[Federal Register: December 24, 2009 (Volume 74, Number 246)]
[Rules and Regulations]               
[Page 68383-68384]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr24de09-8]                         


[[Page 68383]]

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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 225 and 252

RIN 0750-AF22

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

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

ACTION: Final rule.

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

DATES: Effective date: December 24, 2009.

FOR FURTHER INFORMATION CONTACT: Ms. Amy Williams, Defense Acquisition 
Regulations System, OUSD(AT&L)DPAP(DARS), IMD 3D139, 3062 Defense 
Pentagon, Washington, DC 20301-3062. Telephone 703-602-0328; facsimile 
703-602-7887. Please cite DFARS Case 2005-D010.

SUPPLEMENTARY INFORMATION:

A. Background

    DoD published a proposed rule at 71 FR 18695 on April 12, 2006. We 
did not receive any public comments. Therefore, DoD has issued a final 
rule with only a minor editorial correction and an update of the 
baseline.
    This final rule amends DFARS Part 225 and associated provisions and 
clauses to clarify the distinction between foreign acquisition policies 
that apply only to top-level components of end products and those that 
apply to both top-level and lower-tier components of end products. As 
used in this background discussion, ``top-level components'' are those 
components that are incorporated directly into the end product; and 
``lower-tier components'' are components that are incorporated into a 
component of the end product.
    The general definition of ``component'' in FAR 2.101 is ``any item 
supplied to the Government as part of an end item or of another 
component.'' Therefore, for general use, the term includes both top-
level components and lower-tier components. For purposes of determining 
whether a product is a domestic end product under the Buy American Act 
or the Balance of Payments Program, the term ``component'' is defined 
in FAR 25.003 to include only ``an article, material, or supply 
incorporated directly into an end product or construction material'' 
(i.e., only top-level components). This definition would also be 
applicable to any other situation in which evaluation of the end 
product is based on the value of the components, similar to that under 
the Buy American Act (e.g., to determine a qualifying country end 
product or whether anchor chain is a domestic end product).
    In broadly applying these concepts to DFARS Part 225, ``component'' 
has been defined to apply only to top-level components, except in 
Subpart 225.70, where the term ``component'' includes components at all 
tiers. However, there are some requirements of Part 225 other than 
those in 225.70 that are not based on or are not similar to the Buy 
American Act, and there are some requirements in 225.70 that should be 
treated as similar to the Buy American Act.
    Therefore, the definitions of ``component'' included in the final 
rule reflect the correct applicability of foreign acquisition policies 
as follows:
    [cir] 225.900-70 and 252.225-7013, Duty-Free Entry. Duty-free entry 
is not related to evaluation of domestic products under the Buy 
American Act and should apply to qualifying country components at any 
tier.
    [cir] 252.225-7019, Restriction on Anchor and Mooring Chain--The 
requirement that the cost of components manufactured in the United 
States exceed 50 percent of the total cost of components is similar to 
the Buy American Act component test, in which only top-level components 
are considered. Therefore, the definition restricting application to 
top-level components should apply.
    [cir] 252.225-7025, Restriction on Acquisition of Forgings--The 
requirement to acquire forging items that are of domestic manufacture 
is not related to evaluation of domestic products under the Buy 
American Act and should apply to components at any tier.
    In addition, the rule eliminates references to the DoD Industrial 
Preparedness Production Planning Program, at 225.7005-1 and in the 
definition of ``domestic manufacture'' at 252.225-7025, since DoD no 
longer has an Industrial Preparedness Production Planning Program.
    This rule was subject to Office of Management and Budget review 
under Executive Order 12866, dated September 30, 1993.

B. Regulatory Flexibility Act

    DoD certifies that this 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 the rule 
updates and clarifies DFARS terminology, but makes no significant 
change to DoD acquisition policy. DoD did not receive any comments on 
regulatory flexibility and impact of the rule on small business 
entities.

C. Paperwork Reduction Act

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

List of Subjects in 48 CFR Parts 225, 236, and 252

    Government procurement.

Amy G. Williams,
Editor, Defense Acquisition Regulation System.

0
Therefore, 48 CFR parts 225 and 252 are amended as follows:

0
1. The authority citation for 48 CFR parts 225 and 252 continues to 
read as follows:

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

PART 225--FOREIGN ACQUISITION

0
2. Section 225.900-70 is added to read as follows:


225.900-70  Definition.

    ``Component,'' as used in this subpart, means any item supplied to 
the Government as part of an end product or of another component.

0
3. Section 225.7001 is amended by revising paragraph (b); by 
redesignating paragraphs (c) and (d) as paragraphs (d) and (e) 
respectively; and by adding a new paragraph (c) to read as follows:


225.7001  Definitions.

* * * * *
    (b) ``Component'' is defined in the clauses at 252.225-7009, 
Restriction on Acquisition of Certain Articles Containing Specialty 
Metals; 252.225-7012, Preference for Certain Domestic Commodities, and 
252.225-7016, Restriction on Acquisition of Ball and Roller Bearings, 
except that for use in 225.7007, the term has the meaning given in the 
clause at 252.225-7019, Restriction on Acquisition of Anchor and 
Mooring Chain.

[[Page 68384]]

    (c) ``End product'' is defined in the clause at 252.225-7012, 
Preference for Certain Domestic Commodities.
* * * * *

0
4. Section 225.7005-1 is revised to read as follows:


225.7005-1  Restriction.

    In accordance with 10 U.S.C. 2534, do not acquire chemical weapons 
antidote contained in automatic injectors, or the components for such 
injectors, unless the chemical weapons antidote or component is 
manufactured in the United States or Canada by a company that--
    (a) Has received all required regulatory approvals; and
    (b) Has the plant, equipment, and personnel to perform the contract 
in the United States or Canada at the time of contract award.

0
5. Section 225.7101 is revised to read as follows:


225.7101  Definitions.

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

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
6. Section 252.225-7000 is amended by revising the clause date and 
paragraph (a) to read as follows:


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

* * * * *
Buy American Act--Balance of Payments Program Certificate (DEC 2009)
    (a) Definitions. ``Commercially available off-the-shelf (COTS) 
item,'' ``component,'' ``domestic end product,'' ``foreign end 
product,'' ``qualifying country,'' ``qualifying country end product,'' 
and ``United States'' have the meanings given in the Buy American Act 
and Balance of Payments Program clause of this solicitation.
* * * * *

0
7. Section 252.225-7013 is amended by:
0
a. Revising the clause date;
0
b. Redesignating paragraphs (a)(1) through (3) as paragraphs (a)(2) 
through (4) respectively; and
0
c. Adding a new paragraph (a)(1) to read as follows:


252.225-7013  Duty-Free Entry.

* * * * *
Duty-Free Entry (DEC 2009)
    (a) * * *
    (1) ``Component'' means any item supplied to the Government as part 
of an end product or of another component.
* * * * *

0
8. Section 252.225-7019 is amended by:
0
a. Revising the clause date;
0
b. Redesignating paragraphs (a) through (c) as paragraphs (b) through 
(d) respectively;
0
c. Adding a new paragraph (a);
0
d. Amending newly designated paragraph (c) by removing ``paragraph (a) 
of this clause'' and by adding ``paragraph (b) of this clause'' in its 
place; and
0
e. Revising newly designated paragraph (d) to read as follows:


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

* * * * *
Restriction on Acquisition of Anchor and Mooring Chain (DEC 2009)
    (a) Definition.
    ``Component,'' as used in this clause, means an article, material, 
or supply incorporated directly into an end product.
* * * * *
    (d) The Contractor shall insert the substance of this clause, 
including this paragraph (d), in all subcontracts for items containing 
welded shipboard anchor and mooring chain, four inches or less in 
diameter.

0
9. Section 252.225-7025 is amended by:
0
a. Revising the clause date;
0
b. Redesignating paragraphs (a)(1) and (2) as paragraphs (a)(2) and (3) 
respectively;
0
c. Adding a new paragraph (a)(1); and
0
d. Revising newly designated paragraph (a)(2) and paragraph (b) to read 
as follows:


252.225-7025  Restriction on Acquisition of Forgings.

* * * * *
Restriction on Acquisition of Forgings (DEC 2009)
    (a) * * *
    (1) Component means any item supplied to the Government as part of 
an end product or of another component.
    (2) Domestic manufacture means manufactured in the United States, 
its outlying areas, or Canada.
* * * * *
    (b) End products and their components delivered under this contract 
shall contain forging items that are of domestic manufacture only.
* * * * *

0
10. Section 252.225-7035 is amended by revising the clause date and 
paragraph (a) to read as follows:


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

* * * * *
Buy American Act--Free Trade Agreements--Balance of Payments Program 
Certificate (DEC 2009)
    (a) Definitions. ``Bahrainian end product,'' ``commercially 
available off-the-shelf (COTS) item,'' ``component,'' ``domestic end 
product,'' ``Free Trade Agreement country,'' ``Free Trade Agreement 
country end product,'' ``foreign end product,'' ``Moroccan end 
product,'' ``qualifying country end product,'' and ``United States,'' 
as used in this provision, have the meanings given in the Buy American 
Act--Free Trade Agreements--Balance of Payments Program clause of this 
solicitation.
* * * * *

[FR Doc. E9-30296 Filed 12-23-09; 8:45 am]

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