Defense Federal Acquisition Regulation Supplement: Limitation on the Acquisition of Certain Goods Other Than United States Goods (DFARS Case 2021-D022)

<RULE> DEPARTMENT OF DEFENSE <SUBAGY>Defense Acquisition Regulations System</SUBAGY> <CFR>48 CFR Parts 212, 225, and 252</CFR> <DEPDOC>[Docket DARS-2023-0042]</DEPDOC> <RIN>RIN 0750-AL40</RIN> <SUBJECT>Defense Federal Acquisition Regulation Supplement: Limitation on the Acquisition of Certain Goods Other Than United States Goods (DFARS Case 2021-D022)</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Defense Acquisition Regulations System, Department of Defense (DoD). <HD SOURCE="HED">ACTION:</HD> Final rule. <SUM> <HD SOURCE="HED">SUMMARY:</HD> DoD is issuing a final rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to implement two sections of the National Defense Authorization Act for Fiscal Year 2021, one section of the National Defense Authorization Act for Fiscal Year 2022, one section of the National Defense Authorization Act for Fiscal Year 2023, and one section of the Consolidated Appropriations Act, 2023. These statutes remove limitations and restrictions on certain components that are no longer required and add new limitations on other components, subject to exceptions. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> Effective May 30, 2024. </EFFDATE> <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> Kimberly Bass, telephone 703-717-3446. </FURINF> <SUPLINF> <HD SOURCE="HED"> SUPPLEMENTARY INFORMATION: </HD> <HD SOURCE="HD1">I. Background</HD> DoD published a proposed rule in the <E T="04">Federal Register</E> at 88 FR 80472 on November 17, 2023, to implement sections 845 and 1603 of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2021 (Pub. L. 116-283); section 816 of the NDAA for FY 2022 (Pub. L. 117-81); section 853 of the NDAA for FY 2023 (Pub. L. 117-263), and section 8016 of the Consolidated Appropriations Act of 2023 (Pub. L. 117-328). These sections amend 10 U.S.C. 2534, now 10 U.S.C. 4864, to require acquisition of certain items and components from the national technology and industrial base. The national technology and industrial base is defined at 10 U.S.C. 4801 as the United States, Australia, Canada, New Zealand, or the United Kingdom. One respondent submitted public comments in response to the proposed rule. There are no changes made to the final rule. <HD SOURCE="HD1">II. Discussion and Analysis</HD> DoD reviewed the public comments in the development of the final rule. A discussion of the comments is provided, as follows: <E T="03">Comment:</E> A respondent recommended the words “weighing more than 400 pounds” be removed. The respondent provided that exempting satellites weighing less than 400 pounds cedes a large part of the U.S. market for star trackers to foreign suppliers that have been funded largely by the European Space Agency, and that the foreign suppliers currently dominate the high quality small star tracker market. The respondent stated that the exemption of satellites weighing less than 400 pounds also discourages members of the national technology and industrial base from investing and participating in possibly the most attractive segment of the U.S. star tracker market and the market as a whole. Lastly, the respondent recommended that DoD develop and include a DFARS clause that requires procurement of star trackers from domestic sources for satellites, including those weighing less than 400 pounds, and that this requirement should be included in U.S. Government agency procurements for information and services provided by commercial satellite systems. <E T="03">Response:</E> Section 1603 amends 10 U.S.C. 2534(a), now 10 U.S.C. 4864, and adds star trackers to the list of items that must be procured from manufacturers in the national technology and industrial base. The statute applies to a “star tracker used in a satellite weighing more than 400 pounds whose principal purpose is to support the national security, defense, or intelligence needs of the United States Government”. The rule implements this statutory requirement accordingly. Moreover, the DFARS clause at 252.225-7064, Restriction on Acquisition of Satellite Star Trackers, is prescribed at DFARS 225.7004-7(d) for use in solicitations and contracts requiring the acquisition of satellite star trackers, including solicitations and contracts that exceed the simplified acquisition threshold (SAT) and that use FAR part 12 procedures for the acquisition of commercial products, including COTS items, and for the acquisition of commercial services. Lastly, as provided in section III of this preamble, DoD intends to apply the clause to contracts for the acquisition of commercial products including COTS items and for the acquisition of commercial services. <HD SOURCE="HD1">III. Applicability to Contracts at or Below the Simplified Acquisition Threshold (SAT), for Commercial Products (Including Commercially Available Off-the-Shelf (COTS) Items), and for Commercial Services</HD> The clause at DFARS 252.225-7063, Restriction on Acquisition of Components of T-AO 205 Class Vessels, is prescribed at DFARS 225.7004-7(c) for use in solicitations and contracts requiring the acquisition of components of T-AO 205 and T-ARC class vessels, including solicitations and contracts that exceed the SAT and that use FAR part 12 procedures for the acquisition of commercial products, including COTS items, and for the acquisition of commercial services. The clause at DFARS 252.225-7064, Restriction on Acquisition of Satellite Star Trackers, is prescribed at DFARS 225.7004-7(d) for use in solicitations and contracts requiring the acquisition of satellite star trackers, including solicitations and contracts that exceed the SAT and that use FAR part 12 procedures for the acquisition of commercial products, including COTS items, and for the acquisition of commercial services. Consistent with the analysis that DoD provided in the proposed rule with regard to the application of the requirements of sections 845 and 1603 of the NDAA for FY 2021 (Pub. L. 116-283) and section 852 of the NDAA for FY 2023 (Pub. L. 117-263), which amend 10 U.S.C. 4864, DoD has made the determination to apply the statute, as implemented in the clauses at DFARS 252.225-7063 and 252.225-7064 to contracts and subcontracts for the acquisition of commercial products including COTS items, and to the acquisition of commercial services, as defined at Federal Acquisition Regulation 2.101. The requirements of 10 U.S.C. 4864 do not apply to a contract or subcontract for an amount at or below the SAT. Therefore, the clauses will not apply to acquisitions at or below the SAT. <HD SOURCE="HD1">IV. Expected Impact of the Rule</HD> The final rule adds procurement limitations on the acquisition of star trackers for certain national security satellites and certain components for T-AO 205 and T-ARC class vessels, requiring they are manufactured in the national technology and industrial base: the United States, Australia, Canada, New Zealand or the United Kingdom in accordance with 10 U.S.C. 4864. The rule is not expected to have a significant impact on the Government, offerors, or contractors. The satellite star trackers and components for the T-AO 205 and T-ARC class of vessels are the types of items that are readily available in the marketplace, so limitation to national technology and industrial base sources is not viewed as having a significant impact on the availability of sources. Further, the rule provides waiver procedures to the limitation. The domestic source restriction does not apply to— (1) Contracts or subcontracts that do not exceed the simplified acquisition threshold; (2) The acquisition of spare or repair parts needed to support components for naval vessels manufactured outside the United States; and (3) Large medium-speed diesel engines for icebreakers or special mission ships. <HD SOURCE="HD1">V. Executive Orders 12866 and 13563</HD> Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This is not a significant regulatory action and, therefore, was not subject to review under section 6(b) of E.O. 12866, Regulatory Planning and Review, as amended. <HD SOURCE="HD1">VI. Congressional Review Act</HD> As required by the Congressional Review Act (5 U.S.C. 801-808) before an interim or final rule takes effect, DoD will submit a copy of the interim or final rule with the form, Submission of Federal Rules under the Congressional Review Act, to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States. A major rule under the Congressional Review Act cannot take effect until 60 days after it is published in the <E T="04">Federal Register</E> . The Office of Information and Regulatory Affairs has determined that this rule is not a major rule as defined by 5 U.S.C. 804. <HD SOURCE="HD1">VII. Regulatory Flexibility Act</HD> A final regulatory flexibility analysis has been prepared consistent with the Regulatory Flexibility Act, 5 U.S.C. 601, <E T="03">et seq.</E> and is summarized as follows: DoD is amending the Defense Federal Acquisition Regulation Supplement (DFARS) to implement statutes that remove limitations and restrictions no longer required, and that require the procurement of star trackers for certain national security satellites, as well as certain components for T-AO 205 and T-ARC class vessels, from the national technology and industrial base: the United States, Australia, Canada, New Zealand, or the United Kingdom. The objective of the rule is to ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 34k characters. Full document text is stored and available for version comparison. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━