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Proposed Rule

General Services Acquisition Regulation; GSAR Case 2006-G520; Rewrite of GSAR Part 525, Foreign Acquisition

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Office of the Chief Acquisition Officer, General Services Administration (GSA).


Proposed rule.


The General Services Administration (GSA) is proposing to amend the General Services Acquisition Regulation (GSAR) to update the text addressing foreign acquisition. This rule is a result of the General Services Administration Acquisition Manual (GSAM) Rewrite initiative undertaken by GSA to revise the GSAM to maintain consistency with the FAR, and to implement streamlined and innovative acquisition procedures that contractors, offerors and GSA contracting personnel can utilize when entering into and administering contractual relationships. The GSAM incorporates the General Services Administration Acquisition Regulation (GSAR) as well as internal agency acquisition policy. GSA will Start Printed Page 44209rewrite each part of the GSAR and GSAM, and as each part is rewritten, will publish it in the Federal Register.

This part is a continuance in a series of revisions. It covers the rewrite of GSAR Part 525, Foreign Acquisition.


Interested parties should submit written comments to the Regulatory Secretariat on or before September 29, 2008 to be considered in the formulation of a final rule.


Submit comments identified by GSAR Case 2006-G520 by any of the following methods:

Submit comments via the Federal eRulemaking portal by inputting “GSAR Case 2006-G520” under the heading “Comment or Submission”. Select the link “Send a Comment or Submission” that corresponds with GSAR Case 2006-G520. Follow the instructions provided to complete the “Public Comment and Submission Form”. Please include your name, company name (if any), and “GSAR Case 2006-G520” on your attached document.

  • Fax: 202-501-4067.
  • Mail: General Services Administration, Regulatory Secretariat (VPR), 1800 F Street, NW, Room 4041, ATTN: Laurieann Duarte, Washington, DC 20405.

Instructions: Please submit comments only and cite GSAR Case 2006-G520 in all correspondence related to this case. All comments received will be posted without change to, including any personal and/or business confidential information provided.

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For clarification of content, contact Ms. Meredith Murphy at (202) 208-6925. For information pertaining to the status or publication schedules, contact the Regulatory Secretariat (VPR), Room 4041, GS Building, Washington, DC 20405, (202) 501-4755. Please cite GSAR Case 2006-G520.

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A. Background

The GSAR Rewrite Project

GSA published an Advance Notice of Proposed Rulemaking (ANPR) in the Federal Register at 71 FR 7910, February 15, 2006, with request for comments because GSA was beginning the review and update of the General Services Administration Acquisition Regulation (GSAR).

This GSAR rewrite has—

  • Considered comments received from the ANPR, published February 15, 2006.
  • Changed “you” to “contracting officer.''
  • Maintained consistency with the FAR, but eliminated duplication.
  • Revised GSAR sections that are out of date, or which imposed inappropriate burdens on the Government or contractors, especially small businesses.
  • Streamlined and simplified wherever possible.

In addition, GSA has recently reorganized into two (2), rather than three (3), services. Therefore, the reorganization of the Federal Supply Service (FSS) and the Federal Technology Service (FTS) into the Federal Acquisition Service (FAS) was considered in the rewrite initiative.

The Rewrite of Part 525

Subpart 525.3, Balance of Payment Programs, is proposed for deletion because FAR Case 99-616, dated November 20, 2006, removed the corresponding FAR coverage. Subpart 525.5, Evaluating Foreign Offers—Supply Contracts, and the related clause at 552.225-70, are proposed for deletion because they were replaced on January 25, 2007, by GSA Acquisition Letter V-07-02 with more current Berry Amendment coverage at Subpart 525.10, Additional Foreign Acquisition Regulations. Subpart 525.6, Trade Sanctions, is proposed for deletion because Federal Acquisition Circular 2005-09, dated April 2006, removed the corresponding FAR coverage. Subpart 552.3, Provision and Clause Matrices, is being revised to delete reference to the clause at 552.225-70 from the Matrix.

Discussion of Comments

As a result of the ANPR, GSA received three comments pertaining to GSAR Part 525.

Comment 1: One commenter suggested revising the GSAR to provide an exception to the Trade Agreements Act (and certain other domestic source requirements) for commercial off-the-shelf items.

Response: The language of the statute does not authorize such exceptions to be made at the agency level.

Comment 2: The second commenter stressed that, in the medical world, there are numerous products that either are already manufactured off-shore in non-designated countries or soon will be according to industry via market research. When these types of medical items begin to be produced off-shore, historically all competitors end up moving production shortly thereafter because of pricing pressures, and none of them or any future competitors initiate production in an acceptable country under the T.A.A. With this in mind, it is felt that exemptions to the T.A.A. via a non-availability determination should be allowed. The contracting officer making the non-availability determination (with approval from the appropriate individual) can continually monitor the availability of FedBizOpps sources sought announcements, SBA Pro-Net searches and possible other methods.

Response: The statute authorizes a head of the contracting activity to make a non-availability determination on an individual item basis, and this authority is specifically addressed at 525.103(d). The procedure for requesting that an item be added to the List of Nonavailable Articles is at FAR 25.104.

Comment 3: The third commenter suggests that GSA consider revising the GSAR to implement supplemental guidance to clarify the application of the Buy American Act (“BAA”), 41 U.S.C. 10a-10d and Executive order 10582, December 17, 1954, and the Trade Agreements Act (“TAA”), 19 U.S.C. 2501 et seq., to FSS and GWAC Contracts. Contractors seek consistency in treatment under the law and applicable regulations. Knowing when the BAA and TAA apply and how their respective tests will be applied to products and services is of great importance to contractors. Contractors selling commercial items to the Federal Government generally do not manufacture their products based on the origin of supplies or manufacturing locations. The Government, however, requires such contractors to consider these things when they contract to sell commercial products to the Federal Government. Making it easier for contractors to know and understand how the rules will be applied can only improve the procurement system. This is particularly important because an inaccurate certification can result in loss of monies, contracts, serious civil and criminal penalties, or both. Currently there is uncertainty as to whether the BAA or TAA applies to a procurement. The TAA dollar value applicability threshold, which is set out in FAR 25.402, can vary according to whether the country of origin is a Free Trade Agreement (“FTA”) country and whether the contract is for supplies, services or construction.

The commenter also stated that applicability of the Berry Amendment to orders placed under Schedule contracts was not clear.

Response: The statute specifically makes the law (TAA or BAA) applicable to the total value of the acquisition, which the GSA Office of General Counsel has interpreted as meaning the total contract value, not the value of the Start Printed Page 44210individual task order. Therefore, the TAA applies to each order issued under the Schedule contract.

GSA issues Schedules for use by many Government agencies. By regulation, restrictions (such as the Berry Amendment) that are not applicable to all agencies are required to be placed in individual task orders to which they do apply, not in the basic Schedule contract.

The commenter correctly states that GSA is not subject to the Berry Amendment. However, the statute is applicable to purchases “made with DOD appropriated funds,” without regard to which agency places the order. GSA Acquisition Letter V-07-02, Implementation of Berry Amendment Contracting Requirements for Assisted Acquisitions Using DOD Funds, dated January 25, 2007, requires the contracting officer for individual task orders to review the requirement and source of funds for Berry Amendment applicability and include the appropriate DFARS clause in the resulting procurement. In other words, any task order issued using DoD appropriated funds must include the Berry Amendment.

This is not a significant regulatory action and, therefore, was not subject to 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 General Services Administration does not expect this proposed rule to have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq., because there are no substantive changes. An Initial Regulatory Flexibility Analysis has, therefore, not been performed. We invite comments from small businesses and other interested parties. GSA will consider comments from small entities concerning the affected GSAR Parts 525 and 552 in accordance with 5 U.S.C. 610. Interested parties must submit such comments separately and should cite 5 U.S.C. 601, et seq. (GSAR case 2006-G520), in correspondence.

C. Paperwork Reduction Act

The Paperwork Reduction Act does not apply because the proposed changes to the GSAM do not impose information collection requirements that require the approval of the Office of Management and Budget under 44 U.S.C. 3501, et seq.

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List of Subjects in 48 CFR Parts 525 and 552

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Dated: July 24, 2008.

Al Matera,

Director, Office of Acquisition Policy.

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Therefore, GSA proposes to amend 48 CFR parts 525 and 552 as set forth below:

1. The authority citation for 48 CFR parts 525 and 552 is revised to read as follows:

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Authority: 40 U.S.C. 121(c).

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Subpart 525.3 [Removed]

2. Subpart 525.3 is removed.

Subpart 525.5 [Removed]

3. Subpart 525.5 is removed.

Subpart 525.11 [Removed]

4. Subpart 525.11 is removed.

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5. Section 552.225-70 is removed.

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[FR Doc. E8-17373 Filed 7-29-08; 8:45 am]