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Panoptic Enterprises' FEDERAL CONTRACTS DISPATCH

DATE: May 31, 2002

SUBJECT: Defense Federal Acquisition Regulation Supplement (DFARS); Ocean Transportation by U.S.-Flag Vessels

SOURCE: Federal Register, May 31, 2002, Vol. 67, No. 105, page 38020

AGENCIES: Department of Defense (DOD)

ACTION: Final Rule

SYNOPSIS: DOD is amending DFARS 247.573, Solicitation Provision and Contract Clauses, and DFARS 252.247-7023, Transportation of Supplies by Sea, to specify that requirements for use of U.S.-flag vessels in the transportation of supplies by sea apply to contracts at or below the $100,000 simplified acquisition threshold.

EDITOR'S NOTE: For more on the proposed rule, see the September 11, 2001, FEDERAL CONTRACTS DISPATCH "Defense Federal Acquisition Regulation Supplement (DFARS); Ocean Transportation by U.S.-Flag Vessels."

DFARS Subpart 247.5, Ocean Transportation by U.S.-Flag Vessels, implements the Cargo Preference Act of 1904, and that law's provisions exceed the requirements of the Cargo Preference Act of 1954, which is implemented in Federal Acquisition Regulation (FAR) Subpart 47.5, Ocean Transportation by U.S.-Flag Vessels.

Federal Acquisition Circular (FAC) 97-17 revised FAR Subpart 47.5 to make its provisions applicable to contracts awarded using the simplified acquisition procedures in FAR Part 13, Simplified Acquisition Procedures. For more on FAC 97-17, see the April 25, 2000, FEDERAL CONTRACTS DISPATCH "Federal Acquisition Circular (FAC) 97-17, Miscellaneous Amendments."

EFFECTIVE DATE: May 31, 2002.

FOR FURTHER INFORMATION CONTACT: Amy Williams, (703) 602-0328.

SUPPLEMENTAL INFORMATION: DFARS 252.247-7023 requires the use of U.S.-flag vessels when transporting supplies by sea under a DOD contract. The clause requires a contractor to (1) submit any request for use of other than U.S.-flag vessels in writing to the contracting officer; (2) provide a copy of the bill of lading to the contracting officer and the Maritime Administration after each shipment of supplies by sea; (3) provide with the final invoice a representation as to whether ocean transportation and U.S.-flag vessels were used in performance of the contract; and (4) include the clause in subcontracts for construction supplies, noncommercial items, and certain commercial items.

DOD exempted contracts and subcontracts at or below the $100,000 simplified acquisition threshold from the requirements of DFARS 252.247-7023. But on September 11, 2001, DOD published a proposed rule to eliminate this exemption in accordance with 10 U.S.C. 2631, Supplies: Preference for United States Vessels, and regulations of the Maritime Administration at Title 46 of the Code of Federal Regulations (CFR), Part 381. However, the proposed rule prescribed an alternate version of the clause (Alternate III) for contracts and subcontracts at or below the simplified acquisition threshold which excluded the requirement for a contractor or subcontractor to provide a representation regarding ocean transportation with its final invoice.

Five respondents submitted comments on the proposed rule, but DOD decided not to adopt any of the comments, so DOD is adopting the proposed rule as final without changes.

This final rule revises the DFARS 252.247-7023 prescription in DFARS 247.573(b) to eliminate the exemption of contracts at or below the simplified acquisition threshold, and adds a requirement that Alternate III of DFARS 252.247-7023 be used in contracts at or below the simplified acquisition threshold.

In DFARS 252.247-7023, paragraph (e) is revised to change the Maritime Administration's address for copies of the rated on board vessel operating carrier's ocean bill of lading. Also, a new paragraph (h) is added, and it requires that the entire clause be included in contracts exceeding the simplified acquisition threshold, except for paragraphs (f) and (g), which require the contractor to provide a representation regarding ocean transportation with its final invoice, would be deleted from subcontracts at or below the simplified acquisition threshold. Finally, Alternate III of DFARS 252.247-7023 is added, and it is required in contracts at or below the simplified acquisition threshold. Alternate III deletes paragraphs (f), (g), and the new (h), and substitutes a new paragraph (f) which merely requires that the clause as modified by Alternate III be included in all subcontracts at or below the simplified acquisition threshold.

FOR FURTHER INFORMATION CONTACT: Panoptic Enterprises at 703-451-5953 or by e-mail to Panoptic@FedGovContracts.com.

Copyright 2002 by Panoptic Enterprises. All Rights Reserved.

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