Federal Acquisition Regulation; Implementation of the North American Free Trade Agreement Implementation Act

DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 5, 14, 15, 17, 25, and 52

[FAC 90-19; FAR Case 93-310]

Federal Acquisition Regulation; Implementation of the North

American Free Trade Agreement Implementation Act

AGENCIES: Department of Defense (DOD), General Services Administration

(GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Interim rule with request for comment.

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SUMMARY: The Department of Defense, General Services Administration,

and National Aeronautics and Space Administration have agreed to an

interim rule implementing the North American Free Trade Agreement

(NAFTA) Implementation Act.

DATES: Effective Date: January 1, 1994. This rule applies to

solicitations issued on or after January 1, 1994.

Comment Date: Comments should be submitted to the FAR Secretariat

on or before March 7, 1994, to be considered in the formulation of a

final rule.

ADDRESSES: Interested parties should submit written comments to:

General Services Administration, FAR Secretariat (VRS), 18th & F

Streets, NW., room 4037, Washington, DC 20405. Please cite FAC 90-19,

FAR case 93-310 in all correspondence related to this case.

FOR FURTHER INFORMATION CONTACT:

Mr. Peter O'Such at (202) 501-1759 in reference to this FAR case. For

general information, contact the FAR Secretariat, room 4037, GSA

Building, Washington, DC 20405 (202) 501-4755. Please cite FAC 90-19,

FAR case 93-310.

SUPPLEMENTARY INFORMATION:

A. Background

Chapter Ten of NAFTA requires the three NAFTA countries (the United

States, Canada, and Mexico) to eliminate ``buy national'' restrictions

on non-defense related purchases, by their responsible Federal

Governments, of goods and services provided by firms in North America.

NAFTA applies to most United States Government agencies. The Canadian

Free Trade Agreement is suspended while NAFTA remains in effect.

As required by NAFTA, specified agencies must evaluate certain

NAFTA country end products offers without regard to the restrictions of

the Buy American Act or the Balance of Payments Program. This

evaluation method will apply to offers of Canadian end products under

supply contracts with an estimated value above $25,000 and Mexican end

products under supply contracts with an estimated value of $50,000 or

more, except for the Department of Energy's Power Marketing

Administrations, where the estimated acquisition value is $250,000 or

more. This evaluation method also will apply to construction contracts

with an estimated acquisition value of $6,500,000 or more, except for

the Department of Energy's Power Marketing Administration, where the

estimated acquisition value is $8,000,000 or more.

The applicable rule of origin for NAFTA country end products under

the agreement is that of ``substantial transformation'', which means an

article that is wholly the growth, product, or manufacture of a NAFTA

country or has been substantially transformed in a NAFTA country into a

new and different article may be offered.

This rule also--

(1) Designates NAFTA country end products as eligible products

under the Trade Agreements Act, as implemented in Trade Agreements

under the FAR;

(2) Adds language to require that, when an overseas procurement for

performance overseas is subject to NAFTA, it will be synopsized in

accordance with agency procedures;

(3) Revises the prescriptions for the provisions, Submission of

Offers in the English Language, and Submission of Offers in U.S.

Currency, to clarify and include NAFTA;

(4) Updates the list of designated countries in FAR 25.401 to add

``Portugal'' and revise ``Upper Volta'' to ``Burkina Faso'';

(5) Includes the new threshold of $182,000 for application of the

Trade Agreements Act and the European Community (EC) Agreement, which

is effective January 1, 1994;

(6) Updates FAR 25.407 list of agencies covered by the Agreements

on EC and NAFTA; and

(7) Makes clarifications to the interim rule published in FAC 90-18

(58 FR 31140), at FAR 25.407, to implement the Memorandum of

Understanding between the United States of America and the European

Economic Community on Government Procurement and NAFTA.

B. Regulatory Flexibility Act

The interim rule may 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 rule

waives the Buy American Act for certain Mexican and Canadian products.

An Initial Regulatory Flexibility Analysis (IRFA) has been prepared and

will be provided to the Chief Counsel for Advocacy for the Small

Business Administration. A copy of the IRFA may be obtained from the

FAR Secretariat. Comments are invited. Comments from small entities

concerning the affected FAR subpart will be considered in accordance

with 5 U.S.C. 610. Such comments must be submitted separately and cite

5 U.S.C. 601, et seq. (FAR Case 93-310), in correspondence.

C. Paperwork Reduction Act

The Paperwork Reduction Act (Pub. L. 96-511) is deemed to apply

because the new provision at 52.225-20 requires offerors to list the

line item number and country of origin for any end product other than a

domestic end product. Accordingly, a request for clearance of a new

information collection requirement concerning the NAFTA Act is being

submitted to the Office of Management and Budget under 44 U.S.C. 3501,

et seq. Public comments concerning this requirement are invited through

an OMB clearance request appearing in the Federal Register at 58 FR

68636, December 28, 1993.

D. Determination To Issue an Interim Rule

A determination has been made under the authority of the Secretary

of Defense (DOD), the Administrator of General Services (GSA), and the

Administrator of the National Aeronautics and Space Administration

(NASA) that compelling reasons exist to promulgate this interim rule

without prior opportunity for public comment. This action is necessary

because the NAFTA Implementation Act, signed into law on December 8,

1993, becomes effective on January 1, 1994. However, pursuant to Public

Law 98-577 and Federal Acquisition Regulation 1.501, public comments

received in response to this interim rule will be considered in

formulating the final rule.

List of Subjects in 48 CFR Parts 5, 14, 15, 17, 25, and 52

Government procurement.

Dated: December 30, 1993.

Shirley Scott,

Acting Director, Office of Federal Acquisition Policy.

Unless otherwise specified, all Federal Acquisition Regulation

(FAR) and other directive material contained in FAC 90-19 is effective

January 1, 1994.

Dated: December 21, 1993.

Eleanor R. Spector,

Director, Defense Procurement, Department of Defense (DOD).

Dated: December 20, 1993.

Richard H. Hopf, III,

Associate Administrator for Acquisition Policy, General Services

Administration.

Dated: December 21, 1993.

Deidre A. Lee,

Associate Administrator for Procurement, NASA.

Therefore, 48 CFR parts 5, 14, 15, 17, 25, and 52 are amended as

set forth below:

1. The authority citation for 48 CFR parts 5, 14, 15, 17, 25, and

52 continues to read as follows:

Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42

U.S.C. 2473(c).

PART 5--PUBLICIZING CONTRACT ACTIONS

2. Section 5.202 is amended in paragraph (a)(12) by adding a third

sentence to read as follows:

5.202 Exceptions.

(a) * * *

(12) * * * This exception also does not apply to North American

Free Trade Agreement contract actions, which will be synopsized in

accordance with agency regulations.

* * * * *

PART 14--SEALED BIDDING

3. Section 14.201-6 is amended by revising paragraphs (x) and (y)

to read as follows:

14.201-6 Solicitation provisions.

* * * * *

(x) The provision at 52.214-34, Submission of Offers in the English

Language, is required in solicitations subject to the Trade Agreements

Act or the North American Free Trade Agreement Implementation Act (see

25.408(d)). It may be included in other solicitations when the

contracting officer decides that it is necessary.

(y) The provision at 52.214-35, Submission of Offers in U.S.

Currency, is required in solicitations subject to the Trade Agreements

Act or the North American Free Trade Agreement Implementation Act (see

25.408(d)). It may be included in other solicitations when the

contracting officer decides that it is necessary.

4. Section 14.408-1 is amended by revising the introductory text of

paragraph (a)(2) to read as follows:

14.408-1 Award of unclassified contracts.

(a) * * *

(2) For acquisitions subject to the Trade Agreements Act or the

North American Free Trade Agreement (NAFTA) Implementation Act (see

25.405(e)), agencies shall promptly, but in no event later than 7

working days after award, give unsuccessful offerors from designated or

NAFTA countries written notice stating--

* * * * *

PART 15--CONTRACTING BY NEGOTIATION

5. Section 15.407 is amended by revising paragraphs (l) and (m) to

read as follows:

15.407 Solicitation provisions.

* * * * *

(l) The provision at 52.214-34, Submission of Offers in the English

Language, is required in solicitations subject to the Trade Agreements

Act or the North American Free Trade Agreement Implementation Act (see

25.408(d)). It may be included in other solicitations when the

contracting officer decides that it is necessary.

(m) The provision at 52.214-35, Submission of Offers in U.S.

Currency, is required in solicitations subject to the Trade Agreements

Act or the North American Free Trade Agreement Implementation Act (see

25.408(d)). It may be included in other solicitations when the

contracting officer decides that it is necessary.

6. Section 15.1001 is amended by revising paragraph (c)(2) to read

as follows:

15.1001 Notifications to unsuccessful offerors.

* * * * *

(c) * * *

(2) For acquisitions subject to the Trade Agreements Act or the

North American Free Trade Agreement (NAFTA) Implementation Act (see

25.405(e)), the information in paragraph (c)(1) of this section shall

be provided to unsuccessful offerors from designated or NAFTA countries

promptly, but in no event later than seven working days after contract

award.

* * * * *

PART 17--SPECIAL CONTRACTING METHODS

7. Section 17.203 is amended by revising paragraph (h) to read as

follows:

17.203 Solicitations.

* * * * *

(h) See 25.402(a)(5) regarding use of options in calculating the

estimated contract amount for application of the Trade Agreements Act

and North American Free Trade Agreement thresholds.

PART 25--FOREIGN ACQUISITION

25.101 [Amended]

8. Section 25.101 is amended in the definition Domestic end product

by removing the last sentence.

9. Section 25.109 is amended by revising paragraphs (d) and (f),

redesignating paragraph (g)(2) as (g)(3), and adding a new paragraph

(g)(2) to read as follows:

25.109 Solicitation provisions and contract clauses.

* * * * *

(d) Except as provided in paragraph (g) of this section, or when

the clause prescribed by paragraph (f) is used, or when the clause

prescribed in 25.408(a)(4) is used, the contracting officer shall

insert the clause at 52.225-3, Buy American Act-Supplies, in

solicitations and contracts for the acquisition of supplies, or for

services involving the furnishing of supplies, for use within the

United States.

* * * * *

(f) Except as provided in paragraph (g) of this section, the

contracting officer shall insert the clause at 52.225-17, Buy American

Act-Supplies under European Community Agreement, in solicitations and

contracts for the acquisition of supplies, or for services involving

the furnishing of supplies when the estimated acquisition value meets

or exceeds $182,000 for the agencies listed at FAR 25.407, except for

the Power Marketing Administrations' segment of the Department of

Energy, where the estimated acquisition value is $450,000 of more.

(g) * * *

(2) The acquisition is made under the Trade Agreements Act (see

subpart 25.4); or

* * * * *

25.202 [Amended]

10. Section 25.202 is amended in paragraph (c) by removing

``25.402(a)(4)'' and inserting ``25.402(a) (3) and (4)''.

11. Section 25.205 is amended by revising paragraph (b) to read as

follows:

25.205 Solicitation provision and contract clause.

* * * * *

(b) For construction contracts with an estimated acquisition value

of $6,500,000 ($8,000,000 for the Power Marketing Administrations) or

more, to be awarded by agencies listed in 25.407, insert the clause at

52.225-15, Buy American Act-Construction Materials under European

Community and North American Free Trade Agreements, in solicitations

and contracts for construction.

12. Section 25.300 is amended by revising the second sentence to

read as follows:

25.300 Scope of subpart.

* * * The Balance of Payments Program restrictions have been waived

with respect to the acquisition, in accordance with subpart 25.4, of

certain products under the Trade Agreements Act of 1979 and the North

American Free Trade Agreement (NAFTA) Implementation Act.

25.305 [Amended]

13. Section 25.305 is amended in paragraphs (a) and (c) by adding

``or NAFTA'' after ``1979''.

14. Section 25.400 is amended by revising paragraph (c) to read as

follows:

25.400 Scope of subpart.

* * * * *

(c) Acquisitions involving offers of Canadian or Mexican end

products under the North American Free Trade Agreement (NAFTA), as

approved by Congress in the NAFTA Implementation Act (Pub. L. 103-182,

107 Stat. 2057);

* * * * *

15. Section 25.401 is amended by revising the definitions for

``Canadian end product'' and ``Eligible product''; amending the

``designated country'' list by removing ``Upper Volta'' and adding in

alphabetical order ``Burkina Faso'' and ``Portugal''; and adding in

alphabetical order the definitions ``Mexican end product'', ``North

American Free Trade Agreement (NAFTA) country'', ``NAFTA country

construction material'', and ``NAFTA country end product'' to read as

follows:

25.401 Definitions.

Canadian end product, as used in this subpart, means an article

that (a) is wholly the growth, product, or manufacture of Canada, or

(b) in the case of an article which consists in whole or in part of

materials from another country or instrumentality, has been

substantially transformed in Canada 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. The term includes

services (except transportation services) incidental to its supply;

provided, that the value of those incidental services does not exceed

that of the product itself. It does not include service contracts as

such.

* * * * *

Eligible product, as used in this subpart, means a designated,

North American Free Trade Agreement (NAFTA), or Caribbean Basin country

end product.

* * * * *

Mexican end product, as used in this subpart, means an article that

(a) is wholly the growth, product, or manufacture of Mexico, or (b) in

the case of an article which consists in whole or in part of materials

from another country or instrumentality, has been substantially

transformed in Mexico 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. The term includes services

(except transportation services) incidental to its supply; provided,

that the value of those incidental services does not exceed that of the

product itself. It does not include service contracts as such.

North American Free Trade Agreement (NAFTA) country, as used in

this subpart, means Canada or Mexico.

NAFTA country construction material, means a construction material

that (a) is wholly the growth, product, or manufacture of a NAFTA

country or (b) in the case of a construction material which consists in

whole or in part of materials from another country or instrumentality,

has been substantially transformed in a NAFTA country into a new and

different construction material distinct form the materials from which

it was transformed.

NAFTA country end product, as used in this subpart, means a

Canadian end product or a Mexican end product.

16. Section 25.402 is amended--

(a) In paragraph (a)(1) by inserting a new sentence after the first

sentence;

(b) By revising paragraph (a)(3);

(c) In the introductory text of paragraph (a)(4) by inserting

``(European Community Agreement)'' after ``Procurement''; in (a)(4)(i)

by revising ``25.406 or'' to read ``25.407''; and in (a)(4)(ii) by

revising ``$176,000'' to read ``$182,000'';

(d) In paragraphs (a)(5) introductory text and (a)(6) by inserting

``or NAFTA'' after `'Act''; and

(e) By removing ``country'' the first time it appears in the

introductory text of paragraph (f) and the second time it appears in

paragraph (f)(2) and inserting'', North American Free Trade

Agreement,'' in their places.

The revised text reads as follows:

25.402 Policy.

(a)(1) * * * The current threshold is $182,000. * * *

* * * * *

(3) As required by the North American Free Trade Agreement (NAFTA)

Implementation Act (Pub. L. 103-182, 107 Stat. 2057), agencies shall

evaluate offers of the following NAFTA country end products without

regard to the restrictions of the Buy American Act (see subpart 25.1)

or the Balance of Payments Program (see subpart 25.3):

(i) NAFTA country construction materials under construction

contracts with an estimated acquisition value of $6,500,000 or more for

the agencies in 25.407, except for the Power Marketing Administration

segments of the Department of Energy where the estimated acquisition

value is $8,000,000 or more.

(ii) Canadian end products under supply contracts with an estimated

value above $25,000 and Mexican end products under supply contracts

with an estimated value of $50,000 or more for the agencies in 25.407,

except for the Power Marketing Administrations' segment of the

Department of Energy, where the estimated acquisition value is $250,000

or more.

* * * * *

17. Section 25.403 is amended in paragraph (a) by removing ``Trade

Agreements Act''; by revising paragraph (b); in paragraph (e) by

inserting ``(3) and'' after ``25.402(a)''; in paragraph (h) by revising

``25.402(a)(4)(ii)'' to read ``25.402(a)(3) and (4)''; and revising

paragraph (l) to read as follows:

25.403 Exceptions.

* * * * *

(b) Products of countries (1) not identified in 25.401 as

designated, Caribbean Basin, or North American Free Trade Agreement

countries, or (2) barred by 25.402(c);

* * * * *

(l)(1) For purchases subject to North American Free Trade Agreement

or the European Community Agreement, agencies not listed at 25.407;

(2) For other purchases under this subpart, agencies not listed at

25.406; or

* * * * *

25.405 [Amended]

18. Section 25.405 is amended in the introductory text by inserting

``or North American Free Trade Agreement (NAFTA)'' after ``Act''; in

paragraph (d) by removing ``countries'' the first time it appears and

inserting ``, NAFTA,'' in its place; and in paragraph (e) by inserting

``or NAFTA'' after ``designated''.

19. Section 25.406 is amended by revising the ``General Services

Administration'' entry and adding in alphabetical order ``National

Archives and Records Administration'' to read as follows:

25.406 Agencies covered by the Agreement on Government Procurement.

* * * * *

General Services Administration (except Federal Supply Groups 51

and 52 and Federal Supply Class 7340).

* * * * *

National Archives and Records Administration.

* * * * *

20. Section 25.407 is amended by revising the section heading;

removing the introductory paragraph; redesignating paragraphs (a) thru

(d) as (b) thru (e), and adding a new paragraph (a); changing ``is'' to

``are'' in newly redesignated (d); and adding paragraphs (f) and (g) to

read as follows:

25.407 Agencies covered by the European Community and North American

Free Trade Agreements.

(a) The agencies listed in 25.406.

* * * * *

(f) Federal Housing Finance Board.

(g) Office of Thrift Supervision.

21. Section 25.408 is amended by removing ``Act'' following

``Agreements'' from paragraph (a)(1) and (a)(2) the first time it

appears; by removing ``and'' at the end of paragraph (a)(1); by

removing the period at the end of paragraph (a)(2) and inserting a

semicolon in its place; by adding new paragraphs (a)(3) and (a)(4); by

revising paragraph (c); and in paragraph (d) by inserting ``or NAFTA''

following ``Act'' to read as follows:

25.408 Solicitation provision and contract clause.

(a) * * *

(3) The provision at 52.225-20, Buy American Act-North American

Free Trade Agreement (NAFTA) Implementation Act-Balance of Payments

Program Certificate, in solicitations containing the clause at 52.225-

21; and

(4) The clause at 52.225-21, Buy American Act-North American Free

Trade Agreement (NAFTA) Implementation Act-Balance of Payments Program,

where the contracting officer has determined that the acquisition is

not subject to the Trade Agreements Act but is subject to NAFTA.

* * * * *

(c) The clause prescriptions at paragraph (a) of this section shall

apply where any item under a multiple item solicitation is determined

to be subject to the Trade Agreements Act or North American Free Trade

Agreement Implementation Act. If the Acts do not apply to all of the

items being solicited, the contracting officer shall indicate, in the

schedule, those items that are exempt.

* * * * *

25.1003 [Amended]

22. Section 25.1003 is amended in paragraphs (a)(2) and (b)(2) by

revising ``$176,000'' to read ``$182,000''.

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

52.225-3 [Amended]

23. Section 52.225-3 is amended by revising the date of the clause

to read ``(JAN 1994)''; by removing the last sentence from the

definition ``Domestic end product''; and removing the parenthetical

following paragraph (b)(4).

24. Section 52.225-8 is amended in the section and clause headings

by removing ``Act'' following ``Agreements'', and revising the date of

the clause heading to read ``(JAN 1994)''; in paragraph (a) by removing

``Act'' following ``Agreements'', and inserting ``a North American Free

Trade Agreement (NAFTA) country,'' following ``designated country,'';

by revising the introductory text of paragraph (c) and paragraph

(c)(1); and in paragraph (c)(2) by removing ``Act'' following

``Agreements''. The revised text reads as follows:

Sec. 52.225-8 Buy American Act--Trade Agreements--Balance of Payments

Program Certificate.

* * * * *

Buy American Act--Trade Agreements--Balance of Payments Program

Certificate (Jan 1994)

* * * * *

(c) Offers will be evaluated by giving certain preferences to

domestic end products, designated country end products, NAFTA

country end products, and Caribbean Basin country end products over

other end products. In order to obtain these preferences in the

evaluation of each excluded end product listed in paragraph (b) of

this provision, offerors must identify and certify below those

excluded end products that are designated or NAFTA country end

products, or Caribbean Basin country end products. Products that are

not identified and certified below will not be deemed designated

country end products, NAFTA country end products, or Caribbean Basin

country end products. Offerors must certify by inserting the

applicable line item numbers in the following:

(1) The offeror certifies that the following supplies qualify as

``designated or NAFTA country end products'' as those terms are

defined in the clause entitled ``Buy American Act--Trade

Agreements--Balance of Payments Program:''

(Insert line item numbers)

* * * * *

25. Section 52.225-9 is amended in the section and clause headings

by removing ``Act'' following ``Agreements'', and revising the date of

the clause heading to read ``(JAN 1994)''; by revising the introductory

text of paragraph (a) and adding in alphabetical order the definitions

``NAFTA country'', and ``NAFTA country end product''; and revising

paragraph (b) to read as follows:

Sec. 52.225-9 Buy American Act--Trade Agreements--Balance of Payments

Program.

* * * * *

Buy American Act--Trade Agreements--Balance of Payments Program (Jan

1994)

(a) This clause implements the Buy American Act (41 U.S.C. 10),

the Trade Agreements Act of 1979 (19 U.S.C. 2501-2582), the North

American Free Trade Agreement (NAFTA) Implementation Act (Pub. L.

103-182, 107 Stat. 2057) and the Balance of Payments Program by

providing a preference for domestic end products over foreign end

products, except for certain foreign end products which meet the

requirements for classification as designated, NAFTA, or Caribbean

Basin country end products.

* * * * *

NAFTA country, as used in this clause, means Canada or Mexico.

NAFTA country end product, as used in this clause, means an

article that (1) is wholly the growth, product, or manufacture of a

NAFTA country, or (2) in the case of an article which consists in

whole or in part of materials from another country or

instrumentality, has been substantially transformed in a NAFTA

country 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. The term includes services (except

transportation services) incidental to its supply; provided, that

the value of those incidental services does not exceed that of the

product itself. It does not include service contracts as such.

(b) The Contracting Officer has determined that the Trade

Agreements Act and NAFTA apply to this acquisition. Unless otherwise

specified, the Acts apply to all items in the schedule. The

Contractor agrees to deliver under this contract only domestic end

products unless, in its offer, it specifies delivery of foreign end

products in the provision entitled ``Buy American Act--Trade

Agreements--Balance of Payments Program Certificate.'' An offer

certifying that a designated, NAFTA, or Caribbean Basin country end

product will be supplied requires the Contractor to supply a

designated, NAFTA, or Caribbean Basin country end product or, at the

Contractor's option, a domestic end product. Contractors may not

supply a foreign end product for line items subject to the Trade

Agreements Act unless the foreign end product is a designated,

NAFTA, or Caribbean end product (see FAR 25.401), or unless a waiver

is granted under section 302 of the Trade Agreements Act of 1979

(see FAR 25.402(c)).

* * * * *

26. Section 52.225-15 is amended in the section and clause headings

by removing ``Agreement'' and inserting ``and North American Free Trade

Agreements''; by revising the date of the clause heading to read ``(JAN

1994)''; in paragraph (a) by adding in alphabetical order the

definitions ``North American Free Trade Agreement (NAFTA) country'',

and ``NAFTA country construction material''; and by revising paragraphs

(b) and (c) to read as follows:

52.225-15 Buy American Act--Construction Materials under European

Community and North American Free Trade Agreements.

* * * * *

Buy American Act--Construction Materials Under European Community and

North American Free Trade Agreements (Jan 1994)

* * * * *

North American Free Trade Agreement (NAFTA) country means Canada

or Mexico.

NAFTA country construction material means a construction

material that (1) is wholly the growth, product, or manufacture of a

NAFTA country, or (2) in the case of a construction material which

consists in whole or in part of materials from another country or

instrumentality, has been substantially transformed in a NAFTA

country into a new and different construction material distinct from

the materials from which it was transformed.

(b) The Buy American Act (41 U.S.C. 10) provides that the

Government give preference to domestic material. In addition, the

Memorandum of Understanding between the United States of America and

the European Economic Community on Government Procurement, and the

North American Free Trade Agreement (NAFTA), provide that EC and

NAFTA construction materials are exempted from application of the

Buy American Act.

(c) The Contractor agrees that only domestic construction

materials, NAFTA country construction materials or EC construction

materials will be used by the Contractor, subcontractors,

materialmen and suppliers in the performance of this contract,

except for other foreign construction materials, if any, listed in

this contract.

(End of clause)

27. Section 52.225-17 is amended in the clause heading by revising

the date to read ``(JAN 1994)''; in the definition ``Domestic end

product'' by removing the last sentence; by removing the parenthetical

following paragraph (c)(4); and by adding paragraph (d) to read as

follows:

52.225-17 Buy American Act--Supplies under European Community

Agreement.

* * * * *

Buy American Act--Supplies Under European Community Agreement (Jan

1994)

* * * * *

(d) If this contract contains the clause at 52.225-21, Buy

American Act--North American Free Trade Agreement (NAFTA)

Implementation Act--Balance of Payments Program, the Contractor may

deliver NAFTA country end products, notwithstanding the prohibition

in paragraph (c).

(End of clause)

28. Section 52.225-19 is amended in the clause heading by revising

the date to read ``(JAN 1994)''; and by revising paragraph (b) to read

as follows:

52.225-19 European Community Sanction for Services.

* * * * * *

European Community Sanction for Services (Jan 1994)

* * * * *

(b) Agreement. The Contractor agrees not to perform services

under this contract in a sanctioned member state of the EC. This

does not apply to subcontracts.

(End of clause)

29. Sections 52.225-20 and 52.225-21 are added to read as follows:

52.225-20 Buy American Act--North American Free Trade Agreement

Implementation Act--Balance of Payments Program Certificate.

As prescribed in 25.408(a)(3), insert the following provision:

Buy American Act--North American Free Trade Agreement Implementation

Act--Balance of Payments Program Certificate (Jan 1994)

(a) The offeror hereby certifies that each end product, except

those listed in paragraph (b) of this provision, is a domestic end

product (as defined in the clause entitled ``Buy American Act--North

American Free Trade Agreement (NAFTA) Implementation Act--Balance of

Payments Program'') and that components of unknown origin have been

considered to have been mined, produced, or manufactured outside the

United States.

(b) Excluded End Products:

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

Line item No. Country of origin

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

(List as necessary)

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

(c) Offers will be evaluated by giving certain preferences to

domestic end products or NAFTA country end products over other end

products. In order to obtain these preferences in the evaluation of

each excluded end product listed in paragraph (b) of this provision,

offerors must identify and certify below those excluded end products

that are NAFTA country end products. Products that are not

identified and certified below will not be deemed NAFTA country end

products. Offerors must certify by inserting the applicable line

item numbers in the following:

(1) The offeror certifies that the following supplies qualify as

``NAFTA country end products'' as that term is defined in the clause

entitled ``Buy American Act--North American Free Trade Agreement

Implementation Act--Balance of Payments Program:''

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

(Insert line item numbers)

(d) Offers will be evaluated in accordance with FAR part 25.

(End of provision)

52.225-21 Buy American Act--North American Free Trade Agreement

Implementation Act--Balance of Payments Program.

As prescribed in 25.408(a)(4), insert the following clause:

Buy American Act--North American Free Trade Agreement Implementation

Act--Balance of Payments Program (Jan 1994)

(a) Definitions. As used in this clause--

Components means those articles, materials, and supplies

incorporated directly into the end products.

Domestic end product means (1) an unmanufactured end product

mined or produced in the United States, or (2) an end product

manufactured in the United States, if the cost of its components

mined, produced, or manufactured in the United States exceeds 50

percent of the cost of all its components. A component shall also be

considered to have been mined, produced, or manufactured in the

United States (regardless of its source in fact) if the end product

in which it is incorporated is manufactured in the United States and

the component is of a class or kind (i) determined by the

Government, to be not mined, produced, or manufactured in the United

States in sufficient and reasonably available commercial quantities

of a satisfactory quality, or (ii) to which the agency head

concerned has determined that it would be inconsistent with the

public interest to apply the restrictions of the Buy American Act.

End products means those articles, materials, and supplies to be

acquired under this contract for public use.

Foreign end product means an end product other than a domestic

end product.

North American Free Trade Agreement (NAFTA) country means Canada

or Mexico.

NAFTA country end product means an article that (1) is wholly

the growth, product, or manufacture of a NAFTA country, or (2) in

the case of an article which consists in whole or in part of

materials from another country or instrumentality, has been

substantially transformed in a NAFTA country 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. The term includes services (except transportation

services) incidental to its supply; provided, that the value of

those incidental services does not exceed that of the product

itself. It does not include service contracts as such.

(b) This clause implements the Buy American Act (41 U.S.C. 10),

the North American Free Trade Agreement Implementation Act (Pub. L.

103-182, 107 Stat. 2057), and the Balance of Payments Program by

providing a preference for domestic end products over foreign end

products, except for certain foreign end products which meet the

requirements for classification as NAFTA country end products.

(c) The Contracting Officer has determined that the NAFTA

applies to this acquisition. Unless otherwise specified, the Act

applies to all items in the schedule. The Contractor agrees to

deliver under this contract only domestic end products unless, in

its offer, it specifies delivery of foreign end products in the

provision entitled ``Buy American Act--North American Free Trade

Agreement Implementation Act--Balance of Payments Program

Certificate.'' An offer certifying that a NAFTA country end product

will be supplied requires the Contractor to supply a NAFTA country

end product or, at the Contractor's option, a domestic end product.

(d) If the contract contains the clause at 52.225-17, Buy

American Act--Supplies under European Community Agreement, the

Contractor may deliver EC country end products notwithstanding the

provisions of paragraph (c).

(e) Offers will be evaluated in accordance with the policies and

procedures of subpart 25.4 of the Federal Acquisition Regulation.

(End of clause)

[FR Doc. 94-177 Filed 1-4-94; 8:45 am]

BILLING CODE 6820-34-M