[Federal Register: May 31, 2002 (Volume 67, Number 105)]
[Rules and Regulations]
[Page 38020-38022]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr31my02-14]
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DEPARTMENT OF DEFENSE
48 CFR Parts 213, 247, and 252
[DFARS Case 2000-D014]
Defense Federal Acquisition Regulation Supplement; Ocean
Transportation by U.S.-Flag Vessels
AGENCY: 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 specify that requirements
for use of U.S.-flag vessels, in the transportation of supplies by sea,
apply to contracts at or below the simplified acquisition threshold as
well as those that exceed the simplified acquisition threshold.
EFFECTIVE DATE: May 31, 2002.
FOR FURTHER INFORMATION CONTACT: Ms. Amy Williams, (703) 602-0328.
SUPPLEMENTARY INFORMATION:
A. Background
The clause at DFARS 252.247-7023, Transportation of Supplies by
Sea, contains requirements for use of U.S.-flag vessels when
transporting supplies by sea under a DoD contract. The clause requires
a contractor to (1) submit any request for use of other than U.S.-flag
vessels in writing to the contracting officer;
(2) provide a copy of the bill of lading to the contracting officer
and the Maritime Administration after each shipment of supplies by sea;
(3) provide with the final invoice a representation as to whether ocean
transportation and U.S.-flag vessels were used in performance of the
contract; and (4) include the clause in subcontracts for construction
supplies, noncommercial items, and certain commercial items.
Prior to this rule, the DFARS exempted contracts and subcontracts
at or below the simplified acquisition threshold from use of the clause
at DFARS 252.247-7023. In accordance with 10 U.S.C. 2631, Supplies:
Preference to United States Vessels, this rule eliminates the
exemption. However, the rule prescribes an alternate version of the
clause for contracts and subcontracts at or below the simplified
acquisition threshold. The alternate version excludes the requirement
for a contractor or subcontractor to provide a representation regarding
ocean transportation with its final invoice.
DoD published a proposed rule at 66 FR 47153 on September 11, 2001.
Five sources submitted comments on the proposed rule. A summary of the
comments and the DoD response is provided below:
Comment: The rule is contrary to Section 4101 of the Federal
Acquisition Streamlining Act of 1994 (FASA) (Public Law 103-355; 41
U.S.C. 429), which requires the Federal Acquisition Regulation (FAR) to
include 10 U.S.C. 2631 in a list of laws that are inapplicable to
contracts and subcontracts at or below the simplified acquisition
threshold unless the Federal Acquisition Regulatory Council makes a
written determination that it would not be in the best interest of the
Federal Government to exempt such contracts and subcontracts.
DoD Response: The list of laws referred to by the respondent
applies to laws enacted after FASA. 10 U.S.C. 2631 has been in
existence since 1904. There is no statutory authority to exempt 10
U.S.C. 2631 for contracts or subcontracts at or below the simplified
acquisition threshold. In addition, the policy in this DFARS rule is
consistent with the FAR rule published at 65 FR 24324 on April 25,
2000, which applies the preference for U.S.-flag vessels to contracts
awarded using simplified acquisition procedures.
Comment: The rule is contrary to Section 4201(a) of FASA (41 U.S.C.
427(a)), which requires that the FAR provide special simplified
procedures for purchases of property and services for amounts not
greater than the simplified acquisition threshold. Compliance with 10
U.S.C. 2631 for such purchases of property would impose unreasonable
administrative burdens on affected contractors and subcontractors.
DoD Response: The rule is consistent with the provisions of 41
U.S.C. 427 in that it seeks to avoid overly burdensome reporting
requirements for acquisitions at or below the simplified acquisition
threshold. The rule does not require use of the provision at DFARS
252.247-7022, Representation of Extent of Transportation by Sea, or the
clause at DFARS 252.247-7024, Notification of Transportation of
Supplies by Sea, in acquisitions at or below the simplified acquisition
threshold. Additionally, the rule limits the requirements of the clause
at DFARS 252.247-7023, Transportation of Supplies by Sea, in contracts
and subcontracts at or below the simplified acquisition threshold by
excluding from those contracts and subcontracts the requirement for a
contractor or subcontractor to provide a representation regarding ocean
transportation with its final invoice.
Comment: DFARS 247.573(a)(2) exempts solicitations valued at or
below
[[Page 38021]]
the simplified acquisition threshold from the requirement for offerors
to represent whether or not ocean transportation will be used in
performance of the contract. This representation (252.247-7022) helps
to ensure that an offeror is cognizant of requirements for use of U.S.-
flag vessels and that the contracting officer is aware of requirements
for ocean transportation. Elimination of this representation is likely
to increase incidents of non-compliance with Cargo Preference laws and
adversely impact the U.S.-flag merchant marine. In addition, the new
Alternate III for the clause at 252.247-7023, Transportation of
Supplies by Sea, eliminates the following requirements for contracts
and subcontracts at or below the simplified acquisition threshold: (1)
The requirement for a contractor to provide a representation regarding
ocean transportation with its final invoice; (2) The requirement for
the Government to reject and return an invoice that does not contain
the required representation; and (3) The right of the Government to
equitably adjust the contract for unauthorized use of non-U.S.-flag
vessels. Elimination of these requirements diminishes the ability of
the contracting officer to monitor and enforce compliance with Cargo
Preference laws.
DoD Response: Due to the increased potential for use of ocean
transportation in contracts exceeding the simplified acquisition
threshold, the DFARS requires contractors to provide multiple
representations and requires contracting officers to determine whether
ocean transportation will be required during the solicitation phase of
an acquisition. These actions ensure that the contracting officer has
the information needed to perform the appropriate level of oversight
for high dollar value acquisitions. Since only a very limited number of
procurements at or below the simplified acquisition threshold will
require ocean transportation, the type of representations required
above the simplified acquisition threshold would create an unnecessary
burden on the majority of contractors receiving contracts at or below
the threshold. Therefore, DoD believes that the costs of enforcing
these requirements in contracts with an anticipated value at or below
the simplified acquisition threshold would far outweigh the benefits
and would be contrary to the provisions of 41 U.S.C. 427. DoD believes
that the rule is an appropriate balance between the need to enforce the
Cargo Preference laws and the need to impose minimal burden on
contractors and subcontractors (many small businesses) when the value
of the contract or subcontract does not exceed the simplified
acquisition threshold.
Comment: The rule removes DFARS 247.572-1(c), which (1) requires
the contracting officer to ask each offeror if it will transport
supplies by sea, (2) requires a contractor that did not anticipate
transportation of supplies by sea when it submitted its offer to notify
the Government if it later intends to use ocean transportation, and (3)
requires the contractor to use U.S.-flag vessels in the transportation
of supplies by sea and comply with other requirements of the clause at
252.247-7023, Transportation of Supplies by Sea. Elimination of these
requirements will decrease Government oversight and will allow offerors
and contractors to circumvent the requirements of the Cargo Preference
laws.
DoD Response: The DFARS still contains these requirements. The text
at DFARS 247.572-1(c) was removed because it was redundant of the
policy found at DFARS 247.571(a), 247.573(a), 252.247-7022, 252.247-
7023, and 252.247-7024.
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 most entities that provide ocean transportation of freight are
not small businesses, and the rule minimizes the information required
from offerors and contractors for acquisitions valued at or below the
simplified acquisition threshold.
C. Paperwork Reduction Act
The Paperwork Reduction Act applies. This rule increases the number
of contractors subject to the information collection requirements in
paragraphs (d) and (e) of the clause at DFARS 252.247-7023. DoD
estimates that this change will increase paperwork burden by
approximately 240 hours. The Office of Management and Budget (OMB) has
approved this information collection for use through July 31, 2004,
under OMB Control Number 0704-0245.
List of Subjects in 48 CFR Parts 213, 247, and 252
Government procurement.
Michele P. Peterson,
Executive Editor, Defense Acquisition Regulations Council.
Therefore, 48 CFR Parts 213, 247, and 252 are amended as follows:
1. The authority citation for 48 CFR Parts 213, 247, and 252
continues to read as follows:
PART 213--SIMPLIFIED ACQUISITION PROCEDURES
2. Section 213.301 is amended in paragraph (2)(i)(E) by removing
the word ``and'', and by adding paragraph (2)(i)(G) to read as follows:
213.301 Governmentwide commercial purchase card.
* * * * *
(2) * * *
(i) * * *
(G) Does not require transportation of supplies by sea; and
* * * * *
PART 247--TRANSPORTATION
247.572-1 [Amended]
3. Section 247.572-1 is amended by removing paragraph (c) and
redesignating paragraph (d) as paragraph (c).
4. Section 247.573 is amended by revising paragraph (b)(1) and
adding paragraph (b)(4) to read as follows:
247.573 Solicitation provision and contract clauses.
* * * * *
(b)(1) Use the clause at 252.247-7023, Transportation of Supplies
by Sea, in all solicitations and resultant contracts, except those for
direct purchase of ocean transportation services.
* * * * *
(4) Use the clause with its Alternate III in solicitations and
contracts with an anticipated value at or below the simplified
acquisition threshold.
* * * * *
PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
252.212-7001 [Amended]
5. Section 252.212-7001 is amended as follows:
a. By revising the clause date to read ``(MAY 2002)''; and
b. In paragraph (b), in the entry ``252.247-2023'', by removing
``(MAR 2000)'' the first time it appears and adding in its place ``(MAY
2002)''.
[[Page 38022]]
6. Section 252.247-7023 is amended by revising the clause date,
paragraph (e) introductory text, paragraph (f) introductory text, and
paragraph (h), and by adding Alternate III to read as follows:
252.247-7023 Transportation of Supplies by Sea.
* * * * *
Transportation of Supplies by Sea (May 2002)
* * * * *
(e) The Contractor shall, within 30 days after each shipment
covered by this clause, provide the Contracting Officer and the
Maritime Administration, Office of Cargo Preference, U.S. Department
of Transportation, 400 Seventh Street SW., Washington, DC 20590, one
copy of the rated on board vessel operating carrier's ocean bill of
lading, which shall contain the following information:
* * * * *
(f) The Contractor shall provide with its final invoice under
this contract a representation that to the best of its knowledge and
belief--
* * * * *
(h) In the award of subcontracts for the types of supplies
described in paragraph (b)(2) of this clause, the Contractor shall
flow down the requirements of this clause as follows:
(1) The Contractor shall insert the substance of this clause,
including this paragraph (h), in subcontracts that exceed the
simplified acquisition threshold in part 2 of the Federal
Acquisition Regulation.
(2) The Contractor shall insert the substance of paragraphs (a)
through (e) of this clause, and this paragraph (h), in subcontracts
that are at or below the simplified acquisition threshold in part 2
of the Federal Acquisition Regulation.
* * * * *
Alternate III (May 2002)
As prescribed in 247.573(b)(4), substitute the following
paragraph (f) for paragraphs (f), (g), and (h) of the basic clause:
(f) The Contractor shall insert the substance of this clause,
including this paragraph (f), in subcontracts that are for a type of
supplies described in paragraph (b)(2) of this clause.
[FR Doc. 02-13359 Filed 5-30-02; 8:45 am]
BILLING CODE 5001-08-P