80 FR 43451 - Notice of Issuance of Final Determination Concerning Storage Infrastructure Solution System

DEPARTMENT OF HOMELAND SECURITY
U.S. Customs and Border Protection

Federal Register Volume 80, Issue 140 (July 22, 2015)

Page Range		43451-43456
FR Document		2015-17963

This document provides notice that U.S. Customs and Border Protection (``CBP'') has issued a final determination concerning the country of origin of the VistA imaging tier II storage infrastructure solution (``VistA Storage Solution'') manufactured and distributed by Merlin International (``Merlin''). Based upon the facts presented, CBP has concluded that the United States will be the country of origin of the VistA Storage Solution for purposes of U.S. Government procurement.

Federal Register, Volume 80 Issue 140 (Wednesday, July 22, 2015)

[Federal Register Volume 80, Number 140 (Wednesday, July 22, 2015)]
[Notices]
[Pages 43451-43456]
From the Federal Register Online [www.thefederalregister.org]
[FR Doc No: 2015-17963]

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DEPARTMENT OF HOMELAND SECURITY

U.S. Customs and Border Protection

Notice of Issuance of Final Determination Concerning Storage
Infrastructure Solution System

AGENCY: U.S. Customs and Border Protection, Department of Homeland
Security.

ACTION: Notice of final determination.

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SUMMARY: This document provides notice that U.S. Customs and Border
Protection (``CBP'') has issued a final determination concerning the
country of origin of the VistA imaging tier II storage infrastructure
solution (``VistA Storage Solution'') manufactured and distributed by
Merlin International (``Merlin''). Based upon the facts presented, CBP
has concluded that the United States will be the country of origin of
the VistA Storage Solution for purposes of U.S. Government procurement.

DATES: The final determination was issued on July 16, 2015. A copy of
the final determination is attached. Any party-at-interest, as defined
in 19 CFR 177.22(d), may seek judicial review of this final
determination within August 21, 2015.

FOR FURTHER INFORMATION CONTACT: Antonio J. Rivera, Valuation and
Special Programs Branch, Regulations and Rulings, Office of
International Trade (202) 325-0226.

SUPPLEMENTARY INFORMATION: Notice is hereby given that on July 16, 2015
pursuant to subpart B of Part 177, U.S. Customs and Border Protection
Regulations (19 CFR part 177, subpart B), CBP has issued a final
determination concerning the country of origin of the VistA Storage
Solution manufactured and distributed by Merlin, which may be offered
to the U.S. Government under an undesignated government procurement
contract. This final determination, HQ H259758, was issued under
procedures set forth at 19 CFR part 177, subpart B, which implements
Title III of the Trade Agreement Act of 1979, as amended (19 U.S.C.
2511-18). In the final determination CBP found that, based upon the
facts presented, four U.S.-origin hardware and software components and
two foreign-origin hardware and software components were integrated
into one end product, the VistA Storage Solution. CBP found that
assembling the hardware components together, loading the software
components onto the hardware components, and configuring the software
components to reach the desired storage infrastructure, which were
processes that took place entirely in the United States, substantially
transformed the individual components into the final product, the VistA
Storage Solution. CBP noted that the majority of the components were
from the United States; that the processing took place entirely in the
United States; that the name, character and use of the individual
components differed from the name, character and use of the final
product; that the tariff classification of the foreign components
changed when they were integrated into the final product; and, the cost
breakdown of each component, to find that under the totality of the
circumstances, the country of origin of the VistA Storage Solution will
be the United States for purposes of U.S. Government procurement.
Section 177.29, CBP Regulations (19 CFR 177.29), provides that a
notice of final determination shall be published in the Federal
Register within 60 days of the date the final determination is issued.
Section 177.30, CBP Regulations (19 CFR 177.30), provides that any
party-at-interest, as defined in 19 CFR 177.22(d), may seek judicial
review of a final determination within 30 days of publication of such
determination in the Federal Register.

Dated: July 16, 2015.
Harold Singer,
Acting Executive Director, Regulations and Rulings, Office of
International Trade, HQ H59758.
July 16, 2015
OT:RR:CTF:VS H259758 AJR
CATEGORY: Origin
George W. Thompson, Esq.
Thompson & Associates, PLLC
1250 Connecticut Avenue, NW, Suite 200, Washington, DC 20036

RE: U.S. Government Procurement; Country of Origin of Storage
Infrastructure Solution Systems; Substantial Transformation

Dear Mr. Thompson:
This is in response to your letter, dated November 21, 2014,
requesting a final determination on behalf of Merlin International,
Inc. (``Merlin''), pursuant to subpart B of part 177 of the U.S.
Customs and Border Protection (``CBP'') Regulations (19 C.F.R. part
177). Under these regulations, which implement Title III of the Trade
Agreements Act of 1979 (``TAA''), as amended (19 U.S.C. Sec. 2511 et
seq.), CBP issues country of origin advisory rulings and final
determinations as to whether an article is or would be a product of a
designated country or instrumentality for the purposes of granting
waivers of certain ``Buy American'' restrictions in U.S. law or
practice for products offered for sale to the U.S. Government.
This final determination concerns the country of origin of Merlin's
VistA Imaging Tier II Storage Infrastructure Solution (``VistA Storage
Solution''). We note that Merlin is a party-at-interest within the
meaning of 19 C.F.R. Sec. 177.22(d)(1) and is entitled to request this
final determination.
FACTS:
You describe the pertinent facts as follows. The VistA Storage
Solution is a record imaging, storage, and data retrieval system
produced by Merlin in accordance with its contract with the Veterans
Administration (``VA''). The VistA Storage Solution at issue contains a
24 TeraByte (``TB'') storage system.\1\ Under its contract with the VA
(``VA Contract''), Merlin will install the VistA Storage Solution at
144 VA locations where Veterans Integrated Service Network (``VISN'')
facilities are hosted. The VA Contract requires that each installed
VistA Storage Solution (1) be networked into a single ``grid'' to allow
access to, and automatic replication of, stored data throughout the
networked system; while also (2) performing as ``virtual machines'' to
ensure that data stored remains available in the event of any system
failures. To meet these contract requirements, Merlin designed the
VistA Storage Solution, assembling together three main hardware
components and configuring them with three main software components, in
order to provide the particular product required by the VA.
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\1\ Merlin produces other VistA Storage Solutions with the same
functionality as the subject VistA Storage Solution, but with
different storage capabilities that include 18, 36, 90, 120, and 180
TB storage systems.
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A. The Hardware Components
Each VistA Storage Solution will consist of at least the following
hardware components: two to four Cisco UCS C240 rack-mount servers
(``Cisco Servers''); one or more NetApp E2600 series Fibre Channel
storage arrays

[[Page 43452]]

(``NetApp Storage Arrays''); and, two Cisco Catalyst 2960 Gigabit
Ethernet network switches (``Cisco Network Switches'').
You state that the Cisco Servers are produced in the United States
and will provide the computing platform for the system. You state that
the NetApp Storage Arrays are produced in the United States and will
provide the data storage capability for the system. You state that the
Cisco Network Switches are produced in the United States or China and
will provide network connectivity for the system, enabling management
access to the system's components, and user and application access to
the system's data storage.
The Cisco Servers, NetApp Storage Arrays, and Cisco Network
Switches will be interconnected by cables, mounted on a rack, and
supplied electricity through power strips. You state that the cables,
racks, and power strips (collectively, ``Miscellaneous Components'')
originate in various countries.
B. The Software Components
The Cisco Servers will be loaded with the following software:
VMware vSphere 5 ESXi hypervisor software (``VMware''); Novell SuSE
Linux Enterprise Server 11 (``Novell''); and, NetApp's StorageGRID
software solution (``StorageGRID'').
You state that VMware was developed in the United States and it
will enable the Cisco Servers to host three to six ``virtual
machines.'' You state that Novell was developed in the United States
and it will be the operating system software for the Cisco Servers. You
state that StorageGRID was developed in Canada and it will protect
images against data loss or corruption by maintaining multiple
geographically separated replicas, by proactively and continuously
checking integrity, and by self-healing to maintain resiliency in the
event of corruption or failure. Additionally, you state that
StorageGRID will provide the ``virtual machines'' with: an
administration node for administrative access and control; a control
node for metadata management and replication management of data
objects; a storage node for stored objects; a standard gateway node for
access to stored data; and, a primary gateway HA \2\ pair providing a
high availability cluster of standard gateways.
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\2\ HA means High-Availability. See http://www.cisco.com/c/en/us/td/docs/security/nac/appliance/configuration_guide/411/cam/cam411-book/m_ha.html.
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You state the hardware components, with their standard features,
lack the ``grid'' and ``virtual machine'' functions required by the VA
Contract. You state that without VMWare and StorageGRID, it would be
impossible for the VistA Storage Solution components to act together as
part of a multi-site system (i.e. a single ``grid''). You also state
that without Novell, the Cisco Servers would be unable to operate at
all, much less support the ``virtual machine'' requirements.
C. Assembly and Configuration Process
The VistA Storage Solutions will be assembled in Virginia, United
States by two of Merlin's subcontractors, Mission Mobility (``MM'') and
NetApp Inc. (``NAI''). Once MM obtains the hardware from Merlin it will
perform the first assembly process in about two days as follows:
1. Assembling the hardware onto racks, and connecting the
individual pieces by cables;
2. Setting the server specifications for compatibility with VA's
current document storage and retrieval system (VistA Imaging Tier II);
3. Configuring CIMC \3\ and hard drives;
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\3\ CIMC means Cisco Integrated Management Controller.See http://www.cisco.com/c/en/us/support/servers-unified-computing/ucs-c-series-integrated-management-controller/products-installation-and-configuration-guides-list.html.
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4. Setting proper boot device and the connection to the server
CIMC;
5. Connecting drives and media to the servers;
6. Entering the boot menu and configuring the server management IP
address;
7. Loading the VMware on the servers;
8. Configuring the storage devices to accept StorageGRID; and,
9. Conducting tests to ensure the equipment operates properly.
After this first assembly, NAI will install the VistA Storage
Solutions at individual VA sites in a final assembly process that takes
about one to two weeks as follows:
1. Configuring the servers to permit them to communicate on the
VISN, use StorageGRID, adjust the Network Time Protocol, deploy VMware
templates, set up the vCenter Server Linux Virtual Appliance, and
deploy the Open Virtualization Formats;
2. Mapping storage to hosts and creating raw device mapping to
provide direct ``virtual machine'' access to storage devices;
3. Installing Novell on each ``virtual machine'' and building the
nodes;
4. Installing StorageGRID; and,
5. Conducting tests and connecting the equipment to the VA computer
network.
You also state that prior to the final assembly process by NAI, VA
employees will remove preloaded firmware (incompatible with the VA
Contract requirements) from the Cisco Network Switches and replace it
with Cisco Systems firmware package that permits the Cisco Network
Switches to operate in virtual mode. After the NAI installation
activity, you state that VA technicians will update the Cisco Network
Switches with the latest version of Cisco Systems' Internal Operating
Software firmware, a United Stated developed firmware.
In an email, dated May 29, 2015, Merlin submitted information
concerning the cost of each component, photographs of each hardware
component and the installed components together, a workflow diagram of
the system, and the VA Contract.
ISSUE:
What is the country of origin of the VistAs for purposes of U.S.
Government procurement?
LAW AND ANALYSIS:
Pursuant to Subpart B of Part 177, 19 C.F.R. 177.21 et seq., which
implements Title III of the Trade Agreements Act of 1979, as amended
(19 U.S.C. Sec. 2511 et seq.), CBP issues country of origin advisory
rulings and final determinations as to whether an article is or would
be a product of a designated country or instrumentality for the
purposes of granting waivers of certain ``Buy American'' restrictions
in U.S. law or practice for products offered for sale to the U.S.
Government.
Under the rule of origin set forth under 19 U.S.C. Sec.
2518(4)(B):

An article is a product of a country or instrumentality only if (i) it
is wholly the growth, product, or manufacture of that country or
instrumentality, or (ii) in the case of an article which consists in
whole or in part of materials from another country or instrumentality,
it has been substantially transformed into a new and different article
of commerce with a name, character, or use distinct from that of the
article or articles from which it was so transformed.

See also 19 C.F.R. Sec. 177.22(a).
In rendering final determinations for purposes of U.S. Government
Procurement, CBP applies the provisions of subpart B of Part 177
consistent with the Federal Procurement Regulations. See 19 CFR Sec.
177.21. In this regard, CBP recognizes that the Federal Procurement
Regulations restrict the U.S. Government's purchase of products to
U.S.-made or designated

[[Page 43453]]

country end products for acquisitions subject to the TAA. See 48 CFR
Sec. 25.403(c)(1).
The Federal Acquisition Regulations define ``U.S.-made end
product'' as:

an article that is mined, produced, or manufactured in the United
States or that is substantially transformed in the United States into a
new and different article of commerce with a name, character, or use
distinct from that of the article or articles from which it was
transformed. 48 CFR Sec. 25.003.

With respect to the product under consideration in the instant
case, we note that CBP has not previously considered whether the
components at issue are substantially transformed when brought together
in the manner set forth above. However, CBP has previously considered
the substantial transformation of components into servers (see
Headquarter Ruling (``HQ'') H215555, dated July 13, 2012), into storage
arrays (see HQ H125975, dated January 19, 2011), and into network
switches (see HQ H241177, dated December 3, 2013), as ``end products,''
individually. CBP has also considered whether components of various
origins have been substantially transformed during the assembly of
related products. Particularly, HQ H090115, dated August 2, 2010,
considered whether media servers, media gateways,\4\ circuit packs,
telephone sets, and proprietary software were substantially transformed
into a ``Unified Communications Solution,'' the ``end product.'' Though
such rulings may not be directly on point, to the extent the VistA
Storage Solution is an ``end product,'' we find such guidance
applicable to the issue presently before us.
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\4\ The media gateways described in HQ H090115 packed together
wide area network routers and local area network switches.
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In order to determine whether a substantial transformation occurs
when components of various origins are assembled to form completed
articles, CBP considers the totality of the circumstances and makes
such decisions on a case-by-case basis. The country of origin of the
article's components, the extent of the processing that occurs within a
given country, and whether such processing renders a product with a new
name, character, and use are primary considerations in such cases.
Additionally, facts such as resources expended on product design and
development, extent and nature of post-assembly inspection procedures,
and worker skill required during the actual manufacturing process will
be considered when analyzing whether a substantial transformation has
occurred; however, no one such factor is determinative. In this case,
the determination will be ``a mixed question of technology and customs
law, mostly the latter.'' Texas Instruments v. United States, 681 F.2d
778, 783 (CCPA 1982).

The Country of Origin of the Article's Components

In HQ 735315, dated April 10, 1995, CBP considered whether three
essential components (a U.S.-origin controlling computer, an
Australian-origin optics module with a U.S.-origin printed wiring board
assembly (``PWB''), and a U.S.-origin output device such as a printer)
were substantially transformed into an optical spectroscopy instrument
for purposes of U.S. Government procurement. In determining that the
instrument was a product of the United States, it was noted that the
majority of the components (the computer, PWB, and printer) and the
added software were products of the United States, and their
incorporation with the foreign optic module, rendered the instrument a
product of the U.S. Similarly, in HQ 561734, dated March 22, 2001, CBP
determined that certain multifunctional (printer, copier, and
facsimile) machines assembled in Japan from 227 parts (108 from Japan,
92 from Thailand, and 24 from other countries) and eight Japanese
subassemblies, were products of Japan for purposes of U.S. Government
procurement. It was particularly noted that the Japanese-origin scanner
subassembly was characterized as ``the heart of the machine'' in HQ
561734, which is similarly reflected with the U.S.-origin PWB in HQ
735315.
In this case, you state that there are six essential components,
four from the United States, one from China, and one from Canada. From
the VA Contract, the VistA Storage Solution appears to serve two
purposes: (1) giving access to and automatically replicating stored
data in the network; and (2) backing up data virtually in the case of
any system failure. The VA Contract also notes that the VistA Storage
Solution must be compatible with VA's VistA Imaging Tier II, a
sophisticated and comprehensive electronic health record (``EHR(s)'')
database system used by the VA's medical staff to store, retrieve, and
manage documents at various VA locations.\5\
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\5\ EHR is an electronic version of a patient's medical history,
comprising a collection of standard medical and clinical data
gathered by the patient's providers. See http://www.healthit.gov/providers-professionals/electronic-medical-records-emr.
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At their basic levels, all six components provide essential
qualities to support the purposes of the VA Contract; that is, the
server will provide a computer operating structural function, the
storage array will provide a storage structural function, the network
switch will provide a connectivity structural function, VMware will
provide the system with ``virtual machine'' capability, Novell will
provide the system with an operating system, and StorageGRID will
provide the system with capabilities that enhance its virtual functions
and ensure data protection. However, the underlying basis of this
product is the ability to store EHRs for their later use by the VA.\6\
If the product could not store EHRs, it would not have any EHRs to
retrieve. Even when considering its network connectivity and virtual
data protection purposes, these functions would not matter if the
product was not able to store EHRs in the first place. Similar to the
scanner subassembly being the ``heart of the machine'' in HQ 561734,
which allowed the multifunctional machine to take in data it would
eventually output, the NetApp Storage Array allows the VistA Storage
Solution to store EHRs that are later utilized by the functions of its
other components. Therefore, only considering the country of origin of
the VistA Storage Solution's components, and noting that four of the
six components are from the United States, and the particular
importance of the U.S.-origin NetApp Storage Array, we find that this
factor weighs towards a United States country of origin determination
for the VistA Storage Solution.\7\
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\6\ The VistA Storage Solution's storage capabilities were
emphasized in the VA Contract, which states that the purpose of the
solicitation by the VA ``is to acquire Tier II archive storage for
use within VA's VistA Imaging environment,'' noting the prior
storage capabilities and updated storage requirements, which ``must
be reviewed on a regular basis to determine the best solution to
meet the system's expanding storage needs.''
\7\ This finding is made on the assumption that the four U.S.-
origin components of the VistA Storage Solution actually originate
in the United States as claimed in the final determination request.
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The Extent of the Processing that Occurs within a Given Country

In determining whether the combining of parts or materials
constitutes a substantial transformation, the determinative issue is
the extent of operations performed and whether the parts lose their
identity and become an integral part of the new article. Belcrest
Linens v. United States, 573 F. Supp. 1149 (Ct. Int'l Trade 1983),
aff'd, 741 F.2d 1368 (Fed. Cir. 1984). Assembly operations that are
minimal or simple, as opposed to complex or meaningful, will generally
not result in a substantial

[[Page 43454]]

transformation. See C.S.D. 80-111, C.S.D. 85-25, C.S.D. 89-110, C.S.D.
89-118, C.S.D. 90-51, and C.S.D. 90-97. If the manufacturing or
combining process is a minor one which leaves the identity of the
article intact, a substantial transformation has not occurred.
Uniroyal, Inc. v. United States, 3 CIT 220, 542 F. Supp. 1026 (1982),
aff'd 702 F. 2d 1022 (Fed. Cir. 1983).
In HQ H125975, CBP held that an electronic data storage system that
ensures data integrity and availability was a product of Mexico as a
result of the assembly and programming operations that took place in
Mexico. All of the systems hardware components were assembled into the
final product in Mexico and its foreign-origin controller assembly,
already assembled into the final product, was reprogrammed with
software in Mexico. It was stated that the system could not function in
its intended manner without the software.
This case considers a very similar product that will be assembled
from subassemblies into its final form, loaded with software, and then
configured to customer specifications, all in the same country. This
process from assembly to configuration will start and end in the United
States and may take more than two weeks to complete. According to the
information submitted, the VistA Storage Solution cannot function in
its intended manner without the downloaded software components. We also
note there are various configuration tasks which take place throughout
this process that are essential to the VA Contract purposes, such as
configuring the servers to permit them to communicate on the VISN and
deploy VMware, and mapping storage to hosts and creating raw device
mapping to provide direct ``virtual machines'' access to storage
devices. The NetApp and VMware vSphere Storage Best Practices \8\ is a
technical report published by NetApp, detailing the flexible storage
infrastructure designs offered by combining NetApp Storage Array,
VMware, with servers and network switches, and intended for those
architecting, designing, managing, and supporting such a storage
infrastructure. In explaining the best practices for device mapping,
various storage architecture concepts and constructs, and methods of
configuration, it is clear that such tasks are not minimal or simple,
but require a certain level of expertise to design and reach the
desired storage infrastructure for particular systems like the VistA
Storage Solution. Therefore, only considering the extent of processing
that occurs within a given country, and noting the entire process will
take place in the United States, we find that this factor weighs
towards a United States country of origin determination for the VistA
Storage Solution.
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\8\ This technical report was published by NeApp with
contributions from Cisco (Trey Layton), but is independent from
Merlin. See Vaughn Stewart, Larry Touchette, et al., NetApp and
VMware vSphere Storage Best Practices, NetApp Technical Report, TR-
3749, Version 2.1 (July 2010).
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Whether such Processing Renders a Product with a New Name, Character,
and Use

In Data General v. United States, 4 Ct. Int'l Trade 182 (1982), the
court determined that for purposes of determining eligibility under
item 807.00, Tariff Schedules of the United States (predecessor to
subheading 9802.00.80, Harmonized Tariff Schedule of the United States
(``HTSUS'')), the programming of a foreign PROM (Programmable Read-Only
Memory chip) in the United States substantially transformed the PROM
into a U.S. article. In programming the imported PROMs, the U.S.
engineers systematically caused various distinct electronic
interconnections to be formed within each integrated circuit. The
programming bestowed upon each circuit its electronic function, that
is, its ``memory'' which could be retrieved. A distinct physical change
was effected in the PROM by the opening or closing of the fuses,
depending on the method of programming. The court concluded that
altering the non-functioning circuitry comprising a PROM through
technological expertise in order to produce a functioning read only
memory device, possessing a desired distinctive circuit pattern, was no
less a ``substantial transformation'' than the manual interconnection
of transistors, resistors and diodes upon a circuit board creating a
similar pattern.
In C.S.D. 84-85, 18 Cust. B. & Dec. 1044, CBP stated:

We are of the opinion that the rationale of the court in the Data
General case may be applied in the present case to support the
principle that the essence of an integrated circuit memory storage
device is established by programming; . . . [W]e are of the opinion
that the programming (or reprogramming) of an EPROM results in a new
and different article of commerce which would be considered to be a
product of the country where the programming or reprogramming takes
place.

Accordingly, the programming of a device that defines its use generally
constitutes substantial transformation. See also HQ 558868, dated
February 23, 1995 (programming of SecureID Card substantially
transforms the card because it gives the card its character and use as
part of a security system and the programming is a permanent change
that cannot be undone); and HQ 735027, dated September 7, 1993
(programming blank media (EEPROM) with instructions that allow it to
perform certain functions that prevent piracy of software constitute
substantial transformation); but see HQ 732870, dated March 19, 1990
(formatting a blank diskette does not constitute substantial
transformation because it does not add value, does not involve complex
or highly technical operations and did not create a new or different
product); and, HQ 734518, dated June 28, 1993, (motherboards are not
substantially transformed by the implanting of the central processing
unit on the board because, whereas in Data General use was being
assigned to the PROM, the use of the motherboard had already been
determined when it was imported).
It is claimed that Merlin will take several individual components
and combine them in the United States to make an otherwise mere
collection of hardware into a functional storage system, specifically
compatible with the VA technology demands. These hardware components
will not have pairing capability until the software components are
downloaded, and it is claimed that their integration into the final
product will impart the essential character of the VistA Storage
Solution, substantially transforming the individual components that
comprise it. In support, HQ H082476, dated May 11, 2010; HQ H034843,
dated May 5, 2009; and, HQ H175415, dated October 4, 2011, are
cited.\9\
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\9\ Counsel for Merlin cites to ``Notice of Issuance of Final
Determination Concerning Certain Ethernet Switches, 76 Reg. Reg.
62431 (Oct. 7, 2011), issued as Customs Headquarters Ruling
561568.'' HQ 561568, dated March 22, 2001, was published as 66 FR
17222 and concerns bowling pin sets. The cited 76 Reg. Reg. 62431
concerning Ethernet switches corresponds to HQ H175415, and the
correct citation is provided above.
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HQ H082476 held that a mass storage device was a product of the
United because assembling 12 foreign-origin hardware components (a
central processing unit, speed processing circuit, EEPROM, hard disk
drive, memory module, etc.) and configuring them with U.S.-developed
proprietary software, a process that took place entirely in the United
States, constituted a substantial transformation. It was noted that the
tariff classification of the assembled hardware without the software
(8471.70.40, HTSUS) shifted

[[Page 43455]]

when the product was complete with the software (8471.80.10, HTSUS).
The decision particularly emphasized the technical effort in loading
the software, and that the ``customization and installation of firmware
and application software make[s] what would otherwise be a non-
functioning rack storage unit, into [a] proprietary clustered
technology.'' HQ H034843 held that USB flash drives were products of
Israel or the United States because, though the assembly process began
in China and the software and firmware were developed in Israel, the
installation and customization of the firmware and software that took
place in Israel or the United States made the USB flash drives
functional, permitted them to execute their security features, and
increased their value. HQ H175415 held that Ethernet switches were
products of the United States because, though the hardware components
were fully assembled into Ethernet switches in China, they were
programmed with U.S.-origin operating software enabling them to
interact and route within the network, and to monitor, secure, and
access control of the network.
Similarly, the substantial transformation of components into
servers, storage arrays, or network switches per HQ H215555, HQ
H125975, and HQ H241177, as noted above, is well documented, relying on
the same principles discussed in HQ H082476, HQ H034843, and HQ
H175415. This suggests that the servers, storage arrays, and network
switches, each and of themselves, already have a determined use and
character prior to their assembly into a VistA Storage Solution. As HQ
732870 and HQ 734518 point out, when programming does not actually
create a new or different product, it may not constitute a substantial
transformation. Moreover, HQ 241177 notes certain ``software
downloading'' does not amount to ``programming'' which ``involves
writing, testing and implementing code necessary to make a computer
function a certain way.'' Given these considerations, it would appear,
for instance, that programming an imported, already functional, network
switch just to customize its network compatibility, would not actually
change the identity of the imported product as a network switch.
However, the issue before us, with an end product that has functions
and purposes beyond network connectivity, requires consideration beyond
the function of one single component, but rather consideration of the
integrated whole.
In HQ H090115, CBP held, based on a totality of the circumstances,
that subassemblies manufactured in China (media servers, media
gateways, circuit packs, and telephone sets) were substantially
transformed into a ``Unified Communications Solution'' product of the
United States. The United States processing, lasting about 16 days,
included configuring the software to the end users requirements and
integrating the hardware and software to work as one functional unit.
It was particularly noted that the software was developed and
maintained exclusively in the United States, and added functionality to
certain individual components and changed the functionality of others.
In this case, you state there is only one foreign hardware
component. Similar to HQ H090115, the foreign hardware component is
assembled with other hardware components in the United States, loaded
with software, and then configured to the end users requirements. This
process occurs entirely in the United States, lasts about 16 days, and
will also result in one functional unit. By integrating the network
switch into the VistA Storage Solution, the result is not merely a
network switch; rather, the network switch will be configured, per the
added and customized software components, to specifically work with two
other hardware components in a manner that permits storing and
retrieving EHRs for a particular and complex medical network. The
network switch, though it would be functional as a network switch prior
to its assembly and configuration with the other components, would not
be functional as the subject end product with its required purposes and
functions.
Moreover, though HQ H090115 notes that the development of the
software is also relevant, in this case you state that there are three
software components, two developed in the United States and one in
Canada, all of which will be installed and configured in the United
States. Particularly, StorageGRID will be customized in the United
States to be compatible with the hardware components and the networked
system, the various nodes enabled by StorageGRID will be built during
the assembly process in the United States, and the access to storage
enabled by StorageGRID will be enabled in the United States by mapping
the storage to the servers. As noted in the discussion above concerning
NetApp and VMware vSphere Storage Best Practices, these tasks are not
minimal or simple, but require a certain level of expertise to design
and reach the desired storage infrastructure for particular systems
like the VistA Storage Solution.
Therefore, only considering whether such processing renders a
product with a new name, character, and use, and noting the manner in
which the foreign hardware component and foreign software component are
integrated to form an end product that functions differently than such
components do on their own, we find that this factor weighs towards a
United States country of origin determination for the VistA Storage
Solution.\10\
---------------------------------------------------------------------------

\10\ This finding is made on the assumption that the four U.S.-
origin components of the VistA Storage Solution actually originate
in the United States as claimed in the final determination request.
---------------------------------------------------------------------------

Additional Factors

Aside from the factors above weighing towards a finding that the
VistA Storage Solution is a product of the United States for purposes
of U.S. Government Procurement, we note additional factors that lead to
this conclusion. While changes in tariff classification are not
determinative, the two foreign components, the Cisco Network Switch
(8471.80.1000, HTSUS) and StorageGRID (8523, HTSUS), will change in
tariff classification once configured and integrated into the final
product (8471.70, HTSUS). See HQ H082476. Additionally, the cost
breakdown per each hardware component places the most value on the
NetAPP Storage Array, followed by the Cisco Server, and then the Cisco
Network Switch; while the cost breakdown per each software component
places the most value on Novell; followed by VMware, and then
StorageGRID.\11\
---------------------------------------------------------------------------

\11\ Aside from the values per component provided by Merlin in
the email, dated May 29, 2015, these values aligned with the values
per unit costs estimated from Merlin's Product Catalog, dated
October 1, 2013, and similarly reflected by Cisco prices, consumer
reports, and other price databases.
---------------------------------------------------------------------------

In summary, Merlin produces the VistA Storage Solution using six
main components (three hardware components and three software
components), from which only two components are of foreign-origin. The
components will be combined, loaded with software, and then configured
using skilled technical effort to design and reach the desired storage
infrastructure for the VistA Storage Solution. The customization of the
components and further installation of the software and firmware make
what would otherwise be a non-functional rack storage unit into
Merlin's proprietary networked storage system, the VistA Storage
Solution. This process, from combining the two U.S.-origin hardware
components and one foreign-origin hardware component to installing the
two U.S.-origin software

[[Page 43456]]

components and one foreign-origin software component, occurs entirely
in Virginia, United States in a period of up to 16 days. As a result of
the processing in the United States, based on the totality of the
circumstances and assuming that four of the components actually
originate in the United States as claimed, we find that the imported
hardware and software components will be substantially transformed.
Therefore, the country of origin of the VistA Storage Solution will be
the United States for purposes of U.S. Government procurement.
HOLDING:
Based on the facts provided, the hardware and software components
will be substantially transformed through an assembly process that
occurs entirely in the United States. As such, the VistA Storage
Solution will be considered a product of the United States for purposes
of U.S. Government procurement.
Notice of this final determination will be given in the Federal
Register, as required by 19 CFR 177.29. Any party-at-interest other
than the party which requested this final determination may request,
pursuant to 19 CFR 177.31, that CBP reexamine the matter anew and issue
a new final determination. Pursuant to 19 CFR 177.30, any party-at-
interest may, within 30 days of publication of the Federal Register
Notice referenced above, seek judicial review of this final
determination before the Court of International Trade.
Sincerely,
Harold Singer, Acting Executive Director
Regulations and Rulings
Office of International Trade
[FR Doc. 2015-17963 Filed 7-21-15; 8:45 am]
BILLING CODE P

Federal Register / Vol. 80, No. 140 / Wednesday, July 22, 2015 / Notices 43453

country end products for acquisitions substantial transformation has occurred; Contract; that is, the server will provide
subject to the TAA. See 48 CFR however, no one such factor is a computer operating structural
§ 25.403(c)(1). determinative. In this case, the function, the storage array will provide
The Federal Acquisition Regulations determination will be ‘‘a mixed question a storage structural function, the
define ‘‘U.S.-made end product’’ as: of technology and customs law, mostly network switch will provide a
an article that is mined, produced, or the latter.’’ Texas Instruments v. United connectivity structural function,
manufactured in the United States or States, 681 F.2d 778, 783 (CCPA 1982). VMware will provide the system with
that is substantially transformed in the ‘‘virtual machine’’ capability, Novell
The Country of Origin of the Article’s
United States into a new and different will provide the system with an
Components
article of commerce with a name, operating system, and StorageGRID will
character, or use distinct from that of In HQ 735315, dated April 10, 1995, provide the system with capabilities
the article or articles from which it was CBP considered whether three essential that enhance its virtual functions and
transformed. 48 CFR § 25.003. components (a U.S.-origin controlling ensure data protection. However, the
With respect to the product under computer, an Australian-origin optics underlying basis of this product is the
consideration in the instant case, we module with a U.S.-origin printed ability to store EHRs for their later use
note that CBP has not previously wiring board assembly (‘‘PWB’’), and a by the VA.6 If the product could not
considered whether the components at U.S.-origin output device such as a store EHRs, it would not have any EHRs
issue are substantially transformed printer) were substantially transformed to retrieve. Even when considering its
when brought together in the manner set into an optical spectroscopy instrument network connectivity and virtual data
forth above. However, CBP has for purposes of U.S. Government protection purposes, these functions
previously considered the substantial procurement. In determining that the would not matter if the product was not
transformation of components into instrument was a product of the United able to store EHRs in the first place.
servers (see Headquarter Ruling (‘‘HQ’’) States, it was noted that the majority of Similar to the scanner subassembly
H215555, dated July 13, 2012), into the components (the computer, PWB, being the ‘‘heart of the machine’’ in HQ
storage arrays (see HQ H125975, dated and printer) and the added software 561734, which allowed the
January 19, 2011), and into network were products of the United States, and multifunctional machine to take in data
switches (see HQ H241177, dated their incorporation with the foreign it would eventually output, the NetApp
December 3, 2013), as ‘‘end products,’’ optic module, rendered the instrument Storage Array allows the VistA Storage
individually. CBP has also considered a product of the U.S. Similarly, in HQ Solution to store EHRs that are later
whether components of various origins 561734, dated March 22, 2001, CBP utilized by the functions of its other
have been substantially transformed determined that certain multifunctional components. Therefore, only
during the assembly of related products. (printer, copier, and facsimile) machines considering the country of origin of the
Particularly, HQ H090115, dated August assembled in Japan from 227 parts (108 VistA Storage Solution’s components,
2, 2010, considered whether media from Japan, 92 from Thailand, and 24 and noting that four of the six
servers, media gateways,4 circuit packs, from other countries) and eight Japanese components are from the United States,
telephone sets, and proprietary software subassemblies, were products of Japan and the particular importance of the
were substantially transformed into a for purposes of U.S. Government U.S.-origin NetApp Storage Array, we
‘‘Unified Communications Solution,’’ procurement. It was particularly noted find that this factor weighs towards a
the ‘‘end product.’’ Though such rulings that the Japanese-origin scanner United States country of origin
may not be directly on point, to the subassembly was characterized as ‘‘the determination for the VistA Storage
extent the VistA Storage Solution is an heart of the machine’’ in HQ 561734, Solution.7
‘‘end product,’’ we find such guidance which is similarly reflected with the
U.S.-origin PWB in HQ 735315. The Extent of the Processing that
applicable to the issue presently before
In this case, you state that there are Occurs within a Given Country
us.
In order to determine whether a six essential components, four from the In determining whether the
substantial transformation occurs when United States, one from China, and one combining of parts or materials
components of various origins are from Canada. From the VA Contract, the constitutes a substantial transformation,
assembled to form completed articles, VistA Storage Solution appears to serve the determinative issue is the extent of
CBP considers the totality of the two purposes: (1) giving access to and operations performed and whether the
circumstances and makes such automatically replicating stored data in parts lose their identity and become an
decisions on a case-by-case basis. The the network; and (2) backing up data integral part of the new article. Belcrest
country of origin of the article’s virtually in the case of any system Linens v. United States, 573 F. Supp.
components, the extent of the failure. The VA Contract also notes that 1149 (Ct. Int’l Trade 1983), aff’d, 741
processing that occurs within a given the VistA Storage Solution must be F.2d 1368 (Fed. Cir. 1984). Assembly
country, and whether such processing compatible with VA’s VistA Imaging operations that are minimal or simple,
renders a product with a new name, Tier II, a sophisticated and as opposed to complex or meaningful,
comprehensive electronic health record will generally not result in a substantial
character, and use are primary
(‘‘EHR(s)’’) database system used by the
considerations in such cases.
VA’s medical staff to store, retrieve, and 6 The VistA Storage Solution’s storage capabilities
Additionally, facts such as resources
manage documents at various VA were emphasized in the VA Contract, which states
expended on product design and
locations.5 that the purpose of the solicitation by the VA ‘‘is
development, extent and nature of post- At their basic levels, all six to acquire Tier II archive storage for use within
assembly inspection procedures, and VA’s VistA Imaging environment,’’ noting the prior
tkelley on DSK3SPTVN1PROD with NOTICES

components provide essential qualities storage capabilities and updated storage
worker skill required during the actual to support the purposes of the VA requirements, which ‘‘must be reviewed on a
manufacturing process will be regular basis to determine the best solution to meet
considered when analyzing whether a 5 EHR is an electronic version of a patient’s the system’s expanding storage needs.’’
medical history, comprising a collection of standard 7 This finding is made on the assumption that the
4 The media gateways described in HQ H090115 medical and clinical data gathered by the patient’s four U.S.-origin components of the VistA Storage
packed together wide area network routers and providers. See http://www.healthit.gov/providers- Solution actually originate in the United States as
local area network switches. professionals/electronic-medical-records-emr. claimed in the final determination request.

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43456 Federal Register / Vol. 80, No. 140 / Wednesday, July 22, 2015 / Notices

components and one foreign-origin (OMB) control number 1652–0005, collection techniques or other forms of
software component, occurs entirely in abstracted below to OMB for review and information technology.
Virginia, United States in a period of up approval of an extension of the
Information Collection Requirement
to 16 days. As a result of the processing currently approved collection under the
in the United States, based on the Paperwork Reduction Act (PRA). The Title: Security Programs for Foreign
totality of the circumstances and ICR describes the nature of the Air Carriers.
assuming that four of the components information collection and its expected Type of Request: Extension of a
actually originate in the United States as burden. TSA published a Federal currently approved collection.
claimed, we find that the imported Register notice, with a 60-day comment OMB Control Number: 1652–0005.
hardware and software components will period soliciting comments, of the Forms(s): N/A.
be substantially transformed. Therefore, following collection of information on Affected Public: Foreign air carriers.
the country of origin of the VistA April 14, 2015, (80 FR 20003). This Abstract: TSA uses the information
Storage Solution will be the United information collection is mandatory for collected to determine compliance with
States for purposes of U.S. Government foreign air carriers and must be 49 CFR part 1546 and to ensure
procurement. submitted prior to entry into the United passenger safety by monitoring foreign
States. air carrier security procedures. Foreign
HOLDING: air carriers must carry out security
DATES: Send your comments by August
Based on the facts provided, the 21, 2015. A comment to OMB is most measures to provide for the safety of
hardware and software components will effective if OMB receives it within 30 persons and property traveling on
be substantially transformed through an days of publication. flights provided by the foreign air
assembly process that occurs entirely in carrier against acts of criminal violence
ADDRESSES: Interested persons are
the United States. As such, the VistA and air piracy, and the introduction of
Storage Solution will be considered a invited to submit written comments on explosives, incendiaries, or weapons
product of the United States for the proposed information collection to aboard an aircraft. This information
purposes of U.S. Government the Office of Information and Regulatory collection is mandatory for foreign air
procurement. Affairs, OMB. Comments should be carriers and must be submitted prior to
Notice of this final determination will addressed to Desk Officer, Department entry into the United States. The TSA
be given in the Federal Register, as of Homeland Security/TSA, and sent via information collection includes
required by 19 CFR 177.29. Any party- electronic mail to oira_submission@ providing information to TSA as
at-interest other than the party which omb.eop.gov or faxed to (202) 395–6974. outlined in the carrier’s security
requested this final determination may FOR FURTHER INFORMATION CONTACT: program, maintaining records of
request, pursuant to 19 CFR 177.31, that Christina A. Walsh, TSA PRA Officer, compliance with 49 CFR part 1546 and
CBP reexamine the matter anew and Office of Information Technology (OIT), the foreign air carrier’s security
issue a new final determination. TSA–11, Transportation Security program, and security training;
Pursuant to 19 CFR 177.30, any party- Administration, 601 South 12th Street, suspicious incident reporting, and
at-interest may, within 30 days of Arlington, VA 20598–6011; telephone submitting identifying information on
publication of the Federal Register (571) 227–2062; email TSAPRA@ foreign air carriers’ flight crews and
Notice referenced above, seek judicial dhs.gov. passengers.
review of this final determination before SUPPLEMENTARY INFORMATION: Number of Respondents: 170.
the Court of International Trade. Estimated Annual Burden Hours: An
Sincerely, Comments Invited estimated 1,029,010 hours annually.
Harold Singer, Acting Executive In accordance with the Paperwork Dated: July 16, 2015.
Director Reduction Act of 1995 (44 U.S.C. 3501 Joanna Johnson,
Regulations and Rulings et seq.), an agency may not conduct or Acting TSA Paperwork Reduction Act Officer,
Office of International Trade sponsor, and a person is not required to Office of Information Technology.
[FR Doc. 2015–17963 Filed 7–21–15; 8:45 am]
respond to, a collection of information [FR Doc. 2015–17986 Filed 7–21–15; 8:45 am]
BILLING CODE P unless it displays a valid OMB control BILLING CODE 9110–05–P
number. The ICR documentation is
available at http://www.reginfo.gov.
DEPARTMENT OF HOMELAND Therefore, in preparation for OMB
SECURITY review and approval of the following DEPARTMENT OF THE INTERIOR
Transportation Security Administration information collection, TSA is soliciting
Fish and Wildlife Service
comments to—
[Docket No. TSA–2002–11602] (1) Evaluate whether the proposed [FWS–R8–R–2015–N087;
information requirement is necessary for FXRS282108E8PD0–156–F2013227943]
Extension of Agency Information the proper performance of the functions
Collection Activity Under OMB Review: of the agency, including whether the South Bay Salt Pond Restoration
Security Programs for Foreign Air information will have practical utility; Project, Phase 2; Don Edwards San
Carriers (2) Evaluate the accuracy of the Francisco Bay National Wildlife
AGENCY: Transportation Security agency’s estimate of the burden; Refuge; Draft Environmental Impact
Administration, DHS. (3) Enhance the quality, utility, and Statement/Environmental Impact
Report
tkelley on DSK3SPTVN1PROD with NOTICES

ACTION: 30-day notice. clarity of the information to be
collected; and AGENCY: Fish and Wildlife Service,
SUMMARY: This notice announces that (4) Minimize the burden of the Interior.
the Transportation Security collection of information on those who
ACTION: Notice of availability; request
Administration (TSA) has forwarded the are to respond, including using
for public comments; announcement of
Information Collection Request (ICR), appropriate automated, electronic,
meeting.
Office of Management and Budget mechanical, or other technological

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Document Created: 2015-12-15 12:55:06
Document Modified: 2015-12-15 12:55:06

Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Notices
Action		Notice of final determination.
Dates		The final determination was issued on July 16, 2015. A copy of the final determination is attached. Any party-at-interest, as defined in 19 CFR 177.22(d), may seek judicial review of this final determination within August 21, 2015.
Contact		Antonio J. Rivera, Valuation and Special Programs Branch, Regulations and Rulings, Office of International Trade (202) 325-0226.
FR Citation		80 FR 43451

80 FR 43451 - Notice of Issuance of Final Determination Concerning Storage Infrastructure Solution System

DEPARTMENT OF HOMELAND SECURITYU.S. Customs and Border Protection

Federal Register Volume 80, Issue 140 (July 22, 2015)

DEPARTMENT OF HOMELAND SECURITY
U.S. Customs and Border Protection