Rule2022-08813
Defense Federal Acquisition Regulation Supplement: Modification of Small Purchase Threshold Exceptions (DFARS Case 2021-D010)
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
April 28, 2022
Effective
April 28, 2022
Issuing agencies
Defense Department
Abstract
DoD is issuing a final rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to implement a section of the National Defense Authorization Act for Fiscal Year 2021.
Full Text
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<title>Federal Register, Volume 87 Issue 82 (Thursday, April 28, 2022)</title>
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[Federal Register Volume 87, Number 82 (Thursday, April 28, 2022)]
[Rules and Regulations]
[Pages 25146-25147]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-08813]
[[Page 25146]]
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DEPARTMENT OF DEFENSE
48 CFR Parts 225 and 252
[Docket DARS-2021-0018]
RIN 0750-AL29
Defense Federal Acquisition Regulation Supplement: Modification
of Small Purchase Threshold Exceptions (DFARS Case 2021-D010)
AGENCY: Defense Acquisition Regulations System, Department of Defense
(DoD).
ACTION: Final rule
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SUMMARY: DoD is issuing a final rule amending the Defense Federal
Acquisition Regulation Supplement (DFARS) to implement a section of the
National Defense Authorization Act for Fiscal Year 2021.
DATES: Effective April 28, 2022.
FOR FURTHER INFORMATION CONTACT: Ms. Kimberly R. Ziegler, Telephone
571-372-6095.
SUPPLEMENTARY INFORMATION:
I. Background
DoD published a proposed rule in the Federal Register at 86 FR
53931 on September 29, 2021, to implement section 817 of the National
Defense Authorization Act (NDAA) of Fiscal Year (FY) 2021 (Pub. L. 116-
283). Section 817 amends 10 U.S.C. 2533a (commonly known as the ``Berry
Amendment''), by reducing the dollar threshold at which an acquisition
is excepted from the source restrictions of the Berry Amendment from
the simplified acquisition threshold (SAT) to an amount not to exceed
$150,000.
DFARS 225.7002 identifies the domestic source restrictions of 10
U.S.C. 2533a on food, clothing, fabrics, fibers, hand or measuring
tools, and flags, unless an exception applies. DFARS 225.7002-2,
Exceptions, has historically referred to ``actions at or below the
small purchase threshold,'' rather than a specific dollar value, as an
exception to the domestic source restrictions of the Berry Amendment.
As a result, each time the SAT increased, the exception threshold also
increased to align with the new SAT, to include the most recent SAT
increase to $250,000. Federal Acquisition Regulation (FAR) Case 2018-
004, published July 2, 2020 (85 FR 40064) raised the SAT at FAR 2.101
from $150,000 to $250,000.
Three respondents submitted public comments in response to the
proposed rule.
II. Discussion and Analysis
DoD reviewed the public comments in the development of the final
rule. One respondent provided a comment that did not support the rule
for reasons that were outside of the scope of this rule. A discussion
of the comments is provided, as follows:
A. Summary of Significant Changes From the Proposed Rule
There are no changes from the proposed rule as a result of public
comments.
B. Analysis of Public Comments
1. Support for the Rule
Comment: Some respondents supported the rule.
Response: DoD acknowledges the support.
2. Splitting Requirements
Comment: Respondents are concerned that without expressly stating
that contracts cannot be broken into smaller contract actions,
contracting officers will split requirements to avoid applying the
restrictions set forth in 10 U.S.C. 2533a.
Response: Basic contracting officer training already provides
direction to the contracting workforce about splitting contract actions
to avoid application of regulatory requirements. Additional direction
is unnecessary to ensure compliance with this rule.
C. Other Changes
Minor changes are made in paragraph (m) of DFARS 225.7002-2 to
remove text that is not necessary. In paragraph (c) of DFARS clause
252.225-7012, Preference for Certain Domestic Commodities, minor
changes are made to delete an acronym that is no longer needed and to
clarify that the reference to ``225.7002-2(a)'' is a reference to DFARS
225.7002-2(a).
III. Applicability to Contracts at or Below the Simplified Acquisition
Threshold (SAT), for Commercial Products Including Commercially
Available Off-the-Shelf (COTS) Items, and for Commercial Services
This rule amends the applicability of the following DFARS clauses:
(1) 252.225-7006, Acquisition of the American Flag; (2) 252.225-7012,
Preference for Certain Domestic Commodities; and (3) 252.225-7015,
Restriction on Acquisition of Hand or Measuring Tools. DoD does intend
to apply the rule to contracts valued above $150,000 but at or below
the SAT. The clauses impacted by the rule are already prescribed for
use in solicitations and contracts using FAR part 12 procedures for the
acquisition of commercial products including COTS items.
A. Applicability to Contracts at or Below the Simplified Acquisition
Threshold
41 U.S.C. 1905 governs the applicability of laws to contracts or
subcontracts in amounts not greater than the simplified acquisition
threshold. It is intended to limit the applicability of laws to such
contracts or subcontracts. 41 U.S.C. 1905 provides that if a provision
of law contains criminal or civil penalties, or if the Federal
Acquisition Regulatory Council makes a written determination that it is
not in the best interest of the Federal Government to exempt contracts
or subcontracts at or below the SAT, the law will apply to them. The
Principal Director, Defense Pricing and Contracting (DPC), is the
appropriate authority to make comparable determinations for regulations
to be published in the DFARS, which is part of the FAR system of
regulations. DoD does intend to make that determination. Therefore,
this rule will apply above $150,000 but at or below the simplified
acquisition threshold.
B. Determination
DoD plans to apply the rule to contracts valued above $150,000 but
at or below the SAT for the following DFARS clauses: (1) 252.225-7006,
Acquisition of the American Flag; (2) 252.225-7012, Preference for
Certain Domestic Commodities; (3) 252.225-7015, Restriction on
Acquisition of Hand or Measuring Tools.
Not applying these clauses to contracts valued above $150,000 but
at or below the SAT would exclude contracts intended to be covered by
this rule and undermine the overarching purpose of the rule, which is
to increase the number of acquisitions subject to the domestic source
restrictions at DFARS 225.7002 by reducing the volume of procurements
subject to the exception at DFARS 225.7002-2(a). The clauses already
apply to commercial products including COTS items.
IV. Expected Impact of the Rule
DFARS 225.7002 identifies the domestic source restrictions of 10
U.S.C. 2533a on food, clothing, fabrics, fibers, hand or measuring
tools, and flags, unless an exception at DFARS 225.7002-2 applies.
Acquisitions valued below the SAT, currently defined at FAR 2.201 as
$250,000, are excepted from the domestic source restrictions of the
Berry Amendment.
This rule implements section 817 of the NDAA for FY 2021 by
reducing the exception threshold from the SAT to $150,000. DoD expects
the reduction required by section 817 to result in an
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increase in the number of procurements of domestically sourced end
products that are subject to 10 U.S.C. 2533a.
DoD estimates that approximately 970 procurements valued between
$150,000 and the SAT of $250,000 are awarded to an estimated 400
entities annually, based upon data obtained from the Federal
Procurement Data System (FPDS) for fiscal years 2018 through 2020.
Until the final rule for FAR case 2018-004 (85 FR 40064), which
increased the SAT from $150,000 to $250,000, became effective on August
31, 2020, these entities were required to comply with domestic source
restrictions of the Berry Amendment, including the $150,000 exception
threshold. It has only been since August 31, 2020, that these entities
have had the benefit of the higher exception threshold (i.e., the SAT
of $250,000). DoD assumes that some of these entities may have adjusted
their procurement sources in the short time since the threshold was
raised, while some may have continued with their established supply
chains. There is currently no data source that would identify the
entities that made adjustments and would have to return to their
previous practices.
V. Executive Orders 12866 and 13563
Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess
all costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). E.O.
13563 emphasizes the importance of quantifying both costs and benefits,
of reducing costs, of harmonizing rules, and of promoting flexibility.
This is not a significant regulatory action and, therefore, was not
subject to review under section 6(b) of E.O. 12866, Regulatory Planning
and Review, dated September 30, 1993.
VI. Congressional Review Act
As required by the Congressional Review Act (5 U.S.C. 801-808)
before an interim or final rule takes effect, DoD will submit a copy of
the interim or final rule with the form, Submission of Federal Rules
Under the Congressional Review Act, to the U.S. Senate, the U.S. House
of Representatives, and to the Comptroller General of the United
States. A major rule under the Congressional Review Act cannot take
effect until 60 days after it is published in the Federal Register. The
Office of Information and Regulatory Affairs has determined that this
rule is not a major rule as defined by 5 U.S.C. 804.
VII. Regulatory Flexibility Act
A final regulatory flexibility analysis has been prepared
consistent with the Regulatory Flexibility Act, 5 U.S.C. 601, et seq.
The FRFA is summarized as follows:
This rule amends the DFARS to implement section 817 of the National
Defense Authorization Act (NDAA) for Fiscal Year (FY) 2021 (Pub. L.
116-283). Section 817 reduces the dollar threshold exception at DFARS
225.7002, which implements 10 U.S.C. 2533a (commonly known as the
``Berry Amendment''), from the simplified acquisition threshold (SAT)
to an amount not to exceed $150,000.
The objective of the rule is to increase the number of procurements
subject to the domestic source requirements at DFARS 225.7002 by
reducing the number of procurements subject to the exception at DFARS
225.7002-2(a).
There were no significant issues raised by the public in response
to the initial regulatory flexibility analysis.
This rule is expected to affect small entities that participate in
procurements subject to the domestic source restrictions at DFARS
225.7002. However, DoD does not expect a significant change in the
number of actions awarded to small entities resulting from the
reduction in the threshold from the current SAT of $250,000 to
$150,000. To assess the impact of this reduction, data was obtained
from the Federal Procurement Data System (FPDS). According to FPDS for
fiscal years 2018 through 2020, DoD awarded an average of approximately
970 applicable actions valued above $150,000 but below the SAT. Of
those actions, an average of 200 contract actions was awarded to
approximately 72 unique small entities.
The rule does not impose any new reporting, recordkeeping, or
compliance requirements.
There are no practical alternatives that will accomplish the
objectives of the statute.
VIII. Paperwork Reduction Act
This rule does not contain any information collection requirements
that require the approval of the Office of Management and Budget (OMB)
under the Paperwork Reduction Act (44 U.S.C. chapter 35).
List of Subjects in 48 CFR Parts 225 and 252
Government procurement.
Jennifer D. Johnson,
Editor/Publisher, Defense Acquisition Regulations System.
Therefore, 48 CFR parts 225 and 252 are amended as follows:
0
1. The authority citation for 48 CFR parts 225 and 252 continues to
read as follows:
Authority: 41 U.S.C. 1303 and 48 CFR Chapter 1.
PART 225--FOREIGN ACQUISITION
225.7002-2 [Amended]
0
2. Amend section 225.7002-2:
0
a. In paragraph (a), by removing ``at or below the simplified
acquisition threshold'' and adding ``not exceeding $150,000'' in its
place;
0
b. In paragraph (j)(2), by removing ``simplified acquisition
threshold'' and adding ``threshold at 225.7002-2(a)'' in its place;
0
c. In paragraphs (m)(1)(ii) and (iv), by removing ``Product or Service
Group (PSG)'' and adding ``PSG'' in its place.
225.7002-3 [Amended]
0
3. Amend section 225.7002-3, in paragraphs (b) and (c), by removing
``simplified acquisition threshold'' and adding ``threshold at
225.7002-2(a)'' in its place.
PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
252.225-7012 [Amended]
0
4. Amend section 252.225-7012 by--
0
a. Removing the clause date ``(MAR 2022)'' and adding ``(APR 2022)'' in
its place;
0
b. In paragraph (a), in the definition of ``Structural component of a
tent'', redesignating paragraphs (i) and (ii) as paragraphs (1) and
(2), respectively, and at the end of the newly redesignated paragraph
(1) removing the semicolon and adding ``; and'' in its place;
0
c. In paragraph (c)(1), removing ``(FAR)''; and
0
d. In paragraph (c)(2)(ii), removing ``simplified acquisition threshold
in FAR part 2'' and adding ``threshold at Defense Federal Acquisition
Regulation Supplement 225.7002-2(a)'' in its place.
[FR Doc. 2022-08813 Filed 4-27-22; 8:45 am]
BILLING CODE 5001-06-P
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</html>Indexed from Federal Register on April 28, 2022.
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