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Panoptic Enterprises' FEDERAL CONTRACTS DISPATCH

DATE: October 7, 2002

SUBJECT: Defense Federal Acquisition Regulation Supplement (DFARS); Foreign Acquisition

SOURCE: Federal Register, October 7, 2002, Vol. 67, No. 194, page 62589

AGENCIES: Department of Defense (DOD)

ACTION: Proposed Rule

SYNOPSIS: DOD is proposing to amend DFARS Part 225, Foreign Acquisition, and its corresponding clauses to simplify and clarify the policies pertaining to the acquisition of supplies and services from foreign sources.

DATES: Comments on the proposed rule must be submitted on or before December 6, 2002.

ADDRESSES: Respondents may submit comments directly on the web site at http://emissary.acq.osd.mil/dar/dfars.nsf/pubcomm. As an alternative, respondents may e-mail comments to: dfars@acq.osd.mil. Also, respondents who cannot submit comments through the web site or by e-mail may submit comments to Defense Acquisition Regulations Council, Attn: Amy Williams, OUSD(AT&L)DP(DAR), IMD 3C132, 3062 Defense Pentagon, Washington, DC 20301-3062, or by fax to 703-602-0350. Cite DFARS Case 2002-D009 when making comments on this proposed rule.

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

SUPPLEMENTAL INFORMATION: Because of the complexity of the Buy American Act and the trade agreements, DOD has decided to propose an extensive revision to DFARS Part 225 to simplify and clarify the regulations governing the acquisition of supplies and services from foreign sources.

The following are the primary changes to DFARS Part 225 and the corresponding clauses that are being proposed:

• DFARS Subpart 225.5, Evaluating Foreign Offers -- Supply Contracts, would be revised to provide streamlined procedures for evaluating foreign offers when acquiring supplies, and to add procedures for evaluating foreign offers in acquisitions in which price is not the determining factor (proposed paragraph (b)(iii) of DFARS 225.502, Application).
  
  
• The definition of "qualifying country end product" would be changed to permit the qualifying country manufacturing the product to use components from any other qualifying country (see proposed DFARS 252.225-7001, Buy American Act and Balance of Payments Program; DFARS 252.225-7021, Trade Agreements; and DFARS 252.225-7036, Buy American Act -- North American Free Trade Agreement Implementation Act -- Balance of Payments Program).
  
  
• The required approval levels for determinations of nonavailability under the Buy American Act would be revised as follows (see proposed paragraph (b)(ii) of DFARS 225.103, Exceptions):
  
  
  • At a level above the contracting officer if the acquisition is estimated not to exceed $100,000 (currently not to exceed $25,000);
    
    
  • By the chief of the contracting office if the acquisition is estimated not to exceed $250,000 (currently more than $100,000 but not to exceed $1,000,000);
    
    
  • By the head of the contracting activity (HCA) or immediate deputy if the acquisition is estimated to exceed $1,000,000 (currently not to exceed $2,000,000); and
    
    
  • The current approval by the head of the agency, or designee at a level no lower than an HCA, if the acquisition is estimated to exceed $2,000,000, would be removed.
    
    
• The required approval levels for individual public interest determinations for acquisition of end products from qualifying countries would be revised as follows (see proposed paragraph (b) of DFARS 225.872-4, Individual Determinations):
  
  
  • At a level above the contracting officer, for acquisitions of $100,000 or less (currently $25,000 or less);
    
    
  • By the chief of the contracting office, for acquisitions more than of $100,000 (currently $250,000 or less);
    
    
  • The current approval by the HCA for acquisitions of $2,000,000 or less would be removed; and
    
    
  • The current approval by the head of the agency for acquisitions over $2,000,000 would be removed.
    
    
• Paragraph (1)(i)(B) of DFARS 225.902, Procedures, would be revised to provide that the government will evaluate duty only if it is to be paid. In addition, paragraph (b) of proposed DFARS 252.225-7013, Duty-Free Entry, would state that, except for qualifying country supplies or eligible end products, the contractor will request duty-free entry only on foreign supplies for which the contractor estimates that duty will exceed $200 per unit (end product or component). DFARS 252.225-7013 would replace the five existing duty-free clauses: DFARS 252.225-7003, Information for Duty-Free Entry Evaluation; DFARS 252.225-7008, Supplies to be Accorded Duty-Free Entry; DFARS 252.225-7009, Duty-Free Entry -- Qualifying Country Supplies (End Products and Components; DFARS 252.225-7010, Duty-Free Entry -- Additional Provisions; and DFARS 252.225-7037, Duty-Free Entry -- Eligible End Products.
  
  
• Eliminated from DFARS 252.225-7042, Authorization to Perform, would be the requirement for a contractor to represent that it will comply with all laws, decrees, labor standards, and regulations of the foreign country in which the contract will be performed.
  
  
• Restrictions on contracting with firms owned or controlled by the government of a terrorist country or other foreign governments would be moved from paragraph (g)(i) of DFARS 209.104-1, General Standards, to proposed DFARS 225.770, Ownership or Control by the Government of a Terrorist Country.
  
  
• DFARS 252.225-7017, Prohibition on Award to Companies Owned by the People's Republic of China; DFARS 252.225-7024, Restriction on Acquisition of Night Vision Image Intensifier Tubes and Devices; DFARS 252.225-7026, Reporting of Contract Performance Outside the United States; and DFARS 252.225-7029, Preference for United States or Canadian Air Circuit Breakers, would be removed because they address outdated appropriations act restrictions.
  
  
• The changes proposed on July 30, 2002, to DFARS Part 225 and the corresponding provisions and clauses in DFARS Part 252 to implement the determination of Under Secretary of Defense for Acquisition, Technology, and Logistics E.C. "Pete" Aldridge (USD(AT&L)) that, for procurements subject to the Trade Agreements Act, it would be inconsistent with the public interest to apply the Buy American Act to U.S.-made end products that are substantially transformed in the United States, would be adopted (see the July 30, 2002, FEDERAL CONTRACT DISPATCH "Defense Federal Acquisition Regulation Supplement (DFARS); Trade Agreements Act - Exception for U.S.-Made End Products").

FOR FURTHER INFORMATION CONTACT: Panoptic Enterprises at 703-451-5953 or by e-mail to Panoptic@FedGovContracts.com.

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