SUPPLEMENTARY INFORMATION:

I. Background

DoD, GSA, and NASA are issuing an interim rule amending FAR part 25 and the corresponding provisions and clauses in part 52 to implement the United States—Panama Trade Promotion Agreement Implementation Act (Pub. L. 112-43) (19 U.S.C. 3805 note).

This Trade Promotion Agreement is designated in the FAR as the Panama Free Trade Agreement (FTA). This FTA provides for—

• Waiver of the applicability of the Buy American statute (41 U.S.C. chapter 83) for some foreign supplies and construction materials from Panama; and
• Applicability of specified procurement procedures designed to ensure fairness in the acquisition of supplies and services (see FAR 25.408).

II. Discussion and Analysis

This interim rule adds Panama to the definition of “Free Trade Agreement country” in multiple locations in the FAR.

The Panama FTA covers acquisitions of supplies and services equal to or exceeding $202,000. The threshold for the Panama FTA is $7,777,000 for construction contracts. The Panama FTA threshold for supplies and services is higher than the threshold for supplies and services for most of the FTAs ($77,494), and equals the Bahrain, Morocco, Oman, and Peru FTA thresholds for supplies and services ($202,000). The excluded services for the Panama FTA are the same as for the Bahrain FTA, Dominican Republic—Central American FTA, Colombia FTA, Chile FTA, NAFTA, Oman FTA, and Peru FTA.

III. Executive Order 12866 and 13563

Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This is a significant regulatory action and, therefore, was subject to review under section 6(b) of E.O. 12866, Regulatory Planning and Review, dated September 30, 1993. This rule is not a major rule under 5 U.S.C. 804.

IV. Regulatory Flexibility Act

The Department of Defense, the General Services Administration, and the National Aeronautics and Space Administration do not expect this interim 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. Although the rule now opens up Government procurement to the goods and services of Panama, DoD, GSA, and NASA do not anticipate any significant economic impact on U.S. small businesses. The Department of Defense only applies the trade agreements to the non-defense items listed at Defense Federal Acquisition Regulation Supplement (DFARS) 225.401-70, and acquisitions that are set aside or provide other form of preference for small businesses are exempt. FAR 19.502-2 states that acquisitions of supplies or services with an anticipated dollar value between $3,000 and $150,000 (with some exceptions) are automatically reserved for small business concerns. ( printed page 69724)

Therefore, an Initial Regulatory Flexibility Analysis has not been performed. DoD, GSA, and NASA invite comments from small business concerns and other interested parties on the expected impact of this rule on small entities.

DoD, GSA, and NASA will also consider comments from small entities concerning the existing regulations in subparts affected by the rule in accordance with 5 U.S.C. 610. Interested parties must submit such comments separately and should cite 5 U.S.C 610 (FAC 2005-62, FAR Case 2012-027), in correspondence.

V. Paperwork Reduction Act

The Paperwork Reduction Act (44 U.S.C. chapter 35) does apply, because the interim rule affects the certification and information collection requirements in the provisions at FAR 52.212-3, 52.225-4, 52.225-6 and 52.225-11 currently approved under the Office of Management and Budget Control Numbers 9000-0136, titled: Commercial Item Acquisition, 9000-0130, titled: Buy American Act—Free Trade Agreements—Israeli Trade Act Certificate, 9000-0025, titled: Trade Agreements Certificate, and 9000-0141, titled: Buy American—Construction, respectively. The impact, however, is negligible because it is just a question of which category offered goods from Panama would be listed under.

VI. Determination To Issue an Interim Rule

A determination has been made under the authority of the Secretary of Defense (DoD), the Administrator of General Services (GSA), and the Administrator of the National Aeronautics and Space Administration (NASA) that urgent and compelling reasons exist to promulgate this interim rule without prior opportunity for public comment. This action is necessary because the effective date of the Free Trade Agreement with Panama is October 31, 2012. This is a reciprocal agreement, approved by Congress and the President of the United States. It is important for the United States Government to honor its new trade obligations to Panama, as Panama in turn honors its new trade obligations to the United States. However, pursuant to 41 U.S.C. 1707 and FAR 1.501-3(b), DoD, GSA, and NASA will consider public comments received in response to this interim rule in the formation of the final rule.

Therefore, DoD, GSA, and NASA amend 48 CFR parts 25 and 52 as set forth below:

1. The authority citation for 48 CFR parts 25 and 52 is revised to read as follows:

Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 51 U.S.C. 20113.

2. Amend section 25.003 by removing from both the definition of “Designated country” in paragraph (2), and the definition of “Free Trade Agreement country” the words “Oman, Peru,” and adding “Oman, Panama, Peru,” in their place.

3. Amend section 25.400 by revising paragraphs (a)(2)(x) and (a)(2)(xi); and adding paragraph (a)(2)(xii) to read as follows:

4. Amend section 25.401 by removing from paragraph (b), in the table, in the heading, “Oman FTA, and Peru FTA” and adding “Oman FTA, Panama FTA, and Peru FTA” in its place.

5. Amend section 25.402 by revising the table in paragraph (b) to read as follows:

6. Amend section 52.212-3 by revising the date of the provision; and paragraphs (g)(1)(i), (g)(1)(ii), and (g)(4) to read as follows:

7. Amend section 52.212-5 by revising the date of the clause and paragraphs (b)(40) and (b)(41) to read as follows:

8. Amend section 52.225-3 by—

a. Revising the date of the clause;

b. Revising the definitions in paragraph (a) of “Bahrainian, Moroccan, Omani, or Peruvian end product” and “Free Trade Agreement country”;

c. Removing from paragraph (c) “Oman, and Peru” and “Omani, or Peruvian” (twice) and adding “Oman, Panama, and Peru” and “Omani, Panamanian, or Peruvian” (twice) in their places, respectively; and

d. Amending Alternate III by—

1. Revising the introductory text of Alternate III;

2. Revising the introductory paragraph of the definition of “Bahrainian, Korean, Moroccan, Omani, or Peruvian end product” and removing from paragraphs (1) and (2) “Oman, or Peru” and adding “Oman, Panama, or Peru” in its place; and

3. Removing from paragraph (c) “Oman, and Peru” and “Omani, or Peruvian” (twice) and adding “Oman, Panama, and Peru” and “Omani, Panamanian, or Peruvian” (twice) in their places, respectively.

The revised text reads as follows:

9. Amend section 52.225-4 by—

a. Revising the date of the provision;

b. Removing once from paragraph (a) and twice from paragraph (b) “Omani, or Peruvian” and adding “Omani, Panamanian, or Peruvian” in its place; and

c. Revising the date of Alternate III; and removing twice from paragraph (b) “Omani, or Peruvian” and adding “Omani, Panamanian, or Peruvian” in their places. ( printed page 69726)

The revised text reads as follows:

10. Amend section 52.225-5 by—

a. Revising the date of the clause;

b. Removing from paragraph (a), in the definition of “Designated country” in paragraph (2), “Oman, Peru,” and adding “Oman, Panama, Peru,” in its place.

The revised text reads as follows:

11. Amend section 52.225-11 by—

a. Revising the date of the clause;

b. Removing from paragraph (a), in the definition of “Designated country” in paragraph (2), “Oman, Peru,” and adding “Oman, Panama, Peru,” in its place; and

The revised text reads as follows:

12. Amend section 52.225-23 by—

a. Revising the date of the clause; and

b. Removing from paragraph (a), in the definition of “Designated country” in paragraph (2), “Oman, Peru,” and adding “Oman, Panama, Peru,” in its place; and removing from the definition of “Recovery Act designated country” in paragraph (2) “Oman, Peru,” and adding “Oman, Panama, Peru,” in its place.

The revised text reads as follows: