Defense Federal Acquisition Regulation Supplement; Free Trade Agreements-Chile and Singapore

AGENCY:

Department of Defense (DoD).

ACTION:

Final rule.

SUMMARY:

DoD has adopted as final, with changes, an interim rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to implement new Free Trade Agreements with Chile and Singapore, as approved by Congress in the United States-Chile Free Trade Agreement Implementation Act and the United States-Singapore Free Trade Agreement Implementation Act. The new Free Trade Agreements waive the applicability of the Buy American Act for some foreign supplies and construction materials from Chile and Singapore, and specify procurement procedures designed to ensure fairness.

EFFECTIVE DATE:

December 15, 2004.

FOR FURTHER INFORMATION CONTACT:

Ms. Amy Williams, Defense Acquisition Regulations Council, OUSD(AT&L)DPAP(DAR), IMD 3C132, 3062 Defense Pentagon, Washington, DC 20301-3062; telephone (703) 602-0328; facsimile (703) 602-0350. Please cite DFARS Case 2003-D088.

SUPPLEMENTARY INFORMATION:

A. Background

DoD published an interim DFARS rule at 69 FR 1926 on January 13, 2004, to implement new Free Trade Agreements with Chile and Singapore, in accordance with the United States-Chile Free Trade Agreement Implementation Act (Public Law 108-77) and the United States-Singapore Free Trade Agreement Implementation Act (Public Law 108-78). Applicable changes to the Federal Acquisition Regulation (FAR) were published in Federal Acquisition Circular (FAC) 2001-19 on January 7, 2004 (69 FR 1051; Interim rule), and in FAC 2001-25 on October 5, 2004 (69 FR 59700; Final rule).

DoD received no comments on the interim DFARS rule. However, the final rule includes the following additional changes:

• Amendment of the trade agreements clauses at DFARS 252.225-7021, 252.225-7036, and 252.225-7045 to remove the statement that United States law will apply to resolve any claim of breach of contract. This statement is no longer necessary, because the final rule published in FAC 2001-25 contains a new FAR clause, 52.233-4, Applicable Law for Breach of Contract Claim, that is prescribed for inclusion in all contracts.
• A minor amendment at DFARS 225.502(c)(i)(B) to clarify that, in acquisitions subject to a Free Trade Agreement, only eligible products of the applicable Free Trade Agreement country are exempt from application of the Buy American Act or Balance of Payments Program evaluation factor (e.g., for acquisitions between $25,000 and $58,550, a Mexican end product would be a “NAFTA country end product” but would not be an “eligible product,” in accordance with the thresholds at FAR 25.402).

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. Although the rule opens up Government procurement to the products of Chile, and lowers the trade agreements threshold for the products of Singapore, the economic impact on U.S. small businesses will not be significant. DoD applies the trade agreements to only those non-defense items listed at DFARS 225.401-70, and acquisitions below $100,000 that are set aside for small businesses are exempt.

C. Paperwork Reduction Act

This rule affects the certification and information collection requirements in the provisions at DFARS 252.225-7020 and 252.225-7035, currently approved by the Office of Management and Budget under Clearance Number 0704-0229. The impact, however, is negligible. In the provision at DFARS 252.225-7020, Trade Agreements Certificate, the offeror no longer has to list offers of end products from Chile as nondesignated country end products. However, offers of Chilean end products would have been unlikely, because purchase of foreign products other than eligible products is prohibited by the Trade Agreements Act. In the provision at DFARS 252.225-7035, Buy American Act—Free Trade Agreements—Balance of Payments Program Certificate, the offeror must list all end products that are not domestic end products. The offeror will list products of Chile and Singapore on the list of Free Trade Agreement country end products, rather than the list of “other foreign end products.”

List of Subjects in 48 CFR Parts 212, 213, 225, and 252

• Government procurement

Accordingly, the interim rule amending 48 CFR parts 212, 213, 225, and 252, which was published at 69 FR 1926 on January 13, 2004, is adopted as a final rule with the following changes:

1. The authority citation for 48 CFR parts 212, 213, 225, and 252 continues to read as follows:

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

PART 225—FOREIGN ACQUISITION

2. Section 225.502 is amended in paragraph (c)(i)(B) by removing “end” and adding in its place “eligible”.

PART 252—SOLICITATION PROVISIONS AND CONTRACT CLAUSES

3. Section 252.212-7001 is amended as follows:

a. By revising the clause date to read “(DEC 2004)”;

b. In paragraph (b), in entry “252.225-7021”, by removing “(JUN 2004)” and adding in its place “(DEC 2004)”; and

c. In paragraph (b), in entry “252.225-7036”, by removing “(JAN 2004)” the first place it appears and adding in its place “(DEC 2004)”.

4. Section 252.225-7021 is amended as follows:

a. By revising the clause date to read “(DEC 2004)”;

b. By removing paragraph (e); and

c. By redesignating paragraph (f) as paragraph (e).

5. Section 252.225-7036 is amended as follows:

a. By revising the clause date to read “(DEC 2004)”; and

b. By removing paragraph (e).

6. Section 252.225-7045 is amended as follows:

a. By revising the clause date to read “(DEC 2004)”; and

b. By removing paragraph (d).