2010-15126. Defense Federal Acquisition Regulation Supplement; Ownership or Control by a Foreign Government (DFARS Case 2010-D010)

AGENCY:

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

ACTION:

Interim rule with request for comments.

SUMMARY:

DoD is issuing an interim rule to implement revisions to DoD Directive-Type Memorandum (DTM) 09-019, “Policy Guidance for Foreign Ownership, Control, or Influence (FOCI).” The DTM revises the description of communications security material that is “proscribed information.”

DATES:

Effective date: June 23, 2010.

Comment date: August 23, 2010.

ADDRESSES:

You may submit comments, identified by DFARS Case 2010-D010, using any of the following methods:

○ Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments.

○ E-mail: [e-mail]. Include DFARS Case 2010-D010 in the subject line of the message.

○ Fax: [phone].

○ Mail: Defense Acquisition Regulations System, Attn: Mr. Julian E. Thrash, OUSD(AT&L)DPAP/DARS, Room 3B855, 3060 Defense Pentagon, Washington, DC 20301-3060.

Comments received generally will be posted without change to http://www.regulations.gov, including any personal information provided.

FOR FURTHER INFORMATION CONTACT:

Mr. Julian E. Thrash, 703-602-0310. Please cite DFARS Case 2010-D010.

SUPPLEMENTARY INFORMATION:

A. Background

DoD has revised Directive-Type Memorandum (DTM) 09-019, “Policy Guidance for Foreign Ownership, Control, or Influence (FOCI),” which requires conforming changes to the DFARS. This rule revises DFARS 209.104-1, General standards, to reflect that the responsible office is the Undersecretary of Defense for Intelligence. Additionally, subparagraph (a)(4) of DFARS 252.209-7002, Disclosure of Ownership or Control by a Foreign Government, is revised to reflect changes required by the DTM to the definition of “proscribed information.” The DTM revises the description of communication security material that is “proscribed information.”

This rule was not subject to Office of Management and Budget review under Executive Order 12866, dated September 30, 1993. This rule is not a major rule under 5 U.S.C. 604.

B. Regulatory Flexibility Act

DoD does not expect this interim rule to have a significant economic impact on a substantial number of entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601 et seq., because it only impacts companies that are owned or controlled by a foreign government, and most small entities, as defined in the Regulatory Flexibility Act, are not owned or controlled by a foreign government.

DoD invites comments from small business concerns and other interested parties on the expected impact of this rule on small entities.

DoD will also consider comments from small entities concerning the existing regulations in subparts affected by this rule in accordance with 5 U.S.C. 610. Interested parties must submit such comments separately and should cite 5 U.S.C. 610 (DFARS Case 2010-D010) in correspondence.

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.

D. Determination To Issue an Interim Rule

A determination has been made under the authority of the Secretary of Defense (DoD) that urgent and compelling reasons exist to promulgate this interim rule without prior opportunity for public comments pursuant to 41 U.S.C. 418b and FAR 1.501-3(b). DoD Directive-Type Memorandum (DTM) 09-019, “Policy Guidance for Foreign Ownership, Control, or Influence (FOCI),” effective June 8, 2010, implements changes to the definition of “proscribed information.” In reviewing the DTM, it became apparent that the current wording at DFARS 252.209-7002 is potentially misleading. If the DFARS is not changed to be consistent with the revised DTM, contracting officers and contractors will be misinformed as to the meaning of “proscribed information.” DoD will consider public comments received in response to this interim rule in the formation of the final rule.

List of Subjects in 48 CFR Parts 209 and 252

• Government procurement

Ynette R. Shelkin,

Editor, Defense Acquisition Regulations System.

Therefore, 48 CFR parts 209 and 252 are amended as follows:

1. The authority citation for 48 CFR parts 209 and 252 continues to read as follows:

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

PART 209-CONTRACTOR QUALIFICATIONS

2. Section 209.104-1 is amended by revising paragraph (g)(ii)(B) and the introductory text of paragraph (g)(ii)(C) to read as follows:

209.104-1

General standards.

* * * * *

(g) * * *

(ii) * * *

(B) Whenever the contracting officer has a question about application of the provision at 252.209-7002, the contracting officer may seek advice from the Security Directorate, Office of the Deputy Under Secretary of Defense, Human Intelligence, Counterintelligence, and Security.

(C) In accordance with 10 U.S.C. 2536(b)(1)(A), the Secretary of Defense may waive the prohibition in paragraph (g)(ii)(A) of this subsection upon determining that the waiver is essential to the national security interests of the United States. The Secretary has delegated authority to grant this waiver to the Undersecretary of Defense for Intelligence. Waiver requests, prepared by the requiring activity in coordination with the contracting officer, shall be processed through the Director of Defense Procurement and Acquisition Policy, Office of the Under Secretary of Defense (Acquisition, Technology, and Logistics), and shall include a proposed national interest determination. The proposed national interest determination, prepared by the requiring activity in coordination with the contracting officer, shall include:

* * * * *

PART 252—SOLICITATION PROVISIONS AND CONTRACT CLAUSES

3. Section 252.209-7002 is amended by revising the clause date and paragraph (a)(4)(ii) to read as follows:

252.209-7002

Disclosure of ownership or control by a foreign government.

* * * * *

DISCLOSURE OF OWNERSHIP OR CONTROL BY A FOREIGN GOVERNMENT (JUN 2010)(a) * * *

(4)* * *

(ii) Communications security (COMSEC) material, excluding controlled cryptographic items when unkeyed or utilized with unclassified keys;

* * * * *