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Rule2023-20816

Defense Federal Acquisition Regulation Supplement: Limitation on Certain Institutes of Higher Education (DFARS Case 2021-D023)

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Published

September 29, 2023

Effective

October 1, 2023

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 for Fiscal Year 2021, that provides for the limitation of funds authorized to be appropriated or otherwise made available for any fiscal year for DoD, to be provided to an institution of higher education that hosts a Confucius Institute.

Full Text

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<title>Federal Register, Volume 88 Issue 188 (Friday, September 29, 2023)</title>
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[Federal Register Volume 88, Number 188 (Friday, September 29, 2023)]
[Rules and Regulations]
[Pages 67607-67610]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-20816]

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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 209, 212, and 252

[Docket DARS-2023-0029]
RIN 0750-AL41

Defense Federal Acquisition Regulation Supplement: Limitation on
Certain Institutes of Higher Education (DFARS Case 2021-D023)

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 for Fiscal Year 2021, that provides
for the limitation of funds authorized to be appropriated or otherwise
made available for any fiscal year for DoD, to be provided to an
institution of higher education that hosts a Confucius Institute.

DATES: Effective October 1, 2023.
Comments on the interim rule should be submitted in writing to the
address shown below on or before November 28, 2023, to be considered in
the formation of a final rule.

ADDRESSES: Submit comments identified by DFARS Case 2021-D023, 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 2021-D023.'' Select ``Comment'' and follow the
instructions to submit a comment. Please include ``DFARS Case 2021-
D023'' on any attached documents.
[cir] Email: <a href="/cdn-cgi/l/email-protection#1a75697e347e7c7b68695a777b737634777376"><span class="__cf_email__" data-cfemail="127d61763c7674736061527f737b7e3c7f7b7e">[email&#160;protected]</span></a>. Include DFARS Case 2021-D023 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 1062 of
the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2021
(Pub. L. 116-283). Section 1062 provides that none of the funds
authorized to be appropriated or otherwise made available for any
fiscal year for DoD may be provided to an institution of higher
education that hosts a Confucius Institute, defined as a cultural
institute directly or indirectly funded by the government of the
People's Republic of China. According to section 1062, the limitation
of funds is applicable to amounts other than those provided directly to
students as educational assistance. The effective date of section 1062
is October 1, 2023.

II. Discussion and Analysis

A. New Definitions

The interim rule adds new definitions at DFARS section 209.170-1,
Definitions, for ``Confucius Institute'' and ``institution of higher
education''. ``Confucius Institute'' means a cultural institute
directly or indirectly funded by the government of the People's
Republic of China. ``Institution of higher education'' has the meaning
given in 20 U.S.C. 1002.

B. Limitation of Funds

At DFARS 209.170-2, the limitation is added regarding not providing
funds appropriated or otherwise made available for any fiscal year for
DoD to an institution of higher education that hosts a Confucius
Institute, other than amounts provided directly to students as
educational assistance.

C. Waiver of Funds Limitation

Pursuant to section 1286(g) of the NDAA for FY 2019 (Pub. L. 115-
232; 10 U.S.C. 4001 note), the funds limitation with respect to an
institution of higher education can be waived by the Office of the
Under Secretary of Defense for Research and Engineering (OUSD(R&E)).
Section 209.170-3 addresses the OUSD(R&E), Confucius Institute Waiver
Program procedures.

D. Solicitation Provision

A new solicitation provision is added at DFARS 252.209-7011,
Representation for Restriction on the Use of Certain Institutions of
Higher Education, for use in solicitations, including solicitations
using Federal Acquisition Regulation (FAR) part 12 procedures for the
acquisition of commercial products and commercial services, for
acquisitions to an institution of higher education. The prescription
for the provision is at DFARS 209.170-4. The provision is also added to
the list of solicitation provisions and contract clauses for the
acquisition of commercial products and commercial services at DFARS
212.301.

III. Applicability to Contracts at or Below the Simplified Acquisition
Threshold (SAT) and for Commercial Products, Including Commercially
Available Off-the-Shelf (COTS) Items, and Commercial Services

This rule creates a new solicitation provision at DFARS 252.209-
7011, Representation for Restriction on the Use of Certain Institutions
of Higher Education. The provision at DFARS 252.209-7011 is prescribed
in DFARS 209.170-4 for use in solicitations for acquisitions to an
institution of higher education, including solicitations for
acquisitions to an institution of higher education using FAR part 12
procedures for the acquisition of commercial products, including COTS
items, and commercial services. DoD is applying the rule to contracts
at or below the SAT, to contracts for the acquisition of commercial
products including COTS items, and for the acquisition of commercial
services.

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 has made that determination. Therefore, this rule
applies at or below the simplified acquisition threshold.

[[Page 67608]]

B. Applicability to Contracts for the Acquisition of Commercial
Products Including COTS Items and for the Acquisition of Commercial
Services

10 U.S.C. 3452 exempts contracts and subcontracts for the
acquisition of commercial products, including COTS items, and
commercial services from provisions of law enacted after October 13,
1994, unless the Under Secretary of Defense (Acquisition and
Sustainment) (USD(A&S)) makes a written determination that it would not
be in the best interest of DoD to exempt contracts for the procurement
of commercial products and commercial services from the applicability
of the provision or contract requirement, except for a provision of law
that--

--Provides for criminal or civil penalties;
--Requires that certain articles be bought from American sources
pursuant to 10 U.S.C. 4862 or that strategic materials critical to
national security be bought from American sources pursuant to 10 U.S.C.
4863; or
--Specifically refers to 10 U.S.C. 3452 and states that it shall apply
to contracts and subcontracts for the acquisition of commercial
products (including COTS items) and commercial services.

Section 1062 of the NDAA for FY 2021, which is implemented in this
rule, does not impose criminal or civil penalties, does not require
purchase pursuant to 10 U.S.C. 4862 or 4863, and does not refer to 10
U.S.C. 3452. Section 1062 is silent on applicability to the acquisition
of commercial services and commercial products (including COTS items).
Therefore, section 1062 will not apply to the acquisition of commercial
services or commercial products including COTS items unless a written
determination is made. Due to delegations of authority, the Principal
Director, Defense Pricing and Contracting is the appropriate authority
to make this determination. DoD has made that determination. Therefore,
this rule applies to the acquisition of commercial products including
COTS items and to the acquisition of commercial services.

C. Determinations

To ensure compliance with the limitation on the use of funds, the
rule must apply to all contracts with institutions of higher education.
An exception for acquisitions at or below the SAT or for the
acquisition of commercial products including COTS items and commercial
services would exclude the contracts intended to be covered by the law,
thereby undermining the overarching public policy purpose of the law
and the associated statutory funds limitation.

IV. Expected Impact of the Rule

Offerors that are institutions of higher education will be required
to comply with the new provision and to represent, by submission of an
offer, that they are not an entity hosts a Confucius Institute, or that
they have obtained a waiver from OUSD(R&E). De minimis associated
burden exists since the rule only requires the prospective offeror,
when submitting an offer in response to a solicitation, to represent
compliance with the requirements of section 1062. Moreover, data from
the Federal Procurement Data System (FPDS) indicate that 10 unique
entities in fiscal year 2022 met the definition of an institution of
higher education; none of those 10 entities hosted a Confucius
Institute.

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, as amended.

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 the funds limitation concerns a very limited number of offerors
and, therefore, has a limited impact. However, an initial regulatory
flexibility analysis has been performed and is summarized as follows:
DoD is amending the Defense Federal Acquisition Regulation
Supplement (DFARS) to require that none of the funds authorized to be
appropriated or otherwise made available for any fiscal year for DoD
may be provided to an institution of higher education that hosts a
Confucius Institute, defined as a cultural institute directly or
indirectly funded by the government of the People's Republic of China.
The objective for the rule is to implement section 1062 of the
National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2021,
which is the legal basis for the rule. Section 1062 provides
limitations on appropriated funds. Specifically, section 1062 prohibits
DoD from providing funding to any U.S. institution of higher education
hosting a Confucius Institute, unless that institution receives a
waiver from the DoD Office of the Under Secretary of Defense for
Research and Engineering (OUSD(R&E)), when a determination is made that
such a waiver is appropriate in accordance with the OUSD(R&E) Confucius
Institute Waiver Program.
To assess the potential impact, the Federal Procurement Data System
(FPDS) was queried for FY 2020, 2021, and 2022 for DoD contracts and
purchase orders, to include commercial products and commercial
services, awarded to institutions of higher education that meet the
definition in 20 U.S.C. 1002. The FPDS data reflect that DoD made a
total of 110 contract awards to 10 unique entities over the entire
three fiscal years. All awards were made to other than small unique
entities. Entities in FPDS categorized as higher-level institutions of
education are designated only as other than small entities.
This rule does not include any new reporting, recordkeeping, or
other compliance requirements for small entities, unless they are
associated with an institution of higher education that hosts a
Confucius Institute.
The rule does not duplicate, overlap, or conflict with any other
Federal rules.
There are no known significant alternative approaches to the rule
that would meet the requirements 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

[[Page 67609]]

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 2021-D023), in
correspondence.

VIII. Paperwork Reduction Act

This interim 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).

IX. Determination To Issue an Interim Rule Effective in Less Than 30
Days

A determination has been made under the authority of the Secretary
of Defense that urgent and compelling reasons exist to promulgate this
interim rule, effective in less than 30 days, without prior opportunity
for public comment. This action must be effective in less than 30 days,
because the effective date of the statute is October 1, 2023. Section
1062 of the NDAA for FY 2021 provides that none of the funds authorized
to be appropriated or otherwise made available for any fiscal year for
DoD may be provided to an institution of higher education that hosts a
Confucius Institute, defined as a cultural institute directly or
indirectly funded by the government of the People's Republic of China.
Therefore, the interim rule, which implements section 1062, is
necessary to ensure that contracting officers adhere to the limitation
on the use of funds to avoid the risk of a possible violation of the
Anti-Deficiency Act.
However, pursuant to 41 U.S.C. 1707 and FAR 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 209, 212, and 252

Government procurement.

Jennifer D. Johnson,
Editor/Publisher, Defense Acquisition Regulations System.

Therefore, 48 CFR parts 209, 212, and 252 are amended as follows:

0
1. The authority citation for 48 CFR parts 209, 212, and 252 continues
to read as follows:

Authority: 41 U.S.C. 1303 and 48 CFR chapter 1.

PART 209--CONTRACTOR QUALIFICATIONS

209.106 [Amended]

0
2. Amend section 209.106 by removing ``preawared'' and adding
``preaward'' in its place.

0
3. Add sections 209.170, 209.170-0, 209.170-1, 209.170-2, 209.170-3,
and 209.170-4 to read as follows:
* * * * *
Sec.
209.170 Restriction on the use of certain institutions of higher
education.
209.170-0 Scope.
209.170-1 Definitions.
209.170-2 Restriction.
209.170-3 Waiver of restriction.
209.170-4 Solicitation provision.
* * * * *

209.170 Restriction on the use of certain institutions of higher
education.

209.170-0 Scope.

This section implements section 1062 of the National Defense
Authorization Act for Fiscal Year 2021 (Pub. L. 116-283).

209.170-1 Definitions.

As used in this section--
Confucius Institute means a cultural institute directly or
indirectly funded by the government of the People's Republic of China.
Institution of higher education has the meaning given in 20 U.S.C.
1002.

209.170-2 Restriction.

None of the funds authorized to be appropriated or otherwise made
available for any fiscal year for DoD may be used to contract with an
institution of higher education that hosts a Confucius Institute, other
than amounts provided directly to students as educational assistance.
Contracting officers shall not enter into a contract with any
institution of higher education that hosts a Confucius Institute,
unless a waiver has been granted.

209.170-3 Waiver of restriction.

The restriction in 209.170-2 can be waived by the Office of the
Under Secretary of Defense (Research and Engineering), without power of
delegation, in accordance with the Confucius Institute Waiver Program
guidance. See PGI 209.170-4.

209.170-4 Solicitation provision.

Use the provision at 252.209-7011, Representation for Restriction
on the Use of Certain Institutions of Higher Education, in
solicitations, including solicitations using FAR part 12 procedures for
the acquisition of commercial products and commercial services, for
acquisitions to an institution of higher education.

PART 212--ACQUISITION OF COMMERCIAL PRODUCTS AND COMMERCIAL
SERVICES

0
3. Amend section 212.301 by--
0
a. Redesignating paragraphs (f)(iv) through (xix) as paragraphs (f)(v)
through (xx); and
0
b. Adding new paragraph (f)(iv) to read as follows:

212.301 Solicitation provisions and contract clauses for the
acquisition of commercial products and commercial services.

(f) * * *
(iv) Part 209--Contractor Qualifications. Use the provision at
252.209-7011, Representation for Restriction on the Use of Certain
Institutions of Higher Education, as prescribed at 209.170-4, to comply
with section 1062 of the National Defense Authorization Act for Fiscal
Year 2021 (Pub. L. 116-283).
* * * * *

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
4. Add section 252.209-7011 to read as follows:

252.209-7011 Representation for Restriction on the Use of Certain
Institutions of Higher Education.

As prescribed in 209.170-4, use the following provision:

Representation for Restriction on the Use of Certain Institutions of
Higher Education (Oct 2023)

(a) Definitions. As used in this provision--
Confucius Institute means a cultural institute directly or
indirectly funded by the government of the People's Republic of
China.
Institution of higher education has the meaning given in 20
U.S.C. 1002.
(b) Restriction. As required by section 1062 of the National
Defense Authorization Act for Fiscal Year 2021 (Pub. L. 116-283),
DoD may not award a contract with any institution of higher
education that hosts a Confucius Institute. Section 1062 prohibits
DoD from providing funding to any U.S. institution of higher
education hosting a Confucius Institute unless that institution
receives a waiver from the Department of Defense Office of the Under
Secretary of Defense for Research and Engineering (OUSD(R&E)). See
the OUSD(R&E) Confucius Institute Waiver Program Guidance to U.S.
Institutions of Higher Education at <a href="https://rt.cto.mil/wp-content/uploads/Confucius-Institute-Waiver-Program-Guidance-28Mar2023.pdf">https://rt.cto.mil/wp-content/uploads/Confucius-Institute-Waiver-Program-Guidance-28Mar2023.pdf</a>.

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(c) Representation. By submission of an offer, the Offeror
represents that--
(1) It is not an institution of higher education that hosts a
Confucius Institute; or
(2) The Offeror has obtained a waiver approved by OUSD(R&E).

(End of provision)

[FR Doc. 2023-20816 Filed 9-28-23; 8:45 am]
BILLING CODE 5001-06-P

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