[Federal Register: November 24, 2008 (Volume 73, Number 227)]
[Rules and Regulations]               
[Page 70909-70912]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr24no08-16]                         

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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 212, 215, 247, and 252

RIN 0750-AF75

 
Defense Federal Acquisition Regulation Supplement; Carriage 
Vessel Overhaul, Repair, and Maintenance (DFARS Case 2007-D001)

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

ACTION: Final rule.

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SUMMARY: DoD has adopted as final, with changes, an interim rule 
amending the Defense Federal Acquisition Regulation Supplement (DFARS) 
to implement Section 1017 of the National Defense Authorization Act for 
Fiscal Year 2007. Section 1017 requires DoD to establish an evaluation 
criterion, for use in obtaining carriage of cargo by vessel, that 
considers the extent to which an offeror has had overhaul, repair, and 
maintenance work for covered vessels performed in shipyards located in 
the United States or Guam.

DATES: Effective Date: November 24, 2008.

FOR FURTHER INFORMATION CONTACT: Mr. Mark Gomersall, Defense 
Acquisition Regulations System, OUSD (AT&L) DPAP (DARS), IMD 3D139, 
3062 Defense Pentagon, Washington, DC 20301-3062. Telephone 703-602-
0302; facsimile 703-602-7887. Please cite DFARS Case 2007-D001.

SUPPLEMENTARY INFORMATION:

A. Background

    DoD published an interim rule at 72 FR 49204 on August 28, 2007, to 
implement Section 1017 of the National Defense Authorization Act for 
Fiscal Year 2007 (Pub. L. 109-364). Section 1017 requires DoD to issue 
an acquisition policy that establishes, as a criterion required to be 
considered in obtaining carriage of cargo by vessel for DoD, the extent 
to which an offeror of such carriage has had overhaul, repair, and 
maintenance work for covered vessels performed in shipyards located in 
the United States or Guam.
    Nine sources submitted comments on the interim rule. A discussion 
of the comments is provided below.
    1. Comment: Some respondents took exception to the rule's use of 
the term ``evaluation factor or subfactor'' with regard to 
consideration of the amount of work an offeror has performed in U.S. 
shipyards. The respondents suggested

[[Page 70910]]

this evaluation criterion should be established as a significant factor 
in evaluation of offers.
    DoD Response: The text at DFARS 247.573-2(c) has been revised to 
replace the term ``evaluation factor or subfactor'' with ``evaluation 
criterion,'' consistent with the language in Section 1017(a) of Public 
Law 109-364. The decision as to the relative value of the evaluation 
criterion is appropriately the responsibility of the source selection 
authority.
    2. Comment: Some respondents expressed concern that the rule does 
not specifically state that the term ``covered vessels'' includes all 
covered vessels in an offeror's fleet. Other respondents suggested a 
more strict definition of ``covered vessels,'' which would be 
applicable only to the vessels the offeror is proposing to use in the 
procurement under evaluation.
    DoD Response: The definition of ``covered vessel'' in the provision 
at 252.247-7026 is consistent with Section 1017(b) of Public Law 109-
364. DoD interprets this definition to include all covered vessels in 
an offeror's fleet, and not just those offered under a specific 
solicitation. The text at DFARS 247.573-2(c)(3) has been amended to 
clarify this point.
    3. Comment: One respondent recommended that the rule clarify that 
the evaluation preference would apply only in the case where DoD is 
soliciting offers for vessel carriage of its cargo in the coastwise or 
noncontiguous trade, not in other trades. Further, the respondent 
recommended that rule define the term ``coastwise or noncontiguous 
trade.'' The respondent suggested that this would mean referring to a 
voyage that meets the tests of: former Section 27 of the Merchant 
Marine Act, 1920; former 46 U.S.C. 12166; and former Section 2 of the 
Shipping Act, 1916. Therefore, the preference would not apply to 
carriage of cargo to a point that can be served by a vessel that has a 
registry endorsement such as Guam, which is considered part of the non-
contiguous trade but is not a Jones Act trade.
    DoD Response: The final rule clarifies that the evaluation 
preference applies only to solicitations requiring a covered vessel. 
Further, DoD agrees that the preference would not apply to carriage of 
cargo to a point that can be served by a vessel that has a registry 
endorsement, such as Guam. Vessels with a registry endorsement provided 
for under Section 12111 (formerly Section 12105) of Title 46 of the 
United States Code are not covered vessels. The final rule does not 
include a definition of ``coastwise or noncontiguous trade,'' as this 
term is already covered under Section 27 of the Merchant Marine Act, 
which is referenced in the definition of ``covered vessel'' in the 
provision at 252.247-7026.
    4. Comment: One respondent suggested revising the statutory 
references in the definition of ``covered vessel'' to reflect the 
recodification of Title 46 of the United States Code on October 6, 
2006.
    DoD Response: DoD has revised the definition of ``covered vessel'' 
to reflect the current statutory references.
    5. Comment: Some respondents stated that the 15-day work period 
within the definition of ``overhaul, repair, and maintenance work'' at 
252.247-7026 was too long, while another respondent opposed any 
shortening of this time period.
    DoD Response: DoD intended the definition to represent meaningful 
work, such as annual, regulatory, and scheduled overhaul, repair, and 
maintenance. Based on comments received regarding the length of time 
required for typical repairs, DoD has revised the time period for work 
categorized as ``overhaul, repair, and maintenance'' from 15 to 5 
calendar days.
    6. Comment: Some respondents recommended the definition of 
``shipyard'' be changed to include ship repair facilities as well as 
ship building facilities. One respondent stated that the scope and 
nature of the overhaul, repair, and maintenance work, and not whether 
the work is performed in a shipyard that is capable of building a ship, 
should be considered in the evaluation criteria. Another respondent 
stated that, since the rule defines ``shipyard'' as a facility capable 
of building a ship, the size of ship a shipyard must be capable of 
building should be included within the definition.
    DoD Response: DoD agrees that ``shipyard,'' as used within this 
DFARS rule, should be defined as a facility capable of performing 
overhaul, repair, and maintenance work, and the definition has been 
revised accordingly. Additionally, the definition of ``overhaul, 
repair, and maintenance work'' has been revised to remove the word 
``pierside'' as a qualifier for the term ``shipyard.''
    7. Comment: One respondent suggested adding a definition of 
``foreign shipyard,'' to be defined as ``any shipyard that is not 
located in the United States.''
    DoD Response: DoD has added definitions of ``U.S. shipyard'' and 
``foreign shipyard,'' consistent with the definitions in Section 1017 
of Public Law 109-364.
    8. Comment: One respondent recommended that the rule be clarified 
such that the overhaul, repair, and maintenance reports required by the 
rule cover work performed at any shipyard, anywhere in the world.
    DoD Response: The reporting requirement at DFARS 252.247-7026(c) 
has been revised to address work performed both in U.S. and foreign 
shipyards.
    9. Comment: Some respondents suggested that the evaluation 
criterion be qualified such that certain foreign shipyard repairs would 
not receive adverse consideration under specific situations. One 
respondent suggested that repairs in foreign shipyards, due to 
accident, emergency, Act of God, or an infirmity to the vessel, should 
not receive adverse consideration in the evaluation criterion regarding 
the amount of work performed in U.S. shipyards, if it is determined 
that safety considerations warranted taking the vessel to the nearest 
shipyard. Two respondents suggested that foreign shipyard repairs 
should not receive adverse consideration due to non-availability of 
U.S. shipyards if an offeror can demonstrate that it contacted U.S. 
shipyards seeking a berth for a repair and was told that space was not 
available on a timely basis. One respondent suggested that the 
criterion should specifically recognize that U.S. vessels that do not 
call at a U.S. port for two years or more should not be adversely 
affected by the failure to have routine shipyard work performed at U.S. 
shipyards.
    DoD Response: DoD recognizes that overhaul, repair, and maintenance 
work required due to an emergency situation or direction from the U.S. 
Government should not adversely affect an evaluation. Therefore, the 
final rule excludes repairs of this type from the evaluation criterion. 
All other foreign overhaul, repair, and maintenance work will be 
considered under the evaluation criterion, consistent with the 
statutory intent of maintaining the national defense industrial base.
    10. Comment: One respondent suggested that a case could be made 
that facilities covered by NAFTA are effectively less foreign than 
facilities not covered by NAFTA.
    DoD Response: The statute makes no provisions for evaluation 
consideration for overhaul, repair, and maintenance work performed at 
facilities covered by NAFTA.
    11. Comment: Two respondents opposed the time period for reporting 
overhaul, repair, and maintenance work (current calendar year and four 
previous

[[Page 70911]]

calendar years), while one respondent stated support for this time 
period.
    DoD Response: The time period in the rule is considered 
appropriate, as it captures a complete maintenance and repair cycle for 
Coast Guard inspected ships.
    12. Comment: Two respondents suggested the evaluation criterion 
should consider not only overhaul, repair, and maintenance work, but 
also new construction.
    DoD Response: The statute makes no provisions for new construction. 
The Jones Act provides an incentive for new construction in U.S. 
shipyards. In addition, the redefinition of ``shipyard'' as ``a 
facility capable of performing overhaul, repair, and maintenance work 
on covered vessels'' in the final rule broadens the scope of shipyard 
repair facilities.
    13. Comment: One respondent stated that the rule does not extend 
far enough to offer true support and reward for carriers that have 
environmentally sound practices and provisions of efficient services.
    DoD Response: The scope of this rule is limited to implementation 
of Section 1017 of Public Law 109-364.
    14. Comment: One respondent suggested a broader definition of 
``ship'' that would include non-self-propelled vessels.
    DoD Response: The rule refers to ``covered vessels'' rather than 
``ship''. The rule's definition of ``covered vessel'' is consistent 
with Section 1017(b) of Public Law 109-364.
    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 has prepared a final regulatory flexibility analysis consistent 
with 5 U.S.C. 604. A copy of the analysis may be obtained from the 
point of contact specified herein. The analysis is summarized as 
follows:
    The objective of the rule is to maintain a strong national ship 
repair industrial base. Therefore, the rule provides an evaluation 
preference for use in DoD solicitations for carriage of cargo by 
vessel, to apply to those entities that use domestic shipyards for 
vessel overhaul, repair, and maintenance. The rule is expected to have 
a positive effect on entities owning domestic shipyards, by encouraging 
the use of those shipyards. DoD will use the information required by 
the solicitation provision to evaluate offers and to prepare annual 
reports to Congress, as required by Section 1017 of Public Law 109-364.

C. Paperwork Reduction Act

    The Office of Management and Budget has approved the information 
collection requirements of this rule under Control Number 0704-0445.

List of Subjects in 48 CFR Parts 212, 215, 247, and 252

    Government procurement.

Michele P. Peterson,
Editor, Defense Acquisition Regulations System.

0
Accordingly, the interim rule amending 48 CFR Parts 212, 215, 247, and 
252, which was published at 72 FR 49204 on August 28, 2007, is adopted 
as a final rule with the following changes:
0
1. The authority citation for 48 CFR Parts 212, 215, 247, and 252 
continues to read as follows:

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

PART 247--TRANSPORTATION

0
2. Section 247.570 is amended by revising paragraph (a)(2) to read as 
follows:


247.570  Scope.

* * * * *
    (a) * * *
    (2) Section 1017 of the National Defense Authorization Act for 
Fiscal Year 2007 (Pub. L. 109-364), which requires consideration, in 
solicitations requiring a covered vessel, of the extent to which 
offerors have had overhaul, repair, and maintenance work performed in 
shipyards located in the United States or Guam;
* * * * *

0
3. Section 247.571 is revised to read as follows:


247.571  Definitions.

    Covered vessel, foreign shipyard, overhaul, repair, and maintenance 
work, and shipyard, as used in this subpart, have the meaning given in 
the provision at 252.247-7026, Evaluation Preference for Use of 
Domestic Shipyards--Applicable to Acquisition of Carriage by Vessel for 
DoD Cargo in the Coastwise or Noncontiguous Trade.

0
4. Section 247.572 is amended by revising paragraph (d)(1) to read as 
follows:


247.572  Policy.

* * * * *
    (d) * * *
    (1) When obtaining carriage requiring a covered vessel, the 
contracting officer must consider the extent to which offerors have had 
overhaul, repair, and maintenance work for covered vessels performed in 
shipyards located in the United States or Guam; and
* * * * *

0
5. Section 247.573-2 is amended as follows:
0
a. By revising paragraphs (c)(2) and (3); and
0
b. In paragraph (d)(3)(i) introductory text and paragraph (d)(3)(i)(C), 
by removing ``247.573-1(d)'' and adding in its place ``247.573-1(c)''. 
The revised text reads as follows:


247.573-2  Direct purchase of ocean transportation services.

* * * * *
    (c) * * *
    (2) An evaluation criterion for offeror participation in the 
Voluntary Intermodal Sealift Agreement; and
    (3) An evaluation criterion considering the extent to which 
offerors have had overhaul, repair, and maintenance work for all 
covered vessels in an offeror's fleet performed in shipyards located in 
the United States or Guam. Work performed in foreign shipyards shall 
not be evaluated under this criterion if--
    (i) Such work was performed as emergency repairs in foreign 
shipyards due to accident, emergency, Act of God, or an infirmity to 
the vessel, and safety considerations warranted taking the vessel to a 
foreign shipyard; or
    (ii) Such work was paid for or reimbursed by the U.S. Government.
* * * * *

0
6. Section 247.573-3 is amended by revising paragraphs (a)(1) and (b) 
to read as follows:


247.573-3  Annual reporting requirement.

    (a) * * *
    (1) Prepare a report containing all information received from all 
offerors in response to the provision at 252.247-7026 during the 
previous calendar year; and
* * * * *
    (b) The Director of Acquisition, U.S. Transportation Command, will 
submit a consolidated annual report to the congressional defense 
committees, by June 1st of each year, in accordance with Section 1017 
of Public Law 109-364.

0
7. Section 247.574 is amended by revising paragraph (e) to read as 
follows:


247.574  Solicitation provisions and contract clauses.

* * * * *
    (e) Use the provision at 252.247-7026, Evaluation Preference for 
Use of Domestic Shipyards--Applicable to Acquisition of Carriage by 
Vessel for DoD Cargo in the Coastwise or

[[Page 70912]]

Noncontiguous Trade, in solicitations that require a covered vessel for 
carriage of cargo for DoD. See 247.573-3 for reporting of the 
information received from offerors in response to the provision. See 
247.573-2(c)(3) for the required evaluation criterion.

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
8. Section 252.247-7026 is amended by revising the clause date and 
paragraphs (a) through (c) to read as follows:


252.247-7026  Evaluation Preference for Use of Domestic Shipyards--
Applicable to Acquisition of Carriage by Vessel for DoD Cargo in the 
Coastwise or Noncontiguous Trade.

* * * * *

EVALUATION PREFERENCE FOR USE OF DOMESTIC SHIPYARDS--APPLICABLE TO 
ACQUISITION OF CARRIAGE BY VESSEL FOR DOD CARGO IN THE COASTWISE OR 
NONCONTIGUOUS TRADE (NOV 2008)

    (a) Definitions. As used in this provision--
    Covered vessel means a vessel--
    (1) Owned, operated, or controlled by the offeror; and
    (2) Qualified to engage in the carriage of cargo in the 
coastwise or noncontiguous trade under Section 27 of the Merchant 
Marine Act, 1920 (46 U.S.C. 12101, 12132, and 55102), commonly 
referred to as ``Jones Act''; 46 U.S.C. 12102, 12112, and 12119; and 
Section 2 of the Shipping Act, 1916 (46 U.S.C. 50501).
    Foreign shipyard means a shipyard that is not a U.S. shipyard.
    Overhaul, repair, and maintenance work means work requiring a 
shipyard period greater than or equal to 5 calendar days.
    Shipyard means a facility capable of performing overhaul, 
repair, and maintenance work on covered vessels.
    U.S. shipyard means a shipyard that is located in any State of 
the United States or in Guam.
    (b) This solicitation includes an evaluation criterion that 
considers the extent to which the offeror has had overhaul, repair, 
and maintenance work for covered vessels performed in U.S. 
shipyards.
    (c) The offeror shall provide the following information with its 
offer, addressing all covered vessels for which overhaul, repair, 
and maintenance work has been performed during the period covering 
the current calendar year, up to the date of proposal submission, 
and the preceding four calendar years:
    (1) Name of vessel.
    (2) Description and cost of qualifying shipyard work performed 
in U.S. shipyards.
    (3) Description and cost of qualifying shipyard work performed 
in foreign shipyards and whether--
    (i) Such work was performed as emergency repairs in foreign 
shipyards due to accident, emergency, Act of God, or an infirmity to 
the vessel, and safety considerations warranted taking the vessel to 
a foreign shipyard; or
    (ii) Such work was paid for or reimbursed by the U.S. 
Government.
    (4) Names of shipyards that performed the work.
    (5) Inclusive dates of work performed.
* * * * *
[FR Doc. E8-27782 Filed 11-21-08; 8:45 am]

BILLING CODE 5001-08-P