Proposed Rule2023-05676
Defense Federal Acquisition Regulation Supplement: Export-Controlled Items (DFARS Case 2018-D053)
Primary source
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Published
March 22, 2023
Issuing agencies
Defense DepartmentDefense Acquisition Regulations System
Abstract
DoD is proposing to amend the Defense Federal Acquisition Regulation Supplement (DFARS) to implement a requirement for certain contractors to provide export authorizations.
Full Text
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<title>Federal Register, Volume 88 Issue 55 (Wednesday, March 22, 2023)</title>
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[Federal Register Volume 88, Number 55 (Wednesday, March 22, 2023)]
[Proposed Rules]
[Pages 17357-17360]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-05676]
Federal Register / Vol. 88, No. 55 / Wednesday, March 22, 2023 /
Proposed Rules
[[Page 17357]]
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DEPARTMENT OF DEFENSE
Defense Acquisition Regulations System
48 CFR Parts 212, 225, and 252
[Docket DARS-2023-0005]
RIN 0750-AK35
Defense Federal Acquisition Regulation Supplement: Export-
Controlled Items (DFARS Case 2018-D053)
AGENCY: Defense Acquisition Regulations System, Department of Defense
(DoD).
ACTION: Proposed rule.
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SUMMARY: DoD is proposing to amend the Defense Federal Acquisition
Regulation Supplement (DFARS) to implement a requirement for certain
contractors to provide export authorizations.
DATES: Comments on the proposed rule should be submitted in writing to
the address shown below on or before May 22, 2023, to be considered in
the formation of a final rule.
ADDRESSES: Submit comments identified by DFARS Case 2018-D053, using
either of the following methods:
<bullet> Federal eRulemaking Portal: <a href="https://www.regulations.gov">https://www.regulations.gov</a>.
Search for ``DFARS Case 2018-D053.'' Select ``Comment'' and follow the
instructions to submit a comment. Please include ``DFARS Case 2018-
D053'' on any attached documents.
<bullet> Email: <a href="/cdn-cgi/l/email-protection#b7d8c4d399d3d1d6c5c4f7dad6dedb99dadedb"><span class="__cf_email__" data-cfemail="9af5e9feb4fefcfbe8e9daf7fbf3f6b4f7f3f6">[email protected]</span></a>. Include DFARS Case 2018-D053 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
DoD is proposing to amend the DFARS to enable the Defense Contract
Management Agency (DCMA) to obtain export authorizations from certain
contractors. Specifically, when a contract requires government quality
assurance surveillance oversight and has delivery to, or production or
performance in, government quality assurance countries, DoD proposes to
require the contractor to provide relevant export authorizations (i.e.,
export license exemptions, export license exceptions, export licenses,
or other approvals) to the cognizant DCMA administrative contracting
officer along with contact information for the empowered official or
the export point of contact. Government quality assurance countries
include the following countries: Australia, Belgium, Canada, Czech
Republic, Denmark, Finland, France, Germany, Greece, Israel, Italy,
Republic of Korea, Netherlands, Norway, Poland, Romania, Slovakia,
Spain, Sweden, Turkey, and the United Kingdom.
DCMA has found that a significant amount of time is required to
determine whether or not a contractor's export license allows for
foreign auditors to perform required quality assurance functions in
lieu of DCMA. Currently, DCMA is not able to review the export
authorization unless their personnel travel to the contractor's
worksite. If DCMA is able to receive and review an export authorization
from the contractor to determine whether or not they can delegate the
work to foreign auditors, this problem would be resolved.
II. Discussion and Analysis
The proposed rule updates DFARS clause 252.225-7048, Export-
Controlled Items, by adding to the clause at paragraph (e) a
requirement for certain contractors to provide relevant export
authorizations to the cognizant DCMA administrative contracting officer
along with contact information for the empowered official or the export
point of contact. A contractor will be required to submit this
information if their contract requires--
(1) Performance in or delivery to a government quality assurance
country; and
(2) Government quality assurance surveillance oversight.
The proposed rule revises the term export-controlled items and adds
the following terms to the list of definitions at 252.225-7048:
Empowered official, export license exception, export license exemption,
government quality assurance countries, other approval, and relevant
export authorization. The purpose of adding these definitions to the
clause is to clarify for contractors the requirement that is proposed
to be added at 252.225-7048(e).
III. Applicability to Contracts at or Below the Simplified Acquisition
Threshold, for Commercial Products Including Commercially Available
Off-the-Shelf Items, and for Commercial Services
The proposed rule applies to contracts at or below the simplified
acquisition threshold, for commercial products including commercially
available off-the-shelf items, and for commercial services. This
proposed rule requires relevant export authorizations and the contact
information of the export point of contact or the empowered official be
provided to DCMA for DoD contracts that require government quality
assurance surveillance oversight and have delivery to, or performance
in, government quality assurance countries. Therefore, the proposed
rule will apply to contracts at or below the simplified acquisition
threshold, for commercial products including commercially available
off-the-shelf items, and for commercial services.
IV. Expected Impact of the Proposed Rule
Currently, DCMA is required to cite Federal Acquisition Regulation
4.703(a) in order to obtain access to a contractor's export
authorization, which only requires the contractor to make the
information available to DCMA, not to submit the information directly
to DCMA. Therefore, DCMA personnel are not able to review the
information unless they travel to the contractor's international
worksite to inspect the export authorization in person.
This proposed rule would require the contractor to provide the
information to DCMA and identify a point of contact to answer
questions. Receiving the information directly will allow DCMA, without
traveling internationally, to make an informed determination regarding
whether quality assurance activities must be performed by a U.S.
contract administrator or may be delegated to a qualified foreign
inspector.
Contractors would already have the export authorization. Therefore,
the only burden associated with this proposed rule is providing a copy
to the DCMA administrative contracting officer. DoD has calculated this
burden in section VIII of this preamble.
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
[[Page 17358]]
(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. Regulatory Flexibility Act
DoD does not expect this proposed 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.
However, an initial regulatory flexibility analysis has been performed
and is summarized as follows:
This proposed rule is required to enable DCMA to obtain export
authorizations from certain contractors. Currently, DCMA is not able to
review the information unless their personnel travel to the
contractor's worksite. Until DCMA determines if export control items
are present and the licenses are examined, DCMA is unable to exercise
Host Nation Agreements. Requiring the export control license will allow
DCMA to make the determination necessary to exercise Host Nation
Agreements.
The objective of this proposed rule is to require certain
contractors and subcontractors to provide, upon receipt, relevant
export authorizations (i.e., export license exemptions, export license
exceptions, export licenses, or other approvals) to the cognizant DCMA
administrative contracting officer along with contact information for
the empowered official or the export point of contact. The legal basis
for the proposed rule is 41 U.S.C. 1303.
Based on the extrapolation from the DCMA Compass database, it is
estimated that 723 small entities were awarded DoD contracts that
require government quality assurance oversight surveillance and have
delivery to, or performance in, government quality assurance countries
from May 2018 through May 2019. It is estimated that most of these
small entities have subcontracts with delivery to, or performance in,
government quality assurance countries. The government quality
assurance countries are as follows: Australia, Belgium, Canada, Czech
Republic, Denmark, Finland, France, Germany, Greece, Israel, Italy,
Republic of Korea, Netherlands, Norway, Poland, Romania, Slovakia,
Spain, Sweden, Turkey, and the United Kingdom. Any additional burden
from having to submit relevant export authorizations along with contact
information for the empowered official or the export point of contact
to DCMA will impact these small entities.
There are reporting, recordkeeping, or other compliance
requirements associated with this proposed rule. The proposed rule may
result in a reporting or recordkeeping burden requirement.
The proposed rule does not duplicate, overlap, or conflict with any
other Federal rules.
There are no known significant alternative approaches to the
proposed rule that would meet the proposed objectives.
DoD invites comments from small business concerns and other
interested parties on the expected impact of this proposed rule on
small entities.
DoD will also consider comments from small entities concerning the
existing regulations in subparts affected by this proposed 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 2018-D053),
in correspondence.
VII. Paperwork Reduction Act
This proposed 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). Accordingly, DoD
has submitted a request for approval of a new information collection
requirement concerning 2018-D053, Export-Controlled Items, to the
Office of Management and Budget.
A. Estimate of Public Burden
Public reporting burden for this collection of information is
estimated to average 4 hours per response for: (1) the contractor to
locate the contact information for the cognizant DCMA Office using the
DCMA locater website; (2) the contractor to provide relevant export
authorizations and contact information for the empowered official or
export point of contact to DCMA; and (3) if necessary, for the
empowered official to provide clarifications to DCMA.
The annual reporting burden is estimated as follows for all
contractors with awards that require government quality assurance
surveillance oversight and have delivery to, or production or
performance in, government quality assurance countries:
Respondents: 3,614.
Responses per Respondent: 1.
Total Annual Responses: 3,614.
Preparation Hours per Response: 4 hours.
Total Response Burden Hours: 14,456.
B. Request for Comments Regarding Paperwork Burden
Written comments and recommendations on the proposed information
collection, including suggestions for reducing this burden, should be
submitted using the Federal eRulemaking Portal at <a href="https://www.regulations.gov">https://www.regulations.gov</a>. Search for ``DFARS Case 2018-D053.'' Select
``Comment'' and follow the instructions to submit a comment. Please
include ``Paperwork Burden--DFARS Case 2018-D053'' on any attached
documents. Comments must be submitted by the date for submission of
public comments shown in the DATES section of this preamble.
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 to 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 obtain a copy of the supporting statement and associated
collection instruments, please email <a href="/cdn-cgi/l/email-protection#caa5b9aee4aeacabb8b98aa7aba3a6e4a7a3a6"><span class="__cf_email__" data-cfemail="ff908c9bd19b999e8d8cbf929e9693d1929693">[email protected]</span></a>. Include DFARS
Case 2018-D053 in the subject line of the message.
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 proposed to be
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 PRODUCTS AND COMMERCIAL
SERVICES
0
2. Amend section 212.301 by--
0
a. Redesignating paragraphs (f)(ix)(CC) through (MM) as (f)(ix)(DD)
through (NN); and
0
b. Adding a new paragraph (f)(ix)(CC).
The addition reads as follows:
[[Page 17359]]
212.301 Solicitation provisions and contract clauses for the
acquisition of commercial products and commercial services.
* * * * *
(f) * * *
(ix) * * *
(CC) Use the clause at 252.225-7048, Export-Controlled Items, as
prescribed in 225.7901-4, to comply with section 890(a) of the National
Defense Authorization Act for Fiscal Year 2008 (Pub. L. 110-181).
* * * * *
PART 225--FOREIGN ACQUISITION
0
3. Revise section 225.7901-1 to read as follows:
225.7901-1 Definitions.
As used in this section--
Export-controlled items means--
(1) Any information or material that cannot be released to foreign
nationals or representatives of a foreign entity, without first
obtaining approval or license from the Department of State or the
Department of Commerce;
(2) Items subject to the International Traffic in Arms Regulations
(ITAR) (22 CFR parts 120 through 130) or the Export Administration
Regulations (EAR) (15 CFR parts 730 through 774); and
(3) Includes--
(i) ``Defense article'' (22 CFR 120.31), which means any item or
technical data that is specifically designed, developed, configured,
adapted, or modified for a military or other controlled use listed on
the U.S. Munitions List;
(ii) ``Defense service'' (22 CFR 120.32), which means providing
technical data, assistance, or training to a foreign person in the
design, manufacture, installation, repair, or operation of a defense
article;
(iii) ``Technical data'' (22 CFR 120.33), which means any
information for the design, development, assembly, production,
operation, repair, testing, maintenance, or modification of a defense
article; and
(iv) ``Item,'' defined in the EAR (15 CFR 772.1) as ``commodities,
software, and technology''.
225.7901-2 [Amended]
0
4. Amend section 225.7901-2 by removing ``International Traffic in Arms
Regulations'' and ``Export Administration Regulations'' and adding
``ITAR'' and ``EAR'' in their places, respectively.
0
5. Revise section 225.7901-4 to read as follows:
225.7901-4 Contract clause.
Use the clause at 252.225-7048, Export-Controlled Items, in all
solicitations and contracts, including solicitations and contracts
using FAR part 12 procedures for the acquisition of commercial products
and commercial services.
225.7902-2 [Amended]
0
6. Amend section 225.7902-2 by removing ``International Traffic in Arms
Regulation (ITAR)'' and adding ``ITAR'' in its place.
PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
0
7. Amend section 252.225-7048-
0
a. In the clause heading, by removing the date ``(JUN 2013)'' and
adding ``(DATE)'' in its place;
0
b. By revising paragraph (a);
0
c. In paragraphs (d)(4) and (5), by removing ``Parts'' and adding
``parts'' in its place;
0
d. By redesignating paragraph (e) as paragraph (f);
0
e. By adding a new paragraph (e); and
0
f. By revising the newly redesignated paragraph (f).
The revisions and addition read as follows.
252.225[dash]7048 Export-Controlled Items.
* * * * *
(a) Definitions. As used in this clause--
Empowered official, as defined in the International Traffic in Arms
Regulations (ITAR) at 22 CFR 120.67, means--
(1) A U.S. person who--
(i) Is directly employed by the applicant or a subsidiary in a
position having authority for policy or management within the applicant
organization;
(ii) Is legally empowered in writing by the applicant to sign
license applications or other requests for approval on behalf of the
applicant;
(iii) Understands the provisions and requirements of the various
export control statutes and regulations, and the criminal liability,
civil liability, and administrative penalties for violating the Arms
Export Control Act and the ITAR; and
(iv) Has the independent authority to--
(A) Inquire into any aspect of a proposed export, temporary import,
or brokering activity by the applicant;
(B) Verify the legality of the transaction and the accuracy of the
information to be submitted; and
(C) Refuse to sign any license application or other request for
approval without prejudice or other adverse recourse.
(2) For the purposes of a broker who is a foreign person, the
empowered official may be a foreign person who otherwise meets the
criteria for an empowered official in paragraph (1) of this definition.
Export-controlled items means--
(1) Any information or material that cannot be released to foreign
nationals or representatives of a foreign entity, without first
obtaining approval or license from the Department of State or the
Department of Commerce;
(2) Items subject to the ITAR (22 CFR parts 120 through 130) or the
Export Administration Regulations (EAR) (15 CFR parts 730 through 774);
and
(3) Includes--
(i) ``Defense article'' (22 CFR 120.31), which means any item or
technical data that is specifically designed, developed, configured,
adapted, or modified for a military or other controlled use listed on
the U.S. Munitions List;
(ii) ``Defense service'' (22 CFR 120.32), which means providing
technical data, assistance, or training to a foreign person in the
design, manufacture, installation, repair, or operation of a defense
article;
(iii) ``Technical data'' (22 CFR 120.33), which means any
information for the design, development, assembly, production,
operation, repair, testing, maintenance, or modification of a defense
article; and
(iv) ``Item,'' defined in the EAR (15 CFR 772.1) as ``commodities,
software, and technology''.
Export license exception means a special authorization that allows
export or re-export, under stated conditions, of items that are subject
to the EAR that would otherwise require an export license. Export
license exceptions are detailed in the EAR, 15 CFR 740.
Export license exemption means the authorization that exempts the
item or items from the otherwise applicable licensing requirements
under certain conditions. Export license exemptions are detailed in the
ITAR, 22 CFR parts 120 through 130.
Government quality assurance countries means countries that have
current Government Reciprocal Quality Assurance agreements with the
Department of Defense or Reciprocal Government Quality Assurance
annexes contained in a Reciprocal Defense Procurement Memorandum of
Understanding. Accordingly, the following are government quality
assurance countries: Australia, Belgium, Canada, Czech Republic,
Denmark, Finland, France, Germany, Greece, Israel, Italy, Republic of
Korea, Netherlands, Norway, Poland, Romania, Slovakia, Spain, Sweden,
Turkey, and the United Kingdom.
[[Page 17360]]
``Other approval'' as defined in the ITAR at 22 CFR 120.57, means a
document issued by the Deputy Assistant Secretary of State for Defense
Trade Controls, or authorized designee, that approves an activity
regulated by the ITAR (e.g., approvals for brokering activities or
retransfer authorizations), or the use of an exemption to the license
requirements as described in the ITAR.
Relevant export authorization means an export license exemption,
export license exception, export license, or other approval.
* * * * *
(e)(1) If the contract requires government quality assurance
surveillance oversight and has delivery to, or production or
performance in, government quality assurance countries, the Contractor
shall, upon receipt of relevant export authorizations, provide to the
Defense Contract Management Agency (DCMA) Administrative Contracting
Officer--
(i) A copy of the relevant export authorizations; and
(ii) Contact information for the empowered official or the export
point of contact.
(2) The DCMA administrative contracting officer locater can be
found at <a href="https://pubmini.dcma.mil/CMT_View/CMT_View_Search.cfm">https://pubmini.dcma.mil/CMT_View/CMT_View_Search.cfm</a>.
(f) Subcontracts. The Contractor shall include the substance of
this clause, including this paragraph (f), in all subcontracts.
* * * * *
[FR Doc. 2023-05676 Filed 3-21-23; 8:45 am]
BILLING CODE 50010-06-P
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