Rule2022-18226
Defense Federal Acquisition Regulation Supplement: Employment Transparency Regarding Individuals Who Perform Work in the People's Republic of China (DFARS Case 2022-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
August 25, 2022
Effective
August 25, 2022
Issuing agencies
Defense DepartmentDefense Acquisition Regulations System
Abstract
DoD is issuing an interim rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to implement a section of the National Defense Authorization Act that requires a disclosure from entities that employ one or more individuals who will perform work in the People's Republic of China.
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 52339-52342]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-18226]
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DEPARTMENT OF DEFENSE
Defense Acquisition Regulations System
48 CFR Parts 212, 225, and 252
[Docket DARS-2022-0020]
RIN 0750-AL61
Defense Federal Acquisition Regulation Supplement: Employment
Transparency Regarding Individuals Who Perform Work in the People's
Republic of China (DFARS Case 2022-D010)
AGENCY: Defense Acquisition Regulations System, Department of Defense
(DoD).
ACTION: Interim rule.
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SUMMARY: DoD is issuing an interim rule amending the Defense Federal
Acquisition Regulation Supplement (DFARS) to implement a section of the
National Defense Authorization Act that requires a disclosure from
entities that employ one or more individuals who will perform work in
the People's Republic of China.
DATES: Effective August 25, 2022.
Comments on the interim rule should be submitted in writing to the
address shown below on or before October 24, 2022, to be considered in
the formation of a final rule.
ADDRESSES: Submit comments identified by DFARS Case 2022-D010, using
any of the following methods:
[cir] Federal eRulemaking Portal: <a href="https://www.regulations.gov">https://www.regulations.gov</a>.
Search for ``DFARS Case 2022-D010.'' Select ``Comment'' and follow the
instructions to submit a comment. Please include your name, company
name (if any), and ``DFARS Case 2022-D010'' on any attached document.
[cir] Email: <a href="/cdn-cgi/l/email-protection#58372b3c763c3e392a2b183539313476353134"><span class="__cf_email__" data-cfemail="fe918d9ad09a989f8c8dbe939f9792d0939792">[email protected]</span></a>. Include DFARS Case 2022-D010 in
the subject line of the message.
Comments received generally will be posted without change to
<a href="https://www.regulations.gov">https://www.regulations.gov</a>, including any personal information
provided. To confirm receipt of your comment(s), please check <a href="https://www.regulations.gov">https://www.regulations.gov</a>, approximately two to three days after submission
to verify posting.
FOR FURTHER INFORMATION CONTACT: Kimberly Bass, telephone 703-717-3446.
SUPPLEMENTARY INFORMATION:
I. Background
This interim rule revises the DFARS to implement section 855 of the
National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2022
(Pub. L. 117-81, 10 U.S.C. 4651 note prec.). Section 855 requires
offerors who are covered entities, when submitting a bid or proposal
for a covered contract, to disclose their use of workforce and
facilities in the People's Republic of China, if they employ one or
more individuals who will perform work in the People's Republic of
China, unless a national security waiver has been granted. A recurring
disclosure is also required for fiscal years 2023 and 2024, for
contractors that are covered entities and are a party to one or more
covered contracts in each fiscal year, if the contractor employs one or
more individuals who perform work in the People's Republic of China on
any such contract.
II. Discussion and Analysis
A. Award Restriction
Unless a waiver has been granted, the statutory restriction on the
award, renewal, or extension of a covered contract requires the offeror
to provide, at the time of an offer, the disclosures required in the
solicitation provision at DFARS 252.225-7057, Preaward Disclosure of
Employment of Individuals Who Work in the People's Republic of China.
The statutory restriction requires contractors to provide the
disclosures required in the contract clause at 252.225-7058, Postaward
Disclosure of Employment of Individuals Who Work in the People's
Republic of China. Specifically, offerors and contractors that are
covered entities are required to disclose their use of workforce and
facilities in the People's Republic of China, if they employ one or
more individuals who will perform work in the People's Republic of
China on a covered contract.
B. Preaward Disclosure Requirements
This rule adds in the provision at 252.225-7057, Preaward
Disclosure of Employment of Individuals Who Work in the People's
Republic of China, the requirement for offerors to disclose their use
of workforce and facilities in the People's Republic of China, if the
offeror employs one or more individuals who perform work in the
People's Republic of China, unless a national security waiver of the
disclosure is granted. The preaward disclosure is required at the time
the offeror submits an offer.
C. Postaward Disclosure Requirements
The requirement for the postaward disclosures for fiscal years 2023
and 2024 is located in the clause at 252.225-7058, Postaward Disclosure
of Employment of Individuals Who Work in the People's Republic of
China. These disclosures are required following the contract award for
contractors that are covered entities. The postaward disclosures must
include the total number of individuals who will perform work in the
People's Republic of China on the covered contracts; and a description
of the physical presence of the facility, including the street address,
where work on the covered contract will be performed.
D. National Security Waiver of Disclosure
The requirement for the national security waiver of disclosure is
added at DFARS 225.7021-3. The disclosure requirements may be waived if
the senior procurement executive determines in writing that such
disclosure would not be in the national security interests of the
United States. The waiver authority may not be delegated. A cross-
reference is provided to DFARS PGI 225.7021-4(a) to provide guidance on
requirements for the senior procurement executive's determination.
E. Definitions
Definitions for ``covered contract'' and ``covered entity'' are
included at 225.7021-1 as defined in the statute. ``Covered contract''
is defined as any DoD contract or subcontract with a value in excess of
$5 million and excludes contracts for commercial
[[Page 52340]]
items. ``Covered entity'' is defined as any corporation, company,
limited liability, limited partnership, business trust, business
association or similar entity, including any subsidiary thereof
performing work on a covered contract in the People's Republic of
China.
F. Lists of Laws Not Applicable to Commercial Items
The statute does not apply to commercial contracts and
subcontracts. Accordingly, 10 U.S.C. 4651 note prec. is added to the
lists of laws that are not applicable to commercial items at DFARS
212.503, Applicability of certain laws to executive agency contracts
for the acquisition of commercial items; and 212.504, Applicability of
certain laws to subcontracts for the acquisition of commercial items.
At 212.503, paragraph (ix), 107 Stat 1720 (Section 843(a), Pub. L. 103-
160), Reporting Requirement Regarding Dealings with Terrorist
Countries, is removed, as the statute expired on September 30, 1996.
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 creates a new solicitation provision and contract clause:
(1) DFARS 252.225-7057, Preaward Disclosure of Employment of
Individuals Who Work in the People's Republic of China; and (2) DFARS
252.225-7058, Postaward Disclosure of Employment of Individuals Who
Work in the People's Republic of China. The solicitation provision at
DFARS 252.225-7057 is prescribed at DFARS 225.7021-5(a) for use in
solicitations that include the clause at DFARS 252.225-7058. The
contract clause at DFARS 252.225-7058 is prescribed at DFARS 225.7021-
5(b) for use in solicitations and contracts with an estimated value in
excess of $5 million unless a waiver has been granted. Section 855 of
the NDAA for FY 2022 applies to covered contracts valued in excess of
$5 million, excluding contracts for commercial products or commercial
services. Therefore, DoD is not applying the rule to contracts at or
below the SAT or to contracts for the acquisition of commercial
services or commercial products, including COTS items.
IV. Expected Impact of the Rule
The contracting officer will be required to insert the new
solicitation provision and contract clause in solicitations and
resulting contracts with a value in excess of $5 million, excluding
contracts for commercial items. Contractors will be required to include
the clause in subcontracts with a value in excess of $5 million,
excluding subcontracts for commercial items. The offeror's preaward
disclosure is required when the offeror that is a covered entity
submits a proposal in response to a solicitation for a covered
contract. The solicitation provision requires the offeror to disclose
their proposed use of workforce and facilities in the People's Republic
of China, if the offeror employs one or more individuals who will
perform work in the People's Republic of China on a covered contract.
The contractor's postaward disclosure is also required for fiscal
years 2023 and 2024, to disclose if the contractor that is a covered
entity employs one or more individuals who perform work in the People's
Republic of China on a covered contract. The disclosure must include
the total number of individuals who will perform work in the People's
Republic of China on the contract; and a description of the exact
street location of the physical presence in China where the work on the
contract will be performed. The postaward disclosure requirements will
flow down to subcontracts that meet the definition of ``covered
contract.''
In order to provide the disclosures, offerors, contractors, and
subcontractors will need to maintain records of the information
required for the disclosures, ensuring that the information is
available when needed.
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
DoD does not expect this interim rule to have a significant
economic impact on a substantial number of small entities within the
meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq.,
because data analysis revealed no impacted small entities. However, an
initial regulatory flexibility analysis has been performed and is
summarized as follows:
This rule is required to implement section 855 of the National
Defense Authorization Act (NDAA) for Fiscal Year 2022 (Pub. L. 117-81,
10 U.S.C. 4651 note prec.).
The objective of the rule is implement section 855 of the NDAA for
FY 2022 to require offerors when submitting a proposal for a covered
contract to disclose their use of workforce and facilities in the
People's Republic of China, if they employ one or more individuals who
will perform work in the People's Republic of China, unless a national
security waiver has been granted. A national security waiver may be
granted if a determination is made that such disclosure would not be in
the interest of national security. Recurring disclosures are required
following contract award for contractors that are covered entities for
fiscal years 2023 and 2024. The initial and recurring disclosures must
include the total number of individuals who will perform work in the
People's Republic of China on the covered contracts and a description
of the physical presence of the facility, including the street address,
where work on the covered contract will be performed.
Data from the Federal Procurement Data System (FPDS) was analyzed
for fiscal years 2019, 2020, and 2021, purchases of supplies or end
products and services for which the place of manufacture, place of
performance, or country of the product's origin is China; with a value
above $5 million; and excluding commercial items and commercially
available off-the-shelf (COTS) items. The FPDS data revealed no awards
that met these criteria.
In addition, a data analysis was performed on the North Atlantic
Treaty Organization (NATO) Commercial and Government Entity (NCAGE)
codes from the NATO Support and Procurement Agency for entities located
in the
[[Page 52341]]
People's Republic of China, including Hong Kong. This review revealed a
total of 5,143 entities. There were 4,706 entities in the People's
Republic of China with NCAGE codes, and 437 entities in Hong Kong with
NCAGE codes. This list of NCAGE codes was compared to any People's
Republic of China or Hong Kong NCAGE codes from the FPDS data results
for a list of contract awards in fiscal years 2019, 2020, and 2021.
Similarly, there were no contract awards to any unique entities or
small entities meeting the criteria.
There are projected reporting or recordkeeping requirements, and
there may be costs to ensure compliance. The contractor's postaward
disclosure is required for fiscal years 2023 and 2024, if the
contractor that is a covered entity employs one or more individuals who
perform work in the People's Republic of China on a covered contract.
The disclosure must include the total number of individuals who will
perform work in the People's Republic of China on the contract and a
description of the exact street location of the physical presence in
China where the work on the contract will be performed.
The rule does not duplicate, overlap, or conflict with any other
Federal rules.
DoD was unable to identify any other alternatives that would reduce
burden on small businesses and still meet the objectives of the
statute.
DoD invites comments from small business concerns and other
interested parties on the expected impact of this rule on small
entities.
DoD will also consider comments from small entities concerning the
existing regulations in subparts affected by this rule in accordance
with 5 U.S.C. 610. Interested parties must submit such comments
separately and should cite 5 U.S.C 610 (DFARS Case 2022-D010), in
correspondence.
VIII. Paperwork Reduction Act
This rule contains 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). This information collection
requirement has been assigned OMB Control Number 0750-0005, entitled
Defense Federal Acquisition Regulation Supplement (DFARS), Disclosure
of Employment of Individuals Who Work in the People's Republic of
China. The DFARS rule adds preaward and postaward disclosure
requirements.
A. Estimate of Public Reporting Burden
Public reporting burden for this collection of information is
estimated to average approximately 1 hour per response, including the
time for reviewing instructions, searching existing data sources,
gathering and maintaining the data needed, and completing and reviewing
the collection of information.
The annual reporting burden estimated as follows:
Respondents: 30.
Responses per respondent: approximately 1.6.
Total annual responses: 50.
Preparation hours per response: 1.
Total response burden hours: 50.
B. Request for Comments Regarding Paperwork Burden
Written comments and recommendations on the proposed information
collection, including suggestions for reducing this burden, should be
sent to Ms. Susan Minson at the Office of Management and Budget, Desk
Officer for DoD, Room 10236, New Executive Office Building, Washington,
DC 20503, or email <a href="/cdn-cgi/l/email-protection#42113731232c1d0f6c1d0f2b2c312d2c022d2f206c272d326c252d34"><span class="__cf_email__" data-cfemail="a6f5d3d5c7c8f9eb88f9ebcfc8d5c9c8e6c9cbc488c3c9d688c1c9d0">[email protected]</span></a>, with a copy to the
Defense Acquisition Regulations System, Attn: Ms. Kimberly Bass, at
<a href="/cdn-cgi/l/email-protection#412e32256f2527203332012c20282d6f2c282d"><span class="__cf_email__" data-cfemail="87e8f4e3a9e3e1e6f5f4c7eae6eeeba9eaeeeb">[email protected]</span></a>. Comments can be received from 30 to 60 days after
the date of this notice, but comments to OMB will be most useful if
received by OMB within 30 days after the date of this notice.
Public comments are particularly invited on: whether this
collection of information is necessary for the proper performance of
functions of the DFARS, and will have practical utility; whether our
estimate of the public burden of this collection of information is
accurate, and based on valid assumptions and methodology; ways to
enhance the quality, utility, and clarity of the information to be
collected; and ways in which we can minimize the burden of the
collection of information on those who are to respond, through the use
of appropriate technological collection techniques or other forms of
information technology.
To request more information on this proposed information collection
or to obtain a copy of the proposal and associated collection
instruments, please contact Defense Acquisition Regulations System,
Attn: Ms. Kimberly Bass, via email at <a href="/cdn-cgi/l/email-protection#b3dcc0d79dd7d5d2c1c0f3ded2dadf9ddedadf"><span class="__cf_email__" data-cfemail="67081403490301061514270a060e0b490a0e0b">[email protected]</span></a>. Include DFARS
Case 2022-D010 in the subject line of the message.
IX. Determination To Issue an Interim Rule
A determination has been made under the authority of the Secretary
of Defense that urgent and compelling reasons exist to promulgate this
interim rule without prior opportunity for public comment.
Implementation of the disclosure requirements is urgent, because
section 855 of the NDAA for FY 2022 requires DoD to collect preaward
disclosures beginning in FY 2022 and postaward disclosures beginning in
FY 2023. The disclosures are necessary to mitigate the risk associated
with performance of DoD contracts and subcontracts at facilities
located in the People's Republic of China. Performance of a contract,
whether classified or unclassified, in a nation that is not our ally
may provide opportunities for that nation to gather sensitive
information. It is a matter of national security to be aware of the
entities, contracts, and subcontracts that are exposed to such risks,
so that mitigation strategies can be implemented. However, pursuant to
41 U.S.C. 1707 and Federal Acquisition Regulation 1.501-3(b), DoD will
consider public comments received in response to this interim rule in
the formation of the final rule.
List of Subjects in 48 CFR Parts 212, 225, and 252
Government procurement.
Jennifer D. Johnson,
Editor/Publisher, Defense Acquisition Regulations System.
Therefore, 48 CFR parts 212, 225, and 252 are amended as follows:
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 212.503 by revising paragraph (a)(ix) to read as
follows:
212.503 Applicability of certain laws to executive agency contracts
for the acquisition of commercial items.
(a) * * *
(ix) 10 U.S.C. 4651, note prec. (section 855, Pub. L. 117-81),
Employment Transparency Regarding Individuals Who Perform Work in the
People's Republic of China.
* * * * *
0
3. Amend section 212.504 by--
0
a. Redesignating paragraphs (a)(xvi) and (xvii) as paragraphs (a)(xvii)
and (xviii); and
0
b. Adding a new paragraph (a)(xvi) to read as follows:
212.504 Applicability of certain laws to subcontracts for the
acquisition of commercial items.
(a) * * *
(xvi) 10 U.S.C. 4651, note prec. (section 855, Pub. L. 117-81),
[[Page 52342]]
Employment Transparency Regarding Individuals Who Perform Work in the
People's Republic of China.
* * * * *
PART 225--FOREIGN ACQUISITION
0
4. Add sections 225.7021, 225.7021-1, 225.7021-2, 225.7021-3, and
225.7021-4 to subpart 225.70 to read as follows:
* * * * *
Sec.
225.7021 Disclosure requirements for employment transparency
regarding individuals who perform work in the People's Republic of
China.
225.7021-1 Definitions.
225.7021-2 Restrictions.
225.7021-3 National security waiver of disclosure.
225.7021-4 Solicitation provision and contract clause.
* * * * *
225.7021 Disclosure requirements for employment transparency regarding
individuals who perform work in the People's Republic of China.
See PGI 225.7021 for additional procedures regarding disclosures.
225.7021-1 Definitions.
As used in this section--
Covered contract means any DoD contract or subcontract with a value
in excess of $5 million, not including contracts for commercial items.
Covered entity means any corporation, company, limited liability
company, limited partnership, business trust, business association, or
other similar entity, including any subsidiary thereof, performing work
on a covered contract in the People's Republic of China, including by
leasing or owning real property used in the performance of the covered
contract in the People's Republic of China.
225.7021-2 Restrictions.
In accordance with section 855 of the National Defense
Authorization Act for Fiscal Year 2022 (Pub. L. 117-81, 10 U.S.C. 4651
note prec.), do not award, extend, or exercise an option on a covered
contract unless a covered entity has submitted each required
disclosure.
225.7021-3 National security waiver of disclosure.
The senior procurement executive (SPE) may waive the disclosure
requirements at 225.7021-2 if the SPE determines in writing that such
disclosure would not be in the national security interests of the
United States. This authority may not be delegated. See PGI 225.7021-3
for procedures and content requirements regarding the SPE's written
determination.
225.7021-4 Solicitation provision and contract clause.
(a) Use the provision at 252.225-7057, Preaward Disclosure of
Employment of Individuals Who Work in the People's Republic of China,
in solicitations that include the clause at 252.225-7058.
(b) Unless a waiver has been granted, use the clause at 252.225-
7058, Postaward Disclosure of Employment of Individuals Who Work in the
People's Republic of China, in solicitations and contracts with an
estimated value in excess of $5 million.
PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
0
5. Add sections 252.225-7057 and 252.225-7058 to read as follows:
252.225-7057 Preaward Disclosure of Employment of Individuals Who
Work in the People's Republic of China.
As prescribed in 225.7021-4(a), use the following provision:
Preaward Disclosure of Employment of Individuals Who Work in the
People's Republic of China (Aug 2022)
(a) Definitions. As used in this provision--
Covered contract and covered entity have the meaning given in
the clause 252.225-7058, Postaward Disclosure of Employment of
Individuals Who Work in the People's Republic of China.
(b) Prohibition on award. In accordance with section 855 of the
National Defense Authorization Act for Fiscal Year 2022 (Pub. L.
117-81, 10 U.S.C. 4651 note prec.), DoD may not award a contract to
the Offeror if it is a covered entity and proposes to employ one or
more individuals who will perform work in the People's Republic of
China on a covered contract, unless the Offeror has disclosed its
use of workforce and facilities in the People's Republic of China.
(c) Preaward disclosure requirement. At the time of submission
of an offer for a covered contract, an Offeror that is a covered
entity shall provide disclosures to include--
(1) The proposed use of workforce on a covered contract or
subcontract, if the Offeror employs one or more individuals who
perform work in the People's Republic of China;
(2) The total number of such individuals who will perform work
in the People's Republic of China; and
(3) A description of the physical presence, including street
address or addresses, in the People's Republic of China, where work
on the covered contract will be performed.
(End of provision)
252.225-7058 Postaward Disclosure of Employment of Individuals Who
Work in the People's Republic of China.
As prescribed in 225.7021-4(b), use the following clause:
Postaward Disclosure of Employment of Individuals Who Work in The
People's Republic of China (Aug 2022)
(a) Definitions. As used in this clause--
Covered contract means any DoD contract or subcontract with a
value in excess of $5 million, not including contracts for
commercial items.
Covered entity means any corporation, company, limited liability
company, limited partnership, business trust, business association,
or other similar entity, including any subsidiary thereof,
performing work on a covered contract in the People's Republic of
China, including by leasing or owning real property used in the
performance of the covered contract in the People's Republic of
China.
(b) Disclosure requirement. (1) In accordance with section 855
of the National Defense Authorization Act for Fiscal Year 2022 (Pub.
L. 117-81, 10 U.S.C. 4651 note prec.), DoD may not award, extend, or
exercise an option on a covered contract with a covered entity
unless such covered entity submits each required disclosure of its
use of workforce and facilities in the People's Republic of China,
if it employs one or more individuals who perform work in the
People's Republic of China on a covered contract.
(2) If the Contractor is a covered entity, the Contractor shall
disclose for the Government's fiscal years 2023 and 2024, the
Contractor's employment of one or more individuals who perform work
in the People's Republic of China on any covered contract. The
disclosures shall include--
(i) The total number of such individuals who perform work in the
People's Republic of China on the covered contracts funded by DoD;
and
(ii) A description of the physical presence, including street
address or addresses in the People's Republic of China, where work
on the covered contract is performed.
(c) Subcontracts. The Contractor shall insert this clause,
including this paragraph (c), without alteration other than to
identify the appropriate parties, in all subcontracts that meet the
definition of a covered contract.
(End of clause)
[FR Doc. 2022-18226 Filed 8-24-22; 8:45 am]
BILLING CODE 5001-06-P
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