Rule2022-18224
Defense Federal Acquisition Regulation Supplement: Restriction on Acquisition of Tantalum (DFARS Case 2020-D007)
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Published
August 25, 2022
Effective
August 25, 2022
Issuing agencies
Defense DepartmentDefense Acquisition Regulations System
Abstract
DoD has adopted as final, with changes, an interim rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to implement a section of the National Defense Authorization Act for Fiscal Year 2020 that prohibits acquisition of tantalum metals and alloys from North Korea, China, Russia, and Iran.
Full Text
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<title>Federal Register, Volume 87 Issue 164 (Thursday, August 25, 2022)</title>
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[Federal Register Volume 87, Number 164 (Thursday, August 25, 2022)]
[Rules and Regulations]
[Pages 52342-52348]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-18224]
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DEPARTMENT OF DEFENSE
Defense Acquisition Regulations System
48 CFR Parts 212, 225, and 252
[Docket DARS-2020-0035]
RIN 0750-AK94
Defense Federal Acquisition Regulation Supplement: Restriction on
Acquisition of Tantalum (DFARS Case 2020-D007)
AGENCY: Defense Acquisition Regulations System, Department of Defense
(DoD).
[[Page 52343]]
ACTION: Final rule.
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SUMMARY: DoD has adopted as final, with changes, an interim rule
amending the Defense Federal Acquisition Regulation Supplement (DFARS)
to implement a section of the National Defense Authorization Act for
Fiscal Year 2020 that prohibits acquisition of tantalum metals and
alloys from North Korea, China, Russia, and Iran.
DATES: Effective August 25, 2022.
FOR FURTHER INFORMATION CONTACT: Ms. Kimberly Bass, telephone 703-717-
3446.
SUPPLEMENTARY INFORMATION:
I. Background
This final rule finalizes an interim rule that revised the DFARS to
implement section 849 of the National Defense Authorization Act (NDAA)
for Fiscal Year (FY) 2020 (Pub. L. 116-92) (10 U.S.C. 2533c). Section
849 adds tantalum to the definition of ``covered materials'' in 10
U.S.C. 2533c. With some exceptions, 10 U.S.C. 2533c prohibits the
acquisition of any covered material melted or produced in any covered
country (North Korea, China, Russia, or Iran), or any end item,
manufactured in any covered country, that contains a covered material.
DoD published an interim rule in the Federal Register at 85 FR
61500 on September 29, 2020, to implement section 849 of the NDAA for
FY 2020. Nine respondents submitted public comments in response to the
interim rule.
II. Discussion and Analysis
DoD reviewed the public comments in the development of the final
rule. A discussion of the comments and the changes made to the rule as
a result of those comments is provided, as follows:
A. Summary of Significant Changes From the Interim Rule
DoD made the following changes in the interim rule:
1. At DFARS 225.7018-2(c), the applicability of the production
phases for tantalum metals and alloys is revised to provide clarity by
removing the reference to the inclusion of the reduction of tantalum
chemicals such as oxides, chlorides, or potassium salts, to metal
powder. A reference to the applicability of tantalum metals of any kind
and alloys to the production processing steps includes the reduction or
melting of any form of tantalum is also added. Additionally, the
paragraph is revised to convey that the restriction includes the
subsequent production steps for the reduction or melting of any form of
tantalum to create tantalum metals including unwrought, powder, mill
products, and alloys.
2. For consistency with the plain language of the exact statutory
text in accordance with section 849 of the NDAA for FY 2020 and 10
U.S.C. 2533c, at DFARS 225.7018-3(c) and DFARS 252.225-7052(c)(1), the
phrase ``of an end item that is'' is replaced with the phrase ``of an
end item containing a covered material that is''.
3. References to tantalum ``metal and alloys'' in the definition of
covered material in the interim rule are revised to ``metals and
alloys'' in the final rule for consistency with the exact statutory
text at 10 U.S.C. 2533c.
B. Analysis of Public Comments
1. Strong Support for the Rule
Comment: Two respondents strongly supported the interim rule. A
respondent noted that the quantity of tantalum going into the defense
industry is a manageable quantity and will have a negligible impact on
U.S. businesses while affording the U.S. military a protection
similarly enjoyed by the People's Republic of China with respect to
tantalum products that are of U.S. origin. A respondent applauded the
comprehensive scope of the rule regarding tantalum production, which is
necessary to shield DoD weapon systems from unreliable sources.
Response: DoD acknowledges the support for the rule.
2. Impact on Business
a. Impact on Customers
Comment: A respondent commented that this rule will not be a
problem. Tantalum going into the U.S. defense industry annually is a
perfectly manageable quantity to make sure that Chinese material does
not enter the U.S. defense industries final applications. Another
respondent commented that this policy would bleed into civilian U.S.
manufacturing supply chains. As a result of this rule and other non-
conflict material restrictions on tantalum from Africa, there will be
insufficient alternative acceptable tantalum units for the U.S.
industry in the global market. The respondent further stated this will
lead to a higher price, potential raw material shortfalls, and reduced
profits and competitiveness for U.S. manufacturers and end products
exported.
Response: The rule is required to implement section 849 of the NDAA
for FY 2020. It is a matter of national security to reduce U.S.
dependence on the covered countries specified in 10 U.S.C. 2533c,
because tantalum is an important element in the supply chain for the
production of both DoD military systems and nonmilitary systems that
DoD uses.
b. Impact on Manufacturers
Comment: A respondent stated this rule only focuses on defense
applications; the amount of overall tantalum is manageable. Another
respondent expects an initial period of higher pricing and supply chain
impacts after which the tantalum markets will adjust. One respondent
conveyed concerns that damage to competitiveness and efficiency due to
the rule could lead to a relocation of manufacturing outside the United
States and thereby reduce U.S. strength in critical manufacturing
sectors. Members of the respondent's organization supported a
retaliatory approach to China on tantalum policy, while the other half
of the members believed it was counterproductive, as it would
negatively impact U.S. civilian-use manufacturers and exporters.
Response: DoD acknowledges the respondent's concern with initial
impacts to U.S. manufacturers. The implementation of this prohibition
is expected to decrease DoD's dependence on covered materials that
originate in covered countries as a matter of national security.
Tantalum is an important element in the supply chain for the production
of both U.S. military systems and nonmilitary systems that DoD uses.
3. Metals Trade Industry
Comment: A respondent stated that they did not see the interim rule
affecting the metals trade and metals industry generally, either
domestically or internationally. The respondent further stated the
price of tantalum will not increase since the amount of tantalum in
question is minimal annually. Accordingly, the orders placed would
separate defense and commercial consumer applications, will be
balanced, and will not negatively impact consumers financially. The
respondent also stated that U.S. companies are not allowed to sell
tantalum to China and this interim rule is exactly the same.
Response: DoD acknowledges the respondent's position and agrees
that the impact of the rule on the metals industry will have minor
impacts both domestically and internationally.
4. Broader International Trade
a. Potential Future U.S.-Wide Restriction
Comment: A respondent discussed the overall impact of the interim
rule on broader international trade and a
[[Page 52344]]
potential U.S.-wide restriction on the acquisition of tantalum in the
future, from the designated regions or a potential change to consumer
purchasing policy. The respondent also stated the importance of
ensuring the scope of the rule remained only for tantalum for defense
applications, since the defense tantalum market is small and
manageable, and it should not be expanded further since U.S. companies
do sell tantalum finished products to Chinese customers. The respondent
further stated that China does not allow tantalum of U.S. origin.
Response: The defense industry consumption of tantalum units is a
small portion of the tantalum market with regard to global consumption.
This rule is not going to impact the tantalum market as a whole.
b. Potential Price Increases for Tantalum in the U.S. Supply Chain
Comment: Several respondents discussed the impact on broader
international trade as a result of the more restrictive implementation
of the statute with regard to the criteria for the exception
applicability to the entire end item versus the covered material within
the end item. These respondents further stated the interim rule will
have negative impacts to international trade, increased administrative
burden on industry, and increased costs to the Government. A respondent
stated that tantalum prices from non-covered countries have increased
and may continue to do so. The respondent further stated the interim
rule's applicability to DoD products may increase costs due to
manufacturer's dual use of tantalum in the commercial and defense
industries and the subsequent requirement for segregation of products
to track the defense products in accordance with the statutory
requirements.
Response: The rule implements section 849 of the NDAA for FY 2020.
Since the defense tantalum market is a small portion of the overall
global market, DoD anticipates minimal impacts to international trade
and minimal increased administrative burden on industry.
5. Exception
a. Entire End Item and Electronic Device
Comment: A few respondents argued that the interim rule incorrectly
applied an exception to the prohibition on procurement of covered
materials found at 10 U.S.C. 2533c(c)(3). The interim rule provides an
exception for end items that are also an electronic device. The
respondents argued that this misapplies the statute, narrows the
exception beyond what the statute intended, and makes part of the
language of the statute superfluous.
Response: DoD does agree that the omission of ``containing a
covered material'' changes the underlying intent or application of the
rule. Of note, the restriction in 10 U.S.C. 2533c is modeled on the
domestic preference in 10 U.S.C. 2533b, with similar exceptions related
to commercially available off-the-shelf (COTS) items and electronic
components and devices. Based on the similar construction of these
statutes, DoD interprets the exception for ``electronic devices''
pursuant to DFARS 225.7018-3 to include components embedded in other
end items. For example, a missile or munition purchased by DoD may
contain tantalum units in a capacitor. The same missile or munition may
contain tantalum or tungsten units in an explosively-formed penetrator.
The tantalum units embedded in the capacitor would be covered by the
``electronic devices'' exception, but the tantalum or tungsten units in
the explosively-formed penetrator would not be covered by the
exception. DoD believes that the application of the exception provided
in this example aligns with congressional intent, providing an
exception for those products with significant commercial market
exposure (e.g., a capacitor) while maintaining coverage for military-
unique products (e.g., an explosively-formed penetrator). DoD further
addresses the respondents' feedback on these specific aspects of the
rule in the category of comments at paragraph 8c, entitled
clarification of the rule.
b. Prior Melting Production of Tantalum Raw Materials
Comment: A respondent asked that the interim rule be amended to
clarify that the prohibition on procuring any covered material melted
or produced in any covered country applies only to the melting or
production of tantalum metals and alloys that immediately precedes
delivery to the DoD customer or a supplier's higher-tier contractor
customer. Two respondents stated that because tantalum may be melted or
produced or re-melted or reproduced multiple times in the supply chain
life cycle, the only rational reading of 10 U.S.C. 2533c is to conclude
that the most recent melting or manufacture of the covered material
prior to transfer to DoD or to a higher-tier contractor customer does
not occur in a covered country. In addition, another respondent further
stated the interim rule did not contain the phrase ``and melting'' with
regard to the prohibition of the production of tantalum metal and
alloys, including the reduction of tantalum chemicals such as oxides,
chlorides, or potassium salts, to metal powder and all subsequent
phases of the production of tantalum metal and alloys, such as
consolidation of metal powders and melting. The respondent requested
the rationale for the omission of ``and melting'' in the implementation
of section 849 of the NDAA for FY 2020 in the interim rule.
Response: DoD acknowledges that at the time the interim rule was
issued, 10 U.S.C. 2533c was meant to apply to melting or manufacture of
the covered material. However, section 844 of the NDAA for FY 2021
(Pub. L. 116-283) passed subsequent to the publication of the interim
rule. In section 844, Congress amended 10 U.S.C. 2533c(a)(1) from ``. .
. procuring any covered material melted or produced in any covered
nation. . .'' to ``. . . procuring any covered material mined, refined,
separated, melted or produced in any covered nation. . .''. The current
rulemaking effort applies only to the changes mandated by section 849
of the NDAA for FY 2020. Section 844 of the NDAA for FY 2021 has an
effective date five years after the date of enactment and will be
implemented via future rulemaking under DFARS Case 2021-D015. DoD has
deleted the reference to ``chemicals such as oxides, chlorides, or
potassium salts, to metal powder'' and simplified the language to
include ``reduction or melting of any form''. DoD has also clarified
the final forms of tantalum metals as ``including unwrought, powder,
mill products, and alloys.''
c. Tantalum Powder/Raw Materials
Comment: A respondent requested that the draft rule be revised to
exclude tantalum powder from the definition of ``covered material.''
The respondent argued that Congress did not intend to place
restrictions on tantalum powder as neither 10 U.S.C. 2533c nor section
849 of the NDAA for FY 2020 mention tantalum powder specifically, but
rather refer to ``tantalum metals and alloys.''
Response: DoD concurs that the statute at 10 U.S.C. 2533c on its
face does not include tantalum powder as a covered material. The final
rule clarifies that tantalum powder is included in the rule to further
explain that tantalum powder is also considered a metal and therefore,
tantalum powder also would be restricted. In addition, the rule applies
the restriction to cover all subsequent phases of production of
tantalum metals and alloys.
[[Page 52345]]
6. Tantalum Capacitors
Comment: A respondent noted that tantalum is a key component of
capacitors used in military and commercial applications, and that the
United States is dependent on foreign countries, including China, to
acquire tantalum and tantalum capacitors. Therefore, any implementation
of supply constraints should be considered judiciously to guarantee the
availability of tantalum capacitors for U.S. applications.
Response: DoD is aware of U.S. dependence on foreign countries to
acquire tantalum and tantalum capacitors for military and commercial
use. DoD continues to work with allied nations to strengthen this part
of the foreign supply chain for strategic and critical materials such
as tantalum. Additionally, DoD has mandated programs in place to
strengthen the industrial base by funding projects to increase domestic
capability to produce products, including strategic and critical
materials such as tantalum, for military use.
7. Statutory Implementation and Interpretation
Comment: A respondent asked that the final rule be revised to
correct an error within the interim rule implemented in DFARS clause
252.225-7052, specifically the omission of the 10 U.S.C. 2533c(c)(3)
statutory phrase ``containing a covered material.'' The respondent
proposed two options to correct the interim rule. Another respondent
stated that the interim rule unreasonably interprets 10 U.S.C. 2533c
and ``is likely to have a significant impact on acquisitions by the DoD
of end items that include high performance, low weight tantalum
capacitors.'' In summary, the respondent stated the interim rule
disregards language that makes the prohibitions and exceptions created
by the statute apply to both prime contracts and subcontracts at any
tier.
Response: As to the respondent's concerns regarding omission of the
10 U.S.C. 2533c(c)(3) statutory phrase ``containing a covered
material,'' as stated in DFARS 225.7018-5, unless an acquisition of
certain magnets, tantalum, and tungsten is completed outside the United
States for use outside the United States, or an official
nonavailability determination has been made, DFARS clause 252.225-7052,
Restriction on the Acquisition of Certain Magnets, Tantalum, and
Tungsten, shall be included in solicitations and contracts, to include
Federal Acquisition Regulation (FAR) part 12 commercial item
acquisitions, that exceed the simplified acquisition threshold. DFARS
252.225-7052(b)(1) identifies that the restrictions listed apply to the
contractor, who ``shall not deliver under this contract any covered
material melted or produced in any covered country, or any end item,
manufactured in any covered country, that contains a covered material
(10 U.S.C. 2533c).'' Moreover, DFARS 252.225-7052(d) directs the
contractor to insert the substance of the clause, including paragraph
(d), in subcontracts and other contractual instruments that are for
items containing a covered material, including subcontracts and other
contractual instruments for commercial products and commercial
services, unless an exception in paragraph (c) of this clause applies.
Therefore, DFARS clause 252.225-7052 does apply restrictions and
exceptions to both contractors and subcontractors.
8. Recommended Revisions
a. One-Time Waiver
Comment: A respondent recommended a one-time waiver to address
material on hand and in process including alloy already processed. The
respondent further stated that manufacturers normally procure tantalum
one year in advance for forecasted usage and may purchase multiple
years of supply at that time that may contain tantalum from covered
countries. The respondent further stated that if the Government does
not permit manufacturers to use in-process tantalum from covered
countries for military products, the costs to the Government will
likely rise in order to compensate manufacturers for the noncompliant
tantalum procured prior to the implementation of the prohibition.
Response: The interim rule was published on September 29, 2020,
implementing section 849 of the NDAA for FY 2020. Implementation of
this prohibition was urgent, because decreasing DoD's dependence on
covered materials that originate in covered countries is a matter of
national security. Tantalum is an important element in the supply chain
for production of both U.S. military systems and nonmilitary systems
that DoD uses. A shortage of supply of these covered materials would
therefore hinder maintenance and replacement of many DoD military
systems and would also have a negative impact on the broader industrial
base upon which DoD depends. Section 849 of the NDAA for FY 2020
mandates compliance with this prohibition as implemented in the interim
rule published on September 29, 2020, and in effect on October 1, 2020.
In addition, FAR and DFARS changes apply to solicitations issued on or
after the effective date of the change unless otherwise specified (see
FAR 1.108(d)).
b. Add Compliance Incentive
Comment: A respondent recommended the addition of a compliance
incentive for proposals priced with compliant materials versus
noncompliant materials for the purposes of proposal evaluations.
Response: Section 849 of the NDAA for FY 2020 does not include a
compliance incentive requirement for the prohibition; therefore, none
is included in the rule.
c. Clarification of the Rule
Comment: Several respondents recommended revisions to clarify the
interim rule. A respondent commented that the interim rule is costly to
implement and requested the interim rule be modified to clarify that
end items supplied to DoD containing a covered material that is an
electronic device are excepted from the prohibition.
A respondent also recommended that DoD modify the interim rule at
DFARS clause 252.225-7052, paragraph (c)(1) and DFARS 225.7018-3(c).
Specifically, the respondent recommended that DoD replace the phrase
``an end item that is'' with the phrase ``a covered material (as an end
item or incorporated into an end item) that is.'' As an alternative,
the respondent further recommended that the phrase ``an end item that
is'' be replaced with language to match the exact statutory text ``an
end item containing a covered material that is.''
Additionally, a respondent recommended that DoD clarify that DFARS
clause 252.225-7052 applies only to the melting and production of
tantalum metal and alloys as part of the DoD supply chain and not to
prior melting or production or to tantalum raw materials.
Another respondent stated that the prohibition in the interim rule
applies with regard to a prime contractor and prohibits contractors
from incorporating a COTS item or an electronic device from a
subcontractor into an end item delivered to DoD, unless that item is a
COTS item or an electronic device. Subsequently, the respondent stated
as an example, the rule as implemented prohibits a subcontractor from
acquiring a tantalum capacitor made in China, and a prime contractor
could not incorporate that capacitor into an end item delivered to DoD.
The respondent recommended a revision to the interim
[[Page 52346]]
rule at DFARS 225.7018-2 and the clause 252.225-7052, paragraph (a) to
clarify that DoD would neither be acquiring a covered material melted
or produced in a covered country, nor an end item manufactured in any
covered country, that contains a covered material, unless the end item
is itself manufactured in a covered country. Another respondent stated
that the statute prohibits the Government from procuring ``any end item
that contains a covered material manufactured in any covered nation,
except as provided by the clause 252.225-7052(c).''
A respondent indicated the language of the statute at 10 U.S.C.
2533c states that an end item cannot contain a covered material
manufactured in any covered nation; however, the clause 252.225-7052
prohibits a contractor from delivering any end item, manufactured in
any covered country, that contains a covered material (10 U.S.C.
2533c). According to the respondent the clause suggests that a
contractor may deliver an end item containing covered material so long
as that end item is not manufactured in a covered country, creating an
inconsistency with the clause and the statute. The respondent
recommended a revision to clarify whether the phrase ``manufactured in
any covered country'' modifies ``end item'' or ``covered material.''
The respondents further requested that the interim rule be
rewritten to comply with the statute such that the term ``electronic
device'' modifies the term ``covered material'', not ``end item'', to
ensure that in the event an end item contains a covered material and
the covered material is an electronic device, the end item will not be
subject to the general restriction contained in the draft rule.
Response: DoD acknowledges and concurs with the following
recommended revision at DFARS clause 252.225-7052, paragraph (c)(1) and
225.7018-3(c): to remove the phrase ``of an end item that is'' and
replace it with the phrase ``of an end item containing a covered
material that is.'' DoD interprets the exception for ``electronic
devices'' pursuant to DFARS 225.7018-3 to include components embedded
in other end items and does not see the need to clarify further that
end items supplied to DoD containing a covered material that is an
electronic device are excepted from the prohibition in accordance with
10 U.S.C. 2533c(c)(3). As the current rulemaking effort applies only to
the changes mandated by section 849 of the NDAA for FY 2020, any
additional expansion, on the prohibition to clarify that the clause
252.225-7052 applies only to the melting and production of tantalum
metals and alloys as part of the DoD supply chain and not to prior
melting or production or to tantalum raw materials, would be out of
scope.
DoD does not concur with the recommendation to revise DFARS
225.7018-2 and the clause 252.225-7052, paragraph (a), to clarify that
unless the end item is itself manufactured in a covered country, DoD
would be acquiring neither a covered material melted or produced in a
covered country nor an end item manufactured in any covered country
that contains a covered material, unless the end item is itself
manufactured in a covered country. DoD also does not concur with the
recommendation for a revision to clarify whether the phrase
``manufactured in any covered country'' modifies ``end item'' or
``covered material.'' The interim rule as implemented at 225.7018-2(a),
in accordance with section 849 of the NDAA for FY 2020 and 10 U.S.C.
2533c, specifically mandates not acquiring any covered material melted
or produced in any covered country, or any end item, manufactured in
any covered country, that contains a covered material.
d. Extension for Comment Due Date
Comment: A respondent requested an extension to the comment period
for 30 days due to further analysis required and the holiday season.
Response: DoD acknowledges the extension request; however, the
public comment period was not extended.
9. Outside the Scope of the Rule
Comment: A respondent inquired what documentation is required to
import tantalum into the United States and proof of origin.
Response: This final rule is implementing restrictions on the
acquisition of tantalum in accordance with section 849 of the NDAA for
FY 2020. Instructions on documentation for importing tantalum and proof
of origin are outside the scope of this rule.
C. Other Changes
At DFARS 212.505, Applicability of certain laws to contracts for
the acquisition of COTS items, paragraph (b) is added to state that
paragraph (a)(1) of 10 U.S.C. 2533c is not applicable to contracts and
subcontracts for the acquisition of commercially available off-the-
shelf items, except as provided at 225.7018-3(c)(1). The previously
undesignated paragraph at 212.505 is designated as paragraph (a).
III. Applicability to Contracts at or Below the Simplified Acquisition
Threshold (SAT) and for Commercial Services and Commercial Products,
Including Commercially Available Off-the-Shelf (COTS) Items
This rule amends the clause at DFARS 252.225-7052, Restriction on
Acquisition of Certain Magnets, Tantalum, and Tungsten, to implement
section 849 of the NDAA for FY 2020. DFARS 252.225-7052 does not apply
to acquisitions at or below the simplified acquisition threshold but
applies to contracts for the acquisition of commercial items, except as
provided in the statute at 10 U.S.C. 2533c(c)(3). Therefore, DoD has
signed a determination of applicability to acquisitions of commercial
items, except for COTS items to the extent exempted in the statute.
IV. Expected Impact of the Rule
This final rule adds tantalum ``metals'' to the restriction at
DFARS 225.7018 and also incorporates the term into the definition of
``covered material.'' This rule further explains the applicability of
the restriction on the production of tantalum metals of any kind and
alloys in addition to the reduction or melting of any form of tantalum
metal. Moreover, the restriction includes the subsequent production
steps for the reduction or melting of any form of tantalum to create
tantalum metals including unwrought, powder, mill products, and alloys.
In addition, the rule provides an explanation of the exceptions at
DFARS 225.7018-3, paragraph (c)(1)(ii) exception for commercially
available off-the-shelf (COTS) items, which is not applicable to a mill
product that has not been incorporated into an end item, subsystem,
assembly, or component and paragraph (d)(1) meaning of nonavailability
of a covered material in the required form. Although 10 U.S.C. 2533c
provides that the exception to the restriction on tungsten for COTS
items does not apply to a COTS item that is 50 percent or more tungsten
by weight, section 849 does not add a similar condition with regard to
tantalum metal and alloys.
It is a matter of national security to reduce U.S. dependence on
the covered countries in accordance with the section 849 restriction,
because tantalum is an important element in the supply chain for
production of both U.S. military systems and nonmilitary systems that
DoD uses. A shortage of supply of these covered materials would
therefore hinder maintenance and replacement of
[[Page 52347]]
many DoD military systems and would also have a negative impact on the
broader industrial base upon which DoD depends. Implementation of this
prohibition will decrease DoD's dependence on covered materials that
originate in covered countries in support of national security.
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 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 (FRFA) has been prepared
consistent with the Regulatory Flexibility Act, 5 U.S.C. 601, et seq.
The FRFA is summarized as follows:
This rule is required to implement section 849 of the National
Defense Authorization act (NDAA) for Fiscal Year (FY) 2020 (Pub. L.
116-92) (10 U.S.C. 2533c). The objective of the rule is to implement
the section 849 prohibition on the acquisition of tantalum metals and
alloys from North Korea, China, Russia, or Iran.
There were no significant issues raised by the public comments in
response to the initial regulatory flexibility analysis.
This rule will apply to an annual average of approximately 697
small entities. Based on data from the Federal Procurement Data System
for FY 2019, FY 2020, and FY 2021, DoD awarded in the United States
13,204 contracts that exceeded the simplified acquisition threshold of
$250,000 and were for the acquisition of manufactured end products
(excluding those categories that could not include tantalum such as
clothing and fabrics, books, or lumber products). These contracts were
awarded to 3,447 unique entities, of which 2,090 were small entities.
It is not known what percentage of these awards involved tantalum, or
what lesser percentage might involve tantalum from China, North Korea,
Russia, or Iran.
There are no projected reporting or recordkeeping requirements.
However, there may be compliance costs to track the origin of covered
materials.
DoD is exempting acquisitions equal to or less than the simplified
acquisition threshold. DoD was unable to identify any other
alternatives that would reduce burden on small businesses and still
meet 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 under
the Paperwork Reduction Act (44 U.S.C. chapter 35).
List of Subjects in 48 CFR Parts 212, 225, and 252
Government procurement.
Jennifer D. Johnson,
Editor/Publisher, Defense Acquisition Regulations System.
Accordingly, the interim rule amending 48 CFR parts 212, 225, and
252, which was published in the Federal Register at 85 FR 61500 on
September 29, 2020, is adopted as a final rule with the following
changes:
0
1. The authority citation for 48 CFR parts 212, 225, and 252 continues
to read as follows:
Authority: 41 U.S.C. 1303 and 48 CFR chapter 1.
PART 212--ACQUISITION OF COMMERCIAL ITEMS
0
2. Amend section 212.301 by revising paragraph (f)(x)(FF) to read as
follows:
212.301 Solicitation provisions and contract clauses for the
acquisition of commercial items.
(f) * * *
(x) * * *
(FF) Use the clause at 252.225-7052, Restriction on the Acquisition
of Certain Magnets, Tantalum, and Tungsten, as prescribed in 225.7018-
5, to comply with 10 U.S.C. 2533c.
* * * * *
0
3. Amend section 212.505 by--
0
a. Designating the section text as paragraph (a); and
0
b. Adding paragraph (b).
The addition reads as follows:
212.505 Applicability of certain laws to contracts for the acquisition
of COTS items.
* * * * *
(b) Paragraph (a)(1) of 10 U.S.C. 2533c, Prohibition on acquisition
of sensitive materials from non-allied foreign nations, is not
applicable to contracts and subcontracts for the acquisition of
commercially available off-the-shelf items, except as provided at
225.7018-3(c)(1).
PART 225--FOREIGN ACQUISITION
225.7018-1 [Amended]
0
4. Amend section 225.7018-1 in paragraph (3) of the definition of
``Covered material'' by removing ``metal'' and adding ``metals'' in its
place.
0
5. Amend section 225.7018-2 by revising paragraph (c) to read as
follows:
225.7018-2 Restriction.
* * * * *
(c) For production of tantalum metals of any kind and alloys, this
restriction includes the reduction or melting of any form of tantalum
to create tantalum metal including unwrought, powder, mill products,
and alloys. The restriction also covers all subsequent phases of
production of tantalum metals and alloys.
* * * * *
225.7018-3 [Amended]
0
6. Amend section 225.7018-3--
0
a. In the paragraph (c) introductory text, by removing ``Of an end
item'' and adding ``Of an end item containing a covered material'' in
its place; and
0
b. In the paragraph (c)(1) introductory text, by removing ``PGI
225.7018-3(c)(1)(i)'' and adding ``PGI 225.7018-3(c)(1)'' in its place.
PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
0
7. Amend section 252.225-7052 by--
0
a. Adding introductory text;
0
b. Revising the clause date;
0
c. In paragraph (a), in paragraph (3) of the definition of ``Covered
material'', removing ``metal'' and adding ``metals'' in its place;
0
d. Revising paragraph (b)(3); and
0
e. In the paragraph (c)(1) introductory text, removing ``To an end
item'' and
[[Page 52348]]
adding ``To an end item containing a covered material'' in its place.
The addition and revisions read as follows:
252.225-7052 Restriction on the Acquisition of Certain Magnets,
Tantalum, and Tungsten.
As prescribed in 225.7018-5, use the following clause:
Restriction on the Acquisition of Certain Magnets, Tantalum, and
Tungsten (Aug 2022)
* * * * *
(b) * * *
(3) For production of tantalum metals of any kind and alloys,
this restriction includes the reduction or melting of any form of
tantalum to create tantalum metal including unwrought, powder, mill
products, and alloys. The restriction also covers all subsequent
phases of production of tantalum metals and alloys.
* * * * *
[FR Doc. 2022-18224 Filed 8-24-22; 8:45 am]
BILLING CODE 5001-06-P
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</html>Indexed from Federal Register on August 25, 2022.
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