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DFARS Rule Clarifies Foreign Acquisition Definitions

A Department of Defense final rule (DFARS Case 2005-D010) amends the Defense Federal Acquisition Regulation Supplement to clarify the definitions of "component" and "domestic manufacture" as they relate to foreign acquisition policy. This rule amends the acquisition procedures in DFARS Part 225 and associated provisions and clauses to clarify the distinction between foreign acquisition policies that apply only to top-level components of end products and those that apply to both top-level and lower-tier components of end products. "Top-level components" are incorporated directly into the end product, and "lower-tier components" are incorporated into a component of the end product. Accordingly, for purposes of DFARS Part 225, the definition of "component" reflects the correct applicability of foreign acquisition policies as follows:

l DFARS 225.900-70 (newly added) and DFARS 252.225-7013, Duty-Free Entry. Duty-free entry is not related to evaluation of domestic products under the Buy American Act and should apply to qualifying country components at any tier.

l DFARS 252.225-7019, Restriction on Anchor and Mooring Chain. The requirement that the cost of components manufactured in the United States exceed 50 percent of the total cost of components is similar to the Buy American Act component test, in which only top-level components are considered. Therefore, the definition restricting application to top-level components applies.

l DFARS 252.225-7025, Restriction on Acquisition of Forgings. The requirement to acquire forging items that are of domestic manufacture is not related to evaluation of domestic products under the Buy American Act and applies to components at any tier.

In addition, the rule eliminates references to the DoD Industrial Preparedness Production Planning Program, at DFARS 225.7005-1 and in the definition of "domestic manufacture" at DFARS 252.225-7025 because DoD no longer has an Industrial Preparedness Production Planning Program. The rule makes corresponding amendments to DFARS 225.7001, DFARS 225.7101, DFARS 252.225-7000, and DFARS 252.225-7035. The rule finalizes the proposed rule (70,020.227) with only a minor correction and an update to the baseline. For the text of the final rule, effective December 24, 2009, see 70,016.550.




(The news featured above is a selection from the news covered in the Government Contracts Report Letter, which is published weekly and distributed to subscribers of the Government Contracts Reporter. )


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