[Federal Register: April 13, 2000 (Volume 65, Number 72)]
[Rules and Regulations]               
[Page 19849-19858]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr13ap00-13]                         

----------------------------------------------------------------------

DEPARTMENT OF DEFENSE

48 CFR Parts 213, 225, 242, and 252

[DFARS Case 98-D028]

 
Defense Federal Acquisition Regulation Supplement; Foreign 
Acquisition

AGENCY: Department of Defense (DoD).

ACTION:  Final rule.

----------------------------------------------------------------------

SUMMARY: The Acting Director of Defense Procurement has issued a final 
rule amending the Defense Federal Acquisition Regulation Supplement 
(DFARS). These amendments conform the DFARS to the Federal Acquisition 
Regulation (FAR) Amendments pertaining to foreign acquisition that
were 
published in the Federal Register on December 27, 1999.

EFFECTIVE DATE: April 13, 2000.

FOR FURTHER INFORMATION CONTACT: Ms. Amy Williams, Defense Acquisition 
Regulations Council, PDUSD (AT&L) DP (DAR), IMD 3D139, 3062 Defense 
Pentagon, Washington, DC 20301-3062. Telephone (703) 602-0288; telefax 
(703) 602-0350. Please cite DFARS Case 98-D028.

SUPPLEMENTARY INFORMATION:

A. Background

    This final rule amends DFARS Part 225, Foreign Acquisition, and 
updates related references, for conformance with the FAR Part 25 
rewrite that was published at 64 FR 72416 on December 27, 1999
(Federal 
Acquisition Circular 97-15, Item II). The rule reorganizes the
existing 
DFARS text to align it with the revised FAR text. The rule makes no 
substantive change to DFARS policy pertaining to foreign acquisition. 
The following list summarizes the reorganization of the DFARS text:

----------------------------------------------------------------------
        Text previously  located at                 Relocated to
----------------------------------------------------------------------
225.000-70................................  225.003
225.000-71................................  225.001
225.102...................................  225.103
225.105...................................  225.502
Table 25-1................................  225.504
225.107...................................  225.170
225.108...................................  225.104
225.109(a)................................  225.1101(1)
225.109(b)................................  225.171(a)
225.109(d)................................  225.1101(2)
225.109-70(a).............................  225.1101(3)
225.109-70(b).............................  225.171(b)
225.303...................................  225.304
225.305-70................................  225.1103(1)
225.401...................................  225.003
225.402(c)................................  225.403
225.403...................................  225.401
225.403-70................................  225.401-70
225.405...................................  225.408
225.408...................................  225.11
225.602...................................  225.901
225.603...................................  225.902
225.604...................................  225.903
225.605...................................  FAR 25.1101(e)(2)
225.605-70................................  225.11
225.702...................................  225.701
225.970...................................  225.1070
225.971...................................  225.1103(2)
225.972...................................  225.1103(3)
----------------------------------------------------------------------
--

    This rule was not subject to Office of Management and Budget
review under Executive Order 12866, dated September 30, 1993.

[[Page 19850]]

B. Regulatory Flexibility Act

    This final rule does not constitute a significant revision within 
the meaning of FAR 1.501 and Public Law 98-577 and publication for 
public comment is not required. However, DoD will consider comments 
from small entities concerning the affected DFARS subparts in 
accordance with 5 U.S.C. 610. Such comments should cite DFARS Case 98-
D028.

C. Paperwork Reduction Act

    The Paperwork Reduction Act does not apply because the rule does 
not impose any information collection requirements that require the 
approval of the Office of Management and Budget under 44 U.S.C. 3501, 
et seq.

List of Subjects in 48 CFR Parts 213, 225, 242, and 252

    Government procurement.

Michele P. Peterson,
Executive Editor, Defense Acquisition Regulations Council.

    Therefore, 48 CFR parts 213, 225, 242, and 252 are amended as 
follows:
    1. The authority citation for 48 CFR parts 213, 225, 242, and 252 
continues to read as follows:

    Authority: 41 U.S.C. 421 and 48 CFR Chapter 1.

PART 213--SIMPLIFIED ACQUISITION PROCEDURES

    2. Section 213.302-2 is amended in paragraph (d) introductory text 
by revising the first sentence to read as follows:


213.302-5  Clauses.

* * * * *
    (d) When using the clause at FAR 52.213-4, delete the reference to 
the clause at FAR 52.225-1, buy American Act-Balance of Payments 
Program-Supplies. * * *
* * * * *

PART 225--FOREIGN ACQUISITION


225.000-70 and 225.000-71  [Removed]

    3. Sections 225.000-70 and 225.00-71 are removed.

    4. Sections 225.001 and 225.003 are added to read as follows:


225.001  General.

    To apply the policies and procedures of this part, analyze and 
evaluate offers of foreign end products generally as follows:
    (1) Statutory or policy restrictions.
    (i) Determine whether the product is restricted by--
    (A) Defense authorization or appropriations acts (see subpart 
225.70); or
    (B) DoD policy (see subpart 225.71 and FAR 6.302-3).
    (ii) Where an exception to or waiver of a restriction would result 
in award of a foreign end product, apply the policies and procedures
of 
the Buy American Act or the Balance of Payments Program, and, if 
applicable the trade agreements.
    (2) Memoranda of understanding or other international agreements.
    (i) Determine whether the offered product is the product of one of 
the countries (qualifying country), listed in 225.872-1.
    (ii) If the product is the product of a qualifying country, 
evaluate the offer under subpart 225.5 and 225.872-4.
    (3) Trade agreements.
    (i) Determine whether the product is covered by the Trade 
Agreements Act or the North American Free Trade Agreement 
Implementation Act (see subpart 225.4).
    (ii) If the product is an eligible product under subpart 
225.4,evaluate the offer under subpart 225.5.
    (iii) If the product is not an eligible product, a qualifying 
country end product, or a U.S. made end product, purchase of the 
foreign end product may be prohibited (see FAR 25.403(c) and 
225.403(c).
    (4) Contractors controlled by terrorist nations.
    (i) Determine whether the contractor is controlled by a terrorist 
nation.
    (ii) If the contractor is controlled by a terrorist nation, comply 
with 209.104-1(g).
    (5) Buy American Act and Balance of Payments Program. See the 
evaluation procedures in subpart 225.5.


225.003  Definitions.

    As used in this part--
    (1) ``Caribbean Basin country end product'' includes petroleum or 
any product derived from petroleum.
    (2) ``Defense equipment'' means any equipment, item of supply, 
component, or end product purchased by the DoD.
    (3) ``Domestic concern'' means a concern incorporated in the
United 
States or an unincorporated concern having its principal place of 
business in the United States.
    (4) ``Domestic end product'' has the meaning given in the clauses 
at 252.225-7001, Buy American Act and Balance of Payments Program; 
252.225-7007, Buy American Act--Trade Agreements--Balance of Payments 
Program; and 252.225-7036, Buy American Act--North American Free Trade 
Agreement Implementation Act--Balance of Payments Program, instead of 
the meaning in FAR 25.003.
    (5) ``Eligible product'' means, instead of the definition at FAR 
25.003, a designated, NAFTA, or Caribbean Basin country end product in 
the categories listed in 225.401-70.
    (6) ``Foreign concern'' means any concern other than a domestic 
concern.
    (7) ``Nondesignated country end product'' means any end product 
which is not a U.S. made end product or a designated country end 
product.
    (8) ``Nonqualifying country'' means a country other than the
United 
States or a qualifying country.
    (9) ``Nonqualifying country end product'' means an end product 
which is neither a domestic nor qualifying country end product.
    (10) ``Nonqualifying country offer'' means an offer of a 
nonqualifying country end products, including the price of 
transportation to destination.
    (11) ``Qualifying country' is a term used to describe certain 
countries with memoranda of understanding or international agreements 
with the United States. These countries are listed in 225.872-1.
    (12) ``Qualifying country component'' and ``qualifying country end 
product'' are defined in the clauses at 252.225-7001, Buy American Act 
and Balance of Payments Program; 252.225-7007. Buy Americn Act--Trade 
Agreements--Balance of Payments Program; and 252.225-7036, Buy
American 
Act--North American Free Trade Agreement Implementation Act--Balance
of Payments Program. ``Qualifying country end product'' is also defined
in the clause at 252.225-7021, Trade Agreements.
    (13) ``Qualifying country offer'' means an offer of a qualifying 
country end product, including the price of transportation to 
destination.
    (14) ``Source'' when restricted by such words as foreign,
domestic, qualifying country, etc., refers to the actual manufacturer or
producer of the end product or component.

    5. Subpart 225.1 is revised to read as follows:

Subpart 225.1--Buy American Act--Supplies

Sec.
225.103   Exceptions.
225.104   Nonavailable articles.
225.170   Acquisition from or through other Government agencies.
225.171   Solicitations.


225.103  Exceptions.

    (a)(1)(A) Specific public interest exceptions for DoD for certain 
countries are in 225.872.
    (B) The Under Secretary of Defense (Acquisition, Technology, and 
Logistics) has determined that, for procurements subject to the Trade 
Agreements Act, it

[[Page 19851]]

is inconsistent with the public interest to apply the Buy American Act 
to information technology products in Federal Supply Group 70 or 74 
that are substantially transformed in the United States.
    (ii)(A) Normally, use the evaluation procedures in subpart 225.5, 
but consider recommending a public interest exception where the 
purposes of the Buy American Act are not served, or in order to meet a 
need set forth in 10 U.S.C. 2533. For example, a public interest 
exception may be appropriate--
    (1) If accepting the low domestic offer will involve substantial 
foreign expenditures, or accepting the low foreign offer will involve 
substantial domestic expenditures;
    (2) To ensure access to advanced state-of-the-art commercial 
technology; or
    (3) To maintain the same source of supply for spare and
replacement 
parts (also see paragraph (b)(iii)(B) of this section)--
    (i) For an end item that qualifies as an American good; or
    (ii) In order not to impair intergration of the military and 
commerical industrial base.
    (B) A determination whether to grant a public interest exception 
shall be made after consideration of the factors in 10 U.S.C. 2533--
    (1) At a level above the contracting officer for acquisitions 
valued at less than $100,000;
    (2) By the head of the contracting activity for acquisitions
valued 
at $100,000 or more but less than $1,000,000; or
    (3) By the agency head for acquisitions valued at $1,000,000 or 
more.
    (b)(i) A determination that an article, material, or supply is not 
reasonably available is required where no domestic offer is received
or when domestic offers are insufficient to meet the requirement and
award is to be made on a nonqualifying country end product.
    (ii) Except as provided in FAR 25.103(b)(2)(i), the determination 
must be approved--
    (A) At a level above the contracting officer, if the acquisition
is estimated not to exceed $25,000;
    (B) By the chief of the contracting officer if the acquisition is 
estimated not to exceed $250,000;
    (C) By the head of the contracting activity (HCA) or immediate 
deputy if the acquisition is estimated not to exceed $2 million; or
    (D) By the head of the agency, or designee at a level no lower
than an HCA, if the acquisition is estimated to exceed $2 million.
    (iii) A determination as to whether an article, material, or
supply is reasonably available is not required for--
    (A) End products or components listed in 225.104(a)(iii) or FAR 
25.104(a);
    (B) Acquisitions for spare/replacement parts when the acquisition 
is restricted to the original manufacturer or supplier; or
    (C) Acquisition of foreign drugs by the Defense Supply Center, 
Philadelphia, when the Chief of the Technical Operations Division, 
Directorate of Medical Materiel, determines that only the requested 
foreign drug will fulfill the requirements.
    (iv) Under coordinated acquisition (see Subpart 208.70), the 
determination is the responsibility of the requiring department when 
the requiring department specifies acquisition of a foreign end 
product.
    (c) The cost of a domestic end product is unreasonable if it is
not the low evaluated offer when evaluated under Subpart 225.5.


225.104  Nonavailable articles.

    (a)(i) DoD has determined that the articles, materials, and 
supplies listed in FAR 25.104(a) and in paragraph (a)(iii) of this 
section, when purchased as end items or components, are not mined, 
produced, or manufactured in the United States in sufficient and 
reasonably available commercial quantities of a satisfactory quality. 
Regard these items or components as being of domestic origin when 
incorporated in--
    (A) An end product or construction material manufactured in the 
United States; or
    (B) A qualifying country end product or construction material.
(For construction material, see FAR Subpart 25.2.)
    (ii) Scrap is domestic in origin if generated in, collected in,
and prepared for processing in the United States.
    (iii)(A) Aluminum clad steel wire.
    (B) Sperm oil.


225.170  Acquisition from or through other Government agencies.

    Contracting activities must apply the evaluation procedures in 
subpart 225.5 when using Federal supply schedules.


225.171  Solicitations.

    (a) For oral solicitations, inform prospective vendors that only 
domestic and qualifying country end products are acceptable, except 
nonqualifying country end products are acceptable if--
    (1) The items are excepted either on a blanket or an individual 
basis; or
    (2) The price of the nonqualifying country end product is the low 
offer under the evaluation procedures in subpart 225.5.
    (b) When only domestic end products are acceptable, the 
solicitation must make a statement to that effect.

    6. Section 225.202 is revised to read as follows:


225.202  Exceptions.

    (a)(2) A nonavailability determination is not required for 
construction materials listed in FAR 25.104(a) or in 225.104(a)(iii). 
For other materials, a nonavailability determination must be approved 
at the levels specified in 225.103(b)(ii). Use the estimated value of 
the construction materials to determine the approval level.

    7. Subpart 225.3 is revised to read as follows:

Subpart 225.3--Balance of Payments Program

Sec.
225.302  Policy.
225.304  Procedures.


225.302  Policy.

    (1) DoD implements the Balance of Payments Program using
evaluation factors similar to those which implement the Buy American Act.
The Balance of Payments Program restrictions--
    (i) Apply to acquisitions for foreign military sales;
    (ii) Do not apply to services, except services which primarily 
involve the acquisition of supplies;
    (iii) Do not apply to qualifying country end products;
    (iv) Do not apply to articles, materials, or supplies produced or 
manufactured in Panama when purchased by and for the use of U.S.
forces in Panama; and
    (v) For acquisitions subject to the Trade Agreements Act, do not 
apply to information technology products in Federal Supply Group 70 or 
74 that are substantially transformed in the United States.
    (2)(i) Before solicitation, the determinations required by FAR 
25.303(b) may be made by the following individuals or their immediate 
deputies:

ARMY

Deputy Chief of Staff for Research, Development and Acquisition, 
Headquarters, U.S. Army Material Command
Commander in Chief, U.S. Army Europe and DCSLOG, U.S. Army, Europe
Commander Eighth U.S. Army and Chief of Staff, Eighth U.S. Army
Commander, Corps of Engineers Command
Commander, U.S. Army, Japan
Commander, U.S. Army Medical Research and Development Command
Commander, U.S. Army Forces Command

[[Page 19852]]

Commander, U.S. Army, South

NAVY

Commander-in-Chief, U.S. Naval Forces, Europe
Commander, U.S. Naval Forces, Japan
Commander, U.S. Naval Forces, Philippines
Commander-in-Chief, U.S. Atlantic Fleet
Commander-in-Chief, U.S. Pacific Fleet
Commander, Military Sealift Command
Commandant, U.S. Marine Corps
Commander, Naval Facilities Engineering Command
Commanding General, III Marine Amphibious Force

AIR FORCE

Commander, U.S. Air Forces in Europe
Commander, Pacific Air Forces
Commander, Air Mobility Command
Commander, Air Force Materiel Command
Commander, Air Combat Command
Commander, Air Force Space Command

ADVANCED RESEARCH PROJECTS AGENCY

Director, Contracts Management Office

DEFENSE INFORMATION SYSTEMS AGENCY

Director

DEFENSE LOGISTICS AGENCY

Executive Director, Procurement

NATIONAL IMAGERY AND MAPPING AGENCY

Deputy Director for Acquisition, Installations, and Logistics

DEPARTMENT OF DEFENSE EDUCATION ACTIVITY

Director

    (ii) The authority to make the determinations referred to in 
paragraph (2)(i) of this section may be redelegated below the levels 
specified in that paragraph for acquisitions estimated at 500,000 or 
less in foreign cost.
    (3)(i) This authority is not intended for use in making repetitive 
supply acquisitions or acquisitions of total annual supply
requirements 
of items available in the United States but not available within the 
time required.
    (ii) DoD has determined that requirements for the items on the 
lists at FAR 25.104(a) and at 225.104(a)(iii) can only be filled by a 
foreign end product.
    (4) DoD has determined the following items can only be acquired or 
performed in the country concerned:
    (i) Maintenance and repair of, and acquisition of spare parts for, 
foreign-manufactured vehicles, equipment, machinery, and systems; 
provided, in the case of spare parts, the acquisition is restricted to 
the original manufacturer or its supplier in accordance with DoD 
standardization policy (see DoD Directive 4120.3, Defense 
Standardization and Specification Program).
    (ii) Industrial gases.
    (iii) Brand drugs specified by the Defense Medical Materiel Board.
    (iv) Bulk construction materials: sand, gravel, and other soil 
materials, stone, concrete masonry units, and fired brick.
    (v) Overhaul and repair of vessels, aircraft, and vehicles which--
    (A) Are home-ported/stationed/deployed overseas; and
    (B) Cannot practically return to the United States or to U.S. 
operated repair facilities.
    (vi) Ready-mixed asphalt and portland cement concrete, provided 
that foreign cost is estimated at not more than $100,000.
    (5)(i) Purchase of materials, equipment, and supplies for 
construction overseas shall generally be the responsibility of the 
contractor performing the work; but where necessary to comply with 
foreign law, to avoid taxation, or to obtain other advantages,
consider 
direct purchase. Consider savings that may be obtained by exemptions 
from import and other taxes and, to the extent economical, take 
advantage of tax exemptions available under existing agreements.
    (ii) When purchase of materials is the responsibility of the 
construction contractor, the evaluation differential is determined 
through the estimating process and applied before solicitation.


225.304  Procedures.

    (a) Solicitation of offers. When soliciting orally, advise vendors 
that only domestic and qualifying country end products are acceptable 
unless an exception applies or the price of a domestic end product is 
unreasonable.
    (b) Evaluation of offers.
    (i) Use the evaluation procedures in subpart 225.5 instead of the 
evaluation procedures in FAR subpart 25.5. Treatment of duty may
differ 
when delivery is overseas.
    (A) Duty may not be applicable to nonqualifying country offers.
    (B) The U.S. Government cannot guarantee the exemption of duty for 
components or end products imported into foreign countries.
    (C) Foreign governments may impose duties, and offers including 
such duties must be evaluated as offered.
    (ii) Where the evaluation procedures in Subpart 225.5 result in
the 
award of nonqualifying country end product, the acquisition of
domestic 
end products is unreasonable or inconsistent with public interests. If 
no domestic end product offers are received, the determination in FAR 
25.303(b)(1) is not required.

    8. Subpart 225.4 is revised to read as follows:

Subpart 225.4--Trade Agreements

Sec.
225.401  Exceptions.
225.401-70  Products subject to trade agreement acts.
225.402  General.
225.403  Trade Agreements Act.
225.408  Procedures.


225.401  Exceptions.

    (b)(i) If a department or agency considers an individual 
acquisition of a product to be indispensable for national security or 
national defense purposes and appropriate for exclusion from the 
provisions of FAR subpart 25.4, it may submit a request with
supporting 
rationale to the Director of Defense Procurement (USD (AT&L) DP).
    (ii) The following national security/national defense exceptions
do not require approval by USD (AT&L) DP:
    (A) Where purchase from foreign sources is restricted by the DoD 
annual appropriations or authorization acts (see subpart 225.70) or by 
the establishment of required sources of supplies and services under 
FAR part 8.
    (B) Where competition from foreign sources is restricted under the 
authority of FAR 6.302-3(a)(2)(i). Provide USD (AT&L) DP a copy of the 
justification for restricting competition (see FAR 6.303-1(d)).
    (C) Where competition from foreign sources is restricted under 
subpart 225.71.


225.401-70  Products subject to trade agreement acts.

    Foreign end products subject to the Trade Agreements Act and NAFTA 
are those in the following Federal supply groups (FSG). If a product
is not in one of the listed groups, the Trade Agreements Act and NAFTA do 
not apply. The definition of Caribbean Basin country end products in 
FAR 25.003 excludes those end products that are not eligible for duty-
free treatment under 19 U.S.C. 2703(b). However, 225.003 expands the 
definition of Caribbean Basin country end products to include
petroleum and any product derived from petroleum. The list of products
has been annotated to indicate those products that are eligible for designated 
and NAFTA countries, but are not presently eligible for Caribbean
Basin countries.

----------------------------------------------------------------------
              FSG                          Category/description
----------------------------------------------------------------------
22                               Railway equipment
23                               Motor vehicles, trailers, and cycles
                                  (except 2350 and buses under 2310)
24                               Tractors
25                               Vehicular equipment components
26                               Tires and tubes

[[Page 19853]]


29                               Engine accessories
30                               Mechanical power transmission equipment
32                               Woodworking machinery and equipment
34                               Metalworking machinery
35                               Service and trade equipment
36                               Special industry machinery (except 3690)
37                               Agricultural machinery and equipment
38                               Construction, mining, excavating, and
                                  highway maintenance equipment
39                               Materials handling equipment
40                               Rope, cable, chain and fittings
41                               Refrigeration and air conditioning
                                  equipment
42                               Fire fighting, rescue and safety
                                  equipment
43                               Pumps and compressors
44                               Furnace, steam plant and drying
                                  equipment (except 4470)
45                               Plumbing, heating, and sanitation equipment
46                               Water purification and sewage treatment
                                  equipment
47                               Piping, tubing, hose, and fitting
48                               Valves
49                               Maintenance and repair shop equipment
                                  (except 4920-4927, 4931-4935, 4960)
53                               Hardware and abrasives
54                               Prefabricated structures and
                                  scaffolding
55                               Lumber, millwork, plywood, and veneer
56                               Construction and building materials
61                               Electric wire, and power and
                                  distribution equipment
62                               Lighting fixtures and lamps
63                               Alarm and signal systems
65                               Medical, dental, and veterinary
                                  equipment and supplies
66                               Instruments and laboratory equipment
                                  (except aircraft clocks under 6645)--
                                  See FAR 25.003 exclusion of certain
                                  watches and watch parts for certain
                                  Caribbean Basin countries
67                               Photographic equipment
68                               Chemicals and chemical products
69                               Training aids and devices
70                               General purpose ADPE, software,
                                  supplies, and support equipment
71                               Furniture
72                               Household and commercial furnishings
                                  and appliances
73                               Food preparation and serving equipment
74                               Office machines, visible record
                                  equipment and ADP equipment
75                               Office supplies and devices
76                               Books, maps, and other publications
77                               Musical instruments, phonographs, and
                                  home type radios
78                               Recreational and athletic equipment
79                               Cleaning equipment and supplies
80                               Brushes, paints, sealers, and adhesives
81                               Containers, packaging and packing
                                  supplies (except 8140)
84                               Luggage (only 8460)--See FAR 25.003 for
                                  exclusion of luggage for Caribbean
                                  Basin countries
85                               Toiletries
87                               Agricultural supplies
88                               Live animals
91                               Fuels, oils, and waxes
93                               Nonmetallic fabricated materials
94                               Nonmetallic crude materials
96                               Ores, minerals, and their primary
                                  products
99                               Miscellaneous
----------------------------------------------------------------------

225.402  General.

    (1) To estimate the value of the acquisition, use the total 
estimated value of end products subject to trade agreement acts (see 
225.401-70).
    (2) See subpart 225.5 for evaluation of eligible products and U.S. 
made end products, except when acquiring information technology end 
products in Federal Supply Group 70 or 74 that are subject to the
Trade Agreements Act.


225.403  Trade Agreements Act.

    (c)(i) Except as provided in paragraphs (c)(ii) and (iii) of this 
section, do not purchase nondesignated country end products subject to 
the Trade Agreements Act unless they are NAFTA, Caribbean Basin, or 
qualifying country end products (see 225.872-1).
    (ii) The prohibition in paragraph (c)(i) of this section does not 
apply when the contracting officer determines that offers of U.S.
made, 
qualifying country, or eligible products from responsive, responsible 
offerors are either--
    (A) Not received; or
    (B) Insufficient to fill the Government's requirements.


In these cases, accept all responsive, responsible offers of U.S.
made, qualifying country, and eligible products before accepting any other 
offers.
    (iii) National interest waivers under section 302(b)(2) of the 
Trade Agreements Act are approved on a case-by-case basis. Except as 
delegated in paragraphs (c)(iii)(A) and (B) of this section, a request 
for a national interest waiver shall include supporting rationale and 
be submitted under department/agency procedures to the Director of 
Defense Procurement.
    (A) The head of the contracting activity may approve a national 
interest waiver for a purchase by an overseas purchasing activity of 
products critical to the support of U.S. forces stationed abroad. The 
waiver must be supported by a written statement from the requiring 
activity stating that the requirement is critical for the support of 
U.S. forces stationed abroad.
    (B) The Commander, Defense Energy Support Center, may approve 
national interest waivers for purchases of fuel for use by U.S. forces 
overseas.


Sec. 225.408  Procedures.

    (a)(4) The requirements of FAR 25.408(a)(4) do not apply to 
offshore acquisitions or to Defense Energy Support Center post, camp, 
or station overseas requirements.

    9. Subpart 225.5 is added to read as follows:

Subpart 225.5--Evaluating Foreign Offers--Supply Contracts

Sec.
225.502   Application.
225.504   Evaluation examples.


Sec. 225.502  Application.

    Use the following procedures instead of those in FAR 25.502. These 
procedures do not apply to acquisitions of information technology end 
products in Federal Supply Group 70 or 74 that are subject to the
Trade 
Agreements Act.
    (1) Treat offers of eligible end products under acquisitions 
subject to the Trade Agreements Act or NAFTA as if they were
qualifying 
country offers. As used in this section, the term ``nonqualifying 
country offer'' may also apply to an offer that is not an eligible 
offer under a trade agreement (see 225.504(4)).
    (2) Except as provided in paragraph (3) of this section, evaluate 
offers by adding a 50 percent factor to the price (including duty) of 
each nonqualifying country offer (see 225.504 (1)).
    (i) Nonqualifying country offers include duty in the offered
price. 
When applying the factor, evaluate based on the inclusion of duty, 
whether or not duty is to be exempted. If award is made on the 
nonqualifying country offer and duty is to be exempted through 
inclusion of the clause at FAR 52.225-8, Duty-Free Entry, award at the 
offered price minus the amount of duty identified in the provision at 
252.225-7003, Information for Duty-Free Entry Evaluation (see 
225.504(1)(ii)).
    (ii) When a nonqualifying country offer includes more than one
line 
item, apply the 50 percent factor--
    (A) On an item-by-item basis; or
    (B) On a group of items, if the solicitation specifically provides 
for award on a group basis.
    (3) When application of the factor would not result in the award
of 
a domestic end product, i.e., when no domestic offers are received
(see 
225.504(3)) or when a qualifying country offer is lower than the 
domestic offer (see 225.504(2)), evaluate nonqualifying country offers 
without the 50 percent factor.
    (i) If duty is to be exempted through inclusion of the clause at 
FAR 52.225-8, Duty-Free Entry, evaluate the

[[Page 19854]]

nonqualifying country offer exclusive of duty by reducing the offered 
price by the amount of duty identified in the clause at 252.225-7003, 
Information for Duty-Free Entry Evaluation (see 225.504(2)(ii) and 
(3)(ii)). If award is made on the nonqualifying country offer, award
at 
the offered price minus duty.
    (ii) If duty is not to be exempted, evaluate the nonqualifying 
country offer inclusive of duty (see 225.504(2)(i) and (3)(i)).
    (4) If these evaluation procedures result in a tie between a 
nonqualifying country offer and a domestic offer, make award on the 
domestic offer.
    (5)(i) There are two tests that must be met to determine whether a 
manufactured item is a domestic end product--
    (A) The end product must have been manufactured in the United 
States; and
    (B) The cost of its U.S. and qualifying country components must 
exceed 50 percent of the cost of all of its components. This test is 
applied to end products only, and not to individual components.
    (ii) Because of the component test, the definition of ``domestic 
end production'' is more restrictive than the definition for--
    (A) ``U.S. made end product'' under trade agreements;
    (B) ``Domestically produced or manufactured products'' under small 
business set-asides or small business reservations; and
    (C) Products of small businesses under FAR Part 19.
    (iii) If an offer is for a ``U.S. made end product,'' 
``domestically produced end product,'' or the product of a small 
business, but is not a ``domestic end product'' as defined in the 
clause at 252.225-7001, Buy American Act and Balance of Payments 
Program, treat the offer as a nonqualifying country offer (see 
225.504(4)).


255.504  Evaluation examples.

    (1) Example 1.
    (i) Alternate I: Duty Not Exempted for Nonqualifying Country 
Offers:

    Nonqualifying Country Offer (including $100 duty)........    $6,000
    Domestic Offer...........................................     8,900
    Qualifying Country Offer.................................9,100



Award on Domestic Offer. The 50% evaluation factor is added to the 
nonqualifying country offer, inclusive of duty, yielding an evaluated 
price of $9,000.
    (ii) Alternate II: Duty Exempted:

    Nonqualifying Country Offer (including $,1000 duty.......  $600,000
    Domestic Offer...........................................   910,000
    Qualifying Country Offer................................. 920,000



Award on Nonqualifying Country Offer. The addition of the evaluation 
factor yields an evaluated price of $900,000. Since duty is being 
exempted for nonqualifying country offers, the duty is subtracted from 
the offered price, which is awarded at $599,000.
    (2) Example 2.
    (i) Alternate I: Duty Not Exempted for Nonqualifying Country 
Offers:

    Nonqualifying Country Offer (including $100 duty.........    $6,000
    Domestic Offer...........................................     8,500
    Qualifying Country Offer.................................7,800



Award on Nonqualifying Country Offer. Since the qualifying country 
offer is lower than the domestic offer, the nonqualifying country
offer is evaluated without the factor. Since duty is not being exempted for 
nonqualifying country offers, the offer is evaluated and award is made 
at the price inclusive of duty ($6,000).
    (ii) Alternate II: Duty Exempted:

    Nonqualifying Country Offer (including $1,000 duty.......  $880,500
    Domestic Offer...........................................   950,000
    Qualifying Country Offer...............................880,000



Award on Nonqualifying Country Offer. Again, the qualifying country 
offer is lower than the domestic offer. The nonqualifying country
offer is, therefore, evaluated without the factor. Since duty is being 
exempted for nonqualifying country offers, the duty identified by the 
offeror is subtracted from the offered price, which is evaluated and 
awarded at $879,500.
    (3) Example 3.
    (i) Alternate I: Duty Not Exempted for Nonqualifying Country 
Offers:

    Nonqualifying Country Offer (including $150 duty.........    $9,600
    Qualifying Country Offer.................................     9,500



Award on Qualifying Country Offer. Since no domestic offers are 
received, the nonqualifying country offer is evaluated without the 
evaluation factor. Since duty is not being exempted and would be paid 
by the Government, the nonqualifying country offer is evaluated 
inclusive of duty.
    (ii) Alternate II: Duty Exempted:

    Nonqualifying Country Offer (including $1,000 duty.......  $880,500
    Qualifying Country Offer.................................   880,000



Award on Nonqualifying Country Offer. Since no domestic offers are 
received, the nonqualifying country offer is evaluated without the 
evaluation factor. Since duty is being exempted, duty is subtracted 
from the nonqualifying country offer, which is evaluated and awarded
at $879,500.
    (4) Example 4.
    (i) Alternate I:

    Offer of U.S. Made End Product which is not a Domestic     
     Offer...................................................    $800,000
    Domestic Offer...........................................   820,000
    Eligible Product.........................................   830,000



Award on Domestic End Product. U.S. made end products which are not 
also domestic end products are evaluated the same as nonqualifying 
country end products. Adding the 50% evaluation factor yields an 
evaluated price of $1,200,000.
    (ii) Alternate II:

    Offer of U.S. Made End Product which is not a Domestic     
     Offer...................................................    $800,000
    Eligible Product.........................................   820,000
    Domestic Offer...........................................  830,000



Award on U.S. Made End Product. Adding the 50% evaluation factor to
the U.S. made end product would not result in the award of a domestic end 
product since the eligible product, which is evaluated the same as a 
qualifying country offer, is lower. All offers are evaluated without 
the factor.

Subpart 225.6--[Removed]

    10. Subpart 225.6 is removed.

    11. The heading of Subpart 225.7 is revised to read as follows:

Subpart 225.7--Prohibited Sources


225.702  [Redesignated as 225.701]

    12. Section 225.702 is redesignated as section 225.701.

    13. The heading of Subpart 225.8 is revised to read as follows:

Subpart 225.8--Other International Agreements and Coordination

    14. The heading of section 225.801 is revised to read as follows:


225.801  General.

    15. Subpart 225.9 is revised to read as follows:

[[Page 19855]]

Subpart 225.9--Customs and Duties

Sec.
225.901   Policy.
225.902   Procedures.
225.903   Exempted supplies


225.901  Policy.

    (1) Section XXII, Chapter 98, Subchapter VIII, Item 9808.00.30 of 
the Harmonized Tariff Schedule of the United States authorizes duty-
free importation of defense supplies.
    (2) 19 U.S.C. 1309 authorizes duty-free importation of certain 
supplies (not including equipment) for vessels or aircraft operated by 
the United States (see FAR 25.903(b)).
    (3) Unless the supplies are entitled to duty-free treatment under
a special category in the Harmonized Tariff Schedule of the United
States (e.g., the Caribbean Basin Economic Recovery Act or NAFTA), or
unless the supplies already have entered into the customs territory of the 
United States and duty already has been paid, DoD will issue duty-free 
entry certificates for--
    (i) Qualifying country supplies (end products and components) on 
all defense contracts;
    (ii) Eligible products (end products but not components) on
defense contracts subject to the Trade Agreement Act or NAFTA; and
    (iii) Other foreign supplies, if there is reasonable assurance
that the administrative and other costs of processing and controlling the 
certificates will not exceed the amount of duty that would be paid.


225.902  Procedures.

    (1) General.
    (i) Preaward.
    (A) Unless duty was paid prior to submission of the offer, an
offer of domestic end products with no nonqualifying country components,
an offer of qualifying country end products, or an offer of eligible 
products under the Trade Agreements Act or NAFTA, should not include 
duty.
    (B) Offers of U.S. made end products with nonqualifying country 
components, and offers that are neither qualifying country offers nor 
offers of eligible products under a trade agreement, should contain 
applicable duty.
    (c) Exclude from the evaluation of domestic end products, or 
information technology end products in Federal Supply Group 70 or 74
in acquisitions subject to the Trade Agreements Act, any duty for 
nonqualifying country components listed in the provision at 252.225-
7003, Information for Duty-Free Entry Evaluation, for which duty-free 
entry will be granted.
    (D) Except for acquisitions of information technology end products 
in Federal Supply Group 70 or 74 subject to the Trade Agreements Act, 
apply the evaluation procedures for the Buy American Act in accordance 
with 225.502.
    (ii) Award. Exclude duty from the contract price for supplies (end 
products or components) that are to be accorded duty-free entry. If 
duty-free entry is granted to the successful offeror in accordance
with the clause at FAR 52.225-8, Duty-Free Entry, and the clause at
252.225-7003, Information for Duty-Free Entry Evaluation, request that 
the offeror provide the list of foreign supplies that are subject to such 
duty-free entry, and list such supplies in the contract clause at 
252.225-7008, Supplies to be Accorded Duty-Free Entry.
    (iii) Postaward.
    (A) Issue duty-free entry certificates for all qualifying country 
supplies in accordance with the policy at 225.901(3)(i) and the clause 
at 252.225-7009, Duty-Free Entry--Qualifying Country Supplies (End 
Products and Components); for all eligible products subject to trade 
agreements in accordance with the policy at 225.901(3)(ii) and the 
clause at 252.225-7037, Duty-Free Entry--Eligible End Products; and
for other foreign supplies in accordance with the policy at
225.901(3)(iii) on contracts containing the clause at FAR 52.225-8,
Duty-Free Entry; or (following to the extent practicable the procedures
required by the clause at FAR 52.225-8, Duty-Free Entry, and the
clause at 252.225-7010, Duty-Free Entry--Additional Provisions) on other
contracts--
    (1) That fall within one of the following categories:
    (i) Direct purchases of foreign supplies under a DoD prime 
contract, whether title passes at point of origin or at destination in 
the United States, provided the contract states that the final price
is exclusive of duty.
    (ii) Purchases of foreign supplies by a domestic prime contractor 
under a cost-reimbursement type contract or by a cost-reimbursement 
type subcontractor (where no fixed-price prime or fixed-price 
subcontract intervenes between the purchaser and the Government), 
whether title passes at point of origin or at destination in the
United States. If a fixed-price prime or fixed-price subcontract intervenes, 
follow the criteria stated in paragraph (a)(iii)(A)(1)(iii) of this 
section.
    (iii) Purchases of foreign supplies by a fixed-price domestic
prime contractor, a fixed-price subcontractor, or a cost-type subcontractor 
where a fixed-price prime contract or fixed-price subcontract 
intervenes, provided the fixed-price prime contract and, where 
applicable, fixed-price subcontract prices are, or are amended to be, 
exclusive of duty;
    (2) For which the supplies so purchased will be delivered to the 
Government or incorporated in Government-owned property or in an end 
product to be furnished to the Government, and for which duty will be 
paid if such supplies or any portion are used for other than the 
performance of the Government contract or disposed of other than for 
the benefit of the Government in accordance with the contract terms; 
and
    (3) For which such acquisition abroad is authorized by the terms
of the contract or subcontract or by the contracting officer.
    (B) Under a fixed-price contract, negotiate an equitable reduction 
in the contract price if duty-free entry is granted for any 
nonqualifying country component not listed in the Schedule as duty-
free, even if contract award was based on furnishing a domestic 
component or a qualifying country component.
    (2) Formal entry and release.
    (i) The administrative contracting officer must--
    (A) Ensure that prime contractors are aware of and understand any 
Duty-Free Entry clause requirements. Contractors should understand
that failure by them or their subcontractors to include the data required
by the clause will result in treatment of the shipment as without benefit 
of free entry under Section XXII, Chapter 98, Subchapter VIII, Item 
9808.00.30 of the Harmonized Tariff Schedule of the United States.
    (B) Upon receipt of the required notice of purchase of foreign 
supplies from the contractor or any tier subcontractor--
    (1) Verify the duty-free entitlement of goods entering under the 
contract; and
    (2) Review the prime contract to ensure that performance of the 
contract requires the foreign supplies (quantity and price) identified 
in the notice.
    (C) Upon receipt of notification from the contractor that it is 
placing a foreign purchase that was not identified at the time of 
contract award--
    (1) Determine whether a reduction in the contract price is
required under the clause at FAR 52.225-8, Duty-Free Entry;
    (2) If so, make an equitable adjustment in the contract price, 
unless the procuring contracting officer waives this adjustment;
    (3) Determine the price of the foreign supplies exclusive of duty, 
and advise
[[Page 19856]]

the contractor that that amount will be the maximum dollar value of 
supplies for which duty-free entry certificates will be issued.
    (D) Within 20 days after receiving the notification of purchase of 
foreign supplies, forward the following information in the format 
indicated to the Commander, DCMC New York, ATTN: Customs Team, DCMDE-
GNIC, 207 New York Avenue, Staten Island, NY 10305-5013:

We have received a contractor notification of the purchase of foreign 
supplies. I have verified that foreign supplies are required for the 
performance of the contract. If required, the prime contract price has 
been or will be adjusted.
    Prime Contractor Name and Address:
    Prime Contractor CAGE Code:
    Prime Contract Number plus Delivery Order Number, if applicable:
    Total Dollar Value of the Prime Contract or Delivery Order:
    Expiration Date of the Prime Contract or Delivery Order:
    Foreign Supplier Name and Address:
    Number of Subcontract/Purchase Order for Foreign Supplies:
    Total Dollar Value of the Subcontract for Foreign Supplies:
    Expiration Date of the Subcontract for Foreign Supplies:
    CAO Activity Address Number:
    ACO Name and Telephone Number:
    ACO Code:
    Signature:
    Title:

    (E) If a contract modification results in a change to any data 
verifying duty-free entitlement previously furnished, forward a
revised notification including the changed data to DCMC New York.
    (ii) The responsibility for issuing duty-free entry certificates 
for foreign supplies purchased under a DoD contract or subcontract 
rests with the Customs Team, DCMDE-GNIC, DCMC New York. Upon receipt
of import documentation for incoming shipments from the contractor, its 
agent, or the U.S. Customs Service, DCMC New York will verify the
duty-free entitlement and execute the duty-free entry certificate.
    (iii) Upon arrival of foreign supplies at ports of entry, the 
consignee, generally the contractor or its agent (import broker) for 
shipments to other than a military installation, will file U.S.
Customs Form 7501, 7501A, or 7506, with the District Director of Customs.
    (3) Immediate entry and release. Importations made in the name of
a DoD military facility or being shipped directly to a military facility 
are entitled to release under the immediate delivery procedure.
    (i) A DoD immediate delivery application has been approved and is 
on file at Customs Headquarters.
    (ii) The application is for an indefinite period and is good for 
all Customs districts, areas, and ports.


225.903  Exempted supplies.

    (b)(i) The term ``supplies''--
    (A) Includes articles known as ``stores,'' such as food,
medicines, and toiletries, as well as all consumable articles necessary
and appropriate for the propulsion, operation, and maintenance of the 
vessel or aircraft, such as fuel, oil, gasoline, grease, paint, 
cleansing compounds, solvents, wiping rags, and polishes.
    (B) Does not include portable articles necessary and appropriate 
for the navigation, operation, or maintenance of vessel or aircraft
and for the comfort and safety of the persons on board, such as rope,
bolts and nuts, bedding, china and cutlery, which are included in the term 
``equipment.''
    (ii) The duty-free certificate shall be printed, stamped, or typed 
on the face of Customs Form 7501, or attached, and shall be executed
by a duly designated officer or civilian official of the appropriate 
department or agency in the following form:

 
(Date)--------------------------------------------------------------

I certify that the acquisition of this material constituted a 
purchase of supplies by the United States for vessels or aircraft 
operated by the United States, and is admissible free of duty 
pursuant to 19 U.S.C. 1309.

 
(Name)--------------------------------------------------------------
 
(Title)-------------------------------------------------------------
 
(Organization-------------------------------------------------------

    16. Subpart 225.10 is added to read as follows:

Subpart 225.10--Additional Foreign Acquisition Regulations

Sec.
225.1070  Clause deviations in overseas contracts.


225.1070  Clause deviations in overseas contracts.

    See 201.403(2) for approval authority for clause deviations in 
overseas contracts with governments of North Atlantic Treaty 
Organization (NATO) countries or other allies or with United Nations
or NATO organizations.

    17. Subpart 225.11 is added to read as follows:

Subpart 225.11--Solicitation Provisions and Contract Clauses

Sec.
225.1101   Acquisition of supplies.
225.1103   Other provisions and clauses.


225.1101  Acquisition of supplies.

    (1) Use the provision at 252.225-7000, Buy American Act--Balance
of Payments Program Certificate, instead of the provision at FAR
52.225-2, Buy American Act--Balance of Payments Program Certificate. Use the 
provision in any solicitation that includes the clause at
252.225-7001, Buy American Act and Balance of Payments Program.
    (2) Use the clause at 252.225-7001, Buy American Act and Balance
of Payments Program, instead of the clause at FAR 52.225-1, Buy American 
Act--Balance of Payments Program--Supplies, in solicitations and 
contracts for supplies or services that require the furnishing of 
supplies.
    (i) Do not use the clause if an exception to the Buy American Act 
or Balance of Payments Program is known to apply or if using the
clause at 252.225-7007, Buy American Act--Trade Agreements--Balance of 
Payments Program; 252.225-7021, Trade Agreements; or 252.225-7036, Buy 
American Act--North American Free Trade Agreement Implementation Act--
Balance of Payments Program.
    (ii) The clause need not be used if nonqualifying country end 
products are ineligible for award, including--
    (A) End products restricted to domestic or domestic and qualifying 
country sources under appropriations and authorization act
restrictions (see subpart 225.70);
    (B) End products restricted to domestic or domestic and Canadian 
sources (see subpart 225.71); and
    (C) End products restricted under the authority of FAR 6.302-3.
    (iii) The clause may be used if the contracting officer
anticipates a waiver of the restriction in paragraph (2)(ii)(A) or (B) of this 
section.
    (3) Use the clause at 252.225-7002, Qualifying Country Sources as 
Subcontractors, in solicitations and contracts that include one of the 
following clauses:
    (i) 252.225-7001, Buy American Act and Balance of Payments
Program.
    (ii) 252.225-7007, Buy American Act--Trade Agreements--Balance of 
Payments Program.
    (iii) 252.225-7021, Trade Agreements.
    (iv) 252.225-7036, Buy American Act--North American Free Trade 
Agreement Implementation Act--Balance of Payment Program.
    (4) Use the provision at 252.225-7003, Information for Duty-Free 
Entry Evaluation, in solicitations that include the clause at FAR 
52.225-8, Duty-Free Entry. Use the provision with its Alternate I when 
the clause at 252.225-7021, Trade Agreements, is used.
    (5) Use the provision at 252.225-7006, Buy American Act--Trade 
Agreements--Balance of Payments Program Certificate, instead of the

[[Page 19857]]

provision at FAR 52.225-6, Trade Agreements Certificate, in all 
solicitations that include the clause at 252.225-7007, Buy American 
Act--Trade Agreements--Balance of Payments Program.
    (6) Except as provided in paragraph (11) of this section, use the 
clause at 252.225-7007, Buy American Act--Trade Agreements--Balance of 
Payments Program, instead of the clause at FAR 52.225-5, Trade 
Agreements. The clause need not be used where purchase from foreign 
sources is restricted (see 225.401(b)(ii)). The clause may be used 
where the contracting officer anticipates a waiver of the restriction.
    (7) Use the clause at 252.225-7008, Supplies to be Accorded Duty-
Free Entry, in solicitations and contracts that provide for duty-free 
entry and that include the clause at FAR 52.225-8, Duty-Free Entry.
    (8) Use the clause at 252.225-7009, Duty-Free Entry--Qualifying 
Country Supplies (End Products and Components), in solicitations and 
contracts for supplies and in solicitations and contracts for supplies 
for exclusive use outside the United States.
    (9) Use the clause at 252.225-7010, Duty-Free Entry--Additional 
Provisions, in solicitations and contracts that include the clause at 
FAR 52.225-8, Duty-Free Entry.
    (10) Use the provision at 252.225-7020, Trade Agreements 
Certificate, in all solicitations that include the clause at 252.225-
7021, Trade Agreements.
    (11) Use the clause at 252.225-7021, Trade Agreements, instead of 
the clause at FAR 52.225-5, Trade Agreements, when acquiring 
information technology products in Federal Supply Group 70 or 74.
    (12) Use the provision at 252.225-7035, Buy American Act--North 
American Free Trade Agreement Implementation Act--Balance of Payments 
Program Certificate, instead of the provision at FAR 52.225-4, Buy 
American Act--North American Free Trade Agreement--Israeli Trade Act--
Balance of Payments Program Certificate, in all solicitations that 
include the clause at 252.225-7036, Buy American Act-North American 
Free Trade Agreement Implementation Act--Balance of Payments Program.
    (i) Use the basic provision when the basic clause at 252.225-7036 
is used.
    (ii) Use the provision with its Alternate I when the clause at 
252.225-7036 is used with its Alternate I.
    (13) Use the clause at 252.225-7036, Buy American Act--North 
American Free Trade Agreement Implementation Act--Balance of Payments 
Program, instead of the clause at FAR 52.225-3, Buy American
Act--North American Free Trade Agreement--Israeli Trade Act--
Balance of Payments Program. The clause need not be used where
purchase from foreign sources is restricted (see 225.401 (b)(ii)). The clause
may be used where the contracting officer anticipates a waiver of the restriction.
    (i)(A) Use the clause in all solicitations and contracts for the 
items listed at 225.401-70, when the estimated value is $53,150 or
more and the Trade Agreements Act does not apply. Include the clause in 
solicitations for multiple line items if any line item is subject to 
NAFTA.
    (B) Use the clause with its Alternate I when the estimated value
is between $25,000 and $53,150.
    (ii) Application of the procedures in 225.402 and the acquisition 
of noneligible and eligible products under the same solicitation may 
result in the application of the North American Free Trade Agreement 
Implementation Act to only some of the items solicited. In such case, 
indicate in the Schedule those items covered by the Act.
    (14) Use the clause at 252.225-7037, Duty-Free Entry--Eligible End 
Products, in solicitations and contracts for supplies and services
when the clause at 252.225-7007, Buy American Act--Trade
Agreements--Balance of Payments Program; 252.225-7021, Trade Agreements;
or 252.225-7036, Buy American Act--North American Free Trade Agreement
Implementation Act--Balance of Payments Program, is used.


225.1103  Other provisions and clauses.

    (1) In order to allow accurate reporting, by cognizant accounting 
and disbursing officers, of foreign and domestic expenditures, use the 
clause at 252.225-7005, Identification of Expenditures in the United 
States, in all negotiated contracts over $25,000 where--
    (i) For supply contracts, the contract requires end products 
manufactured or produced in the United States; and
    (A) The contractor is a foreign concern; or
    (B) The contractor is a domestic concern and the Government will 
take title outside the United States.
    (ii) For contracts for construction, repair, and maintenance of 
real property, or services to be performed outside the United States--
    (A) The contractor is a domestic concern; or
    (B) The contractor is a foreign concern and the contract requires 
acquisition of materials, equipment, or services from U.S. sources.
    (2) Use the clause at 252.225-7041, Correspondence in English, in 
solicitations and contracts when contract performance will be wholly
or in part in a foreign country.
    (3) Use the clause at 252.225-7042, Authorization to Perform, in 
solicitations and contracts when contract performance will be wholly
or in part in a foreign country.

PART 242--CONTRACT ADMINISTRATION AND AUDIT SERVICES

    18. Section 242.302 is amended by revising paragraph (a)(19) to 
read as follows:


242.302  Contract administration functions.

    (a) * * *
    (19) Also negotiate and issue contract modifications reducing 
contract prices in connection with the provisions of paragraph (c) of 
the clause at FAR 52.225-8, Duty-Free Entry.
* * * * *

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES


252.225-7000  [Amended]

    19. Section 252.225-7000 is amended in the introductory text by 
removing ``225.109(a)'' and adding in its place ``225.1101(1)''.


225.225-7001  [Amended]

    20. Section 252.225-7001 is amended in the introductory text by 
removing ``225.109(d)'' and adding in its place ``225.1101(2)''.


252.225-7002  [Amended]

    21. Section 252.225-7002 is amended in the introductory text by 
removing ``225.109-70(a)'' and adding in its place ``225.1101(3)''.


252.225-7003  [Amended]

    22. Section 252.225-7003 is amended in the introductory text by 
removing ``225.605-70(d)'' and adding in its place ``225.1101(4)'';
and 
in Alternate I introductory text by removing ``225.605-70(d)'' and 
adding in its place ``225.1101(4)''.


252.225-7005  [Amended]

    23. Section 252.225-7005 is amended in the introductory text by 
removing ``225.305-70'' and adding in its place ``225.1103(1)''.


252.225-7006  [Amended]

    24. Section 252.225-7006 is amended in the introductory text by 
removing

[[Page 19858]]

``225.408(a)(i)'' and adding in its place ``225.1101(5)''.


252.225-7007  [Amended]

    25. Section 252.225-7007 is amended in the introductory text by 
removing ``225.408(a)(ii)'' and adding in its place ``225.1101(6)''.


252.225-7008  [Amended]

    26. Section 252.225-7008 is amended in the introductory text by 
removing ``225.605-70(e)'' and adding in its place ``225.1101(7)''.


252.225-7009  [Amended]

    27. Section 252.225-7009 is amended in the introductory text by 
removing ``225.605-70(a)'' and adding in its place ``225.1101(8)''.


252.225-7010  [Amended]

    28. Section 252.225-7010 is amended in the introductory text by 
removing ``225.605-70(c)'' and adding in its place ``225.1101(9)''.


252.225-7020  [Amended]

    29. Section 252.225-7020 is amended in the introductory text by 
removing ``225.408(a)(iii)'' and adding in its place ``225.1101(10)''.


252.225-7021  [Amended]

    30. Section 252.225-7021 is amended in the introductory text by 
removing ``225.408(a)(iv)'' and adding in its place ``225.1101(11)''.


252.225-7035  [Amended]

    31. Section 252.225-7035 is amended in the introductory text by 
removing ``225.408(a)(v)'' and adding in its place ``225.1101(12)''; 
and in Alternate I by removing ``225.408(a)(v)(B)(2)'' and adding in 
its place ``225.1101(12)(ii)''.


252.225-7036  [Amended]

    32. Section 252.225-7036 is amended in the introductory text by 
removing ``225.408(a)(vi)'' and adding in its place ``225.1101(13)''; 
and in Alternate I introductory text by removing 
``225.408(a)(vi)(B)(2)'' and adding in its place 
``225.1101(13)(i)(B)''.


252.225-7037  [Amended]

    33. Section 252.225-7037 is amended in the introductory text by 
removing ``225.605-70(b)'' and adding in its place ``225.1101(14)''.


252.225-7041  [Amended]

    34. Section 252.225-7041 is amended in the introductory text by 
removing ``225.971'' and adding in its place ``225.1103(2)''.


252.225-7042  [Amended]

    35. Section 252.225-7042 is amended in the introductory text by 
removing ``225.97'' and adding in its place ``225.1103(3)''.

[FR Doc. 00-9087 Filed 4-12-00; 8:45 am]
BILLING CODE 5000-04-M