DoD Interim Rules Implement Procurement Provisions of Colombia, Korea FTAs

(According to DoD, the U.S.-Colombia PTA provides for: (1) waiver of the applicability of the Buy American statute for some foreign supplies and construction materials from Colombia; and (2) applicability of specified procurement procedures designed to ensure fairness in the acquisition of supplies and services. Korea is already party to the World Trade Organization’s Government Procurement Agreement (GPA) and thus already receives a waiver of applicability of the “Buy American” statute and applicability of procurement procedures designed to ensure fairness. However, the U.S.-Korea FTA lowers the threshold for these provisions from the current WTO GPA threshold of $202,000 to the new FTA threshold of $100,000. See ITT’s Online Archives 12051815 for summary of the Presidential proclamation implementing the U.S.-Colombia TPA, which was effective May 15, 2012, and 12041650 for summary of the Presidential proclamation implementing the U.S.-Korea FTA, which was effective March 15, 2012.)

U.S.-Colombia TPA

Colombia Listed in DFARS as “FTA Country”, “Designated Country”

DOD’s interim rule on the Colombia TPA adds Colombia to the definitions of “Free Trade Agreement country” and “Designated country” in multiple locations in the DFARS. According to the interim rule, the Colombia TPA covers acquisition of supplies and services equal to or exceeding $77,494. The threshold for the Colombia PTA is $7,777,000 for construction.

DoD said because the Colombia TPA construction threshold of $7,777,000 is the same as the World Trade Organization Government Procurement Agreement threshold, no new clause alternates are required for the Balance of Payments Program -- Construction Material under the Trade Agreements clause.

U.S.-Korea FTA

Korea Listed in DFARS as “FTA Country”; Already a “Designated Country”

DoD’s interim rule on the U.S.-Korea FTA adds Korea to definition of “Free Trade Agreement country” in multiple locations in the DFARS (as Korea is already party to the WTO GPA, it is already listed under the definition of “Designated country.”) DoD said the excluded services for the U.S.-Korea FTA are the same as for the WTO GPA. According to the interim rule, eligible goods and services from Korea are now covered when valued at or above $100,000. The threshold for the U.S.-Korea FTA for construction is the same as the threshold for the WTO GPA for construction.

According to DoD, the Korea FTA figure of $100,000 for supplies and services is higher than the threshold for supplies and services for most of the FTAs ($77,494), but not as high as the Bahrain, Morocco, and Peru FTA threshold for supplies and services ($202,000). Therefore, new alternates are required for the provision and clause for the acquisition of photovoltaic devices and the Buy American Act -- Free Trade Agreements -- Balance of Payments Program provision and clause to cover acquisitions that are valued at $77,494 or more but less than $100,000. In that dollar range, all FTAs are applicable, except for the Bahrain, Korea, Morocco, and Peru FTAs.

Agencies Cannot Require Previously Awarded Contract, Etc.

DoD’s interim rule for the U.S.-Korea FTA also explicitly specifies that, regarding applicability of specified procurement procedures designed to ensure fairness in the acquisition of supplies and services, “these obligations include, among others, that an agency shall not impose the condition that, in order for an offeror to be allowed to submit an offer or be awarded a contract, the offeror has been previously awarded one or more contracts by an agency of the United States Government or that the offeror has prior work experience in the United States.”

DoD interim rule for U.S.-Colombia TPA (FR Pub 05/22/12) available here.

DoD interim rule for U.S.-Korea FTA (FR Pub 05/22/12) available here.