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DoD Issues Seven Rules Amending the DFARS

The Department of Defense has issued seven rules amending the Defense Federal Acquisition Regulation Supplement: United States-Korea Free Trade Agreement (DFARS Case 2012-D025); New Free Trade Agreement With Colombia (DFARS Case 2012-D032); Defense Trade Cooperation Treaty With the United Kingdom (DFARS 2012-D034); Report on Waiver of Prohibition on Acquisition from Communist Chinese Military Companies (DFARS Case 2012-D023); Contingency Contract Closeout (DFARS Case 2012-D014); Order of Application for Modifications (DFARS Case 2012-D002); and Utilization of Domestic Photovoltaic Devices (DFARS Case 2011-D046). The first three rules are interim and the last four are final. The effective date of each rule is May 22, 2012. Comments on the interim rules are due July 23, 2012. DoD has also issued Publication Notice 20120522, which amends the DFARS companion resource, Procedures, Guidance, and Information. A complete listing of all of the DFARS and PGI provisions amended by these rules appears in the regulation table below.

UK Defense Treaty

The interim rule in DFARS 2012-D034 streamlines the export control regulations between the United States and the United Kingdom. The rule implements the Treaty Between the Government of the United States of America and the Government of the United Kingdom of Great Britain and Northern Ireland Concerning Defense Trade Cooperation and the Security Cooperation Act of 2010 (PL 111-266). The treaty establishes an Approved Community that includes the US and UK governments, as well as selected defense and security companies, and facilities. The treaty generally permits exports of most US defense articles, including technical data and defense services, to enter and to move freely within this community, without the need for government approvals and licenses, when supporting: combined US-UK military or counterterrorism operations; US-UK cooperative security and defense research, development, production, and support programs; mutually agreed-to security and defense projects that are for UK government use only; and US government end use. The exporter will verify information on a Department of State web site. If the verification requirements are met, the US exporter and the UK member may proceed without export licenses. Exporters using the treaty must also comply with applicable International Traffic in Arms Regulations, such as those pertaining to marking and recordkeeping, and other laws and regulations. The rule creates new DFARS Subpart 225.79, Export Control, new PGI Subpart 225.79, Export Control, a new clause at DFARS 252.225-7046, and a new provision at DFARS 252.225-7047. New DFARS 225.7902 implements requirements that relate to exports that a prospective contractor may make under a DoD solicitation or that a contractor may make in performance of a DoD contract. For the text of the rule, see 70,016.712.

Contingency Contract Closeout

The final rule in DFARS Case 2012-D014 revises the DFARS to require additional planning, monitoring, and executing activities for contract closeouts when the contracts are awarded for performance in contingency areas. The rule implements a recommendation made in a Government Accountability Office report entitled "CONTINGENCY CONTRACTING: Improved Planning and Management Oversight Needed to Address Challenges with Closing Contracts" (http://www.gao.gov/products/GAO-11-891). The report recommended that DoD revise contract guidance to enhance advance planning for contingency contract closeouts. Additionally, GAO advocated a requirement for senior contracting officials to monitor and assess the progress of contract closeout activities throughout the contingency operation. The rule revises DFARS 204.804 to require the head of the contracting activity to assign the highest priority to contracts performed in a contingency area in order to reduce potential backlogs. Heads of contracting activities are responsible for supervising the progress of contingency contract closeout activities and taking appropriate steps if a backlog occurs. The rule also revises PGI 207.105 and PGI 225.7404, which are cross-referenced in DFARS 204.804. The text of this rule appears at 70,016.714.

Photovoltaic Devices

DFARS Case 2011-D046 finalizes, with an editorial change, an interim rule (70,016.691) that implemented Section 846 of the National Defense Authorization Act for Fiscal Year 2011 (PL 111-383). Section 846 requires the use of photovoltaic devices in performance of any covered contract to comply with the Buy American statute, with exceptions. Photovoltaic devices produce direct current electricity from sunlight, which can be used to provide power to things such as DoD-owned facilities or private housing. The interim rule added new DFARS 225.7017, Utilization of domestic photovoltaic devices, as well as an associated clause (DFARS 252.225-7017) and solicitation provision (DFARS 252.225-7018). Under DFARS 225.7017-4, the clause must be used in solicitations for a contract that is expected to exceed the simplified acquisition threshold and may be a covered contract. DFARS 225.7017-1 defines "covered contract" as an energy savings performance contract, a utility service contract, or a private housing contract, if the contract will result in DoD ownership of photovoltaic devices, by means other than DoD purchase as end products. DoD is deemed to own a photovoltaic device if the device is installed on DoD property or in a facility owned by DoD and reserved for exclusive DoD use for the full economic life of the device. Under DFARS 225.7017-2, photovoltaic devices provided under any covered contract must comply with the Buy American statute, subject to the exceptions provided in the Trade Agreements Act of 1979 (19 USC 2501, et seq.), or as otherwise provided by law. DFARS 225.7017-3 makes exceptions for qualifying country photovoltaic devices, Free Trade Agreement, or designated country, and other foreign photovoltaic devices. For the text of the final rule, see 70,016.716.

Korea FTA

The DFARS Case 2012-D025 interim rule implements the United States-Korea Free Trade Agreement (see PL 112-41 and 19 USC 3805 note). As a result of the Korea FTA's implementation, eligible goods and services from Korea are now covered when valued at or above $100,000, rather than at or above the World Trade Organization Government Procurement Agreement threshold of $202,000. The Korea FTA threshold amount for construction is the same as the threshold for the WTO GPA for construction. The Korea FTA $100,000 threshold for supplies and services is higher than the threshold for supplies and services for most of the FTAs ($77,494), but not as high as the Bahrain, Morocco, and Peru FTA threshold for supplies and services ($202,000). Therefore, the rule creates new alternates for the provision and clause for acquisition of photovoltaic devices (DFARS 252.225-7017 and DFARS 252.225-7018) and the Buy American Act --Free Trade Agreements --Balance of Payments Program provision and clause (DFARS 252.225-7035 and DFARS 252.225-7036) to cover acquisitions that are valued at $77,494 or more but less than $100,000. In this dollar range, all FTAs apply, except for the Bahrain, Korea, Morocco, and Peru FTAs. The rule also makes conforming changes to the clause prescriptions at DFARS 225.1101, Alternate A, Annual Representations and Certifications, and DFARS 252.212-7001, Contract Terms and Conditions required to Implement Statutes or Executive Orders Applicable to Defense Acquisitions of Commercial Items. See 70,016.710 for the text of this rule.

Columbia FTA

Another interim rule, DFARS Case 2012-D032, implements the United States --Colombia Trade Promotion Agreement Implementation Act (see PL 112-42 and 19 USC 3805 note). This trade promotion agreement, which the Federal Acquisition Regulation designates as the Colombia Free Trade Agreement, provides for mutually non-discriminatory treatment of eligible products and services from Columbia. The FTA provides for both a waiver of the application of the Buy American statute (41 USC 83) for some foreign supplies and construction materials from Colombia and the application of specified procurement procedures designed to ensure fairness in the acquisition of supplies and services (FAR 25.408). The Colombia FTA covers acquisition of supplies and services equal to or exceeding $77,494. The threshold for the Columbia FTA is $7,777,000 for construction. This rule amends DFARS 252.225-7017, DFARS 252.225-7021, and DFARS 252.225-7045 to add Colombia to the definition of "Free Trade Agreement country." The text of this rule appears at 70,016.711. A subsequent technical amendments final rule (70,016.717), which is effective May 29, 2012, makes editorial changes to this rule.

Communist China Waiver

The DFARS Case 2012-D023 final rule implements Section 1243 of the National Defense Authorization Act for Fiscal Year 2012 (PL 112-81), which requires DoD to report to the congressional defense committees before issuing a waiver of the prohibition on acquisition of United States Munitions List items from Communist Chinese military companies. Section 1243 requires a report to the congressional defense committees not less than 15 days before issuing a waiver to the requirements of Section 1211 of the FY 2006 NDAA (PL 109-163) implemented at DFARS 225.770, Prohibition on acquisition of United States Munitions List items from Communist Chinese military companies. The prior requirement was for a report within 30 days after the date of the waiver. In addition to amending DFARS 225.770, the final rule revises DFARS 225.770-5 to add a requirement to send a copy of the report to Defense Procurement and Acquisition Policy. The mailing address for the report is added at new PGI 225.770-5. For the text of the rule, see 70,016.713.

Order of Modifications

DFARS Case 2012-D002 finalizes, with one change, a rule (70,020.313) that proposed to establish an order for application of contract modifications to resolve any potential conflicts that may arise from multiple modifications with the same effective date. DFARS Subpart 204.70, Uniform Procurement Instrument Identification Numbers, prescribes numbering procedures for contract modifications, and FAR Part 43.1, General, prescribes rules for determining the effective date of contract modifications. However, there are no rules to describe in what order to apply modifications to determine the actual content of a resulting modified contract. Therefore, a method for determining the order of application for modifications is needed to resolve any conflict arising from multiple modifications with the same effective date. Accordingly, the rule adds DFARS 204.7007, Order of Application for Modifications, to resolve any potential conflict in these circumstances. In response to the only comments on the proposed rule, DoD has added a cross-reference to the revised provision at new DFARS 243.172. For the text of the final rule, see 70,016.715.

Security Services Contracts

Publication Notice 20120522 incorporates into PGI 225.7401(a), Contracts requiring performance or delivery in a foreign country, a performance standard mandated by Section 833 of the National Defense Authorization Act for Fiscal Year 2011 (PL 111-383). Under the new checklist item, if the acquisition requires performance of security services, as defined in DFARS 252.225-7039, in areas of combat operations, contingency operations, or other military operations or exercises, the government must incorporate and require compliance with ANSI/ASIS PSC.1-2012, American National Standard, Management System for Quality of Private Security Operations --Requirements with Guidance (https://www.asisonline.org/guidelines/published.htm). According to DoD, the standard is mandated by law, but it is not a procurement standard. The contractual requirements for contractor personnel performing private security functions are already included in DFARS 252.225-7039, and the determination to incorporate the standard in a requirements package is up to requirements personnel. For the text of the notice, see http://www.acq.osd.mil/dpap/dars/change_notices.html.




(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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