1. First of all, the citation is not from "FAR" but is DFARS 225.872. Second, this DFARS section is not a "clause" but a statement of DoD policy, under which DFARS 225.872-1(a) and (b) specify the following:
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(a) As a result of memoranda of understanding and other international agreements, DoD has determined it inconsistent with the public interest to apply restrictions of the Buy American statute or the Balance of Payments Program to the acquisition of qualifying country end products from the following qualifying countries: Australia, Belgium, Canada, Czech Republic, Denmark, Egypt, Federal Republic of Germany, Finland, France, Greece, Israel, Italy, Luxembourg, Netherlands, Norway, Poland, Portugal, Spain, Sweden, Switzerland, Turkey, United Kingdom of Great Britain and Northern Ireland
(b) Individual acquisitions of qualifying country end products from the following qualifying country may, on a purchase-by-purchase basis (see 225.872-4), be exempted from application of the Buy American statute and the Balance of Payments Program as inconsistent with the public interest: Austria
2. Pursuant to DFARS 225.872-8 Subcontracting with qualifying country sources, in reviewing contractor subcontracting procedures, the contracting officer shall ensure that the contract does not preclude qualifying country sources from competing for subcontracts, except when restricted by national security interest reasons, mobilization base considerations, or applicable U.S. laws or regulations (see the clause at 252.225-7002, Qualifying Country Sources as Subcontractors).
3. Based on the above, prime contractors are not required to apply the restrictions of the Buy American stature or the Balance of Payments Program when subcontracting with firms from the qualifying countries listed above. Pursuant to DFARS 225.1101(3), this policy is reflected in prime contract clause DFARS 252.225-7002 Qualifying Country Sources as Subcontractors.