GT Alert

DoD Changes Rules For Foreign Procurement

October 2002
By Fred Shaheen, Greenberg Traurig, Tysons Corner Office

  View or download the PDF version of this Alert here.

Of interest to our Defense and Aerospace clients, whether prime contractors or sub-contractors, is an initiative by the Department of Defense ("DoD") to amend the Defense Federal Acquisition Regulation Supplement or "DFARS". The DFARS are the military procurement-specific amplifying procurement rules to the basic Federal Acquisition Regulations or "FAR". The purpose of the proposed amendment is to simplify and clarify DoD’s policy pertaining to the acquisition of supplies and services from foreign sources.

Fred Shaheen

The rule proposes revisions to DFARS Part 225, "Foreign Acquisition", and associated provisions and clauses. The revised rule purports to:

1. Streamline procedures for evaluating foreign offers when acquiring supplies, and adds procedures for evaluating foreign offers in acquisitions in which the price is not the determining factor.
2. Change the definition of "qualifying country end product" to permit the qualifying country manufacturing the product to use components from any other qualifying country.
3. Lower the required approval levels for determinations of non-availability under the U.S. "Buy American Act".
4. Lower the required approval levels for individual public interest determinations for acquisition of end products from qualifying countries.
5. Provide that the Government will evaluate duty only if it is to be paid. Except for qualifying country supplies or eligible end products, the contractor will request duty-free entry only on foreign supplies for which the contractor estimates that duty will exceed $200 per unit (end product or component). One duty-free entry clause replaces five existing clauses.
6. Make use of the clause pertaining to Waiver of United Kingdom Levies optional for acquisitions not expected to exceed the simplified acquisition threshold.
7. Eliminate the requirement for a contractor to represent that it will comply with all laws, decrees, labor standards, and regulations of the foreign country in which the contract will be performed.
8. Move restrictions on contracting with firms owned or controlled by the government of a terrorist country or other foreign governments from Part 209, Contractor Responsibility, to Part 225, Foreign Acquisition.
9. Delete obsolete text and clauses relating to outdated appropriations act restrictions, resulting in the elimination of four clauses.
10. Incorporates the DFARS changes proposed under Case 2002-D008, Trade Agreements Act-Exception for U.S.-Made End Products, published at 67 FR 49278 on July 30, 2002.

DoD is inviting comments to this sweeping proposed new rule. They must be submitted in writing on or before December 6, 2002 to be considered in the formation of the final rule.

Please feel free to contact Fred Shaheen in the Tysons Corner with questions regarding further clarification on the implications of this rule or interest in commenting upon it to DoD.

© 2002 Greenberg Traurig

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