[Federal Register Volume 60, Number 248 (Wednesday, December 27, 1995)]
[Proposed Rules]
[Pages 67028-67032]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-31205]
[[Page 67027]]
_______________________________________________________________________
Part III
Department of Defense
General Services Administration
National Aeronautics and Space Administration
_______________________________________________________________________
48 CFR Parts 25 and 52
Federal Acquisition Regulation: Buy American Act--Construction
(Grimberg Decision); Proposed Rule
Federal Register / Vol. 60, No. 248 / Wednesday, December 27, 1995 /
Proposed Rules
[[Page 67028]]
DEPARTMENT OF DEFENSE
GENERAL SERVICES ADMINISTRATION
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Parts 25 and 52
[FAR Case 91-119]
RIN 9000-AG81
Federal Acquisition Regulation; Buy American Act--Construction
(Grimberg Decision)
AGENCIES: Department of Defense (DOD), General Services Administration
(GSA), and National Aeronautics and Space Administration (NASA).
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: The Civilian Agency Acquisition Council and the Defense
Acquisition Regulations Council are considering changes to the Federal
Acquisition Regulation (FAR) to amend FAR Parts 25 and 52 to add
guidance on requests for exceptions to the Buy American Act for
construction. This regulatory action was not subject to Office of
Management and Budget review under Executive Order 12866, dated
September 30, 1993.
DATES: Comment due date: To be considered in the formulation of a final
rule, comments should be submitted on or before February 26, 1996.
ADDRESSES: Comments should be submitted to: General Services
Administration, FAR Secretariat (VRS), 18th & F Streets NW., Room 4037,
Washington, DC 20405.
FOR FURTHER INFORMATION CONTACT: Mr. Edward Loeb at (202) 501-4547 in
reference to this FAR case. For general information, contact the FAR
Secretariat, Room 4037, GS Building, Washington, DC 20405 (202) 501-
4755. Please cite FAR case 91-119.
SUPPLEMENTARY INFORMATION:
A. Background
In its decision in John C. Grimberg Co., Inc. v. U.S., 869 F.2d
1475 (Fed. Cir. 1989), the Court of Appeals for the Federal Circuit in
effect ruled that the current Department of Defense practice of
generally denying post-award waivers of the Buy American Act for
construction contracts is unreasonable. In light of this decision, FAR
revisions are proposed to add guidance on exceptions to the Buy
American Act.
B. Regulatory Flexibility Act
The proposed rule is not expected 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., because
contractors are required to either comply with the Buy American Act or
seek exceptions. An Initial Regulatory Flexibility Analysis has,
therefore, not been performed. Comments are invited from small
businesses and other interested parties. Comments from small entities
concerning the affected FAR subpart will also be considered in
accordance with 5 U.S.C. 610. Such comments must be submitted
separately and should cite 5 U.S.C. 601, et seq. (FAR case 91-119), in
correspondence.
C. Paperwork Reduction Act
The Paperwork Reduction Act (Pub. L. 96-511) applies because the
proposed revisions impose additional record-keeping requirements or
information collection requirements or collection of information from
offerors, contractors or members of the public which require the
approval of the Office of Management and Budget (OMB) under 44 U.S.C.
3501, et seq. The proposed rule requires contractors proposing to use
foreign construction materials to submit information on the foreign and
domestic construction materials, as well as a justification for use of
foreign materials. This information will be evaluated by the Government
in determining if a request for a waiver of the Buy American Act should
be granted. A request for approval of the new information collection
requirement has been submitted to OMB.
DATES: Comments may be submitted on or before February 26, 1996.
ADDRESSES: Send comments regarding the burden estimate or any other
aspect of the information collection requirement to Mr. Peter Weiss,
FAR Desk Officer, OMB, Room 10102, NEOB, Washington, DC 20503, and a
copy to the FAR Secretariat.
Annual Reporting Burden
Public reporting burden for this collection of information is
estimated to average .5 hours per response, including the time for
reviewing instructions, searching existing data sources, gathering and
maintaining the data needed, and completing and reviewing the
collection of information.
The annual reporting burden is estimated to be $37,500 as a result
of the following estimated number of hours of labor for compliance:
Respondents, 1,000; responses per respondent, 5; total annual
responses, 5,000; preparation hours per response, .5; and total
response burden hours, 2,500.
List of Subjects in 48 CFR Parts 25 and 52
Government procurement.
Dated: December 18, 1995.
Edward C. Loeb,
Acting Director, Office of Federal Acquisition Policy.
Therefore, it is proposed that48 CFR parts 25 and 52 be amended as
set forth below:
PART 25--FOREIGN ACQUISITION
1. The authority citation for 48 CFR Parts 25 and 52 continues to
read as follows:
Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42
U.S.C. 2473(c).
25.200 [Amended]
2. Section 25.200 is amended to revise the cite ``41 U.S.C. 10'' to
read ``41 U.S.C. 10a-10d''.
3. Section 25.202 is amended by revising paragraph (a)(1),
redesignating paragraphs (b) through (c) as paragraphs (c) through (d),
and adding a new paragraph (b) to read as follows:
25.202 Policy.
(a) * * *
(1) The cost would be unreasonable (the cost of a particular
domestic construction material shall be determined to be unreasonable
when the cost of such material exceeds the cost of foreign material by
more than 6 percent, unless the agency head determines a higher
percentage to be appropriate; see Executive Order 10582);
* * * * *
(b) Offerors should request an exception to the Buy American Act in
time to allow determination before submission of offers so that,
through competition, economic benefits of the exception are passed
along to the Government. Officials making these determinations shall
consider the feasibility of foregoing the acquisition or of acquiring a
domestic substitute.
* * * * *
25.203, 25.204, and 25.205 [Redesignated as 25.204, 25.206, and
25.207]
4. Sections 25.203, 25.204, and 25.205 are redesignated as 25.204,
25.206, and 25.207, respectively.
4A. A new 25.203 is added to read as follows:
25.203 Exceptions requested before submission of offers.
(a) Any request for exception to the Buy American Act made before
receipt of offers shall be evaluated based on the information in the
applicable clause at 52.225-5, Buy American Act--
[[Page 67029]]
Construction Materials, paragraph (c) and (d) or 52.225-15, Buy
American Act--Construction Materials under European Community and North
American Free Trade Agreements, paragraphs (c) and (d) and may be
supplemented by other information readily available to the contracting
officer.
(b) If an exception to the Buy American Act is granted before
receipt of offers, the excepted material shall be identified in the
clause at 52.225-5 or 52.225-15.
5. Newly designated 25.204 is revised to read as follows:
25.204 Evaluating offers of foreign construction material.
(a) Offerors proposing to use foreign construction material other
than that listed in the applicable clause at 52.225-5(b)(2) or 52.225-
15(b)(3) must provide the information required by paragraphs (c) and
(d) of the respective clauses.
(b) Unless agency regulations specify a higher percentage, the
Government will add to the offer price 6 percent of the cost of any
foreign construction material proposed for exception from the
requirements of the Buy American Act based on the unreasonable cost of
domestic construction materials. If the evaluation of offers results in
a tie between an offer including foreign construction material, as
evaluated, and an offer including solely domestic material, award shall
be made on the offer including solely domestic material. This procedure
does not apply to foreign construction material whose use is excepted
by the Government under the clause at 52.225-5(b)(2) or 52.225-
15(b)(3).
(c) Offerors also may submit alternate offers based on use of
domestic construction material to avoid the possibility that denial of
an exception permitting use of foreign construction material shall
cause rejection of the entire offer.
(d) If an exception to the Buy American Act is granted, the
excepted material shall be listed in the contract.
6. A new 25.205 is added to read as follows:
25.205 Post award exceptions.
(a) If a contractor requests an exception to the Buy American Act
after contract award, the contractor shall explain why the exception
could not have been requested before contract award or otherwise was
not reasonably foreseeable. If the contractor does not submit a
satisfactory explanation, an exception should not be granted unless it
is in the Government's best interests.
(b) Any request for exception to the Buy American Act made after
contract award shall be evaluated based on information similar to that
required before award by the applicable clause at 52.225-5(c) and (d)
or 52.225-15(c) and (d) and/or other information readily available to
the contracting officer.
(c) If an exception to the Buy American Act is granted after
contract award, the contract shall be modified to allow use of the
foreign construction material, and adequate consideration shall be
negotiated. However, when the basis for the exception is the
unreasonable price of a domestic construction material, adequate
consideration shall not be less than the differential established in
25.202(a)(1) or agency procedures.
7. Newly designated Section 25.206 is revised to read as follows:
25.206 Noncompliance.
(a) The contracting officer is responsible for conducting Buy
American Act investigations when available information indicates such
action is warranted.
(b) Unless fraud is suspected, the contracting officer shall notify
the contractor of the apparent unauthorized use of foreign construction
material and request a reply, to include proposed corrective action.
(c) If an investigation reveals that a contractor or subcontractor
has used foreign construction material without authorization, the
contracting officer shall take appropriate action, including one or
more of the following:
(1) If granting an exception to the Buy American Act is
appropriate, the contracting officer may process an exception in
accordance with 25.205.
(2) If an exception to the Buy American Act is not appropriate:
(i) The contracting officer should consider requiring removal and
replacement of the unauthorized foreign construction material.
(ii) If removal and replacement of foreign construction material
incorporated in a building or work would be impracticable, cause undue
delay, or otherwise be detrimental to the interests of the Government,
the contracting officer may determine in writing that the foreign
construction material need not be removed and replaced. Such a
determination does not constitute approval of an exception and should
be so stated in the determination. Further, such a determination does
not affect the Government's right to suspend and/or debar a contractor,
subcontractor or supplier for violation of the Buy American Act, or to
exercise other contractual rights and remedies, such as reducing the
contract price or terminating the contract for default.
(iii) If the noncompliance is sufficiently serious, the contracting
officer should consider exercising appropriate contractual remedies,
such as terminating the contract for default. The contracting officer
should also consider preparing and forwarding a report for suspension
and/or debarment, including findings and supporting evidence in
accordance with FAR subpart 9.4, Debarment, Suspension, and
Ineligibility. In addition, if the noncompliance appears to be
fraudulent, the contracting officer should consider referring the
matter to other appropriate agency officials, such as the officer
responsible for criminal investigation and prosecution.
8. Newly designated Section 25.207 is revised to read as follows:
25.207 Solicitation provision and contract clause.
(a) The contracting officer shall insert the provision at 52.225-X,
Notice of Buy American Act--Construction Materials, in solicitations
for construction when the clause at 52.225-5, Buy American Act--
Construction Materials, is prescribed.
(b) The contracting officer shall insert the clause at 52.225-5,
Buy American Act--Construction Materials, in solicitations and
contracts for construction inside the United States, except when the
clause at 52.225-15, Buy American Act--Construction Materials under
European Community and North American Free Trade Agreements, is
prescribed.
(c) The contracting officer shall insert the provision at 52.225-
XX, Notice of Buy American Act Requirement--Construction Materials
under European Community and North American Free Trade Agreements, in
solicitations for construction when the clause at 52.225-15, Buy
American Act--Construction Materials under European Community and North
American Free Trade Agreements, is prescribed.
(d) The contracting officer shall insert the clause at 52.225-15,
Buy American Act--Construction Materials under European Community and
North American Free Trade Agreements, in solicitations and contracts
for construction inside the United States with an estimated acquisition
value of $6,500,000 ($8,000,000 for the Power Marketing
Administrations) or more, to be awarded by agencies listed in 25.407.
[[Page 67030]]
PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
9. Section 52.225-X is added to read as follows:
52.225-X Notice of Buy American Act requirement--construction
materials.
As prescribed in 25.207(a), insert the following provision:
Notice of Buy American Act Requirement--Construction Materials (Date)
(a) Offerors are required to comply with the requirements of FAR
clause 52.225-5, Buy American Act--Construction Materials, of this
solicitation. The terms ``construction material'' and ``domestic
construction material'' as used in this provision, have the meanings
set forth in FAR clause 52.225-5(a), Definitions.
(b) Offerors should request an exception to the Buy American Act
in time to allow determination before submission of offers. For
evaluation of a request for an exception to the requirements of the
Buy American Act prior to bid opening, the information and
applicable supporting data required by FAR clause 52.225-5(c) and
(d) shall be included in the request. If a request has not been made
before the time set for receipt of offers or a response has not been
received to a request made prior to receipt of offers, the
information and supporting data shall be included in the offer.
(c) Evaluation of offers. (1) For evaluation of offers, (unless
agency regulations specify a higher percentage) the Government will
add to the offer price 6 percent of the cost of any foreign
construction material proposed for exception from the requirements
of the Buy American Act based on claimed unreasonable cost of
domestic construction materials.
(2) If the evaluation of offers results in a tie between an
offer including foreign construction material, as evaluated, and an
offer including solely domestic material, award shall be made on the
offer including solely domestic material.
(3) This procedure does not apply to foreign construction
material whose use is excepted by the Government under FAR clause
52.225-5(b)(2) of the solicitation.
(d) Alternate offerors. (1) When an offer includes foreign
construction material, offerors also may submit alternate offers
based on use of domestic construction material.
(2) If alternate offers are submitted, a separate SF 1442 shall
be submitted for each alternate offer, and a separate price
comparison table prepared in accordance with FAR clause 52.225-5(c)
and (d) shall be submitted for each offer that is based on the use
of any foreign construction material.
(3) If a particular exception requested under FAR clause 52.225-
5(c), is not approved--
(i) The Government will evaluate only offers based on use of the
equivalent domestic construction material, and the offeror shall be
required to furnish such domestic construction material;
(ii) In sealed bid procurements, any offer based on use of that
particular foreign construction material must be rejected as
nonresponsive; and
(iii) In negotiated procurements, any offer based on use of that
particular foreign construction material may not be accepted unless
revised during negotiations.
(End of provision)
10. Section 52.225-5 is amended by revising the introductory
paragraph; revising the clause date; revising paragraph (a)
introductory text; by removing the phrase ``as used in this clause''
from the definitions of ``Components'', ``Construction materials'' and
``Domestic construction materials''; by revising paragraph (b); and
adding paragraphs (c) and (d) to read as follows:
52.225-5 Buy American Act--construction materials.
As prescribed in 25.207(b), insert the following clause:
Buy American Act--Construction Materials (Date)
(a) Definitions. As used in this clause
* * * * *
(b)(1) The Buy American Act (41 U.S.C. 10(a)-10(d)) requires
that only domestic construction material be used in performing this
contract, except as provided in subparagraphs (b)(2) or (b)(3) of
this clause.
(2) This requirement does not apply to the excepted construction
material or components listed by the Government below:
----------------------------------------------------------------------
(list applicable accepted materials or indicate ``none''.)
(3) Other foreign construction material may be used if the
Government determines that--
(i) The cost would be unreasonable (the cost of a particular
domestic construction material shall be determined to be
unreasonable when the cost of such material exceeds the cost of
foreign material by more than 6 percent, unless the agency head
determines a higher percentage to be appropriate);
(ii) The use of a particular domestic construction material
would be impracticable; or
(iii) The construction material is not mined, produced, or
manufactured in the United States in sufficient and reasonably
available commercial quantities of a satisfactory quality.
(4) The Contractor agrees that only domestic construction
material will be used by the Contractor, subcontractors, material
men, and suppliers in the performance of this contract, except for
foreign construction materials, if any--
(i) Listed in paragraph (b)(2) of this clause; or
(ii) Proposed by the Contractor and approved by the Government
in accordance with paragraphs (c) and (d) of this clause.
(c) Request for exceptions. (1) Contractors proposing to use
foreign construction material shall provide adequate information for
Government evaluation of the request for exception to the Buy
American Act. Each submission shall include a description of the
foreign and domestic construction materials, including unit of
measure, quantity, prices and time of delivery or availability,
location of the construction project, name and address of the
proposed contractor, and a detailed justification of the reason for
use of foreign materials cited in accordance with subparagraph
(b)(3) of this clause. A submission based on unreasonable cost shall
include a reasonable survey of the market and a completed price
comparison table in the format in paragraph (d) of this clause. The
price of construction material shall include all delivery costs to
the construction site and any applicable duty (whether or not a
duty-free certificate may be issued).
(2) If an exception to the Buy American Act is granted after
contract award, the contract shall be modified to allow use of the
foreign construction material, and adequate consideration shall be
negotiated. However, when the basis for the exception is the
unreasonable price of a domestic construction material, adequate
consideration shall not be less than the differential established in
subparagraph (b)(3)(i) of this clause.
(3) If a request for an exception to the Buy American Act is not
granted, the use of that particular foreign construction material
will be a failure to comply with the Act.
(d) For evaluation of requests under paragraph (c) of this
clause, the following information and any applicable supporting data
based on the canvas of suppliers shall be included in the request.
Foreign and Domestic Construction Materials Price Comparison
------------------------------------------------------------------------
Unit of Price
Construction material description measure Quantity (dollars)
------------------------------------------------------------------------
Item 1:
Foreign construction material.. ........... ........... ...........
Domestic construction material. ........... ........... ...........
Item 2:
Foreign construction material.. ........... ........... ...........
Domestic construction material. ........... ........... ...........
[[Page 67031]]
List name, address, telephone number and contact for suppliers surveyed.
Attach copy of response; if oral, attach summary.
Include other applicable supporting information.
------------------------------------------------------------------------
Include all delivery costs to the construction site and any applicable
duty (whether or not a duty-free entry certificate is issued).
(End of clause)
11. Section 52.225-XX is added to read as follows:
52.225-XX Notice of Buy American Act requirement--construction
materials under European Community and North American Free Trade
Agreements.
As prescribed in 25.207(c), insert the following provision:
Notice of Buy American Act Requirement--Construction Materials Under
European Community and North American Free Trade Agreements (Date)
(a) Offerors are required to comply with the requirements of
Federal Acquisition Regulation (FAR) clause 52.225-15 of this
solicitation. The definitions set forth at 52.225-15(a) have the
same meaning in this provision.
(b) Offerors should request an exception to the Buy American Act
in time to allow determination before receipt of offers. For
evaluation of a request for an exception to the requirements of the
Buy American Act prior to bid opening, the information and
applicable supporting data required by 52.225-15 (c) and (d) shall
be included in the request. If a request has not been made before
the time set for receipt of offers or a response has not been
received to a request made prior to receipt of offers, the
information and supporting data shall be included in the offer.
(c) Evaluation of offers. (1) For evaluation of offers, (unless
agency regulations specify a higher percentage) the Government will
add to the offer price 6 percent of the cost of any foreign
construction material proposed for exception from the requirements
of the Buy American Act based on claimed unreasonable cost of
domestic construction materials.
(2) If the evaluation of offers results in a tie between an
offer including foreign construction material, as evaluated, and an
offer including solely domestic material, award shall be made on the
offer including solely domestic material.
(3) This procedure does not apply to foreign construction
material whose use is excepted by the Government under 52.225-
15(b)(3) of the solicitation.
(d) Alternate offers. (1) When an offer includes foreign
construction material, offerors also may submit alternate offers
based on use of domestic construction material.
(2) If alternate offers are submitted, a separate SF 1442 shall
be submitted for each alternate offer, and a separate price
comparison table prepared in accordance with 52.225-15 (c) and (d)
shall be submitted for each alternate offer that is based on the use
of any foreign construction material.
(3) If a particular exception requested under 52.225 15(c) is
not approved--
(i) The Government will evaluate only offers based on use of the
equivalent domestic construction material, and the offeror shall be
required to furnish such domestic construction material;
(ii) In sealed bid procurements, any offer based on use of that
particular foreign construction material must be rejected as
nonresponsive; and.
(iii) In negotiated procurements, any offer based on use of that
particular foreign construction material may not be accepted unless
revised during negotiations.
(End of provision)
12. Section 52.225-15 is amended by revising the introductory
paragraph, the clause date, and paragraphs (b) and (c); and adding
paragraph (d) to read as follows:
52.225-15 Buy American Act--Construction Materials under European
Community and North American Free Trade Agreements.
As prescribed in 25.207(d), insert the following clause:
Buy American Act--Construction Materials Under European Community and
North American Free Trade Agreements (Date)
(a) Definitions. As used in this clause--
* * * * *
(b)(1) The Buy American Act (41 U.S.C. 10(a)-10(d)) requires
that only domestic construction material be used in performing this
contract, except as provided in subparagraphs (b)(2), (b)(3), or
(b)(4) of this clause.
(2) The Memorandum of Understanding between the United States of
America and the European Economic Community on Government
Procurement, and the North American Free Trade Agreement (NAFTA),
provide that EC and NAFTA construction materials are exempted from
application of the Buy American Act.
(3) This requirement does not apply to the excepted construction
material or components listed by the Government below:
----------------------------------------------------------------------
(list applicable accepted materials or indicate ``none''.)
(4) Other foreign construction material may be used if the
Government determines that--
(i) The cost would be unreasonable (the cost of a particular
domestic construction material shall be determined to be
unreasonable when the cost of such material exceeds the cost of
foreign material by more than 6 percent, unless the agency head
determines a higher percentage to be appropriate);
(ii) The use of a particular domestic construction material
would be impracticable; or
(iii) The construction material is not mined, produced, or
manufactured in the United States in sufficient and reasonably
available commercial quantities of a satisfactory quality.
(5) The Contractor agrees that only domestic construction
material will be used by the Contractor, subcontractors, material
men, and suppliers in the performance of this contract, except for
foreign construction materials, if any--
(i) Listed in paragraph (b)(3) of this clause; or
(ii) Proposed by the Contractor and approved by the Government
in accordance with paragraphs (c) and (d) of this clause.
(c) Request for exceptions. (1) Contractors proposing to use
foreign construction material shall provide adequate information for
Government evaluation of the request for exception to the Buy
American Act. Each submission shall include a description of the
foreign and domestic construction materials, including unit of
measure, quantity, prices and time of delivery or availability,
location of the construction project, name and address of the
proposed contractor, and a detailed justification or the reason for
use of foreign materials cited in accordance with subparagraph
(b)(3) of this clause. A submission based on unreasonable cost shall
include a reasonable survey of the market and a completed price
comparison table in the format in paragraph (d) of this clause. The
price of construction material shall include all delivery costs to
the construction site and any applicable duty (whether or not a
duty-free certificate may be issued).
(2) If an exception to the Buy American Act is granted after
contract award, the contract shall be modified to allow use of the
foreign construction material, and adequate consideration shall be
negotiated. However, when the basis for the exception is the
unreasonable price of a domestic construction material, adequate
consideration shall not be less than the differential established in
subparagraph (b)(4)(i) of this clause.
(3) If a request for an exception to the Buy American Act is not
granted, the use of that particular foreign construction material
will be a failure to comply with the Act.
(d) For evaluation of requests under paragraph (c) of this
clause, the following information and any applicable supporting data
based on the canvas of suppliers shall be included in the request.
[[Page 67032]]
Foreign and Domestic Construction Materials Price Comparison
------------------------------------------------------------------------
Construction material Unit of Price
description measure Quantity (dollars)*
------------------------------------------------------------------------
Item 1:
Foreign construction ........... ........... $
material.
Domestic construction ........... ........... $
material.
Item 2:
Foreign construction ........... ........... $
material.
Domestic construction ........... ........... $
material.
List name, address, telephone number and contact for suppliers
surveyed. Attach copy of response; if oral, attach summary.
Include other applicable supporting information.
------------------------------------------------------------------------
* Include all delivery costs to the construction site and any applicable
duty (whether or not a duty-free entry certificate is issued).
[End of clause]
[FR Doc. 95-31205 Filed 12-26-95; 8:45 am]
BILLING CODE 6820-EP-P
