Clarifications and Updates to Defense Priorities and Allocations System Regulation

<RULE> DEPARTMENT OF COMMERCE <SUBAGY>Bureau of Industry and Security</SUBAGY> <CFR>15 CFR Part 700</CFR> <DEPDOC>[Docket No240628-0180]</DEPDOC> <RIN>RIN 0694-AJ15</RIN> <SUBJECT>Clarifications and Updates to Defense Priorities and Allocations System Regulation</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Bureau of Industry and Security, Department of Commerce. <HD SOURCE="HED">ACTION:</HD> Final rule. <SUM> <HD SOURCE="HED">SUMMARY:</HD> The Bureau of Industry and Security (BIS) is finalizing amendments to its Defense Priorities and Allocations System (DPAS) regulation as originally proposed on February 7, 2024 with minor technical amendments. This final rule clarifies existing standards and procedures by which BIS may provide Special Priorities Assistance (SPA); revises Schedule I to provide transparency and differentiation between other departments' priorities jurisdiction and the Department of Commerce's jurisdiction; and provides technical edits to reflect certain non-substantive updates since the DPAS regulation was last amended in 2014, including updated contact information, legal citations, and definitions. The two technical amendments are made to accurately reflect updated information sourced from other Federal agencies. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> This final rule is effective August 21, 2024. </EFFDATE> <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> Katie Reid at (202) 482-3634, <E T="03">DPAS@bis.doc.gov.</E> </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> <HD SOURCE="HD1">Background</HD> On February 7, 2024 in 89 FR 8363, the Bureau of Industry and Security (BIS) proposed to update the priorities and allocations provisions set forth in the Defense Priorities and Allocations System (DPAS) regulation (15 CFR part 700) and implemented by the Department of Commerce (DOC), BIS, consistent with its authorities under Title I of the Defense Production Act of 1950, as amended (50 U.S.C. 4501 <E T="03">et seq.</E> ) (DPA), as delegated by Executive Order 13603 (March 16, 2012). The DPAS has two principal components, priorities and allocations. Under the priorities component, certain contracts between the government and private parties or between private parties for the production or delivery of industrial resources are required to be given priority over other contracts to facilitate expedited delivery in promotion of the U.S. national defense. Under the allocations component, materials, services, and facilities may be allocated to promote the national defense. For both components, the term “national defense” means programs for military and energy production or construction, homeland security, stockpiling, space, emergency preparedness, critical infrastructure protection and restoration, and any directly related activity. The term also includes military and critical infrastructure assistance to any foreign nation. <HD SOURCE="HD1">Section-by-Section Analysis of the Clarifications and Updates That This Final Rule Makes to the Existing DPAS Regulation</HD> The following discussion explains the changes that this final rule makes to the existing DPAS regulation. <HD SOURCE="HD2">Subpart A—Purpose</HD> <E T="03">Section 700.1—Purpose of this part.</E> This section adds the legal citation for the DPA and updates the legal citation for the Robert T. Stafford Disaster Relief Emergency Assistance Act. This rule also makes minor changes to the language to be consistent with the DPA and Executive Order (E.O.) 13603. <HD SOURCE="HD2">Subpart B—Overview</HD> <E T="03">Section 700.2—Introduction.</E> This section changes the reference to “industrial items” to “industrial resources” in paragraph (b) in order to use the term “industrial resources” defined in § 700.8. It also revises paragraph (c) to highlight that the DOC is also listed as an agency in Schedule I and the reason why. BIS believes that the additional information provides a more complete description of Schedule I. <E T="03">Section 700.3—Priority ratings and rated orders.</E> This section adds in paragraph (a) references to the rating symbol to conform with the current definition of priority rating in section 700.8 as well as a description of a rating symbol. BIS makes these changes so that paragraph (a) will give a more complete description of a priority rating. It also revises paragraph (d) of this section by changing “items” to “industrial resources” in order to use the term “industrial resources” defined in section 700.8. <HD SOURCE="HD2">Subpart C—Definitions</HD> <E T="03">Section 700.8—Definitions.</E> This section updates the legal citation for the DPA found in the definition of “Defense Production Act.” It updates the legal citation for the Stafford Act found in the definitions of “national defense” and “Stafford Act,” and it updates the legal citation for the Selective Service Act found in the definition of “Selective Service Act.” This section updates both the definition of “approved program” and “priorities authority,” which is consistent with the language of the DPA and E.O. 13603. It also updates the definition of “priority rating” to clarify that the DOC may assign the priority rating, which is consistent with 15 CFR part 700. It removes the definition of “item” and updates the definition of “industrial resources” to clarify and be consistent with the use of both terms in 15 CFR part 700. This section includes the definitions of “facilities,” “materials,” and “services” to provide clarity and consistency with the DPA. It also provides a definition for “determination department” and “resources department” to provide clarity and consistency with sections 201 and 202 of E.O. 13603 and other priorities and allocations regulations. It also makes non-substantive changes by adding a comma after “administrative subpoenas” in the definition of official action and a comma after “chemicals” in the definition of “maintenance and repair and/or operating supplies (MRO).” <HD SOURCE="HD2">Subpart D—Industrial Priorities</HD> <E T="03">Section 700.10—Authority.</E> This section revises the last sentence of paragraph (c)(1), to clarify what the provisions of 15 CFR part 700 are inapplicable to by removing “those other items which include.” This change is consistent with the use of “item” in 15 CFR part 700. <E T="03">Section 700.11—Priority ratings.</E> This section makes a non-substantive change in paragraph (a)(1) by moving the period inside the quotation. It also capitalizes the word “schedule” in paragraph (b) as this word references Schedule I, a specific part of 15 CFR part 700, which is capitalized throughout 15 CFR part 700. It also clarifies the explanation of what “A7” signifies consistent with Schedule I. This section updates paragraph (c) by replacing reference to the “C2” program identification symbol with “A7” in order to refer to the program identification symbol later referenced as an example of a priority rating in this paragraph. <E T="03">Section 700.12—Elements of a rated order.</E> This section replaces the example that refers to a “DX-A4” priority rating, which is not currently in use, with a reference to a “DX-A2” priority rating, which is more commonly used, in paragraph (a)(1). It also revises paragraph (a)(4) by changing the word “regulations” to “regulation,” which is consistent with the use of the word when referencing 15 CFR part 700. <E T="03">Section 700.13—Acceptance and rejection of rated orders.</E> This section replaces the brackets with parentheses in paragraph (c)(5) consistent with other sections of 15 CFR part 700. It adds “(1)” in between “one” and “working day” in paragraph (d)(3), which is consistent with other parts of this section. <E T="03">Section 700.14—Preferential scheduling.</E> This section revises the “Examples” by changing “June 2” to “June 3” so that the fact pattern makes sense. <E T="03">Section 700.15—Extension of priority ratings.</E> This section revises paragraphs (a), (b), and (c) by changing “items” to “industrial resources,” which clarifies the type of resource covered by the extension of priority ratings provision. It also revises paragraph (a) by adding a pinpoint citation to section 700.17, adding clarity as to which section of 15 CFR part 700 is referenced. This section inserts language in paragraphs (a) and (b) that clarifies that all four required elements of a rated order outlined in section 700.12 must be included on each successive order placed to fulfill a rated order. It also inserts language in the “Example” that clarifies that a “DO-A3” is a priority rating on a rated order. <E T="03">Section 700.16—Changes or cancellations of priority ratings and rated orders.</E> This section makes one non-substantive change to paragraph (b) by removing the comma after “DO”. <E T="03">Section 700.17—Use of rated orders.</E> This section clarifies in paragraph (a)(4) that a “DO-A3” and “DO-H7” are a priority rating on a rated order. This section updates paragraph (b)(1) by adding the spelling of “90” and parentheses around “90,” which is consistent with other sections of 15 CFR part 700. This section revises paragraph (d)(1)(ii) by changing the word “regulations” to “regulation,” which is consistent with the use of the word when referencing 15 CFR part 700. This section changes the value of $75,000 listed in paragraph (f) to $125,000. This change is made to conform with the changes to the Simplified Acquisition Threshold (SAT) value made under the National Defense Authorization Act for Fiscal Year 2018 (Public Law 115-91), which raised the SAT from $150,000 to $250,000. As a result of the SAT increase, U.S. firms are not required to place a priority rating on an order less than $125,000 (one-half of the revised SAT of $250,000), as this amount is greater than $75,000. BIS posted a notice to its website notifying t ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 91k characters. Full document text is stored and available for version comparison. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━