DATE: January 13, 2004

SUBJECT: Defense Federal Acquisition Regulation Supplement (DFARS); Chile and Singapore Free Trade Agreements

SOURCE: Federal Register, January 13, 2004, Vol. 69, No. 8, page 1926

AGENCIES: Department of Defense (DOD)

ACTION: Final Rule

SYNOPSIS: DOD is amending DFARS Part 225, Foreign Acquisitions, and the related clauses in DFARS Part 252 to implement the the United States-Chile Free Trade Agreement Implementation Act (USCFTA) (Public Law 108-77) and United States-Singapore Free Trade Agreement Implementation Act (USSFTA) (Public Law 108-78).

DATES: The interim rule is effective January 13, 2004. Comments on the interim rule must be submitted on or before March 15, 2004.

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: interim rule.

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

SUPPLEMENTAL INFORMATION: Essentially, this interim rule duplicates the interim rule in Federal Acquisition Circular (FAC) 2001-19 that amended Federal Acquisition Regulation (FAR) Part 25 and the corresponding clauses in FAR Part 52 to implement the USCFTA and the USSFTA (see the January 7, 2004, FEDERAL CONTRACTS DISPATCH "Federal Acquisition Circular (FAC) 2001-19, SF 330 Effectivity Delay and Free Trade Acts"). For example, the term "North American Free Trade Agreement" (NAFTA) is replaced throughout DFARS Part 225 and DFARS Part 252 by the term "Free Trade Agreements" (FTA), which encompasses NAFTA, USCFTA, USSFTA, and any future free trade agreements into which the United States may enter, just as in FAC 2001-19. Also, the terms "NAFTA country," "NAFTA country end product." and "NAFTA country construction material" are replaced by "Free Trade Agreement country," "Free Trade Agreement country end product" and "Free Trade Agreement country construction material," respectively.

Another parallel with FAC 2001-19 is the addition of the sentence "United States law will apply to resolve any claim of breach of this contract" to DFARS 252.225-7021, Trade Agreements; DFARS 252.225-7036, Buy American Act -- Free Trade Agreements -- Balance of Payments Program; and DFARS 252.225-7045, Balance of Payments Program -- Construction Material Under Trade Agreements. This sentence is added because both the USCFTA and the USSFTA provide that the United States is authorized to resolve any claim against it, and require that contracts specify the law that will apply to resolve any breach of contract claim. DOD is inviting comments on the appropriate implementation of this authorization.

Finally, the interim rule establishes the threshold for applicability of the USCFTA and USSFTA at $58,550 for supplies and services and $6,725,000 for construction, same as FAC 2001-19.

EDITOR'S NOTE: Congress has developed an entire body of legislation (primarily provisions in authorization and appropriations acts) that applies only to DOD and not to the rest of the government. This occurred because Congress gives DOD so much money to spend each year, and Congress wants to make sure that as much of that money is spent domestically. This is why DOD has its own extensive DFARS Part 225 and separate set of contract clauses, and why DOD has to issue a separate rule that makes the same changes to the DFARS that were made to the FAR -- FAR Part 25 and the FAR clauses do not reflect all the additional requirements and exceptions that apply to DOD.

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

Copyright 2004 by Panoptic Enterprises. All Rights Reserved.

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