Homeland Security Acquisition Regulation, Restrictions on Foreign Acquisition Update (HSAR Case 2024-002)

<RULE> DEPARTMENT OF HOMELAND SECURITY <CFR>48 CFR Parts 3025 and 3052</CFR> <DEPDOC>[Docket No. DHS-2024-0022]</DEPDOC> <RIN>RIN 1601-AB13</RIN> <SUBJECT>Homeland Security Acquisition Regulation, Restrictions on Foreign Acquisition Update (HSAR Case 2024-002)</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Office of the Chief Procurement Officer, Department of Homeland Security (DHS). <HD SOURCE="HED">ACTION:</HD> Final rule. <SUM> <HD SOURCE="HED">SUMMARY:</HD> DHS is issuing a final rule to amend the Homeland Security Acquisition Regulation (HSAR) provisions that relate to the Kissell Amendment, a section of the American Recovery and Reinvestment Act of 2009, that deals with the acquisition of certain clothing, canvas or textile products and natural and synthetic fabrics. These changes are intended to reduce confusion and provide clarity to the requirements under the Kissell Amendment. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> This final rule is effective December 26, 2024. </EFFDATE> <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> Nancy Harvey, Department of Homeland Security, Office of the Chief Procurement Officer, Acquisition Policy and Legislation, at (202) 282-8000 or email at <E T="03">HSAR@hq.dhs.gov.</E> Include HSAR Case 2024-002 in the subject line. </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> <HD SOURCE="HD1">Table of Contents for Preamble</HD> <EXTRACT> <FP SOURCE="FP-2">I. Background</FP> <FP SOURCE="FP-2">II. Discussion of Comments and the Final Rule</FP> <FP SOURCE="FP-2">III. Regulatory Analyses</FP> <FP SOURCE="FP1-2">A. Executive Orders 12866, 13563, and 14094</FP> <FP SOURCE="FP1-2">B. Regulatory Flexibility Act</FP> <FP SOURCE="FP1-2">C. Paperwork Reduction Act</FP> <FP SOURCE="FP1-2">D. National Environmental Policy Act</FP> </EXTRACT> <HD SOURCE="HD1">I. Background</HD> In a Notice of Proposed Rulemaking (NPRM), published in the <E T="04">Federal Register</E> on July 24, 2024, DHS proposed to amend the Homeland Security Acquisition Regulation (HSAR) provisions that relate to the Kissell Amendment, a section of the American Recovery and Reinvestment Act of 2009 (Recovery Act), that deals with the acquisition of certain clothing, canvas or textile products and natural and synthetic fabrics. <SU>1</SU> <FTREF/> <FTNT> <SU>1</SU>   <E T="03">See</E> 89 FR 59877, Homeland Security Acquisition Regulation, Restrictions on Foreign Acquisition Update (HSAR Case 2024-002) (Jul. 24, 2024). </FTNT> As explained in the NPRM, the Recovery Act was enacted in 2009. <SU>2</SU> <FTREF/> Section 604 of the Recovery Act is also known as the Kissell Amendment. <SU>3</SU> <FTREF/> The Kissell Amendment requires, with limited exceptions, that funds appropriated or otherwise available to DHS may not be used for the procurement of certain textiles, clothing and footwear, if that item is directly related to the national security interests of the United States, unless the item is grown, reprocessed, reused, or produced in the United States. <SU>4</SU> <FTREF/> One of the exceptions is a De Minimis Exception, which allows the Secretary of Homeland Security to accept delivery of the aforementioned textiles, clothing and footwear “that contain non-compliant fibers if the total value of non-compliant fibers contained in the end item does not exceed 10 percent of the total purchase price of the end item.”  <SU>5</SU> <FTREF/> <FTNT> <SU>2</SU>   <E T="03">See</E> Public Law 111-5, 123 Stat. 115,165-166 (Feb. 17, 2009). </FTNT> <FTNT> <SU>3</SU>  Section 604 of the Recovery Act is codified at 6 U.S.C. 453b. </FTNT> <FTNT> <SU>4</SU>   <E T="03">See</E> 6 U.S.C. 453b. </FTNT> <FTNT> <SU>5</SU>   <E T="03">See</E> 6 U.S.C. 453b(d). </FTNT> The Kissel Amendment further requires DHS to apply it in a manner consistent with United States obligations under international agreements. <SU>6</SU> <FTREF/> As DHS has explained in prior notices, this includes free trade agreements and the World Trade Organization Agreement on Government Procurement. <SU>7</SU> <FTREF/> These requirements apply with respect to contracts entered into by DHS on or after August 16, 2009. <SU>8</SU> <FTREF/> <FTNT> <SU>6</SU>   <E T="03">See</E> 6 U.S.C. 453b(k). </FTNT> <FTNT> <SU>7</SU>   <E T="03">See, e.g.,</E> 75 FR 32676, (June 9, 2010). </FTNT> <FTNT> <SU>8</SU>   <E T="03">See</E> 6 U.S.C. 453b(l). </FTNT> As discussed in the NPRM, in 2009, DHS published an interim rule (“2009 Interim Rule”) amending the Homeland Security Acquisition Regulation (HSAR) at 48 CFR part 3025, Foreign Acquisitions, and part 3052, Solicitation Provisions and Contract Clauses, incorporating the Kissell Amendment requirements. <SU>9</SU> <FTREF/> In 2010, DHS published a final rule (“2010 Final Rule”) adopting the 2009 Interim Rule as final without change. <SU>10</SU> <FTREF/> The 2009 Interim Rule made amendments to the HSAR “to add solicitation provisions, contract clauses and related policy statements implementing these requirements and exceptions for certain DHS contracts, option exercises and orders.”  <SU>11</SU> <FTREF/> <FTNT> <SU>9</SU>   <E T="03">See Revision of Department of Homeland Security Acquisition Regulation; Restrictions on Foreign Acquisition</E> (HSAR Case 2009-004), 74 FR 41346 (Aug. 17, 2009). </FTNT> <FTNT> <SU>10</SU>   <E T="03">See Revision of Department of Homeland Security Acquisition Regulation; Restrictions on Foreign Acquisition</E> (HSAR Case 2009-004), 75 FR 32676 (June 9, 2010). </FTNT> <FTNT> <SU>11</SU>   <E T="03">See</E> 74 FR 41346 (Aug. 17, 2009). </FTNT> The regulations also provided an exception for “incidental amounts of cotton, other natural fibers, or wool incorporated in an end product, for which the estimated value of the cotton, other natural fibers, or wool is not more than 10 percent of the total price of the end product.”  <SU>12</SU> <FTREF/> <FTNT> <SU>12</SU>   <E T="03">See</E> 48 CFR 3052.225-70(d)(2). </FTNT> On March 5, 2013, DHS issued a deviation regarding the applicability of the Kissell Amendment (Deviation 13-01). <SU>13</SU> <FTREF/> Under Deviation 13-01, DHS deviates from the language of 48 CFR 3025.7000 that restricted application of certain Kissell provisions to those actions with funds appropriated or otherwise provided on or before February 17, 2009. <SU>14</SU> <FTREF/> <FTNT> <SU>13</SU>   <E T="03">See HSAR class deviation, 13-01, Applicability of the “Kissell Amendment” to Department of Homeland Security Acquisitions</E> (Mar. 5, 2013) (“Deviation 13-01”) available at: <E T="03">https://www.dhs.gov/sites/default/files/publications/cpo-HSARclassdeviation13-01_0_0_0_0_0.pdf</E> (last accessed May 31, 2024). </FTNT> <FTNT> <SU>14</SU>  “Effective immediately, the scope of the subpart 3025.70 shall apply as follows . . . This subpart contains restrictions on the acquisition of certain foreign textile products imposed by the American Recovery and Reinvestment Act of 2009 on contracts, exercising of an option and orders entered into on or after August 16, 2009.” <E T="03">See</E> Deviation 13-01, available at: <E T="03">https://www.dhs.gov/sites/default/files/publications/cpo-HSARclassdeviation13-01_0_0_0_0_0.pdf</E> (last accessed May 31, 2024). </FTNT> In addition, on March 14, 2013, DHS issued an amendment to Deviation 13-01 (“Deviation Amendment 1”). <SU>15</SU> <FTREF/> Under Deviation Amendment 1, the De Minimis Exception described above was to be read as applying to “incidental amounts of non-compliant fibers if the total value of non-compliant fibers contained in the end item does not exceed 10 percent of the total purchase price of the end item . . .”. <SU>16</SU> <FTREF/> Deviation 13-01 and Deviation Amendment 1 were both effective immediately at the time of their publication in 2013 and are still in effect. <SU>17</SU> <FTREF/> <FTNT> <SU>15</SU>   <E T="03">See HSAR class deviation, 13-01, Amendment 1, Homeland Security Acquisition Regulation 3052.225-70, Requirement for Use of Certain Domestic Commodities,</E> (March 14, 2013) (“Deviation Amendment 1”), available at: <E T="03">https://www.dhs.gov/sites/default/files/publications/cpo-HSARclassdeviation13-01%E2%80%93amendment1_0_0_0_0_0_0.pdf</E> (last accessed May 31, 2024). </FTNT> <FTNT> <SU>16</SU>  The clause would not apply to “incidental amounts of cotton, other natural fibers, or wool incorporated in an end product, for which the estimated value of the cotton, other natural fibers, or wool is not more than 10 percent of the total price of the end product.” </FTNT> <FTNT> <SU>17</SU>   <E T="03">See</E> Deviation 13-01, available at: <E T="03">https://www.dhs.gov/sites/default/files/publications/cpo-HSARclassdeviation13-01_0_0_0_0_0.pdf</E> (last accessed Apr. 23, 2024); <E T="03">see also</E> Deviation Amendment available at: <E T="03">https://www.dhs.gov/sites/default/files/publications/cpo-HSARclassdeviation13-01%E2%80%93amendment1_0_0_0_0_0_0.pdf</E> (last accessed May 31, 2024). </FTNT> <HD SOURCE="HD1">II. Discussion of Comments and the Final Rule</HD> Interested parties were given until September 23, 2024, to comment on the NPRM. DHS received two public comments, neither of which were substantive. DHS received one comment that was outside the scope of the rule, and another comment that supported the rule. This final rule amends the HSAR to better clarify how DHS complies with the Kissell Amendment including codifying certain requirements from Deviation 13-01 and Deviation Amendment 1. Consistent with Deviation 13-01 this final rule, defines the term “end item” to mean “supplies delivered under a line item of a contract.” <E T="03">See</E> 48 CFR 3025.70 ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 26k characters. Full document text is stored and available for version comparison. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━