83 FR 62498 - Defense Federal Acquisition Regulation Supplement: Sunset of Provision Relating to the Procurement of Certain Goods (DFARS Case 2018-D007)

DEPARTMENT OF DEFENSE
Defense Acquisition Regulations System

Federal Register Volume 83, Issue 233 (December 4, 2018)

DoD is issuing a final rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to implement a section of the National Defense Authorization Act for Fiscal Year 2018 that repeals the Fiscal Year 2015 restrictions on the source of photovoltaic devices in contracts awarded by DoD that result in DoD ownership of photovoltaic devices by means other than DoD purchase of the photovoltaic devices as end products.

[Federal Register Volume 83, Number 233 (Tuesday, December 4, 2018)]
[Rules and Regulations]
[Pages 62498-62501]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-26305]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 212, 225, and 252

[Docket DARS-2018-0028]
RIN 0750-AJ71


Defense Federal Acquisition Regulation Supplement: Sunset of 
Provision Relating to the Procurement of Certain Goods (DFARS Case 
2018-D007)

AGENCY: Defense Acquisition Regulations System, Department of Defense 
(DoD).

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: DoD is issuing a final rule amending the Defense Federal 
Acquisition Regulation Supplement (DFARS) to implement a section of the 
National Defense Authorization Act for Fiscal Year 2018 that repeals 
the Fiscal Year 2015 restrictions on the source of photovoltaic devices 
in contracts awarded by DoD that result in DoD ownership of 
photovoltaic devices by means other than DoD purchase of the 
photovoltaic devices as end products.

DATES: Effective December 5, 2018.

FOR FURTHER INFORMATION CONTACT: Ms. Amy G. Williams, telephone 571-
372-6106.

SUPPLEMENTARY INFORMATION: 

I. Background

    DoD published a proposed rule in the Federal Register at 83 FR 
42822 on August 24, 2018, to implement section 813(b) of the National 
Defense Authorization Act (NDAA) for Fiscal Year (FY) 2018 (Pub. L. 
115-91). Section 813(b) repeals section 858 of the NDAA for FY 2015 
(Pub. L. 113-291), but does not repeal section 846 of the NDAA for FY 
2011 (Pub. L. 111-383), with regard to sources of photovoltaic devises 
purchased by contractors that become property of DoD. There were no 
public comments submitted in response to the proposed rule. There are 
no changes from the proposed rule in the final rule.

II. Applicability to Contracts at or Below the Simplified Acquisition 
Threshold and for Commercial Items, Including Commercially Available 
Off-the-Shelf Items

    This rule does not affect the applicability of DFARS clause 
252.225-7017, Photovoltaic Devices, and DFARS provision 252.225-7018, 
Photovoltaic Devices--Certification. A determination was signed by the 
Director, Defense Procurement and Acquisition Policy, on October 13, 
2011, to not apply the requirements of section 846 of the NDAA for FY 
2011 to contracts at or below the simplified acquisition threshold, but 
to apply the rule to contracts for the acquisition of commercial items, 
including commercially available off-the-shelf items.

III. 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,

[[Page 62499]]

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. This rule is 
not a major rule under 5 U.S.C. 804.

IV. Executive Order 13771

    This rule is not an E.O. 13771 regulatory action, because this 
final rule is not significant under E.O. 12866.

V. Regulatory Flexibility Act

    A final regulatory flexibility analysis (FRFA) has been prepared 
consistent with the Regulatory Flexibility Act, 5 U.S.C. 601, et seq. 
The FRFA is summarized as follows:
    This rule implements section 813(b) of the National Defense 
Authorization Act (NDAA) for Fiscal Year (FY) 2018 (Pub. L. 115-91), 
which repealed of section 858 of the National Defense Authorization Act 
(NDAA) for FY 2015 (Pub. L. 113-291), while retaining the requirements 
of section 846 of the NDAA for FY 2011 (Pub. L. 111-383), with regard 
to sources of photovoltaic devices purchased by contractors that become 
the property of DoD.
    The objective of this rule is to revert to the regulations on 
photovoltaic devices that were in effect prior to superimposing the 
additional regulations required by section 858 on November 20, 2015 (80 
FR 72599). By restoring the tie to the Buy American statute, this rule 
reinstates the Buy American exceptions for acquisitions of photovoltaic 
devices below the micro-purchase threshold, nonavailability, 
unreasonable cost, and public interest, including the DoD class 
determinations that exempt U.S.-made and qualifying country 
photovoltaic devices from the requirements of the Buy American statute, 
as well as the Governmentwide determination that removes the component 
test for commercially available off-the-shelf items.
    No significant issues were raised by the public comments in 
response to the initial regulatory flexibility analysis. No public 
comments were received.
    This rule generally applies at the prime contract level to other 
than small entities. When purchasing renewable power generated via 
onsite photovoltaic devices, DoD can either purchase the photovoltaic 
devices and thereby own, operate, and maintain the devices for their 
full economic life (already covered in DFARS part 225 under standard 
Buy American statute/Trade Agreements regulations) or, for example, may 
do some variation of the following:
    a. Enter into an energy savings performance contract, which is a 
contracting method in which the contractor provides capital to 
facilitate energy conservation measures and maintains them in exchange 
for a portion of the energy savings generated. Under this arrangement, 
the Government would take title to the devices during contract 
performance or at the conclusion of the contract. For example, DoD uses 
either the master indefinite delivery-indefinite quantity contract of 
the Department of Energy or the Army Corps of Engineers and awards task 
orders off one of those contracts. Generally, the same approved 
contractors are on each contract. Of the approved contractors, all but 
one are large businesses. There are subcontracting goals that each 
contractor has to meet, but the ultimate task order award is most often 
made to a large business.
    b. Enter into a power purchase agreement, also referred to as a 
utility service contract, for the purchase of the power output of 
photovoltaic devices that are installed on DoD land or buildings, but 
owned, operated, and maintained by the contractor. At the conclusion of 
the contract, DoD would either require the contractor to dismantle and 
remove the photovoltaic equipment or abandon the equipment in place. 
Prime contractors for this type of contract would generally be large 
businesses, based on the capital costs involved in these projects. 
However, many developers tend to subcontract out the majority of the 
work to smaller companies.
    There are approximately 80 manufacturers of photovoltaic devices. 
We do not currently have data available on whether any of the 
manufacturers of photovoltaic devices are small entities, because the 
Federal Procurement Data System does not collect such data on 
subcontractors.
    There are no new reporting burdens under this rule. In fact, there 
is a de minimis reduction in burden, because no certification will be 
required if the value of the photovoltaic devices does not exceed the 
micro-purchase threshold, and identification of country of origin will 
no longer be required if the photovoltaic devices are domestic or U.S.-
made. Furthermore, since the prime contractors subject to this rule are 
other than small businesses, the existing reporting requirements do not 
impact small entities.
    DoD did not identify any significant alternatives that meet the 
requirements of the statute and would have less impact on small 
entities. The overall effect of this rule is deregulatory and it does 
not have significant impact on small entities.

VI. Paperwork Reduction Act

    The 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); however, these changes to the 
DFARS do not impose additional information collection requirements to 
the paperwork burden previously approved under OMB Control Number 0704-
0229, entitled ``Defense Federal Acquisition Regulation Supplement 
(DFARS) Part 225, Foreign Acquisition, and related clauses at DFARS 
252.225.''

List of Subjects in 48 CFR Parts 212, 225, and 252

    Government procurement.

Jennifer Lee Hawes,
Regulatory Control Officer, Defense Acquisition Regulations System.

    Therefore, 48 CFR parts 212, 225, and 252 are amended as follows:

0
1. The authority citation for 48 CFR parts 212, 225, and 252 continues 
to read as follows:

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

PART 212--ACQUISITION OF COMMERCIAL ITEMS

0
2. Amend section 212.301 by revising paragraphs (f)(ix)(J) and (K) to 
read as follows:


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

* * * * *
    (f) * * *
    (ix) * * *
    (J) Use the clause at 252.225-7017, Photovoltaic Devices, as 
prescribed in 225.7017-4(a), to comply with section 846 of Public Law 
111-383.
    (K) Use the provision at 252.225-7018, Photovoltaic Devices--
Certificate, as prescribed in 225.7017-4(b), to comply with section 846 
of Public Law 111-383.
* * * * *

PART 225--FOREIGN ACQUISITION

0
3. Amend section 225.7017-1 by revising the definitions of ``covered 
contract'' and ``domestic photovoltaic device'' to read as follows:

[[Page 62500]]

225.7017-1   Definitions.

* * * * *
    Covered contract means an energy savings performance contract, a 
utility services contract, or a private housing contract awarded by 
DoD, to be performed in the United States, if such contract results in 
DoD ownership of photovoltaic devices, by means other than DoD purchase 
as end products. DoD is deemed to own a photovoltaic device if the 
device is--
    (1) Installed in the United States on DoD property or in a facility 
owned by DoD; and
    (2) Reserved for the exclusive use of DoD in the United States for 
the full economic life of the device.
* * * * *
    Domestic photovoltaic device means a photovoltaic device that is 
manufactured in the United States.
* * * * *

0
4. Revise section 225.7017-2 to read as follows:


225.7017-2   Restriction.

    In accordance with section 846 of the National Defense 
Authorization Act for Fiscal Year 2011 (Pub. L. 111-383), photovoltaic 
devices provided under any covered contract shall comply with 41 U.S.C. 
chapter 83, Buy American, subject to the exceptions to that statute 
provided in the Trade Agreements Act of 1979 (19 U.S.C. 2501 et seq.).

0
5. Revise section 225.7017-3 to read as follows:


225.7017-3   Exceptions.

    DoD requires the contractor to utilize domestic photovoltaic 
devices in covered contracts that exceed the simplified acquisition 
threshold, with the following exceptions:
    (a) Qualifying country. Qualifying country photovoltaic devices may 
be utilized in any covered contract, because 225.103(a)(i)(A) provides 
an exception to the Buy American statute for products of qualifying 
countries, as defined in 225.003.
    (b) Buy American--unreasonable cost. For a covered contract that 
utilizes photovoltaic devices valued at less than $180,000, the 
exception for unreasonable cost may apply (see FAR 25.103(c). If the 
cost of a foreign photovoltaic device plus 50 percent is less than the 
cost of a domestic photovoltaic device, then the foreign photovoltaic 
device may be utilized.
    (c) Trade agreements--(1) Free Trade Agreements. For a covered 
contract that utilizes photovoltaic devices valued at $25,000 or more, 
photovoltaic devices may be utilized from a country covered under the 
acquisition by a Free Trade Agreement, depending upon dollar threshold 
(see FAR subpart 25.4).
    (2) World Trade Organization--Government Procurement Agreement. For 
covered contracts that utilize photovoltaic devices that are valued at 
$180,000 or more, only U.S.-made photovoltaic devices, designated 
country photovoltaic devices, or qualifying country photovoltaic 
devices may be utilized.


225.7017-4.  [Removed]

0
6. Remove section 225.7017-4.


225.7017-5   [Redesignated as 225.7017-4]

0
7. Redesignate section 225.7017-5 as 225.7017-4 and in the newly 
redesignated section 225.7017-4, revise paragraph (a)(1) to read as 
follows:


225.7017-4   Solicitation provision and contract clause.

    (a)(1) Use the clause at 252.225-7017, Photovoltaic Devices, in 
solicitations, including solicitations using FAR part 12 procedures for 
the acquisition of commercial items, for a contract expected to exceed 
the simplified acquisition threshold that may be a covered contract, 
i.e., an energy savings performance contract, a utility service 
contract, or a private housing contract awarded by DoD, if such 
contract will result in DoD ownership of photovoltaic devices, by means 
other than DoD purchase as end products.
* * * * *

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
8. Amend section 252.225-7017 by--
0
a. In the introductory text, removing ``225.7017-5(a)'' and adding 
``225.7017-4(a)'' in its place;
0
b. Removing the clause date ``(JAN 2018)'' and adding ``(DEC 2018)'' in 
its place;
0
c. In paragraph (a)--
0
i. Removing subparagraph designations ``(i)'' and ``(ii)'' and adding 
``(1)'' and (2)'' in their places wherever they appear;
0
ii. Removing subparagraph designations ``(iii)'' and ``(iv)'' and 
adding ``(3)'' and ``(4)'' in their places wherever they appear;
0
iii. Revising the definition of ``domestic photovoltaic device'';
0
d. In paragraph (b), removing ``858 of the National Defense 
Authorization Act for Fiscal Year 2015 (Pub. L. 113-291)'' and adding 
``846 of the National Defense Authorization Act for Fiscal Year 2011 
(Pub. L. 111-383)'' in its place; and
0
e. In paragraph (c)--
0
i. Revising paragraph (c)(1);
0
ii. In paragraph (c)(2), removing ``photovoltaic device as specified, 
or,'' and adding ``photovoltaic device, or,'' in its place; and
0
iii. Revising paragraphs (c)(3), (4), and (5).
    The revisions read as follows:


252.225-7017  Photovoltaic Devices.

    (a) * * *
    Domestic photovoltaic device means a photovoltaic device that is 
manufactured in the United States.
* * * * *
    (c) * * *
    (1) More than the micro-purchase threshold but less than $25,000, 
then the Contractor shall utilize only domestic photovoltaic devices 
unless, in its offer, it specified utilization of qualifying country or 
other foreign photovoltaic devices in paragraph (d)(2) of the 
Photovoltaic Devices--Certificate provision of the solicitation.
* * * * *
    (3) $80,317 or more but less than $100,000, then the Contractor 
shall utilize under this contract only domestic photovoltaic devices, 
unless, in its offer, it specified utilization of Free Trade Agreement 
country photovoltaic devices (other than Bahrainian, Korean, Moroccan, 
Panamanian, or Peruvian photovoltaic devices), qualifying country 
photovoltaic devices, or other foreign photovoltaic devices in 
paragraph (d)(4) of the Photovoltaic Devices--Certificate provision of 
the solicitation. If the Contractor certified in its offer that it will 
utilize a Free Trade Agreement country photovoltaic device (other than 
a Bahrainian, Korean, Moroccan, Panamanian, or Peruvian photovoltaic 
device) or a qualifying country photovoltaic device, then the 
Contractor shall utilize a Free Trade Agreement country photovoltaic 
device (other than a Bahrainian, Korean, Moroccan, Panamanian, or 
Peruvian photovoltaic device) or a qualifying country photovoltaic 
device; or, at the Contractor's option, a domestic photovoltaic device;
    (4) $100,000 or more but less than $180,000, then the Contractor 
shall utilize under this contract only domestic photovoltaic devices, 
unless, in its offer it specified utilization of Free Trade Agreement 
country photovoltaic devices (other than Bahrainian, Moroccan, 
Panamanian, or Peruvian photovoltaic devices), qualifying country 
photovoltaic devices, or other foreign photovoltaic devices in 
paragraph (d)(5) of the Photovoltaic Devices--Certificate provision of 
the solicitation. If the Contractor certified in

[[Page 62501]]

its offer that it will utilize a Free Trade Agreement country 
photovoltaic device (other than a Bahrainian, Moroccan, Panamanian, or 
Peruvian photovoltaic device) or a qualifying country photovoltaic 
device, then the Contractor shall utilize a Free Trade Agreement 
country photovoltaic device (other than a Bahrainian, Moroccan, 
Panamanian, or Peruvian photovoltaic device) or a qualifying country 
photovoltaic device; or, at the Contractor's option, a domestic 
photovoltaic device; or
    (5) $180,000 or more, then the Contractor shall utilize under this 
contract only U.S.-made, designated country, or qualifying country 
photovoltaic devices.
* * * * *

0
9. Amend section 252.225-7018 by--
0
a. In the introductory text, removing ``225.7017-5(b)'' and adding 
``225.7017-4(b)'' in its place;
0
b. Removing clause date ``(JAN 2018)'' and adding ``(DEC 2018)'' in its 
place;
0
c. Revising paragraphs (b)(1) and (2); and
0
d. Revising paragraphs (d)(1), (d)(2) introductory text, and (d)(3) 
through (6).
    The revisions read as follows:


252.225-7018  Photovoltaic Devices--Certificate.

* * * * *
    (b) * * *
    (1) If more than the micro-purchase threshold but less than 
$180,000, then the Government will not accept an offer specifying the 
use of other foreign photovoltaic devices in paragraph (d)(2)(ii), 
(d)(3)(ii), (d)(4)(ii), or (d)(5)(ii) of this provision, unless the 
offeror documents to the satisfaction of the Contracting Officer that 
the price of the foreign photovoltaic device plus 50 percent is less 
than the price of a comparable domestic photovoltaic device.
    (2) If $180,000 or more, then the Government will consider only 
offers that utilize photovoltaic devices that are U.S.-made, qualifying 
country, or designated country photovoltaic devices.
* * * * *
    (d) * * *
    __ (1) No photovoltaic devices will be utilized in performance of 
the contract, or such photovoltaic devices have an estimated value that 
does not exceed the micro-purchase threshold.
    (2) If more than the micro-purchase threshold but less than 
$25,000--
* * * * *
    (3) If $25,000 or more but less than $80,317--
    __ (i) The offeror certifies that each photovoltaic device to be 
utilized in performance of the contract is a domestic photovoltaic 
device;
    __ (ii) The offeror certifies that each photovoltaic device to be 
utilized in performance of the contract is a Canadian photovoltaic 
device or a qualifying country photovoltaic device [Offeror to specify 
country of origin___]; or
    __ (iii) The foreign (other than Canadian or qualifying country) 
photovoltaic devices to be utilized in performance of the contract are 
the product of ___. [Offeror to specify country of origin, if known, 
and provide documentation that the cost of a domestic photovoltaic 
device would be unreasonable in comparison to the cost of the proposed 
foreign photovoltaic device, i.e. that the price of the foreign 
photovoltaic device plus 50 percent is less than the price of a 
comparable domestic photovoltaic device.]
    (4) If $80,317 or more but less than $100,000--
    __ (i) The offeror certifies that each photovoltaic device to be 
utilized in performance of the contract is a domestic photovoltaic 
device;
    __ (ii) The offeror certifies that each photovoltaic device to be 
utilized in performance of the contract is a Free Trade Agreement 
country photovoltaic device (other than a Bahrainian, Korean, Moroccan, 
Panamanian, or Peruvian photovoltaic device) or a qualifying country 
photovoltaic device [Offeror to specify country of origin___]; or
    __ (iii) The offered foreign photovoltaic devices (other than those 
from countries listed in paragraph (d)(4)(ii) of this provision) are 
the product of ___. [Offeror to specify country of origin, if known, 
and provide documentation that the cost of a domestic photovoltaic 
device would be unreasonable in comparison to the cost of the proposed 
foreign photovoltaic device, i.e. that the price of the foreign 
photovoltaic device plus 50 percent is less than the price of a 
comparable domestic photovoltaic device.]
    (5) If $100,000 or more but less than $180,000--
    __ (i) The offeror certifies that each photovoltaic device to be 
utilized in performance of the contract is a domestic photovoltaic 
device;
    __ (ii) The offeror certifies that each photovoltaic device to be 
utilized in performance of the contract is a Free Trade Agreement 
country photovoltaic device (other than a Bahrainian, Moroccan, 
Panamanian, or Peruvian photovoltaic device) or a qualifying country 
photovoltaic device [Offeror to specify country of origin___]; or
    __ (iii) The offered foreign photovoltaic devices (other than those 
from countries listed in paragraph (d)(5)(ii) of this provision) are 
the product of ___. [Offeror to specify country of origin, if known, 
and provide documentation that the cost of a domestic photovoltaic 
device would be unreasonable in comparison to the cost of the proposed 
foreign photovoltaic device, i.e. that the price of the foreign 
photovoltaic device plus 50 percent is less than the price of a 
comparable domestic photovoltaic device.]
    (6) If $180,000 or more, the Offeror certifies that each 
photovoltaic device to be used in performance of the contract is--
    __ (i) A U.S.-made photovoltaic device; or
    __ (ii) A designated country photovoltaic device or a qualifying 
country photovoltaic device. [Offeror to specify country of origin___.]
* * * * *
[FR Doc. 2018-26305 Filed 12-3-18; 8:45 am]
 BILLING CODE 5001-06-P