[Federal Register Volume 59, Number 241 (Friday, December 16, 1994)] [Unknown Section] [Page 0] From the Federal Register Online via the Government Publishing Office [www.gpo.gov] [FR Doc No: 94-30817] [[Page Unknown]] [Federal Register: December 16, 1994] ======================================================================= ----------------------------------------------------------------------- GENERAL SERVICES ADMINISTRATION 48 CFR Parts 525 and 552 [APD 2800.12A, CHGE 59] RIN 3090-AF12 General Services Administration Acquisition Regulation; Implementation of the Memorandum of Understanding Between the United States of America and the European Economic Community (EC) on Government Procurement and the North American Free Trade Agreement (NAFTA) AGENCY: Office of Acquisition Policy, GSA. ACTION: Final rule. ----------------------------------------------------------------------- SUMMARY: This rule amends the General Services Administration Acquisition Regulation to incorporate the temporary change made by Acquisition Circular (AC-93-1) which implemented the Memorandum of Understanding between the United States and the European Economic Community (EC) on Government Procurement and the North American Free Trade Agreement (NAFTA). The rule is essentially the same as the Circular that appeared in the Federal Register on December 30, 1993 (58 FR 69243), except for minor modifications. EFFECTIVE DATE: December 17, 1994. FOR FURTHER INFORMATION CONTACT: Edward J. McAndrew, Office of GSA Acquisition Policy, (202) 501-1224. SUPPLEMENTARY INFORMATION: A. Public Comments A temporary rule was published in the Federal Register on December 30, 1993 (58 FR 69243) in order to meet the January 1, 1994, effective date for implementation of NAFTA. The temporary rule invited public comments. No public comments were received. B. Executive Order 12866 This rule was not submitted to the Office of Management and Budget because it is not a significant rule as defined in Executive Order 12866, Regulatory Planning and Review. C. Regulatory Flexibility Act The changes do not appear to have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601 et sequentia because they permit offerors to use EC and NAFTA country end products or construction materials above certain thresholds without application of Buy American Act preference. For this reason, a regulatory flexibility analysis was not prepared. No comments from small entities were received. D. Paperwork Reduction Act The provision at 552.225-75, Buy American Act Notice-Construction Materials, which is being modified by this rule, does contain an information collection requirement. However, the revision does not affect the information collection requirements that have previously been approved by OMB and assigned Control Number 3090-0198. List of Subjects in 48 CFR Parts 525 and 552 Government procurement. Accordingly, 48 CFR parts 525 and 552 are amended as follows: 1. The authority citation for 48 CFR Parts 525 and 552 continues to read as follows: Authority: 40 U.S.C. 486(c). PART 525--FOREIGN ACQUISITION 2. Section 525.203 is revised to read as follows: 525.203 Evaluation of offers. (a) The HCA or a designee may authorize the use of a particular foreign construction material when the use of a comparable domestic construction material would unreasonably increase the cost of the contract. The cost of a particular domestic construction material shall be determined to be unreasonable when the cost of such material exceeds the cost of foreign material by more than 6 percent. The cost of construction material includes all delivery costs to the construction site and any applicable duty (whether or not a duty-free entry certificate is issued). (b) The evaluation process described in paragraph (a) of this section does not apply to: (1) Excepted materials listed in the solicitation; or (2) European Community (EC) and North American Free Trade Agreement (NAFTA) country construction materials offered in response to solicitations for construction contracts with an estimated value of $6,500,000 or more. (c) Offerors proposing to use foreign construction materials (other than EC or NAFTA country construction materials on contracts with an estimated value of $6,500,000 or more) are required to provide adequate information for Government evaluation under paragraph (a) of this section. Offerors may submit alternate offers for comparable domestic construction materials at stated prices. When foreign construction material (other than EC or NAFTA country construction materials on contracts with an estimated value of $6,500,000 or more) is not authorized under paragraph (a), evaluation of the offer must be based on the stated price, if any, for comparable domestic material. If an offeror proposing to use foreign construction materials (other than EC or NAFTA country construction materials on contracts with an estimated value of $6,500,000 or more) does not furnish data on the cost of comparable domestic construction material, and the use of foreign construction material is not authorized, such offer must be rejected, unless the contracting officer is able to obtain prices on comparable domestic material which verifies that domestic prices are unreasonable. (d) The contracting officer shall add 6 percent to the cost of foreign construction materials (other than EC or NAFTA country construction materials on contracts with an estimated value of $6,500,000 or more) authorized for use in accordance with paragraph (a) of this section, to the prices offered, if applicable, for evaluation purposes only. 3. Section 525.205 is revised to read as follows: 525.205 Solicitation provision and contract clause. The contracting officer shall insert the provision at 552.225-75, Buy American Act Notice--Construction Materials in solicitations for construction that include the Buy American Act--Construction Materials clause at (FAR) 48 CFR 52.225-5 and have an estimated value less than $6,500,000. Alternate I shall be used for construction contracts with an estimated value of $6,500,000 or more that include the Buy American Act--Construction Materials Under European Community Agreement and NAFTA clause at (FAR) 48 CFR 52.225-15. 4. Section 525.402 is amended by revising paragraph (a) to read as follows: 525.402 Policy. (a) Under (FAR) 48 CFR 25.402(a), when the estimated value of all items or products (exclusive of any item or product within any of the exceptions described in (FAR) 48 CFR 25.403) listed in the solicitation exceeds the Trade Agreements Act threshold, contracting officers shall evaluate offers without regard to the restrictions of the Buy American Act or the Balance of Payments Program. * * * * * PART 552--SOLICITATION PROVISIONS AND CONTRACT CLAUSES 5. Section 552.225-8 is revised to read as follows: 552.225-8 Trade Agreements Act Certificate. As prescribed in 525.407(a), insert the following provision: TRADE AGREEMENTS ACT CERTIFICATE (DEC 1994) (DEVIATION FAR 52.225-8) (a) The Offeror, by signing this offer, certifies that each end product to be delivered under this contract is a U.S. made end product, a designated country end product, a Caribbean Basin country end product, a Canadian end product or a Mexican end product as defined in the clause entitled ``Trade Agreements Act'' at 48 CFR 552.225-9. (b) Offers will be evaluated in accordance with subpart 25.4 of the Federal Acquisition Regulation except that offers of U.S. made end products, designated country end products, Caribbean Basin end products, Canadian end products, or Mexican end products shall be evaluated without the restrictions of the Buy American Act or the Balance of Payments Program. (End of Provision) 6. Section 552.225-9 is revised to read as follows: 552.225-9 Trade Agreements Act. As prescribed in 525.407(a), insert the following clause. TRADE AGREEMENTS ACT (DEC 1994) (DEVIATION FAR 52.225-9) (a) This clause implements the Trade Agreements Act of 1979 (19 U.S.C. 2501-2582) by providing a preference for U.S. made end products, designated country end products, Caribbean Basin country end products, Canadian end products or Mexican end products over other products. ``Caribbean Basin country end products,'' as used in this clause, means an article that: (1) is wholly the growth, product, or manufacture of a Caribbean Basin country (as defined in section 25.401 of the Federal Acquisition Regulation (FAR)), or (2) in the case of an article which consists in whole or in part of materials from another country or instrumentality, has been substantially transformed into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was so transformed. The term includes services (except transportation services) incidental to its supply; provided that the value of those incidental services does not exceed that of the product itself. It does not include service contracts as such. The term excludes products that are excluded from duty free treatment from Caribbean countries under the Caribbean Basin Economic Recovery Act (19 U.S.C. 2703(b)). These exclusions presently consist of (i) textiles and apparel articles that are subject to textile agreements; (ii) footwear, handbags, luggage, flat goods, work gloves, and leather wearing apparel not designated as eligible articles for the purpose of the Generalized System of Preference under title V of the Trade Act of 1974; (iii) tuna, prepared or preserved in any manner in airtight containers, (iv) petroleum, or any product derived from petroleum; and (v) watches and watch parts (including cases, bracelets and straps) of whatever type including, but not limited to, mechanical, quartz digital or quartz analog, if such watches or watch parts contain any material that is the product of any country to which the Tariff Schedule of the United States (TSUS) column 2 rates of duty apply. ``Designated country end product,'' as used in this clause, means an article that (1) is wholly the growth, product, or manufacture of the designated country (as defined in section 25.401 of the Federal Acquisition Regulation (FAR)), or (2) in the case of an article which consists in whole or in part of materials from another country or instrumentality, has been substantially transformed into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was so transformed. The term includes services (except transportation services) incidental to its supply, provided that the value of those incidental services does not exceed that of the product itself. It does not include service contracts as such. ``Canadian end product,'' as used in this clause, means an article that (1) is wholly the growth, product, or manufacture of Canada, or (2) in the case of an article which consists in whole or in part of materials from another country or instrumentality, has been substantially transformed in Canada into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was transformed. The term includes services (except transportation services) incidental to its supply; provided, that the value of those incidental services does not exceed that of the product itself. It does not include service contracts as such. ``Mexican end product,'' as used in this clause, means an article that (1) is wholly the growth, product, or manufacture of Mexico, or (2) in the case of an article which consists in whole or in part of materials from another country or instrumentality, has been substantially transformed in Mexico into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was so transformed. The term includes services (except transportation services) incidental to its supply, provided that the value of those incidental services does not exceed that of the product itself. It does not include service contracts as such. ``End products,'' as used in this clause, means those articles, materials, and supplies to be acquired under this contract for public use. ``U.S. made end product,'' as used in this clause, means an article which (1) is wholly the growth, product, or manufacture of the United States, or (2) in the case of an article which consists in whole or in part of materials from another country or instrumentality, has been substantially transformed in the United States into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was so transformed. ``Nondesignated country end products,'' as used in this clause, means any end product which is not a U.S. made end product, designated country end product, Caribbean Basin Country end product, Canadian end product or Mexican end product. ``United States,'' as used in this clause, means the United States, its possessions, Puerto Rico, and any other place which is subject to its jurisdiction, but does not include leased bases or trust territories. (b) The Contractor agrees to deliver under this contract only U.S. made end products, designated country end products, Caribbean Basin country end products, Canadian end products or Mexican end products or, if a national interest waiver is granted under section 302 of the Trade Agreements Act of 1979, nondesignated country end products. Only if such waiver is granted may a nondesignated country end product be delivered under this contract(s). (c) Offers will be evaluated in accordance with the policies and procedures of Part 25 of the FAR except that offers of U.S. made end products, designated country end products, Caribbean Basin end products, Canadian end products or Mexican end products shall be evaluated without the restrictions of the Buy American Act or the Balance of Payments Program. (End of Clause) 7. Section 552.225-72 is amended by revising paragraphs (a) introductory text, (a)(1) and (c) [the chart is unchanged] to read as follows: 552.225-72 Eligible Products From Nondesignated Countries--Waiver. As prescribed in 525.407(b), insert the following clause: ELIGIBLE PRODUCTS FROM NONDESIGNATED COUNTRIES--WAIVER (DEC 1994) (a) In accordance with the Trade Agreements Act of 1979 and 48 CFR 25.402(b), no eligible product that originates in a nondesignated country may be purchased by a Federal agency. However, this restriction may be waived before award when it is determined to be in the national interest. Accordingly, offers to furnish products originating in a nondesignated country identified in paragraph (c) below, may be submitted in response to this solicitation and will be considered for award if a waiver is obtained from the U.S. Trade Representative or a designee (19 U.S.C. 2512) on the basis that: (1) No responsive bid or technically acceptable offer from a responsible offeror is received offering U.S. or designated country end products Caribbean end products, Canadian or Mexican end products as defined in the clause entitled ``Trade Agreements Act'' in this solicitation; or * * * * * (c) The Offeror certifies that the following product(s) is an end product other than an end product of the United States, a designated country or a Caribbean Basin country Canadian or Mexican end products, as such end products are defined in the clause entitled ``Trade Agreements Act'' in this solicitation: * * * * * 8. Section 552.225-75 is revised to read as follows: 552.225-75 Buy American Act Notice--Construction Materials. As prescribed in 525.205, insert the following provision: BUY AMERICAN ACT NOTICE--CONSTRUCTION MATERIALS (JAN 1994) (a) The Buy American Act (41 U.S.C. 10) generally requires that only domestic construction material be used in performing this contract (See the clause entitled ``Buy American Act--Construction Materials''). This requirement does not apply to the excepted construction material or components listed below: (List applicable excepted materials or indicate ``none.'') (b) Offers based on the use of other foreign construction material may be acceptable for award if the Government determines that-- (1) Comparable domestic construction material in sufficient and reasonably available quantities, of a satisfactory quality, is unavailable; or (2) Use of comparable domestic construction material is impracticable or would unreasonably increase the cost of this contract. (c) Any offer based on the use of one or more other foreign construction materials shall include current data, based on a reasonable canvass of suppliers, in the format listed in paragraph (g) below, clearly demonstrating that the cost of each other foreign construction material, plus 6 percent, is less than the cost of each comparable domestic construction material. The cost of construction material shall include all delivery costs to the construction site and any applicable duty (whether or not a duty-free entry certificate may be issued). (d) For evaluation purposes, the Government will add to the offer 6 percent of the cost of other foreign construction material that qualifies for acceptance under paragraph (c) above. (e) When offering other foreign construction material, offerors may also offer, at stated prices, any available comparable domestic construction material to avoid the possibility that the entire offer will be rejected if the other foreign construction material is not accepted under (c) above. If any other foreign construction material does not qualify for acceptance under paragraph (c) above, the Government will evaluate the offer on the basis of the stated price for comparable domestic construction material, and the Offeror shall be required to furnish such domestic construction material at that price. If the Offeror does not state a price for a comparable domestic construction material, and the other foreign construction material does not qualify for acceptance under paragraph (c) above, the offer will be rejected in sealed bid procurements and may be rejected in negotiated procurements. (f) If the foregoing procedure results in a tie between a foreign offer as evaluated and a domestic offer, award shall be made on the domestic offer. In such case, offers proposing to use any foreign construction material will be considered to be foreign offers. (g) For evaluation purposes under paragraph (c) above, the following information and any applicable supporting data based on the canvass of suppliers shall be included in the offer for the use of one or more other foreign construction materials: Foreign and Domestic Construction Materials Cost Comparison ---------------------------------------------------------------------------------------------------------------- Unit of Cost Construction material description measure Quantity (dollars)\1\ ---------------------------------------------------------------------------------------------------------------- Item 1: Foreign construction material............................................. ........ ........ $ Comparable domestic construction material................................. ........ ........ $ Item 2: Foreign construction material............................................. ........ ........ $ Comparable domestic construction material................................. ........ ........ $ ---------------------------------------------------------------------------------------------------------------- \1\Include all delivery costs to the construction site and any applicable duty. (End of Provision) Alternate I (JAN 1994). If Alternate I is used, paragraphs (a) and (f) of the basic clause should be deleted and the following paragraphs (a) and (f) substituted. In addition, two asterisks should be inserted after the phrase ``Foreign construction material'' each time it appears in the chart in paragraph (g) and the following explanation added at the bottom of the chart ``* * * Do not include EC or NAFTA country construction materials.'' (a) The Buy American Act (41 U.S.C. 10) generally requires that only domestic construction material be used in performing this contract. However, the Memorandum of Understanding between the United States of America and the European Community (EC) on Government procurement and the North American Free Trade Agreement (NAFTA) exempt EC and NAFTA country construction material from application of the Buy American Act. (See FAR 52.225-15 ``Construction Materials under European Community and NAFTA Agreements''). Therefore, the Contractor shall use only domestic construction material, EC construction materials, or NAFTA country construction materials in the performance of this contract except for other foreign construction materials, if any, listed below. ``Other foreign construction material,'' as used in this provision, means construction material that is not EC or NAFTA country construction material as defined in FAR 52.225-15. (List applicable excepted materials or indicate ``none.'') (f) If the foregoing procedure results in a tie between an offer that includes other foreign construction material as evaluated and an offer that includes domestic, EC or NAFTA construction material, award shall be made on the offer providing domestic, EC or NAFTA construction material. Dated: November 30, 1994. Ida M. Ustad, Associate Administrator for Acquisition Policy. [FR Doc. 94-30817 Filed 12-15-94; 8:45 am] BILLING CODE 6820-61-M