Defense Federal Acquisition Regulation Supplement; Terrorist Countries

DEPARTMENT OF DEFENSE

48 CFR Parts 209 and 252

Defense Federal Acquisition Regulation Supplement; Terrorist

Countries

AGENCY: Department of Defense (DoD).

ACTION: Interim rule with request for comments.

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SUMMARY: The Director of Defense Procurement has issued an interim rule

amending the Defense Federal Acquisition Regulation Supplement (DFARS)

to require offerors and contractors to report commercial transactions

they have conducted with the government of a terrorist country.

DATES: Effective date: September 29, 1994.

Comment date: Comments on the interim rule should be submitted in

writing to the address shown below on or before December 6, 1994, to be

considered in the formulation of the final rule.

ADDRESSES: Interested parties should submit written comments to:

Defense Acquisition Regulations Council, Attn: Ms. Michele Peterson,

PDUSD (A&T)DP(DAR), IMD 3D139, 3062 Defense Pentagon, Washington, DC

20301-3062. Telefax number (703) 604-5971. Please cite DFARS Case 93-

D319 in all correspondence related to this issue.

FOR FURTHER INFORMATION CONTACT:

Ms. Michele Peterson, (703) 604-5929.

SUPPLEMENTARY INFORMATION:

A. Background

Section 843 of the National Defense Authorization Act for Fiscal

Year 1994 (Public Law 103-160) requires offerors and contractors under

DoD solicitations and contracts exceeding $5,000,000 to report

commercial transactions conducted with the Government of a terrorist

country. This interim rule adds new language to DFARS Subpart 209.1, a

new provision at 252.209-7003, and a new clause at 252.209-7004 to

implement the requirements of Section 843 of Public Law 103-160. The

rule also revises the provision at 252.209-7001 for consistency with

the terminology used in the new provision and clause.

B. Regulatory Flexibility Act

The proposed rule is not expected to have a significant economic

impact on a substantial number of small entities within the meaning of

the Regulatory Flexibility Act, 5 U.S.C. 601, et seq., because the rule

only applies to contracts exceeding $5,000,000. An initial regulatory

flexibility analysis has therefore not been performed. Comments are

invited from small businesses and other interested parties. Comments

from small entities concerning the affected subparts will be considered

in accordance with Section 610 of the Act. Such comments must be

submitted separately and cite DFARS Case 93-D319 in correspondence.

C. Paperwork Reduction Act

The Paperwork Reduction Act applies. A request for approval of the

information collection requirement has been sent to the Office of

Management and Budget.

List of Subjects in 48 CFR Parts 209 and 252

Government procurement.

Claudia L. Naugle,

Deputy Director, Defense Acquisition Regulations Council.

Therefore, CFR Parts 209 and 252 are amended as follows:

1. The authority citation for 48 CFR Parts 209 and 252 continues to

read as follows:

Authority: 41 U.S.C. 421 and 48 CFR Chapter 1.

PART 209--CONTRACTOR QUALIFICATIONS

2. Section 209.104-1 is amended by revising the title of paragraph

(g)(i) and adding paragraph (g)(iii) to read as follows:

209.104-1 General standards.

* * * * *

(g) (i) Ownership or control by the government of a terrorist

country * * *

* * * * *

(iii) Commercial transactions with the government of a terrorist

country.

(A) In accordance with Section 843 of the National Defense

Authorization Act for Fiscal Year 1994 (Public Law 103-160)--

(1) Each offeror submitting an offer exceeding $5,000,000 must

disclose each commercial transaction that it has conducted with the

government of a terrorist country since February 28, 1994; and

(2) For each contract exceeding $5,000,000, the contractor must

annually report each commercial transaction that it conducts during the

course of the contract (but not beyond September 30, 1996) with the

government of a terrorist country.

(B) Upon award of a contract exceeding $5,000,000 to an offeror

disclosing that it has conducted commercial transactions with the

government of a terrorist country, the contracting officer shall--

(1) Forward a copy of the offeror's disclosure to the Deputy

Director of Defense Procurement (Foreign Contracting); and

(2) Include with the disclosure the following information:

(i) Offeror's name and address;

(ii) Contracting officer's name and telephone number; and

(iii) Contract number and award date.

3. Section 209.104-70 is amended by revising the title and

paragraph (a) and adding paragraphs (c) and (d) to read as follows:

209.104-70 Solicitation provisions and contract clause.

(a) Use the provision at 252.209-7001, Disclosure of Ownership or

Control by the Government of a Terrorist Country, in all solicitations

expected to result in contracts of $100,000 or more.

* * * * *

(c) Use the provision at 252.209-7003, Disclosure of Commercial

Transactions with the Government of a Terrorist Country, in all

solicitations expected to result in contracts exceeding $5,000,000.

(d) Use the clause at 252.209-7004, Reporting of Commercial

Transactions with the Government of a Terrorist Country, in all

solicitations that include the provision at 252.209-7003, and in all

contracts exceeding $5,000,000.

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

4. Section 252.209-7001 is revised to read as follows:

252.209-7001 Disclosure of ownership or control by the government of a

terrorist country.

As prescribed in 209.104-70(a), use the following provision:

Disclosure of Ownership or Control by the Government of a Terrorist

Country (Sep 1994)

(a) Definitions.

As used in this provision--

(1) ``Government of a terrorist country'' includes the state and

the government of a terrorist country, as well as any political

subdivision, agency, or instrumentality thereof.

(2) ``Terrorist country'' means a country determined by the

Secretary of State, under section 6(j)(1)(A) of the Export

Administration Act of 1979 (50 U.S.C. App. 2405(j)(i)(A)), to be a

country the government of which has repeatedly provided support for

acts of international terrorism. As of the date of this provision,

terrorist countries include: Cuba, Iran, Iraq, Libya, North Korea,

Sudan, and Syria.

(3) ``Significant interest'' means--

(i) Ownership of or beneficial interest in 5 percent or more of

the firm's or subsidiary's securities. Beneficial interest includes

holding 5 percent or more of any class of the firm's securities in

``nominee shares,'' ``street names,'' or some other method of

holding securities that does not disclose the beneficial owner;

(ii) Holding a management position in the firm, such as a

director or officer;

(iii) Ability to control or influence the election, appointment,

or tenure of directors or officers in the firm;

(iv) Ownership of 10 percent or more of the assets of a firm

such as equipment, buildings, real estate, or other tangible assets

of the firm; or

(v) Holding 50 percent or more of the indebtedness of a firm.

(b) Prohibition on award.

In accordance with 10 U.S.C. 2327, no contract may be awarded to

a firm or a subsidiary of a firm if the government of a terrorist

country has a significant interest in the firm or subsidiary, unless

a waiver is granted by the Secretary of Defense.

(c) Disclosure.

If the government of a terrorist country has a significant

interest in the Offeror or a subsidiary of the Offeror, the Offeror

shall disclose such interest in an attachment to its offer. If the

Offeror is a subsidiary, it shall also disclose any significant

interest the government of a terrorist country has in any firm that

owns or controls the subsidiary. The disclosure shall include--

(1) Identification of each government holding a significant

interest; and

(2) A description of the significant interest held by each

government.

(End of provision)

5. Sections 252.209-7003 and 252.209-7004 are added to read as

follows:

252.209-7003 Disclosure of Commercial Transactions with the Government

of a Terrorist Country.

As prescribed in 209.104-70(c), use the following provision:

Disclosure of Commercial Transactions With the Government of a

Terrorist Country (Sep 1994)

(a) Definitions.

Government of a terrorist country and terrorist country are

defined in the Reporting of Commercial Transactions with the

Government of a Terrorist Country clause of this solicitation.

(b) Disclosure.

(1) Section 843 of the National Defense Authorization Act for

Fiscal Year 1994 (Pub. L. 103-160) requires offerors to disclose

commercial transactions conducted with the government of a terrorist

country. If this offer exceeds $5,000,000, and if the Offeror has

conducted such transactions, the Offeror shall disclose, in an

attachment to its offer, each commercial transaction that it has

conducted with the government of a terrorist country since February

28, 1994. The disclosure shall include--

(i) Identification of the government with which each transaction

was conducted; and

(ii) The nature of each transaction.

(2) This disclosure requirement does not apply to--

(i) Transactions conducted by affiliates or subsidiaries of the

Offeror; or

(ii) Payment or receipt of payment of a judgment or award

ordered by a court or arbitral tribunal of competent jurisdiction.

(End of provision)

252.209-7004 Reporting of Commercial Transactions with the Government

of a Terrorist Country.

As prescribed in 209.104-70(d), use the following clause:

Reporting of Commercial Transactions With the Government of a Terrorist

Country (Sep 1994)

(a) Definitions.

As used in this clause--

(1) Government of a terrorist country includes the state and the

government of a terrorist country, as well as any political

subdivision, agency, or instrumentality thereof.

(2) Terrorist country means a country determined by the

Secretary of State, under section 6(j)(1)(A) of the Export

Administration Act of 1979 (50 U.S.C. App. 2405(j)(1)(A)), as of 60

days before the contract award date, to be a country the government

of which has repeatedly provided support for acts of international

terrorism. As of the date of this clause, terrorist countries

include: Cuba, Iran, Iraq, Libya, North Korea, Sudan, and Syria.

(b) Reporting.

(1) In accordance with section 843 of the National Defense

Authorization Act for Fiscal Year 1994 (Pub. L. 103-160), if this

contract exceeds $5,000,000, the Contractor shall report each

commercial transaction that it conducts with the government of a

terrorist country during the period of performance of this contract

(but not beyond September 30, 1996).

(2) This reporting requirement does not apply to--

(i) Transactions conducted by affiliates or subsidiaries of the

Contractor; or

(ii) Payment of receipt of payment of a judgment or award

ordered by a court or arbitral tribunal of competent jurisdiction.

(3) The Contractor shall submit reports in the following format:

Title of Report: Report of Commercial Transactions with the

Government of a Terrorist Country

Date of Report:

Contract Number:

Contractor's Name and Address:

Name and Telephone Number of Individual Submitting Report:

Commercial Transactions with the Government of a Terrorist Country:

Country

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Nature of Commercial Transaction

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(4) The Contractor shall submit reports annually by September

30, but not beyond September 30, 1996. Each report shall include

transactions conducted during the preceding one-year period of

contract performance.

(5) The Contractor shall submit reports to: Deputy Director of

Defense Procurement (Foreign Contracting), PDUSD (A&T) DP (FC),

Washington, DC 20301-3060.

(End of clause)

[FR Doc. 94-24772 Filed 10-6-94; 8:45 am]

BILLING CODE 5000-04-M