[Federal Register Volume 88, Number 40 (Wednesday, March 1, 2023)]
[Rules and Regulations]
[Pages 12861-12862]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-04029]


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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 212, 225, and 252

[Docket DARS-2022-0020]
RIN 0750-AL61


Defense Federal Acquisition Regulation Supplement: Employment 
Transparency Regarding Individuals Who Perform Work in the People's 
Republic of China (DFARS Case 2022-D010)

AGENCY: Defense Acquisition Regulations System, Department of Defense 
(DoD).

ACTION: Final rule.

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SUMMARY: DoD is adopting as final, without change, an interim rule 
amending the Defense Federal Acquisition Regulation Supplement (DFARS) 
to implement a section of the National Defense Authorization Act for 
Fiscal Year 2022 that requires a disclosure from entities that employ 
one or more individuals who will perform work in the People's Republic 
of China.

DATES: Effective March 1, 2023.

FOR FURTHER INFORMATION CONTACT: Kimberly Bass, telephone 703-717-3446.

SUPPLEMENTARY INFORMATION: 

I. Background

    DoD published an interim rule in the Federal Register at 87 FR 
52339 on August 25, 2022, to implement section 855 of the National 
Defense Authorization Act (NDAA) for Fiscal Year (FY) 2022 (Pub. L. 
117-81, 10 U.S.C. 4651 note prec.). Section 855 requires offerors, when 
submitting a bid or proposal for a covered contract, to disclose their 
use of workforce and facilities in the People's Republic of China, if 
they employ one or more individuals who will perform work in the 
People's Republic of China, unless a national security waiver has been 
granted. A recurring disclosure is also required for fiscal years 2023 
and 2024, for contractors that are covered entities and are a party to 
one or more covered contracts in each fiscal year, to disclose if the 
contractor employs one or more individuals who perform work in the 
People's Republic of China on any such contract. One respondent 
submitted a public comment in response to the interim rule.

II. Discussion and Analysis

    DoD reviewed the public comment in the development of the final 
rule. No changes were made to the rule as a result of the comment. A 
discussion of the public comment, which stated support for the rule, is 
provided as follows:
    Comment: The respondent supported the disclosure requirement in the 
interim rule, stating that an outright ban for contracts exceeding the 
$5 million threshold would be inappropriate and would not allow a 
follow-on investigation to reach a determination that protects our 
national security interests while minimizing the effects on businesses 
and individuals.
    Response: DoD acknowledges the support for the rule.

III. Applicability to Contracts at or Below the Simplified Acquisition 
Threshold (SAT) and for Commercial Services and Commercial Products, 
Including Commercially Available Off-the-Shelf (COTS) Items

    The requirements of section 855 of the NDAA for FY 2022 apply to 
covered contracts valued in excess of $5 million, excluding contracts 
for commercial products or commercial services. Therefore, DoD is not 
applying the rule to contracts at or below the SAT or to contracts for 
the acquisition of commercial services or commercial products, 
including COTS items.

IV. Executive Orders 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 not a significant regulatory action and, therefore, was not 
subject to review under section 6(b) of E.O. 12866, Regulatory Planning 
and Review, dated September 30, 1993.

V. Congressional Review Act

    As required by the Congressional Review Act (5 U.S.C. 801-808) 
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. The Office of

[[Page 12862]]

Information and Regulatory Affairs has determined that this rule is not 
a major rule as defined by 5 U.S.C. 804.

VI. Regulatory Flexibility Act

    A final regulatory flexibility analysis (FRFA) has been prepared 
consistent with the Regulatory Flexibility Act, 5 U.S.C. 601, et seq. 
The FRFA is summarized as follows:
    This rule is required to implement section 855 of the National 
Defense Authorization Act (NDAA) for Fiscal Year 2022 (Pub. L. 117-81, 
10 U.S.C. 4651 note prec.). The objective of the rule is to implement 
section 855 of the NDAA for FY 2022 to require offerors, when 
submitting a proposal for a covered contract, to disclose their use of 
workforce and facilities in the People's Republic of China if they 
employ one or more individuals who will perform work in the People's 
Republic of China, unless a national security waiver has been granted. 
A national security waiver may be granted if a determination is made 
that such disclosure would not be in the interest of national security. 
Recurring disclosures are required following contract award for 
contractors that are covered entities for fiscal years 2023 and 2024. 
The initial and recurring disclosures must include the total number of 
individuals who will perform work in the People's Republic of China on 
the covered contracts and a description of the physical presence of the 
facility, including the street address, where work on the covered 
contract will be performed.
    There were no significant issues raised by the public comments in 
response to the initial regulatory flexibility analysis.
    Federal Procurement Data System (FPDS) data was analyzed for fiscal 
years 2019, 2020, and 2021, purchases of supplies or end products and 
services for which the place of manufacture, place of performance, or 
country of the product's origin is China; with a value above $5 
million; and excluding commercial services, commercial products, and 
commercially available off-the-shelf (COTS) items. The FPDS data 
revealed no awards that met these criteria.
    In addition, a data analysis was performed on the North Atlantic 
Treaty Organization (NATO) Commercial and Government Entity (NCAGE) 
codes from the NATO Support and Procurement Agency (NSPA) for entities 
located in the People's Republic of China, including Hong Kong. This 
review revealed a total of 5,143 entities. There were 4,706 entities in 
the People's Republic of China with NCAGE codes, and 437 entities in 
Hong Kong with NCAGE codes. This list of NCAGE codes was compared to 
any People's Republic of China or Hong Kong NCAGE codes from the FPDS 
data results for a list of contract awards in fiscal years 2019, 2020 
and 2021. Similarly, there were no contract awards to any unique 
entities or small business entities meeting the criteria.
    There are projected reporting or recordkeeping requirements, and 
there may be costs to ensure compliance. The contractor's postaward 
disclosure is required for fiscal years 2023 and 2024, to disclose if a 
contractor that is a covered entity employs one or more individuals who 
perform work in the People's Republic of China on a covered contract. 
The disclosure must include the total number of individuals who will 
perform work in the People's Republic of China on the contract and a 
description of the exact street location of the physical presence in 
China where the work on the contract will be performed.
    There are no known alternate approaches to the rule that would meet 
the objectives of the statute.

VII. Paperwork Reduction Act

    This rule contains information collection requirements that have 
been approved by the Office of Management and Budget under the 
Paperwork Reduction Act (44 U.S.C. chapter 35). This information 
collection requirement has been assigned OMB Control Number 0750-0005, 
entitled Defense Federal Acquisition Regulation Supplement (DFARS), 
Disclosure of Employment of Individuals Who Work in the People's 
Republic of China.

List of Subjects in 48 CFR Parts 212, 225, and 252

    Government procurement.

Jennifer D. Johnson,
Editor/Publisher, Defense Acquisition Regulations System.


0
Accordingly, the interim rule implementing 48 CFR parts 212, 225, and 
252, which was published at 87 FR 52339 on August 25, 2022, is adopted 
as final without change.

[FR Doc. 2023-04029 Filed 2-28-23; 8:45 am]
BILLING CODE 5001-06-P