5 U.S.C. 3109 shall not exceed the highest rate fixed by the Classification Act Schedules for grade GS-15 (see 5 CFR 304.105(a)).

* * * * *

237.170 through 237.170-3 [Removed]

237.201 Definitions.

237.203 Policy.

237.203-70 [Redesignated and Amended]

237.271 and 237.272 respectively.

PART 239--ACQUISITION OF INFORMATION TECHNOLOGY

239.7405 Multiyear contracting authority for telecommunications resources.

and

(3) The agency complies with OMB budget and accounting procedures relating to appropriated funds.

239.7406 [Amended]

PART 241--ACQUISITION OF UTILITY SERVICES

Subpart 241.1--General

Sec.

Subpart 241.2--Acquiring Utility Services

241.201 Policy.

241.202 Procedures.

Subpart 241.5--Solicitation Provisions and Contract Clauses

241.501-70 Additional clauses.

Subpart 241.1--General

241.101 Definitions.

definite period of not less than one nor more than ten years.

Dual service area means a geographical area in which two or more utility suppliers are authorized under State law to provide services.

Indefinite term contract means a month-to-month contract for utility services which may be terminated by the Government upon proper notice.

Independent regulatory body means the Federal Energy Regulatory Commission, a state-wide agency, or an agency with less than state-wide jurisdiction when operating pursuant to state authority. The body has the power to fix, establish, or control the rates and services of utility suppliers.

Nonindependent regulatory body means a body that regulates a utility supplier which is owned or operated by the same entity that created the regulatory body, e.g., a municipal utility.

Regulated utility supplier means a utility supplier regulated by an independent regulatory body.

241.102 Applicability.

purchased from regulated utility suppliers. (b)(7) This part does not apply to third party financed projects.

However, it may be used for any purchased utility services directly resulting from such projects, including those authorized by-

25 years;

Subpart 241.2--Acquiring Utility Services

241.201 Policy.

practice; and

considered "prices set by law or regulation" and do not require submission of cost or pricing data (see FAR Subpart 15.4).

241.202 Procedures.

installation is established, the contracting officer shall-

availability of competition. If available, evaluate the need to rewrite the contract considering-

The Government may pay a connection charge when required to cover the cost of the necessary connecting facilities. A connection charge based on the estimated labor cost of installing and removing the facility shall not include salvage cost. A lump-sum connection charge shall be no more than the agreed cost of the connecting facilities less net salvage. The order of precedence for contractual treatment of connection and service charges is-

(B) Construction labor standards ordinarily do not apply to construction accomplished under the connection charge provisions of this part. However, if installation includes construction of a public building or public work as defined in FAR 36.102, construction labor standards may apply.

241.203 GSA assistance.

The General Services Administration (GSA) has delegated to DoD the authority to enter into utility service contracts (see FAR 41.103); therefore, contracting officers need not seek assistance or approval from GSA.

241.205 Separate contracts.

(a)(i) Requests for proposals shall state the anticipated service period in terms of months or years. Where the period extends beyond the current fiscal year, evaluate offers of incentives for a definite term contract.

(ii) The solicitation may permit offerors the choice of proposing on the basis of-

241.270 Preaward contract review.

Departments/agencies shall conduct their owned preaward contract reviews.

Subpart 241.5--Solicitation Provision and Contract Clauses

241.501-70 Additional clauses.

PART 242--CONTRACT ADMINISTRATION

(a)(19) to read as follows:

242.302 Contract administration functions.

* * * * *

(19) Also negotiate and issue contract modifications reducing contract prices in connection with the provisions of paragraph (b) of the clause at FAR 52.225-10, Duty-Free Entry.

* * * * *

242.1107-70 Solicitation provision and contract clause.

Plans, in solicitation for other than major systems that require cost/ schedule status reports.

PART 243--CONTRACT MODIFICATIONS

reference "15.804-2(a)(1)(iii)" to read "15.403-4(a)(1)(iii)" and

by adding paragraph © to read as follows:

243.204-70 Certification of requests for equitable adjustment.

* * * * *

© The certification required by 10 U.S.C. 2410(a), as implemented in the clause at 252.243-7002, is different from the certification required by the Contract Disputes Act of 1978 (41 U.S.C. 605©). If the contractor has certified a request for equitable adjustment in accordance with 10 U.S.C. 2410(a), and desires to convert the request to a claim under the Contract Disputes Act, the contractor shall certify the claim in accordance with FAR Subpart 33.2.

PART 250--EXTRAORDINARY CONTRACTUAL ACTIONS

250.102-70 Limitations on payment.

See 10 U.S.C. 2410b for limitations on Congressionally directed payment of a request for equitable adjustment to contract terms or a request for relief under Pub. L. 85-804.

250.201 [Amended]

reference "FAR subpart 50.2" to read FAR Subpart 50.4".

PART 252--SOLICITATION PROVISIONS AND CONTRAST CLAUSES

* * * * *

Contract Terms and Conditions Required to Implement Statutes of Executive Orders Applicable to Defense Acquisitions of Commercial Items (Mar 1998)

* * * * *

Program (41 U.S.C. 10a-10d, E.O. 10582).

Balance of Payments Program (____Alternate I) (41 U.S.C. 10a-10d, 19 U.S.C. 2501-2518, and 19 U.S.C. 3301 note).

* * * * *

________ 252.225-7021 Trade Agreements (____Alternate I) (19 U.S.C. 2501-2518 and 19 U.S.C. 3301 note).

* * * * *

________ 252.225-7036 Buy American Act-North American Free Trade Agreement Implementation Act-Balance of Payment Program (____ Alternate I) (41 U.S.C. 10a-10d and 19 U.S.C. 3301 note).

* * * * *

252.225-7001 Buy American Act and Balance of Payments Program.

Buy American Act and Balance of Payments Program (Mar 1998)

United States in sufficient and reasonably available commercial

quantities and of a satisfactory quality; or

225.872-1 of the Defense Federal Acquisition Regulation Supplement.

(6) Qualifying country component means an item mined, produced, or manufactured in a qualifying country.

qualifying country; or

(ii) An end product manufactured in a qualifying country if the cost of the components mined, produced, or manufactured in the qualifying country and its components mined, produced, or manufactured in the United States exceeds 50 percent of the cost of all its components.

(b) This clause implements the Buy American Act (41 U.S.C. Section 10a-d) in a manner that will encourage a favorable international balance of payments by providing a preference to domestic end products over other end products, except for end products which are qualifying country end products. © The Contractor agrees that it will deliver only domestic end products unless, in its offer, it specified delivery of other end products in the Buy American Act-Balance of Payments Program Certificate provision of the solicitation. An offer certifying that a qualifying country end product will be supplied requires the Contractor to deliver a qualifying country end product or a domestic end product.

(d) The offered price of qualifying country end products should not include custom fees or duty. The offered price of nonqualifying country end products, and products manufactured in the United States that contain nonqualifying country components, must include all applicable duty. The award price will not include duty for end products or components that are to be accorded duty-free entry. Generally, when the Buy American Act is applicable, each nonqualifying country offer is adjusted for the purpose of evaluation by adding 50 percent of the offer, inclusive of duty.

(End of clause)

252.225-7003 Information for duty-free entry evaluation.

Information for Duty-Free Entry Evaluation (Mar 1998)

for which the offeror requests duty-free entry; or

(2) A foreign end product consisting of end items, components, or material of foreign origin other than those for which duty-free entry is to be accorded pursuant to the Duty-Free Entry-Qualifying Country Supplies (End Products and Components) clause or, if applicable, the Duty-Free Entry-Eligible End Products clause of this solicitation?

questions:

included in the offer to cover such duty?$________________

© If the duty has not been paid, the Government may elect to make award on a duty-free basis. If so, the offered price will be reduced in the contract award by the amount specified in paragraph (b)(3). The Offeror agrees to identify, at the request of the Contracting Officer, the foreign supplies which are subject to duty-free entry.

(End of provision)

Alternate I (Mar 1998). As prescribed in 225.605-70(d), substitute the following paragraph (a) for paragraph (a) of the basic clause:

(a) Does the offeror propose to furnish a U.S. made end product with nonqualifying country components for which the offeror requests duty-free entry?

Buy American Act-Trade Agreements-Balance of Payments Program Certificate (Mar 1998)

* * * * *

* * * * *

* * * * *

(End of provision)

Buy American Act-Trade Agreements-Balance of Payments Program (Mar 1998)

Antigua and Barbuda

Aruba

Bahamas

Barbados

Belize

British Virgin Islands

Costa Rica

Dominica

Dominican Republic

El Salvador

Grenada

Guatemala

Guyana

Haiti

Honduras

Jamaica

Montserrat

Netherlands Antilles

Nicaragua

Panama

St. Kitts-Nevis

St. Lucia

St. Vincent and the Grenadines

Trinidad and Tobago

Basin country; or

Aruba

Austria

Bangladesh

Belgium

Benin

Bhutan

Botswana

Burkina Faso

Burundi

Canada

Cape Verde

Central; African Republic

Chad

Comoros

Denmark

Djibouti

Equatorial Guinea

Finland

France

Gambia

Germany

Greece

Guinea

Guinea-Bissau

Haiti

Hong Kong

Ireland

Israel

Italy

Japan

Kiribati

Lesotho

Liechtenstein

Luxembourg

Malawi

Maldives

Mali

Mozambique

Nepal

Netherlands

Niger

Norway

Portugal

Republic of Korea

Rwanda

Sao Tome and Principe

Sierra Leone

Singapore

Somalia

Spain

Sweden

Switzerland

Tanzania U.R.

Togo

Tuvalu

Uganda

United Kingdom

Vanuatu

Western Samoa

Yemen

United States in sufficient and reasonably available commercial

quantities and of a satisfactory quality; or

Canada or Mexico.

Puerto Rico, and any other place subject to its jurisdiction, but does not include leased bases or trust territories.

States; or

(19 U.S.C. 2501 et seq.), the North American Free Trade Agreement Implementation Act of 1993 (19 U.S.C. 3301 note), and the Caribbean Basin Initiative apply to all items in the Schedule.

©(1) The Contractor agrees to deliver under this contract only domestic end products unless, in its offer, it specified delivery of U.S. made, qualifying country, designated country, Caribbean Basin country, NAFTA country, or other nondesignated country end products in the Buy American Act-Trade Agreements-Balance of Payments Program Certificate provision of the solicitation.

(2) The Contractor may not supply a nondesignated country end product unless-

302 of the Trade Agreements Act of 1979.

Supplies To Be Accorded Duty-Free Entry (Mar 1998)

In accordance with paragraph (b) of the Duty-Free Entry clause of this contract, in addition to duty-free entry for all qualifying country supplies (end products and components) and all eligible end products subject to applicable trade agreements (if this contract contains the Buy American Act-Trade Agreements-Balance of Payments Program clause or the Buy American Act-North American Free Trade Agreement Implementation Act-Balance of Payments Program clause), the following foreign end products that are neither qualifying country end products nor eligible end products under a trade agreement, and the following nonqualifying country components, are accorded duty-free entry.

----------------------------------------------------------------------

----------------------------------------------------------------------

----------------------------------------------------------------------

(End of clause)

Duty-Free Entry-Qualifying Country Supplies (End Products and Components) (Mar 1998)

* * * * *

(iv)(A) For direct shipments to a U.S. military installation, the notation:

UNITED STATES GOVERNMENT, DEPARTMENT OF DEFENSE Duty-Free Entry to be claimed pursuant to Section XXII, Chapter 98, Subchapter VIII, Item 9808.00.30 of the Harmonized Tariff Schedule of the United States. Upon arrival of shipment at the appropriate port of entry, District Director of Customs, please release shipment under 19 CFR part 142 and notify Commander, Defense Contract Management Command (DCMC) New York, ATTN: Customs Team, DCMDN-GNIC, 207 New York Avenue, Staten Island, New York, 10305-5013, for execution of Customs Forms 7501, 7501A, or 7506 and any required duty-free entry certificates.

* * * * *

* * * * *

Duty-Free Entry-Additional Provisions (Mar 1998)

* * * * *

Duty-Free Entry clause, the Contractor shall furnish the following

for all foreign supplies to be imported pursuant to paragraph (a) or

(b) of the Duty-Free Entry clause. The Contractor shall furnish this information to the Contracting Officer administering the prime contract immediately upon award of any contract or subcontract involving supplies to be accorded duty-free entry.

* * * * *

New York, ATTN: Customs Team, DCMDN-GNIC, 207 New York Avenue,

Staten Island, New York 10305-5013, as the cognizant contract

administration office (for paragraph (f) only) in those cases when

the shipment is consigned directly to a military installation. * * *

* * * * *

* * * * *

Preference for Domestic Specialty Metals (Mar 1998)

225.872-1 of the Defense Federal Acquisition Regulation Supplement.

following limits: manganese, 1.65 percent; silicon, 0.60 percent; or

copper, 0.60 percent; or

(B) That contains more than 0.25 percent of any of the following elements: aluminum, chromium, cobalt, columbium, molybdenum, nickel, titanium, tungsten, or vanadium;

(ii) Metal alloys consisting of nickel, iron-nickel, and cobalt base alloys containing a total of other alloying metals (except iron) in excess of 10 percent;

* * * * *

incorporated in an article manufactured in a qualifying country;

* * * * *

* * * * *

© * * *

incorporated in an article manufactured in a qualifying country; or

* * * * *

84. Sections 252.225-7020 and 252.225-7021 are added to read as follows:

252.225-7020 Trade Agreements Certificate.

Trade Agreements Certificate (Mar 1998)

(a) Definitions. Caribbean Basin country end product, designated country end product, NAFTA country end product, nondesignated country end product, qualifying country end product, and U.S. made end product have the meanings given in the Trade Agreements clause of this solicitation.

(b) Evaluation. Offers will be evaluated in accordance with the policies and procedures of part 225 of the Defense Federal Acquisition Regulation Supplement. Offers of foreign end products that are not U.S. made, qualifying country, designated country, Caribbean Basin country, or NAFTA country end products will not be considered for award, unless the Contracting Officer determines that there are not offers of such end products; or the offers of such end products are insufficient to fulfill the requirements; or a national interest exception to the Trade Agreements Act is granted.

© Certifications. (1) The offeror certifies that each end product to be delivered under this contract, except those listed in paragraph ©(2) of this provision, is a U.S. made, qualifying country, designated country, Caribbean Basin country, or NAFTA country end product.

(2) The following supplies are other nondesignated country end products:

(End of provision)

252.225-7021 Trade Agreements.

Trade Agreements (Mar 1998)

Antigua and Barbuda

Aruba

Bahamas

Barbados

Belize

British Virgin Islands

Costa Rica

Dominica

Dominican Republic

El Salvador

Grenada

Guatemala

Guyana

Haiti

Honduras

Jamaica

Montserrat

Netherlands Antilles

Nicaragua

Panama

St. Kitts-Nevis

St. Lucia

St. Vincent and the Grenadines

Trinidad and Tobago

Basin country; or

Aruba

Austria

Bangladesh

Belgium

Benin

Bhutan

Botswana

Burkina Faso

Burundi

Canada

Cape Verde

Central African Republic

Chad

Comoros

Denmark

Dijbouti

Equatorial Guinea

Finland

France

Gambia

Germany

Greece

Guinea

Guinea-Bissau

Haiti

Hong Kong

Ireland

Israel

Italy

Japan

Kiribati

Lesotho

Liechtenstein

Luxembourg

Malawi

Maldives

Mali

Mozambique

Nepal

Netherlands

Niger

Norway

Portugal

Republic of Korea

Rwanda

Sao Tome and Principe

Sierra Leone

Singapore

Somalia

Spain

Sweden

Switzerland

Tanzania U.R.

Togo

Tuvalu

Uganda

United Kingdom

Vanuatu

Western Samoa

Yemen

Canada or Mexico.

Puerto Rico, and any other place subject to its jurisdiction, but does not include leased bases or trust territories.

States; or

(19 U.S.C. 2501, et seq.), the North American Free Trade Agreement Implementation Act of 1993 (19 U.S.C. 3301 note), and the Caribbean Basin Initiative apply to all items in the Schedule.

©(1) The Contractor agrees to deliver under this contract only U.S. made, qualifying country, designated country, Caribbean Basin country or NAFTA country end product unless, in its offer, it specified delivery of other nondesignated country end products in the Trade Agreements Certificate provision of the solicitation.

302 of the Trade Agreements Act of 1979.

(End of clause)

Alternate I (Mar 1998). As prescribed in 225.408(a)(iv), delete Singapore from the list of designated countries in paragraph (a)(4) of the basic clause.

* * * * *

Reporting of Contract Performance Outside the United States (Mar 1998)

* * * * *

(2) The Contractor shall provide the prime contract number to subcontractors for reporting purposes.

* * * * *

252.225-7027 Restriction on contingent fees for foreign military sales.

As prescribed in 225.7308(a), use the following clause. Insert in paragraph (b)(1) of the clause the name(s) of any foreign country customer(s) listed in 225.7303-4(b).

Restriction on Contingent Fees for Foreign Military Sales (Mar 1998)

Buy American Act-North American Free Trade Agreement Implementation Act-Balance of Payments Program Certificate (MAR 1998)

(ii) The Offeror certifies that the following supplies qualify as NAFTA country end products:

(iii) The following supplies are other foreign end products:

(End of provision)

"Canadian end product" for the phrase "NAFTA country end product" in paragraph (a); and substitute the phrase "Canadian end products" for the phrase "NAFTA country end products" in paragraphs (b) and (c)(2)(ii) of the basic clause.

252.225-7036 Buy American Act-North American Free Trade Agreement

Implementation Act-Balance of Payments Program

Buy American Act-North American Free Trade Agreement Implementation Act-Balance of Payments Program (Mar 1998)

United States in sufficient and reasonably available commercial

quantities and of a satisfactory quality; or

Canada or Mexico.

225.872-1 of the Defense Federal Acquisition Regulation Supplement.

(8) Qualifying country component means an item mined, produced, or manufactured in a qualifying country.

qualifying country; or

(ii) An end product manufactured in a qualifying country if the cost of the components mined, produced, or manufactured in the qualifying country and its components mined, produced, or manufactured in the United States exceeds 50 percent of the cost of all its components.

(b) Unless otherwise specified, the North American Free Trade Agreement Implementation Act of 1993 (19 U.S.C. 3301 note) applies to all items in the Schedule.

© The Contractor agrees to deliver under this contract only domestic end products unless, in its offer, it specified delivery of qualifying country, NAFTA country, or other foreign end products in the Buy American Act-North American Free Trade Agreement Implementation Act-Balance of Payments Program Certificate provision of the solicitation. An offer certifying that a qualifying country end product or a NAFTA country end product will be supplied requires the Contractor to supply a qualifying country end product or a NAFTA country end product, whichever is certified, or, at the Contractor's option, a domestic end product.

(d) The offered price of qualifying country end products, or NAFTA country end products for line items subject to the North American Free Trade Agreement Implementation Act, should not include custom fees or duty. The offered price of foreign end products listed in paragraph ©(2)(iii) of the Buy American Act-North American Free Trade Agreement Implementation Act-Balance of Payments Program Certificate provision of the solicitation, or the offered price of domestic end products that contain nonqualifying country components, must include all applicable duty. The award price will not include duty for end products or components that are to be accorded duty-free entry. Generally, each foreign end product listed in paragraph ©(2)(iii) of the Buy American Act-North American Free Trade Agreement Implementation Act-Balance of Payments Program Certificate provision of the solicitation is adjusted for the purpose of evaluation by adding 50 percent of the offered price, inclusive of duty.

(End of clause)

paragraphs (a)(4), (c), and (d) for paragraphs (a)(4), (c), and (d) of the basic clause:

of materials from another country or instrumentality, has been substantially transformed in Canada 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 so was so 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 that of the product itself.

© The Contractor agrees to deliver under this contract only domestic end products unless, in its offer, it specified delivery of qualifying country, Canadian, or other foreign end products in the Buy American Act-North American Free Trade Agreement Implementation Act-Balance of Payments Program Certificate provision of the solicitation. An offer certifying that a qualifying country end product or a Canadian end product will be supplied requires the Contractor to supply a qualifying country end product or a Canadian end product, whichever is certified, or, at the Contractor's option, a domestic end product.

(d) The offered price of qualifying country end products, or Canadian end products for line items subject to the North American Free Trade Agreement Implementation Act, should not include custom fees or duty. The offered price of foreign end products listed in paragraph ©(2)(iii) of the Buy American Act-North American Free Trade Agreement Implementation Act-Balance of Payments Program Certificate provision of the solicitation, or the offered price of domestic end products that contain nonqualifying country components, must include all applicable duty. The award price will not include duty for end products or components that are to be accorded duty-free entry. Generally, each foreign end product listed in paragraph ©(2)(iii) of the Buy American Act-North American Free Trade Agreement Implementation Act-Balance of Payments Program Certificate provision of the solicitation is adjusted for the purpose of evaluation by adding 50 percent of the offered price, inclusive of duty.

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

Duty-Free Entry-Eligible End Products (Mar 1998)

(a) Definition. Eligible end product, as used in this clause, means-

(1) Designated country end product, Caribbean Basin country end product, or NAFTA country end product, as defined in the Trade Agreements clause of this contract;

Act-North American Free Trade Agreement Implementation Act-Balance

of Payments Program clause of this contract; or

(3) Canadian end product, as defined in Alternate I of the Buy American Act-North American Free Trade Agreement Implementation Act-Balance of Payments Program clause of this contract.

(b) The requirements of this clause apply to this contract and subcontracts, including purchase orders, that involve delivery of eligible end products to be accorded duty-free entry whether placed-

domestic concern.

© Except as otherwise approved by the Contracting Officer, no amount is or will be included in the contract price for duty for eligible end products.

be claimed under this clause, are intended to be delivered to the

Government; and

(2) The Contractor will pay any applicable duty to the extent that such eligible end products, or any portion thereof (if not scrap or salvage) are diverted to nongovernmental use, other than as a result of a competitive sale made, directed, or authorized by the Contracting Officer.

(e) The Government agrees to execute duty-free certificates and to afford such assistance as appropriate to obtain the duty-free entry of eligible end products for which the shipping documents bear the notation specified in paragraph (f) of this clause, except as the Contractor may otherwise agree.

(f) All shipping documents submitted to Customs, covering eligible end products for which duty-free entry certificates are to be issued under this clause, shall-

Contractor's delivery address; or

supplies if applicable;

the notation:

UNITED STATES GOVERNMENT, DEPARTMENT OF DEFENSE Duty-Free Entry to be claimed pursuant to Section XXII, Chapter 98, Subchapter VIII, Item 9808.00.30 of the Harmonized Tariff Schedule of the United States. Upon arrival of shipment at the appropriate port of entry, District Director of Customs, please release shipment under 19 CFR part 142, and notify Commander, Defense Contract Management Command (DCMC) New York, ATTN: Customs Team, DCMDN-GNIC, 207 New York Avenue, Staten Island, New York 10305-5013, for execution of Customs Forms 7501, 7501A, or 7506 and any required duty-free entry certificates.

(B) In cases where the shipment will be consigned to other than a military installation, e.g., a domestic contractor's plant, the shipping document notation shall be altered to insert the name and address of the contractor, agent or broker who will notify Commander, DCMC, NY, for execution of the duty-free certificate. (Note: In those instances where the shipment will be consigned to a contractor's plant and no duty-free entry certificate is required, the contractor or its agent shall claim duty-free entry under NAFTA or other trade agreement and shall comply with the U.S. Customs Service requirements. No notification to Commander, CDMC, NY, is required.

(v) Gross weight in pounds (if freight is based on space tonnage, state cubic feet in addition to gross shipping weight);

office actually administering the prime contract, e.g., for DCMC Dayton, S3605A.

(g) Preparation of customs forms. (1) Except for shipments consigned to a military installation, the Contractor shall prepare, or authorize an agent to prepare, any customs forms required for the entry of eligible end products in connection with DoD contracts into the United States, its possessions, or Puerto Rico. The completed customs forms shall be submitted to the District Director of Customs with a copy to DCMC NY for execution of any required duty-free entry certificates. Shipments consigned directly to a military installation will be released in accordance with 10.101 and 10.102 of the U.S. Customs regulations.

(2) For shipments containing both supplies that are to be accorded duty-free entry and supplies that are not, the Contractor shall identify on the customs forms those items that are eligible for duty-free entry.

foreign supplier), or to instruct the foreign supplier to prepare, a sufficient number of copies, of the bill of lading (or other shipping document) so that at least two of the copies accompanying the shipment will be available for use by the District Director of Customs at the port of entry;

this clause; and

office actually administering the prime contract.

(i) The Contractor agrees to notify the Contracting Officer administering the prime contract in writing of any purchase under the contract of eligible end products to be accorded duty-free entry that are to be imported into the United States for delivery to the Government or for incorporation in end items to be delivered to the Government. The notice shall be furnished to the contract administration office immediately upon award to the supplier of the eligible end products. The notice shall contain-

applicable;

products;

(7) Total dollar value of the subcontract for eligible end products;

(8) Expiration date of the subcontract for eligible end products;

shall be paid by the Contractor to the extent that such eligible end

products are diverted to nongovernmental use other than as a result

of a competitive sale made, directed, or authorized by the

Contracting Officer; and

(End of clause)

252.229-7004 [Amended]

252.234-7000 [Amended]

252.234-7001 Earned value management system.

Earned Value Management System (Mar 1998)

EVMS changes require approval of the ACO prior to implementation. The ACO shall advise the Contractor of the acceptability of such changes within 30 calendar days after receipt of the notice of proposed changes from the Contractor. If the advance approval requirements are waived by the ACO, the Contractor shall disclose EVMS changes to the ACO at least 14 calendar days prior to the effective date of implementation.

(Contracting Officer to insert names of subcontractors selected for application of EVMS criteria in accordance with 252.234-7000©.)

----------------------------------------------------------------------

----------------------------------------------------------------------

----------------------------------------------------------------------

----------------------------------------------------------------------

(End of clause)

252.236-7010 [Amended]

252.236-7012 Military construction on Kwajalein Atoll-evaluation preference.

Military Construction on Kwajalein Atoll-Evaluation Preference (Mar 1998)

Marshall Islands, or otherwise legally organized under the laws of the Marshall Islands, that-

Islands; or

States firms or Marshallese firms will be evaluated by adding 20 percent to the offer, unless application of the factor would not result in award to a United States firm.

________ a Marshallese firm; ________ Other.

(End of provision)

252.237-7019 [Removed and Reserved]

252.241-7000 [Amended]

* * * * *

Cost/Schedule Status Report (Mar 1998)

* * * * *

The total allocated budget may exceed the contract budget base only

after consultation with the Contracting Officer. For cost-

reimbursement contracts, the contract budget base shall exclude

changes for cost growth increase, other than for authorized changes

to the contract scope; and

* * * * *

* * * * *

252.243-7002 Requests for equitable adjustment.

Requests for Equitable Adjustment (Mar 1998)

----------------------------------------------------------------------

(Official's Name)

----------------------------------------------------------------------

(Title)

[[Page 11550]]

©(4)(xi)(A) and (c)(4)(xi)(C) to read as follows:

253.204-70 DD Form 350, Individual Contracting Action Report.

* * * * *

* * * * *

© Code W-Not Obtained-Waived. Enter code W when cost or pricing data were not obtained because the requirement was waived (see FAR 15.403-1©(4)).

* * * * *

Appendix G to Chapter 2 [Amended]

DAAB24; by revising entry DACA81; and by adding, in alpha-numerical order, entries DAJN01, DAJN02, and DASW02 to read as follows:

PART 2--ARMY ACTIVITY ADDRESS NUMBERS

* * * * *

DACA81, CA81, CN USA Engineer District, Far East, APO AP 96205-0610

* * * * *

DAJN01, JN01, 1B U.S. Southern Command, Contracting Office, HQCMDT,

7955 NW 12th Street, Suite 450, Miami, FL 33126-1823

DAJN02, JN02, 8V Fort Buchanan Contracting Office, Attn: AFZK-DOC,

Fort Buchanan, PR 00934-5049

* * * * *

DASW02, SW02, 1W Joint Visual Information Activity, Attn: SAM-OPV-

JC, 601 North Fairfax Street, Room 334, Alexandria, VA 22314-2007

* * * * *

F04704 R9; and by revising entry FA2550 to read as follows:

PART 5--AIR FORCE ACTIVITY ADDRESS NUMBERS

* * * * *

FA2550 50 CONS, 66 Falcon Parkway, Ste 49, Falcom AFB, CO 80912-

6649

* * * * *

Louis, MO 63166-0516

S3001A YS DCMC Lockheed Martin Sanders, P.O. Box 0868, NHQ-539,

Nashua, NH 03061-0868

S3101A WT DCMC Springfield, Building 1, ARDEC, Picatinny, NJ 07806-

5000

S3102A UU DCMC Allied Signal, Route 46, Mail Stop 1-37, Teterboro,

NJ 07608-1173

S3109A WC DCMC Springfield-GEC/Kearfott, 164 Totowa Road, MS 11A30,

Wayne, NJ 07474-0975

S3110A X7 DCMC Lockheed Martin Delaware Valley, Mail Stop AE 2-W, 1

Federal Street, Camden, NJ 08102-1013

S3306A XU DCMC Syracuse, 615 Erie Boulevard West, Syracuse, NY

13402-2408

S3309A VX DCMC Long Island, 605 Stewart Avenue, Garden City, NY

11530-4761

S3310A DCMC New York, 207 New York City Avenue, Staten Island, NY

10305-5013

S3315A YR DCMC Lockheed Martin, Federal Systems, Owego, 1801 State

Route 17C, Owego, NY 13827-3998

S3316A KK DCMC Grumman Bethpage, Bethpage, NY 11714-3593

S3317A NH DCMC Lockheed Martin Tactical, Defense Systems, East, 365

Lakeville Road, Great Neck, NY 11020-1696

S3619A SB DCMC GE Aircraft Engines, Evendale, Mail Drop N-1,

Cincinnati,OH 45215-6303

S3603A VB DCMC Cleveland, Admiral Kidd Building, 555 East 88th

Street, Bratenahl, OH 44108-1068

S3605A VL DCMC Dayton, Gentile Station, 1001 Hamilton Street,

Dayton, OH 45444-5300

S3613A YB DCMC Cleveland-Westinghouse, 18901 Euclid Avenue, Plant

2, Cleveland, OH 44117-1388

S3616A X6 DCMC Cleveland-Lockheed Martin, Tactical Defense Systems,

Akron, 1210 Massillon Road, Akron, OH 44315-0001

S3618A YF DCMC General Dynamics Lima, 1155 Buckeye Road, Lima, OH

45804-1898

S3620A VA DCMC International, 8725 John J. Kingman Road, Fort

Belvoir VA 22060-6221

S3911A X3 DCMC Pittsburgh, Federal Building, Room 1612, 1000

Liberty Avenue, Pittsburgh, PA 15222-4190

S3912A XM DCMC Reading, 1125 Berkshire Blvd, Suite 160, Wyomissing,

PA 19610-1249

S3915A XD DCMC Philadelphia, South 20th Street, Philadelphia, PA

19101-7699

S3916A TU DCMC Boeing Helicopters, PO Box 16859, Philadelphia, PA

19142-0859

S4201A XY DCMC United Defense Limited Partnership, PO Box 15512,

York, PA 17405-1512

S4402A Z7 DCMC Dallas, 1200 Main Street, Dallas, TX 75202-4399

S4404A XN DCMC San Antonio, 615 East Houston, PO Box 1040, San

Antonio, TX 78294-1040

S4407A WN DCMC E-Systems Greenville, PO Box 6379, Greenville, TX

75403-6379

S4408A XZ DCMC Texas Instruments, PO Box 660246, MS 256, Dallas, TX

75266-0246

S4418A WI DCMC Bell Helicopter Textron, PO Box 1605, Fort Worth, TX

76101-1605

S4419A SL DCMC Lockheed, Fort Worth, PO Box 371, Fort Worth, TX

76101-0371

S4420A WP DCMC Lockheed Martin Vought Systems, PO Box 655907, M/S

4915, Dallas, TX 75265-5907

S4503A R6 DCMC Thiokol, PO Box 524, Mail Stop Z-10, Brigham City,

UT 84302-0524

S4801A XW DCMC Seattle, Corporate Campus East III, 3009 112th Ave,

NE, Suite 200, Bellevue, WA 98004-8019

S4804A SP DCMC Boeing, Seattle, PO Box 3707, Seattle, WA 98124-2207

S4807A WM DCMC Stewart and Stevenson, Inc., PO Box 457, Sealy, TX

77474-0457

Appendix I to Chapter 2 [Amended]