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    Is the DPAS rating applicable to a subcontract with a foreign firm for a commercial product?


    Answer

    The DPAS Regulation (15 CFR Part 700) addresses the legal authority inside/outside the United States in §700.57 -- Military assistance programs with other nations and international organizations. [specific reference in second sentence of §700.57(a).] which states the following:
     
    Scope. To promote military assistance to foreign nations and international organizations (for example, the North Atlantic Treaty Organization or the United Nations), this section provides for authorizing priority ratings to persons in foreign nations or international organizations to obtain items in the United States in support of approved programs. Although priority ratings have no legal authority outside of the United States, this section also provides information on how persons in the United States may obtain informal assistance in Australia, Finland, Italy, The Netherlands, Spain, Sweden, and the United Kingdom in support of approved programs.
     
    FAR subpart 11.6 Priorities and Allocations implements the Defense Priorities and Allocations System (DPAS) and should be followed in regards to any DPAS rated contracts. Upon researching FAR subpart 11.6, there is nothing there that indicates exemptions for foreign subcontractors; in fact FAR 11.603(a) specifically states the DPAS regulation contains provisions concerning "extension of priority ratings (flowdown), (see 15 CFR 700.15).
     
    FAR Part 12 Acquisition of Commercial Items prescribes the policies and procedures unique to the acquisition of commercial items. Further FAR subpart 12.5 identify the applicability of Certain Laws to the Acquisition of Commercial Items and Commercially Available off-the-shelf items. FAR 12.503 identify those that are not applicable to Executive agency contracts for the acquisition of commercial items and FAR 12.504 identify those that are not applicable to subcontracts at any tier for the acquisition of commercial items, neither of these references identify that the requirements of 50 U.S.C. Title I of the Defense Production Act of 1950 which authorizes DPAS is inapplicable to commercial items.
     
    The DPAS website at www.bis.doc.gov/dpas states the following: "Commerce may also authorize other government agencies, foreign governments, owners and operators of critical infrastructure, or companies to place priority ratings on contracts or orders on a case-by-case basis. Such requests must first be determined as necessary or appropriate to promote the national defense by the Departments of Defense, Homeland Security, or Energy. This site also has a DPAS training course that is designed to assist any company that receives priority rated contracts, subcontracts, or purchase orders from the U.S. Government or from U.S. Government contractors.  The goal of this course is to provide the basic understanding of the DPAS as well as provide a guide for applying the DPAS to contracts and purchase orders. Page 35 of the training states the following: "Companies who receive rated orders must in turn place rated orders with their suppliers for the items they need to fill the orders. This continues from contractor to subcontractor to supplier throughout the entire supply chain".
     
     
    Depending on what country the foreign firm is located, a DPAS rating can be authorized to promote military assistance but is not required.  If the U.S. company is having difficulty obtaining items in a timely manner from the foreign firm and if U.S. Department of Defense (DoD) has entered into a Security of Supply (SoS) Arrangement with that foreign government, the SoS Arrangement provides a way for DoD to request priority delivery for DoD contracts, subcontracts, or orders from companies.  Information on SoS, the current SoS Arrangements, and how priority support can be requested can be found here: http://www.businessdefense.gov/security-of-supply/.  It is, also, suggested that the author of the question access the DPAS website for more detailed guidance as the FAR nor the DFARS address exemption of commercial items from foreign subcontractors. Other sources of information include DPAS Regulation 15 CFR 700.15 and Defense Priority and Allocation Manual 4400.1-M.

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