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Barry McVay's FEDERAL CONTRACTS DISPATCH

DATE: December 13, 2000

FROM: Barry McVay, CPCM

SUBJECT: Defense Federal Acquisition Regulation Supplement (DFARS); Polyacrylonitrile (PAN) Carbon Fiber

SOURCE: Federal Register, December 13, 2000, Vol. 65, No. 240, page 77832

AGENCIES: Department of Defense (DOD)

ACTION: Final Rule

SYNOPSIS: DOD is amending DFARS 225.7103-1, Policy, and DFARS 225.7103-3, Contract Clause, to phase out by May 31, 2005, the restrictions on the acquisition of polyacrylonitrile (PAN) carbon fiber from foreign sources.

EDITOR'S NOTE: For more on the proposed rule, see the July 3, 2000, FEDERAL CONTRACTS DISPATCH "Defense Federal Acquisition Regulation Supplement (DFARS); Polyacrylonitrile (PAN) Carbon Fiber."

EFFECTIVE DATE: December 13, 2000.

FOR FURTHER INFORMATION CONTACT: Ms. Amy Williams, Defense Acquisition Regulations Council, OUSD (AT&L) DP (DAR), IMD 3C132, 3062 Defense Pentagon, Washington, DC 20301-3062; 703-602-0288; fax: 703-602-0350.

SUPPLEMENTAL INFORMATION: DFARS 225.7103-1 required that "all new major systems must use U.S. or Canadian manufacturers or producers for all PAN carbon fiber requirements." DOD conducted a review of this restriction by evaluating DOD applications for PAN carbon fiber, the existence of key domestic and foreign PAN fiber suppliers, supply and demand market information, and potential national security issues. As a result of the review, DOD decided to phase out the restrictions over the five-year period ending May 31, 2005, to gradually introduce competition into the PAN carbon fiber market to encourage innovation and emphasize affordability.

On July 3, 2000, DOD published a proposed rule that would revise DFARS 225.7103-1 to state that "DOD is phasing out the restrictions over the five-year period ending May 31, 2005. Contractors with contracts that contain the clause at 252.225-7022 [Restriction on Acquisition of Polyacrylonitrile (PAN) Carbon Fiber] must use U.S. or Canadian manufacturers or producers for all PAN carbon fiber requirements." In addition, the proposed rule would revise the prescription for DFARS 252.225-7022 in DFARS 225.7103-3 to require its inclusion in solicitations and contracts issued on or before May 31, 2003, if the system is not yet in production or the clause was used in prior program contracts). However, between June 1, 2003, and May 31, 2005, the clause would be used in contracts and solicitations "if the system is not yet in engineering and manufacturing development".

Three sources submitted comments on the proposed rule. However, DOD has decided to finalize the proposed rule without changes.

FOR FURTHER INFORMATION CONTACT: Barry McVay at 703-451-5953 or by e-mail to BarryMcVay@FedGovContracts.com.

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