[Federal Register Volume 74, Number 10 (Thursday, January 15, 2009)]
[Rules and Regulations]
[Pages 2713-2724]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-551]
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DEPARTMENT OF DEFENSE
GENERAL SERVICES ADMINISTRATION
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Parts 2, 3, 12, 23, 25, and 52
[FAC 2005-30; FAR Case 2000-305; Item II; Docket 2009-0001; Sequence 1]
RIN 9000-AJ55
Federal Acquisition Regulation; FAR Case 2000-305, Commercially
Available Off-the-Shelf (COTS) Items
AGENCIES: Department of Defense (DoD), General Services Administration
(GSA), and National Aeronautics and Space Administration (NASA).
ACTION: Final rule.
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SUMMARY: The Civilian Agency Acquisition Council and the Defense
Acquisition Regulations Council (Councils) have agreed on a final rule
amending the Federal Acquisition Regulation (FAR) to implement Section
4203 of the Clinger-Cohen Act of 1996 (41 U.S.C. 431) (the Act) with
respect to the inapplicability of certain laws to contracts and
subcontracts for the acquisition of commercially available off-the-
shelf (COTS) items.
DATES: Effective Date: February 17, 2009.
FOR FURTHER INFORMATION CONTACT: Mr. Michael Jackson, Procurement
Analyst, at (202) 208-4949 for clarification of content. For
information pertaining to status or publication schedules, contact the
FAR Secretariat at (202) 501-4755. Please cite FAC 2005-30, FAR case
2000-305.
SUPPLEMENTARY INFORMATION:
A. Background
Section 35 of the Office of Federal Procurement Policy (OFPP) Act
(41 U.S.C. 431) requires that the Federal Acquisition Regulation (FAR)
include a list of provisions of law that are inapplicable to contracts
for the acquisition of commercially available off-the-shelf (COTS)
items. Certain laws cannot be exempt from the acquisition of COTS and
they include laws that--
Provide for criminal or civil penalties;
Specifically refer to 41 U.S.C. 431 and the laws state
that it applies to COTS;
Provide for a bid protest procedure or small business
preference listed at 41 U.S.C. 431(a)(3); or
Are applicable because the Administrator of OFPP makes a
written determination that it would not be in the best interest of the
United States to exempt such COTS contracts from the applicability of
the laws.
In order to implement section 4203 of the Clinger-Cohen Act of
1996, DoD, GSA, and NASA published an advanced notice of proposed rule
(ANPR) in the Federal Register at 68 FR 4874, January 30, 2003. The
ANPR listed provisions that may be inapplicable to the acquisition of
COTS items, and requested public comment. (A prior ANPR had been issued
under FAR Case 96-308.) The Councils published a proposed rule at 69 FR
2448, January 15, 2004. The comment period closed on March 15, 2004.
The Councils received comments from 56 respondents, of which 3 were
duplicates. The comments were thoroughly examined by the FAR
Acquisition Law Team, Civilian Agency Acquisition Council (CAAC), and
Defense Acquisition Regulations Council (DARC).
B. Definition of COTS.
The Councils received several comments on the definition of COTS.
1. Include services/IT in the definition. One respondent suggested
that the definition of COTS item should delete the words ``of supply''
from the definition. The respondent states that this is not part of the
statutory definition. Further, three respondents commented that
definition of COTS should specifically include services. Another
respondent suggested additional language in the definition of COTS to
address software and other information technology products.
Response: The statute defines ``COTS item'' as an item that ``Is a
commercial item as described in section 4(12)(A).'' ``Commercial item''
is defined at 41 U.S.C. 403(12). Paragraph (A) of that definition reads
as follows:
``Any item, other than real property, that is of a type customarily
used by the general public or by non-governmental purposes, and that--
(i) Has been sold, leased, or licensed to the general public; or
(ii) Has been offered for sale, lease or license to the general
public.''
Paragraphs (F) and (G) of the definition deal with commercial
services. These paragraphs were not referenced in the statutory
definition of a COTS item. Services are therefore necessarily excluded
from the definition. To make the definition clearer, the reference to
the definition of commercial item has been revised to point to the
first paragraph of the definition of commercial item.
The Councils have clarified that the words ``of supply'' include
[[Page 2714]]
``construction material''. Although the definition of ``construction
materials'' states that they are ``supplies'', FAR Part 25
distinguishes between Buy American Act--Supplies (FAR Subpart 25.1) and
Buy American Act--Construction materials (FAR Subpart 25.2). Therefore,
this clarification is beneficial. The OFPP memorandum, dated February
14, 2008, specifically mentions waiver of the component test at 41
U.S.C. 10a (supply) and 10b (construction.)
Since the only laws waived are the component test of the Buy
American Act and the recycled material estimate and certification, and
no laws relating to FAR Part 27 have been waived, it is unnecessary to
specifically mention information technology (IT) or software in the
definition of COTS item.
2. ``Without modification''. One respondent considers the phrase
``without modification'' to be too restrictive. Some COTS products may
require some type of modification to suit the intended use of the
product.
Response: The phrase ``without modification'' is required by
statute. However, the Councils have added ``under a contract or
subcontract at any tier'' to clarify that whether an item is a COTS
item is determined at the point of sale to the next higher tier
subcontractor. This is consistent with the DoD definition of ``COTS
item'' as applied to the waiver of specialty metals restrictions when
acquiring COTS items. If a COTS item is accepted by the next high tier
without modification, then any waiver applicable to COTS items is
applicable to this item at the time of acceptance, even if it is
subsequently modified. Although this distinction is not necessary in
this particular rule, because both laws being waived apply only at the
level of the prime contract, it is beneficial to keep this definition
clear and consistent, in case a law is waived in the future that
applies at the subcontract level. This intent to address COTS items at
the subcontract level is demonstrated in section 804 of the National
Defense Authorization Act for Fiscal Year 2008 (Pub. L. 110-181), which
states in paragraph (b) (10 U.S.C. 2533b(h)) that ``This section does
not apply to contracts or subcontracts for the acquisition of
commercially available off-the-shelf items, as defined in section 35(c)
of the Office of Federal Procurement Policy Act (41 U.S.C.
431(c))[hellip]''.
3. ``Sold in substantial quantities.'' One respondent requests that
this should be clarified, that it is not necessary that the contractor
itself sells substantial quantities. Multiple vendors may sell the item
in substantial quantities in the commercial marketplace.
Response: This definition is statutory. There is nothing in the
definition that implies that it is the contractor that must sell the
item in substantial quantities in the commercial marketplace. The way
the definition reads, the substantial quantities test does apply to the
item, as suggested by the respondent.
4. Incorporate definition of COTS into FAR 52.202-1, Definitions.
One respondent recommended that the definition of COTS item should be
incorporated into FAR 52.202-1, Definitions, because the proposed rule
added a cross reference in FAR 52.244-6 to the definition of COTS item
at FAR 52.202-1.
Response: This comment was correct at the time, but has been
overtaken by events. First, the final rule does not make the proposed
change to FAR 52.244-6. In addition, the clause at FAR 52.202-1 was
rewritten under another case, so that it no longer contains a list of
definitions. Rather, it refers to where definitions can be found and
provides guidance as to which definitions apply, when a term is defined
in more than one place.
5. Subset of commercial items. The proposed rule included in the
definition of COTS item the statement that COTS items are a subset of
commercial items. Although no public comments were received on this
issue, the Councils decided that it is redundant to state that COTS
items are a subset of commercial items when the definition itself
requires that COTS items meet the definition of the first paragraph of
the definition of commercial item. This information that COTS items are
a subset of commercial items is now provided at FAR 12.505, rather than
in the definition.
C. Implementation of COTS in FAR Part 12.
The draft final rule modifies FAR Subparts 12.1, 12.3, and 12.5 as
proposed, to address COTS items, and adds the section 12.505. However,
because only 2 laws are being waived, section 12.505 has been modified
to include only those 2 laws, while stating that all laws waived for
contracts or subcontracts for the acquisition of commercial items are
also waived for COTS (because it is a subset). This more clearly
identifies the differences that apply to COTS items.
The rule does not make any change to FAR 12.504, based on the
recommendation of SBA. An extraneous proposal to delete 15 U.S.C.
644(d), not directly related to this case, has been removed. SBA states
that, although FASA attempted to eliminate labor surplus areas for
purposes of subcontracting, the drafters of FASA missed the reference
to subcontracting in 15(d) of the Small Business Act. Therefore, until
this error is corrected, it is better to leave it on the list of laws
that are inapplicable to subcontracts for the acquisition of COTS
items.
D. Determination by OFPP.
After considering the analysis and recommendations as to laws that
should be waived for the acquisition of COTS items, the Administrator
for the Office of Federal Procurement Policy, made a determination on
February 14, 2008, of the laws applicable and laws inapplicable to the
acquisition of COTS items.
1. Laws Waived. The Administrator of OFPP exercised the authority
to wholly or partially waive the following laws:
a. Buy American Act. A partial waiver of the Buy American Act
(BAA)(41 U.S.C. 10a and 10b), limited to the Act's domestic components
test was granted.
b. Estimate of Percentage of Recovered Material Act. The Estimate
of Percentage of Recovered Material Act (42 U.S.C. 6962(c)(3)(A)) was
waived in its entirety.
2. Waiver still under consideration. A partial waiver of the
following law is under consideration and a determination and findings
will be made on this law at a later date:
Rights in Technical Data (41 U.S.C. 418a and 10 U.S.C. 2520),
specifically waiver of--
Unlimited Government rights in data for operation,
maintenance, installation, or training; and
The Government's right to make unlimited copies.
3. Laws already inapplicable or modified for the acquisition of
commercial items. No further modification was made to any of the
following laws, which have already been determined inapplicable or
modified for the acquisition of commercial items:
a. Walsh-Healey, 41 U.S.C. 43.
b. Contingent Fees, 41 U.S.C. 254(a) and 10 U.S.C. 2306(b).
c. Minimum response time, 41 U.S.C. 416(a) (3) and (6).
d. Drug Free Workplace, 41 U.S.C. 701.
e. Limitation on the use of appropriated funds, 31 U.S.C. 1354(a).
f. Contract Work Hours and Safety Standards Act, 40 U.S.C. 3701.
g. Anti-Kickback Act of 1986, 41 U.S.C. 57 (a) and (b), and 58.
h. Truth in Negotiations Act, 41 U.S.C. 254(d) and 10 U.S.C. 2306a.
[[Page 2715]]
i. Cost Accounting Standards, 41 U.S.C. 422.
4. Law not subject to waiver.
Limitation on appropriated funds to influence certain Federal
contracting and financial transactions (31 U.S.C. 1352).
5. Laws that will not be waived because it is not in the best
interest of the Government. A determination was made that the following
laws will not be waived for the acquisition of COTS because it is not
in the best interest of the Government:
a. Trade Agreements Act (19 U.S.C. 2501 and 19 U.S.C. 2512);
b. Restrictions on Advance Payments (31 U.S.C. 3324).
c. Employment Reports for Veterans (38 U.S.C. 4212(d)(l)).
d. Validation of Proprietary Data Restrictions (41 U.S.C. 253d and
10 U.S.C. 2321).
e. Prohibition on Limiting Subcontractor Direct Sales (41 U.S.C.
253g and 10 U.S.C. 2402).
f. Cargo Preference, 10 U.S.C. 2631(a) and 46 U.S.C. 1241(b).
g. Affirmative Action for Workers with Disabilities, 29 U.S.C. 793.
h. Equal opportunity for Special Disabled Veterans, 38 U.S.C. 4212.
i. Examination of records by the Comptroller General, 41 U.S.C.
254d(c) and 10 U.S.C. 2313(c).
j. Fly American Act, 49 U.S.C. 40118 (but see 12.503).
E. Discussion and analysis of laws considered for waiver.
1. Laws Waived.
a. Buy American Act (41 U.S.C. 10a and 10b), component test. Ten
respondents specifically endorse waiver of the application of the Buy
American Act (BAA) to COTS and 4 respondents endorse the waiver as part
of a broad endorsement of the waivers in general, without specific
identification or comment. Two respondents oppose the waiver of the BAA
as a whole.
Some respondents state that the BAA makes it increasingly difficult
for U.S. companies to compete for Federal business. These laws are out
of place in the contemporary international market for commercial items.
Companies must source products globally in order to be competitive in
the worldwide marketplace. Therefore, companies must choose between
being competitive in the global market and being competitive in the
Government market. The BAA usually does not influence COTS
manufacturers because revenue derived from Government sales is
typically a very small percentage of overall revenue for COTS.
Therefore, Federal agencies are often denied access to the
most productive, cost-effective technology.
BAA restrictions may also hamper the Government's ability
to fully implement federal policies. It may hinder Government access to
technology compliant with Section 508 of the Rehabilitation Act of 1973
(accessible to employees with disabilities) and the most energy-
efficient products, as required by E.O. 13101 and 13123.
Some respondents are concerned that the Government-unique
requirement to track where components are being manufactured imposes a
severe administrative burden, especially on small business. It requires
contractors to establish and maintain costly and labor intensive
management systems. Tracking the place of manufacture and component
value is not necessary for the general origin labeling requirements
applicable generally in the U.S. commercial market place. BAA
compliance is a major procurement requirement that adds complexity and
cost to the delivery of goods to the Government. The increased cost of
ensuring compliance with the BAA keeps some firms out of the market
completely and affects the price of products sold to the Government.
Another issue for respondents is that application of the
regulations relating to the BAA is very complex and difficult. The
certification requirements potentially expose manufacturers to civil
false claims and other legal sanctions, even when they have taken
extraordinary steps to comply with the BAA.
Some respondents contend that Congress mandates the elimination,
where possible, of barriers to the Government's ability to procure
commercial items.
Federal agencies contend that it is difficult and causes delay to
try to obtain case-by-case waivers of the BAA.
On the other hand, two respondents were concerned that a permanent
waiver of the BAA should not be granted without reciprocity. These
respondents believed that the Government needs these provisions to stay
in general effect so that possibility of waiver will provide incentive
to encourage other countries to provide reciprocal access. Agencies can
waive the BAA on a case-by-case basis or for a class of items when it
is in the public interest to do so.
Response: The Councils concur with the respondents on the
especially burdensome nature of the component test. Today's markets are
globally integrated with foreign components often indistinguishable
from domestic components. Manufacturers' component purchasing decisions
are based on factors such as cost, quality, availability, and
maintaining the state of the art, not the country of origin, making it
much more difficult in today's market for a manufacturer to guarantee
the source of its components over the term of a contract. It is even
more difficult for a dealer to determine and guarantee the source of
the components included in products on the shelf. The difficulty in
tracking the country of origin of components is a disincentive for
firms to become defense contractors, limiting the ability of the
Government to purchase products already in the commercial distribution
systems. In today's globally integrated market, it is expensive for
manufacturers to distinguish between foreign and domestic components.
Requiring them to do so results in increased costs of procurements and
impedes the ability to obtain the latest advances in commercial
technology.
The rationale provided against waiver of the BAA as a whole is
resolved by waiving only the component test of the BAA. The component
test of the BAA has already been waived for all acquisitions subject to
the World Trade Organization Government Procurement Agreement (WTO
GPA). By waiving only the component test of the BAA for COTS items, but
still requiring manufacture in the United States, the Government can
preserve an incentive to encourage other countries to provide
reciprocal access, while reducing the significant administrative burden
on contractors and the associated increased cost to the Government.
A determination was made that a waiver of the components test would
allow a COTS item to be treated as a domestic end product if it is
manufactured in the U.S., without tracking the origin of the
components. Waiving only the component test of the BAA for COTS items
and still requiring the end product to be manufactured in the U.S.,
reduces significantly the administrative burden on contractors and the
associated cost to the Government. The U.S. Trade Representative's
Office was consulted and did not oppose the partial waiver of the BAA.
The component test of the BAA was waived because it is in the best
interest of the U.S. to do so.
The draft final rule modifies FAR Part 25 and associated clauses to
implement waiver of the component test of the BAA:
Indication of the new waiver at FAR 25.101 (Buy American
Act--Supplies, General) and FAR 25.201, (Buy
[[Page 2716]]
American Act--Construction Materials, Policy).
Changes to the definition of ``domestic end product'' and
``domestic construction material'' at FAR 25.003 and in the associated
clauses, to include COTS end products or construction materials
manufactured in the United States for which the component test of the
Buy American Act has been waived; and
The following FAR provisions and clauses need only minor
modifications, to incorporate the new definitions, make discussions of
components applicable only to items other than COTS items, and clarify
that now a United States end product that does not qualify as a
domestic end product is an end product that is not a COTS item and does
not meet the component test in paragraph (2) of the definition of
``domestic end product'':
52.225-1 Buy American Act--Supplies.
52.225-2 Buy American Act Certificate.
52.225-3 Buy American Act--Free Trade Agreements--Israeli
Trade Act.
52.225-4 Buy American Act--Free Trade Agreements--Israeli
Trade Act Certificate.
52.225-9 Buy American Act--Construction Materials.
52.225-10 Notice of Buy American Act Requirement--
Construction Materials.
52.225-11 Buy American Act--Construction Materials under
Trade Agreements, and Alternate I.
52.225-12 Notice of Buy American Act Requirement--
Construction Materials Under Trade Agreements.
Conforming changes are also required for--
52.212-3 Offeror Representations and Certifications--
Commercial Items;
52.212-5 Contract Terms and Conditions Required to
Implement Statutes or Executive Orders--Commercial Items; and
52.213-4 Terms and Conditions--Simplified Acquisitions
(Other Than Commercial Items).
b. Certification and Estimate of Percentage of Recovered Material
(42 U.S.C. 6962 (c)(3)(A)). There were no specific comments supporting
waiver of the Estimate of Percentage of Recovered Materials. However,
ten respondents supported waiver as part of broad general support for
the proposed rule. One respondent specifically opposed to waiver of 42
U.S.C. 6962(c)(3)(A), Estimate of Percentage of Recovered Material,
because the respondent feels that it may preclude contractors from
having to indicate on their products the percent of recycled materials
contained therein. Information on the recovered material content is
necessary in order for agencies to carry out the intent of the Resource
Conservation and Recovery Act (RCRA) and Executive order (E.O.) 13101.
Response: Both the Environmental Protection Agency (EPA) and the
Office of the Federal Environmental Executive (OFEE) agree that
requiring pre-award certification from offerors and a written estimate
of percentage of recovered materials from the contractor after contract
completion are unnecessary requirements for COTS. These requirements
are a paperwork exercise and are not consistent with buying COTS items
from the commercial market place. The recycled content statement on the
product packaging serves as the certification and the estimate. The
Chief Acquisition Officer and Senior Procurement Executive at EPA and
the OFEE were not opposed to waiving the requirement for certification
and estimation for COTS items. This does not waive any of the other
RCRA requirements. The Government will still acquire competitively, in
a cost-effective manner, products that meet reasonable performance
requirements and that are composed of the highest percentage of
recovered materials practicable.
A determination was made that waiver of this law is in the best
interest of the Government because the law's requirements are not
consistent with the acquisition of COTS items in the commercial
marketplace.
The only necessary changes to implement this waiver are--
i. Modification of the clause prescription at FAR 23.406 to exclude
application to COTS items (as proposed); and
ii. Modification of FAR 52.212-5(b)(25)(i) and (ii), to indicate
that FAR 52.223-9 is not applicable to the acquisition of COTS items.
2. Waiver still under consideration.
Rights in Technical Data (41 U.S.C. Sec. 418a and 10 U.S.C. Sec.
2320).
Ten respondents supported waiver as part of broad general support
for the proposed rule (Respondents No. 9, 11, 19, 20, 26, 28, 32, 34,
38, and 40). No respondents opposed the waiver. However, the Councils
did not reach consensus on this waiver. The Department of the Treasury
opposed waiver of this provision. The proposed waiver of the data
rights statutes is based on the premise that, because COTS items are
developed at private expense, there would be no Government rights in
technical data associated therewith. The Councils do not agree entirely
with this premise. For example, FAR 52.227-14 provides for unlimited
rights in form, fit and function data; and in manuals and training
materials necessary for installation, operation, maintenance, and
repair; regardless of whether such data is developed at Government
expense. The fact that items delivered under a contract are COTS does
not diminish the Government's need to operate and repair them, and
form, fit, and function data could be critical if a COTS item is
integrated into a Government system and must subsequently be replaced.
The Councils agree that the relevant statutes do not focus only on
data related to technologies developed exclusively at the Government's
expense - they also cover development in whole or in part at private
expense, including commercial item technologies (this is especially
clear in the DoD statute, 10 U.S.C. 2320). Further, it is not accurate
to conclude that the possibility of Government funding for (elements
of) COTS technologies is always ``irrelevant.'' The statutory schemes
have numerous elements that are designed to protect important rights
and proprietary interests of contractors (and subcontractors),
especially in cases of privately developed or commercial technologies.
For example, the Government is prohibited from requiring
contractors to provide the Government with detailed design data, and
from requiring the contractors to relinquish proprietary rights in data
related to proprietary or commercial technologies, as a condition of
contract award (see 418a(a), and 2320(a)(2)(F)). Additionally, the DoD
scheme specifically and expressly addresses the rights in data related
to technologies developed in whole or in part at private expense
(2320(a)(2)(B) & (C)), and the civilian statutes requires the
regulations to address these funding scenarios (418a(c)(1)). Both
statutory schemes also recognize the special requirements under the
Small Business Innovation Research (SBIR) program, which allow the
small business to treat even 100 percent Government-funded technologies
as proprietary for certain periods.
Similarly, the schemes identify and protect the interests of the
Government in acquiring and using data for certain important purposes,
such as operation and maintenance, or emergency repair and overhaul, of
the item. These protections of interests, both for the contractors/
subcontractors and the Government, are equally applicable to COTS items
as for other commercial items or noncommercial items (as the Department
of Treasury notes).
All of these considerations demonstrate that the statutory schemes
[[Page 2717]]
are designed to balance Government and private interests in all such
acquisitions, and thus should not be waived in their entirety for COTS
item acquisitions.
3. Laws already inapplicable or modified for the acquisition of
commercial items. None of the respondents commented specifically on any
of these laws that are already inapplicable or modified for the
acquisition of commercial items, as identified in section C.3. of this
notice.
4. Law not subject to waiver.
Limitation on appropriated funds to influence certain Federal
contracting and financial transactions (31 U.S.C. 1352). After
publication of the proposed rule, the Councils determined that this
statute is not eligible for waiver because it provides for criminal or
civil penalties.
5. Laws that will not be waived because it is not in the best
interest of the Government.
a. Trade Agreements Act (TAA)(19 U.S.C. 2501 and 19 U.S.C. 2512).
Many of the respondents (21) endorse waiver of the application of the
trade agreements prohibitions to COTS.
On the other hand, 4 respondents (including the United States Trade
Representative (USTR) and the Department of Commerce) opposed the
waiver.
The proponents of waiver of the purchase restrictions of the Trade
Agreements Act (TAA) contend that--
i. The TAA makes it increasingly difficult for U.S. companies to
compete for Federal business. These laws are out of place in the
contemporary international market for commercial items. Companies must
source products globally in order to be competitive in the worldwide
marketplace. Therefore, companies must choose between being competitive
in the global market and being competitive in the Government market.
The trade agreements procurement restriction usually does not influence
COTS manufacturers because revenue derived from Government sales is
typically a very small percentage of overall revenue for COTS.
Therefore, Federal agencies are often denied access to the
most productive, cost-effective technology.
TAA restrictions may also hamper the Government's ability
to fully implement Federal policies. It may hinder Government access to
technology compliant with Section 508 of the Rehabilitation Act of 1973
(accessible to employees with disabilities) and the most energy-
efficient products, as required by E.O. 13101 and 13123.
Although most IT and electronics manufacturing now occurs
in Asia, only 4 Asian countries have signed the GPA - Hong Kong, Japan,
Singapore, and the Republic of Korea. Asian countries not signatories
include China, Indonesia, Malaysia, the Philippines, and Taiwan.
ii. The Government-unique requirement to track where products are
being manufactured imposes a severe administrative burden. It requires
contractors to establish and maintain costly and labor intensive
management systems. TAA compliance is a major procurement requirement
that adds complexity and cost to the delivery of goods to the
Government. The increased cost of ensuring compliance with the TAA
keeps some firms out of the market completely.
iii. Application of the regulations relating to trade agreements is
very complex and difficult. It is often difficult to determine
``substantial transformation'' for purposes of the TAA. The
certification requirements potentially expose manufacturers to civil
False Claims and other legal sanctions, even when they have taken
extraordinary steps to comply with the TAA.
iv. Congress mandates the elimination, where possible, of barriers
to the Government's ability to procure commercial items.
v. Barring access to the U.S. Government market has not provided
the leverage to open foreign government markets that U.S. trade
negotiators may have envisioned when the TAA was passed. Several
commenters state that of the 145 WTO member countries, only 28
countries have signed the GPA in 25 years, 23 of the signatories being
original signatories.
vi. The restrictions of the TAA are not required by any treaty of
international agreement, including the GPA. The commenters believe that
the U.S. is the only GPA signatory to enact such market restrictions.
vii. It is difficult and causes delay to try to obtain case-by-case
waivers of the trade agreements.
The opponents of waiver of the purchase restrictions of the TAA
contend that--
i. A permanent waiver would significantly disadvantage U.S.
suppliers, especially small businesses, without providing reciprocal
market access for them. China, Malaysia, and the Philippines have not
joined the GPA or provided benefits in a bilateral agreement.
ii. USTR's ability to waive the TAA purchasing restriction on a
case-by-case basis has been a key element in its ability to negotiate
reciprocal market access for U.S. suppliers in the government
procurement markets of foreign countries, through bilateral FTAs, as
well as accession to the GPA. In recent years, USTR has concluded new
FTAs with Chile, Australia, Morocco, and more agreements are pending. A
permanent waiver for COTS would severely undermine leverage that is
critical to USTR's ability to negotiate such agreements.
iii. There is no need for a permanent waiver, because waivers can
be granted on a case-by-case basis when in the national interest.
Response: The TAA essentially outlines a process for approval of
trade agreements, and the relationship of trade agreements to U.S. law.
A determination was made that a waiver of the prohibition on
acquisitions of products from countries that have not entered into
trade agreements with the United States would put U.S. suppliers,
especially small businesses, at a significant disadvantage without
providing reciprocal market access for them. China, Malaysia, and the
Philippines have not joined the GPA or provided benefits in a bilateral
agreement. USTR's ability to waive the TAA purchasing restriction on a
case-by-case basis has been a key element in its ability to negotiate
reciprocal market access for U.S. suppliers in the government
procurement markets of foreign countries, through bilateral Free Trade
Agreements (FTA), as well as consent to the GPA. In recent years, USTR
has concluded new FTAs with Chile, Australia, Morocco, Bahrain,
Dominican Republic-Central America, and more agreements are pending.
Therefore, a permanent waiver is not in the best interests of the
Government because it would severely undermine leverage that is
critical to USTR's ability to negotiate such agreements. USTR can grant
waivers on a case-by-case basis when in the national interest.
b. Restrictions on Advance Payments (31 U.S.C. 3324). The Councils
received 10 comments that supported waiver as part of broad general
support for the proposed rule and two comments specifically supporting
the waiver of the restriction on advance payments, whereas one
respondent specifically opposed the waiver of the restriction on
advance payments.
One respondent supported waiving the restriction on the basis that
it would permit the Government to follow the common business practice
of ``payment due upon receipt.'' Another respondent supported waiving
the restriction because it also believes that it is common business
practice to make payment for IT support packages at the beginning of
the term. The respondent that opposed the waiver of the statute
[[Page 2718]]
was concerned that contracting officers will be faced with demands for
advance payments for routine COTS purchases.
Response: In addition to permitting invoicing upon delivery to the
``point of first receipt by the Government,'' the proposed rule would
also have allowed invoicing upon delivery of supplies to a post office
or common carrier. Consequently, the Government might be obligated to
make payment before receipt.
This statute prohibits, except in certain circumstances, payment in
excess of the value of supplies or services already delivered or
provided. 31 U.S.C. 3324(b) provides that an advance of public money
may be made only if it is authorized by a specific appropriation or
other law or as authorized by the President in some circumstances. 41
U.S.C. 255(f) and 10 U.S.C. 2307(f) provide some authority for advance
payments for commercial items, but treat this as Government financing
and require the Government to obtain adequate security. It was
determined that a permanent waiver is not necessary because 41 U.S.C.
Sec. 255(f) (as implemented by FAR 32.2, Commercial Item Purchase
Financing, specifically FAR 32.202-4(a)(2)) already authorizes advance
payments for commercial item acquisitions, and agencies have the
authority to waive, if it is in the best of the Government.
c. Employment Reports for Veterans (38 U.S.C. 4212(d)(l)). The
Councils received one comment specifically in favor of waiving the
statute and 10 respondents supported waiver as part of broad general
support for the proposed rule. The Councils also received 2 responses
specifically opposed to the waiver.
The respondents who favored waiver contended that waiving the
statute only affects the submission of a report and data gathering. By
waiving the statute, an administrative function would be eliminated but
the intent to continue with the regulations to promote veteran
employment would remain unchanged.
Respondents who objected to waiver of the statute feared that
veteran programs would be impacted.
Response: This statute requires that each contractor that enters
into a contract in excess of $100,000 for personal property and non-
personal services, including construction, provide an annual report to
the Secretary of Labor that includes specific information about their
contractor workforce. The report requires Federal contractors and
subcontractors to ``take affirmative action'' to hire and promote
qualified special disabled veterans, veterans of the Vietnam-era and
any veteran who served on active duty during a war or in a campaign or
expedition for which a campaign badge has been authorized. Congress has
taken a keen interest in the VETS 100 Report, as evidenced by Section
1354 of Public Law 105-339, Veterans Employment Opportunities Act of
1998, which supports this reporting requirement. A determination was
made not to waive the requirement for contractors to file employment
reports because it is not in the best interest of the Government to do
so.
d. Validation of Proprietary Data Restrictions (41 U.S.C. 253d and
10 U.S.C. 2321). 10 respondents supported waiver as part of broad
general support for the proposed rule. No respondents opposed the
waiver.
Response: This statute provides an extensive procedure for due
process for a Government contractor when the Government has a suspicion
that technical data the contractor is claiming to be proprietary was,
in fact, produced under a Government contract and was not produced at
private expense. The validation scheme is also carefully structured to
balance the interest of all parties, and create a uniform mechanism to
determine the appropriate allocation of rights in the data. These
statutes establish procedures, rights, and legal remedies regarding the
validation of the asserted proprietary restrictions. A determination
was made that these statutes should be available to balance the
interest of all parties involved in an acquisition, including COTS.
e. Prohibition on Limiting Subcontractor Direct Sales (41 U.S.C.
253g and 10 U.S.C. 2402). Nine respondents supported waiver as part of
broad general support for the proposed rule. One respondent opposed the
waiver.This respondent stated that this exemption has some potential
for harming small business and the Federal Government itself.
Response: This statute was enacted as part of Pub. L. 98-577, which
was intended by Congress as a comprehensive solution to ``$600 toilet
seats and $400 hammers.'' This provision answered the practice of major
defense contractors prohibiting their subcontractors from selling
directly to the Government. In the past, when the prime contractor
wanted to be the source to the Government, they would charge at least a
material overhead to any cost or price from the subcontractor/supplier.
Waiving this Act would allow prime contractors to restrict their
subcontractors from selling directly to the Government and limit
opportunities for small businesses, including women-owned and minority-
owned businesses. A determination was made not to waive this Act so as
to ensure competition is preserved for all sectors of the economy.
f. Cargo Preference, 10 U.S.C. 2631(a) and 46 U.S.C. 1241(b). The
Councils did not receive any comments specifically supporting waiver of
the cargo preference laws for acquisition of COTS. 10 respondents
supported waiver as part of broad general support for the proposed
rule. 14 respondents specifically opposed a waiver of Cargo Preference
laws for COTS, including the following Government agencies:
U.S. Maritime Administration (MARAD)(Department of
Transportation)
MARAD, Division of Maritime Programs
Under Secretary of Defense (Acquisition, Technology, and
Logistics)
United States Transportation Command (Department of
Defense)
Opponents of the waiver of Cargo Preference laws when acquiring
COTS items present the following rationale:
i. The Cargo Preference laws are vital to maintaining a viable
merchant marine, including both vessels and mariners.
ii. The proposed waiver is contrary to the Government's maritime
policy. The Secretary of Transportation stated in March 2004 that
``cargo preference laws are essential elements of America's national
maritime policy.''
iii. Many respondents state that the COTS category represents the
vast preponderance of cargo that is carried for or sponsored by the
U.S. Government. The MARAD Administrator states that waiver could
result in the potential loss of nearly $1.2 billion in revenue to U.S.
flag vessel operators and further loss to the economy through job loss.
The American Maritime Congress believes that finalization of this
waiver will eventually result in more than 100 U.S.-flag vessels in the
international trades leaving the U.S. flag, and points out further
adverse impact on foreign exchange, and reduced Federal tax revenues.
iv. Weakening of the U.S. maritime industry will adversely impact
our country's ability to respond to international crises. We need U.S.-
flag vessels to transport troops, machinery, and medical and other
critical supplies throughout the world during contingencies or war.
v. The waiver will put at risk two DoD programs (the Voluntary
Intermodal Sealift Agreement and the Maritime Security Program) that
are essential to U.S. security interests. Through these
[[Page 2719]]
programs, DoD has immediate access to reliable commercial maritime
assets at a fraction of the cost it would incur if it had to replicate
those assets (Transportation Institute). Shippers cannot dedicate
valuable assets to the defense and other governmental needs of the
United States unless they can rely on a steady flow of cargoes.
vi. DoD needs a viable merchant marine to provide a pool of trained
mariners from which DoD crews Defense reserve ships.
vii. U.S.-flag commercial vessels are forced to operate in an
international shipping arena that is dominated by state owned and
controlled merchant fleets. They are financially disadvantaged due to
higher labor costs, vessel standards, and tax disadvantages. Therefore,
the U.S.-flag vessels require the help of the U.S. Government to
compete.
viii. Waiving the Cargo Preference laws at this time would be
inequitable, because shipping companies have relied upon the present
laws to take irrevocable business actions.
ix. The American Shipbuilding Association is further concerned that
this waiver would adversely impact the defense shipbuilding industry,
which in turn, will threaten America's ability to build a Navy and
impact the national security of the United States.
x. The FAR Council already made the determination that waiver of
Cargo Preference laws for all commercial subcontracts was not in the
best interest of the Government. 41 U.S.C. 430 requires that provisions
of law described in 41 U.S.C. 430(c) shall be included on the list of
inapplicable provisions of law to subcontracts for the procurement of
commercial items unless the FAR Council makes a written determination
that such exemption would not be in the best interest of the
Government. On May 1, 1996, the Administrator of OFPP signed a
memorandum stating the policy that the waiver of Cargo preference for
commercial subcontracts ``is not intended to waive compliance with the
Cargo Preference Laws for ocean cargos clearly destined for eventual
military or Government use.'' This memorandum was the result of
extensive negotiations between representatives from the national
Economic Council, OFPP, DoD, MARAD, and the maritime industry. In 2002,
a formal determination was signed by all members of the FAR Council
that it would be in the best interest of the Government to limit the
waiver of the Cargo preference laws, in accordance with the OFPP
memorandum, dated May 1, 1996, as implemented in the FAR through FAR
Case 1999-024.
Response: 10 U.S.C. 2631(a), Transportation of Supplies by Sea (The
Cargo Preference Act of 1904), requires the use of only U.S.-flag
vessels for ocean transportation of supplies owned by, or destined for
use by for the Army, Navy, Air Force, or Marine Corps unless those
vessels are not available at fair and reasonable rates. 46 U.S.C.
1241(b), Transportation in American Vessels of Government Personnel and
Certain Cargo (The Cargo Preference Act of 1954), requires that
Government agencies acquiring, either within or outside the United
States, supplies that may require ocean transportation shall ensure
that at least 50 percent of the gross tonnage of these supplies
(computed separately for dry bulk carriers, dry cargo liners, and
tankers) is transported on privately owned U.S.-flag commercial vessels
to the extent that such vessels are available at rates that are fair
and reasonable for U.S.-flag commercial vessels. The Cargo Preference
laws are vital to maintaining a viable merchant marine, including both
vessels and mariners and are essential elements of America's national
maritime policy. Therefore, a determination was made that it is not in
the best interest of the Government to waive this Act.
g. Affirmative Action for Workers with Disabilities, 29 U.S.C. 793.
The Councils did not receive any specific comments in favor of waiving
the statute. 10 respondents supported waiver as part of broad general
support for the proposed rule. The Councils received 2 responses
specifically opposed to waiver, i.e.--
Department of Veterans Affairs
U.S. Department of Labor
ANALYSIS: The Department of Veterans Affairs (VA) objected to
waiver on the grounds that, in meeting its mission to support veterans,
including those who with service related disabilities, the VA purchases
mostly COTS items and would consider it unfair for the VA to purchase
supplies from companies that would not be required to comply with the
statute.
The Department of Labor stated that ``The relatively minor burdens
imposed on contractors by Section 503 of the Rehabilitation Act of
1973, (29 U.S.C. Sec. 793) are justified by the significant benefits
the law provides for disabled job applicants and workers. The Census
Bureau estimates that approximately 18.6 million American workers have
disabilities. Section 503 requires, for example, that contractors
recruit qualified applicants with disabilities for job openings,
develop anti-disability harassment policies, and refrain from
discriminating against qualified individuals with disabilities.
Reducing protections for qualified job applicants and workers with
disabilities would not be consistent with the President's New Freedom
Initiative, designed to ensure that Americans with disabilities have
the opportunity to learn and develop skills and to engage in productive
work.''
Response: A determination was made that the requirements of the
affirmative action provision are justified by the significant benefits
the law provides for disabled job applicants and workers. Reducing
protections for qualified job applicants and workers with disabilities
would not be consistent with the President's New Freedom Initiative.
h. Equal opportunity for Special Disabled Veterans, 38 U.S.C. 4212.
The Councils did not receive any specific comments in favor of waiving
the statute. 10 respondents supported waiver as part of broad general
support for the proposed rule. The Councils received 3 responses
specifically opposed to waiver, including--
Department of Veterans Affairs
U.S. Department of Labor
The Department of Veterans Affairs raised objections to waiver on
the grounds that, in meeting its mission to support veterans, including
those with service related disabilities, the VA purchases mostly COTS
items and would consider it unfair for the VA to purchase supplies from
companies that would not be required to comply with the statute.
The Department of Labor objects to waiving the statute on the basis
that the relatively minor burdens imposed by the affirmative action
provision are justified by the significant direct benefits for
individual protected veterans. Waiving the law would reduce possible
job opportunities for veterans.
Another respondent stated that ``At a time when our nation is at
war and our veterans are returning home[hellip]every effort should be
made to ensure their employment rather than limit their
opportunities''.
Response : It was determined that the affirmative action provision
is justified by the significant direct benefits for individual
protected veterans, and we must make every effort to ensure their
employment.
i. Examination of records by the Comptroller General, 41 U.S.C.
254d(c) and 10 U.S.C. 2313(c). The Councils did not receive any
comments specifically supporting waiver of the examination of records
by the Comptroller General for acquisition of COTS. 10 respondents
supported waiver as part of broad general support for the proposed
rule.
[[Page 2720]]
The Councils received comments from 2 respondents opposed the waiver.
One respondent objected to waiver of the examination of records by
the Comptroller General because this is the last remaining general
contractual audit authority applicable to commercial items. If this
authority is removed, the Government will have no routine audit
authority. The respondent cites legislative history that Congress did
not intend to eliminate this authority.
Another respondent also strongly objects to waiver of this
authority, stating that removal would improperly restrict the authority
of the Comptroller General's ability to review and examine contractor
records related to the expenditure of public funds.
Response: This is the only general contractual audit authority
applicable to commercial items. Thus it was determined that although
access to contractor records will not generally be necessary because of
the protection provided by competitive procedures of the marketplace,
the Comptroller General should have the ability to examine records if
the need arises.
j. Fly American Act, 49 U.S.C. 40118. The Councils did not receive
any comments specifically supporting waiver of the cargo preference
laws for acquisition of COTS. 10 respondents supported waiver as part
of broad general support for the proposed rule. The Councils received 2
responses specifically opposed to the waiver of the Fly American Act
for acquisition of COTS, i.e.--
United States Transportation Command
Under Secretary of Defense (Acquisition, Technology, and
Logistics)
Opponents of the waiver of the Fly American Act when acquiring COTS
items present the following rationale:
i. The Fly American Act is vital to maintaining a viable U.S. air
carrier industry, which is heavily relied on by DoD during
contingencies or war.
ii. Weakening of the U.S. air industry will adversely impact our
country's ability to move forces and equipment during contingencies or
war.
Response: The Fly American Act is not applicable to subcontracts
for the acquisition of commercial items. The requirement for use of a
clause is not applicable to prime contracts for the acquisition of
commercial items, but the requirements of the Act still apply. A
determination was made that the Fly American Act is vital for
maintaining a viable U.S. air carrier industry, which is heavily relied
upon by DoD during contingencies or war.
F. Other public comments.
1. Recommend an Alternate I to proposed clause 52.212-XX, for
paperless writing systems. DoD uses a process called Automatic Clause
Selection, rather than having the contracting officer check off
applicable clauses from the list.
Response: The final rule will not include the new clause 52.212-XX,
but will continue to use FAR clause 52.212-5. Furthermore, DoD already
has a deviation in place for this clause that meets the needs of a
paperless system.
2. Limit the imposition of non-commercial terms and conditions.
Multiple respondents were concerned about the proliferation of
Government-unique clauses in contracts for the acquisition of COTS
items, and want limitations imposed on the authority of the contracting
officer to include clauses that are not commonly used with COTS items
being procured in the marketplace.
Response: This suggestion is outside the scope of the case.
3. DFARS 212.504 still applies for DoD procurements. This
respondent wants to ensure that for DoD COTS procurement, 10 U.S.C.
2320 and 2321 (dealing with technical data rights), which are listed at
DFARS 212.504, are still waived.
Response: This is outside the scope of this case.
4. Use of ``et seq.''. Several respondents were concerned that in
some cases the statutory references followed by ``et seq.'' were too
broad.
Response: This issue has been resolved in the final rule. The term
``et seq.'' is not used in the statutory references for laws to be
waived in the final rule.
5. Significant rule. Several respondents were concerned that the
proposed rule would satisfy the economic impact threshold for a major
rule and clearly meets the threshold requirements to be classified as a
significant rule.
Response: The statutes that were of particular concern to these
respondents (Cargo Preference) have not been waived. Therefore, the
comments are no longer relevant.
6. Comments no longer applicable. There are several comments not
specifically addressed in this Federal Register notice, because they
are no longer applicable, due to other changes in the final rule.
7. E-verify. The councils note that the FAR 2.101 definition of
``Commercially available off the shelf (COTS) item'' differs from the
COTS definition in 22.1801. Pursuant to the FAR treatment of
definitions, the COTS definition is 22.1801 is solely applicable to
issues arising under Subpart 22.18 and associated clause (FAR case
2007-013).
This is not a significant regulatory action and, therefore, was not
subject to review under Section 6(b) of Executive Order 12866,
Regulatory Planning and Review, dated September 30, 1993. This rule is
not a major rule under 5 U.S.C. 804.
G. Regulatory Flexibility Act
The Department of Defense, the General Services Administration, and
the National Aeronautics and Space Administration certify that this
final rule 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 this rule relieves
burdens rather than imposes burdens. Only 2 laws have been waived, and
the relief to small business is not considered to be of significant
economic impact.
H. Paperwork Reduction Act
The Paperwork Reduction Act (44 U.S.C. Chapter 35) applies because
the final rule will result in reduced burdens under OMB Control number
9000-0024 (52.225-2), 9000-0130 (52.225-4), 9000-0134 (52.223-9), and
9000-0141 (52.225-9 and 52.225-11). The Councils anticipate the
following reductions:
--------------------------------------------------------------------------------------------------------------------------------------------------------
Current Revised
OMB Control No. respondents Current responses Current hours respondents Revised responses Revised hours
--------------------------------------------------------------------------------------------------------------------------------------------------------
9000-0024....................... 3,707 x 15 = 55,605 x 0.109 = 6,061 3,521 x 15 52,815 x .109 5,757 hrs
9000-0130....................... 1,140 x 5 = 5,700 x .117 = 667 1083 x 5 = 5415 x .117 = 634 hrs
9000-0134....................... 64,350 x 1 = 64,350 x .325 = 20,913 64 x 1 64 x .325 21 hrs
9000-0141....................... 500 x 2 = 1,000 x 2.5 = 2,500 450 x 2 = 900 x 2.5 = 2,250 hrs
--------------------------------------------------------------------------------------------------------------------------------------------------------
[[Page 2721]]
A Paperwork Burden Act Change to pertinent existing burdens has
been submitted to the Office of Management and Budget under 44 U.S.C.
Chapter 35, et seq.
List of Subjects in 48 CFR Parts 2, 3, 12, 23, 25, and 52
Government procurement.
Dated: December 24, 2008
Edward Loeb,
Acting Director, Office of Acquisition Policy.
0
Therefore, DoD, GSA, and NASA amend 48 CFR parts 2, 3, 12, 23, 25, and
52 as set forth below:
0
1. The authority citation for 48 CFR parts 2, 3, 12, 23, 25, and 52
continues to read as follows:
Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 42
U.S.C. 2473(c).
PART 2--DEFINITIONS OF WORDS AND TERMS
0
2. Amend section 2.101 in paragraph (b)(2) by adding, in alphabetical
order, the definition ``Commercially available off-the-shelf (COTS)
item'' to read as follows:
2.101 Definitions.
* * * * *
(b) * * *
(2) * * *
Commercially available off-the-shelf (COTS) item (1) Means any item
of supply (including construction material) that is--
(i) A commercial item (as defined in paragraph (1) of the
definition in this section);
(ii) Sold in substantial quantities in the commercial marketplace;
and
(iii) Offered to the Government, under a contract or subcontract at
any tier, without modification, in the same form in which it is sold in
the commercial marketplace; and
(2) Does not include bulk cargo, as defined in section 3 of the
Shipping Act of 1984 (46 U.S.C. App. 1702), such as agricultural
products and petroleum products.
* * * * *
PART 3--IMPROPER BUSINESS PRACTICES AND PERSONAL CONFLICTS OF
INTEREST
0
3. Revise section 3.503-2 to read as follows:
3.503-2 Contract clause.
The contracting officer shall insert the clause at 52.203-6,
Restrictions on Subcontractor Sales to the Government, in solicitations
and contracts exceeding the simplified acquisition threshold, except
when contracts are for the acquisition of commercially available off-
the-shelf items. For the acquisition of commercial items, the
contracting officer shall use the clause with its Alternate I.
PART 12--ACQUISITION OF COMMERCIAL ITEMS
0
4. Add section 12.103 to read as follows:
12.103 Commercially available off-the-shelf (COTS) items.
COTS items are defined in 2.101. Unless indicated otherwise, all of
the policies that apply to commercial items also apply to COTS. Section
12.505 lists the laws that are not applicable to COTS (in addition to
12.503 and 12.504); the components test of the Buy American Act, and
the two recovered materials certifications in Subpart 23.4, do not
apply to COTS.
12.301 [Amended]
0
5. Amend section 12.301 in the first sentence of paragraph (b)(4) by
removing ``executive orders'' and adding ``Executive orders'' in its
place;
0
6. Revise the heading of Subpart 12.5 to read as follows.
Subpart 12.5--Applicability of Certain Laws to the Acquisition of
Commercial Items and Commercially Available Off-The-Shelf Items
0
7. Revise section 12.500 to read as follows:
12.500 Scope of subpart.
(a) As required by sections 34 and 35 of the Office of Federal
Procurement Policy Act (41 U.S.C. 430 and 431), this subpart lists
provisions of law that are not applicable to--
(1) Contracts for the acquisition of commercial items;
(2) Subcontracts, at any tier, for the acquisition of commercial
items; and
(3) Contracts and subcontracts, at any tier, for the acquisition of
COTS items.
(b) This subpart also lists provisions of law that have been
amended to eliminate or modify their applicability to either contracts
or subcontracts for the acquisition of commercial items.
0
8. Amend section 12.502 by adding paragraph (c) to read as follows:
12.502 Procedures.
* * * * *
(c) The FAR prescription for the provision or clause for each of
the laws listed in 12.505 has been revised in the appropriate part to
reflect its proper application to contracts and subcontracts for the
acquisition of COTS items.
0
9. Add section 12.505 to read as follows:
12.505 Applicability of certain laws to contracts for the acquisition
of COTS items.
COTS items are a subset of commercial items. Therefore, any laws
listed in sections 12.503 and 12.504 are also inapplicable or modified
in their applicability to contracts or subcontracts for the acquisition
of COTS items. In addition, the following laws are not applicable to
contracts for the acquisition of COTS items:
(a)(1) 41 U.S.C. 10a, portion of first sentence that reads
``substantially all from articles, materials, or supplies mined,
produced, or manufactured, as the case may be, in the United States,''
Buy American Act--Supplies, component test (see 52.225-1 and 52.225-3).
(2) 41 U.S.C. 10b, portion of first sentence that reads
``substantially all from articles, materials, or supplies mined,
produced, or manufactured, as the case may be, in the United States,''
Buy American Act--Construction Materials, component test (see 52.225-9
and 52.225-11).
(b) 42 U.S.C. 6962(c)(3)(A), Certification and Estimate of
Percentage of Recovered Material.
PART 23--ENVIRONMENT, ENERGY AND WATER EFFICIENCY, RENEWABLE ENERGY
TECHNOLOGIES, OCCUPATIONAL SAFETY, AND DRUG-FREE WORKPLACE
0
10. Amend section 23.406 by revising the introductory text of paragraph
(c); and removing from paragraph (d) ``Insert'' and adding ``Except for
the acquisition of commercially available off-the-shelf items,
insert'', in its place. The revised text reads as follows:
23.406 Solicitation provisions and contract clauses.
* * * * *
(c) Except for the acquisition of commercially available off-the-
shelf items, insert the provision at 52.223-4, Recovered Material
Certification, in solicitations that--
* * * * *
PART 25--FOREIGN ACQUISITION
0
11. Amend section 25.003 by revising the definitions ``Domestic
construction material'' and ``Domestic end product'' to read as
follows:
25.003 Definitions.
* * * * *
Domestic construction material means--
[[Page 2722]]
(1) An unmanufactured construction material mined or produced in
the United States;
(2) A construction material manufactured in the United States, if--
(i) The cost of its components mined, produced, or manufactured in
the United States exceeds 50 percent of the cost of all its components.
Components of foreign origin of the same class or kind for which
nonavailability determinations have been made are treated as domestic;
or
(ii) The construction material is a COTS item.
Domestic end product means--
(1) An unmanufactured end product mined or produced in the United
States;
(2) An end product manufactured in the United States, if--
(i) The cost of its components mined, produced, or manufactured in
the United States exceeds 50 percent of the cost of all its components.
Components of foreign origin of the same class or kind as those that
the agency determines are not mined, produced, or manufactured in
sufficient and reasonably available commercial quantities of a
satisfactory quality are treated as domestic. Scrap generated,
collected, and prepared for processing in the United States is
considered domestic; or
(ii) The end product is a COTS item.
* * * * *
0
12. Revise section 25.100 to read as follows:
25.100 Scope of subpart.
(a) This subpart implements--
(1) The Buy American Act (41 U.S.C. 10a - 10d);
(2) Executive Order 10582, December 17, 1954; and
(3) Waiver of the component test of the Buy American Act for
acquisitions of commercially available off-the-shelf (COTS) items in
accordance with 41 U.S.C 431.
(b) It applies to supplies acquired for use in the United States,
including supplies acquired under contracts set aside for small
business concerns, if--
(1) The supply contract exceeds the micro-purchase threshold; or
(2) The supply portion of a contract for services that involves the
furnishing of supplies (e.g., lease) exceeds the micro-purchase
threshold.
0
13. Amend section 25.101 by revising paragraph (a)(2) to read as
follows:
25.101 General.
(a) * * *
(2) The cost of domestic components must exceed 50 percent of the
cost of all the components. In accordance with 41 U.S.C. 431, this
component test of the Buy American Act has been waived for acquisitions
of COTS items (see 12.505(a)).
* * * * *
0
14. Revise section 25.200 to read as follows:
25.200 Scope of subpart.
(a) This subpart implements--
(1) The Buy American Act (41 U.S.C. 10a - 10d);
(2) Executive Order 10582, December 17, 1954; and
(3) Waiver of the component test of the Buy American Act for
acquisitions of commercially available off-the-shelf (COTS) items in
accordance with 41 U.S.C. 431.
(b) It applies to contracts for the construction, alteration, or
repair of any public building or public work in the United States.
PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
0
15. Amend section 52.212-3 by--
0
a. Revising the date of clause;
0
b. Revising paragraph (f)(1); and
0
c. Revising paragraph (g)(1)(i) and the last sentence of paragraph
(g)(1)(iii).
The revised text reads as follows:
52.212-3 Offeror Representations and Certifications--Commercial Items.
* * * * *
OFFEROR REPRESENTATIONS AND CERTIFICATIONS--COMMERCIAL ITEMS (FEB
2009)
* * * * *
(f) * * *
(1) The offeror certifies that each end product, except those
listed in paragraph (f)(2) of this provision, is a domestic end
product and that for other than COTS items, the offeror has
considered components of unknown origin to have been mined,
produced, or manufactured outside the United States. The offeror
shall list as foreign end products those end products manufactured
in the United States that do not qualify as domestic end products,
i.e., an end product that is not a COTS item and does not meet the
component test in paragraph (2) of the definition of ``domestic end
product.'' The terms ``commercially available off-the-shelf (COTS)
item,'' ``component,'' ``domestic end product,'' ``end product,''
``foreign end product,'' and ``United States'' are defined in the
clause of this solicitation entitled ``Buy American Act--Supplies.''
* * * * *
(g)(1) * * *
(i) The offeror certifies that each end product, except those
listed in paragraph (g)(1)(ii) or (g)(1)(iii) of this provision, is
a domestic end product and that for other than COTS items, the
offeror has considered components of unknown origin to have been
mined, produced, or manufactured outside the United States. The
terms ``Bahrainian or Moroccan end product,'' ``commercially
available off-the-shelf (COTS) item,'' ``component,'' ``domestic end
product,'' ``end product,'' ``foreign end product,'' ``Free Trade
Agreement country,'' ``Free Trade Agreement country end product,''
``Israeli end product,'' and ``United States'' are defined in the
clause of this solicitation entitled ``Buy American Act-Free Trade
Agreements-Israeli Trade Act.''
* * * * *
(iii) * * * The offeror shall list as other foreign end products
those end products manufactured in the United States that do not
qualify as domestic end products, i.e., an end product that is not a
COTS item and does not meet the component test in paragraph (2) of
the definition of ``domestic end product.''
* * * * *
(End of provision)
0
16. Amend section 52.212-5 by revising the date of the clause and
paragraph (b)(27); by removing from paragraph (b)(30) ``(June 2003)''
and adding ``(FEB 2009)'' in its place; and by removing from paragraph
(b)(31)(i) ``(Aug 2007)'' and adding ``(FEB 2009)'' in its place. The
revised text reads as follows:
52.212-5 Contract Terms and Conditions Required to Implement Statutes
or Executive Orders--Commercial Items.
* * * * *
CONTRACT TERMS AND CONDITIONS REQUIRED TO IMPLEMENT STATUTES OR
EXECUTIVE ORDERS--COMMERCIAL ITEMS (FEB 2009)
* * * * *
---- (b)(27)(i) 52.223-9, Estimate of Percentage of Recovered
Material Content for EPA-Designated Items (May 2008) (42 U.S.C.
6962(c)(3)(A)(ii)). (Not applicable to the acquisition of
commercially available off-the-shelf items.)
---- (ii) Alternate I (May 2008) of 52.223-9 (42 U.S.C.
6962(i)(2)(C)). (Not applicable to the acquisition of commercially
available off-the-shelf items.)
* * * * *
(End of clause)
52.213-4 [Amended]
0
17. Amend section 52.213-4 by removing from the clause heading ``(Dec
2008)'' and adding ``(FEB 2009)'' in its place; and by removing from
paragraph (b)(1)(ix) ``(June 2003)'' and adding ``(FEB 2009)'' in its
place.
0
18. Amend section 52.225-1 by revising the date of the clause; by
adding in paragraph (a), in alphabetical order, the definition
``Commercially available off-the-shelf (COTS) item'' and revising the
definition ``Domestic end product''; and by revising paragraph (b) to
read as follows:
52.225-1 Buy American Act--Supplies.
* * * * *
[[Page 2723]]
BUY AMERICAN ACT--SUPPLIES (FEB 2009)
(a) Definitions. * * *
Commercially available off-the-shelf (COTS) item-- (1) Means any
item of supply (including construction material) that is--
(i) A commercial item (as defined in paragraph (1) of the
definition at FAR 2.101);
(ii) Sold in substantial quantities in the commercial
marketplace; and
(iii) Offered to the Government, under a contract or subcontract
at any tier, without modification, in the same form in which it is
sold in the commercial marketplace; and
(2) Does not include bulk cargo, as defined in section 3 of the
Shipping Act of 1984 (46 U.S.C. App. 1702), such as agricultural
products and petroleum products.
* * * * *
Domestic end product means--
(1) An unmanufactured end product mined or produced in the
United States;
(2) An end product manufactured in the United States, if--
(i) The cost of its components mined, produced, or manufactured
in the United States exceeds 50 percent of the cost of all its
components. Components of foreign origin of the same class or kind
as those that the agency determines are not mined, produced, or
manufactured in sufficient and reasonably available commercial
quantities of a satisfactory quality are treated as domestic. Scrap
generated, collected, and prepared for processing in the United
States is considered domestic; or
(ii) The end product is a COTS item.
* * * * *
(b) The Buy American Act (41 U.S.C. 10a - 10d) provides a
preference for domestic end products for supplies acquired for use
in the United States. In accordance with 41 U.S.C. 431, the
component test of the Buy American Act is waived for an end product
that is a COTS item (See 12.505(a)(1)).
* * * * *
(End of clause)
0
19. Amend section 52.225-2 by revising the date of the provision and
paragraph (a) to read as follows:
52.225-2 Buy American Act Certificate.
* * * * *
BUY AMERICAN ACT CERTIFICATE (FEB 2009)
(a) The offeror certifies that each end product, except those
listed in paragraph (b) of this provision, is a domestic end product
and that for other than COTS items, the offeror has considered
components of unknown origin to have been mined, produced, or
manufactured outside the United States. The offeror shall list as
foreign end products those end products manufactured in the United
States that do not qualify as domestic end products, i.e., an end
product that is not a COTS item and does not meet the component test
in paragraph (2) of the definition of ``domestic end product.'' The
terms ``commercially available off-the-shelf (COTS) item, ''
``component,'' ``domestic end product,'' ``end product,'' ``foreign
end product,'' and ``United States'' are defined in the clause of
this solicitation entitled ``Buy American Act--Supplies.''
* * * * *
(End of provision)
0
20. Amend section 52.225-3 by revising the date of the clause; in
paragraph (a), by adding, in alphabetical order, the definition
``Commercially available off-the-shelf (COTS) item'' and revising the
definition ``Domestic end product''; and by revising paragraph (c) to
read as follows:
52.225-3 Buy American Act--Free Trade Agreements--Israeli Trade Act.
* * * * *
BUY AMERICAN ACT--FREE TRADE AGREEMENTS--ISRAELI TRADE ACT (FEB
2009)
(a) Definitions. * * *
* * * * *
Commercially available off-the-shelf (COTS) item-- (1) Means any
item of supply (including construction material) that is--
(i) A commercial item (as defined in paragraph (1) of the
definition at FAR 2.101);
(ii) Sold in substantial quantities in the commercial
marketplace; and
(iii) Offered to the Government, under a contract or subcontract
at any tier, without modification, in the same form in which it is
sold in the commercial marketplace; and
(2) Does not include bulk cargo, as defined in section 3 of the
Shipping Act of 1984 (46 U.S.C. App. 1702), such as agricultural
products and petroleum products.
* * * * *
Domestic end product means--
(1) An unmanufactured end product mined or produced in the
United States;
(2) An end product manufactured in the United States, if--
(i) The cost of its components mined, produced, or manufactured
in the United States exceeds 50 percent of the cost of all its
components. Components of foreign origin of the same class or kind
as those that the agency determines are not mined, produced, or
manufactured in sufficient and reasonably available commercial
quantities of a satisfactory quality are treated as domestic. Scrap
generated, collected, and prepared for processing in the United
States is considered domestic; or
(ii) The end product is a COTS item.
* * * * *
(c) Delivery of end products. The Buy American Act (41 U.S.C.
10a - 10d) provides a preference for domestic end products for
supplies acquired for use in the United States. In accordance with
41 U.S.C. 431, the component test of the Buy American Act is waived
for an end product that is a COTS item (See 12.505(a)(1)). In
addition, the Contracting Officer has determined that FTAs (except
the Bahrain and Morocco FTAs) and the Israeli Trade Act apply to
this acquisition. Unless otherwise specified, these trade agreements
apply to all items in the Schedule. The Contractor shall deliver
under this contract only domestic end products except to the extent
that, in its offer, it specified delivery of foreign end products in
the provision entitled ``Buy American Act--Free Trade Agreements--
Israeli Trade Act Certificate.'' If the Contractor specified in its
offer that the Contractor would supply a Free Trade Agreement
country end product (other than a Bahrainian or Moroccan end
product) or an Israeli end product, then the Contractor shall supply
a Free Trade Agreement country end product (other than a Bahrainian
or Moroccan end product), an Israeli end product or, at the
Contractor's option, a domestic end product.
* * * * *
(End of clause)
0
21. Amend section 52.225-4 by revising the date of the provision and
paragraphs (a) and (c) to read as follows:
52.225-4 Buy American Act--Free Trade Agreements--Israeli Trade Act
Certificate.
* * * * *
BUY AMERICAN ACT--FREE TRADE AGREEMENTS--ISRAELI TRADE ACT
CERTIFICATE (FEB 2009)
(a) The offeror certifies that each end product, except those
listed in paragraph (b) or (c) of this provision, is a domestic end
product and that for other than COTS items, the offeror has
considered components of unknown origin to have been mined,
produced, or manufactured outside the United States. The terms
``Bahrainian or Moroccan end product,'' ``commercially available
off-the-shelf (COTS) item,'' ``component,'' ``domestic end
product,'' ``end product,'' ``foreign end product,'' ``Free Trade
Agreement country,'' ``Free Trade Agreement country end product,''
``Israeli end product,'' and ``United States'' are defined in the
clause of this solicitation entitled ``Buy American Act--Free Trade
Agreements--Israeli Trade Act.''
* * * * *
(c) The offeror shall list those supplies that are foreign end
products (other than those listed in paragraph (b) of this
provision) as defined in the clause of this solicitation entitled
``Buy American Act--Free Trade Agreements--Israeli Trade Act.'' The
offeror shall list as other foreign end products those end products
manufactured in the United States that do not qualify as domestic
end products, i.e., an end product that is not a COTS item and does
not meet the component test in paragraph (2) of the definition of
``domestic end product.''
Other Foreign End Products:
LINE ITEM NO. COUNTRY OF ORIGIN
---------------- ----------------
---------------- ----------------
---------------- ----------------
[List as necessary]
* * * * *
(End of provision)
0
22. Amend section 52.225-9 by revising the date of the clause; in
paragraph (a), by adding, in alphabetical order, the definition
``Commercially available off-the-shelf (COTS) item'' and revising the
definition ``Domestic construction material''; and by revising
paragraph (b)(1) to read as follows:
[[Page 2724]]
52.225-9 Buy American Act--Construction Materials.
* * * * *
BUY AMERICAN ACT--CONSTRUCTION MATERIALS (FEB 2009)
(a) Definitions. * * *
Commercially available off-the-shelf (COTS) item-- (1) Means any
item of supply (including construction material) that is--
(i) A commercial item (as defined in paragraph (1) of the
definition at FAR 2.101);
(ii) Sold in substantial quantities in the commercial
marketplace; and
(iii) Offered to the Government, under a contract or subcontract
at any tier, without modification, in the same form in which it is
sold in the commercial marketplace; and
(2) Does not include bulk cargo, as defined in section 3 of the
Shipping Act of 1984 (46 U.S.C. App. 1702), such as agricultural
products and petroleum products.
* * * * *
Domestic construction material means--
(1) An unmanufactured construction material mined or produced in
the United States;
(2) A construction material manufactured in the United States,
if--
(i) The cost of its components mined, produced, or manufactured
in the United States exceeds 50 percent of the cost of all its
components. Components of foreign origin of the same class or kind
for which nonavailability determinations have been made are treated
as domestic; or
(ii) The construction material is a COTS item.
* * * * *
(b) Domestic preference. (1) This clause implements the Buy
American Act (41 U.S.C. 10a-10d) by providing a preference for
domestic construction material. In accordance with 41 U.S.C. 431,
the component test of the Buy American Act is waived for
construction material that is a COTS item (See FAR 12.505(a)(2)).
The Contractor shall use only domestic construction material in
performing this contract, except as provided in paragraphs (b)(2)
and (b)(3) of this clause.
* * * * *
(End of clause)
0
23. Amend section 52.225-10 by revising the date of the provision and
paragraph (a) to read as follows:
52.225-10 Notice of Buy American Act Requirement--Construction
Materials.
* * * * *
NOTICE OF BUY AMERICAN ACT REQUIREMENT--CONSTRUCTION MATERIALS (FEB
2009)
(a) Definitions. ``Commercially available off-the-shelf (COTS)
item,'' ``construction material,'' ``domestic construction
material,'' and ``foreign construction material,'' as used in this
provision, are defined in the clause of this solicitation entitled
``Buy American Act--Construction Materials'' (Federal Acquisition
Regulation (FAR) clause 52.225-9).
* * * * *
(End of provision)
0
24. Amend section 52.225-11 by--
0
a. Revising the date of the clause;
0
b. In paragraph (a), by adding, in alphabetical order, the definition
``Commercially available off-the-shelf (COTS) item'' and revising the
definition ``Domestic construction material'';
0
c. Revising paragraph (b)(1); and
0
d. Revising the date of Alternate I and in paragraph (b)(1) adding a
new second sentence to read as follows:
52.225-11 Buy American Act--Construction Materials Under Trade
Agreements.
* * * * *
BUY AMERICAN ACT--CONSTRUCTION MATERIALS UNDER TRADE AGREEMENTS
(FEB 2009)
(a) Definitions. * * *
* * * * *
Commercially available off-the-shelf (COTS) item-- (1) Means any
item of supply (including construction material) that is--
(i) A commercial item (as defined in paragraph (1) of the
definition at FAR 2.101);
(ii) Sold in substantial quantities in the commercial
marketplace; and
(iii) Offered to the Government, under a contract or subcontract
at any tier, without modification, in the same form in which it is
sold in the commercial marketplace; and
(2) Does not include bulk cargo, as defined in section 3 of the
Shipping Act of 1984 (46 U.S.C. App. 1702), such as agricultural
products and petroleum products.
* * * * *
Domestic construction material means--
(1) An unmanufactured construction material mined or produced in
the United States;
(2) A construction material manufactured in the United States,
if--
(i) The cost of its components mined, produced, or manufactured
in the United States exceeds 50 percent of the cost of all its
components. Components of foreign origin of the same class or kind
for which nonavailability determinations have been made are treated
as domestic; or
(ii) The construction material is a COTS item.
* * * * *
(b) Construction materials. (1) This clause implements the Buy
American Act (41 U.S.C. 10a-10d) by providing a preference for
domestic construction material. In accordance with 41 U.S.C. 431,
the component test of the Buy American Act is waived for
construction material that is a COTS item (See FAR 12.505(a)(2)). In
addition, the Contracting Officer has determined that the WTO GPA
and Free Trade Agreements (FTAs) apply to this acquisition.
Therefore, the Buy American Act restrictions are waived for
designated county construction materials.
* * * * *
Alternate I (FEB 2009). * * *
* * * * *
(b) Construction materials. (1) * * * In accordance with 41 U.S.C.
431, the component test of the Buy American Act is waived for
construction material that is a COTS item (See FAR 12.505(a)(2)). * * *
* * * * *
0
25. Amend section 52.225-12 by revising the date of the provision and
revising paragraph (a) to read as follows:
52.225-12 Notice of Buy American Act Requirement--Construction
Materials Under Trade Agreements.
* * * * *
NOTICE OF BUY AMERICAN ACT REQUIREMENT--CONSTRUCTION MATERIALS
UNDER TRADE AGREEMENTS (FEB 2009)
(a) Definitions. ``Commercially available off-the-shelf (COTS)
item,'' ``construction material,'' ``designated country construction
material,'' ``domestic construction material,'' and ``foreign
construction material,'' as used in this provision, are defined in
the clause of this solicitation entitled ``Buy American Act--
Construction Materials Under Trade Agreements'' (Federal Acquisition
Regulation (FAR) clause 52.225-11).
* * * * *
(End of provision)
[FR Doc. E9-551 Filed 1-14-09; 8:45 am]
BILLING CODE 6820-EP-S