[Federal Register: December 19, 2006 (Volume 71, Number 243)]
[Rules and Regulations]               
[Page 75893-75894]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr19de06-18]                         

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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 225 and 252

RIN 0750-AF17

 
Defense Federal Acquisition Regulation Supplement; Restriction on 
Carbon, Alloy, and Armor Steel Plate (DFARS Case 2005-D002)

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

ACTION: Final rule.

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SUMMARY: DoD has issued a final rule amending the Defense Federal 
Acquisition Regulation Supplement (DFARS) to clarify the restriction on 
the acquisition of foreign carbon, alloy, or armor steel plate. The 
restriction implements provisions of annual DoD appropriations acts.

DATES: Effective Date: December 19, 2006.

FOR FURTHER INFORMATION CONTACT: Ms. Amy Williams, Defense Acquisition 
Regulations System, OUSD (AT&L) DPAP (DARS), IMD 3C132, 3062 Defense 
Pentagon, Washington, DC 20301-3062. Telephone (703) 602-0328; 
facsimile (703) 602-0350. Please cite DFARS Case 2005-D002.

SUPPLEMENTARY INFORMATION:

A. Background

    Section 8111 of the Fiscal Year 1992 DoD Appropriations Act (Pub. 
L. 102-172) and similar sections in subsequent DoD Appropriations Acts 
(the most recent being Section 8024 of Pub. L. 109-289) contain a 
restriction on the acquisition of carbon, alloy, or armor steel plate, 
that is not melted and rolled in the United States or Canada, for use 
in any Government-owned facility or property under the control of the 
Department of Defense. This restriction is implemented in the DFARS at 
225.7011-1 through 225.7011-3 and in the corresponding contract clause 
at 252.225-7030.
    DoD published a proposed rule at 70 FR 73189 on December 9, 2005, 
to clarify the applicability of the restriction. Two respondents 
provided comments on the proposed rule. One of the respondents 
applauded DoD's initiative to clarify the restriction and recommended 
adoption of the rule as proposed. The other respondent raised two 
issues regarding the proposed rule. A discussion of these issues is 
provided below.
    1. Property under the control of DoD. The respondent interpreted 
the statutory phrase ``property under the control of the Department of 
Defense'' to mean personal property as well as real property, and 
recommended amendment of the rule to reflect this interpretation.
    DoD has not adopted this recommendation, as DoD believes that 
limitation of the restriction to real property is consistent with the 
statutory provisions; and that, if the statutory phrase ``for use in 
any * * * property under the control of the Department of Defense'' 
were intended to include all personal property controlled by DoD, the 
words of the statute ``for use in any Government-owned facility'' would 
be without added meaning. The current interpretation of the statute has 
been in use since 1992 without objection.
    2. Use as a raw material. The respondent stated that the rule's 
limitation of the restriction to plate used as a ``raw material'' sets 
a limitation that does not appear in the statute. In addition, the 
respondent stated that carbon, alloy, and armor steel plate is not a 
``raw material''; it is a finished steel mill product that can be used 
``as is'' in certain applications or as an intermediate material for 
the fabrication of other products. Therefore, the respondent 
recommended that the phrase ``as a raw material'' be removed from the 
rule.
    DoD notes that the phrase ``as a raw material'' has been in the 
clause at 252.225-7030 since 1992 without objection. The phrase was 
added to the clause as a result of a public comment submitted by an 
industry association in response to the interim rule published

[[Page 75894]]

at 57 FR 14988 on April 23, 1992 (Defense Acquisition Circular 91-2, 
Item XI). The industry association did not believe that the statute was 
intended to apply to end items (hardware) delivered to the Government 
and used in Government facilities. The association recommended revision 
of the prescriptive language to require application of the clause to 
only those contracts for the direct acquisition of carbon, alloy, or 
armor steel plate. As a result, the final rule published at 57 FR 53596 
on November 12, 1992 (Defense Acquisition Circular 91-4, Item XI), 
required application of the clause to carbon, alloy, and armor steel 
plate furnished as a deliverable under the contract or purchased by the 
contractor as a raw material. The statutory language addressing use of 
the plate in a Government-owned facility or property under the control 
of DoD expresses an intent not to apply the restriction to the 
manufacture of items in the plants of commercial contractors. For 
example, the restriction should not apply if a contractor acquires a 
machine tool for use in a Government-owned facility, if the machine 
tool is manufactured by another contractor in a facility that is not 
Government-owned. DoD has amended the rule to make this concept 
clearer, without use of the term ``raw material''.
    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 certifies 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 the rule clarifies existing policy regarding the statutory 
restriction on the acquisition of foreign carbon, alloy, or armor steel 
plate.

C. Paperwork Reduction Act

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

List of Subjects in 48 CFR Parts 225 and 252

    Government procurement.

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

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 225.7011-1 is revised to read as follows:


225.7011-1  Restriction.

    (a) In accordance with Section 8111 of the Fiscal Year 1992 DoD 
Appropriations Act (Pub. L. 102-172) and similar sections in subsequent 
DoD appropriations acts, do not acquire any of the following types of 
carbon, alloy, or armor steel plate for use in a Government-owned 
facility or a facility under the control of (e.g., leased by) DoD, 
unless it is melted and rolled in the United States or Canada:
    (1) Carbon, alloy, or armor steel plate in Federal Supply Class 
9515.
    (2) Carbon, alloy, or armor steel plate described by specifications 
of the American Society for Testing Materials or the American Iron and 
Steel Institute.
    (b) This restriction--
    (1) Applies to the acquisition of carbon, alloy, or armor steel 
plate as a finished steel mill product that may be used ``as is'' or 
may be used as an intermediate material for the fabrication of an end 
product; and
    (2) Does not apply to the acquisition of an end product (e.g., a 
machine tool), to be used in the facility, that contains carbon, alloy, 
or armor steel plate as a component.

0
3. Section 225.7011-3 is amended by revising paragraph (a) to read as 
follows:


225.7011-3  Contract clause.

* * * * *
    (a) Require the delivery to the Government of carbon, alloy, or 
armor steel plate that will be used in a Government-owned facility or a 
facility under the control of DoD; or
* * * * *

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
4. Section 252.225-7030 is revised to read as follows:


252.225-7030  Restriction on Acquisition of Carbon, Alloy, and Armor 
Steel Plate.

    As prescribed in 225.7011-3, use the following clause:

Restriction on Acquisition of Carbon, Alloy, and Armor Steel Plate (DEC 
2006)

    (a) Carbon, alloy, and armor steel plate shall be melted and rolled 
in the United States or Canada if the carbon, alloy, or armor steel 
plate--
    (1) Is in Federal Supply Class 9515 or is described by 
specifications of the American Society for Testing Materials or the 
American Iron and Steel Institute; and
    (2)(i) Will be delivered to the Government for use in a Government-
owned facility or a facility under the control of the Department of 
Defense; or
    (ii) Will be purchased by the Contractor for use in a Government-
owned facility or a facility under the control of the Department of 
Defense.
    (b) This restriction--
    (1) Applies to the acquisition of carbon, alloy, or armor steel 
plate as a finished steel mill product that may be used ``as is'' or 
may be used as an intermediate material for the fabrication of an end 
product; and
    (2) Does not apply to the acquisition of an end product (e.g., a 
machine tool), to be used in the facility, that contains carbon, alloy, 
or armor steel plate as a component.


(End of clause)

[FR Doc. E6-21511 Filed 12-18-06; 8:45 am]

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