Federal Acquisition Regulation; Foreign Acquisition (Part 25 Rewrite)

SUMMARY: The Civilian Agency Acquisition Council and the Defense

Acquisition Regulations Council are proposing to amend the Federal

Acquisition Regulation (FAR) to rewrite guidance and clauses on foreign

acquisition. This regulatory action was not subject to Office of

Management and Budget review under Executive Order 12866, dated

September 30, 1993. This is not a major rule under 5 U.S.C. 804.

DATES: Comments should be submitted on or before November 27, 1998 to

be considered in the formulation of a final rule.

ADDRESSES: Interested parties should submit written comments to:

General Services Administration, FAR Secretariat (MVRS), Attn: Ms.

Laurie Durate, 1800 F Street, NW, Room 4035, Washington, DC 20405, E-

mail comments submitted over Internet should be addressed to:

[email protected].

Please cite FAR case 97-024 in all correspondence related to this

case.

FOR FURTHER INFORMATION CONTACT: The FAR Secretariat, Room 4035, GS

Building, Washington, DC 20405 (202) 501-4755 for information

pertaining to status or publication schedules. For clarification of

content, contact Mr. Paul Linfield, Procurement Analyst, at (202) 501-

1757. Please cite FAR case 97-024.

SUPPLEMENTARY INFORMATION:

A. Background

This rule constitutes a rewrite of FAR Part 25 and the associated

clauses in Part 52. Part 25 implements a number of statutes and

executive orders that use different terminology that have specific

definitions. These statutes and executive orders provide different

exceptions and may exempt certain departments or agencies. The effort

to rewrite FAR Part 25 was undertaken to make the various policies and

procedures that implement these statutes and executive orders in

acquisitions of foreign supplies, services, and construction materials

clearer and more understandable to the reader. In addition to numerous

editorial changes, some policies and procedures were clarified to

eliminate potential conflict or inconsistency with other parts of the

FAR. Several changes were made to provide either new or more consistent

and uniform direction to agencies. One of the more significant of these

changes, discussed below, addresses the treatment of U.S. made end

products for acquisitions subject to the Trade Agreements Act.

To qualify as a domestic end product under the Buy American Act,

the end product must be manufactured in the United States and the cost

of the components manufactured in the United States must exceed 50% of

the cost of all components. Under the Trade Agreements Act, the country

of origin of an end product that is not wholly the growth, product or

manufacture of a country, is the country in which the end product is

substantially transformed into a new and different article, without

regard to the source of the components. The proposed rule defines U.S.

made end products as products that are manufactured or substantially

transformed in the United States, regardless of the source of the

components. Therefore, U.S. made end products pass the Trade Agreements

Act country of origin test, but do not necessarily qualify as domestic

end products under the Buy American Act.

The Trade Agreements Act prohibits the purchase of foreign end

products, except for the products of countries that are eligible under

the Trade Agreements Act, the North American Free Trade Agreement, the

Caribbean Basin Economic Recovery Initiative, or some other agreement.

These eligible products compete on an equal basis with domestic end

products, without application of a Buy American Act or Balance of

Payments Program evaluation factor.

The Trade Agreements Act does not specifically address the

treatment of U.S. made end products that do not qualify as domestic end

products under the Buy American Act. Because these other U.S. made end

products are foreign end products under the Buy American Act and are

not the products of an eligible country, the current FAR prohibits a

contractor from supplying these other U.S. made end products when the

Trade Agreements Act applies.

In 1990, the GSBCA Board of Contract Appeals ruled that the Trade

Agreements Act does not prohibit the purchase of U.S. products. See

International Business Machines Corp., GSBCA No. 10532-P, May 18, 1990,

90-2 BCA. U.S. made end products that do not meet the definition of

domestic end product under the Buy American Act are not foreign end

products included in the Trade Agreements Act procurement prohibition.

Until now, the GSBCA decision has been separately implemented by each

agency. This proposed rule revises the FAR to permit the purchase of

all U.S. made end products, whether or not they are domestic end

products. All such products compete equally with eligible end products.

Agencies that previously needed to deviate from the FAR to conform

their acquisitions to the GSBCA decision will no longer need a

deviation, since that decision is implemented in the proposed rule.

However, the Board did not rule on the application of the Buy

American Act when a U.S. made end product that is not a domestic end

product competes with a domestic end product. As a result, an agency

may handle this evaluation differently. As a matter of policy, agencies

generally apply the Balance of Payments Program to overseas

acquisitions in the same way they apply the Buy American Act to

acquisitions in the United States. For example, GSA and the Department

of Commerce do not apply the Buy American Act or Balance of Payments

Program to provide a preference for domestic end products over other

U.S. made end products that do not qualify as domestic end products

when the Trade Agreements Act applies, i.e., all U.S. made end products

are treated the same. On the other hand, unless a waiver of the Buy

American Act has been specifically granted, DoD does provide an

evaluation preference to domestic end products, when such products are

competing with other U.S. made end products that do not qualify as

domestic end products. DoD has waived application of the Buy American

Act/Balance of Payments Program for all U.S. made information

technology end products, when the Trade Agreements Act applies.

The evaluation procedures at FAR 25.502(b)(2) are appropriate for

those agencies that provide the same treatment to all U.S. made end

products. The proposed rule does not require a determination as to

whether a U.S. made end product is domestic through an assessment of

the source and value

[[Page 51643]]

of the components. Agencies, such as DoD, that in some cases apply the

Buy American Act or Balance of Payments Program evaluation preference

to domestic end products in competition with other U.S. made end

products in acquisitions subject to the Trade Agreements Act, may

provide alternative evaluation procedures in agency FAR supplements.

Numerous structural and editorial changes are proposed. Revisions

include--(1) adding an overview to help readers understand the part

(25.001, General); (2) adding 25.002, Applicability of subparts; (3)

adding definitions of ``cost of components,'' ``eligible offer,''

``noneligible product,'' ``Israeli end product,'' ``nondesignated

country end product,'' and ``U.S. made end product;'' eliminating

unnecessary definitions; and relocating all definitions to 25.003; and

(4) adding text and examples for evaluating offers under the Buy

American Act and trade agreements for supply contracts.

In this proposed rule, the clauses prescribed in Part 25 have been

renumbered, revised, and sometimes both. In order to better understand

the revisions to Part 52, the following list is provided:

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

New FAR

Current FAR section section

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

52.225-1 and -6........................................... 52.225-2

52.225-2.................................................. 52.225-7

52.225-3 and -7........................................... 52.225-1

52.225-4.................................................. 52.225-17

52.225-5.................................................. 52.225-9

52.225-8.................................................. 52.225-6

52.225-9.................................................. 52.225-5

52.225-10................................................. 52.225-8

52.225-11................................................. 52.225-13

52.225-12................................................. 52.225-10

52.225-13................................................. 52.225-12

52.225-14................................................. 52.225-14

52.225-15 and -22......................................... 52.225-11

52.225-18................................................. 52.225-15

52.225-19................................................. 52.225-16

52.225-20................................................. 52.225-4

52.225-21................................................. 52.225-3

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

B. Regulatory Flexibility Act

This 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 it

primarily clarifies existing guidance pertaining to acquisition of

foreign supplies, services, and construction. 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 FAR subpart will be

considered in accordance with 5 U.S.C. 610 of the Act. Such comments

must be submitted separately and should cite 5 U.S.C. 601, et seq. (FAR

case 97-024), in correspondence.

C. Paperwork Reduction Act

The Paperwork Reduction Act (44 U.S.C. 3501, et seq.) is deemed to

apply because the proposed rule contains information collection

requirements. These information collection requirements were submitted

and cleared by the Office of Management and Budget (OMB) under 44

U.S.C. 3501, et seq. The OMB control numbers are 9000-0022, 9000-0023,

9000-0024, 9000-0025, 9000-0130, and 9000-0141.

The existing provisions at 52.225-1, Buy American Certificate, and

52.225-6, Balance of Payments Program Certificate (OMB Control Numbers

9000-0024 and 9000-0023, respectively), are now combined into a new

provision at 52.225-2, Buy American Act--Balance of Payments Program

Certificate, with no change in paperwork burden. The existing provision

at 52.225-8, Buy American Act--Trade Agreements--Balance of Payments

Program Certificate (OMB Control Number 9000-0025) is replaced by the

provision at 52.225-6, Trade Agreements Certificate. The existing

provision at 52.225-20, Buy American Act--North American Free Trade

Agreement Implementation Act--Balance of Payments Program Certificate

(OMB Control Number 9000-0130) is replaced by the provision at 52.225-

4, Buy American Act--North American Free Trade Agreement--Israeli Trade

Act--Balance of Payments Program Certificate. These replacement

provisions eliminate redundancies in required listing of foreign end

products and country of origin. The provisions and clauses at 52.225-5,

Buy American Act--Construction Materials; 52.225-15, Buy American Act--

Construction Materials under Trade Agreements Act and North American

Free Trade Agreement; 52.225-12, Notice of Buy American Act

Requirement-- Construction Materials; 52.225-13, Notice of Buy American

Act Requirement--Construction Materials under Trade Agreements Act and

North American Free Trade Agreement (OMB Clearance 9000-0141); and

52.225-22, Balance of Payments Program-- Construction Materials--NAFTA,

are replaced by the provisions and clauses at 52.225-9, Buy American

Act--Balance of Payments Program--Construction Materials; 52.225-10,

Notice of Buy American Act/Balance of Payments Program Requirement--

Construction Materials; 52.225-11, Buy American Act--Balance of

Payments Program--Construction Materials under Trade Agreements; and

52.225-12, Notice of Buy American Act/Balance of Payments Program

Requirement--Construction Materials under Trade Agreements. There is no

change in burden relating to the renumbered clause at 52.225-8 entitled

``Duty-Free Entry,'' currently 52.225-10 (OMB Clearance 9000-0022).

List of Subjects in 48 CFR Parts 1, 5, 6, 9, 12, 13, 14, 15, 17,

25, and 52

Government procurement.

Dated: September 18, 1998.

Edward C. Loeb,

Director, Federal Acquisition Policy Division.

Therefore, it is proposed that 48 CFR Parts 1, 5, 6, 9, 12, 13, 14,

15, 17, 25, and 52 be amended as set forth below:

1. The authority citation for 48 CFR Parts 1, 5, 6, 9, 12, 13, 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 1--FEDERAL ACQUISITION REGULATIONS SYSTEM

2. Section 1.106 is amended in the table following the introductory

paragraph by removing the FAR Segment and OMB Control number in the

left columns and inserting the FAR Segment and OMB Control Number

listed in the right columns as follows:

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

Remove Insert

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

FAR segment OMB control No. FAR segment OMB control No.

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

52.225-1 9000-0024 52.225-2 9000-0023 and 9000-0024

52.225-6 9000-0023 52.225-4 9000-0130

52.225-8 9000-0025 52.225-6 9000-0025

52.225-10 9000-0022 52.225-8 9000-0022

52.225-20 9000-0130 52.225-9 9000-0141

52.225-11 9000-0141

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

[[Page 51644]]

PART 5--PUBLICIZING CONTRACT ACTIONS

5.301 [Amended]

3. Section 5.301 is amended in the parenthetical in paragraph

(a)(1) by removing ``(see 25.402 and 25.403)'' and inserting ``(see

subpart 25.4)''.

PART 6--COMPETITION REQUIREMENTS

4. Section 6.303-1 is amended by revising the first sentence of

paragraph (d) to read as follows:

6.303-1 Requirements.

* * * * *

(d) Contract actions subject to the Trade Agreements Act (see

subpart 25.4) may be made without providing for full and open

competition only when permitted and justified pursuant to this subpart.

* * *

* * * * *

PART 9--CONTRACTOR QUALIFICATIONS

5. Section 9.205 is amended by revising paragraph (b) to read as

follows:

9.205 Opportunity for qualification before award.

* * * * *

(b) The activity responsible for establishing a qualification

requirement shall keep any list maintained of those already qualified

open for inclusion of additional products, manufacturer, or other

potential sources, including eligible products from designated

countries under the terms of the Trade Agreements Act (see subpart

25.4).

PART 12--ACQUISITION OF COMMERCIAL ITEMS

6. Section 12.205 is amended by revising paragraph (c) to read as

follows:

12.205 Offers.

* * * * *

(c) Consistent with the requirements at 5.203(b), the contracting

officer may allow fewer than 30 days response time for receipt of

offers for commercial items, unless the acquisition is subject to NAFTA

or the Trade Agreements Act(see 5.203(h)).

12.504 [Amended]

7. Section 12.504 is amended by removing paragraphs (a)(2) through

(a)(4) and redesignating (a)(5) through (a)(15) as (a)(2) through

(a)(12), respectively.

PART 13--SIMPLIFIED ACQUISITION PROCEDURES

13.101 [Amended]

8. Section 13.101 is amended by removing paragraph (a)(3) and

redesignating (a)(4) as (a)(3).

PART 14--SEALED BIDDING

9. 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 that include any of the clauses

prescribed in 25.1101 or 25.1102. 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 that include any of the clauses

prescribed in 25.1101 or 25.1102, unless the clause at 52.225-17,

Evaluation of Foreign Currency Offers, prescribed in 25.1103(d) is

included. It may be included in other solicitations when the

contracting officer decides that it is necessary.

14.409-1 [Amended]

10. Section 14.409-1 is amended in paragraph (a)(2) by removing the

reference ``25.405(e)'' and inserting ``25.408(a)(5)''.

PART 15--CONTRACTING BY NEGOTIATION

15.209 [Amended]

11. Section 15.209 is amended by removing the reference ``25.901''

and inserting ``25.1001'' in paragraph (b)(4).

PART 17--SPECIAL CONTRACTING METHODS

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

follows:

17.203 Solicitations.

* * * * *

(h) Include the value of options in determining if the acquisition

will exceed the Trade Agreements Act and North American Free Trade

Agreement thresholds.

13. Part 25 is revised to read as follows:

PART 25--FOREIGN ACQUISITION

25.000 Scope of part.

25.001 General.

25.002 Applicability of subparts.

25.003 Definitions.

Subpart 25.1--Buy American Act--Supplies

25.100 Scope of subpart.

25.101 General.

25.102 Policy.

25.103 Exceptions.

25.104 Nonavailable articles.

25.105 Determining reasonableness of cost.

Subpart 25.2--Buy American Act--Construction Materials

25.200 Scope of subpart.

25.201 Policy.

25.202 Exceptions.

25.203 Preaward determinations.

25.204 Evaluating offers of foreign construction material.

25.205 Postaward determinations.

25.206 Noncompliance.

Subpart 25.3--Balance of Payments Program

25.300 Scope of subpart.

25.301 General.

25.302 Policy.

25.303 Exceptions.

25.304 Procedures.

Subpart 25.4--Trade Agreements

25.400 Scope of subpart.

25.401 Exceptions.

25.402 General.

25.403 Trade Agreements Act.

25.404 Caribbean Basin Trade Initiative.

25.405 North American Free Trade Agreement (NAFTA).

25.406 Israeli Trade Act.

25.407 Agreement on Trade in Civil Aircraft.

25.408 Procedures.

Subpart 25.5--Evaluating Foreign Offers--Supply Contracts

25.501 General.

25.502 Application.

25.503 Group offers.

25.504 Evaluation examples.

25.504-1 Buy American Act/Balance of Payments Program.

25.504-2 Trade Agreements Act/Caribbean Basin Trade Initiative/

NAFTA.

25.504-3 Other trade agreements.

25.504-4 Group award basis.

[[Page 51645]]

Subpart 25.6--Trade Sanctions

25.600 Scope of subpart.

25.601 Policy.

25.602 Exceptions.

Subpart 25.7--Prohibited Sources

25.701 Restrictions.

25.702 Source of further information.

Subpart 25.8--Other International Agreements and Coordination

25.801 General.

25.802 Procedures.

Subpart 25.9--Customs and Duties

25.900 Scope of subpart.

25.901 Policy.

25.902 Procedures.

25.903 Exempted supplies.

Subpart 25.10--Additional Foreign Acquisition Regulations

25.1001 Waiver of right to examination of records.

25.1002 Use of foreign currency.

Subpart 25.11--Solicitation Provisions and Contract Clauses

25.1101 Acquisition of supplies.

25.1102 Acquisition of construction.

25.1103 Other provisions and clauses.

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

U.S.C. 2473(c).

PART 25--FOREIGN ACQUISITION

25.000 Scope of part.

This part provides policies and procedures for acquiring foreign

supplies, services, and construction materials. It implements the Buy

American Act, the Balance of Payments Program, trade agreements, and

other laws and regulations.

25.001 General.

(a) The Buy American Act--

(1) Restricts the purchase of supplies, that are not domestic end

products, for use within the United States. A foreign end product may

be purchased if it is determined that the price of the lowest domestic

offer is unreasonable, or if another exception applies (see subpart

25.1); and

(2) Requires that, with some exceptions, only domestic construction

materials be used in contracts for construction in the United States

(see subpart 25.2).

(b) The Balance of Payments Program (see subpart 25.3) is similar

to the Buy American Act in its implementation except that it applies to

the purchase of supplies for use outside the United States, and

construction materials for construction contracts performed outside the

United States.

(c) The restrictions in the Buy American Act and the Balance of

Payments Program are waived in acquisitions subject to certain trade

agreements (see subpart 25.4). In these acquisitions, end products and

construction materials from certain countries receive nondiscriminatory

treatment in evaluation with domestic offers. Generally, the dollar

value of the acquisition will determine which of the trade agreements

applies. Exceptions to the applicability of the trade agreements are

described in subpart 25.4.

(d) The test used to determine the country of origin for an end

product under the trade agreements is different from the test used to

determine the country of origin for an end product under the Buy

American Act (see definitions of ``end product'' in 25.003). The Buy

American Act uses a two-part test to define a ``domestic end product''

(manufacture in the United States and a formula based on cost of

domestic components). Under the trade agreements, the test to determine

country of origin is ``substantial transformation,'' i.e., transforming

an article into a new and different article of commerce, with a name,

character, or use distinct from the original article.

(e) Sanctions have been imposed against some European Union

countries for discriminating against U.S. products and services (see

subpart 25.6).

25.002 Applicability of subparts.

The applicability of the subparts is shown in the following table.

Comprehensive procedures for offer evaluation, and examples, are

provided in subpart 25.5.

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

Supplies for use Construction Services performed

Subpart -----------------------------------------------------------------------------------

Inside U.S. Outside U.S. Inside U.S. Outside U.S. Inside U.S. Outside U.S.

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

25.1 Buy American Act--

Supplies................... X ............ ............ ............ ............ ............

25.2 Buy American Act--

Construction Materials..... ............ ............ X ............ ............ ............

25.3 Balance of Payments

Program.................... ............ X ............ X ............ ............

25.4 Trade Agreements...... X X X X X X

25.5 Evaluating Foreign

Offers--Supply Contracts... X X ............ ............ ............ ............

25.6 Trade Sanctions....... X X X X X X

25.7 Prohibited Sources.... X X X X X X

25.8 Other International

Agreements and Coordination X X ............ X ............ X

25.9 Customs and Duties.... X ............ ............ ............ ............ ............

25.10 Additional Foreign

Acquisition Regulations.... X X X X X X

25.11 Solicitation

Provisions and Contract

Clauses.................... X X X X X X

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

25.003 Definitions.

As used in this part--

Canadian end product means an article that--

(1) Is wholly the growth, product, or manufacture of Canada; or

(2) In the case of an article that consists in whole or in part of

materials from another country, 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 refers to a product offered for

purchase under a supply contract, but for purposes of calculating the

value of the end product includes services (except transportation

services) incidental to the article, provided that the value of those

incidental services does not exceed that of the article itself.

Caribbean Basin country means any of the following countries:

Antigua and Barbuda, Aruba, Bahamas, Barbados, Belize, British Virgin

Islands, Costa Rica, Dominica, Dominican Republic, El Salvador,

Grenada, Guatemala, Guyana, Haiti, Honduras, Jamaica, Montserrat,

Netherlands Antilles, Nicaragua, Panama, St. Kitts and Nevis, St.

Lucia, St. Vincent and the Grenadines, Tobago and Trinidad.

Caribbean Basin country end product means an article that--

(1) Is wholly the growth, product, or manufacture of a Caribbean

Basin country; or

(2) In the case of an article that consists in whole or in part of

materials from another country, has been substantially transformed in a

Caribbean Basin country into a new and different article of commerce

with a name, character, or use distinct from that of

[[Page 51646]]

the article or articles from which it was transformed. The term refers

to a product offered for purchase under a supply contract, but for

purposes of calculating the value of the end product includes services

(except transportation services) incidental to the article; provided

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

article itself. The term excludes products that are excluded from duty-

free treatment for Caribbean countries under 19 U.S.C. 2703(b), which

presently are--

(i) Textiles and apparel articles that are subject to textile

agreements;

(ii) Footwear, handbags, luggage, flat goods, work gloves, and

leather wearing apparel not designated as eligible articles for the

purpose of the Generalized System of Preferences under Title V of the

Trade Act of 1974;

(iii) Tuna, prepared or preserved in any manner in airtight

containers;

(iv) Petroleum, or any product derived from petroleum; and

(v) Watches and watch parts (including cases, bracelets, and

straps) of whatever type including, but not limited to, mechanical,

quartz digital, or quartz analog, if such watches or watch parts

contain any material that is the product of any country to which the

Harmonized Tariff Schedule of the United States (HTSUS) column 2 rates

of duty apply.

Civil aircraft and related articles means--

(1) All aircraft other than aircraft to be purchased for use by the

Department of Defense or the U.S. Coast Guard;

(2) The engines (and parts and components for incorporation into

the engines) of these aircraft;

(3) Any other parts, components, and subassemblies for

incorporation into the aircraft; and

(4) Any ground flight simulators, and parts and components of these

simulators, for use with respect to the aircraft, whether to be used as

original or replacement equipment in the manufacture, repair,

maintenance, rebuilding, modification, or conversion of the aircraft

and without regard to whether the aircraft or articles receive duty-

free treatment under section 601(a)(2) of the Trade Agreements Act.

Components means those articles, materials, and supplies

incorporated directly into the end products.

Construction means construction, alteration, or repair of any

public building or public work.

Construction material means an article, material, or supply brought

to the construction site by a contractor or subcontractor for

incorporation into the building or work. The term also includes an item

brought to the site preassembled from articles, materials, or supplies.

However, emergency life safety systems, such as emergency lighting,

fire alarm, and audio evacuation systems, that are discrete systems

incorporated into a public building or work and that are produced as

complete systems, shall be evaluated as a single and distinct

construction material regardless of when or how the individual parts or

components of such systems are delivered to the construction site.

Materials purchased directly by the Government are supplies, not

construction material.

Cost of components means--

(1) For components purchased by the contractor, the acquisition

cost, including transportation costs to the place of incorporation into

the end product (whether or not such costs are paid to a domestic

firm), and any applicable duty (whether or not a duty-free entry

certificate is issued); or

(2) For components manufactured by the contractor, all costs

associated with the manufacture of the component, including

transportation costs as described in paragraph (1) of this definition,

plus allocable overhead costs, but excluding profit. Cost of components

does not include any costs associated with the manufacture of the end

product.

Customs territory of the United States means the States, the

District of Columbia, and Puerto Rico.

Designated country means any of the following countries:

Aruba

Austria

Bangladesh

Belgium

Benin

Bhutan

Botswana

Burkina Faso

Burundi

Canada

Cape Verde

Central African Republic

Chad

Comoros

Denmark

Djibouti

Equatorial Guinea

Finland

France

Gambia

Germany

Greece

Guinea

Guinea-Bissau

Haiti

Hong Kong

Ireland

Israel

Italy

Japan

Kiribati

Korea, Republic of Lesotho

Liechtenstein

Luxembourg

Malawi

Maldives

Mali

Mozambique

Nepal

Netherlands

Niger

Norway

Portugal

Rwanda

Sao Tome and Principe

Sierra Leone

Singapore

Somalia

Spain

Sweden

Switzerland

Tanzania U.R.

Togo

Tuvalu

Uganda

United Kingdom

Vanuatu

Western Samoa

Yemen

Designated country end product means an article that--

(1) Is wholly the growth, product, or manufacture of a designated

country; or

(2) In the case of an article that consists in whole or in part of

materials from another country, has been substantially transformed in a

designated 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 refers to a product offered for

purchase under a supply contract, but for purposes of calculating the

value of the end product includes services (except transportation

services) incidental to the article; provided that the value of those

incidental services does not exceed that of the article itself.

Domestic construction material means--

(1) An unmanufactured construction material mined or produced in

the United States; or

(2) A construction material 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.

Components of foreign origin of the same class or kind for which

nonavailability determinations have been made are treated as domestic.

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

[[Page 51647]]

manufactured in the United States exceeds 50 percent of the cost of all

its components. Components of foreign origin of the same class or kind

as those that the agency determines are not mined, produced, or

manufactured in sufficient and reasonably available commercial

quantities of a satisfactory quality are treated as domestic. Scrap

generated, collected, and prepared for processing in the United States

is considered domestic.

Domestic offer means an offer of a domestic end product. When the

solicitation specifies that award will be made on a group of line

items, a domestic offer means an offer where the proposed price of the

domestic end products exceeds 50 percent of the total proposed price of

the group.

Eligible offer means an offer of an eligible product. When the

solicitation specifies that award will be made on a group of line

items, an eligible offer means a foreign offer where the combined

proposed price of the eligible products and the domestic end products

exceeds 50 percent of the total proposed price of the group.

Eligible product means a foreign end product that is not subject to

the discriminatory treatment of the Buy American Act or the Balance of

Payments Program due to the applicability of a trade agreement to a

particular acquisition.

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

acquired under the contract for public use.

Foreign construction material means a construction material other

than a domestic construction material.

Foreign contractor means a contractor or subcontractor organized or

existing under the laws of a country other than the United States, its

territories, or possessions.

Foreign end product means an end product other than a domestic end

product.

Foreign offer means any offer other than a domestic offer.

Israeli end product means an article that--

(1) Is wholly the growth, product, or manufacture of Israel; or

(2) In the case of an article that consists in whole or in part of

materials from another country, has been substantially transformed in

Israel 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.

Mexican end product means an article that--

(1) Is wholly the growth, product, or manufacture of Mexico; or

(2) In the case of an article that consists in whole or in part of

materials from another country, 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 refers to a product offered for

purchase under a supply contract, but for purposes of calculating the

value of the end product includes services (except transportation

services) incidental to the article; provided that the value of those

incidental services does not exceed that of the article itself.

Noneligible product means a foreign end product that is not an

eligible 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 that consists in whole or in part of

materials from another country, 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 refers to a product offered for

purchase under a supply contract, but for purposes of calculating the

value of the end product includes services (except transportation

services) incidental to the article; provided that the value of those

incidental services does not exceed that of the article itself.

Sanctioned European Union (EU) country construction means

construction to be performed in a sanctioned EU member state.

Sanctioned EU country end product means an article that--

(1) Is wholly the growth, product, or manufacture of a sanctioned

EU member state; or

(2) In the case of an article that consists in whole or in part of

materials from another country, has been substantially transformed in a

sanctioned EU member state 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 refers to a product

offered for purchase under a supply contract, but for purposes of

calculating the value of the end product includes services (except

transportation services) incidental to the article; provided that the

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

itself.

Sanctioned EU country services means services to be performed in a

sanctioned EU member state.

Sanctioned EU member state means Austria, Belgium, Denmark,

Finland, France, Ireland, Italy, Luxembourg, the Netherlands, Sweden,

or the United Kingdom.

United States means the 50 states and the District of Columbia, its

possessions, the Commonwealth of Puerto Rico, and any other place

subject to its jurisdiction, but does not include leased bases or trust

territories.

U.S. made end product means an article that has been manufactured

in the United States or that has been 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.

Subpart 25.1--Buy American Act--Supplies

25.100 Scope of subpart.

This subpart implements the Buy American Act (41 U.S.C. 10a-10d)

and Executive Order 10582, December 17, 1954 (as amended). It applies

to supplies acquired for use in the United States, including supplies

acquired under contracts set aside for small business concerns, if--

(a) The supply contract exceeds the micro-purchase threshold; or

(b) The supply portion of a contract for services that involves the

furnishing of supplies (e.g., lease) exceeds the micro-purchase

threshold.

25.101 General.

(a) The Buy American Act restricts the purchase of supplies that

are not domestic end products. For manufactured end products, the Buy

American Act uses a two-part test to define a domestic end product--

(1) The article must be manufactured in the United States; and

(2) The cost of domestic components must exceed 50 percent of the

cost of all the components.

(b) The Buy American Act applies to small business set-asides. The

product of a small business concern (see subpart 19.5) is a U.S. made

end product, but is not a domestic end product unless it meets the

component test in paragraph (a)(2) of this section.

(c) Exceptions that allow the purchase of a foreign end product are

listed at 25.103. The unreasonable cost exception is implemented

through the use of an evaluation factor applied to low foreign offers

that are not eligible offers (see 25.003). The evaluation factor is not

used to provide a preference for one

[[Page 51648]]

foreign offer over another. Evaluation procedures and examples are

provided in subpart 25.5.

25.102 Policy.

Except as provided in section 25.103, only domestic end products

shall be acquired for public use inside the United States.

25.103 Exceptions.

When one of the following exceptions applies, a foreign end product

may be acquired without regard to the restrictions of the Buy American

Act:

(a) Public interest. The head of the agency may make a

determination that domestic preference would be inconsistent with the

public interest. This exception applies when an agency has an agreement

with a foreign government that provides a blanket exception to the Buy

American Act.

(b) Nonavailability. A determination may be made that an article,

material, or supply is not mined, produced, or manufactured in the

United States in sufficient and reasonably available commercial

quantities of a satisfactory quality.

(1) A nonavailability determination has been made for the articles

listed in 25.104.

(2)(i) Unless agency regulation prescribes otherwise, a

nonavailability determination may be made by the head of the

contracting activity under any circumstances, or by the contracting

officer if all of the following conditions are present:

(A) The acquisition was conducted through use of full and open

competition.

(B) The acquisition was synopsized in accordance with 5.201.

(C) No offer for a domestic end product was received.

(ii) A copy of each determination and supporting documentation

shall be submitted to the appropriate council identified in 1.201-1 in

accordance with agency procedures, for possible addition to the list in

25.104.

(c) Unreasonable cost. A decision may be made that the cost of an

end product from a domestic source would be unreasonable, in accordance

with 25.105 and subpart 25.5.

(d) Resale. Foreign end products may be purchased specifically for

commissary resale.

25.104 Nonavailable articles.

(a) The following articles have been determined to be nonavailable

in accordance with 25.103(b):

Acetylene, black.

Agar, bulk.

Anise.

Antimony, as metal or oxide.

Asbestos, amosite, chrysotile, and crocidolite.

Bananas.

Bauxite.

Beef, corned, canned.

Beef extract.

Bephenium hydroxynapthoate.

Bismuth.

Books, trade, text, technical, or scientific; newspapers; pamphlets;

magazines; periodicals; printed briefs and films; not printed in the

United States and for which domestic editions are not available.

Brazil nuts, unroasted.

Cadmium, ores and flue dust.

Calcium cyanamide.

Capers.

Cashew nuts.

Castor beans and castor oil.

Chalk, English.

Chestnuts.

Chicle.

Chrome ore or chromite.

Cinchona bark.

Cobalt, in cathodes, rondelles, or other primary ore and metal

forms.

Cocoa beans.

Coconut and coconut meat, unsweetened, in shredded, desiccated, or

similarly prepared form.

Coffee, raw or green bean.

Colchicine alkaloid, raw.

Copra.

Cork, wood or bark and waste.

Cover glass, microscope slide.

Crane rail (85-pound per foot).

Cryolite, natural.

Dammar gum.

Diamonds, industrial, stones and abrasives.

Emetine, bulk.

Ergot, crude.

Erythrityl tetranitrate.

Fair linen, altar.

Fibers of the following types: abaca, abace, agave, coir, flax,

jute, jute burlaps, palmyra, and sisal.

Goat and kidskins.

Graphite, natural, crystalline, crucible grade.

Hand file sets (Swiss pattern).

Handsewing needles.

Hemp yarn.

Hog bristles for brushes.

Hyoscine, bulk.

Ipecac, root.

Iodine, crude.

Kaurigum.

Lac.

Leather, sheepskin, hair type.

Lavender oil.

Manganese.

Menthol, natural bulk.

Mica.

Microprocessor chips (brought onto a Government construction site as

separate units for incorporation into building systems during

construction or repair and alteration of real property).

Nickel, primary, in ingots, pigs, shots, cathodes, or similar forms;

nickel oxide and nickel salts.

Nitroguanidine (also known as picrite).

Nux vomica, crude.

Oiticica oil.

Olive oil.

Olives (green), pitted or unpitted, or stuffed, in bulk.

Opium, crude.

Oranges, mandarin, canned.

Petroleum, crude oil, unfinished oils, and finished products.

Pine needle oil.

Platinum and related group metals, refined, as sponge, powder,

ingots, or cast bars.

Pyrethrum flowers.

Quartz crystals.

Quebracho.

Quinidine.

Quinine.

Rabbit fur felt.

Radium salts, source and special nuclear materials.

Rosettes.

Rubber, crude and latex.

Rutile.

Santonin, crude.

Secretin.

Shellac.

Silk, raw and unmanufactured.

Spare and replacement parts for equipment of foreign manufacture,

and for which domestic parts are not available.

Spices and herbs, in bulk.

Sugars, raw.

Swords and scabbards.

Talc, block, steatite.

Tantalum.

Tapioca flour and cassava.

Tartar, crude; tartaric acid and cream of tartar in bulk.

Tea in bulk.

Thread, metallic (gold).

Thyme oil.

Tin in bars, blocks, and pigs.

Triprolidine hydrochloride.

Tungsten.

Vanilla beans.

Venom, cobra.

Wax, carnauba.

Wire glass.

Woods; logs, veneer, and lumber of the following species: Alaskan

yellow cedar, angelique, balsa, ekki, greenheart, lignum vitae,

mahogany, and teak.

Yarn, 50 Denier rayon.

(b) The determination in paragraph (a) of this section does not

apply if the contracting officer learns before the time designated for

receipt of offers or final proposal revisions that an article on the

list has become available domestically in sufficient and reasonably

available quantities of a satisfactory quality. The contracting officer

shall amend the solicitation if purchasing the article, or if

purchasing an end product that could contain such an article as a

component, and shall specify in all new solicitations that the article

has been found to be available and that offerors and contractors may

not treat foreign components of the same class or kind as domestic

components. In addition, a copy of supporting documentation shall be

submitted to the appropriate council identified in 1.201-1 in

accordance with agency procedures, for possible removal of the article

from the list.

[[Page 51649]]

25.105 Determining reasonableness of cost.

(a) The contracting officer--

(1) Shall use the evaluation factors in paragraph (b) of this

section unless the head of the agency makes a written determination

that the use of higher factors is more appropriate. If the

determination will be applicable to all agency acquisitions, the agency

evaluation factors shall be published in agency regulations.

(2) Shall not apply evaluation factors to offers of eligible

products if the acquisition is subject to a trade agreement under

subpart 25.4.

(b) If there is a domestic offer that is not the low offer, and the

restrictions of the Buy American Act apply to the low offer, the

contracting officer shall determine the reasonableness of the cost of

the domestic offer by adding to the price of the low offer, inclusive

of duty--

(1) 6 percent, if the lowest domestic offer is from a large

business concern.

(2) 12 percent, if the lowest domestic offer is from a small

business concern. The contracting officer shall use this factor, or

another factor established in agency regulations, in small business

set-asides if the low offer is from a small business concern offering

the product of a small business concern that is not a domestic end

product (see subpart 19.5).

(c) The price of the domestic offer is reasonable if it does not

exceed the evaluated price of the low offer after addition of the

appropriate evaluation factor in accordance with paragraph (a) or (b)

of this section.

Subpart 25.2--Buy American Act--Construction Materials

25.200 Scope of subpart.

This subpart implements the Buy American Act (41 U.S.C. 10a-10d)

and Executive Order 10582, December 17, 1954 (as amended). It applies

to contracts for the construction, alteration, or repair of any public

building or public work in the United States.

25.201 Policy.

Except as provided in 25.202, only domestic construction materials

shall be used in construction contracts performed in the United States.

25.202 Exceptions.

(a) When one of the following exceptions applies, foreign

construction materials may be acquired without regard to the

restrictions of the Buy American Act:

(1) Impracticable or inconsistent with public interest. The head of

the agency may determine that application of the restrictions of the

Buy American Act to a particular construction material would be

impracticable or would be inconsistent with the public interest. The

public interest exception applies when an agency has an agreement with

a foreign government that provides a blanket exception to the Buy

American Act.

(2) Nonavailability. The head of the contracting activity may

determine that a particular construction material is not mined,

produced, or manufactured in the United States in sufficient and

reasonably available commercial quantities of a satisfactory quality.

The determination of nonavailability of the articles listed at

25.104(a) and the procedures at 25.104(b) also apply if any such

articles are acquired as construction materials.

(3) Unreasonable cost. The cost of domestic construction material

is unreasonable if it exceeds the cost of foreign construction material

by more than 6 percent, unless the head of the agency determines that a

higher percentage is appropriate (see Executive Order 10582).

(b) Determination and findings. When a determination is made for

any of the reasons stated in this section that certain foreign

construction materials may be used, the contracting officer shall list

the excepted materials in the contract. The agency shall make the

findings justifying the exception available for public inspection.

(c) Acquisitions under trade agreements. For construction contracts

with an estimated acquisition value of $6,909,500 or more, see 25.405.

If the acquisition value is $7,143,000 or more, also see 25.403.

25.203 Preaward determinations.

(a) The contracting officer shall consider an offeror's request for

a determination concerning the inapplicability of the Buy American Act

for specifically identified construction materials if the request is

received either before the time set for receipt of offers or submitted

with the offer.

(b) The contracting officer shall evaluate any request for a

determination regarding the inapplicability of the Buy American Act

made before award, based on the information requested in the applicable

clause at 52.225-9, Buy American Act--Balance of Payments Program--

Construction Materials, paragraphs (c) and (d), or 52.225-11, Buy

American Act--Balance of Payments Program--Construction Materials under

Trade Agreements, paragraphs (c) and (d). The contracting officer may

supplement this information with other readily available information.

(c) If the appropriate authority determines before award that an

exception to the Buy American Act applies (other than a general

exception based on the Trade Agreements Act or NAFTA), the contracting

officer shall identify the excepted material in paragraph (b)(2) of the

clause at 52.225-9 or paragraph (b)(3) of the clause at 52.225-11.

25.204 Evaluating offers of foreign construction material.

(a) Offerors proposing to use foreign construction material other

than that listed by the Government in paragraph (b)(2) of the

applicable clause at 52.225-9, or paragraph (b)(3) of 52.225-11, or

excepted under the Trade Agreements Act or NAFTA (paragraph (b)(2) of

52.225-11), must provide the information required by paragraphs (c) and

(d) of the respective clauses.

(b) Unless agency regulations specify a higher percentage, the

contracting officer shall add to the offered price 6 percent of the

cost of any foreign construction material proposed for exception from

the requirements of the Buy American Act based on the unreasonable cost

of domestic construction materials. In the case of a tie, the

contracting officer shall give preference to an offer that does not

include foreign construction material excepted at the request of the

offeror on the basis of unreasonable cost.

(c) Offerors also may submit alternate offers based on use of

equivalent domestic construction material to avoid possible rejection

of the entire offer, if the Government determines that an exception

permitting use of a particular foreign construction material does not

apply.

(d) If award is made to an offeror that proposed foreign

construction material not included in the applicable clause in the

solicitation (paragraph (b)(2) of 52.225-9 or paragraph (b)(3) of

52.225-11), the contracting officer shall add these excepted materials

to the list in the contract clause.

25.205 Postaward determinations.

(a) If a contractor requests a determination regarding the

inapplicability of the Buy American Act after contract award, the

contractor shall explain why the determination could not have been

requested before contract award or why the need for such determination

otherwise was not reasonably foreseeable. If the contracting officer

concludes that the request should have been made before

[[Page 51650]]

contract award, the request may be denied.

(b) Evaluation of any request for a determination regarding the

inapplicability of the Buy American Act made after contract award shall

be based on information required by paragraphs (c) and (d) of the

applicable clause at 52.225-9 or 52.225-11 and/or other information

readily available to the contracting officer.

(c) If a determination is made after contract award that an

exception to the Buy American Act applies, adequate consideration shall

be negotiated and the contract shall be modified to allow use of the

foreign construction material. When the basis for the exception is the

unreasonable price of a domestic construction material, adequate

consideration shall be at least the differential established in

25.202(a) or in accordance with agency procedures.

25.206 Noncompliance.

(a) The contracting officer is responsible for conducting Buy

American Act investigations when available information indicates such

action is warranted.

(b) Unless fraud is suspected, the contracting officer shall notify

the contractor of the apparent unauthorized use of foreign construction

material and shall request a reply, to include proposed corrective

action.

(c) If an investigation reveals that a contractor or subcontractor

has used foreign construction material without authorization, the

contracting officer shall take appropriate action, including one or

more of the following:

(1) Process a determination with regard to the inapplicability of

the Buy American Act in accordance with 25.205.

(2) Consider requiring the removal and replacement of the

unauthorized foreign construction material.

(3) If removal and replacement of foreign construction material

incorporated in a building or work would be impracticable, cause undue

delay, or otherwise be detrimental to the interests of the Government,

the contracting officer may determine in writing that the foreign

construction material need not be removed and replaced. Such a

determination to retain foreign construction material does not

constitute a determination that an exception to the Buy American Act

applies, and this should be so stated in the determination. Further,

such a determination to retain foreign construction material does not

affect the Government's right to suspend or debar a contractor,

subcontractor, or supplier for violation of the Buy American Act, or to

exercise other contractual rights and remedies, such as reducing the

contract price or terminating the contract for default.

(4) If the noncompliance is sufficiently serious, consider

exercising appropriate contractual remedies, such as terminating the

contract for default. Also consider preparing and forwarding a report

to the agency suspending or debarring official in accordance with

subpart 9.4. If the noncompliance appears to be fraudulent, refer the

matter to other appropriate agency officials, such as the officer

responsible for criminal investigation.

Subpart 25.3--Balance of Payments Program

25.300 Scope of subpart.

This subpart provides policies and procedures implementing the

Balance of Payments Program. It applies to contracts for the purchase

of supplies for use outside the United States and contracts for

construction, alteration, or repair of any public building or public

work outside the United States.

25.301 General.

The Balance of Payments Program restricts the purchase of supplies

that are not domestic end products, for use outside the United States,

and restricts the use of construction materials that are not domestic,

for performance of construction contracts outside the United States.

Its restrictions are similar to those of the Buy American Act. It uses

the same definitions and evaluation procedures, except that a 50

percent factor is used to determine unreasonable cost. Exceptions to

the Balance of Payments Program, especially for construction materials,

are generally determined prior to solicitation and assignment of

contracting responsibility. Excepted supplies and construction

materials shall be identified in the contract.

25.302 Policy.

Except as provided in 25.303, only domestic end products shall be

acquired for use outside the United States and only domestic

construction materials shall be used for construction, repair, or

maintenance of real property outside the United States.

25.303 Exceptions.

A foreign end product may be acquired for use outside the United

States, or a foreign construction material may be used in construction

outside the United States without regard to the restrictions of the

Balance of Payments Program if--

(a) The estimated cost of the end product does not exceed the

simplified acquisition threshold;

(b) The end product or construction material is listed at 25.104,

or the head of the contracting activity determines that a requirement--

(1) Can only be filled by a foreign end product or construction

material (see 25.103(b));

(2) Is for end products or construction materials that, by their

nature or as a practical matter, can only be acquired in the geographic

area concerned, e.g., ice, books, or bulk material, such as sand,

gravel, or other soil material, stone, concrete masonry units, or fired

brick; or

(3) Is for perishable subsistence products and delivery from the

United States would significantly impair their quality at the point of

consumption;

(c) The acquisition of foreign end products is required by a treaty

or executive agreement between governments;

(d) The end products are--

(1) Petroleum products; or

(2) For commissary resale;

(e) The end products are eligible products subject to the Trade

Agreements Act, NAFTA, or the Israeli Trade Act, or the construction

material is subject to the Trade Agreements Act or NAFTA;

(f) The cost of the domestic end product or construction material

(including transportation and handling costs) exceeds the cost of the

foreign end product or construction material by more than 50 percent. A

differential greater than 50 percent may be used when specifically

authorized by the head of the agency; or

(g) The agency has determined that it is not in the public interest

to apply the restrictions of the Balance of Payments Program to the end

product or construction material or that it is impracticable to apply

the restrictions of the Balance of Payments Program to the construction

material.

25.304 Procedures.

(a) Solicitation of offers. The contracting officer shall identify,

in the solicitation, supplies and construction materials known in

advance to be excepted from the procedures of this subpart.

(b) Evaluation of offers. The contracting officer shall--

(1) Evaluate offers for supplies in accordance with subpart 25.5;

and

(2) Evaluate offers proposing foreign construction material by

using the procedures at 25.204, except that a factor of 50 percent

shall be applied to foreign construction material proposed

[[Page 51651]]

for exception from the requirements of the Balance of Payments Program

on the basis of unreasonable cost of domestic construction materials.

(c) Other procedures for construction. For construction contracts,

the procedures at 25.203, 25.205, and 25.206, for determinations and

noncompliance under the Buy American Act, are also applicable to

determinations and noncompliance under the Balance of Payments Program.

Subpart 25.4--Trade Agreements

25.400 Scope of subpart.

(a) This subpart provides policies and procedures applicable to

acquisitions with a value greater than $25,000 that are subject to--

(1) The Agreement on Government Procurement, as approved by

Congress in the Trade Agreements Act of 1979 (19 U.S.C. 2501 et seq.)

(Trade Agreements Act) and as amended by the Uruguay Round Agreements

Act (Pub. L. 103-465), including the Agreement on Trade in Civil

Aircraft (19 U.S.C. 2513);

(2) The determination of the U.S. Trade Representative that end

products granted duty-free entry under the Caribbean Basin Economic

Recovery Act (19 U.S.C. 2701, et seq.) shall be treated as eligible

products under the Trade Agreements Act (Caribbean Basin Trade

Initiative);

(3) The North American Free Trade Agreement, as approved by

Congress in the North American Free Trade Agreement Implementation Act

of 1993 (19 U.S.C. 3301 note) (NAFTA); and

(4) The U.S.-Israel Free Trade Area Agreement, as approved by

Congress in the United States-Israel Free Trade Area Implementation Act

of 1985 (19 U.S.C. 2112 note) (Israeli Trade Act).

(b) For application of the trade agreements that are unique to

individual agencies (Department of Defense, National Aeronautics and

Space Administration, Department of Energy (Power Marketing

Administration), and Department of the Interior (Bureau of

Reclamation)), see agency regulations.

25.401 Exceptions.

This subpart does not apply to--

(a) Purchases under small business set-asides;

(b) Purchases of arms, ammunition, or war materials, or purchases

indispensable for national security or for national defense purposes;

(c) Research and development contracts;

(d) Purchases of end products for resale;

(e) Purchases under subpart 8.6, Acquisition from Federal Prison

Industries, Inc., and subpart 8.7, Acquisition from Nonprofit Agencies

Employing People Who Are Blind or Severely Disabled; and

(f) Purchases not open to competition, when justified in accordance

with subpart 6.3 (but see 25.408(b)).

25.402 General.

The trade agreements waive the applicability of the Buy American

Act or the Balance of Payments Program for some foreign supplies and

construction materials from certain countries. The value of the

acquisition is a determining factor in the applicability of the trade

agreements. When the restrictions of the Buy American Act or the

Balance of Payments Program are waived for eligible products, offers of

such products (eligible offers) receive equal consideration with

domestic offers. However, eligible offers will not be given preference

over a low acceptable foreign offer. Under the Trade Agreements Act,

only U.S. made end products or eligible products may be acquired (also

see 25.403(d)). See subpart 25.5 for evaluation procedures for supply

contracts subject to trade agreements.

25.403 Trade Agreements Act.

(a) General. The Trade Agreements Act--

(1) Waives application of the Buy American Act and the Balance of

Payments Program to the end products and construction materials of

designated countries;

(2) Prohibits discriminatory practices on the basis of foreign

ownership (see 25.403(c));

(3) Restricts purchases to end products identified in 25.403(d);

(4) Provides a specific waiver with regard to purchase of civil

aircraft from countries that are party to the Agreement on Trade in

Civil Aircraft (see 25.407); and

(5) Requires certain procurement procedures designed to ensure fair

and open competition (see 25.408).

(b) Applicability. (1) The Trade Agreements Act applies to an

acquisition for supplies or services if the estimated value of the

acquisition is $186,000 or more; the Trade Agreements Act applies to an

acquisition for construction if the estimated value of the acquisition

is $7,143,000 or more. These dollar thresholds became effective January

1, 1998, and are subject to revision by the U.S. Trade Representative

approximately every 2 years (see Executive Order 12260).

(2) To determine whether the Trade Agreements Act applies to the

acquisition of products by lease, rental, or lease-purchase contract

(including lease-to-ownership, or lease-with-option-to purchase),

calculate the estimated acquisition value as follows:

(i) If a fixed-term contract of 12 months or less is contemplated,

use the total estimated value of the acquisition.

(ii) If a fixed-term contract of more than 12 months is

contemplated, use the total estimated value of the acquisition plus the

estimated residual value of the leased equipment at the conclusion of

the contemplated term of the contract.

(iii) If an indefinite-term contract is contemplated, use the

estimated monthly payment multiplied by the total number of months that

ordering would be possible under the proposed contract, i.e., the

initial ordering period plus any optional ordering periods.

(iv) If there is any doubt as to the contemplated term of the

contract, use the estimated monthly payment multiplied by 48.

(3) The estimated value includes the value of all options.

(4) If, in any 12-month period, recurring or multiple awards for

the same type of product or products are anticipated, use the total

estimated value of these projected awards to determine whether the

Trade Agreements Act applies. No acquisition shall be divided with the

intent of reducing the estimated value of the acquisition below the

dollar threshold of the Trade Agreements Act.

(c) Nondiscrimination. Subject to the provisions of U.S. law and

regulation, a supplier established in a designated country or a

Caribbean Basin country shall not be accorded less favorable treatment

than is accorded to another supplier established in that country on the

basis of--

(1) Foreign ownership or affiliation; or

(2) The place of production of the articles to be supplied;

provided that the country of production is a designated country or a

Caribbean Basin country.

(d) Purchase restriction. (1) In acquisitions subject to the Trade

Agreements Act, only U.S. made end products or eligible products

(designated, Caribbean Basin, or NAFTA country end products) shall be

acquired unless offers for such end products are either not received or

are insufficient to fulfill the requirements.

(2) This restriction does not apply to purchases by the Department

of Defense from a country with which it has entered into a reciprocal

agreement, as provided in departmental regulations.

25.404 Caribbean Basin Trade Initiative.

Under the Caribbean Basin Trade Initiative, the U.S. Trade

Representative has determined that for acquisitions

[[Page 51652]]

subject to the Trade Agreements Act, Caribbean Basin country end

products shall be treated as eligible products. This determination is

effective until September 30, 1998.

25.405 North American Free Trade Agreement (NAFTA).

(a) An acquisition of supplies is not subject to NAFTA if the

estimated value of the acquisition is $25,000 or less. For acquisitions

subject to NAFTA, the contracting officer shall evaluate offers of

NAFTA country end products without regard to the restrictions of the

Buy American Act or the Balance of Payments Program, except that for

acquisitions with an estimated value of less than $53,150, only

Canadian end products are eligible products. Eligible products from

NAFTA countries are entitled to the nondiscriminatory treatment of the

Trade Agreements Act (see 25.403(c)). NAFTA does not prohibit the

purchase of other foreign end products.

(b) NAFTA applies to construction materials if the estimated value

of the construction contract is $6,909,500 or more.

(c) The procedures in 25.408 apply to the acquisition of NAFTA

country services. These are services provided by a firm established in

a NAFTA country under service contracts with an estimated acquisition

value of $53,150 or more ($6,909,500 or more for construction), except

for the following excluded services (Federal Service Code or Category

from the Federal Procurement Data System Product/Service Code Manual

indicated in parentheses):

(1) Information processing and related telecommunications services.

(i) ADP telecommunications and transmission services (D304).

(ii) ADP teleprocessing and timesharing services (D305).

(iii) Telecommunication network management services (D316).

(iv) Automated news services, data services, or other information

services (D317).

(v) Other ADP and telecommunications services (D399).

(2) Maintenance, repair, modification, rebuilding, and installation

of equipment.

(i) Maintenance, repair, modification, rebuilding, and installation

of equipment related to ships (J019).

(ii) Non-nuclear ship repair (J998).

(3) Operation of Government-owned facilities.

(i) All facilities operated by the Department of Defense,

Department of Energy, and the National Aeronautics and Space

Administration.

(ii) Research and development facilities (M180).

(4) Utilities--All classes (S).

(5) Transportation, travel, and relocation services (V), except

travel agent services (V302).

(6) All services purchased in support of military forces overseas.

(7) Construction dredging services.

25.406 Israeli Trade Act.

Acquisitions of supplies by most agencies are subject to the

Israeli Trade Act, if the estimated value of the acquisition is $50,000

or more, but does not exceed the Trade Agreements Act threshold for

supplies (see 25.403(b)(1)). Agencies other than the Department of

Defense, the Department of Energy, the Department of Transportation,

the Bureau of Reclamation of the Department of the Interior, the

Federal Housing Finance Board, and the Office of Thrift Supervision

shall evaluate offers of Israeli end products without regard to the

restrictions of the Buy American Act or the Balance of Payments

Program. The Israeli Trade Act does not prohibit the purchase of other

foreign end products.

25.407 Agreement on Trade in Civil Aircraft.

Under the authority of Section 303 of the Trade Agreements Act, the

U.S. Trade Representative has waived the Buy American Act for civil

aircraft and related articles that meet the substantial transformation

test of the Trade Agreements Act for countries that are parties to the

Agreement on Trade in Civil Aircraft. Those countries are Austria,

Belgium, Canada, Denmark, Finland, France, Germany, Greece, Ireland,

Italy, Japan, Luxembourg, the Netherlands, Norway, Portugal, Romania,

Spain, Sweden, Switzerland, and the United Kingdom.

25.408 Procedures.

(a) When the Trade Agreements Act or NAFTA applies, the contracting

officer shall--

(1) Comply with the requirements of 5.203, Publicizing and response

time;

(2) Not include technical requirements in solicitations solely to

preclude the acquisition of eligible products;

(3) Specify in solicitations that offers shall be submitted in the

English language and in U.S. dollars (see 52.214-34, Submission of

Offers in the English Language, and 52.214-35, Submission of Offers in

U.S. Currency, or paragraph (c)(5) of 52.215-1, Instruction to

Offerors--Competitive Acquisitions);

(4) Open offers in the presence of an impartial witness and record

this individual's name in the contract file, if anticipating

competitive negotiations; and

(5) Provide unsuccessful offerors from designated or NAFTA

countries written notice within 3 days after award of a contract for an

eligible product, in accordance with 14.409-1 and 15.503. ``Day,'' for

purposes of the notification process, means calendar day, except that

if the last day of the period is a Saturday, Sunday, or legal holiday,

the period will be extended until the first subsequent day that is not

a Saturday, Sunday, or legal holiday.

(b) Acquisitions under the Trade Agreements Act are subject to the

competition requirements of part 6 (see 6.303-1(d)).

(c) See subpart 25.5 for evaluation procedures and examples.

Subpart 25.5--Evaluating Foreign Offers--Supply Contracts

25.501 General.

The contracting officer--

(a) Shall apply the evaluation procedures of this subpart to each

line item of an offer unless either the offer or the solicitation

specifies evaluation on a group basis (see 25.503).

(b) May rely on the offeror's certification of end product origin

when evaluating a foreign offer.

(c) Shall identify and reject offers of end products that are

prohibited or sanctioned in accordance with subparts 25.6 and 25.7.

(d) Shall not use the Buy American Act and Balance of Payments

Program evaluation factors prescribed in this subpart to provide a

preference for one foreign offer over another foreign offer.

25.502 Application.

(a) Unless otherwise specified in agency regulations, perform the

following steps in the order presented:

(1) Eliminate all offers or offerors that are unacceptable for

reasons other than price; e.g., nonresponsive, debarred or suspended,

sanctioned (see subpart 25.6), or a prohibited source (see subpart

25.7).

(2) Rank the remaining offers by price.

(b) For acquisitions subject to the Trade Agreements Act (see

25.401 and 25.403(b))--

(1) Consider only offers of U.S. made, designated country,

Caribbean Basin country, or NAFTA country end products, unless no

offers of such end products were received;

(2) If the agency gives the same consideration given eligible

offers to offers of U.S. made end products that are not domestic end

products, award on the low offer.

[[Page 51653]]

Otherwise, evaluate in accordance with agency procedures; and

(3) If there were no offers of U.S. made, designated country,

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

nonavailability determination (see 25.103(b)(2)) and award on the low

offer (see 25.403(d)).

(c) For acquisitions not subject to the Trade Agreements Act--

(1) If the low offer is a domestic offer or an eligible offer under

a trade agreement other than the Trade Agreements Act, award on that

offer.

(2) If the low offer is a noneligible offer and there were no

domestic offers, make a nonavailability determination (see

25.103(b)(2)) and award on the low offer.

(3) If the low offer is a noneligible offer and there is an

eligible offer that is lower than the lowest domestic offer, award on

the low offer. The Buy American Act and the Balance of Payments Program

provide an evaluation preference only for domestic offers.

(4) Otherwise, apply the appropriate evaluation factor provided in

25.105 or 25.301 to the low offer.

(i) If the evaluated price of the low offer remains less than the

lowest domestic offer, award on the low offer.

(ii) If the price of the lowest domestic offer is less than the

evaluated price of the low offer, award on the lowest domestic offer.

(d) When the solicitation specifies award on the basis of factors

in addition to cost or price, apply the evaluation factors as specified

in this section and use the evaluated cost or price in determining the

offer that represents the best value to the Government.

(e) Ties. (1) If application of an evaluation factor results in a

tie between a domestic offer and a foreign offer, award on the domestic

offer.

(2) If no evaluation preference was applied (i.e., offers afforded

nondiscriminatory treatment under the Buy American Act or Balance of

Payments Program), resolve ties between domestic and foreign offers by

a witnessed drawing of lots by an impartial individual.

(3) Resolve ties between foreign offers from small business

concerns (under the Buy American Act and Balance of Payments Program, a

small business offering a manufactured article that does not meet the

definition of ``domestic end product'' is a foreign offer) or foreign

offers from a small business concern and a large business concern in

accordance with 14.408-6(a).

25.503 Group offers.

(a) If the solicitation or an offer specifies that award can be

made only on a group of line items or on all line items contained in

the solicitation or offer, reject the offer--

(1) If any part of the award would consist of sanctioned or

prohibited end products (see subparts 25.6 and 25.7); or

(2) If the Trade Agreements Act applies and part of the offer

consists of items restricted under 25.403(d).

(b) Where an offeror restricts award to a group of line items or to

all line items contained in its offer, determine for each line item

whether to apply an evaluation factor (see 25.504-4, Example 7):

(1) First, evaluate offers that do not specify an award restriction

on a line item basis in accordance with 25.502, determining a tentative

award pattern by selecting on each line item the offer with the lowest

evaluated price.

(2) Evaluate an offer that specifies an award restriction against

the proposed prices of the tentative award pattern, applying the

appropriate evaluation factor on a line item basis.

(3) Compute the total evaluated price for the tentative award

pattern and the offer that specified an award restriction.

(4) Unless the total evaluated price of the offer that specified an

award restriction is less than the total evaluated price of the

tentative award pattern, award based on the tentative award pattern.

(c) If the solicitation specifies that award will be made only on a

group of line items or all line items contained in the solicitation,

determine the category of end products on the basis of each line item,

but determine whether to apply an evaluation factor on the basis of the

group of items (see 25.504-4, Example 8).

(1) If the proposed price of domestic end products exceeds 50

percent of the total proposed price of the group, evaluate the entire

group as a domestic offer. Evaluate all the other groups as foreign

offers.

(2) For foreign offers, if the proposed price of domestic end

products and eligible products exceeds 50 percent of the total proposed

price of the group, evaluate the entire group as an eligible offer.

(3) Apply the evaluation factor to the entire group in accordance

with 25.502.

25.504 Evaluation examples.

The following examples illustrate the application of the evaluation

procedures in 25.502 and 25.503. The examples assume that the

contracting officer has eliminated all offers that are unacceptable for

reasons other than price or a trade agreement (see 25.502(a)(1)).

Although these examples are generally constructed in terms of the Buy

American Act, the same evaluation procedures would apply under the

Balance of Payments Program. The evaluation factor may change as

provided in agency regulations.

25.504-1 Buy American Act/Balance of Payments Program.

(a) Example 1.

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

Offer A.......................... $11,000 Domestic end product, small business.

Offer B.......................... 10,700 Domestic end product, large business.

Offer C.......................... 10,000 Foreign end product (noneligible).

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

Analysis: This acquisition is for end products for use in the

United States. The Buy American Act applies. Therefore, all foreign end

products are noneligible. Perform the steps in 25.502(a) . Since the

low domestic offer, Offer B, is from a large business, apply the 6

percent factor to Offer C. The resulting evaluated price of $10,600

remains lower than Offer B. The cost of Offer B is; therefore,

unreasonable. Award on Offer C at $10,000 (see 25.502(c)(4)(i)).

(b) Example 2.

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

Offer A.......................... $11,000 Domestic end product, small business.

Offer B.......................... 10,700 Domestic end product, large business.

Offer C.......................... 10,200 Foreign end product (noneligible).

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

Analysis: This acquisition is for end products for use outside the

United States. Therefore, the Balance of Payments Program applies and

the Buy American Act does not. Apply the 50 percent factor to Offer C.

The evaluated price of $15,300 exceeds the price of Offer B . Award on

Offer B (see 25.502(c)(4)(ii)).

[[Page 51654]]

25.504-2 Trade Agreements Act/Caribbean Basin Trade Initiative/NAFTA.

(c) Example 3.

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

Offer A.......................... $204,000 U.S. made end product (not domestic).

Offer B.......................... 203,000 U.S. made end product, small business (domestic).

Offer C.......................... 200,000 Eligible product.

Offer D.......................... 195,000 Noneligible product (not U.S. made).

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

Analysis: Eliminate Offer D because the Trade Agreements Act

applies and there is an offer of a U.S. made or an eligible product

(see 25.502(b)(1)). If the agency gives the same consideration given

eligible offers to offers of U.S. made end products that are not

domestic offers, it is unnecessary to determine whether U.S. made end

products are domestic (large or small business). No further analysis is

necessary. Award on the low remaining offer, Offer C (see

25.502(b)(2)).

25.504-3 Other trade agreements.

(a) Example 4.

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

Offer A.......................... $105,000 Domestic end product, small business.

Offer B.......................... 100,000 Eligible product.

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

Analysis: Since the offer is an eligible offer, award on the low

offer (see 25.502(c)(1)).

(b) Example 5.

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

Offer A.......................... $105,000 Eligible product.

Offer B.......................... 103,000 Noneligible product.

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

Analysis: Since the acquisition is not subject to the Trade

Agreements Act, the noneligible offer can be considered. Since no

domestic offer was received, make a nonavailability determination and

award on Offer B (see 25.502(c)(2)).

(c) Example 6.

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

Offer A.......................... $105,000 Domestic end product, large business.

Offer B.......................... 103,000 Eligible product.

Offer C.......................... 100,000 Noneligible product.

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

Analysis: Since the acquisition is not subject to the Trade

Agreements Act, the noneligible offer can be considered. Because the

eligible offer (Offer B) is lower than the domestic offer (Offer A), no

evaluation factor applies to the low offer (Offer C). Award on the low

offer (see 25.502(c)(3)).

25.504-4 Group award basis.

Key:

DO=Domestic end product

EL=Eligible product

NEL=Noneligible product

(a) Example 7.

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

Offers

Item -----------------------------------------------------------

A B C

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

1................................................... DO=$55,000 EL=$56,000 NEL=$50,000

2................................................... NEL=13,000 EL=10,000 EL=13,000

3................................................... NEL=11,500 DO=12,000 DO=10,000

4................................................... NEL=24,000 EL=28,000 NEL=22,000

5................................................... DO=18,000 NEL=10,000 DO=14,000

121,500 116,000 109,000

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

Problem: Offeror C specifies all-or-none award. Assume all offerors

are large businesses. The Trade Agreements Act does not apply.

Analysis: (see 25.503)

STEP 1: Evaluate Offers A & B before considering Offer C and

determine which offer has the lowest evaluated cost for each line item

(the tentative award pattern):

Item 1: Low offer A is domestic; select A.

Item 2: Low offer B is eligible; do not apply factor; select B.

Item 3: Low offer A is noneligible and Offer B is a domestic offer.

Apply 6% factor to Offer A. The evaluated price of Offer A is higher

than Offer B; select B.

Item 4: Low offer A is noneligible. Since neither offer is a

domestic offer, no evaluation factor applies; select A.

Item 5: Low offer B is noneligible; apply 6% factor to Offer B.

Offer A is still higher than Offer B; select B.

STEP 2: Evaluate Offer C against the tentative award pattern for

Offers A and B:

[[Page 51655]]

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

Offers

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

Item Tentative award

Low offer patterns from A C

and B

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

1.......................................... A DO=$55,000 NEL=$53,000*

2.......................................... B EL=10,000 EL=13,000

3.......................................... B DO=12,000 DO=10,000

4.......................................... A NEL=24,000 NEL=22,000

5.......................................... B NEL=10,600* DO=14,000

111,600 112,000

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

*Offer + 6 percent.

On a line item basis, apply a factor to any noneligible offer if

the other offer for that line item is domestic.

For Item 1, apply a factor to Offer C because Offer A is domestic

and the acquisition was not subject to the Trade Agreements Act. The

evaluated price of Offer C, Item 1, becomes $53,000 ($50,000 plus 6

percent). Apply a factor to Offer B, Item 5, because it is a

noneligible product and Offer C is domestic. The evaluated price of

Offer B is $10,600 ($10,000 plus 6%). The remaining items are evaluated

without applying a factor.

STEP 3: The tentative unrestricted award pattern from Offers A and

B is lower than the evaluated price of Offer C. Award the combination

of Offers A and B. Note that if Offer C had not specified all-or-none

award, award would be made on Offer C for line items 1, 3, and 4,

totaling an award of $82,000.

(b) Example 8.

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

Offers

Item -----------------------------------------------------------

A B C

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

1................................................... DO=$50,000 EL=$50,500 NEL=$50,000

2................................................... NEL=10,300 NEL=10,000 EL=10,200

3................................................... EL=20,400 EL=21,000 NEL=20,200

4................................................... DO=10,500 DO=10,300 DO=10,400

91,200 91,800 90,800

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

Problem: The solicitation specifies award on a group basis. Assume

the Buy American Act applies and all offerors are large businesses.

Analysis: (see 25.503(c))

STEP 1: Determine which of the offers are domestic (see

25.503(c)(1)):

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

Domestic percent Determination

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

A............................ 60,500/91,200=66.3 Domestic.

B............................ 10,300/91,800=11.2 Foreign.

C............................ 10,400/90,800=11.5 Foreign.

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

STEP 2: Determine whether foreign offers are eligible or

noneligible offers (see 25.503(c)(2)):

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

Domestic+eligible

percent Determination

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

A............................ N/A Domestic.

B............................ 81,800/91,800=89.1 Eligible.

C............................ 20,600/90,800=22.7 Noneligible.

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

STEP 3: Determine whether to apply an evaluation factor (see

25.503(c)(3)). The low offer (Offer C) is a foreign offer. There is no

eligible offer lower than the domestic offer. Therefore, apply the

factor to the low offer. Addition of the 6 percent factor (use 12

percent if Offer A is a small business) to Offer C yields an evaluated

price of $96,248 ($90,800 + 6%). Award on Offer A (see

25.502(c)(4)(ii)). Note that, if Offer A were greater than Offer B, an

evaluation factor would not be applied and award would be on Offer C

(see 25.502(c)(3)).

Subpart 25.6--Trade Sanctions

25.600 Scope of subpart.

This subpart implements sanctions imposed by the President (58 FR

3116, May 28, 1993) pursuant to Section 305(g)(1) of the Trade

Agreements Act of 1979, as amended (19 U.S.C. 2515(g)(1)), on European

Union (EU) states (sanctioned EU member states) that discriminate

against U.S. products or services. This subpart does not apply to

contracts for supplies or services awarded and performed outside of the

United States or its territories, or to the Department of Defense. For

thresholds unique to individual agencies (e.g., the Power Marketing

Administration of the Department of Energy), see agency regulations.

25.601 Policy.

(a) Except as provided in 25.602, agencies shall not award

contracts for--

(1) Sanctioned EU country end products with an estimated

acquisition value less than $186,000;

(2) Sanctioned EU country construction with an estimated

acquisition value less than $7,143,000; or

[[Page 51656]]

(3) Sanctioned EU country services as follows (Federal Service Code

or Category from the Federal Procurement Data System Product/Service

Code Manual is indicated in parentheses):

(i) Service contracts regardless of acquisition value for--

(A) All transportation services, including launching services (all

V codes, J019, J998, J999, K019);

(B) Dredging (Y216, Z216);

(C) Management and operation of certain Government or privately-

owned facilities used for Government purposes, including Federally

Funded Research and Development Centers (all M codes);

(D) Development, production or coproduction of program material for

broadcasting, such as motion pictures (T006, T016);

(E) Research and development (all A codes);

(F) Airport concessions (S203);

(G) Legal services (R418);

(H) Hotel and restaurant services (S203);

(I) Placement and supply of personnel services (V241, V251);

(J) Investigation and security services (S206, S211, R423);

(K) Education and training services (all U codes, R419);

(L) Health and social services (all O codes, all G codes);

(M) Recreational, cultural, and sporting services (G003); or

(N) Telecommunication services (encompassing only voice telephony,

telex, radio telephony, paging, and satellite services) (S1, D304,

D305, D316, D317, and D399).

(ii) All other service contracts with an estimated acquisition

value less than $186,000.

(b) Determine the applicability of sanction thresholds in the

manner provided at 25.403(b).

25.602 Exceptions.

(a) The sanctions in 25.601 do not apply to--

(1) Purchases at or below the simplified acquisition threshold

awarded by simplified acquisition procedures;

(2) Total small business set-asides in accordance with 19.502-2;

(3) Contracts in support of U.S. national security interests; or

(4) Contracts for essential spare, repair, or replacement parts not

otherwise available from nonsanctioned countries.

(b)(1) The head of the agency, without power of redelegation, may

authorize the award of a contract or class of contracts for sanctioned

EU country end products, services, and construction, the purchase of

which is otherwise prohibited by 25.601(a), if the head of the agency

determines that such action is necessary--

(i) In the public interest;

(ii) To avoid the restriction of competition in a manner that would

limit the acquisition in question to, or would establish a preference

for, the services, articles, materials, or supplies of a single

manufacturer or supplier; or

(iii) Because there would be or are an insufficient number of

potential or actual offerors to ensure the acquisition of services,

articles, materials, or supplies of requisite quality at competitive

prices.

(2) When a determination is made in accordance with paragraph

(b)(1) of this section, the agency shall notify the U.S. Trade

Representative within 30 days after contract award.

Subpart 25.7--Prohibited Sources

25.701 Restrictions.

(a) The Government does not acquire supplies or services that

cannot be imported lawfully into the United States. Therefore, agencies

and their contractors and subcontractors shall not acquire any supplies

or services originating from sources within, or that were located in or

transported from or through--

(1) Cuba (31 CFR part 515);

(2) Iran (31 CFR part 560);

(3) Iraq (31 CFR part 575);

(4) Libya (31 CFR part 550);

(5) North Korea (31 CFR part 500); or

(6) Sudan (Executive Order 13067).

(b) Agencies and their contractors and subcontractors shall not

acquire any supplies or services from entities controlled by the

Government of Iraq (Executive Orders 12722 and 12724).

25.702 Source of further information.

Questions concerning the restrictions in 25.701 should be referred

to the Department of the Treasury, Office of Foreign Assets Control,

Washington, D.C. 20220 (Telephone (202) 622-2520).

Subpart 25.8--Other International Agreements and Coordination

25.801 General.

Treaties and agreements between the United States and foreign

governments affect the manner in which offers from foreign entities are

evaluated and the performance of contracts in foreign countries.

25.802 Procedures.

(a) When placing contracts with contractors located outside the

United States, for performance outside the United States, contracting

officers shall--

(1) Determine the existence and applicability of any international

agreements and ensure compliance with these agreements; and

(2) Conduct the necessary advance acquisition planning and

coordination between the appropriate U.S. executive agencies and

foreign interests as required by these agreements.

(b) Many international agreements are compiled in the ``United

States Treaties and Other International Agreements'' series published

by the Department of State. Copies of this publication are normally

available in overseas legal offices and U.S. diplomatic missions.

(c) Contracting officers shall award all contracts with Taiwanese

firms or organizations through the American Institute of Taiwan (AIT).

AIT is under contract to the Department of State.

Subpart 25.9--Customs and Duties

25.900 Scope of subpart.

This subpart provides policies and procedures for exempting from

import duties certain supplies purchased under Government contracts.

25.901 Policy.

United States laws impose duties on foreign supplies imported into

the customs territory of the United States. Certain exemptions from

these duties are available to Government agencies. Agencies shall use

these exemptions when the anticipated savings to appropriated funds

will outweigh the administrative costs associated with processing

required documentation.

25.902 Procedures.

For regulations governing importations and duties, see the Customs

Regulations issued by the U.S. Customs Service, Department of the

Treasury (19 CFR Chapter 1). Except as provided elsewhere in the

Customs Regulations (see 19 CFR 10.100), all shipments of imported

supplies purchased under Government contracts are subject to the usual

Customs entry and examination requirements. Unless the agency obtains

an exemption (see 25.903), those shipments are also subject to duty.

25.903 Exempted supplies.

(a) Subchapters VIII and X of Chapter 98 of the Harmonized Tariff

Schedule of the United States (19 U.S.C. 1202) list supplies for which

exemptions from duty may be obtained when imported into the customs

territory of the United States under a Government contract. For certain

of these supplies, the contracting agency must certify to the

Commissioner of Customs that they are for the purpose stated in the

[[Page 51657]]

Harmonized Tariff Schedule (see 19 CFR 10.102 through 10.104, 10.114,

and 10.121 and 15 CFR part 301 for requirements and formats).

(b) Supplies (excluding equipment) for Government-operated vessels

or aircraft may be withdrawn from any customs-bonded warehouse, from

continuous customs custody elsewhere than in a bonded warehouse, or

from a foreign-trade zone, free of duty and internal revenue tax as

provided in 19 U.S.C. 1309 and 1317. The contracting activity shall

cite this authority on the appropriate customs form when making such

purchases (see 19 CFR 10.59 through 10.65).

Subpart 25.10--Additional Foreign Acquisition Regulations

25.1001 Waiver of right to examination of records.

(a) Policy. The clause at 52.215-2, Audit and Records--Negotiation,

prescribed at 15.209(b), implements 10 U.S.C. 2313 and 41 U.S.C. 254d.

The basic clause authorizes examination of records by the Comptroller

General.

(1) The contracting officer shall use the basic clause, whenever

possible, in negotiated contracts with foreign contractors.

(2) The contracting officer may use the clause with its Alternate

III in contracts with foreign contractors after--

(i) Exhausting all reasonable efforts to include the basic clause;

(ii) Considering factors such as alternate sources of supply,

additional cost, and time of delivery; and

(iii) The head of the agency has executed a determination and

findings in accordance with paragraph (b) of this section, with the

concurrence of the Comptroller General. However, concurrence of the

Comptroller General is not required if the contractor is a foreign

government or agency thereof or is precluded by the laws of the country

involved from making its records available for examination.

(b) Determination and findings. The determination and findings

shall--

(1) Identify the contract and its purpose, and whether it is a

contract with a foreign contractor or with a foreign government or

agency thereof;

(2) Describe the efforts to include the basic clause;

(3) State the reasons for the contractor's refusal to include the

basic clause;

(4) Describe the price and availability of the supplies or services

from the United States and other sources; and

(5) Determine that it will best serve the interest of the United

States to use the clause with its Alternate III.

25.1002 Use of foreign currency.

(a) Unless a specific currency is required by international

agreement or by the Trade Agreements Act (see 25.408(a)(3)),

contracting officers shall determine whether solicitations for

contracts to be entered into and performed outside the United States

will require submission of offers in U.S. currency or a specified

foreign currency. In unusual circumstances, the contracting officer may

permit submission of offers in other than a specified currency.

(b) To ensure a fair evaluation of offers, solicitations generally

should require all offers to be priced in the same currency. However,

if submission of offers in other than a specified currency is

permitted, the contracting officer shall convert the offered prices to

U.S. currency for evaluation purposes. The contracting officer shall

use the current market exchange rate from a commonly used source in

effect as follows:

(1) For acquisitions conducted using sealed bidding procedures, on

the date of bid opening; or

(2) For acquisitions conducted using negotiation procedures--

(i) On the date specified for receipt of offers if award is based

on initial offers; otherwise

(ii) On the date specified for receipt of final proposal revisions.

(c) If a contract is priced in foreign currency, the agency shall

ensure that adequate funds are available to cover currency fluctuations

to avoid a violation of the Anti-Deficiency Act (31 U.S.C. 1341, 1342,

1511-1519).

Subpart 25.11--Solicitation Provisions and Contract Clauses

25.1101 Acquisition of supplies.

The following provisions and clauses apply to the acquisition of

supplies and the acquisition of services involving the furnishing of

supplies.

(a) The contracting officer shall--

(1) Insert the clause at 52.225-1, Buy American Act--Balance of

Payments Program--Supplies, in solicitations and contracts with a value

exceeding $2,500 but not exceeding $25,000, and in solicitations and

contracts with a value exceeding $25,000, when none of the clauses

prescribed in paragraphs (b) and (c) of this section apply, except

when--

(i) The solicitation is restricted to domestic end products in

accordance with subpart 6.3;

(ii) The acquisition is for supplies to be used within the United

States and an exception to the Buy American Act applies (e.g.,

nonavailability or public interest); or

(iii) The acquisition is for supplies to be used outside the United

States and an exception to the Balance of Payments Program applies.

(2) Insert the provision at 52.225-2, Buy American Act--Balance of

Payments Program Certificate, in solicitations containing the clause at

52.225-1.

(b) The contracting officer shall--

(1)(i) Insert the clause at 52.225-3, Buy American Act--North

American Free Trade Agreement--Israeli Trade Act--Balance of Payments

Program, in solicitations and contracts with a value exceeding $25,000

but less than $186,000, unless the acquisition is exempt from the North

American Free Trade Agreement and the Israeli Trade Act (see 25.401).

For acquisitions of agencies not subject to the Israeli Trade Act

(25.406), see agency regulations.

(ii) If the acquisition exceeds $25,000 but is less than $50,000,

use the clause with its Alternate I.

(iii) If the acquisition value is $50,000 or more but less than

$53,150, use the clause with its Alternate II.

(2)(i) Insert the provision at 52.225-4, Buy American Act--North

American Free Trade Agreement--Israeli Trade Act-- Balance of Payments

Program Certificate, in solicitations containing the clause at 52.225-

3.

(ii) If the acquisition value exceeds $25,000 but is less than

$50,000, use the provision with its Alternate I.

(iii) If the acquisition value is $50,000 or more but less than

$53,150, use the provision with its Alternate II.

(c) The contracting officer shall--

(1) Insert the clause at 52.225-5, Trade Agreements, in

solicitations and contracts valued at $186,000 or more, if the Trade

Agreements Act applies (see 25.401 and 25.403) and the agency has

determined that the restrictions of the Buy American Act or Balance of

Payments Program are not applicable to U.S. made end products. If the

agency has not made such a determination, the contracting officer shall

follow agency procedures.

(2) Insert the provision at 52.225-6, Trade Agreements Certificate,

in solicitations containing the clause at 52.225-5.

(d) The contracting officer shall insert the provision at 52.225-7,

Waiver of Buy American Act for Civil Aircraft and Related Articles, in

solicitations for civil aircraft and related articles (see 25.407).

(e) The contracting officer shall insert the clause at 52.225-8,

Duty-Free Entry, in solicitations and contracts for supplies that may

be imported into the United States and for which duty-free entry may be

obtained in accordance

[[Page 51658]]

with 25.903(a), if the value of the acquisition--

(1) Exceeds $100,000; or

(2) Is $100,000 or less, but the savings from waiving the duty is

anticipated to be more than the administrative cost of waiving the

duty. When used for acquisitions valued at $100,000 or less, paragraphs

(b)(1) and (i)(2) of the clause may be modified to reduce the dollar

figure.

25.1102 Acquisition of construction.

The contracting officer shall--

(a) Insert the clause at 52.225-9, Buy American Act--Balance of

Payments Program--Construction Materials, in solicitations and

contracts for construction valued at less than $6,909,500. If specified

in agency regulations, substitute a higher evaluation percentage in

paragraph (b)(3)(i) of the clause.

(b)(1) Insert the provision at 52.225-10, Notice of Buy American

Act/Balance of Payments Program Requirement--Construction Materials, in

solicitations containing the clause at 52.225-9.

(2) If insufficient time is available to process a determination

regarding the inapplicability of the Buy American Act or Balance of

Payments Program before receipt of offers, use the provision with its

Alternate I.

(c)(1) Insert the clause at 52.225-11, Buy American Act--Balance of

Payments Program--Construction Materials Under Trade Agreements, in

solicitations and contracts valued at $6,909,500 or more. If specified

in agency regulations, substitute a higher evaluation percentage in

paragraph (b)(4)(i) of the clause.

(2) For acquisitions valued at $6,909,500 or more, but less than

$7,143,000, use the clause with its Alternate I.

(d)(1) Insert the provision at 52.225-12, Notice of Buy American

Act/Balance of Payments Program Requirement--Construction Materials

Under Trade Agreements, in solicitations containing the clause at

52.225-11.

(2) If insufficient time is available to process a determination

regarding the inapplicability of the Buy American Act or Balance of

Payments Program before receipt of offers, use the provision with its

Alternate I.

25.1103 Other provisions and clauses.

(a) Restrictions on certain foreign purchases. The contracting

officer shall insert the clause at 52.225-13, Restrictions on Certain

Foreign Purchases, in solicitations and contracts with a value

exceeding $2,500.

(b) Translations. The contracting officer shall insert the clause

at 52.225-14, Inconsistency Between English Version and Translation of

Contract, in solicitations and contracts where translation into another

language is anticipated.

(c) Sanctions. (1) Except as provided in paragraph (c)(2) of this

section, the contracting officer shall insert the clause at--

(i) 52.225-15, Sanctioned European Union Country End Products, in

solicitations and contracts for supplies valued at less than $186,000;

or

(ii) 52.225-16, Sanctioned European Union Country Services, in

solicitations and contracts for services--

(A) Listed in 25.601(a)(3)(i); or

(B) Valued at less than $186,000.

(2) The clauses in paragraph (c)(1) of this section shall not be

used in--

(i) Solicitations issued and contracts awarded by a contracting

activity located outside of the United States or its territories,

provided the supplies will be used or the services performed outside of

the United States or its territories;

(ii) Purchases at or below simplified acquisition threshold awarded

using simplified acquisition procedures;

(iii) Total small business set-asides;

(iv) Contracts in support of U.S. national security interests;

(v) Contracts for essential spare, repair, or replacement parts

available only from sanctioned EU member states; or

(vi) Contracts where the head of the agency has made a

determination in accordance with 25.602(b).

(d) Foreign currency offers. The contracting officer shall--

(1) Insert the provision at 52.225-17, Evaluation of Foreign

Currency Offers, in solicitations that permit the use of other than a

specified currency; and

(2) Insert in the provision the source of the rate to be used in

the evaluation of offers.

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

14. Section 52.212-3 is amended by revising the date of the

provision and paragraphs (f) and (g) to read as follows:

52.212-3 Offeror Representations and Certifications--Commercial Items.

* * * * *

Offeror Representations and Certifications--Commercial Items (Date)

* * * * *

(f) Buy American Act--Balance of Payments Program Certificate.

(Applies only if the clause at Federal Acquisition Regulation (FAR)

52.225-1, Buy American Act-- Balance of Payments Program--Supplies,

is included in this solicitation.)

(1) The offeror certifies that each end product, except those

listed in paragraph (f)(2) of this provision, is a domestic end

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

Balance of Payments Program--Supplies'' and that components of

unknown origin have been considered to have been mined, produced, or

manufactured outside the United States. The offeror shall list as

foreign end products those end products manufactured in the United

States that do not qualify as domestic end products.

(2) Foreign End Products:

Line Item No.

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

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

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

Country of Origin

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

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

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

(List as necessary)

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

procedures of FAR Part 25.

(g)(1) Buy American Act--North American Free Trade Agreement--

Israeli Trade Act--Balance of Payments Program Certificate. (Applies

only if the clause at FAR 52.225-3, Buy American Act--North American

Free Trade Agreement--Israeli Trade Act--Balance of Payments

Program, is included in this solicitation.)

(i) The offeror certifies that each end product, except those

listed in paragraph (g)(1)(ii) or (g)(1)(iii) of this provision, is

a domestic end product (as defined in the clause of this

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

Agreement Implementation Act--Israeli Trade 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.

(ii) The offeror certifies that the following supplies are NAFTA

country end products or Israeli end products as defined in the

clause of this solicitation entitled ``Buy American Act--North

American Free Trade Agreement--Israeli Trade Act--Balance of

Payments Program.''

NAFTA Country or Israeli End Products:

Line Item No.

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

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

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

Country of Origin

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

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

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

(List as necessary)

(iii) The offeror shall list those supplies that are foreign end

products (other than those listed in paragraph (g)(1)(ii) of this

provision) as defined in the clause of this solicitation entitled

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

Trade Act--Balance of Payments Program.'' The offeror shall list as

other foreign end products those end products

[[Page 51659]]

manufactured in the United States that do not qualify as domestic

end products.

Other Foreign End Products:

Line Item No.

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

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

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

Country of Origin

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

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

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

(List as necessary)

(iv) Offers will be evaluated in accordance with the policies

and procedures of FAR Part 25.

(2) Buy American Act--North American Free Trade Agreements--

Israeli Trade Act--Balance of Payments Program Certificate,

Alternate I (DATE). If Alternate I to the clause at FAR 52.225-3 is

included in this solicitation, substitute the following paragraph

(g)(1)(ii) for paragraph (g)(1)(ii) of the basic provision:

(g)(1)(ii) The offeror certifies that the following supplies are

Canadian end products as defined in the clause of this solicitation

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

Israeli Trade Act--Balance of Payments Program.''

Canadian End Products:

Line Item No.

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

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

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

(List as necessary)

(3) Buy American Act--North American Free Trade Agreements--

Israeli Trade Act--Balance of Payments Program Certificate,

Alternate II (DATE). If Alternate II to the clause at FAR 52.225-3

is included in this solicitation, substitute the following paragraph

(g)(1)(ii) for paragraph (g)(1)(ii) of the basic provision:

(g)(1)(ii) The offeror certifies that the following supplies are

Canadian end products or Israeli end products as defined in the

clause of this solicitation entitled ``Buy American Act--North

American Free Trade Agreement--Israeli Trade Act--Balance of

Payments Program.''

Canadian or Israeli End Products:

Line Item No.

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

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

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

County of Origin

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

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

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

(List as necessary)

(4) Trade Agreements Certificate. (Applies only if the clause at

FAR 52.225-5, Trade Agreements, is included in this solicitation.)

(i) The offeror certifies that each end product, except those

listed in paragraph (g)(4)(ii) of this provision, is a U.S. made,

designated country, Caribbean Basin country, or NAFTA country end

product, as defined in the clause of this solicitation entitled

``Trade Agreements.''

(ii) The offeror shall list as other end products those supplies

that are not U.S. made, designated country, Caribbean Basin country,

or NAFTA country end products.

Other end products:

Line Item No.

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

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

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

Country of Origin

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

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

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

(List as necessary)

(iii) Offers will be evaluated in accordance with the policies

and procedures of FAR Part 25. For line items subject to the Trade

Agreements Act, offers of U.S. made, designated country, Caribbean

Basin country, or NAFTA country end products will be evaluated

without regard to the restrictions of the Buy American Act or the

Balance of Payments Program. Only offers of U.S. made, designated

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

be considered for award unless the Contracting Officer determines

that there are no offers for such products or that the offers for

such products are insufficient to fulfill the requirements of this

solicitation.

* * * * *

15. Section 52.212-5 is amended by revising the clause date; at the

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

(a)(2) by removing the period and inserting ``; and''; by adding

paragraph (a)(3); and by revising paragraphs (b)(11) through (b)(16) to

read as follows:

52.212-5 Contract Terms and Conditions Required to Implement Statutes

or Executive Orders--Commercial Items.

* * * * *

Contract Terms and Conditions Required to Implement Statutes or

Executive Orders--Commercial Items (Date)

(a) * * *

(3) 52.225-13, Restrictions on Certain Foreign Purchases (E.O.'s

12722, 12724, 13059, and 13067).

(b) * * *

____ (11) 52.225-1, Buy American Act--Balance of Payment

Program--Supplies (41 U.S.C. 10a-10d).

____ (12)(i) 52.225-3, Buy American Act--North American Free

Trade Agreement--Israeli Trade Act--Balance of Payments Program (41

U.S.C. 10a-10d, 19 U.S.C. 3301 note, 19 U.S.C. 2112 note).

____ (ii) Alternate I of 52.225-3.

____ (iii) Alternate II of 52.225-3.

____ (13) 52.225-5, Trade Agreements (19 U.S.C. 2501 et seq., 19

U.S.C. 3301 note).

____ (14) 52.225-15, Sanctioned European Union Country End

Products (E.O. 12849).

____ (15) 52.225-16, Sanctioned European Union Country Services

(E.O. 12849).

____ (16) [Reserved]

* * * * *

16. Section 52.213-4 is amended by revising the date of the clause;

and paragraph (a)(2)(i) and paragraph (b)(1)(viii) to read as follows:

52.213-4 Terms and Conditions--Simplified Acquisitions (Other Than

Commercial Items).

* * * * *

Terms and Conditions--Simplified Acquisitions (Other Than Commercial

Items) (Date)

(a) * * *

(2) * * *

(i) 52.225-13, Restrictions on Certain Foreign Purchases (DATE).

* * * * *

(b) * * *

(1) * * *

(viii) 52.225-1, Buy American Act--Balance of Payments Program--

Supplies (DATE) (41 U.S.C. 10a-10d) (Applies to supplies, and

services involving the furnishing of supplies, if the contract--

(A) Does not exceed $25,000; or

(B) Is set aside for small business concerns, regardless of

dollar value).

* * * * *

17. Section 52.214-34 is amended by revising the introductory

paragraph to read as follows:

52.214-34 Submission of Offers in the English Language.

As prescribed in 14.201-6(x), insert the following provision:

* * * * *

18. Section 52.214-35 is amended by revising the introductory text

to read as follows:

52.214-35 Submission of Offers in U.S. Currency.

As prescribed in 14.201-6(y), insert the following provision:

* * * * *

19. Section 52.215-1 is amended by revising the date of the

provision and paragraph (c)(5) to read as follows:

52.215-1 Instructions to Offerors--Competitive Acquisitions.

* * * * *

(c) * * *

(5) Proposals submitted in response to this solicitation shall

be in English unless otherwise permitted by the solicitation and

shall be in U.S. dollars, unless the provision at FAR 52.225-17,

Evaluation of Foreign Currency Offers, is included in the

solicitation.

* * * * *

20. Sections 52.225-1 through 52.225-17 are revised to read as

follows:

[[Page 51660]]

Subpart 52.2--Text of Provisions and Clauses

Sec.

* * * * *

52.225-1 Buy American Act--Balance of Payments Program--Supplies.

52.225-2 Buy American Act--Balance of Payments Program Certificate.

52.225-3 Buy American Act--North American Free Trade Agreement--

Israeli Trade Act--Balance of Payments Program.

52.225-4 Buy American Act--North American Free Trade Agreement--

Israeli Trade Act--Balance of Payments Program Certificate.

52.225-5 Trade Agreements.

52.225-6 Trade Agreements Certificate.

52.225-7 Waiver of Buy American Act for Civil Aircraft and Related

Articles.

52.225-8 Duty-Free Entry.

52.225-9 Buy American Act--Balance of Payments Program--

Construction Materials.

52.225-10 Notice of Buy American Act/Balance of Payments Program

Requirement--Construction Materials.

52.225-11 Buy American Act--Balance of Payments Program--

Construction Materials Under Trade Agreements.

52.225-12 Notice of Buy American Act/Balance of Payments Program

Requirement--Construction Materials Under Trade Agreements.

52.225-13 Restrictions on Certain Foreign Purchases.

52.225-14 Inconsistency Between English Version and Translation of

Contract.

52.225-15 Sanctioned European Union Country End Products.

52.225-16 Sanctioned European Union Country Services.

52.225-17 Evaluation of Foreign Currency Offers.

* * * * *

Subpart 52.2--Text of Provisions and Clauses

52.225-1 Buy American Act--Balance of Payments Program--Supplies.

As prescribed in 25.1101(a)(1), insert the following clause:

Buy American Act--Balance of Payments Program--Supplies (Date)

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

Components means those articles, materials, and supplies

incorporated directly into the end products.

Cost of components means--

(1) For components purchased by the Contractor, the acquisition

cost, including transportation costs to the place of incorporation

into the end product (whether or not such costs are paid to a

domestic firm), and any applicable duty (whether or not a duty-free

entry certificate is issued); or

(2) For components manufactured by the Contractor, all costs

associated with the manufacture of the component, including

transportation costs as described in paragraph (1) of this

definition, plus allocable overhead costs, but excluding profit.

Cost of components does not include any costs associated with the

manufacture of the end product.

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.

Components of foreign origin of the same class or kind as those that

the agency determines are not mined, produced, or manufactured in

sufficient and reasonably available commercial quantities of a

satisfactory quality are treated as domestic. Scrap generated,

collected, and prepared for processing in the United States is

considered domestic.

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

acquired under the contract for public use.

Foreign end product means an end product other than a domestic

end product.

(b) The Buy American Act (41 U.S.C. 10a-10d) provides a

preference for domestic end products for supplies acquired for use

in the United States. The Balance of Payments Program provides a

preference for domestic end products for supplies acquired for use

outside the United States.

(c) Offerors may obtain from the Contracting Officer a list of

foreign articles that will be treated as domestic for this contract.

(d) The Contractor shall deliver only domestic end products

except to the extent that it specified delivery of foreign end

products in the provision of the solicitation entitled ``Buy

American Act--Balance of Payments Program Certificate.''

(End of clause)

52.225-2 Buy American Act--Balance of Payments Program Certificate.

As prescribed in 25.1101(a)(2), insert the following provision:

Buy American Act--Balance of Payments Program Certificate (Date)

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

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

as defined in the clause of this solicitation entitled ``Buy

American Act--Balance of Payments Program--Supplies'' and that

components of unknown origin have been considered to have been

mined, produced, or manufactured outside the United States. The

offeror shall list as foreign end products those end products

manufactured in the United States that do not qualify as domestic

end products.

(b) Foreign End Products:

Line Item No.

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

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

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

Country of Origin

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

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

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

(List as necessary)

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

procedures of Part 25 of the Federal Acquisition Regulation.

(End of provision)

52.225-3 Buy American Act--North American Free Trade Agreement--

Israeli Trade Act--Balance of Payments Program.

As prescribed in 25.1101(b)(1)(i), insert the following clause:

Buy American Act--North American Free Trade Agreement--Israeli Trade

Act--Balance of Payments Program (Date)

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

Components means those articles, materials, and supplies

incorporated directly into the end products.

Cost of components means--

(1) For components purchased by the Contractor, the acquisition

cost, including transportation costs to the place of incorporation

into the end product (whether or not such costs are paid to a

domestic firm), and any applicable duty (whether or not a duty-free

entry certificate is issued); or

(2) For components manufactured by the Contractor, all costs

associated with the manufacture of the component, including

transportation costs as described in paragraph (1) of this

definition, plus allocable overhead costs, but excluding profit.

Cost of components does not include any costs associated with the

manufacture of the end product.

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.

Components of foreign origin of the same class or kind as those that

the agency determines are not mined, produced, or manufactured in

sufficient and reasonably available commercial quantities of a

satisfactory quality are treated as domestic. Scrap generated,

collected, and prepared for processing in the United States is

considered domestic.

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

acquired under the contract for public use.

Foreign end product means an end product other than a domestic

end product.

Israeli end product means an article that--

(1) Is wholly the growth, product, or manufacture of Israel; or

(2) In the case of an article that consists in whole or in part

of materials from another country, has been substantially

transformed in Israel 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.

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 that consists in whole or in part

of materials from another country, has been substantially

transformed

[[Page 51661]]

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 refers to a product

offered for purchase under a supply contract, but for purposes of

calculating the value of the end product includes services (except

transportation services) incidental to the article, provided that

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

article itself.

(b) Components of foreign origin. Offerors may obtain from the

Contracting Officer a list of foreign articles that will be treated

as domestic for this contract.

(c) Implementation. This clause implements the Buy American Act

(41 U.S.C. 10a-10d), the North American Free Trade Agreement

Implementation Act (NAFTA) (19 U.S.C. 3301 note), the Israeli Free

Trade Area Implementation Act of 1985 (Israeli Trade Act) (19 U.S.C.

2112 note), and the Balance of Payments Program by providing a

preference for domestic end products, except for certain foreign end

products that are NAFTA country end products or Israeli end

products.

(d) Delivery of end products. The Contracting Officer has

determined that NAFTA and the Israeli Trade Act apply to this

acquisition. Unless otherwise specified, these trade agreements

apply to all items in the Schedule. The Contractor shall deliver

under this contract only domestic end products except to the extent

that, in its offer, it specified delivery of foreign end products in

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

Agreement--Israeli Trade Act--Balance of Payments Program

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

or an Israeli end product will be supplied requires the Contractor

to supply a NAFTA country end product, an Israeli end product or, at

the Contractor's option, a domestic end product.

(End of clause)

Alternate I (DATE). As prescribed in 25.1101(b)(1)(ii), add the

following definition to paragraph (a) of the basic clause, and

substitute the following paragraph (d) for paragraph (d) of the

basic clause:

Canadian end product means an article that--

(1) Is wholly the growth, product, or manufacture of Canada; or

(2) In the case of an article that consists in whole or in part

of materials from another country, 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 refers to a product

offered for purchase under a supply contract, but for purposes of

calculating the value of the end product includes services (except

transportation services) incidental to the article; provided that

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

article itself.

(d) Delivery of end products. The Contracting Officer has

determined that NAFTA applies to this acquisition. Unless otherwise

specified, NAFTA applies to all items in the Schedule. The

Contractor shall deliver under this contract only domestic end

products except to the extent that, in its offer, it specified

delivery of foreign end products in the provision entitled ``Buy

American Act--North American Free Trade Agreement--Israeli Trade

Act--Balance of Payment Program Certificate.'' An offer specifying

that a Canadian end product will be supplied requires the Contractor

to supply a Canadian end product or, at the Contractor's option, a

domestic end product.

Alternate II (DATE). As prescribed in 25.1101(b)(1)(iii), add

the following definition to paragraph (a) of the basic clause, and

substitute the following paragraph (d) for paragraph (d) of the

basic clause:

Canadian end product means an article that--

(1) Is wholly the growth, product, or manufacture of Canada; or

(2) In the case of an article that consists in whole or in part

of materials from another country, 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 refers to a product

offered for purchase under a supply contract, but for purposes of

calculating the value of the end product includes services (except

transportation services) incidental to the article, provided that

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

article itself.

(d) Delivery of end products. The Contracting Officer has

determined that NAFTA and the Israeli Trade Act apply to this

acquisition. Unless otherwise specified, these trade agreements

apply to all items in the Schedule. The Contractor shall deliver

under this contract only domestic end products except to the extent

that, in its offer, it specified delivery of foreign end products in

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

Agreement--Israeli Trade Act--Balance of Payment Program

Certificate.'' An offer specifying that a Canadian end product or an

Israeli end product will be supplied requires the Contractor to

supply a Canadian end product, an Israeli end product or, at the

Contractor's option, a domestic end product.

52.225-4 Buy American Act--North American Free Trade Agreement--

Israeli Trade Act--Balance of Payments Program Certificate.

As prescribed in 25.1101(b)(2)(i), insert the following provision:

Buy American Act--North American Free Trade Agreement--Israeli Trade

Act--Balance of Payments Program Certificate (Date)

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

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

product (as defined in the clause of this solicitation entitled

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

Trade 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) The offeror certifies that the following supplies are NAFTA

country end products or Israeli end products as defined in the

clause of this solicitation entitled ``Buy American Act--North

American Free Trade Agreement--Israeli Trade Act--Balance of

Payments Program.''

NAFTA Country or Israeli End Products:

Line Item No.

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

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

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

Country of Origin

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

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

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

(List as necessary)

(c) The offeror shall list those supplies that are foreign end

products (other than those listed in paragraph (b) of this

provision) as defined in the clause of this solicitation entitled

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

Trade Act--Balance of Payments Program.'' The offeror shall list as

other foreign end products those end products manufactured in the

United States that do not qualify as domestic end products.

Other Foreign End Products:

Line Item No.

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

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

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

Country of Origin

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

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

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

(List as necessary)

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

procedures of Part 25 of the Federal Acquisition Regulation.

(End of provision)

Alternate I (DATE). As prescribed in 25.1101(b)(2)(ii),

substitute the following paragraph (b) for paragraph (b) of the

basic provision:

(b) The offeror certifies that the following supplies are

Canadian end products as defined in the clause of this solicitation

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

Israeli Trade Act--Balance of Payments Program.''

Canadian End Products:

Line Item No.

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

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

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

(List as necessary)

Alternate II (DATE). As prescribed in 25.1101(b)(2)(iii),

substitute the following paragraph (b) for paragraph (b) of the

basic provision:

(b) The offeror certifies that the following supplies are

Canadian end products or Israeli end products as defined in the

clause of this solicitation entitled ``Buy American Act--North

American Free Trade Agreement--Israeli Trade Act--Balance of

Payments Program.''

[[Page 51662]]

Canadian or Israeli End Products:

Line Item No.

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

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

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

Country of Origin

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

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

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

(List as necessary)

52.225-5 Trade Agreements.

As prescribed in 25.1101(c)(1), insert the following clause:

Trade Agreements (Date)

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

Caribbean Basin country means any of the following countries:

Antigua and Barbuda, Aruba, Bahamas, Barbados, Belize, British

Virgin Islands, Costa Rica, Dominica, Dominican Republic, El

Salvador, Grenada, Guatemala, Guyana, Haiti, Honduras, Jamaica,

Montserrat, Netherlands Antilles, Nicaragua, Panama, St. Kitts and

Nevis, St. Lucia, St. Vincent and the Grenadines, Trinidad and

Tobago.

Caribbean Basin country end product means an article that--

(1) Is wholly the growth, product, or manufacture of a Caribbean

Basin country; or

(2) In the case of an article that consists in whole or in part

of materials from another country, has been substantially

transformed in a Caribbean Basin 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 refers to a product offered for purchase under a supply

contract, but for purposes of calculating the value of the end

product includes services (except transportation services)

incidental to the article, provided that the value of those

incidental services does not exceed that of the article itself. The

term excludes products that are excluded from duty-free treatment

for Caribbean countries under 19 U.S.C. 2703(b), which presently

are--

(i) Textiles and apparel articles that are subject to textile

agreements;

(ii) Footwear, handbags, luggage, flat goods, work gloves, and

leather wearing apparel not designated as eligible articles for the

purpose of the Generalized System of Preferences under Title V of

the Trade Act of 1974;

(iii) Tuna, prepared or preserved in any manner in airtight

containers;

(iv) Petroleum, or any product derived from petroleum; and

(v) Watches and watch parts (including cases, bracelets, and

straps) of whatever type including, but not limited to, mechanical,

quartz digital, or quartz analog, if such watches or watch parts

contain any material that is the product of any country to which the

Harmonized Tariff Schedule of the United States (HTSUS) column 2

rates of duty apply.

Designated country means any of the following countries:

Aruba

Austria

Bangladesh

Belgium

Benin

Bhutan

Botswana

Burkina Faso

Burundi

Canada

Cape Verde

Central African Republic

Chad

Comoros

Denmark

Djibouti

Equatorial Guinea

Finland

France

Gambia

Germany

Greece

Guinea

Guinea-Bissau

Haiti

Hong Kong

Ireland

Israel

Italy

Japan

Kiribati

Korea, Republic of

Lesotho

Liechtenstein

Luxembourg

Malawi

Maldives

Mali

Mozambique

Nepal

Netherlands

Niger

Norway

Portugal

Rwanda

Sao Tome and Principe

Sierra Leone

Singapore

Somalia

Spain

Sweden

Switzerland

Tanzania U.R.

Togo

Tuvalu

Uganda

United Kingdom

Vanuatu

Western Samoa

Yemen

Designated country end product means an article that--

(1) Is wholly the growth, product, or manufacture of a

designated country; or

(2) In the case of an article that consists in whole or in part

of materials from another country, has been substantially

transformed in a designated 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 refers

to a product offered for purchase under a supply contract, but for

purposes of calculating the value of the end product includes

services (except transportation services) incidental to the article,

provided that the value of those incidental services does not exceed

that of the article itself.

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

acquired under the contract for public use.

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 that consists in whole or in part

of materials from another country, 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 refers

to a product offered for purchase under a supply contract, but for

purposes of calculating the value of the end product includes

services (except transportation services) incidental to the article,

provided that the value of those incidental services does not exceed

that of the article itself.

U.S. made end product means an article that has been

manufactured in the United States or that has been 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.

(b) Implementation. This clause implements the Trade Agreements

Act (19 U.S.C. 2501 et seq.) and the North American Free Trade

Agreement Implementation Act of 1993 (NAFTA) (19 U.S.C. 3301 note),

by restricting the acquisition of end products that are not U.S.

made, designated country, Caribbean Basin country, or NAFTA country

end products.

(c) Delivery of end products. The Contracting Officer has

determined that the Trade Agreements Act and NAFTA apply to this

acquisition. Unless otherwise specified, these trade agreements

apply to all items in the Schedule. The Contractor shall deliver

under this contract only U.S. made, designated country, Caribbean

Basin country, or NAFTA country end products except to the extent

that, in its offer, it specified delivery of other end products in

the provision entitled ``Trade Agreements Certificate.''

(End of clause)

52.225-6 Trade Agreements Certificate.

As prescribed in 25.1101(c)(2), insert the following provision:

Trade Agreements Certificate (Date)

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

listed in paragraph (b) of this provision, is a U.S. made,

designated country, Caribbean Basin country, or NAFTA country end

product, as defined in the clause of this solicitation entitled

``Trade Agreements.''

(b) The offeror shall list as other end products those supplies

that are not U.S. made, designated country, Caribbean Basin country,

or NAFTA country end products.

Other End Products:

Line Item No.

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

[[Page 51663]]

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

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

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

Country of Origin

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

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

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

(List as necessary)

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

procedures of Part 25 of the Federal Acquisition Regulation. For

line items subject to the Trade Agreements Act, offers of U.S. made,

designated country, Caribbean Basin country, or NAFTA country end

products will be evaluated without regard to the restrictions of the

Buy American Act or the Balance of Payments Program. Only offers of

U.S. made, designated country, Caribbean Basin country, or NAFTA

country end products will be considered for award unless the

Contracting Officer determines that there are no offers for such

products or that the offers for such products are insufficient to

fulfill the requirements of this solicitation.

(End of provision)

52.225-7 Waiver of Buy American Act for Civil Aircraft and Related

Articles.

As prescribed in 25.1101(d), insert the following provision:

Waiver of Buy American Act for Civil Aircraft and Related Articles

(Date)

(a) Civil aircraft and related articles, as used in this

provision, means--

(1) All aircraft other than aircraft to be purchased for use by

the Department of Defense or the U.S. Coast Guard;

(2) The engines (and parts and components for incorporation into

the engines) of these aircraft;

(3) Any other parts, components, and subassemblies for

incorporation into the aircraft; and

(4) Any ground flight simulators, and parts and components of

these simulators, for use with respect to the aircraft, whether to

be used as original or replacement equipment in the manufacture,

repair, maintenance, rebuilding, modification, or conversion of the

aircraft, and without regard to whether the aircraft or articles

receive duty-free treatment under section 601(a)(2) of the Trade

Agreements Act.

(b) The U.S. Trade Representative has waived the Buy American

Act for acquisitions of civil aircraft and related articles from

countries that are parties to the Agreement on Trade in Civil

Aircraft. Those countries are Austria, Belgium, Canada, Denmark,

Finland, France, Germany, Greece, Ireland, Italy, Japan, Luxembourg,

the Netherlands, Norway, Portugal, Romania, Spain, Sweden,

Switzerland, and the United Kingdom.

(c) For the purpose of this waiver, an article is a product of a

country only if--

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

country; or

(2) In the case of an article that consists in whole or in part

of materials from another country, 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 transformed.

(d) The waiver is subject to modification or withdrawal by the

U.S. Trade Representative.

(End of provision)

52.225-8 Duty-Free Entry.

As prescribed in 25.1101(e), insert the following clause:

Duty-Free Entry (Date)

(a) Except as otherwise approved by the Contracting Officer, the

Contractor shall not include in the contract price any amount for

duties on supplies specifically identified in the Schedule to be

accorded duty-free entry.

(b) Except as provided in paragraph (c) of this clause, or

elsewhere in this contract, the following procedures apply to

supplies not identified in the Schedule to be accorded duty-free

entry:

(1) The Contractor shall notify the Contracting Officer, in

writing, of any purchase of foreign supplies (including, without

limitation, raw materials, components, and intermediate assemblies)

in excess of $10,000 that are to be imported into the customs

territory of the United States for delivery to the Government under

this contract, either as end products for incorporation into end

products. The notice shall be furnished to the Contracting Officer

at least 20 calendar days before the importation and shall identify

the--

(i) Foreign supplies;

(ii) Estimated amount of duty; and

(iii) Country of origin.

(2) The Contracting Officer shall determine whether any of these

supplies should be accorded duty-free entry and shall notify the

Contractor within 10 calendar days after receipt of the Contractor's

notification.

(3) Except as otherwise approved by the Contracting Officer, the

contract price shall be reduced by (or the allowable cost shall not

include) the amount of duty that would be payable if the supplies

were not entered duty-free.

(c) Notification under paragraph (b) of this clause is not

required for purchases of foreign supplies if--

(1) The supplies are identical in nature to items purchased by

the Contractor or any subcontractor in connection with its

commercial business; and

(2) Segregation of these supplies to ensure use only on

Government contracts containing duty-free entry provisions is not

economical or feasible.

(d) The Contractor shall claim duty-free entry only for supplies

to be delivered to the Government under this contract, either as end

products or incorporated into end products, and shall pay duty on

supplies, or any portion of them, other than scrap, salvage, or

competitive sale authorized by the Contracting Officer, diverted to

non-Governmental use.

(e) The Government shall execute any required duty-free entry

certificates for supplies to be accorded duty-free entry and shall

assist the Contractor in obtaining duty-free entry for these

supplies.

(f) Shipping documents for supplies to be accorded duty-free

entry shall consign the shipments to the contracting agency in care

of the Contractor and shall include the--

(1) Delivery address of the Contractor (or contracting agency,

if appropriate);

(2) Government prime contract number;

(3) Identification of carrier;

(4) Notation ``UNITED STATES GOVERNMENT, ________ agency

________, Duty-free entry to be claimed pursuant to Item No(s)

________ from Tariff Schedules ________, Harmonized Tariff Schedules

of the United States. Upon arrival of shipment at port of entry,

District Director of Customs, please release shipment under 19 CFR

142 and notify [cognizant contract administration office] for

execution of Customs Forms 7501 and 7501-A and any required duty-

free entry certificates;''

(5) Gross weight in pounds (if freight is based on space

tonnage, state cubic feet in addition to gross shipping weight); and

(6) Estimated value in United States dollars.

(g) The Contractor shall instruct the foreign supplier to--

(1) Consign the shipment as specified in paragraph (f) of this

clause;

(2) Mark all packages with the words ``UNITED STATES

GOVERNMENT'' and the title of the contracting agency; and

(3) Include with the shipment at least two copies of the bill of

lading (or other shipping document) for use by the District Director

of Customs at the port of entry.

(h) The Contractor shall provide written notice to the cognizant

contract administration office immediately after notification by the

Contracting Officer that duty-free entry will be accorded foreign

supplies or, for duty-free supplies identified in the Schedule, upon

award by the Contractor to the overseas supplier. The notice shall

identify the--

(1) Foreign supplies;

(2) Country of origin;

(3) Contract number; and

(4) Scheduled delivery date(s).

(i) The Contractor shall include the substance of this clause in

any subcontract if--

(1) Supplies identified in the Schedule to be accorded duty-free

entry will be imported into the customs territory of the United

States; or

(2) Other foreign supplies in excess of $10,000 may be imported

into the customs territory of the United States.

(End of clause)

52.225-9 Buy American Act--Balance of Payments Program--Construction

Materials.

As prescribed in 25.1102(a), insert the following clause:

Buy American Act--Balance of Payments Program--Construction Materials

(Date)

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

Components means those articles, materials, and supplies

incorporated directly into construction materials.

Construction material means an article, material, or supply

brought to the construction site by the Contractor or subcontractor

for incorporation into the building or work. The term also includes

an item brought to the site preassembled from articles, materials,

or supplies. However,

[[Page 51664]]

emergency life safety systems, such as emergency lighting, fire

alarm, and audio evacuation systems, that are discrete systems

incorporated into a public building or work and that are produced as

complete systems, shall be evaluated as a single and distinct

construction material regardless of when or how the individual parts

or components of such systems are delivered to the construction

site.

Cost of components means--

(1) For components purchased by the Contractor, the acquisition

cost, including transportation costs to the place of incorporation

into the end product (whether or not such costs are paid to a

domestic firm), and any applicable duty (whether or not a duty-free

entry certificate is issued); or

(2) For components manufactured by the Contractor, all costs

associated with the manufacture of the component, including

transportation costs as described in paragraph (1) of this

definition, plus allocable overhead costs, but excluding profit.

Cost of components does not include any costs associated with the

manufacture of the end product.

Domestic construction material means--

(1) An unmanufactured construction material mined or produced in

the United States; or

(2) A construction material 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. Components of foreign origin of the same class or kind

for which nonavailability determinations have been made are treated

as domestic.

Foreign construction material means a construction material

other than a domestic construction material.

(b) Domestic preference. (1) This clause implements the Buy

American Act (41 U.S.C. 10a-10d) and the Balance of Payments Program

by providing a preference for domestic construction material. Only

domestic construction material shall be used in performing this

contract, except as provided in paragraphs (b)(2) and (b)(3) of this

clause.

(2) This requirement does not apply to the construction material

or components listed by the Government as follows:

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

[Contracting Officer to list applicable excepted materials or

indicate ``none'']

(3) Other foreign construction material may be added to the list

in paragraph (b)(2) of this clause if the Government determines

that--

(i) The cost of domestic construction material would be

unreasonable. The cost of a particular domestic construction

material subject to the requirements of the Buy American Act shall

be determined to be unreasonable when the cost of such material

exceeds the cost of foreign material by more than 6 percent. For

determination of unreasonable cost under the Balance of Payments

Program, a factor of 50 percent shall be used;

(ii) The application of the restriction of the Buy American Act

or Balance of Payments Program to a particular construction material

would be impracticable or inconsistent with the public interest; or

(iii) The construction material is not mined, produced, or

manufactured in the United States in sufficient and reasonably

available commercial quantities of a satisfactory quality.

(c) Request for determination of inapplicability of the Buy

American Act or Balance of Payments Program. (1)(i) Any Contractor

request to use foreign construction material in accordance with

paragraph (b)(3) of this clause shall include adequate information

for Government evaluation of the request, including a description of

the foreign and domestic construction materials, unit of measure,

quantity, price, time of delivery or availability, location of the

construction project, name and address of the proposed supplier, and

a detailed justification of the reason for use of foreign

construction materials cited in accordance with paragraph (b)(3) of

this clause. A request based on unreasonable cost shall include a

reasonable survey of the market and a completed price comparison

table in the format in paragraph (d) of this clause. The price of

construction material shall include all delivery costs to the

construction site and any applicable duty (whether or not a duty-

free certificate may be issued).

(ii) Any Contractor request for a determination submitted after

contract award shall explain why the determination could not have

been requested before contract award or why the need for such

determination otherwise was not reasonably foreseeable. If the

Contractor does not submit a satisfactory explanation, the

Government need not make a determination.

(2) If the Government determines after contract award that an

exception to the Buy American Act or Balance of Payments Program

applies, the contract shall be modified to allow use of the foreign

construction material, and adequate consideration shall be

negotiated. However, when the basis for the exception is the

unreasonable price of a domestic construction material, adequate

consideration shall not be less than the differential establi

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