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Panoptic Enterprises' FEDERAL CONTRACTS DISPATCH

DATE: September 15, 2003

SUBJECT: Defense Federal Acquisition Regulation Supplement (DFARS); Fish, Shellfish, and Seafood Products

SOURCE: Federal Register, September 15, 2003, Vol. 68, No. 178, page 53945

AGENCIES: Department of Defense (DOD)

ACTION: Proposed Rule

SYNOPSIS: DOD is proposing to amend DFARS 225.7002-2, Exceptions, and DFARS 252.225-7012, Preference for Certain Domestic Commodities, to clarify the interim rule published on February 14, 2003, that implemented Section 8136 of the Defense Appropriations Act for Fiscal Year 2003 (Public Law 107-248). Section 8136 requires the acquisition of domestic fish, shellfish, and seafood, including fish, shellfish, and seafood manufactured or processed, or contained in foods manufactured or processed, in the United States.

EDITOR'S NOTE: For more on the interim rule being clarified, see the February 14, 2003, FEDERAL CONTRACTS DISPATCH "Defense Federal Acquisition Regulation Supplement (DFARS); Fish, Shellfish, and Seafood Products."

For more on the "Berry Amendment," see DFARS 225.7002, Restrictions on Food, Clothing, Fabrics, Specialty Metals, and Hand or Measuring Tools, and the April 26, 2002, FEDERAL CONTRACTS DISPATCH "Defense Federal Acquisition Regulation Supplement (DFARS); Modification of the Berry Amendment."

DATES: Comments must be submitted on or before November 14, 2003.

ADDRESSES: Respondents may submit comments directly on the web site at http://emissary.acq.osd.mil/dar/dfars.nsf/pubcomm. As an alternative, respondents may e-mail comments to: dfars@acq.osd.mil. Also, respondents who cannot submit comments through the web site or by e-mail may submit comments to Defense Acquisition Regulations Council, Attn: Amy Williams, OUSD(AT&L)DP(DAR), IMD 3C132, 3062 Defense Pentagon, Washington, DC 20301-3062, or by fax to 703-602-0350. Cite "DFARS Case 2002-D034" when making comments on this proposed rule.

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

SUPPLEMENTAL INFORMATION: On February 14, 2003, DOD published an interim rule addressing changes made by Public Law 107-248 to the application of the Berry Amendment (10 U.S.C. 2533a). The Berry Amendment requires the acquisition of certain items from domestic sources, including food. In general, DOD must buy foods grown or produced in the United States (paragraph (a)(1) of DFARS 225.7002-1, Restrictions), but DFARS 225.7002-2(j) provides an exception for the acquisition of foods manufactured or processed in the United States, regardless of where the foods (and any component if applicable) were grown or produced (10 U.S.C. 2533a(f)).

Section 8136 of Public Law 107-248 makes the exception at 10 U.S.C. 2533a(f) inapplicable to fish, shellfish, and seafood products, and makes this exception applicable to contracts and subcontracts for the procurement of commercial items. Therefore, the interim rule made the following revisions:

• DFARS 225.7002-2(j) was revised to state, "Acquisitions of foods manufactured or processed in the United States, regardless of where the foods (and any component if applicable) were grown or produced, except that, in accordance with Section 8136 of the DoD Appropriations Act for Fiscal Year 2003 (Pub. L. 107-248), the following foods are subject to the restrictions in 225.7002-1: fish, shellfish, or seafood manufactured or processed in the United States; and fish, shellfish, or seafood contained in foods manufactured or processed in the United States."
  
  
• DFARS 252.225-7012(c)(3) was revised to state that the clause does not apply "to foods that have been manufactured or processed in the United States, its possessions, or Puerto Rico, regardless of where the foods (and any component if applicable) were grown or produced, except that this clause does apply to fish, shellfish, or seafood manufactured or processed in the United States and fish, shellfish, or seafood contained in foods manufactured or processed in the United States..."

Comments from eight respondents were received. Because of the comments, the following additional revisions are proposed:

• One comment was that the interim rule does not provide a definition or other guidance for determining which items qualify as "domestic" fish, shellfish, and seafood products, nor is it clear whether domestic fish, shellfish, and seafood would include those caught by U.S.-flag or U.S.-owned vessels, or whether the domestic restriction is intended to focus on the place where the fish, shellfish, and seafood may be caught.
  
  To clarify this, the following new paragraph (d) would be added to DFARS 252.225-7012:
  

  "(d)(1) Fish, shellfish, and seafood delivered under this contract, or contained in foods delivered under this contract --
  
        "(i) Shall be taken from the sea by U.S.-flag vessels; or
  
        "(ii) If not taken from the sea, shall be obtained from fishing within the United States; and
  
  "(2) Any processing or manufacturing of the fish, shellfish, or seafood shall be performed on a U.S.-flag vessel or in the United States."

  
  These requirements are based on the definition of "a good wholly obtained or produced" in U. S. Customs Service regulations at 19 CFR 102.1(g).
  
  
• Another comment was that the interim rule does not define the intended geographic limit of "United States" in which the fish, shellfish, and seafood must be manufactured or processed to qualify as domestic, nor is "United States" defined in DFARS.
  
  After the publication of this interim rule, the Federal Acquisition Regulation (FAR) was revised to clarify "United States" (see the May 22, 2003, FEDERAL CONTRACTS DISPATCH "Federal Acquisition Circular (FAC) 2001-14, Miscellaneous Amendments," specifically Item (1)). Therefore, DFARS 252.225-7012(a) would be revised to add the following definitions:

  "(a)(3) United States means the 50 States, the District of Columbia, and outlying areas.
  
  "(4) U.S.-flag vessel means a vessel of the United States or belonging to the United States, including any vessel registered or having national status under the laws of the United States."

  
  
• One other comment was that the language in the interim rule version of DFARS 225.7002-2(j) and DFARS 252.212-7012(c)(3) made all the exceptions in DFARS 225.7002-2 inapplicable to fish and seafood products, such as: products acquired outside the United States; acquisitions not exceeding the simplified acquisition threshold; supplies purchased for commissary resale; and when the Secretary determines that domestic products cannot be acquired when needed in a satisfactory quality and quantity.
  
  Since the interim rule was not intended to make all other Berry Amendment exceptions inapplicable to fish, shellfish, and seafood products, the proposed rule would revise DFARS 225.7002-2(j) to read as follows:

  "(j) Acquisitions of foods manufactured or processed in the United States, regardless of where the foods (and any component if applicable) were grown or produced. However, in accordance with Section 8136 of the DoD Appropriations Act for Fiscal Year 2003 (Pub. L. 107-248), this exception does not apply to fish, shellfish, or seafood manufactured or processed in the United States or fish, shellfish, or seafood contained in foods manufactured or processed in the United States."

  
  Likewise, DFARS 252.225-7012(c)(3) would be revised to state that the clause does not apply "to foods, other than fish, shellfish, or seafood, that have been manufactured or processed in the United States, regardless of where the foods (and any component if applicable) were grown or produced. Fish, shellfish, or seafood manufactured or processed in the United States and fish, shellfish, or seafood contained in foods manufactured or processed in the United States..."

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

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