Federal Acquisition Regulation; Foreign Acquisition (Part 25 Rewrite)

Federal RegisterDec 27, 1999

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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 1, 2, 5, 6, 9, 12, 13, 14, 15, 17, 19, 25, 36, and 52

[FAC 97-15; FAR Case 97-024; Item II]

RIN 9000-AH30

Federal Acquisition Regulation; Foreign Acquisition (Part 25

Rewrite)

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

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

ACTION: Final rule.

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

SUMMARY: The Civilian Agency Acquisition Council and the Defense

Acquisition Regulations Council (Councils) have agreed on a final rule

amending the Federal Acquisition Regulation (FAR) to clarify policies

and procedures concerning foreign acquisition and to rewrite Part 25 in

plain language.

DATES: Effective Date: February 25, 2000.

Applicability Date: The FAR, as amended by this rule, is applicable

to solicitations issued on or after February 25, 2000.

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 FAC 97-15, FAR case 97-024.

SUPPLEMENTARY INFORMATION:

A. Background

This final rule amends FAR Parts 1, 2, 5, 6, 9, 12, 13, 14, 15, 17,

19, 25, 36, and 52 to clarify policies and procedures concerning

foreign acquisition and to rewrite Part 25 in plain language. DoD, GSA,

and NASA published a proposed rule in the Federal Register on September

28, 1998 (63 FR 51642). Seven respondents submitted comments. The

Councils considered all comments in formulation of the final rule. This

final rule differs from the proposed rule as follows:

Deletes the definitions ``components'' and

``construction'' (25.003), defines construction in 2.101, and

substitutes the definition of ``component'' (2.101) in 52.225-1 and

52.225-3.

Deletes the definition ``end product'' (25.003), defines

``end product'' (2.101), and substitutes the definition ``end product''

in 2.101 in the clauses at 52.225-1, 52.225-3, and 52.225-5.

Revises the definition ``U.S.-made end product'' to

include unmanufactured articles mined or produced in the United States

(25.003).

Deletes the requirement in some circumstances for a

written determination of domestic nonavailability (25.103).

Clarifies the procedures for preaward determinations of

inapplicability of the Buy American Act for construction contracts

(25.203).

Clarifies the application of the Trade Agreements Act in

acquisitions with limitations on the use of full and open competition

in accordance with Part 6 or 13 (6.303-1, 25.401, and 25.408).

Addresses excluded services under the Trade Agreements Act

as well as NAFTA (25.401).

Clarifies that the procedures at 25.502(c) apply only if

the Buy American Act or Balance of Payments Program apply.

[[Page 72417]]

Revises the examples at 25.504-1 to clarify how the Buy

American Act and the Balance of Payments Programs apply to small

business set-asides.

Adds an alternate to the clause at 52.212-5, Contract

Terms and Conditions Required to Implement Statute or Executive

Orders--Commercial Items, to provide for waiver of the examination of

records (12.301(b), 25.1001, and 52.212-5).

Adds a definition of ``United States'' to the clauses at

52.225-1, 52.225-3, 52.225-5, 52.225-9, and 52.225-11.

Adds a definition of ``Customs territory of the United

States'' to the clause at 52.225-8, Duty-Free Entry.

Clarifies application of the Balance of Payments Program

(25.504-1(b), 25.1101(b)(1)(i)(A), and 25.1101(c)(1)).

The restructuring of Part 25 in the proposed rule has been

maintained in the final rule. The following list summarizes the

renumbering of the clauses at 52.225, which has not changed from the

proposed rule:

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

Current FAR Section New FAR 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

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

This rule was not subject to Office of Management and Budget review

under Section 6(b) of Executive Order 12866, Regulatory Planning and

Review, dated September 30, 1993. This rule is not a major rule under 5

U.S.C. 804.

B. Regulatory Flexibility Act

The Department of Defense, the General Services Administration, and

the National Aeronautics and Space Administration certify that this

final rule will not 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.

C. Paperwork Reduction Act

The Paperwork Reduction Act (Pub. L. 104-13) applies because the

final rule contains information collection requirements. The Office of

Management and Budget has approved the information collection

requirements associated with Part 25 under OMB Control Numbers 9000-

0022, 9000-0023, 9000-0024, 9000-0025, 9000-0130, and 9000-0141. The

applicable changes to the clause numbers of the provisions and clauses

that are covered by these approvals are addressed in the preamble to

the proposed rule (63 FR 51642).

List of Subjects in 48 CFR Parts 1, 2, 5, 6, 9, 12, 13, 14, 15, 17,

19, 25, 36, and 52:

Government procurement.

Dated: December 20, 1999.

Edward C. Loeb,

Director, Federal Acquisition Policy Division.

Therefore, DoD, GSA, and NASA amend 48 CFR parts 1, 2, 5, 6, 9, 12,

13, 14, 15, 17, 19, 25, 36, and 52 as set forth below:

1. The authority citation for 48 CFR parts 1, 2, 5, 6, 9, 12, 13,

14, 15, 17, 19, 25, 36, 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. Amend section 1.106 in the table following the introductory

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

left columns and adding the FAR Segment and OMB Control Number listed

in the right columns as follows:

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

Remove Add

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

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

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PART 2--DEFINITIONS OF WORDS AND TERMS

3. Amend section 2.101 by revising the definitions ``Component''

and ``United States'', and by adding, in alphabetical order, the

definitions ``Construction'' and ``End product'' to read as follows:

2.101 Definitions.

* * * * *

Component means any item supplied to the Government as part of an

end item or of another component, except that for use in 52.225-9 and

52.225-11, see the definitions in 52.225-9(a) and 52.225-11(a).

Construction means construction, alteration, or repair (including

dredging, excavating, and painting) of buildings, structures, or other

real property. For purposes of this definition, the terms ``buildings,

structures, or other real property'' include, but are not limited to,

improvements of all types, such as bridges, dams, plants, highways,

parkways, streets, subways, tunnels, sewers, mains, power lines,

cemeteries, pumping stations, railways, airport facilities, terminals,

docks, piers, wharves, ways, lighthouses, buoys, jetties, breakwaters,

levees, canals, and channels. Construction does not include the

manufacture, production, furnishing, construction, alteration, repair,

processing, or assembling of vessels, aircraft, or other kinds of

personal property.

* * * * *

End product means supplies delivered under a line item of a

Government contract.

* * * * *

United States, when used in a geographic sense, means the 50 States

and the District of Columbia, except as follows:

(1) For use in Subpart 22.8, see the definition at 22.801.

(2) For use in Subpart 22.10, see the definition at 22.1001.

(3) For use in Part 25, see the definition at 25.003.

[[Page 72418]]

(4) For use in Subpart 47.4, see the definition at 47.401.

PART 5--PUBLICIZING CONTRACT ACTIONS

4. Amend section 5.301 by revising paragraph (a); and in paragraph

text reads as follows:

5.301 General.

(a) Except for contract actions described in paragraph (b) of this

section, contracting officers must synopsize in the Commerce Business

Daily (CBD) awards exceeding $25,000 that are--

(1) Subject to the Trade Agreements Act (see Subpart 25.4); or

(2) Likely to result in the award of any subcontracts. However, the

dollar threshold is not a prohibition against publicizing an award of a

smaller amount when publicizing would be advantageous to industry or to

the Government.

* * * * *

PART 6--COMPETITION REQUIREMENTS

5. Revise paragraph (d) of section 6.303-1 to read as follows:

6.303-1 Requirements.

* * * * *

(d) If the authority of 6.302-3(a)(2)(i) or 6.302-7 is being cited

as a basis for not providing for full and open competition in an

acquisition that would otherwise be subject to the Trade Agreements Act

(see Subpart 25.4), the contracting officer must forward a copy of the

justification, in accordance with agency procedures, to the agencys

point of contact with the Office of the United States Trade

Representative.

* * * * *

PART 9--CONTRACTOR QUALIFICATIONS

6. Revise paragraph (b) of section 9.205 to read as follows:

9.205 Opportunity for qualification before award.

* * * * *

(b) The activity responsible for establishing a qualification

requirement must keep any list maintained of those already qualified

open for inclusion of additional products, manufacturers, 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

7. Revise paragraph (c) of section 12.205 to read as follows:

12.205 Offers.

* * * * *

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)).

8. Amend section 12.301 by adding a sentence to the end of

paragraph (b)(4) to read as follows:

12.301 Solicitation provisions and contract clauses for the

acquisition of commercial items.

* * * * *

(b) * * *

(4) * * * Use the clause with its Alternate I when the head of the

agency has waived the examination of records by the Comptroller General

in accordance with 25.1001.

* * * * *

12.504 [Amended]

9. Amend section 12.504 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]

10. Amend section 13.101 at the end of paragraph (a)(2) by adding

the word ``and''; by removing paragraph (a)(3); and by redesignating

paragraph (a)(4) as (a)(3).

11. Revise paragraph (d) of section 13.302-5 to read as follows:

13.302-5 Clauses.

* * * * *

(d)(1) The contracting officer may use the clause at 52.213-4,

Terms and Conditions--Simplified Acquisitions (Other Than Commercial

Items), in simplified acquisitions exceeding the micro-purchase

threshold that are for other than commercial items (see 12.301).

(2) The clause--

(i) Is a compilation of the most commonly used clauses that apply

to simplified acquisitions; and

(ii) May be modified to fit the individual acquisition to add other

needed clauses, or those clauses may be added separately. Modifications

(i.e., additions, deletions, or substitutions) must not create a void

or internal contradiction in the clause. For example, do not add an

inspection and acceptance or termination for convenience requirement

unless the existing requirement is deleted. Also, do not delete a

paragraph without providing for an appropriate substitute.

(3)(i) When an acquisition for supplies for use within the United

States cannot be set aside for small business concerns and trade

agreements apply (see Subpart 25.4), substitute the clause at FAR

52.225-3, Buy American Act--North American Free Trade Agreement--

Israeli Trade Act--Balance of Payments Program, used with Alternate I

or Alternate II, if appropriate, instead of the clause at FAR 52.225-1,

Buy American Act--Balance of Payments Program--Supplies.

(ii) When acquiring supplies for use outside the United States,

delete clause 52.225-1 from the clause list at 52.213-4(b).

PART 14--SEALED BIDDING

12. Revise paragraphs (w) and (x) of section 14.201-6 to read as

follows:

14.201-6 Solicitation provisions.

* * * * *

(w) Insert the provision at 52.214-34, Submission of Offers in the

English Language, 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.

(x) Insert the provision at 52.214-35, Submission of Offers in U.S.

Currency, in solicitations that include any of the clauses prescribed

in 25.1101 or 25.1102, unless the contracting officer includes the

clause at 52.225-17, Evaluation of Foreign Currency Offers, as

prescribed in 25.1103(d). It may be included in other solicitations

when the contracting officer decides that it is necessary.

14.409-1 [Amended]

13. Amend section 14.409-1 in the introductory text of paragraph

(a)(2) by removing ``(see 25.405(e))'' and adding ``(see

25.408(a)(4))'' in its place; and by removing ``shall'' and adding

``must'' in its place.

PART 15--CONTRACTING BY NEGOTIATION

14. Revise paragraph (b)(4) of section 15.209 to read as follows:

15.209 Solicitation provisions and contract clauses.

* * * * *

(b) * * *

(4) When the head of the agency has waived the examination of

records by

[[Page 72419]]

the Comptroller General in accordance with 25.1001, use the clause with

its Alternate III.

* * * * *

PART 17--SPECIAL CONTRACTING METHODS

15. Revise paragraph (h) of section 17.203 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.

PART 19--SMALL BUSINESS PROGRAMS

19.1103 [Amended]

15a. In paragraph (a)(2) of section 19.1103, remove ``25.402'' and

add ``25.403'' in its place.

19.1307 [Amended]

15b. In paragraph (b)(3) of section 19.1307, remove ``25.402'' and

add ``25.403'' in its place.

16. Revise Part 25 to read as follows:

PART 25--FOREIGN ACQUISITION

Sec.

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 NAFTA/Israeli Trade Act.

25.504-4 Group award basis.

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).

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 the contracting officer determines that the price of

the lowest domestic offer is unreasonable or if another exception

applies (see Subpart 25.1); and

(2) Requires, with some exceptions, the use of only domestic

construction materials 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.

Payments Program are not applicable 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 determines which of the

trade agreements applies. Exceptions to the applicability of the trade

agreements are described in Subpart 25.4.

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

under the trade agreements is different from the test to determine the

country of origin for an end product under the Buy American Act (see

the various country ``end product'' definitions 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) On April 22, 1992, the President made a determination under

section 305 of the Trade Agreements Act to impose sanctions against

some European Union countries for discriminating against U.S. products

and services (see Subpart 25.6).

25.002 Applicability of subparts.

The following table shows the applicability of the subparts.

Subpart 25.5 provides comprehensive procedures for offer evaluation and

examples.

[[Page 72420]]

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

Supplies for use Construction Services

------------------------------------ performed

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

Inside Outside Inside Outside Inside Outside

U.S. U.S. U.S. U.S. U.S. U.S.

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

25.1 ................. Buy American Act--Supplies........ X ....... ....... ....... ....... .......

25.2 ................. Buy American Act--Construction ....... ....... X ....... ....... .......

Materials.

25.3 ................. Balance of Payments Program....... ....... X ....... X ....... .......

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

25.5 ................. Evaluating Foreign Offers--Supply X X ....... ....... ....... .......

Contracts.

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 X X ....... X ....... X

Coordination.

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

25.10................. Additional Foreign Acquisition X X X X X X

Regulations.

25.11................. Solicitation Provisions and X X X X X X

Contract Clauses.

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

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 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.

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, are evaluated as a single and distinct construction

material regardless of when or how the individual parts or components

of those 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,

[[Page 72421]]

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 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

discriminatory treatment under either the Buy American Act or the

Balance of Payments Program, due to applicability of a trade agreement

to a particular acquisition.

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.

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 offer means an offer of a noneligible product.

Noneligible product means a foreign end product that is not an

eligible product.

North American Free Trade Agreement country means Canada or Mexico.

North American Free Trade Agreement country end product means an

article that--

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

American Free Trade Agreement (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 country construction means construction

to be performed in a sanctioned European Union member state.

Sanctioned European Union country end product means an article

that--

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

European Union (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 these incidental services does not exceed that of the article

itself.

Sanctioned European Union country services means services to be

performed in a sanctioned European Union member state.

Sanctioned European Union 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,

U.S. territories

[[Page 72422]]

and possessions, Puerto Rico, the Northern Mariana Islands, and any

other place subject to U.S. jurisdiction, but does not include leased

bases.

U.S.-made end product means an article that is mined, produced, or

manufactured in the United States or that is substantially transformed

in the United States into a new and different article of commerce with

a name, character, or use distinct from that of the article or articles

from which it was transformed.

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. It applies to supplies

acquired for use in the United States,

(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. A

manufactured product of a small business concern 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.

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. The evaluation factor is not used to

provide a preference for one foreign offer over another. Evaluation

procedures and examples are provided in Subpart 25.5.

25.102 Policy.

Except as provided in 25.103, acquire only domestic end products

for public use inside the United States.

25.103 Exceptions.

When one of the following exceptions applies, the contracting

officer may acquire a foreign end product 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. (1) A nonavailability determination has been

made for the articles listed in 25.104.

(2)(i) The head of the contracting activity may make a

determination 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.

(ii) If the contracting officer considers that the nonavailability

of an article is likely to affect future acquisitions, the contracting

officer may submit a copy of the determination and supporting

documentation to the appropriate council identified in 1.201-1 in

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

25.104.

(3) A written determination is not required if all of the following

conditions are present:

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

competition.

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

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

the cost of a domestic end product would be unreasonable, in accordance

with 25.105 and Subpart 25.5.

(d) Resale. The contracting officer may purchase foreign end

products 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.

[[Page 72423]]

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 bids in sealed bidding or final offers in negotiation that

an article on the list is available domestically in sufficient and

reasonably available quantities of a satisfactory quality. The

contracting officer must amend the solicitation if purchasing the

article, or if purchasing an end product that could contain such an

article as a component, and must specify in all new solicitations that

the article is available domestically and that offerors and contractors

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

components. In addition, the contracting officer must submit a copy of

supporting documentation to the appropriate council identified in

1.201-1 in accordance with agency procedures, for possible removal of

the article from the list.

25.105 Determining reasonableness of cost.

(a) The contracting officer--

(1) Must 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 applies to all agency acquisitions, the agency evaluation

factors must be published in agency regulations; and

(2) Must 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 must 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; or

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

business concern. The contracting officer must 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).

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. (See evaluation procedures at Subpart 25.5.)

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. 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, use only domestic construction

materials in construction contracts performed in the United States.

25.202 Exceptions.

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

officer may acquire foreign construction materials 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 determinations of nonavailability of the articles listed at

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

articles are acquired as construction materials.

(3) Unreasonable cost. The contracting officer concludes that the

cost of domestic construction material is unreasonable in accordance

with 25.204.

(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 must list

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

findings justifying the exception available for public inspection.

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) For any acquisition, an offeror may request from the

contracting officer a determination concerning the inapplicability of

the Buy American Act for specifically identified construction

materials. The time for submitting the request is specified in the

solicitation in paragraph (b) of either 52.225-10 or 52.225-12,

whichever applies. The information and supporting data that must be

included in the request are also specified in the solicitation in

paragraphs (c) and (d) of either 52.225-9 or 52.225-11, whichever

applies.

(b) Before award, the contracting officer must evaluate all

requests based on the information provided and may supplement this

information with other readily available information.

25.204 Evaluating offers of foreign construction material.

(a) Offerors proposing to use foreign construction material other

than that listed by the Government in the applicable clause at 52.225-

9, paragraph (b)(2), or 52.225-11, paragraph (b)(3), 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 the head of the agency specifies a higher percentage,

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

cost of any foreign construction material proposed for exception from

the requirements of

[[Page 72424]]

the Buy American Act based on the unreasonable cost of domestic

construction materials. In the case of a tie, the contracting officer

must 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.

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 the contracting officer awards a contract to an offeror that

proposed foreign construction material not listed 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 must add the 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 must explain why it could not request the determination

before contract award or why the need for such determination otherwise

was not reasonably foreseeable. If the contracting officer concludes

that the contractor should have made the request before contract award,

the contracting officer may deny the request.

(b) The contracting officer must base evaluation of any request for

a determination regarding the inapplicability of the Buy American Act

made after contract award on information required by paragraphs (c) and

(d) of the applicable clause at 52.225-9 or 52.225-11 and/or other

readily available information.

award that an exception to the Buy American Act applies, the

contracting officer must negotiate adequate consideration and modify

the contract 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 is at least the

differential established in 25.202(a) or in accordance with agency

procedures.

25.206 Noncompliance.

The contracting officer must--

(a) Review allegations of Buy American Act violations;

(b) Unless fraud is suspected, notify the contractor of the

apparent unauthorized use of foreign construction material and request

a reply, to include proposed corrective action; and

used foreign construction material without authorization, take

appropriate action, including one or more of the following:

(1) Process a determination concerning 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. 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 stated in the determination. Further, 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 generally 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. The contracting officer

must identify excepted supplies and construction materials in the

contract.

25.302 Policy.

Except as provided in 25.303, acquire only domestic end products

for use outside the United States, and use only domestic construction

materials 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 or 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;

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;

[[Page 72425]]

(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,

or a higher percentage specifically authorized by the head of the

agency; or

(g) The head of 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 must 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 must--

(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 or a

higher percentage (see 25.303(f)) must be applied to foreign

construction material proposed for exception from the requirements of

the Balance of Payments Program on the basis of unreasonable cost of

domestic construction materials.

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 that are subject to

(1) The Trade Agreements Act (the Agreement on Government

Procurement, as approved by Congress in the Trade Agreements Act of

1979 (19 U.S.C. 2501, et seq.), and as amended by the Uruguay Round

Agreements Act (Pub. L. 103-465));

(2) The Caribbean Basin Trade Initiative (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.) must be treated as eligible products under the Trade Agreements

Act);

(3) NAFTA (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));

(4) The Israeli Trade Act (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)); or

(5) The Agreement on Trade in Civil Aircraft (U.S. Trade

Representative waiver of the Buy American Act for signatories of the

Agreement on Trade in Civil Aircraft, as implemented in the Trade

Agreements Act of 1979 (19 U.S.C. 2513)).

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

individual agencies, see agency regulations.

25.401 Exceptions.

(a) This subpart does not apply to--

(1) Acquisitions set aside for small businesses;

(2) Acquisitions of arms, ammunition, or war materials, or

purchases indispensable for national security or for national defense

purposes, including all services purchased in support of military

forces located overseas;

(3) Acquisitions of end products for resale;

(4) Acquisitions 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;

(5) Other acquisitions not using full and open competition, if

authorized by Subpart 6.2 or 6.3, when the limitation of competition

would preclude use of the procedures of this subpart (but see 6.303-

1(d)); or sole source acquisitions justified in accordance with

13.501(a); and

(6) Acquisitions of the following excluded services:

(i) Automatic data processing (ADP) telecommunications and

transmission services, except enhanced (i.e., value-added)

telecommunications services.

(ii) Research and development.

(iii) Transportation services (including launching services, but

not including travel agent services).

(iv) Utility services.

(b)(1) Other services not covered by the Trade Agreements Act are--

(i) Dredging; and

(ii) Management and operation contracts to certain Government or

privately owned facilities used for Government purposes, including

Federally Funded Research and Development Centers (FFRDCs).

(2) Other services not covered by NAFTA are--

(i) ADP teleprocessing and timesharing services (D305),

telecommunications network management services (D316), automated news

services, data services or other information services (D317), and other

ADP and telecommunications services (D399) (Federal Service Code from

the Federal Procurement Data System Product/Service Code Manual

indicated in parentheses);

(ii) Operation of all facilities by the Department of Defense,

Department of Energy, or the National Aeronautics and Space

Administration; and all Government-owned research and development

facilities or Government-owned environmental laboratories;

(iii) Maintenance, repair, modification, rebuilding and

installation of equipment related to ships; and

(iv) Nonnuclear ship repair.

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 Trade Agreements Act

and NAFTA specify procurement procedures designed to ensure fairness.

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. Under the Trade Agreements Act,

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

see 25.403(c)). See Subpart 25.5 for evaluation procedures for supply

contracts subject to trade agreements.

25.403 Trade Agreements Act.

(a) General. The Agreement on Government Procurement of 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 based on foreign ownership;

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

(4) Requires certain procurement procedures designed to ensure

fairness (see 25.408).

(b) Thresholds. (1) Except as provided in 25.401, 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

[[Page 72426]]

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. Do not divide any acquisition with the

intent of reducing the estimated value of the acquisition below the

dollar threshold of the Trade Agreements Act.

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

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

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 United States Trade

Representative has determined that, for acquisitions subject to the

Trade Agreements Act, Caribbean Basin country end products must be

treated as eligible products. This determination is effective until

September 30, 1999, except that, for products of Panama, this

determination is effective until September 30, 2000. The U.S. Trade

Representative may extend these dates through a document in the Federal

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, 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. 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.

country services, other than services identified in 25.401. NAFTA

country services 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).

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

must 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, from countries that are parties to

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

Belgium, Bulgaria, Canada, Denmark, Egypt, Finland, France, Germany,

Greece, Ireland, Italy, Japan, Luxembourg, Macao, the Netherlands,

Norway, Portugal, Romania, Spain, Sweden, Switzerland, and the United

Kingdom.

25.408 Procedures.

(a) If the Trade Agreements Act or NAFTA applies (see 25.401), the

contracting officer must--

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

time;

(2) Comply with the requirements of 5.207, Preparation and

Transmittal of Synopses, including the appropriate ``Numbered Note''

(5.207(e)(2)) for contracts that are subject to the Trade Agreements

Act;

(3) Not include technical requirements in solicitations solely to

preclude the acquisition of eligible products;

(4) Specify in solicitations that offerors must submit offers 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); and

(5) Provide unsuccessful offerors from designated or NAFTA

countries notice in accordance with 14.409-1 or 15.503.

(b) See Subpart 25.5 for evaluation procedures and examples.

Subpart 25.5--Evaluating Foreign Offers--Supply Contracts

25.501 General.

The contracting officer--

(a) Must 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;

prohibited or sanctioned in accordance with Subparts 25.6 and 25.7; and

(d) Must 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.

[[Page 72427]]

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.

(3) If 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.

(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. 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(c)).

subject to the Buy American Act or the Balance of Payments Program

(NAFTA or the Israeli Trade Act also may apply), the following applies:

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

NAFTA or the Israeli Trade Act, award on that offer.

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

domestic offers (see 25.103(b)(3)), 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 25.304 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) 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 any part of the offer

consists of items restricted in accordance with 25.403(c).

(b) If an offer restricts award to a group of line items or to all

line items contained in the offer, determine for each line item whether

to apply an evaluation factor (see 25.504-4, Example 1).

(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 for each line item the offer with the lowest

evaluated price.

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

the offered 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.

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 2).

(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 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)(1) Example 1.

Offer A............................. $12,000 Domestic end product,

small business.

Offer B............................. 11,700 Domestic end product,

small business.

Offer C............................. 10,000 U.S.-made end product

(not domestic), small

business.

(2) Analysis: This acquisition is for end products for use in the

United States and is set aside for small business concerns. The Buy

American Act applies. Since the acquisition value is less than $25,000

and the acquisition is set aside, none of the trade agreements apply.

Perform the steps in 25.502(a). Offer C is evaluated as a foreign end

product because it is the product of a small business, but is not a

domestic end product (see 25.502(c)(4)). Since Offer B is a domestic

offer, apply the 12 percent factor to Offer C (see 25.105(b)(2)). The

resulting evaluated price of $11,200 remains lower than Offer B. The

cost of Offer B is therefore unreasonable (see 25.105(c)). Award on

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

(b)(1) Example 2.

Offer A............................. $110,000 Domestic end product,

small business.

[[Page 72428]]

Offer B............................. 107,000 Domestic end product,

small business.

Offer C............................. 102,000 U.S.-made end product

(not domestic), small

business.

(2) Analysis: This acquisition is for end products for use outside

the United States and is set aside for small business concerns. Since

the value of the acquisition exceeds the simplified acquisition

threshold, the Balance of Payments Program applies. While the

acquisition value exceeds $25,000, none of the trade agreements apply

because the acquisition is set aside. Perform the steps in 25.502(a).

Offer C is evaluated as a foreign end product because it is the product

of a small business, but is not a domestic end product (see

25.502(c)(4)). After applying the 50 percent factor, the evaluated

price of Offer C is $153,000. Award on Offer B at $107,000 (see

25.502(c)(4)(ii)).

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

Example 1.

Offer A............................. $204,000 U.S.-made end product

(not domestic).

Offer B............................. 203,000 U.S.-made end product

(domestic), small

business.

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 if 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 NAFTA/Israeli Trade Act.

(a) Example 1.

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

small business.

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

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

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

(b) Example 2.

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 contracting officer can consider the noneligible

offer. Since no domestic offer was received, make a nonavailability

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

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 contracting officer can consider the noneligible

offer. 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.

(a) Example 1.

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

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

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

Key: DO = Domestic end product; EL = Eligible product; NEL = Noneligible product.

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 a 6 percent 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 a 6 percent 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:

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

Offers

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

Item Tentative award pattern

Low offer from A and B C

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

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

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

[[Page 72429]]

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 percent). Evaluate the

remaining items 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 2.

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

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 the acquisition cannot be

set aside for small business concerns. 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 percent). 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 pursuant

to Section 305(g)(1) of the Trade Agreements Act of 1979 (19 U.S.C.

2515(g)(1)), on European Union (EU) member states that discriminate

against U.S. products or services (sanctioned EU member states). This

subpart does not apply to contracts for supplies or services awarded

and performed outside the United States, or to the Department of

Defense. For thresholds unique to individual agencies, see agency

regulations.

25.601 Policy.

(a) Except as provided in 25.602, agencies must 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

(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, and K019);

(B) Dredging (Y216 and Z216);

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 and 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 and V251);

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

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

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

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

(N) Telecommunications 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 using 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.

[[Page 72430]]

(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 the head of the agency makes a determination in accordance

with paragraph (b)(1) of this section, the agency must notify the U.S.

Trade Representative within 30 days after contract award.

Subpart 25.7--Prohibited Sources

25.701 Restrictions.

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

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

even for overseas use, agencies and their contractors and

subcontractors must 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 (31 CFR part 538).

(b) Agencies and their contractors and subcontractors must not

acquire any supplies or services from entities controlled by the

Government of Iraq or other specially designated nationals (31 CFR

Chapter V, Appendix A).

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, DC 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 evaluation of offers from foreign entities 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 must--

(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) The Department of State publishes many international agreements

in the ``United States Treaties and Other International Agreements''

series. Copies of this publication normally are available in overseas

legal offices and U.S. diplomatic missions.

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 must 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

Harmonized Tariff Schedule (see 19 CFR 10.102-104, 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 must cite

this authority on the appropriate customs form when making purchases

(see 19 CFR 10.59--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), and paragraph (d) of the clause at 52.212-5,

Contract Terms and Conditions Required to Implement Statutes or

Executive Orders--Commercial Items, prescribed at 12.301(b)(4),

implement 10 U.S.C. 2313 and 41 U.S.C. 254d. The basic clauses

authorize examination of records by the Comptroller General.

(1) Insert the appropriate basic clause, whenever possible, in

negotiated contracts with foreign contractors.

(2) The contracting officer may use 52.215-2 with its Alternate III

or 52.212-5 with its Alternate I 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

must--

(1) Identify the contract and its purpose, and identify if the

contract is with a foreign contractor or with a

[[Page 72431]]

foreign government or an agency of a foreign government;

(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 appropriate alternate clause in paragraph (a)(2) of

this section.

25.1002 Use of foreign currency.

(a) Unless an international agreement or the Trade Agreements Act

(see 25.408(a)(3)) requires a specific currency, contracting officers

must 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 the solicitation permits submission of offers in other than a

specified currency, the contracting officer must convert the offered

prices to U.S. currency for evaluation purposes. The contracting

officer must 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.

(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.

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)(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, if none of the clauses

prescribed in paragraphs (b) and (c) of this section apply, except if--

(i) The solicitation is restricted to domestic end products in

accordance with Subpart 6.3;

(ii) The acquisition is for supplies for use 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 for use 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)(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--

(A) The acquisition is for the acquisition of supplies, or for

services involving the furnishing of supplies, for use outside the

United States, and the value of the acquisition is less than the

simplified acquisition threshold; or

(B) 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 (see 25.406), see agency

regulations.

(ii) If the acquisition value 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-

(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)(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, unless

the acquisition is to be awarded and performed outside the United

States in support of a contingency operation or a humanitarian or

peacekeeping operation and does not exceed the increased simplified

acquisition threshold of $200,000. If the agency has not made such a

determination, the contracting officer must follow agency procedures.

(2) Insert the provision at 52.225-6, Trade Agreements Certificate,

in solicitations containing the clause at 52.225-5.

(d) 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), if the acquisition value is

less than $186,000.

(e) 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 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, the

contracting officer may modify paragraphs (b)(1) and (i)(2) of the

clause to reduce the dollar figure.

25.1102 Acquisition of construction.

(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.

(1) List in paragraph (b)(2) of the clause all foreign construction

material excepted from the requirements of the Buy American Act.

(2) If the head of the agency determines that a higher percentage

is appropriate, substitute the 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 prior to receipt of offers, use the provision with its

Alternate I.

Payments Program--Construction Materials under Trade Agreements, in

solicitations and contracts valued at $6,909,500 or more.

[[Page 72432]]

(1) List in paragraph (b)(3) of the clause all foreign construction

material excepted from the requirements of the Buy American Act, other

than designated country or NAFTA country construction material.

(2) If the head of the agency determines that a higher percentage

is appropriate, substitute the higher evaluation percentage in

paragraph (b)(4)(i) of the clause.

(3) 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. Insert the clause at

52.225-13, Restrictions on Certain Foreign Purchases, in solicitations

and contracts with a value exceeding $2,500.

(b) Translations. Insert the clause at 52.225-14, Inconsistency

Between English Version and Translation of Contract, in solicitations

and contracts if anticipating translation into another language.

section, 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;

(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) Do not insert the clauses in paragraph (c)(1) of this section

in--

(i) Solicitations issued and contracts awarded by a contracting

activity located outside of the United States, provided the supplies

will be used or the services will be performed outside of the United

States;

(ii) Purchases at or below the 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 for which the head of the agency has made a

determination in accordance with 25.602(b).

(d) Foreign currency offers. Insert the provision at 52.225-17,

Evaluation of Foreign Currency Offers, in solicitations that permit the

use of other than a specified currency. Insert in the provision the

source of the rate to be used in the evaluation of offers.

PART 36--CONSTRUCTION AND ARCHITECT-ENGINEER CONTRACTS

36.102 [Amended]

17. Amend section 36.102 by removing the definition

``Construction''.

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

18. Amend section 52.212-3 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 (Feb 2000)

* * * * *

(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 of this solicitation entitled ``Buy

American Act--Balance of Payments Program--Supplies'' and that the

offeror has considered components of unknown origin 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) The Government will evaluate offers 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--

Israeli Trade Act--Balance of Payments Program'' and that the

offeror has considered components of unknown origin 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 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) The Government will evaluate offers 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 (Feb 2000). 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 (Feb 2000). 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.:---------------------------------------------------------

Country of Origin:-----------------------------------------------------

(List as necessary)

[[Page 72433]]

(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 end

products 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) The Government will evaluate offers in accordance with the

policies and procedures of FAR Part 25. For line items subject to

the Trade Agreements Act, the Government will evaluate offers of

U.S.-made, designated country, Caribbean Basin country, or NAFTA

country end products without regard to the restrictions of the Buy

American Act or the Balance of Payments Program. The Government will

consider for award only offers of U.S.-made, designated country,

Caribbean Basin country, or NAFTA country end products 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 the solicitation.

* * * * *

19. Amend section 52.212-5 by revising the date of the clause; by

revising paragraph (a); by revising paragraphs (b)(16) through (b)(21);

and by adding Alternate I after ``(End of clause)'' 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 (Feb 2000)

(a) The Contractor agrees to comply with the following FAR

clauses, which are incorporated in this contract by reference, to

implement provisions of law or executive orders applicable to

acquisitions of commercial items:

(1) 52.222-3, Convict Labor (E.O. 11755).

(2) 52.225-13, Restrictions on Certain Foreign Purchases (E.O.'s

12722, 12724, 13059, and 13067).

(3) 52.233-3, Protest after Award (31 U.S.C. 3553).

(b) * * *

____(16) 52.225-1, Buy American Act--Balance of Payments Program--

Supplies (41 U.S.C. 10a-10d).

____(17)(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.

____(18) 52.225-5, Trade Agreements (19 U.S.C. 2501, et seq., 19

U.S.C. 3301 note).

____(19) 52.225-15, Sanctioned European Union Country End Products

(E.O. 12849).

____(20) 52.225-16, Sanctioned European Union Country Services (E.O.

12849).

____(21) [Reserved]

* * * * *

Alternate I (Feb 2000). As prescribed in 12.301(b)(4), delete

paragraph (d) from the basic clause, redesignate paragraph (e) as

paragraph (d), and revise the reference to ``paragraphs (a), (b),

(c), or (d) of this clause'' in the redesignated paragraph (d) to

read ``paragraphs (a), (b), and (c) of this clause''.

20. Amend section 52.213-4 by--

a. Revising the date of the clause;

b. Redesignating paragraph (a)(1)(ii) as (a)(1)(iii) and adding

a new paragraph (a)(1)(ii);

c. Removing paragraph (a)(2)(i) and redesignating paragraphs

(a)(2)(ii) through (a)(2)(viii) as (a)(2)(i) through (a)(2)(vii),

respectively; and

d. Revising 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) (Feb 2000)

(a)(1) * * *

(ii) 52.225-13, Restrictions on Certain Foreign Purchases (Feb

2000) (E.O.'s 12722, 12724, 13059, and 13067).

* * * * *

(b)(1) * * *

(viii) 52.225-1, Buy American Act--Balance of Payments Program--

Supplies (Feb 2000) (41 U.S.C. 10a-10d) (Applies to contracts for

supplies, and to contracts for services involving the furnishing of

supplies, for use within the United States if the value of the

supply contract or supply portion of a service contract exceeds the

micro-purchase threshold and the acquisition--

(A) Is set aside for small business concerns; or

(B) Cannot be set aside for small business concerns (see 19.502-

2), and does not exceed $25,000.)

* * * * *

52.214-34 [Amended]

21. Amend the introductory paragraph of section 52.214-34 by

removing ``and 25.408(d)''.

52.214-35 [Amended]

22. Amend the introductory paragraph of section 52.214-35 by

removing ``and 25.408(d)''.

23. Amend section 52.215-1 by revising the date of the provision

and paragraph (c)(5) to read as follows:

52.215-1 Instructions to Offerors--Competitive Acquisition.

* * * * *

Instructions to Offerors--Competitive Acquisitions (Feb 2000)

(5) Offerors shall submit proposals in response to this

solicitation in English, unless otherwise permitted by the

solicitation, and in U.S. dollars, unless the provision at FAR

52.225-17, Evaluation of Foreign Currency Offers, is included in the

solicitation.

* * * * *

24. Revise sections 52.225-1 through 52.225-15; add section 52.225-

16 and 52.225-17; and remove sections 52.225-18 through 52.225-22 to

read as follows:

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.

* * * * *

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 (Feb 2000)

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

[[Page 72434]]

Component means any item supplied to the Government as part of

an end item or of another component.

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 supplies delivered under a line item of a

Government contract.

Foreign end product means an end product other than a domestic

end product.

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

U.S. territories and possessions, Puerto Rico, the Northern Mariana

Islands, and any other place subject to U.S. jurisdiction, but does

not include leases bases.

(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.

foreign articles that the Contracting Officer will treat 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 (Feb 2000)

(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 the

offeror has considered components of unknown origin 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

and products.

(b) Foreign End Products:

Line Item No.:---------------------------------------------------------

Country of Origin:-----------------------------------------------------

(List as necessary)

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 (Feb 2000)