[Federal Register Volume 61, Number 120 (Thursday, June 20, 1996)]
[Rules and Regulations]
[Pages 31646-31649]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-14529]
-----------------------------------------------------------------------
DEPARTMENT OF DEFENSE
48 CFR Parts 25, 27, and 52
[FAC 90-39, FAR Case 93-310, Item XIV]
RIN 9000-AF60
Federal Acquisition Regulation; Implementation of the North
American Free Trade Agreement Implementation Act
AGENCIES: Department of Defense (DOD), General Services Administration
(GSA), and National Aeronautics and Space Administration (NASA).
ACTION: Revised interim rule with request for comment.
-----------------------------------------------------------------------
SUMMARY: The Civilian Agency Acquisition Council and the Defense
Acquisition Regulations Council have agreed to a revised interim rule
implementing the North American Free Trade Agreement (NAFTA)
Implementation Act. This regulatory action was not subject to Office of
Management and Budget review under Executive Order 12866, dated
September 30, 1993, and is not a major rule under 5 U.S.C. 804.
DATES: Effective Date: June 20, 1996.
-Comment Date: Comments should be submitted to the FAR Secretariat
at the address shown below on or before August 19, 1996, to be
considered in the formulation of a final rule.
ADDRESSES: Interested parties should submit written comments to: -
General Services Administration, FAR Secretariat (MVRS), 18th & F
Streets, NW., Room 4035, Attn: Ms. Beverly Fayson, Washington, DC
20405. Please cite FAC 90-39, FAR case 93-310 in all correspondence
related to this case.
FOR FURTHER INFORMATION CONTACT: Mr. Peter O'Such at (202) 501-1759 in
reference to this FAR case. For general information, contact the FAR
Secretariat, Room 4037, GS Building, Washington, DC 20405 (202) 501-
4755. Please cite FAC 90-39, FAR case 93-310.
SUPPLEMENTARY INFORMATION:
A. Background
While the North American Free Trade Agreement (NAFTA) remains in
effect, the Canadian Free Trade Agreement (CFTA) is suspended. The CFTA
interim rule published December 30, 1988 (53 FR 53340, FAC 84-41, FAR
case 88-070), which revised the FAR coverage
[[Page 31647]]
concerning Canadian products, has been revised and updated by FAR case
93-310, which implements NAFTA. As a result, FAR case 88-070 was closed
into FAR case 93-310.
An interim rule was published January 5, 1994 (59 FR 544, FAC 90-
19, FAR case 93-310), to implement NAFTA. Based on the analysis of
public comments, the interim rule has been revised to--
(1) Add language to FAR 25.402 to address the applicability of
NAFTA to services.
(2) Implement Article 1709(10) of NAFTA and Section 6 of Executive
Order 12889 of December 27, 1993. FAR 27.208 is added to make
contracting personnel aware of the requirements to obtain authorization
from the owner of technology covered by a valid patent prior to use by
or for the Federal Government and of waivers permitted under Section 6
of Executive Order 12889.
(3) Revise 52.212-3 and 52.212-5 to reflect changes to 52.225-20
and 52.225-21, accomplished in this revised interim rule.
(4) Add alternates for the provision at 52.225-20 and the clause at
52.225-21 for use in procurements between $25,000 and $50,000.
(5) Add a new clause 52.225-22, ``Balance of Payments Program--
Construction Materials--NAFTA,'' for construction contracts awarded
outside the United States with an estimated value over $6,500,000.
B. Regulatory Flexibility Act
The amendments in this revised interim rule are not expected 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 seq., because (1) the new clause, ``Balance of Payments
Program--Construction Materials--NAFTA, is only for construction
contracts awarded outside the United States; (2) the new coverage at
27.208 pertains only to patents held by parties from NAFTA countries;
and (3) other changes are primarily for clarification or editorial. An
Initial Regulatory Flexibility Analysis (IRFA) was prepared and
provided to the Chief Counsel for Advocacy for the Small Business
Administration when the interim rule was issued in January 1994. A copy
of the IRFA may be obtained from the FAR Secretariat. Comments are
invited. Comments from small entities concerning the affected FAR
subparts will be considered in accordance with 5 U.S.C. 610. Such
comments must be submitted separately and cite 5 U.S.C. 601 et seq.
(FAC 90-39, FAR case 93-310), in correspondence.
C. Paperwork Reduction Act
The Paperwork Reduction Act does not apply because the changes to
the FAR do not impose recordkeeping or information collection
requirements, or collections of information from offerors, contractors,
or members of the public which require the approval of OMB under 44
U.S.C. 3501 et seq.
D. Determination to Issue an Interim Rule
A determination has been made under the authority of the Secretary
of Defense (DOD), the Administrator of General Services (GSA), and the
Administrator of the National Aeronautics and Space Administration
(NASA) that compelling reasons exist to promulgate this revised interim
rule without prior opportunity for public comment. This action is
necessary because the North American Free Trade Agreement
Implementation Act, signed into law on December 8, 1993, became
effective on January 1, 1994, and several substantive changes to the
existing interim rule are needed to fully implement the Act. However,
pursuant to Public Law 98-577 and FAR 1.501, public comments received
in response to this interim rule will be considered in the formation of
the final rule.
List of Subjects in 48 CFR Parts 25, 27, and 52
Government procurement.
Dated: June 4, 1996.
Edward C. Loeb,
Director, Federal Acquisition Policy Division.
Therefore, 48 CFR parts 25, 27, and 52 are amended as set forth
below:
1. The authority citation for 48 CFR parts 25, 27, and 52 continues
to read as follows:
Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42
U.S.C. 2473(c).
PART 25--FOREIGN ACQUISITION
2. Section 25.305 is amended in the section heading and in the
heading of paragraph (c) by revising the word ``clause'' to read
``clauses''; designating the existing paragraph (c) as (c)(1); and
adding paragraph (c)(2) to read as follows:
25.305 Solicitation provision and contract clauses.
* * * * *
(c) * * *
(2) For construction contracts outside the United States, with an
estimated value of $6,500,000 or more, insert the clause at 52.225-22,
Balance of Payments Program--Construction Materials-- NAFTA.
3. Section 25.402 is amended by adding paragraph (g) to read as
follows:
25.402 Policy.
* * * * *
(g) The procedures in 25.405 apply to the acquisition of NAFTA
country services. These are services provided by a firm established in
a NAFTA country under service contracts with an estimated acquisition
value of $50,000 or more ($6,500,000 or more for construction), except
for the following excluded services (Federal Service Code or Category
from the Federal Procurement Data System Product/Service Code Manual is
indicated in parentheses):
(1) Information processing and related telecommunications services
(D):
(i) Automated data processing (ADP) telecommunications and
transmission services (D304).
(ii) ADP teleprocessing and timesharing services (D305).
(iii) Telecommunications network management services (D316).
(iv) Automated news services, data services, or other information
services (D317).
(v) Other ADP and telecommunications services (D399).
(2) Maintenance, repair, modification, rebuilding, and installation
of equipment (J):
(i) Maintenance, repair, modification, rebuilding, and installation
of equipment related to ships (J019).
(ii) Non-nuclear ship repair (J998).
(3) Operation of Government-owned facilities (M):
(i) All facilities operated by the Department of Defense,
Department of Energy, and the National Aeronautics and Space
Administration.
(ii) Research and development facilities (M180).
(4) Utilities--all classes (S).
(5) Transportation, travel, and relocation services--all classes
except V503 travel agent services (V).
(6) All services purchased in support of military forces overseas.
(7) Construction dredging services.
4. Section 25.408 is amended by revising paragraphs (a)(3) and
(a)(4) to read as follows:
25.408 Solicitation provisions and contract clauses.
(a) * * *
(3) The provision at 52.225-20, Buy American Act--North American
Free Trade Agreement Implementation Act--Balance of Payments Program
Provision, in solicitations containing the clause at 52.225-21. Use the
provision with its
[[Page 31648]]
Alternate I if the acquisition value is between $25,000 and $50,000;
and
(4) The clause at 52.225-21, Buy American Act--North American Free
Trade Agreement Implementation Act--Balance of Payments Program, in
solicitations and contracts for supplies where the contracting officer
has determined that the acquisition is not subject to the Trade
Agreements Act but is subject to NAFTA. Use the clause with its
Alternate I if the acquisition value is between $25,000 and $50,000.
* * * * *
PART 27--PATENTS, DATA, AND COPYRIGHTS
5. Section 27.208 is added to read as follows:
27.208 Use of patented technology under the North American Free Trade
Agreement.
(a) The requirements of this section apply to the use of technology
covered by a valid patent when the patent holder is from a country that
is a party to the North American Free Trade Agreement (NAFTA).
(b) Article 1709(10) of NAFTA generally requires a user of
technology covered by a valid patent to make a reasonable effort to
obtain authorization prior to use of the patented technology. However,
NAFTA provides that this requirement for authorization may be waived in
situations of national emergency or other circumstances of extreme
urgency, or public noncommercial use.
(c) Section 6 of Executive Order 12889 of December 27, 1993, waives
the requirement to obtain advance authorization for--
(1) An invention used or manufactured by or for the Federal
Government, except that the patent owner must be notified whenever the
agency or its contractor, without making a patent search, knows or has
demonstrable reasonable grounds to know that an invention described in
and covered by a valid U.S. patent is or will be used or manufactured
without a license; and
(2) The existence of a national emergency or other circumstances of
extreme urgency, except that the patent owner must be notified as soon
as it is reasonably practicable to do so.
(d) Section 6(c) of Executive Order 12889 provides that the notice
to the patent owner does not constitute an admission of infringement of
a valid privately owned patent.
(e) When addressing issues regarding compensation for the use of
patented technology, Government personnel should be advised that NAFTA
uses the term ``adequate remuneration.'' Executive Order 12889 equates
``remuneration'' to ``reasonable and entire compensation'' as used in
28 U.S.C. 1498, the statute which gives jurisdiction to the U.S. Court
of Federal Claims to hear patent and copyright cases involving
infringement by the U.S. Government.
(f) Depending on agency procedures, either the technical/requiring
activity or the contracting officer shall ensure compliance with the
notice requirements of NAFTA Article 1709(10). A contract award should
not be suspended pending notification to the right holder.
(g) When questions arise regarding the notice requirements or other
matters relating to this section, the contracting officer should
consult with legal counsel.
PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
6. Section 52.212-3 is amended--
(a) By revising the date of the provision to read ``(JUN 1996)'';
(b) Redesignating paragraphs (g)(1) through (g)(4) as (g)(1)(i)
through (g)(1)(iv) and redesignating paragraph (g) as ``(g)(1)'';
removing ``(NAFTA)'' each time it appears (twice); and removing the
word ``Certificate'';
(c) Revising newly designated paragraphs (g)(1)(i), (g)(1)(iii),
and (g)(1)(iv); and
(d) Adding paragraph (g)(2) to read as follows:
52.212-3 Offeror Representations and Certifications--Commercial
Items.
* * * * *
Offeror Representations and Certifications--Commercial Items (JUN 1996)
* * * * *
(g)(1) * * *
(i) Each end product being offered, except those listed in
paragraph (g)(1)(ii) of this provision, is a domestic end product
(as defined in the clause entitled ``Buy American Act--North
American Free Trade Agreement Implementation Act--Balance of
Payments Program.'' Components of unknown origin have been
considered to have been mined, produced, or manufactured outside the
United States.
* * * * *
(iii) Offers will be evaluated by giving certain preferences to
domestic end products or NAFTA country end products over other end
products. In order to obtain these preferences in the evaluation of
each excluded end product listed in paragraph (g)(1)(ii) of this
provision, offerors must identify below those excluded end products
that are NAFTA country end products. Products that are not
identified below will not be deemed NAFTA country end products.
The following supplies qualify as ``NAFTA country end products''
as that term is defined in the clause entitled ``Buy American Act--
North American Free Trade Agreement Implementation Act--Balance of
Payments Program:''
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
(Insert line item numbers)
(iv) Offers will be evaluated in accordance with Part 25 of the
Federal Acquisition Regulation. In addition, if this solicitation is
for supplies for use outside the United States, an evaluation factor
of 50 percent will be applied to offers of end products that are not
domestic or NAFTA country end products.
(2) Alternate I. If Alternate I to the clause at 52.225-21 is
included in this solicitation, substitute the following paragraph
(g)(1)(iii) for paragraph (g)(1)(iii) of this provision:
(g)(1)(iii) Offers will be evaluated by giving certain
preferences to domestic end products or Canadian end products over
other end products. In order to obtain these preferences in the
evaluation of each excluded end product listed in paragraph (b) of
this provision, offerors must identify below those excluded end
products that are Canadian end products. Products that are not
identified below will not be deemed Canadian end products.
The following supplies qualify as ``Canadian end products'' as
that term is defined in the clause entitled ``Buy American Act--
North American Free Trade Agreement Implementation Act--Balance of
Payments Program'':
----------------------------------------------------------------------
(Insert line item numbers)
7. Section 52.212-5 is amended by revising the date of the clause
to read ``(JUN 1996)''; paragraph (b)(15) is redesignated as
(b)(15)(i); and (b)(15)(ii) is added to read as follows:
52.212-5 Contract Terms and Conditions Required To Implement Statutes
or Executive Orders--Commercial Items.
* * * * *
Contract Terms and Conditions Required to Implement Statutes or
Executive Orders--Commercial Items (Jun 1996)
* * * * *
(b) * * *
____(15)(ii) Alternate I of 52.225-21.
* * * * *
8. Section 52.225-20 is amended in the section heading and
provision heading by revising the word ``Certificate'' to read
``Provision''; revising the date of the provision to read ``(JUN
1996)''; revising paragraphs (a), (c), and (d) of the provision; and
adding Alternate I to read as follows:
52.225-20 Buy American Act--North American Free Trade Agreement
Implementation Act--Balance of Payments Program Provision.
* * * * *
[[Page 31649]]
Buy American Act--North American Free Trade Agreement Implementation
Act--Balance of Payments Program Provision (Jun 1996)
(a) Each end product being offered, except those listed in
paragraph (b) of this provision, is a domestic end product (as
defined in the clause entitled ``Buy American Act--North American
Free Trade Agreement Implementation Act--Balance of Payments
Program''). Components of unknown origin have been considered to
have been mined, produced, or manufactured outside the United
States.
* * * * *
(c) Offers will be evaluated by giving certain preferences to
domestic end products or NAFTA country end products over other end
products. In order to obtain these preferences in the evaluation of
each excluded end product listed in paragraph (b) of this provision,
offerors must identify below those excluded end products that are
NAFTA country end products. Products that are not identified below
will not be deemed NAFTA country end products.
The following supplies qualify as ``NAFTA country end products''
as that term is defined in the clause entitled ``Buy American Act--
North American Free Trade Agreement Implementation Act--Balance of
Payments Program'':
------------------------------------------------------------------------
Line item no.---- Country of origin
------------------------------------------------------------------------
------------------------------------------------------------------------
(List as necessary)
(d) Offers will be evaluated in accordance with Part 25 of the
Federal Acquisition Regulation. In addition, if this solicitation is
for supplies for use outside the United States, an evaluation factor
of 50 percent will be applied to offers of end products that are not
domestic or NAFTA country end products.
(End of provision)
Alternate I (JUN 1996). As prescribed in 25.408(a)(3),
substitute the following paragraph (c) for paragraph (c) of the
basic provision:
(c) Offers will be evaluated by giving certain preferences to
domestic end products or Canadian end products over other end
products. In order to obtain these preferences in the evaluation of
each excluded end product listed in paragraph (b) of this provision,
offerors must identify below those excluded end products that are
Canadian end products. Products that are not identified below will
not be deemed Canadian end products.
The following supplies qualify as ``Canadian end products'' as
that term is defined in the clause entitled ``Buy American Act--
North American Free Trade Agreement Implementation Act--Balance of
Payments Program'':
----------------------------------------------------------------------
(Insert line item numbers)
9. Section 52.225-21 is amended by revising the date of the clause
to read ``(JUN 1996)''; in the fourth sentence of paragraph (c) by
revising the word ``certifying'' to read ``specifying''; removing
paragraph (d) of the clause; and by adding Alternate I to read as
follows:
52.225-21 Buy American Act--North American Free Trade Agreement
Implementation Act--Balance of Payments Program.
* * * * *
Buy American Act--North American Free Trade Agreement Implementation
Act--Balance of Payments Program (Jun 1996)
* * * * *
Alternate I (JUN 1996). As prescribed in 25.408(a)(4), add the
following definition to paragraph (a) and substitute the following
paragraph (c) for paragraph (c) of the basic clause:
Canadian end product 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 refers to a product offered for
purchase under a supply contract, but for purposes of calculating
the value of the end product 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.
(c) The Contracting Officer has determined that NAFTA applies to
this acquisition. Unless otherwise specified, NAFTA applies to all
items in the schedule. The Contractor agrees to deliver under this
contract only domestic end products unless, in its offer, it
specifies delivery of foreign end products in the provision entitled
``Buy American Act--North American Free Trade Agreement
Implementation Act--Balance of Payments Program Certificate.'' An
offer specifying that a Canadian end product will be supplied
requires the Contractor to supply a Canadian end product or, at the
Contractor's option, a domestic end product.
10. Section 52.225-22 is added to read as follows:
52.225-22 Balance of Payments Program--Construction Materials--NAFTA.
As prescribed in 25.305(c)(2), insert the following clause:
Balance of Payments Program--Construction Materials--NAFTA (Jun 1996)
(a) Definitions. As used in this clause--
Components means those articles, materials, and supplies
incorporated directly into construction materials.
Construction material means an article, material, or supply
brought to the construction site for incorporation into the building
or work. Construction material also includes an item brought to the
site pre-assembled from articles, materials, or supplies. However,
emergency life safety systems, such as emergency lighting, fire
alarm, and audio evacuation systems, which are discrete systems
incorporated into a public building or work and which are produced
as a complete system, shall be evaluated as a single and distinct
construction material regardless of when or how the individual parts
or components of such systems are delivered to the construction
site.
Domestic construction material means (1) an unmanufactured
construction material mined or produced in the United States, or (2)
a construction material manufactured in the United States, if the
cost of its components mined, produced, or manufactured in the
United States exceeds 50 percent of the cost of all its components.
Components of foreign origin of the same class or kind as the
construction materials determined to be unavailable pursuant to
subparagraph 25.202(a)(3) of the Federal Acquisition Regulation
shall be treated as domestic.
NAFTA country construction material means a construction
material that (1) is wholly the growth, product, or manufacture of a
NAFTA country, or (2) in the case of a construction material which
consists in whole or in part of materials from another country or
instrumentality, has been substantially transformed in a NAFTA
country into a new and different construction material distinct from
the materials from which it was transformed.
North American Free Trade Agreement (NAFTA) country means Canada
and Mexico.
(b) The Balance of Payments Program provides that the Government
give preference to domestic construction material.
(c) The Contractor agrees that only domestic construction
material or NAFTA country construction material will be used by the
Contractor, subcontractors, material men, and suppliers in the
performance of this contract, except for other foreign construction
materials, if any, listed in this contract.
(End of clause)
[FR Doc. 96-14529 Filed 6-19-96; 8:45 am]
BILLING CODE 6820-EP-P