06-8217. Federal Acquisition Regulation; FAR Case 2005-022, Exception to the Buy American Act for Commercial Information Technology

AGENCIES:

Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA).

ACTION:

Final rule.

SUMMARY:

The Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council (Councils) have agreed to convert to a final rule without change, an interim rule amending the Federal Acquisition Regulation (FAR) to implement Section 535(a) of Division F of the Consolidated Appropriations Act, 2004, and similar sections in subsequent appropriations acts. Section 535(a) authorizes an exception to the Buy American Act for acquisitions of information technology that are commercial items.

DATES:

Effective Date: September 28, 2006.

FOR FURTHER INFORMATION CONTACT

For clarification of content, contact Mr. Jeremy Olson, at [phone]. Please cite FAC 2005-13, FAR case 2005-022. For information pertaining to status or publication schedules, contact the FAR Secretariat at [phone].

SUPPLEMENTARY INFORMATION:

A. Background

This final rule amends the Federal Acquisition Regulation to implement annual appropriations act provisions that exempt acquisitions of information technology that are commercial items from the Buy American Act, including—

• Section 535(a) of Division F, Consolidated Appropriations Act, 2004 (Pub. L. 108-199);
• Section 517 of Division H, Title V of the Consolidated Appropriations Act, 2005 (Pub. L. 108-447); and
• Section 717 of Division A, Transportation, Treasury, Housing and Urban Development, the Judiciary, the District of Columbia, and Independent Agencies Appropriations Act, 2006 (Pub. L. 109-115).

This exception was initially implemented through deviations by the individual agencies, until it became clear that it was not just for one year. The Councils now expect this exception to continue to appear in future appropriations acts. If the exception does not appear in a future appropriations act, the Councils will promptly change the FAR to limit applicability of the exception to the fiscal years to which it applies. DoD, GSA, and NASA published an interim rule in the Federal Register at 71 FR 223, January 3, 2006 and the public comment period closed on March 6, 2006.

Public comments. The Councils addressed the two public comments as follows:

Agree with rule

One respondent concurs with the rule as written. The respondent views this rule as a positive first step in recognizing the Government's need for quicker, cheaper access to commercial-off-the-shelf information technology.

Response: None required.

Rule should not apply to DoD

The other respondent believes that the exception should not apply to DoD due to the security risk associated with foreign entities potentially gaining access to DoD information systems.

Response: This rule implements statute. The statutes that the Councils are implementing do not exempt DoD. Each fiscal year statute states that the restrictions of the Buy American Act shall not apply to the acquisition by the Federal Government of information technology that is a commercial item.

Although DoD uses DoD-unique Buy American Act/Free Trade Agreement provisions and clauses, this exception has already been implemented by DoD for Fiscal Years 2004 through 2006 by class deviations signed by the Director of Defense Procurement and Acquisition Policy (2004-O0003, 2005-O0004, 2005-O0010).

Regardless of the applicability of the Buy American Act, Defense FAR Supplement (DFARS) Subpart 239.71, Security and Privacy for Computer Systems, requires defense agencies to ensure that information assurance is provided for information technology in accordance with current policies, procedures, and statutes.

This is not a significant regulatory action and, therefore, was not subject to review under Section 6(b) of Executive Order 12866, Regulatory Planning and Review, dated September 30, 1993. This rule is not a major rule under 5 U.S.C. 804.

B. Regulatory Flexibility Act

The Regulatory Flexibility Act, 5 U.S.C. 601, et seq., applies to this final rule. The Councils prepared a Final Regulatory Flexibility Analysis (FRFA), and it is summarized as follows:

The objective of this rule is to promote Government access to commercial information technology. As a result of this exception, the Buy American Act will no longer apply to acquisitions of commercial information technology. The Free Trade Agreement non-discriminatory provisions are no longer necessary, since all products will be treated without the restrictions of the Buy American Act. The final rule applies to all offerors responding to solicitations for commercial information technology where the Buy American Act previously applied (generally, acquisitions between the micro-purchase threshold and $193,000). This impact analysis does not include the Department of Defense, which applies this exception to DoD-unique Buy American Act/Free Trade Agreement provisions and clauses under a separate case (DFARS Case 2005-D011). This exception will allow small entities to compete without meeting the Buy American Act domestic end product requirements.

It is anticipated that small business concerns will continue to receive the same number of awards in the range of the micro-purchase threshold to $100,000, because these awards are generally set-aside for small business concerns. It is also expected that small business concerns will continue to receive awards in the range of $100,000 to $193,000, but in this range they will face competition from foreign end products.

This rule will not have an effect on small businesses affected by the “non-manufacturer rule,” which means that a contractor under a small business set-aside or 8(a) contract shall be a small business under the applicable size standard and shall provide either its own product or that of another domestic small business manufacturing or processing concern. If there is a small business set-aside, and there is no SBA waiver of the nonmanufacturer rule, then FAR 52.219-6(c) and/or FAR 52.219-18(d) require that a domestic product must be furnished. In this case, the rule will have no effect on small businesses because the nonmanufacturer rule is not changed. If SBA did waive the nonmanufacturer rule, then there is no requirement to purchase a domestic product but an evaluation preference would apply. The rule could have an impact on small businesses when there is no small business set-aside because small businesses may lose the evaluation preference for acquisitions between $25,000 and $193,000.

Interested parties may obtain a copy of the FRFA from the FAR Secretariat. The FAR Secretariat has submitted a copy of the FRFA to the Chief Counsel for Advocacy of the Small Business Administration.

C. Paperwork Reduction Act

The Paperwork Reduction Act does apply because the changes to the FAR will slightly reduce the information collection requirements currently approved by the Office of Management and Budget OMB Clearances 9000-0024 and 9000-0130. We estimate a reduction of approximately 300 hours to OMB Clearance 9000-0024 and 50 hours to 9000-0130.

List of Subjects in 48 CFR Part 25

• Government procurement

Dated: September 19, 2006.

Ralph De Stefano,

Director, Contract Policy Division.

Interim Rule Adopted as Final Without Change

Accordingly, the interim rule amending 48 CFR part 25, which was published in the Federal Register at 71 FR 223, January 3, 2006, is adopted as a final rule without change.