[Federal Register: October 4, 2006 (Volume 71, Number 192)]
[Rules and Regulations]               
[Page 58541-58544]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr04oc06-21]                         

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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Part 252

RIN 0750-AF49

 
Defense Federal Acquisition Regulation Supplement; Free Trade 
Agreements--Guatemala and Bahrain (DFARS Case 2006-D028)

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

ACTION: Interim rule with request for comments.

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SUMMARY: DoD has issued an interim rule amending the Defense Federal 
Acquisition Regulation Supplement (DFARS) to implement the United 
States-Bahrain Free Trade Agreement and the Dominican Republic-Central 
America-United States Free Trade Agreement with respect to Guatemala. 
The Free Trade Agreements waive the applicability of the Buy American 
Act for some foreign supplies and construction materials and specify 
procurement procedures designed to ensure fairness.

DATES: Effective date: October 4, 2006.
    Comment date: Comments on the interim rule should be submitted in 
writing to the address shown below on or before December 4, 2006, to be 
considered in the formation of the final rule.

ADDRESSES: You may submit comments, identified by DFARS Case 2006-D028, 
using any of the following methods:
    [cir] Federal eRulemaking Portal: http://www.regulations.gov. 

Follow the instructions for submitting comments.
    [cir] E-mail: dfars@osd.mil. Include DFARS Case 2006-D028 in the 
subject line of the message.
    [cir] Fax: (703) 602-0350.
    [cir] Mail: Defense Acquisition Regulations System, Attn: Ms. Amy 
Williams, OUSD(AT&L)DPAP(DARS), IMD 3C132, 3062 Defense Pentagon, 
Washington, DC 20301-3062.
    [cir] Hand Delivery/Courier: Defense Acquisition Regulations 
System, Crystal Square 4, Suite 200A, 241 18th Street, Arlington, VA 
22202-3402.
    Comments received generally will be posted without change to http://www.regulations.gov
, including any personal information provided.


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

SUPPLEMENTARY INFORMATION:

A. Background

    This interim rule amends DFARS provisions and clauses to implement 
the Dominican Republic-Central America-United States Free Trade 
Agreement, with respect to Guatemala, and the United States-Bahrain 
Free Trade Agreement. Congress approved these trade agreements in the 
Dominican Republic-Central America-United States Free Trade Agreement 
Implementation Act (Public Law 109-53) and the United States-Bahrain 
Free Trade Agreement Implementation Act (Public Law 109-169).
    The rule adds Bahrain and Guatemala to the definition of ``Free 
Trade Agreement country.'' In addition, the rule removes Guatemala from 
the definition of ``Caribbean Basin country'' because, in accordance 
with Section 201(a)(3) of Public Law 109-53, when the Dominican 
Republic-Central America-United States Free Trade Agreement enters into 
force with respect to a country, that country is no longer designated 
as a beneficiary country for purposes of the Caribbean Basin Economic 
Recovery Act.
    The dollar thresholds for applicability of the Dominican Republic-
Central America-United States Free Trade

[[Page 58542]]

Agreement to Guatemala are the same as those for the other countries 
subject to the agreement. The dollar thresholds for applicability of 
the Bahrain Free Trade Agreement are $193,000 for supply and service 
contracts, and $8,422,165 for construction contracts.
    Like the Morocco Free Trade Agreement, the Bahrain Free Trade 
Agreement threshold for supplies and services is higher than the 
thresholds for the other Free Trade Agreements. Therefore, Bahrainian 
end products are not covered by the Buy American Act-Free Trade 
Agreements-Balance of Payments Program provision and clause at DFARS 
252.225-7035 and 252.225-7036, respectively.
    Like the North American Free Trade Agreement, the Bahrain Free 
Trade Agreement threshold for construction is higher than the 
thresholds of the other Free Trade Agreements. Therefore, Bahrainian 
construction material is excluded from coverage under the Balance of 
Payments Program--Construction Materials Under Trade Agreements clause 
at DFARS 252.225-7045 for acquisitions less than $8,422,165.
    In addition, this interim rule makes the following editorial 
changes:
    [cir] Removal of the word ``instrumentality'' from the definitions 
of ``Caribbean Basin country end product,'' ``Free Trade Agreement 
country end product,'' ``least developed country end product,'' 
``Moroccan end product,'' and ``Canadian end product,'' for consistency 
with the FAR definitions of ``end product.'' The term 
``instrumentality,'' as used in trade agreements, applies to the 
European Union. The FAR and DFARS have separately listed each member 
country of the European Union, so it is unnecessary to continue to 
refer to instrumentalities in the end product definitions.
    [cir] Amendment of the Trade Agreements clause at DFARS 252.225-
7021 to add a definition of ``WTO GPA country end product'' and to 
update the Internet address for location of the Harmonized Tariff 
Schedule of the United States.
    This rule was not subject to Office of Management and Budget review 
under Executive Order 12866, dated September 30, 1993.

B. Regulatory Flexibility Act

    DoD does not expect this rule to have a significant economic impact 
on a substantial number of small entities within the meaning of the 
Regulatory Flexibility Act, 5 U.S.C. 601, et seq. Although the rule 
opens up DoD procurement to the products of Guatemala and Bahrain, DoD 
does not believe there will be a significant economic impact on U.S. 
small businesses. DoD applies the trade agreements to only those non-
defense items listed at DFARS 225.401-70, and procurements that are set 
aside for small businesses are exempt from application of the trade 
agreements. Therefore, DoD has not performed an initial regulatory 
flexibility analysis. DoD invites comments from small businesses and 
other interested parties. DoD also will consider comments from small 
entities concerning the affected DFARS subparts in accordance with 5 
U.S.C. 610. Such comments should be submitted separately and should 
cite DFARS Case 2006-D028.

C. Paperwork Reduction Act

    This interim rule affects the certification and information 
collection requirements in the provisions at DFARS 252.225-7020 and 
252.225-7035, currently approved under Office of Management and Budget 
Control Number 0704-0229 for use through May 31, 2007. The impact, 
however, is negligible.

D. Determination To Issue an Interim Rule

    A determination has been made under the authority of the Secretary 
of Defense that urgent and compelling reasons exist to publish an 
interim rule prior to affording the public an opportunity to comment. 
This interim rule implements the Dominican Republic-Central America-
United States Free Trade Agreement with respect to Guatemala, and the 
United States-Bahrain Free Trade Agreement, as approved by Congress in 
Public Laws 109-53 and 109-169. The agreement with Guatemala took 
effect on July 1, 2006, and the agreement with Bahrain took effect on 
August 1, 2006. Comments received in response to this interim rule will 
be considered in the formation of the final rule.

List of Subjects in 48 CFR Part 252

    Government procurement.

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

0
Therefore, 48 CFR Part 252 is amended as follows:

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

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

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


Sec.  252.212-7001  [Amended]

0
2. Section 252.212-7001 is amended as follows:
0
a. By revising the clause date to read ``(Oct 2006)'';
0
b. In paragraphs (b)(9) and (b)(12)(i) by removing ``(Jun 2006)'' and 
adding in its place ``(Oct 2006)''; and
0
c. In paragraph (b)(12)(ii) by removing ``(Jan 2005)'' and adding in 
its place ``(Oct 2006)''.

0
3. Section 252.225-7013 is amended by revising the clause date and 
paragraph (a)(2)(ii) to read as follows:


Sec.  252.225-7013  Duty-Free Entry

* * * * *

Duty-Free Entry (Oct 2006)

    (a) * * *
    (2) * * *
    (ii) Free Trade Agreement country end product, other than a 
Bahrainian end product or a Moroccan end product, as defined in the Buy 
American Act-Free Trade Agreements-Balance of Payments Program clause 
of this contract; or
* * * * *

0
4. Section 252.225-7021 is amended as follows:
0
a. By revising the clause date;
0
b. In paragraph (a)(1)(i)(B), in the first sentence, by removing ``or 
instrumentality'';
0
c. By revising paragraph (a)(3)(ii);
0
d. In paragraph (a)(3)(iv) by removing ``Guatemala,'';
0
e. In paragraph (a)(6)(ii) in the first sentence, and in paragraph 
(a)(7)(ii) in the first sentence, by removing ``or instrumentality'';
0
f. By adding paragraph (a)(13); and
0
g. In paragraph (e) introductory text by revising the first sentence. 
The revised and added text reads as follows:


Sec.  252.225-7021  Trade Agreements

* * * * *
Trade Agreements (Oct 2006)
    (a) * * *
    (3) * * *
* * * * *
    (ii) A Free Trade Agreement country (Australia, Bahrain, Canada, 
Chile, El Salvador, Guatemala, Honduras, Mexico, Morocco, Nicaragua, or 
Singapore);
* * * * *
    (13) WTO GPA country end product means an article that--
    (i) Is wholly the growth, product, or manufacture of a WTO GPA 
country; or
    (ii) In the case of an article that consists in whole or in part of 
materials from another country, has been substantially transformed in a 
WTO GPA country into a new and different

[[Page 58543]]

article of commerce with a name, character, or use distinct from that 
of the article or articles from which it was transformed. The term 
refers to a product offered for purchase under a supply contract, but 
for purposes of calculating the value of the end product includes 
services (except transportation services) incidental to its supply, 
provided that the value of those incidental services does not exceed 
the value of the product itself.
* * * * *
    (e) The HTSUS is available on the Internet at http://www.usitc.gov/tata/hts/bychapter/index.htm.
 * * *

* * * * *
0
5. Section 252.225-7035 is amended by revising the clause date and 
paragraphs (a), (b)(2), (c)(2)(ii), and Alternate I to read as follows:


Sec.  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 (Oct 2006)
    (a) Definitions. Bahrainian end product, 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 have the meanings given in the Buy American 
Act--Free Trade Agreements--Balance of Payments Program clause of this 
solicitation.
    (b) * * *
    (2) For line items subject to Free Trade Agreements, will evaluate 
offers of qualifying country end products or Free Trade Agreement 
country end products other than Bahrainian end products or Moroccan end 
products without regard to the restrictions of the Buy American Act or 
the Balance of Payments Program.
    (c) * * *
    (2) * * *
    (ii) The offeror certifies that the following supplies are Free 
Trade Agreement country end products other than Bahrainian end products 
or Moroccan end products:
(Line Item Number) (Country of Origin)
* * * * *
Alternate I (Oct 2006)
    As prescribed in 225.1101(9), substitute the phrase Canadian end 
product for the phrases Bahrainian end product, Free Trade Agreement 
country, Free Trade Agreement country end product, and Moroccan end 
product in paragraph (a) of the basic provision; and substitute the 
phrase Canadian end products for the phrase Free Trade Agreement 
country end products other than Bahrainian end products or Moroccan end 
products in paragraphs (b) and (c)(2)(ii) of the basic provision.

0
6. Section 252.225-7036 is amended as follows:
0
a. By revising the clause date;
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b. By redesignating paragraphs (a)(1) through (11) as paragraphs (a)(2) 
through (12) respectively;
0
c. By adding a new paragraph (a)(1);
0
d. By revising newly designated paragraph (a)(6);
0
e. In newly designated paragraphs (a)(7)(ii) and (a)(8)(ii), in the 
first sentence of each, by removing ``or instrumentality'';
0
f. By revising paragraph (c);
0
g. In Alternate I by revising the date to read ``(OCT 2006)''; and
0
h. In Alternate I, in paragraph (a)(4)(ii), in the first sentence, by 
removing ``or instrumentality''. The revised and added text reads as 
follows:


Sec.  252.225-7036  Buy American Act--Free Trade Agreements--Balance of 
Payments Program

* * * * *
Buy American Act--Free Trade Agreements--Balance of Payments Program 
(Oct 2006)
    (a) * * *
    (1) Bahrainian end product means an article that--
    (i) Is wholly the growth, product, or manufacture of Bahrain; or
    (ii) In the case of an article that consists in whole or in part of 
materials from another country, has been substantially transformed in 
Bahrain into a new and different article of commerce with a name, 
character, or use distinct from that of the article or articles from 
which it was transformed. The term refers to a product offered for 
purchase under a supply contract, but for purposes of calculating the 
value of the end product includes services (except transportation 
services) incidental to its supply, provided that the value of those 
incidental services does not exceed the value of the product itself.
* * * * *
    (6) Free Trade Agreement country means Australia, Bahrain, Canada, 
Chile, El Salvador, Guatemala, Honduras, Mexico, Morocco, Nicaragua, or 
Singapore;
* * * * *
    (c) The Contractor shall deliver under this contract only domestic 
end products unless, in its offer, it specified delivery of qualifying 
country end products, Free Trade Agreement country end products other 
than Bahrainian end products or Moroccan end products, or other foreign 
end products in the Buy American Act--Free Trade Agreements--Balance of 
Payments Program Certificate provision of the solicitation. If the 
Contractor certified in its offer that it will deliver a qualifying 
country end product or a Free Trade Agreement country end product other 
than a Bahrainian end product or a Moroccan end product, the Contractor 
shall deliver a qualifying country end product, a Free Trade Agreement 
country end product other than a Bahrainian end product or a Moroccan 
end product, or, at the Contractor's option, a domestic end product.
* * * * *

0
7. Section 252.225-7045 is amended as follows:
0
a. By revising the clause date;
0
b. In paragraph (a), in the definition of ``Designated country'', by 
revising the parenthetical in paragraph (2) to read ``(Australia, 
Bahrain, Canada, Chile, El Salvador, Guatemala, Honduras, Mexico, 
Morocco, Nicaragua, or Singapore)'';
0
c. In paragraph (a), in the definition of ``Designated country'', by 
removing ``Guatemala,'' from paragraph (4); and
0
d. By revising Alternate I to read as follows:


Sec.  252.225-7045  Balance of Payments Program--Construction Material 
Under Trade Agreements

* * * * *
Balance of Payments Program--Construction Material under Trade 
Agreements (Oct 2006)
* * * * *
Alternate I (Oct 2006)
    As prescribed in 225.7503(b), add the following definition of 
Bahrainian or Mexican construction material to paragraph (a) of the 
basic clause, and substitute the following paragraphs (b) and (c) for 
paragraphs (b) and (c) of the basic clause:
    Bahrainian or Mexican construction material means a construction 
material that--
    (1) Is wholly the growth, product, or manufacture of Bahrain or 
Mexico; or
    (2) In the case of a construction material that consists in whole 
or in part of materials from another country, has been substantially 
transformed in Bahrain or Mexico into a new and different construction 
material distinct from the materials from which it was transformed.
    (b) This clause implements the Balance of Payments Program by

[[Page 58544]]

providing a preference for domestic construction material. In addition, 
the Contracting Officer has determined that the WTO GPA and all Free 
Trade Agreements except NAFTA apply to this acquisition. Therefore, the 
Balance of Payments Program restrictions are waived for designated 
country construction material other than Bahrainian or Mexican 
construction material.
    (c) The Contractor shall use only domestic or designated country 
construction material other than Bahrainian or Mexican construction 
material in performing this contract, except for--
    (1) Construction material valued at or below the simplified 
acquisition threshold in Part 2 of the Federal Acquisition Regulation; 
or
    (2) The construction material or components listed by the 
Government as follows:
[fxsp0]----------------------------------------------------------------
[Contracting Officer to list applicable excepted materials or 
indicate ``none''].

 [FR Doc. E6-16418 Filed 10-3-06; 8:45 am]

BILLING CODE 5001-08-P