05-3201. Defense Federal Acquisition Regulation Supplement; Acquisition of Ball and Roller Bearings

AGENCY:

Department of Defense (DoD).

ACTION:

Proposed rule with request for comments.

SUMMARY:

DoD is proposing to amend the Defense Federal Acquisition Regulation Supplement (DFARS) to update text pertaining to restrictions on the acquisition of foreign ball and roller bearings. This proposed rule is a result of a transformation initiative undertaken by DoD to dramatically change the purpose and content of the DFARS.

DATES:

Comments on the proposed rule should be submitted in writing to the address shown below on or before April 25, 2005, to be considered in the formation of the final rule.

ADDRESSES:

You may submit comments, identified by DFARS Case 2003-D021, using any of the following methods:

• Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments.
• Defense Acquisition Regulations Web Site: http://emissary.acq.osd.mil/​dar/​dfars.nsf/​pubcomm. Follow the instructions for submitting comments.
• E-mail: [e-mail]. Include DFARS Case 2003-D021 in the subject line of the message.
• Fax: [phone].
• Mail: Defense Acquisition Regulations Council, Attn: Ms. Amy Williams, OUSD(AT&L)DPAP(DAR), IMD 3C132, 3062 Defense Pentagon, Washington, DC 20301-3062.
• Hand Delivery/Courier: Defense Acquisition Regulations Council, Crystal Square 4, Suite 200A, 241 18th Street, Arlington, VA 22202-3402.

All comments received will be posted to http://emissary.acq.osd.mil/​dar/​dfars.nsf.

FOR FURTHER INFORMATION CONTACT:

Ms. Amy Williams, [phone].

SUPPLEMENTARY INFORMATION:

A. Background

This proposed rule is a result of DFARS Transformation, which is a major DoD initiative to dramatically change the purpose and content of the DFARS. The objective is to improve the efficiency and effectiveness of the acquisition process, while allowing acquisition workforce the flexibility to innovate. The transformed DFARS will contain only requirements of law, DoD-wide policies, delegations of FAR authorities, deviations from FAR requirements, and policies/procedures that have a significant effect beyond the internal operating procedures of DoD or a significant cost or administrative impact on contractors or offerors. Additional information on the DFARS Transformation initiative is available at http://www.acq.osd.mil/​dpap/​dfars/​transf.htm.

10 U.S.C. 2534 and annual Defense appropriations acts contain restrictions on the acquisition of foreign ball and roller bearings. These restrictions are implemented in DFARS 225.7009 and in the clause at DFARS 252.225-7016, Restriction on Acquisition of Ball and Roller Bearings. This rule proposes to clarify DFARS 225.7009 and 252.225-7016 by (1) only addressing the exceptions, waivers, and waiver authority available to the contracting officer under current law; and (2) applying the exception to 10 U.S.C. 2534, authorized by Section 8003 of the Federal Acquisition Streamlining Act of 1994 (Public Law 103-355; 41 U.S.C. 430), as implemented at DFARS 212.504(a)(xviii), to bearings that are commercial components of non-commercial end items or components.

The only exception to the annual Defense appropriations act restrictions on the acquisition of foreign bearings is the exception for contracts or subcontracts for the acquisition of commercial items, except for commercial ball and roller bearings acquired as end items. 10 U.S.C. 2534, as currently implemented at DFARS 225.7009-2(a)(2), provides an exception for commercial items incorporating ball or roller bearings. This exception does not apply to bearings that are commercial components of a non-commercial item. However, as a result of Section 8003 of the Federal Acquisition Streamlining Act of 1994, DFARS 212.504(a)(xviii) lists 10 U.S.C. 2534 as a law that is not applicable to subcontracts at any tier for the acquisition of commercial items. Applying this “any tier” interpretation to bearings would be consistent with the annual Defense appropriations acts' commercial item exception, and would provide a single consistent exception to the statutory restrictions on the acquisition of foreign bearings.

The annual Defense appropriations acts allow the Secretary of a military department to waive bearing domestic source restrictions on a case-by-case basis. The justification for the waiver must establish that (1) adequate domestic supplies are not available to meet DoD requirements on a timely basis; and (2) such an acquisition must be made in order to acquire capability for national security purposes. The waiver authorities of 10 U.S.C. 2354 are unusable, except to the extent that they can also meet the waiver requirements of the annual Defense appropriations acts. Therefore, this proposed rule eliminates from the DFARS the exceptions and waivers authorized by 10 U.S.C. 2534, that are rendered ineffective by the overriding restrictions of the annual Defense appropriations acts.

The current DFARS also includes several more restrictive waiver requirements that derive from the 1992 DFARS. These waiver requirements relate to multiyear acquisitions and miniature and instrument ball bearings. Although 10 U.S.C. 2534(a) imposes the restrictions of the 1992 DFARS, 10 U.S.C. 2534(d) provides new waiver authority that supersedes the prior more restrictive waiver authority of the 1992 DFARS. This rule proposes to remove the 1992 waiver restrictions from the DFARS, which would substantially reduce paperwork burden for contractors.

This rule was not subject to Office of Management and Budget review under Executive Order 12866, dated September 30, 1993.

B. Regulatory Flexibility Act

The proposed rule may 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 it permits the acquisition of foreign commercial bearings that are components of noncommercial items. Although existing language at DFARS 212.504(a)(xviii) provides that 10 U.S.C. 2534 is not applicable to subcontracts at any tier for the acquisition of commercial items, DoD is not certain to what extent this authority has been implemented due to the inconsistent requirements in DFARS Part 225. This proposed rule resolves that inconsistency. An initial regulatory flexibility analysis has been prepared and is summarized as follows:

This proposed rule establishes a consistent exception to restrictions on the acquisition of foreign ball and roller bearings, to apply to the acquisition of commercial bearings. The objective of the proposed rule is to increase clarity of the regulations and reduce administrative burden for DoD contractors. The legal basis for the proposed rule is 10 U.S.C. 2534; Section 8059 of the Defense Appropriations Act for Fiscal Year 2005 (Pub. L. 108-287); and Section 8003 of the Federal Acquisition Streamlining Act of 1994 (Pub. L. 103-355; 41 U.S.C. 430). The proposed rule will apply to manufacturers of commercial bearings, and manufacturers of noncommercial products that incorporate commercial bearings. Manufacturers of domestic commercial bearings may face increased competition from foreign commercial bearing manufacturers, but manufacturers of noncommercial products incorporating bearings will be relieved of extensive administrative burdens in tracking the source of commercial bearings and requesting waivers from domestic source requirements. All entities will benefit from the increased simplicity and clarity of the regulations.

A copy of the analysis may be obtained from the point of contact specified herein. DoD invites comments from small businesses and other interested parties. DoD also will consider comments from small entities concerning the affected DFARS subparts in accordance with 5 U.S.C. 610. Such comments should be submitted separately and should cite DFARS Case 2003-D021.

C. Paperwork Reduction Act

The information collection and recordkeeping requirements of the clause at 252.225-7016, Restriction on Acquisition of Ball and Roller Bearings, are approved through March 31, 2007, under Office of Management and Budget Clearance 0704-0229. The proposed changes will reduce the estimated annual burden on contractors by 301,600 hours.

List of Subjects in 48 CFR Parts 225 and 252

• Government procurement

Michele P. Peterson,

Editor, Defense Acquisition Regulations System.

Therefore, DoD proposes to amend 48 CFR Parts 225 and 252 as follows:

PART 225—FOREIGN ACQUISITION

1. The authority citation for 48 CFR Parts 225 and 252 continues to read as follows:

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

2. Sections 225.7009-1 through 225.7009-4 are revised to read as follows:

225.7009-1

Scope.

This section implements—

(a) 10 U.S.C. 2534; and

(b) Section 8064 of the Fiscal Year 2001 DoD Appropriations Act (Public Law 106-259) and similar sections in subsequent DoD appropriations acts.

225.7009-2

Restriction.

Do not acquire ball and roller bearings or bearing components unless the bearings and bearing components are manufactured in the United States or Canada.

225.7009-3

Exception.

The restriction in 225.7009-2 does not apply to contracts or subcontracts for the acquisition of commercial items, except for commercial ball and roller bearings acquired as end items.

225.7009-4

Waiver.

The Secretary of the department responsible for acquisition may waive the restriction in 225.7009-2, on a case-by-case basis, by certifying to the House and Senate Committees on Appropriations that—

(a) Adequate domestic supplies are not available to meet DoD requirements on a timely basis; and

(b) The acquisition must be made in order to acquire capability for national security purposes.

3. Section 225.7009-5 is added to read as follows:

225.7009-5

Contract clause.

Use the clause at 252.225-7016, Restriction on Acquisition of Ball and Roller Bearings, in solicitations and contracts, unless—

(a) The items being acquired are commercial items other than ball or roller bearings acquired as end items;

(b) The items being acquired do not contain ball and roller bearings; or

(c) A waiver has been granted in accordance with 225.7009-4.

PART 252—SOLICITATION PROVISIONS AND CONTRACT CLAUSES

252.212-7001

[Amended]

4. Section 252.212-7001 is amended as follows:

a. By revising the clause date to read “(XXX 2005)”;

b. In paragraph (b), in entry “252.225-7016”, by removing “(MAY 2004)” and adding in its place “(XXX 2005)”; and

c. In paragraph (b), in entry “252.225-7016”, by removing “(APR 2003)” and adding in its place “(XXX 2005)”.

5. Section 252.225-7016 is revised to read as follows:

252.225-7016

Restriction on Acquisition of Ball and Roller Bearings.

As prescribed in 225.7009-5, use the following clause:

Restriction on Acquisition of Ball and Roller Bearings (XXX 2005)

(a) Definition. Bearing components, as used in this clause, means the bearing element, retainer, inner race, or outer race.

(b) Except as provided in paragraph (c) of this clause, all ball and roller bearings and ball and roller bearing components delivered under this contract, either as end items or components of end items, shall be wholly manufactured in the United States or Canada. Unless otherwise specified, raw materials, such as preformed bar, tube, or rod stock and lubricants, need not be mined or produced in the United States or Canada.

(c) The restriction in paragraph (b) of this clause does not apply to ball or roller bearings that are acquired as components if—

(1) The end items or components containing ball or roller bearings are commercial items; or

(2) The ball or roller bearings are commercial components.

(d) The restriction in paragraph (b) of this clause may be waived upon request from the Contractor in accordance with subsection 225.7009-4 of the Defense Federal Acquisition Regulation Supplement.

(e) The Contractor shall insert the substance of this clause, including this paragraph (e), in all subcontracts, except those for—

(1) Commercial items; or

(2) Items that do not contain ball or roller bearings.

(End of clause)