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97-008

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OFFICE OF THE SECRETARY OF DEFENSE

1000 DEFENSE PENTAGON
WASHINGTON, DC 20301-1000
January 17,1997

 
ACQUISITION AND
 TECHNOLOGY

DP(DAR)

                                                In reply refer to
                                                DFARS Case: 96-D328/96-D329
                                                D. L. 97-008



MEMORANDUM FOR	DIRECTORS OF DEFENSE AGENCIES
                    DEPUTY FOR ACQUISITION AND BUSINESS MANAGEMENT,
                      ASN(RD&A)/ABM
                    DEPUTY ASSISTANT SECRETARY OF THE AIR FORCE
                      (CONTRACTING), SAF/AQC
                    DIRECTOR, PROCUREMENT POLICY, ASA(RD&A)/SARD-PP
                    DEPUTY DIRECTOR (ACQUISITION), DEFENSE LOGISTICS
                      AGENCY



SUBJECT:    Restriction on MILCON Overseas Architect-Engineer (A-E)
            Contracts and Preference for U.S. Firms on MILCON Overseas
            Construction


     We have amended the Defense Federal Acquisition Regulation
Supplement (DFARS) to implement Sections 111 and 112 of the Fiscal Year
1997 Military Construction Appropriations Act (Public Law 104-196).
Section 111 restricts award of A-E contracts estimated to exceed $500,000,
for projects to be accomplished in Japan, in any NATO member country, or
in countries bordering the Arabian Gulf, to U.S. firms or U.S. firms in
joint venture with host nation firms.  Section 112 provides a 20 percent
preference for U.S. firms on all contracts estimated to exceed $1,000,000
for military construction projects in the U.S. territories and possessions
in the Pacific and on Kwajalein Atoll, or in countries bordering the
Arabian Gulf.


    The attached interim DFARS rule is effective immediately and will
be included in a future Defense Acquisition Circular.









                                                    /s/

                                             Eleanor R. Spector
                                             Director, Defense Procurement

DFARS Case 96-D328
Preference for U.S. Firms on MILCON Overseas Construction
Contracts

DFARS Case 96-D329
Restriction on MILCON Overseas A-E Contracts

Interim Rule

PART 225-FOREIGN ACQUISITION

* * * * *

SUBPART 225.70-AUTHORIZATION ACTS, APPROPRIATIONS ACTS, AND OTHER
STATUTORY RESTRICTIONS ON FOREIGN [ACQUISITION]

225.7000 Scope of subpart.

(a) This subpart contains restrictions on the acquisition of foreign products [and services], imposed by [Defense] [a]ppropriations and [a]uthorization [a] cts and other statutes. Refer to the [a]cts to verify current applicability of the restrictions.

* * * * *

225.7003 [Restriction on overseas military construction].
For restriction on award of military construction contracts to be performed in the United States territories and possessions in the Pacific and on Kwajalein Atoll, or in countries bordering the Arabian Gulf, see 236.274(a).]

225.7004 [Restriction on overseas architect-engineer services].
For restriction on award of architect-engineer contracts to be performed in Japan, any North Atlantic Treaty Organization member country, or in countries bordering the Arabian Gulf, see 236.602- 70.]

* * * * *

PART 236-CONSTRUCTION AND ARCHITECT-ENGINEER CONTRACTS

SUBPART 236.1-GENERAL

236.102 Definitions.

* * * * *

[(4) "United States firm," is defined in the provisions at 252.236-7010, Overseas Military Construction—Preference for United States Firms, and 252.236-7011, Overseas Architect- Engineer Services—Restriction to United States Firms.

* * * * *

SUBPART 236.2-SPECIAL ASPECTS OF CONTRACTING FOR CONSTRUCTION

* * * * *

236.274 Construction in foreign countries.

[(a) In accordance with Section 112 of Public Law 104-32 and similar sections in subsequent military construction appropriations acts, military construction contracts that are estimated to exceed $1,000,000 and are to be performed in the United States territories and possessions in the Pacific and on Kwajalein Atoll, or in countries bordering the Arabian Gulf, shall be awarded only to United States firms, unless the lowest responsive and responsible offer of a United States firm exceeds the lowest responsive and responsible offer of a foreign firm by more than 20 percent.

[(b)]

When a technical working agreement with a foreign government is required for a construction contract-

    ([1]) Consider inviting the Army Office of the Chief of Engineers, or the Naval Facilities Engineering Command to participate in the negotiations.

    ([2]) The agreement should, as feasible and where not otherwise provided for in other agreements, cover all elements necessary for the construction that are required by laws, regulations, and customs of the United States and the foreign government, including-

      ([i]) Acquisition of all necessary rights;

      ([ii]) Expeditious, duty-free importation of labor, material, and equipment;

      ([iii]) Payment of taxes applicable to contractors, personnel, materials, and equipment;

      ([iv]) Applicability of workers' compensation and other labor laws to citizens of the United States, the host country, and other countries;

      ([v]) Provision of utility services;

      ([vi]) Disposition of surplus materials and equipment;

      ([vii]) Handling of claims and litigation; and

      ([viii]) Resolution of any other foreseeable problems which can appropriately be included in the agreement.

* * * * *

SUBPART 236.5-CONTRACT CLAUSES

236.570 Additional provisions and clauses.

* * * * *

[(c) Use the provision at 252.236-7010, Overseas Military Construction—Preference for United States Firms, in solicitations for military construction contracts that are estimated to exceed $1,000,000 and are to be performed in the United States territories and possessions in the Pacific and on Kwajalein Atoll, or in countries bordering the Arabian Gulf.]

* * * * *

SUBPART 236.6-ARCHITECT-ENGINEER SERVICES

* * * * *

236.602 Selection of firms for architect-engineer contracts.

* * * * *

[236.602-70 Restriction on award of overseas architect-engineer contracts to foreign firms.

In accordance with Section 111 of Public Law 104-32 and similar sections in subsequent military construction appropriations acts, A-E contracts funded by military construction appropriations that are estimated to exceed $500,000 and are to be performed in Japan, any North Atlantic Treaty Organization member country, or in countries bordering the Arabian Gulf, shall be awarded only to United States firms or to joint ventures of United States and host nation firms.]

* * * * *

236.609-70 [Additional provision and clause].

(a)

    [(1)] Use the clause at 252.236-7009, Option for Supervision and Inspection Services, in solicitations and contracts for A-E services when-

      ([i]) The contract will be fixed price; and

      ([ii]) Supervision and inspection services by the A-E may be required during construction.

    ([2]) Include the scope of such services in Appendix A of the contract.

[(b) Use the provision at 252.236-7011, Overseas Architect- Engineer Services—Restriction to United States Firms, in solictations for A-E contracts that are estimated to exceed $500,000 and are to be performed in Japan, any North Atlantic Treaty Organization member country, or in countries bordering the Arabian Gulf.]

* * * * *

PART 252-SOLICITATION PROVISIONS AND CONTRACT CLAUSES

* * * * *

[252.236-7010 Overseas Military Construction—Preference for United States Firms.
As prescribed in 236.570(c), use the following provision:

OVERSEAS MILITARY CONSTRUCTION-PREFERENCE FOR
UNITED STATES FIRMS (JAN 1997)

(a) Definition.
"United States firm," as used in this provision, means a firm incorporated in the United States that complies with the following:

    (1) The corporate headquarters are in the United States;
    (2) The firm has filed corporate and employment tax returns in the United States for a minimum of 2 years (if required), has filed State and Federal income tax returns (if required) for 2 years, and has paid any taxes due as a result of these filings; and
    (3) The firm employs United States citizens in key management positions.

(b) Evaluation. Offers from firms that do not qualify as United States firms will be evaluated by adding 20 percent to the offer.

(c) Status. The offeror ____ is, _____is not a United States firm.

(End of provision)]

[252.236-7011 Overseas Architect-Engineer Services—Restriction to United States Firms.
As prescribed in 236.609-70(b), use the following provision:

OVERSEAS ARCHITECT-ENGINEER SERVICES—RESTRICTION TO
UNITED STATES FIRMS (JAN 1997)

(a) Definition.
"United States firm," as used in this provision, means a firm incorporated in the United States that complies with the following:

    (1) The corporate headquarters are in the United States;
    (2) The firm has filed corporate and employment tax returns in the United States for a minimum of 2 years (if required), has filed State and Federal income tax returns (if required) for 2 years, and has paid any taxes due as a result of these filings; and
    (3) The firm employs United States citizens in key management positions.

(b) Restriction. Military construction appropriations acts restrict award of a contract, resulting from this solicitation, to a United States firm or a joint venture of United States and host nation firms.

(c) Status. The offeror confirms, by submission of its offer, that it is a United States firm or a joint venture of United States and host nation firms.

(End of provision)]

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