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Federal Register / Vol. 86, No. 165 / Monday, August 30, 2021 / Proposed Rules
1 Familiarization costs should be low.
2 Some, if not many, contractors may already be able to meet the more stringent threshold.
3 Costs incurred by contractors who adjust their supply chains, so that their end products qualify as domestic, will enjoy a larger price preference that should help to offset these costs over time.
Each of these arguments is explained below.
First, DoD does not anticipate significant costs from contractor familiarization with the rule given the recent publication of the FAR final rule implementing E.O. 13881 and the history of rulemaking and E.O.s in general in this area. The basic mechanics of the Buy American statute e.g., how and when the price preference is used to favor domestic end products, certifications required of offerors to demonstrate end products are domestic continue to reflect processes that have been in place for decades and are not new to contractors.
Second, some, if not many, contractors may already be able to comply with the lower foreign content requirement needed to meet the definition of domestic end product under E.O. 13881 and the proposed rule.
Laws such as the SECURE Technology Act Pub. L. 115390, which requires a series of actions to strengthen the Federal infrastructure for managing supply chain risks, are placing significantly increased emphasis on Federal agencies and Federal Government contractors to identify and reduce risk in their supply chains.
One way to reduce supply chain risk is to increase domestic sourcing of content. In addition, in the context of iron and steel, many laws already in place call for more stringent accounting of domestic sourcing of content. For example, the Recovery Act required that all construction material for a project for the construction, alteration, maintenance, or repair of a public building or a public work in the United States, consisting wholly or predominantly of iron or steel, had to be produced in the United States when using Recovery Act funds, to the extent consistent with trade agreements see FAR 25.6021, implementing section 1605 of the Recovery Act.
In addition, Federal contractors who also work on contracts funded under Federal grants may, in some cases, find that the steel, iron, and manufactured goods used in the project must be produced in the United States, as is the case for certain funding administered by the Federal Transit Administration for
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public transportation projects see 49
U.S.C. 5323j.
Third, it is anticipated that some contractors products and construction materials may not meet the definition of domestic end product and construction material unless the contractors take steps to adjust their supply chains to increase the domestic content. Those contractors that make a business decision not to modify their supply chains will still be able to bid on DoD
contracts but will no longer enjoy a price preference.
Accordingly, it is likely that the Federal market for iron and steel has already completed significant retooling and could meet the requirements of E.O.
13881 without too much additional effort.
This rule proposes to amend clauses that implement the Buy American statute. There are 4 clauses affected by the changes in this rule:
1 252.2257001, Buy American and Balance of Payments Program Basic and Alternate I.
2 252.2257036, Buy American Free Trade AgreementsBalance of Payments Program Basic and Alternates IV.
3 252.2257044, Balance of Payments ProgramConstruction Material Basic and Alternate I.
4 252.2257045, Balance of Payments ProgramConstruction Material Basic and Alternates IIII.
This rule changes the definitions of domestic end product and domestic construction material. The rule also adds the definitions of steel and predominantly of iron or steel or a combination of both in the clauses to conform the DFARS with the FAR
implementation of E.O. 13881.
According to the Federal Procurement Data System FPDS data for fiscal year FY 2017, FY 2018, and FY 2019 for new awards with a foreign place of performance for construction valued over the micro-purchase threshold and for awards for supplies, DoD awarded an average of 3,222 construction contracts with a foreign place of performance per year. In addition, DoD
awarded an average of 332,607 supply contracts per year during FY 2017
through FY 2019.
In summary, the rule will strengthen domestic preferences under the Buy American statute and provide both large and small businesses the opportunity and incentive to deliver U.S.
manufactured products from domestic suppliers. It is expected that this rule will benefit large and small U.S.
manufacturers, including those of iron or steel.

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Therefore, it is estimated that any increase in implementation costs associated with this rule is de minimis.
V. Executive Orders 12866 and 13563
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 6b of E.O. 12866, Regulatory Planning and Review, dated September 30, 1993.
VI. Congressional Review Act As required by the Congressional Review Act 5 U.S.C. 801808, before an interim or final rule takes effect, DoD
will submit a copy of the interim or final rule with the form, Submission of Federal Rules under the Congressional Review Act, to the U.S. Senate, the U.S.
House of Representatives, and the Comptroller General of the United States. A major rule under the Congressional Review Act cannot take effect until 60 days after it is published in the Federal Register. This rule is not anticipated to be a major rule under 5
U.S.C. 804.
VII. Regulatory Flexibility Act DoD 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. However, an initial regulatory flexibility analysis has been performed and is summarized as follows:
The rule proposes to amend the Defense Federal Acquisition Regulation Supplement DFARS to implement section 2ai of Executive Order E.O.
13881, Maximizing Use of AmericanMade Goods, Products, and Materials, and also makes conforming changes to the applicable clauses as a result of implementation of this E.O. in the Federal Acquisition Regulation FAR.
The objective of this rule is to strengthen domestic preferences under the Buy American statute, as required by E.O. 13881, by changing how a domestic product and domestic construction material are defined.
Data was obtained from the Federal Procurement Data System FPDS on awards valued over the micro-purchase threshold in fiscal year FY 2017, FY

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