[Federal Register Volume 71, Number 70 (Wednesday, April 12, 2006)]
[Proposed Rules]
[Pages 18695-18697]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-5282]


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

DEPARTMENT OF DEFENSE

48 CFR Parts 225 and 252

RIN 0750-AF22


Defense Acquisition Regulations System; Defense Federal 
Acquisition Regulation Supplement; Definitions of Component and 
Domestic Manufacture (DFARS Case 2005-D010)

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

ACTION: Proposed rule with request for comments.

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

SUMMARY: DoD is proposing to amend the Defense Federal Acquisition 
Regulation Supplement (DFARS) to clarify the definitions of 
``component'' and ``domestic manufacture'' as they relate to policy on 
foreign acquisition.

DATES: Comments on the proposed rule should be submitted in writing to 
the address shown below on or before June 12, 2006 to be considered in 
the formation of the final rule.

ADDRESSES: You may submit comments, identified by DFARS Case 2005-D010, 
using any of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     E-mail: [email protected]. Include DFARS Case 2005-D010 in the 
subject line of the message.
     Fax: (703) 602-0350.
     Mail: Defense Acquisition Regulations System, Attn: Ms. 
Amy Williams, OUSD (AT&L) DPAP (DARS), IMD 3C132, 3062 Defense 
Pentagon, Washington, DC 20301-3062.
     Hand Delivery/Courier: Defense Acquisition Regulations 
System, Crystal Square 4, Suite 200A, 241 18th Street, Arlington, VA 
22202-3402.
    Comments received generally will be posted without change to http://www.regulations.gov, including any personal information provided.

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

SUPPLEMENTARY INFORMATION:

A. Background

    This proposed rule amends DFARS Part 225 and associated provisions 
and clauses to clarify the distinction between foreign acquisition 
policies that apply only to top-level components of end products and 
those that apply to both top-level and lower-tier components of end 
products. As used in this background discussion, ``top-level 
components'' are those components that are incorporated directly into 
the end product; and ``lower-tier components''

[[Page 18696]]

are components that are incorporated into a component of the end 
product.
    The general definition of ``component'' in FAR 2.101 is ``any item 
supplied to the Government as part of an end item or of another 
component.'' Therefore, for general use, the term includes both top-
level components and lower-tier components. For purposes of determining 
whether a product is a domestic end product under the Buy American Act 
or the Balance of Payments Program, the term ``component'' is defined 
in FAR 25.003 to include only ``an article, material, or supply 
incorporated directly into an end product or construction material'' 
(i.e., only top-level components). This definition would also be 
applicable to any other situation in which evaluation of the end 
product is based on the value of the components, similar to that under 
the Buy American Act (e.g., to determine a qualifying country end 
product or whether anchor chain is a domestic end product).
    In broadly applying these concepts to DFARS Part 225, ``component'' 
has been defined to apply only to top-level components, except in 
Subpart 225.70, where the term ``component'' includes components at all 
tiers. However, there are some requirements of Part 225 other than 
those in 225.70 that are not based on or are not similar to the Buy 
American Act, and there are some requirements in 225.70 that should be 
treated as similar to the Buy American Act.
    Therefore, the definitions of ``component'' included in the 
proposed rule reflect the correct applicability of foreign acquisition 
policies as follows:
     225.900-70 and 252.225-7013, Duty-Free Entry--Duty-free 
entry is not related to evaluation of domestic products under the Buy 
American Act and should apply to qualifying country components at any 
tier.
     252.225-7019, Restriction on Anchor and Mooring Chain--The 
requirement that the cost of components manufactured in the United 
States exceed 50 percent of the total cost of components is similar to 
the Buy American Act component test, in which only top-level components 
are considered. Therefore, the definition restricting application to 
top-level components should apply.
     252.225-7025, Restriction on Acquisition of Forgings--The 
requirement to acquire forging items that are of domestic manufacture 
applies to any forging item, whether purchased as an end item or as a 
component at any tier.
    In addition, the proposed rule eliminates references to the DoD 
Industrial Preparedness Production Planning Program, at 225.7005-1 and 
in the definition of ``domestic manufacture'' at 252.225-7025, since 
DoD no longer has an Industrial Preparedness Production Planning 
Program.
    This rule was not subject to Office of Management and Budget review 
under Executive Order 12866, dated September 30, 1993.

B. Regulatory Flexibility Act

    DoD does not expect this rule to have a significant economic impact 
on a substantial number of small entities within the meaning of the 
Regulatory Flexibility Act, 5 U.S.C. 601, et seq., because the proposed 
rule updates and clarifies DFARS terminology, but makes no significant 
change to DoD acquisition policy. Therefore, DoD has not performed an 
initial regulatory flexibility analysis. DoD invites comments from 
small businesses and other interested parties. DoD also will consider 
comments from small entities concerning the affected DFARS subparts in 
accordance with 5 U.S.C. 610. Such comments should be submitted 
separately and should cite DFARS Case 2005-D010.

C. Paperwork Reduction Act

    The Paperwork Reduction Act does not apply, because the rule does 
not impose any information collection requirements that require the 
approval of the Office of Management and Budget under 44 U.S.C. 3501, 
et seq.

List of Subjects in 48 CFR Parts 225 and 252

    Government procurement.

Michele P. Peterson,
Editor, Defense Acquisition Regulations System.
    Therefore, 48 CFR parts 225 and 252 are proposed to be amended as 
follows:
    1. The authority citation for 48 CFR parts 225 and 252 continues to 
read as follows:


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

PART 225--FOREIGN ACQUISITION

    2. Section 225.900-70 is added to read as follows:


225.900-70  Definition.

    Component, as used in this subpart, means any item supplied to the 
Government as part of an end product or of another component.
    3. Section 225.7001 is amended as follows:
    a. By revising paragraph (b);
    b. By redesignating paragraphs (c) and (d) as paragraphs (d) and 
(e) respectively; and
    c. By adding a new paragraph (c) to read as follows:


225.7001  Definitions.

* * * * *
    (b) Component, other than bearing components, is defined in the 
clauses at 252.225-7012, Preference for Certain Domestic Commodities, 
and 252.225-7016, Restriction on Acquisition of Ball and Roller 
Bearings, except that for use in 225.7007, the term has the meaning 
given in the clause at 252.225-7019, Restriction on Acquisition of 
Anchor and Mooring Chain.
    (c) End product is defined in the clause at 252.225-7012, 
Preference for Certain Domestic Commodities.
* * * * *


225.7005-1  [Amended]

    4. Section 225.7005-1 is amended by removing paragraph (a) and 
redesignating paragraphs (b) and (c) as paragraphs (a) and (b) 
respectively.
    5. Section 225.7101 is revised to read as follows:


225.7101  Definitions.

    Component and domestic manufacture, as used in this subpart, are 
defined in the clause at 252.225-7025, Restriction on Acquisition of 
Forgings.

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

    6. Section 252.225-7000 is amended by revising the clause date and 
paragraph (a) to read as follows:


252.225-7000  Buy American Act--Balance of Payments Program 
Certificate.

* * * * *
Buy American Act--Balance of Payments Program Certificate (XXX 2006)
    (a) Definitions. Component, domestic end product, foreign end 
product, qualifying country, and qualifying country end product have 
the meanings given in the Buy American Act and Balance of Payments 
Program clause of this solicitation.
* * * * *
    7. Section 252.225-7013 is amended as follows:
    a. By revising the clause date;
    b. By redesignating paragraphs (a)(1) through (3) as paragraphs 
(a)(2) through (4) respectively; and
    c. By adding a new paragraph (a)(1) to read as follows:

[[Page 18697]]

252.225-7013  Duty-Free Entry.

* * * * *

Duty-Free Entry (XXX 2006)

    (a) * * *
    (1) Component means any item supplied to the Government as part of 
an end product or of another component.
* * * * *
    8. Section 252.225-7019 is amended as follows:
    a. By revising the clause date;
    b. By redesignating paragraphs (a) through (c) as paragraphs (b) 
through (d) respectively;
    c. By adding a new paragraph (a); and
    d. By revising newly designated paragraph (d) to read as follows:


252.225-7019  Restriction on Acquisition of Anchor and Mooring Chain.

* * * * *
Restriction on Acquisition of Anchor and Mooring Chain (XXX 2006)
    (a) Definition. Component, as used in this clause, means an 
article, material, or supply incorporated directly into an end product 
or construction material.
* * * * *
    (d) The Contractor shall insert the substance of this clause, 
including this paragraph (d), in all subcontracts for items containing 
welded shipboard anchor and mooring chain, four inches or less in 
diameter.
    9. Section 252.225-7025 is amended as follows:
    a. By revising the clause date;
    b. By redesignating paragraphs (a)(1) and (2) as paragraphs (a)(2) 
and (3) respectively;
    c. By adding a new paragraph (a)(1); and
    d. By revising newly designated paragraph (a)(2) and paragraph (b) 
to read as follows:


252.225-7025  Restriction on Acquisition of Forgings.

* * * * *
Restriction on Acquisition of Forgings (XXX 2006)
    (a) * * *
    (1) Component means any item supplied to the Government as part of 
an end product or of another component.
    (2) Domestic manufacture means manufactured in the United States, 
its outlying areas, or Canada.
* * * * *
    (b) End products and their components delivered under this contract 
shall contain forging items that are of domestic manufacture only.
* * * * *
    10. Section 252.225-7035 is amended by revising the clause date and 
paragraph (a) to read as follows:


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

* * * * *
Buy American Act--Free Trade Agreements--Balance of Payments Program 
Certificate (XXX 2006)
    (a) Definitions. Component, domestic end product, end product of 
Australia, Canada, Chile, Mexico, or Singapore, foreign end product, 
qualifying country end product, and United States, as used in this 
provision, have the meanings given in the Buy American Act--Free Trade 
Agreements--Balance of Payments Program clause of this solicitation.
* * * * *
 [FR Doc. E6-5282 Filed 4-11-06; 8:45 am]
BILLING CODE 5001-08-P