Defense Priorities and Allocations System

15CFR700

DEFENSE PRIORITIES AND ALLOCATIONS SYSTEM (DPAS)

Current copies of this document are available from the US
Government Printing Office.

The US Department of Commerce maintains a web site which provides
additional information about this program at the Bureau
of Exports Administration.

__________________________________________________________

[Code of Federal Regulations]
[Title 15, Volume 2, Parts 300 to 799]
[Revised as of January 1, 1999]
From the U.S. Government Printing Office via GPO Access
[CITE: 15CFR700]

[Page 69-94]

TITLE 15–COMMERCE AND FOREIGN TRADE

PART 700–DEFENSE PRIORITIES AND ALLOCATIONS SYSTEM

Subpart A–Purpose

Sec.
700.1 Purpose of this regulation.

Subpart B–Overview

700.2 Introduction.
700.3 Priority ratings and rated orders.
700.4 Priorities and allocations in a national emergency.
700.5 Special priorities assistance.
700.6 Official actions.

700.7 Compliance.

Subpart C–Definitions

700.8 Definitions.

Subpart D–Industrial Priorities

700.10 Delegation of authority.
700.11 Priority ratings.

700.12 Elements of a rated order.
700.13 Acceptance and rejection of rated orders.
700.14 Preferential scheduling.
700.15 Extension of priority ratings.
700.16 Changes or cancellations of priority ratings and rated
orders.
700.17 Use of rated orders.

700.18 Limitations on placing rated orders.

Subpart E–Industrial Priorities for Energy Programs

700.20 Use of priority ratings.
700.21 Application for priority rating authority.

Subpart F–National emergency Preparedness and
Critical Items

700.30 Priorities and allocations in a national emergency.

700.31 Metalworking machines.

Subpart G [Reserved]

Subpart H–Special Priorities Assistance

700.50 General provisions.
700.51 Requests for priority rating authority.
700.52 Examples of assistance.

700.53 Criteria for assistance.
700.54 Instances where assistance may not be provided.
700.55 Assistance programs with Canada and other nations.

Subpart I–Official Actions

700.60 General provisions.
700.61 Rating Authorizations.

700.62 Directives.
700.63 Letters of Understanding.

Subpart J–Compliance

700.70 General provisions.
700.71 Audits and investigations.
700.72 Compulsory process.

700.73 Notification of failure to comply.
700.74 Violations, penalties, and remedies.
700.75 Compliance conflicts.

Subpart K–Adjustments, Exceptions, and Appeals

700.80 Adjustments or exceptions.
700.81 Appeals.

Subpart L–Miscellaneous Provisions

700.90 Protection against claims.
700.91 Records and reports.
700.92 Applicability of this regulation and official actions.
700.93 Communications.

Schedule I to Part 700–Approved Programs and Delegate Agencies

Appendix I to Part 700–Form BXA-999-Request for Special Priorities
Assistance

Authority: Titles I and VII of the Defense Production Act of
1950, as amended (50 U.S.C. app. 2061 et seq.), Title VI of the
Robert T. Stafford Disaster Relief and Emergency Assistance Act
(42 U.S.C. 5195 et seq.), and Executive Order 12919, 59 FR 29525,
3 CFR, 1994 Comp., p. 901; Section 18 of the Selective Service
Act of 1948 (50 U.S.C. App. 468), 10 U.S.C. 2538, 50 U.S.C. 82,
and Executive Order 12742, 56 FR 1079, 3 CFR, 1991 Comp., p. 309;
and Executive Order 12656, 53 FR 226, 3 CFR, 1988 Comp., p. 585.

Source: 49 FR 30414, July 30, 1984, unless otherwise noted. Redesignated
at 54 FR 601, Jan. 9, 1989.

Subpart A–Purpose

Sec. 700.1 Purpose of this regulation.

(a) Title I of the Defense Production Act of 1950, as amended
(50 U.S.C. App. 2061, et seq.) (Defense Production Act),

[[Page 70]]

authorizes the President: to require the priority performance
of contracts and orders necessary or appropriate to promote the
national defense over other contracts or orders; to allocate materials,
services, and facilities as necessary or appropriate to promote
the national defense; and to require the allocation of, or the
priority performance under contracts or orders relating to, supplies
of materials, equipment, and services in order to assure domestic
energy supplies for national defense needs.

(b) Section 18 of the Selective Service Act of 1948 (50 U.S.C.
app. 468) (Selective Service Act) authorizes the President to
place an order with a supplier for any articles or materials required
for the exclusive use of the U.S. armed forces whenever the President
determines that in the interest of national security, prompt delivery
of the articles and materials is required. The supplier must give
precedence to the order so as to deliver the articles or materials
in a required time period. 10 U.S.C. 2538, and 50 U.S.C. 82, provide
similar authority specifically for Department of Defense procurement,
but only in time of war or when war is imminent.

(c) Section 602(b) of the Robert T. Stafford Disaster Relief
and Emergency Assistance Act (42 U.S.C. 5195a(b)) provides that
the terms “national defense” and “defense” as used in the
Defense Production Act includes “emergency preparedness activities”
conducted pursuant to Title VI of the Stafford Act. The definition
of “national defense” in Section 702(13) of the Defense Production
Act provides that this term includes “emergency preparedness
activities” conducted pursuant to Title VI of the Stafford Act.

(d) The Defense Priorities and Allocations System (DPAS) regulation
implements the priorities and allocations authority of the Defense
Production Act and as this authority pertains to Title VI of the
Stafford Act, and the priorities authority of the Selective Service
Act and related statutes, all with respect to industrial resources.
The DPAS ensures the timely availability of industrial resources
for approved programs and provides an operating system to support
rapid industrial response to a national emergency.

(e) To aid in understanding and using the DPAS, an overview of
its major provisions is incorporated into this regulation as subpart
B– Overview. The full text of the DPAS is found in subparts D
through L.

[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan.
9, 1989, as amended at 63 FR 31921, June 11, 1998]

Subpart B–Overview

Sec. 700.2 Introduction.

(a) Certain national defense and energy programs (including emergency
preparedness activities) are approved for priorities and allocations
support. For example, military aircraft production, ammunition,
and certain programs which maximize domestic energy supplies are
“approved programs.” A complete list of currently approved programs
is provided at Schedule 1 to this part.

(b) The Department of Commerce administers the DPAS to ensure
the timely delivery of industrial items to meet approved program
requirements.

(c) Commerce has delegated authority to place priority ratings
on contracts or orders necessary or appropriate to promote the
national defense to the government agencies that issue such contracts
or orders. Schedule I includes a list of agencies delegated this
authority. Copies of the Delegations of Authority are provided
at Appendix II. They set forth the authorities delegated and those
retained by Commerce.

[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan.
9, 1989, as amended at 63 FR 31921, June 11, 1998]

Sec. 700.3 Priority ratings and rated orders.

(a) Rated orders are identified by a priority rating consisting
of the rating–either DX or DO–and a program identification symbol.
Rated orders take preference over all unrated orders as necessary
to meet required delivery dates. Among rated orders, DX rated
orders take preference over DO rated orders. Program identification
symbols

[[Page 71]]

indicate which approved program is involved with the rated order.
For example, A1 identifies defense aircraft programs and A7 signifies
defense electronic programs. The program identification symbols,
in themselves, do not connote any priority.

(b) Persons receiving rated orders must give them preferential
treatment as required by this regulation. This means a person
must accept and fill a rated order for items that the person normally
supplies. The existence of previously accepted unrated or lower
rated orders is not sufficient reason for rejecting a rated order.
Persons are required to reschedule unrated orders if they conflict
with performance against a rated order. Similarly, persons must
reschedule DO rated orders if they conflict with performance against
a DX rated order.

(d) Persons who receive rated orders must in turn place rated
orders with their suppliers for the items they need to fill the
orders. This provision ensures that suppliers will give priority
treatment to rated orders from contractor to subcontractor to
suppliers throughout the procurement chain.

(e) Persons may place a priority rating on orders only when they
are in receipt of a rated order, have been explicitly authorized
to do so by the Department of Commerce or a Delegate Agency, or
are otherwise permitted to do so by this regulation.

[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan.
9, 1989, as amended at 63 FR 31921, June 11, 1998]

Sec. 700.4 Priorities and allocations in a national emergency.

(a) In the event of a national emergency, special rules may be
established as needed to supplement this part, thus ensuring rapid
industrial response and the timely availability of critical industrial
items and facilities to meet the urgent national defense requirements,
including domestic emergency preparedness requirements, of approved
programs.

(b) The special rules established in response to the emergency
may include provisions for the taking of certain emergency official
actions and the allocation of critical and scarce materials and
facilities.

[63 FR 31921, June 11, 1998]

Sec. 700.5 Special priorities assistance.

(a) The DPAS is designed to be largely self-executing. However,
from time-to-time production or delivery problems will arise.
In this event, special priorities assistance is available from
Commerce and from the Delegate Agencies.

(b) Special priorities assistance is available for any reason
consistent with this regulation. Generally, special priorities
assistance is provided to expedite deliveries, resolve delivery
conflicts, place rated orders, locate suppliers, or to verify
information supplied by customers and vendors. Special priorities
assistance may also be used to request rating authority for items
not automatically ratable.

Sec. 700.6 Official actions.

When necessary, Commerce takes specific official actions to implement
or enforce the provisions of this regulation and to provide special
priorities assistance. Such actions may include the issuance of:
Rating Authorizations, Directives, Letters of Understanding, Set-asides,
and compliance documents (Administrative Subpoenas, Demands for
Information, and Inspection Authorizations).

Sec. 700.7 Compliance.

(a) Compliance with the provisions of this regulation and official
actions is required by the Defense Production Act and the Selective
Service Act and related statutes. Violators are subject to criminal
penalties.

(b) Any person who places or receives a rated order should be
thoroughly familiar with, and must comply with, the provisions
of this regulation.

[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan.
9, 1989, as amended at 63 FR 31921, June 11, 1998]

[[Page 72]]

Subpart C–Definitions

Sec. 700.8 Definitions.

In addition to the definitions provided in Section 702 of the
Defense Production Act (excepting the definition of “industrial
resources”) and Section 602(a) of the Stafford Act, the following
definitions pertain to all sections of this part:

Approved program–a program determined as necessary or appropriate
for priorities and allocations support to promote the national
defense by the Secretary of Defense, the Secretary of Energy,
or the Director, Federal Emergency Management Agency, under the
authority of the Defense Production Act, the Stafford Act, and
Executive Order 12919, or the Selective Service Act and related
statutes and Executive Order 12742.

Construction. The erection, addition, extension, or alteration
of any building, structure, or project, using materials or products
which are to be an integral and permanent part of the building,
structure, or project. Construction does not include maintenance
and repair.

Delegate Agency. A government agency authorized by delegation
from the Department of Commerce to place priority ratings on contracts
or orders needed to support approved programs.

Defense Production Act. the Defense Production Act of 1950, as
amended (50 U.S.C. App. 2061, et seq.).

Industrial resources–all materials, services, and facilities,
including construction materials, the authority for which has
not been delegated to other agencies under Executive Order 12919.
This term also includes the term “item” as defined and used
in this part.

Item. Any raw, in process, or manufactured material, article,
commodity, supply, equipment, component, accessory, part, assembly,
or product of any kind, technical information, process, or service.

Maintenance and repair and operating supplies (MRO):

(a) Maintenance is the upkeep necessary to continue any plant,
facility, or equipment in working condition.

(b) Repair is the restoration of any plant, facility, or equipment
to working condition when it has been rendered unsafe or unfit
for service by wear and tear, damage, or failure of parts.

(c) Operating supplies are any items carried as operating supplies
according to a person’s established accounting practice. Operating
supplies may include hand tools and expendable tools, jigs, dies,
fixtures used on production equipment, lubricants, cleaners, chemicals
and other expendable items.

(d) MRO does not include items produced or obtained for sale
to other persons or for installation upon or attachment to the
property of another person, or items required for the production
of such items; items needed for the replacement of any plant,
facility, or equipment; or items for the improvement of any plant,
facility, or equipment by replacing items which are still in working
condition with items of a new or different kind, quality, or design.

Official action. An action taken by Commerce under the authority
of the Defense Production Act, the Selective Service Act and related
statutes, and this regulation. Such actions include the issuance
of Set- asides, Rating Authorizations, Directives, Letters of
Understanding, Demands for Information, Inspection Authorizations,
and Administrative Subpoenas.

Person–any individual, corporation, partnership, association,
or any other organized group of persons, or legal successor or
representative thereof; or any authorized State or local government
or agency thereof; and for purposes of administration of this
part, includes the United States Government and any authorized
foreign government or agency thereof, delegated authority as provided
in this part.

Production equipment. Any item of capital equipment used in producing
materials or furnishing services that has a unit acquisition cost
of $2,500 or more, an anticipated service life in excess of one
year, and the potential for maintaining its integrity as a capital
item.

Rated order. A prime contract, a subcontract, or a purchase order
in support of an approved program issued in accordance with the
provisions of this regulation.

[[Page 73]]

Selective Service Act and related statutes–Section 18 of the
Selective Service Act of 1948 (50 U.S.C. app. 468), 10 U.S.C.
2538, and 50 U.S.C. 82.

Set-aside. The amount of an item for which a supplier must reserve
order book space in anticipation of the receipt of rated orders.

Stafford Act–Title VI (Emergency Preparedness) of the Robert
T. Stafford Disaster Relief and Emergency Assistance Act, as amended
(42 U.S.C. 5195 et seq.).

[49 FR 30414, July 30, 1984; 49 FR 50172, Dec. 27, 1984. Redesignated
at 54 FR 601, Jan. 9, 1989, as amended at 63 FR 31921, June 11,
1998]

Subpart D–Industrial Priorities

Sec. 700.10 Delegation of authority.

(a) The priorities and allocations authorities of the President
under Title I of the Defense Production Act with respect to industrial
resources have been delegated to the Secretary of Commerce under
Executive Order 12919 of June 3, 1994 (59 FR 29525). The priorities
authorities of the President under the Selective Service Act and
related statutes with respect to industrial resources have also
been delegated to the Secretary of Commerce under Executive Order
12742 of January 8, 1991 (56 FR 1079).

(b) Within the Department of Commerce, these responsibilities
have been assigned to the Office of Strategic Industries and Economic
Security. The Department of Commerce has authorized the Delegate
Agencies to assign priority ratings to orders for items needed
for approved programs. Copies of these Delegations of Authority
are provided at Appendix II. They set forth the authorities delegated
and those retained by Commerce.

[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan.
9, 1989, as amended at 63 FR 31922, June 11, 1998]

Sec. 700.11 Priority ratings.

(a) Levels of priority.

(1) There are two levels of priority established by this regulation,
identified by the rating symbols “DO” and “DX”.

(2) All DO rated orders have equal priority with each other and
take preference over unrated orders. All DX rated orders have
equal priority with each other and take preference over DO rated
orders and unrated orders. (For resolution of conflicts among
rated orders of equal priority, see Sec. 700.14(c).)

(3) In addition, a Directive issued by Commerce takes preference
over any DX rated order, DO rated order, or unrated order, as
stipulated in the Directive. (For a full discussion of Directives,
see Sec. 700.62.)

(b) Program identification symbols. Program identification symbols
indicate which approved program is being supported by a rated
order. The list of approved programs and their identification
symbols are listed in Schedule I. For example, A1 identifies defense
aircraft programs and A7 signifies defense electronic programs.
Program identification symbols, in themselves, do not connote
any priority.

(c) Priority ratings. A priority rating consists of the rating
symbol–DO and DX–and the program identification symbol, such
as A1, B2, or H6. Thus, a contract for the production of an aircraft
will contain a DO-A1 or DX-A1 priority rating. A contract for
a radar set will contain a DO-A7 or DX-A7 priority rating.

[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan.
9, 1989, as amended at 63 FR 31922, June 11, 1998]

Sec. 700.12 Elements of a rated order.

Each rated order must include:

(a) The appropriate priority rating (e.g. DO-A1, DX-A4, DO-H1);

(b) A required delivery date or dates. The words “immediately”
or “as soon as possible” do not constitute a delivery date.
A “requirements contract”, “basic ordering agreement”, “prime
vendor contract”, or similar procurement document bearing a priority
rating may contain no specific delivery date or dates and may
provide for the furnishing of items from time-to-time or within
a stated period against specific purchase orders, such as “calls”,
“requisitions”, and “delivery orders”. These purchase orders
must specify a required delivery date or dates and are to be considered
as rated as of the date of their receipt by the supplier and not
as of the date of the original procurement document;

[[Page 74]]

(c) The written signature on a manually placed order, or the
digital signature or name on an electronically placed order, of
an individual authorized to sign rated orders for the person placing
the order. The signature or use of the name certifies that the
rated order is authorized under this part and that the requirements
of this part are being followed; and

(d) A statement that reads in substance:

This is a rated order certified for national defense use, and
you are required to follow all the provisions of the Defense Priorities
and Allocations System regulation (15 CFR part 700).

[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan.
9, 1989, as amended at 63 FR 31922, June 11, 1998]

Sec. 700.13 Acceptance and rejection of rated orders.

(a) Mandatory acceptance.

(1) Except as otherwise specified in this section, a person shall
accept every rated order received and must fill such orders regardless
of any other rated or unrated orders that have been accepted.

(2) A person shall not discriminate against rated orders in any
manner such as by charging higher prices or by imposing different
terms and conditions than for comparable unrated orders.

(b) Mandatory rejection. Unless otherwise directed by Commerce:

(1) A person shall not accept a rated order for delivery on a
specific date if unable to fill the order by that date. However,
the person must inform the customer of the earliest date on which
delivery can be made and offer to accept the order on the basis
of that date. Scheduling conflicts with previously accepted lower
rated or unrated orders are not sufficient reason for rejection
under this section.

(2) A person shall not accept a DO rated order for delivery on
a date which would interfere with delivery of any previously accepted
DO or DX rated orders. However, the person must offer to accept
the order based on the earliest delivery date otherwise possible.

(3) A person shall not accept a DX rated order for delivery on
a date which would interfere with delivery of any previously accepted
DX rated orders, but must offer to accept the order based on the
earliest delivery date otherwise possible.

(4) If a person is unable to fill all the rated orders of equal
priority status received on the same day, the person must accept,
based upon the earliest delivery dates, only those orders which
can be filled, and reject the other orders. For example, a person
must accept order A requiring delivery on December 15 before accepting
order B requiring delivery on December 31. However, the person
must offer to accept the rejected orders based on the earliest
delivery dates otherwise possible.

(c) Optional rejection. Unless otherwise directed by Commerce,
rated orders may be rejected in any of the following cases as
long as a supplier does not discriminate among customers:

(1) If the person placing the order is unwilling or unable to
meet regularly established terms of sale or payment;

(2) If the order is for an item not supplied or for a service
not performed;

(3) If the order is for an item produced, acquired, or provided
only for the supplier’s own use for which no orders have been
filled for two years prior to the date of receipt of the rated
order. If, however, a supplier has sold some of these items, the
supplier is obligated to accept rated orders up to that quantity
or portion of production, whichever is greater, sold within the
past two years;

(4) If the person placing the rated order, other than the U.S.
Government, makes the item or performs the service being ordered;

(5) If acceptance of a rated order or performance against a rated
order would violate any other regulation, official action, or
order of the Department of Commerce issued under the authority
of the Defense Production Act or the Selective Service Act and
related statutes [See Sec. 700.75].

(d) Customer notification requirements.

(1) A person must accept or reject a rated order in writing or
electronically within fifteen (15) working days after receipt
of a DO rated order and within ten (10) working days after receipt
of a DX rated order. If the order is rejected, the person must
give reasons in writing (not electronically) for the rejection.

[[Page 75]]

(2) If a person has accepted a rated order and subsequently finds
that shipment or performance will be delayed, the person must
notify the customer immediately, give the reasons for the delay,
and advise of a new shipment or performance date. If notification
is given verbally, written or electronic confirmation must be
provided within five (5) working days.

(The information collection requirements in paragraphs (d)(1)
and (d)(2) are approved by the Office of Management and Budget
under OMB control number 0694-0053.)

[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan.
9, 1989, as amended at 63 FR 31922, June 11, 1998]

Sec. 700.14 Preferential scheduling.

(a) A person must schedule operations, including the acquisition
of all needed production items, in a timely manner to satisfy
the delivery requirements of each rated order. Modifying production
or delivery schedules is necessary only when required delivery
dates for rated orders cannot otherwise be met.

(b) DO rated orders must be given production preference over
unrated orders, if necessary to meet required delivery dates,
even if this requires the diversion of items being processed or
ready for delivery against unrated orders. Similarly, DX rated
orders must be given preference over DO rated orders and unrated
orders.

Examples: If a person receives a DO rated order with a delivery
date of June 3 and if meeting that date would mean delaying production
or delivery of an item for an unrated order, the unrated order
must be delayed. If a DX rated order is received calling for delivery
on July 15 and a person has a DO rated order requiring delivery
on June 2 and operations can be scheduled to meet both deliveries,
there is no need to alter production schedules to give any additional
preference to the DX rated order.

(1) If a person finds that delivery or performance against any
accepted rated orders conflicts with the delivery or performance
against other accepted rated orders of equal priority status,
the person shall give preference to the conflicting orders in
the sequence in which they are to be delivered or performed (not
to the receipt dates). If the conflicting rated orders are scheduled
to be delivered or performed on the same day, the person shall
give preference to those orders which have the earliest receipt
dates.

(2) If a person is unable to resolve rated order delivery or
performance conflicts under this section, the person should promptly
seek special priorities assistance as provided in Secs. 700.50
through 700.54. If the person’s customer objects to the rescheduling
of delivery or performance of a rated order, the customer should
promptly seek special priorities assistance as provided in Secs.
700.50 through 700.54. For any rated order against which delivery
or performance will be delayed, the person must notify the customer
as provided in Sec. 700.13(d)(2).

(d) If a person is unable to purchase needed production items
in time to fill a rated order by its required delivery date, the
person must fill the rated order by using inventoried production
items. A person who uses inventoried items to fill a rated order
may replace those items with the use of a rated order as provided
in Sec. 700.17(b).

[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan.
9, 1989, as amended at 63 FR 31922, June 11, 1998]

Sec. 700.15 Extension of priority ratings.

(a) A person must use rated orders with suppliers to obtain items
needed to fill a rated order. The person must use the priority
rating indicated on the customer’s rated order, except as otherwise
provided in this regulation or as directed by the Department of
Commerce.

For example, if a person is in receipt of a DO-A3 rated order
for a navigation system and needs to purchase semiconductors for
its manufacture, that person must use a DO-A3 rated order to obtain
the needed semiconductors.

(b) The priority rating must be included on each successive order
placed to obtain items needed to fill a customer’s rated order.
This continues from contractor to subcontractor to supplier throughout
the entire procurement chain.

Sec. 700.16 Changes or cancellations of priority ratings and
rated orders.

(a) The priority rating on a rated order may be changed or cancelled
by:

[[Page 76]]

(1) An official action of the Department of Commerce; or

(2) Written notification from the person who placed the rated
order (including a Delegate Agency).

(b) If an unrated order is amended so as to make it a rated order,
or a DO, rating is changed to a DX rating, the supplier must give
the appropriate preferential treatment to the order as of the
date the change is received by the supplier.

(c) An amendment to a rated order that significantly alters a
supplier’s original production or delivery schedule shall constitute
a new rated order as of the date of its receipt. The supplier
must accept or reject the amended order according to the provisions
of Sec. 700.13.

(d) The following amendments do not constitute a new rated order:
a change in shipping destination; a reduction in the total amount
of the order; an increase in the total amount of the order which
has negligible impact upon deliveries; a minor variation in size
or design; or a change which is agreed upon between the supplier
and the customer.

(e) If a person no longer needs items to fill a rated order,
any rated orders placed with suppliers for the items, or the priority
rating on those orders, must be cancelled.

(f) When a priority rating is added to an unrated order, or is
changed or cancelled, all suppliers must be promptly notified
in writing.

Sec. 700.17 Use of rated orders.

(a) A person must use rated orders to obtain:

(1) Items which will be physically incorporated into other items
to fill rated orders, including that portion of such items normally
consumed, or converted into scrap or by-products, in the course
of processing;

(2) Containers or other packaging materials required to make
delivery of the finished items against rated orders;

(3) Services, other than contracts of employment, needed to fill
rated orders; and

(4) MRO needed to produce the finished items to fill rated orders.
However, for MRO, the priority rating used must contain the program
identification symbol H7 along with the rating symbol contained
on the customer’s rated order. For example, a person in receipt
of a DO-A3 rated order, who needs MRO, would place a DO-H7 rated
order with the person’s supplier.

(b) A person may use a rated order to replace inventoried items
(including finished items) if such items were used to fill rated
orders, as follows:

(1) The order must be placed within 90 days of the date of use
of the inventory.

(2) A DO rating symbol and the program identification symbol
indicated on the customer’s rated order must be used on the order.
A DX rating symbol may not be used even if the inventory was used
to fill a DX rated order.

(3) If the priority ratings on rated orders from one customer
or several customers contain different program identification
symbols, the rated orders may be combined. In this case, the program
identification symbol H1 must be used (i.e., DO-H1).

(c) A person may combine DX and DO rated orders from one customer
or several customers if the items covered by each level of priority
are identified separately and clearly. If different program identification
symbols are indicated on those rated orders of equal priority,
the person must use the program identification symbol H1 (i.e.,
DO-H1 or DX- H1).

(d) Combining rated and unrated orders.

(1) A person may combine rated and unrated order quantities on
one purchase order provided that:

(i) The rated quantities are separately and clearly identified;
and

(ii) The four elements of a rated order, as required by Sec.
700.12, are included on the order with the statement required
in Sec. 700.12(d) modified to read in substance:

This purchase order contains rated order quantities certified
for national defense use, and you are required to follow all the
provisions of the Defense Priorities and Allocations System regulation
(15 CFR part 700) only as it pertains to the rated quantities.

(2) A supplier must accept or reject the rated portion of the
purchase order as provided in Sec. 700.13 and give preferential
treatment only to the rated quantities as required by this part.

[[Page 77]]

This part may not be used to give preferential treatment to the
unrated portion of the order.

(3) Any supplier who believes that rated and unrated orders are
being combined in a manner contrary to the intent of this regulation
or in a fashion that causes undue or exceptional hardship may
submit a request for adjustment or exception under Sec. 700.80.

(e) A person may place a rated order for the minimum commercially
procurable quantity even if the quantity needed to fill a rated
order is less than that minimum. However, a person must combine
rated orders as provided in paragraph (c) of this section, if
possible, to obtain minimum procurable quantities.

(f) A person is not required to place a priority rating on an
order for less than $50,000, or one half of the Federal Acquisition
Regulation (FAR) Simplified Acquisition Threshold (see FAR 2.101),
whichever amount is larger, provided that delivery can be obtained
in a timely fashion without the use of the priority rating.

[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan.
9, 1989, as amended at 63 FR 31923, June 11, 1998]

Sec. 700.18 Limitations on placing rated orders.

(a) General limitations.

(1) A person may not place a DO or DX rated order unless entitled
to do so under this regulation.

(2) Rated orders may not be used to obtain:

(i) Delivery on a date earlier than needed;

(ii) A greater quantity of the item than needed, except to obtain
a minimum procurable quantity. Separate rated orders may not be
placed solely for the purpose of obtaining minimum procurable
quantities on each order;

(iii) Items in advance of the receipt of a rated order, except
as specifically authorized by Commerce (see Sec. 700.51(c) for
information on obtaining authorization for a priority rating in
advance of a rated order); or

(iv) Any of the following items unless specific priority rating
authority has been obtained from a Delegate Agency or Commerce:

(A) Items for plant improvement, expansion or construction, unless
they will be physically incorporated into a construction project
covered by a rated order; and

(B) Production or construction equipment or items to be used
for the manufacture of production equipment. [For information
on requesting priority rating authority, see Sec. 700.53.]

(v) Any items related to the development of chemical or biological
warfare capabilities or the production of chemical or biological
weapons, unless such development or production has been authorized
by the President or the Secretary of Defense.

(b) Jurisdictional limitations.

(1) The priorities and allocations authority for certain items
has been delegated under Executive Orders 12919 and 12742, other
executive order, or Interagency Memoranda of Understanding to
other agencies. Unless otherwise agreed to by the concerned agencies,
the provisions of this part are not applicable to these items
which include:

(i) Food resources, food resource facilities, and the domestic
distribution of farm equipment and commercial fertilizer (Department
of Agriculture–see Attachment A to DPAS Delegation 1 in Appendix
II to part 700 concerning combat rations);

(ii) All forms of energy, including radioisotopes, stable isotopes,
source material, and special nuclear material produced in Government-
owned plants or facilities operated by or for the Department of
Energy (Department of Energy);

(iii) Health resources (Department of Health and Human Services);

(iv) All forms of civil transportation (Department of Transportation);

(v) Water resources (Department of Defense/U.S. Army Corps of
Engineers);

(vi) Communications services (National Communications System
under Executive Order 12472 of April 3, 1984); and

(vii) Mineral resources and mineral processing facilities (Department
of the Interior/U.S. Geological Survey–see Memorandum of Understanding
Between Interior and Commerce in DPAS Appendix III to part 700).

[[Page 78]]

(2) The jurisdiction of the Department of Commerce and the Departments
of Energy, Agriculture, and the Interior over certain specific
items included in the categories listed above has been clarified
by Interagency Memoranda of Understanding. Copies of these Memoranda
are provided for information at appendix III.

(3) The following items under the jurisdiction of Commerce are
currently excluded from the rating provisions of this regulation;
however, these items are subject to Commerce Directives. These
excluded items are:

Copper raw materials
Crushed stone
Gravel

Sand
Scrap
Slag
Steam heat, central
Waste paper

[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan.
9, 1989, as amended at 63 FR 31923, June 11, 1998]

Subpart E–Industrial Priorities for Energy Programs

Sec. 700.20 Use of priority ratings.

(a) Section 101(c) of the Defense Production Act authorizes the
use of priority ratings for projects which maximize domestic energy
supplies.

(b) Projects which maximize domestic energy supplies include
those which maintain or further domestic energy exploration, production,
refining, and transportation; maintain or further the conservation
of energy; or are involved in the construction or maintenance
of energy facilities.

Sec. 700.21 Application for priority rating authority.

(a) For projects believed to maximize domestic energy supplies,
a person may request priority rating authority for scarce, critical,
and essential supplies of materials, equipment, and services (related
to the production of materials or equipment, or the installation,
repair, or maintenance of equipment) by submitting DOE Form PR
437 to the Department of Energy. Blank applications and further
information may be obtained from the U.S. Department of Energy,
Office of Clearance and Support, Field/Headquarters Support Division,
Forrestal Building, 1000 Independence Avenue, S.W., Washington,
D.C. 20585; Attn.: PR-132.

(b) On receipt of the application, the Department of Energy will:

(1) Determine if the project maximizes domestic energy supplies;
and

(2) Find whether the materials, equipment, or services involved
in the application are critical and essential to the project.

(c) If the Department of Energy notifies Commerce that the project
maximizes domestic energy supplies and that the materials, equipment,
or services are critical and essential, Commerce must find whether
the items in question are scarce and whether there is a need to
use the priorities and allocations authorities.

(1) Scarcity implies an unusual difficulty in obtaining the materials,
equipment, or services in a timeframe consistent with the timely
completion of the energy project. Among the factors to be used
in making the scarcity finding will be the following:

(i) Value and volume of material or equipment shipments;

(ii) Consumption of material and equipment;

(iii) Volume and market trends of imports and exports;

(iv) Domestic and foreign sources of supply;

(v) Normal levels of inventories;

(vi) Rates of capacity utilization;

(vii) Volume of new orders; and

(viii) Lead times for new orders.

(2) In finding whether there is a need to use the priorities
and allocations authorities, Commerce will consider alternative
supply solutions and other measures.

(d) If Commerce does not find that the items of materials, equipment,
or services are scarce, it will not proceed to analyze the need
to use the priorities and allocations authorities.

(e) Commerce will inform the Department of Energy of the results
of its analysis. If Commerce has made the two required findings,
it will authorize the Department of Energy to grant the use of
a priority rating to the applicant.

[[Page 79]]

(f) Schedule I includes a list of approved programs to support
the maximization of domestic energy supplies. A Department of
Energy regulation setting forth the procedures and criteria used
by the Department of Energy in making its determination and findings
is published in 10 CFR part 216.

[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan.
9, 1989, as amended at 63 FR 31923, June 11, 1998]

Subpart F–National Emergency Preparedness and
Critical Items

Source: 63 FR 31923, June 11, 1998, unless otherwise noted.

Sec. 700.30 Priorities and allocations in a national emergency.

(1) Emergency official actions.

(i) As needed, this part may be supplemented to include additional
definitions to cover civilian emergency preparedness industrial
items, support for essential civilian programs, and provisions
for the taking of certain emergency official actions under sections
Secs. 700.60 through 700.63.

(ii) Emergency official actions may include:

(A) Controlling inventories of critical and scarce defense and/or
emergency preparedness items;

(B) Restricting the purchase, use, or distribution of critical
and scarce defense and/or emergency preparedness items, or the
use of production or distribution facilities, for non-essential
purposes; and

(C) Converting the production or distribution of non-essential
items to the production or distribution of critical and scarce
defense and/or emergency preparedness items.

(2) Allocation of critical and scarce items and facilities.

(i) As needed, this part may be supplemented to establish special
rules for the allocation of scarce and critical items and facilities
to ensure the timely availability of these items and facilities
for approved programs, and to provide for an equitable and orderly
distribution of requirements for such items among all suppliers
of the items. These rules may provide for the allocation of individual
items or they may be broad enough to direct general industrial
activity as required in support of emergency requirements.

(ii) Allocation rules (i.e., controlled materials programs) were
established in response to previous periods of national security
emergency such as World War II and the Korean Conflict. The basic
elements of the controlled materials programs were the set-aside
(the amount of an item for which a producer or supplier must reserve
order book space in anticipation of the receipt of rated orders),
the production directive (requires a producer to supply a specific
quantity, size, shape, and type of an item within a specific time
period), and the allotment (the maximum quantity of an item authorized
for use in a specific program or application). These elements
can be used to assure the availability of any scarce and critical
item for approved programs. Currently, a set-aside applies only
to metalworking machines (see Sec. 700.31).

(3) In the event that certain critical items become scarce, and
approved program requirements for these items cannot be met without
creating a significant dislocation in the civilian market place
so as to create appreciable hardship, Commerce may establish special
rules under section 101(b) of the Defense Production Act to control
the general distribution of such items in the civilian market.

(b) Regional Emergency Coordinators. (1) If due to a catastrophic
national security emergency event, communications with Commerce
headquarters in Washington, D.C. are severed, DPAS Emergency Delegation
1 will provide authority to the Regional Emergency Coordinators
(REC) located in the Standard Federal Region Council cities (Boston,
New York, Philadelphia, Atlanta, Dallas, Kansas City, Chicago,
Denver, San Francisco, and Seattle) to represent the Secretary
of Commerce,

[[Page 80]]

and as necessary, act for the Secretary to carry out the emergency
industrial production and distribution control functions of Commerce
as set forth in this part, in any supplement thereto, or other
applicable authority. See DPAS Emergency Delegation 1 for further
information about the authority and duties of the RECs, and the
effective date of the Delegation.

(2) If DPAS Emergency Delegation 1 is implemented due to a catastrophic
national security emergency event, requests for special priorities
assistance under Secs. 700.50 through 700.55 should be filed with
the nearest Regional Emergency Coordinator located in one of the
Standard Federal Region Council cities as provided in DPAS Delegation
1.

Sec. 700.31 Metalworking machines.

(a) “Metalworking machines” include power driven, manual or
automatic, metal cutting and metal forming machines and complete
machines not supported in the hands of an operator when in use.
Basic machines with a list price of $2,500 or less are not covered
by this section.

(b) Metalworking machines covered by this section include:

Bending and forming machines
Boring machines

Broaching machines
Drilling and tapping machines
Electrical discharge, ultrasonic and chemical erosion machines
Forging machinery and hammers
Gear cutting and finishing machines
Grinding machines

Hydraulic and pneumatic presses, power driven
Machining centers and way-type machines
Manual presses
Mechanical presses, power driven
Milling machines
Miscellaneous machine tools

Miscellaneous secondary metal forming and cutting machines
Planers and shapers
Polishing, lapping, boring, and finishing machines
Punching and shearing machines
Riveting machines
Saws and filing machines

Turning machines, lathes, including automatic
Wire and metal ribbon forming machines

(c) A metalworking machine producer is not required to accept
DO rated orders calling for delivery in any month of a total quantity
of any size of machine in excess of 60 percent of scheduled production
of that size of machine for that month, or any DO rated orders
received less than three months prior to the beginning of the
month for which delivery is requested. However, DX rated orders
must be accepted without regard to a set-aside or the lead time,
if delivery can be made by the required date.

[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan.
9, 1989. Further redesignated at 63 FR 31924, June 11, 1998]

Subpart G [Reserved]

Subpart H–Special Priorities Assistance

Sec. 700.50 General provisions.

(a) The DPAS is designed to be largely self-executing. However,
it is anticipated that from time-to-time problems will occur.
In this event, a person should immediately contact the appropriate
contract administration officer for guidance or assistance. If
additional formal aid is needed, special priorities assistance
should be sought from the Delegate Agency through the contract
administration officer. If the Delegate Agency is unable to resolve
the problem or to authorize the use of a priority rating and believes
additional assistance is warranted, the Delegate Agency may forward
the request to the Department of Commerce for action. Special
priorities assistance is a service provided to alleviate problems
that do arise.

(b) Special priorities assistance can be provided for any reason
in support of this regulation, such as assisting in obtaining
timely deliveries of items needed to satisfy rated orders or authorizing
the use of priority ratings on orders to obtain items not automatically
ratable under this regulation.

(c) A request for special priorities assistance or priority rating
authority must be submitted on Form BXA-999 (OMB control number
0694- 0057) to the local contract administration representative.
Form BXA-999 may be obtained from the Delegate Agency representative
or from the Department of

[[Page 81]]

Commerce. A sample Form BXA-999 is attached at Appendix I.

[49 FR 30414, July 30, 1984; 49 FR 50171, Dec. 27, 1984. Redesignated
at 54 FR 601, Jan. 9, 1989, as amended at 63 FR 31924, June 11,
1998]

Sec. 700.51 Requests for priority rating authority.

(a) If a rated order is likely to be delayed because a person
is unable to obtain items not normally rated under this regulation,
the person may request the authority to use a priority rating
in ordering the needed items. Examples of items for which priority
ratings can be authorized include:

(1) Production or construction equipment;

(2) Computers when not used as production items; and

(3) Expansion, rebuilding or replacing plant facilities.

(b) Rating authority for production or construction equipment.

(1) A request for priority rating authority for production or
construction equipment must be submitted to the appropriate Delegate
Agency. The Delegate Agency may establish particular forms to
be used for these requests (e.g., Department of Defense Form DD
691.)

(2) When the use of a priority rating is authorized for the procurement
of production or construction equipment, a rated order may be
used either to purchase or to lease such equipment. However, in
the latter case, the equipment may be leased only from a person
engaged in the business of leasing such equipment or from a person
willing to lease rather than sell.

(1) In certain cases and upon specific request, Commerce, in
order to promote the national defense, may authorize a person
to place a priority rating on an order to a supplier in advance
of the issuance of a rated prime contract. In these instances,
the person requesting advance rating authority must obtain sponsorship
of the request from the appropriate Delegate Agency. The person
shall also assume any business risk associated with the placing
of rated orders if these orders have to be cancelled in the event
the rated prime contract is not issued.

(2) The person must state the following in the request:

It is understood that the authorization of a priority rating
in advance of our receiving a rated prime contract from a Delegate
Agency and our use of that priority rating with our suppliers
in no way commits the Delegate Agency, the Department of Commerce
or any other government agency to enter into a contract or order
or to expend funds. Further, we understand that the Federal Government
shall not be liable for any cancellation charges, termination
costs, or other damages that may accrue if a rated prime contract
is not eventually placed and, as a result, we must subsequently
cancel orders placed with the use of the priority rating authorized
as a result of this request.

(3) In reviewing requests for rating authority in advance of
a rated prime contract, Commerce will consider, among other things,
the following criteria:

(i) The probability that the prime contract will be awarded;

(ii) The impact of the resulting rated orders on suppliers and
on other authorized programs;

(iii) Whether the contractor is the sole source;

(iv) Whether the item being produced has a long lead time;

(v) The political sensitivity of the project; and

(vi) The time period for which the rating is being requested.

(4) Commerce may require periodic reports on the use of the rating
authority granted under paragraph (c) of this section.

(5) If a rated prime contract is not issued, the person shall
promptly notify all suppliers who have received rated orders pursuant
to the advanced rating authority that the priority rating on those
orders is cancelled.

Sec. 700.52 Examples of assistance.

(a) While special priorities assistance may be provided for any
reason in support of this regulation, it is usually provided in
situations where:

(1) A person is experiencing difficulty in obtaining delivery
against a rated order by the required delivery date; or

(2) A person cannot locate a supplier for an item needed to fill
a rated order.

(b) Other examples of special priorities assistance include:

[[Page 82]]

(1) Ensuring that rated orders receive preferential treatment
by suppliers;

(2) Resolving production or delivery conflicts between various
rated orders;

(3) Assisting in placing rated orders with suppliers;

(4) Verifying the urgency of rated orders; and

(5) Determining the validity of rated orders.

Sec. 700.53 Criteria for assistance.

Requests for special priorities assistance should be timely,
i.e., the request has been submitted promptly and enough time
exists for the Delegate Agency or Commerce to effect a meaningful
resolution to the problem, and must establish that:

(a) There is an urgent need for the item; and

(b) The applicant has made a reasonable effort to resolve the
problem.

Sec. 700.54 Instances where assistance will not be provided.

Special priorities assistance is provided at the discretion of
the Delegate Agencies and Commerce when it is determined that
such assistance is warranted to meet the objectives of this regulation.
Examples where assistance may not be provided include situations
when a person is attempting to:

(a) Secure a price advantage;

(b) Obtain delivery prior to the time required to fill a rated
order;

(d) Disrupt an industry apportionment program in a manner designed
to provide a person with an unwarranted share of scarce items;
or

(e) Overcome a supplier’s regularly established terms of sale
or conditions of doing business.

[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan.
9, 1989, as amended at 63 FR 31924, June 11, 1998]

Sec. 700.55 Assistance programs with Canada and other nations.

(a) To promote military assistance to foreign nations, this section
provides for authorizing priority ratings to persons in Canada
and in other foreign nations 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 Canada.

(b) Canada.

(1) The joint U.S.-Canadian military arrangements for the defense
of North America and the integrated nature of their defense industries
as set forth in the U.S.-Canadian Statement of Principles for
Economic Cooperation (October 26, 1950) require close coordination
and the establishment of a means to provide mutual assistance
to the defense industries located in both countries.

(2) The Department of Commerce coordinates with the Canadian
Public Works and Government Services Canada on all matters of
mutual concern relating to the administration of this regulation.
A copy of the Memorandum of Understanding between the two departments
is provided at appendix IV.

(3) Any person in the United States ordering defense items in
Canada should inform the Canadian supplier that the items being
ordered are to be used to fill a rated order. The Canadian supplier
should be informed that if production materials are needed from
the United States by the supplier or the supplier’s vendor to
fill the order, they should contact the Canadian Public Works
and Government Services Canada for authority to place rated orders
in the United States.

(4) Any person in Canada producing defense items for the Canadian
government may also obtain priority rating authority for items
to be purchased in the United States by applying to the Canadian
Public Works and Government Services Canada in accordance with
procedures specified by that Department.

(5) Persons in Canada needing special priorities assistance in
obtaining defense items in the United States may apply for such
assistance to the Canadian Public Works and Government Services
Canada. Public Works and Government Services Canada will forward
appropriate requests to Commerce.

(6) Any person in the United States requiring assistance in obtaining
items in Canada must submit a request through the Delegate Agency
to Commerce on Form BXA-999. Commerce

[[Page 83]]

will forward appropriate requests to the Canadian Public Works
and Government Services Canada.

(1) Any person in a foreign nation other than Canada requiring
assistance in obtaining defense items in the United States or
priority rating authority for defense items to be purchased in
the United States, should apply for such assistance or rating
authority to the U.S. Department of Defense. The request must
be sponsored by the government of the foreign nation prior to
its submission.

(2) If the Department of Defense endorses the request, it will
be forwarded to Commerce for appropriate action.

[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan.
9, 1989, as amended at 63 FR 31924, June 11, 1998]

Subpart I–Official Actions

Sec. 700.60 General provisions.

(a) Commerce may, from time-to-time, take specific official actions
to implement or enforce the provisions of this regulation.

(b) Several of these official actions (Rating Authorizations,
Directives, and Letters of Understanding) are discussed in this
subpart. Other official actions which pertain to compliance (Administrative
Subpoenas, Demands for Information, and Inspection Authorizations)
are discussed in Sec. 700.71(b).

Sec. 700.61 Rating Authorizations.

(a) A Rating Authorization is an official action granting specific
priority rating authority that:

(1) Permits a person to place a priority rating on an order for
an item not normally ratable under this regulation; or

(2) Authorizes a person to modify a priority rating on a specific
order or series of contracts or orders.

(b) To request priority rating authority, see Sec. 700.51.

Sec. 700.62 Directives.

(a) A Directive is an official action which requires a person
to take or refrain from taking certain actions in accordance with
its provisions.

(b) A person must comply with each Directive issued. However,
a person may not use or extend a Directive to obtain any items
from a supplier, unless expressly authorized to do so in the Directive.

(c) Directives take precedence over all DX rated orders, DO rated
orders, and unrated orders previously or subsequently received,
unless a contrary instruction appears in the Directive.

Sec. 700.63 Letters of Understanding.

(a) A Letter of Understanding is an official action which may
be issued in resolving special priorities assistance cases to
reflect an agreement reached by all parties (Commerce, the Delegate
Agency, the supplier, and the customer).

(b) A Letter of Understanding is not used to alter scheduling
between rated orders, to authorize the use of priority ratings,
to impose restrictions under this regulation, or to take other
official actions. Rather, Letters of Understanding are used to
confirm production or shipping schedules which do not require
modifications to other rated orders.

Subpart J–Compliance

Sec. 700.70 General provisions.

(a) Compliance actions may be taken for any reason necessary
or appropriate to the enforcement or the administration of the
Defense Production Act, the Selective Service Act and related
statutes, this regulation, or an official action. Such actions
include audits, investigations, or other inquiries.

(b) Any person who places or receives a rated order should be
thoroughly familiar with, and must comply with, the provisions
of this regulation.

(c) Willful violation of any of the provisions of Title I or
section 705 of the Defense Production Act, this regulation, or
an official action of the Department of Commerce, is a criminal
act, punishable as provided in the Defense Production Act and
as set forth in Sec. 700.74 of this regulation.

[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan.
9, 1989, as amended at 63 FR 31924, June 11, 1998]

[[Page 84]]

Sec. 700.71 Audits and investigations.

(a) Audits and investigations are official examinations of books,
records, documents, other writings and information to ensure that
the provisions of the Defense Production Act, the Selective Service
Act and related statutes, this regulation, and official actions
have been properly followed. An audit or investigation may also
include interviews and a systems evaluation to detect problems
or failures in the implementation of this regulation.

(b) When undertaking an audit, investigation, or other inquiry,
the Department of Commerce shall:

(1) Define the scope and purpose in the official action given
to the person under investigation, and

(2) Have ascertained that the information sought or other adequate
and authoritative data are not available from any Federal or other
responsible agency.

(1) Administrative Subpoenas. An Administrative Subpoena requires
a person to appear as a witness before an official designated
by the Department of Commerce to testify under oath on matters
of which that person has knowledge relating to the enforcement
or the administration of the Defense Production Act, the Selective
Service Act and related statutes, this regulation, or official
actions. An Administrative Subpoena may also require the production
of books, papers, records, documents and physical objects or property.

(2) Demand for Information. A Demand for Information requires
a person to furnish to a duly authorized representative of the
Department of Commerce any information necessary or appropriate
to the enforcement or the administration of the Defense Production
Act, the Selective Service Act and related statutes, this regulation,
or official actions.

(3) Inspection Authorizations. An Inspection Authorization requires
a person to permit a duly authorized representative of Commerce
to interview the person’s employees or agents, to inspect books,
records, documents, other writings and information in the person’s
possession or control at the place where that person usually keeps
them, and to inspect a person’s property when such interviews
and inspections are necessary or appropriate to the enforcement
or the administration of the Defense Production Act, the Selective
Service Act and related statutes, this regulation, or official
actions.

(d) The production of books, records, documents, other writings
and information will not be required at any place other than where
they are usually kept if, prior to the return date specified in
the Administrative Subpoena or Demand for Information, a duly
authorized official of Commerce is furnished with copies of such
material that are certified under oath to be true copies. As an
alternative, a person may enter into a stipulation with a duly
authorized official of Commerce as to the content of the material.

(e) An Administrative Subpoena, Demand for Information, or Inspection
Authorization, shall include the name, title or official position
of the person to be served, the evidence sought to be adduced,
and its general relevance to the scope and purpose of the audit,
investigation, or other inquiry. If employees or agents are to
be interviewed; if books, records, documents, other writings,
or information are to be produced; or if property is to be inspected;
the Administrative Subpoena, Demand for Information, or Inspection
Authorization will describe them with particularity.

(f) Service of documents shall be made in the following manner:

(1) Service of a Demand for Information or Inspection Authorization
shall be made personally, or by Certified Mail–Return Receipt
Requested at the person’s last known address. Service of an Administrative
Subpoena shall be made personally. Personal service may also be
made by leaving a copy of the document with someone of suitable
age and discretion at the person’s last known dwelling or place
of business.

(2) Service upon other than an individual may be made by serving
a partner, corporate officer, or a managing or general agent authorized
by appointment or by law to accept service of process. If an agent
is served, a copy of

[[Page 85]]

the document shall be mailed to the person named in the document.

(3) Any individual 18 years of age or over may serve an Administrative
Subpoena, Demand for Information, or Inspection Authorization.
When personal service is made, the individual making the service
shall prepare an affidavit as to the manner in which service was
made and the identity of the person served, and return the affidavit,
and in the case of subpoenas, the original document, to the issuing
officer. In case of failure to make service, the reasons for the
failure shall be stated on the original document.

[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan.
9, 1989, as amended at 63 FR 31924, June 11, 1998]

Sec. 700.72 Compulsory process.

(a) If a person refuses to permit a duly authorized representative
of Commerce to have access to any premises or source of information
necessary to the administration or the enforcement of the Defense
Production Act, the Selective Service Act and related statutes,
this regulation, or official actions, the Commerce representative
may seek compulsory process. Compulsory process means the institution
of appropriate legal action, including ex parte application for
an inspection warrant or its equivalent, in any forum of appropriate
jurisdiction.

(b) Compulsory process may be sought in advance of an audit,
investigation, or other inquiry, if, in the judgment of the Director
of the Office of Industrial Resource Administration, U.S. Department
of Commerce, in consultation with the Chief Counsel for Export
Administration, U.S. Department of Commerce, there is reason to
believe that a person will refuse to permit an audit, investigation,
or other inquiry, or that other circumstances exist which make
such process desirable or necessary.

[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan.
9, 1989, as amended at 63 FR 31924, June 11, 1998]

Sec. 700.73 Notification of failure to comply.

(a) At the conclusion of an audit, investigation, or other inquiry,
or at any other time, Commerce may inform the person in writing
where compliance with the requirements of the Defense Production
Act, the Selective Service Act and related statutes, this regulation,
or an official action were not met.

(b) In cases where Commerce determines that failure to comply
with the provisions of the Defense Production Act, the Selective
Service Act and related statutes, this regulation, or an official
action was inadvertent, the person may be informed in writing
of the particulars involved and the corrective action to be taken.
Failure to take corrective action may then be construed as a willfull
violation of the Defense Production Act, this regulation, or an
official action.

[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan.
9, 1989, as amended at 63 FR 31924, June 11, 1998]

Sec. 700.74 Violations, penalties, and remedies.

(a) Willful violation of the provisions of Title I or Sections
705 or 707 of the Defense Production Act, the priorities provisions
of the Selective Service Act and related statutes, this part,
or an official action, is a crime and upon conviction, a person
may be punished by fine or imprisonment, or both. The maximum
penalty provided by the Defense Production Act is a $10,000 fine,
or one year in prison, or both. The maximum penalty provided by
the Selective Service Act and related statutes is a $50,000 fine,
or three years in prison, or both.

(b) The government may also seek an injunction from a court of
appropriate jurisdiction to prohibit the continuance of any violation
of, or to enforce compliance with, the Defense Production Act,
this regulation, or an official action.

(c) In order to secure the effective enforcement of the Defense
Production Act, this regulation, and official actions, the following
are prohibited (see section 704 of the Defense Production Act;
see also, for example, sections 2 and 371 of Title 18, United
States Code):

(1) No person may solicit, influence or permit another person
to perform any act prohibited by, or to omit any act required
by, the Defense Production Act, this regulation, or an official
action.

[[Page 86]]

(2) No person may conspire or act in concert with any other person
to perform any act prohibited by, or to omit any act required
by, the Defense Production Act, this regulation, or an official
action.

(3) No person shall deliver any item if the person knows or has
reason to believe that the item will be accepted, redelivered,
held, or used in violation of the Defense Production Act, this
regulation, or an official action. In such instances, the person
must immediately notify the Department of Commerce that, in accordance
with this provision, delivery has not been made.

[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan.
9, 1989, as amended at 63 FR 31924, June 11, 1998]

Sec. 700.75 Compliance conflicts.

If compliance with any provision of the Defense Production Act,
the Selective Service Act and related statutes, this regulation,
or an official action would prevent a person from filling a rated
order or from complying with another provision of the Defense
Production Act, this regulation, or an official action, the person
must immediately notify the Department of Commerce for resolution
of the conflict.

[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan.
9, 1989, as amended at 63 FR 31924, June 11, 1998]

Subpart K–Adjustments, Exceptions, and Appeals

Sec. 700.80 Adjustments or exceptions.

(a) A person may submit a request to the Office of Strategic
Industries and Economic Security, U.S. Department of Commerce,
for an adjustment or exception on the ground that:

(1) A provision of this regulation or an official action results
in an undue or exceptional hardship on that person not suffered
generally by others in similar situations and circumstances; or

(2) The consequence of following a provision of this regulation
or an official action is contrary to the intent of the Defense
Production Act, the Selective Service Act and related statutes,
or this regulation.

(b) Each request for adjustment or exception must be in writing
and contain a complete statement of all the facts and circumstances
related to the provision of this regulation or official action
from which adjustment is sought and a full and precise statement
of the reasons why relief should be provided.

(c) The submission of a request for adjustment or exception shall
not relieve any person from the obligation of complying with the
provision of this regulation or official action in question while
the request is being considered unless such interim relief is
granted in writing by the Office of Strategic Industries and Economic
Security.

(d) A decision of the Office of Strategic Industries and Economic
Security under this section may be appealed to the Assistant Secretary
for Export Administration, U.S. Department of Commerce. (For information
on the appeal procedure, see Sec. 700.81.)

[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan.
9, 1989, as amended at 63 FR 31924, 31925, June 11, 1998]

Sec. 700.81 Appeals.

(a) Any person who has had a request for adjustment or exception
denied by the Office of Strategic Industries and Economic Security
under Sec. 700.80, may appeal to the Assistant Secretary for Export
Administration, U.S. Department of Commerce, who shall review
and reconsider the denial.

(b) An appeal must be received by the Office of the Assistant
Secretary for Export Administration, Bureau of Export Administration,
U.S. Department of Commerce, Washington, D. C. 20230, Ref: DPAS,
no later than 45 days after receipt of a written notice of denial
from the Office of Strategic Industries and Economic Security.
After this 45-day period, an appeal may be accepted at the discretion
of the Assistant Secretary for Trade Administration for good cause
shown.

(c) Each appeal must be in writing and contain a complete statement
of all the facts and circumstances related to the action appealed
from and a full and precise statement of the reasons the decision
should be modified or reversed.

[[Page 87]]

(d) In addition to the written materials submitted in support
of an appeal, an appellant may request, in writing, an opportunity
for an informal hearing. This request may be granted or denied
at the discretion of the Assistant Secretary for Export Administration.

(e) When a hearing is granted, the Assistant Secretary for Export
Administration may designate an employee of the Department of
Commerce to conduct the hearing and to prepare a report. The hearing
officer shall determine all procedural questions and impose such
time or other limitations deemed reasonable. In the event that
the hearing officer decides that a printed transcript is necessary,
all expenses shall be borne by the appellant.

(f) When determining an appeal, the Assistant Secretary for Export
Administration may consider all information submitted during the
appeal as well as any recommendations, reports, or other relevant
information and documents available to the Department of Commerce,
or consult with any other persons or groups.

(g) The submission of an appeal under this section shall not
relieve any person from the obligation of complying with the provision
of this regulation or official action in question while the appeal
is being considered unless such relief is granted in writing by
the Assistant Secretary for Export Administration.

(h) The decision of the Assistant Secretary for Export Administration
shall be made within a reasonable time after receipt of the appeal
and shall be the final administrative action. It shall be issued
to the appellant in writing with a statement of the reasons for
the decision.

[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan.
9, 1989, as amended at 63 FR 31925, June 11, 1998]

Subpart L–Miscellaneous Provisions

Sec. 700.90 Protection against claims.

A person shall not be held liable for damages or penalties for
any act or failure to act resulting directly or indirectly from
compliance with any provision of this regulation, or an official
action, notwithstanding that such provision or action shall subsequently
be declared invalid by judicial or other competent authority.

Sec. 700.91 Records and reports.

(a) Persons are required to make and preserve for at least three
years, accurate and complete records of any transaction covered
by this regulation (OMB control number 0694-0053) or an official
action.

(b) Records must be maintained in sufficient detail to permit
the determination, upon examination, of whether each transaction
complies with the provisions of this regulation or any official
action. However, this regulation does not specify any particular
method or system to be used.

(c) Records required to be maintained by this regulation must
be made available for examination on demand by duly authorized
representatives of Commerce as provided in Sec. 700.71.

(d) In addition, persons must develop, maintain, and submit any
other records and reports to Commerce that may be required for
the administration of the Defense Production Act, the Selective
Service Act and related statutes, and this regulation.

(e) Section 705(e) of the Defense Production Act provides that
information obtained under this section which the President deems
confidential, or with reference to which a request for confidential
treatment is made by the person furnishing such information, shall
not be published or disclosed unless the President determines
that the withholding of this information is contrary to the interest
of the national defense. Information required to be submitted
to Commerce in connection with the enforcement or administration
of the Act, this regulation, or an official action, is deemed
to be confidential under section 705(e) of the Act and shall not
be published or disclosed except as required by law.

[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan.
9, 1989, as amended at 63 FR 31924, 31925, June 11, 1998]

Sec. 700.92 Applicability of this regulation and official actions.

(a) This regulation and all official actions, unless specifically
stated otherwise, apply to transactions in any

[[Page 88]]

state, territory, or possession of the United States and the
District of Columbia.

(b) This regulation and all official actions apply not only to
deliveries to other persons but also include deliveries to affiliates
and subsidiaries of a person and deliveries from one branch, division,
or section of a single entity to another branch, division, or
section under common ownership or control.

(c) This regulation and its schedules shall not be construed
to affect any administrative actions taken by Commerce, or any
outstanding contracts or orders placed pursuant to any of the
regulations, orders, schedules or delegations of authority under
the Defense Materials System and Defense Priorities System previously
issued by Commerce. Such actions, contracts, or orders shall continue
in full force and effect under this regulation unless modified
or terminated by proper authority.

(d) The repeal of the regulations, orders, schedules and delegations
of authority of the Defense Materials System (DMS) and Defense
Priorities System (DPS) shall not have the effect to release or
extinguish any penalty or liability incurred under the DMS/DPS.
The DMS/ DPS shall be treated as still remaining in force for
the purpose of sustaining any action for the enforcement of such
penalty or liability.

Sec. 700.93 Communications.

All communications concerning this regulation, including requests
for copies of the regulation and explanatory information, requests
for guidance or clarification, and requests for adjustment or
exception shall be addressed to the Office of Industrial Resource
Administration, Room 3876, U.S. Department of Commerce, Washington,
DC 20230, Ref: DPAS; telephone: (202) 482-3634 or FAX: (202) 482-5650.

[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan.
9, 1989, as amended at 63 FR 31925, June 11, 1998]

Schedule I to Part 700–Approved Programs and Delegate Agencies

The programs listed in this schedule have been approved for priorities
and allocations support under this part. They have equal preferential
status. The Department of Commerce has authorized the Delegate
Agencies to use this part in support of those programs assigned
to them, as indicated below.

——————————————————————————–

Program identification symbol

Approved program

Delegate agency

——————————————————————————–

Defense programs:
A1………….	Aircraft………………	Department of Defense.\1\
A2………….	Missiles……………..	Do.
A3………….	Ships…………………	Do.
A4………….	Tank__Automotive…	Do.
A5………….	Weapons…………….	Do.
A6………….	Ammunition…………	Do.
A7………….	Electronic and communications equipment.	Do.
B1………….	Military building supplies.	Do.
B8………….	Production equipment (for defense contractor’s account).	Do.
B9………….	Production equipment (Government owned).	Do.
C1………….	Food resources (combat rations).	Do.
C2………….	Department of Defense construction.	Do.
C3………….	Maintenance, repair, and operating supplies (MRO) for Department of Defense facilities.	Do.
C9………….	Miscellaneous………	Do.

International defense programs:
Canada:
D1………….	Canadian military programs.	Department of Commerce.
D2………….	Canadian production and construction.	Do.
D3………….	Canadian atomic energy program	Do.
Other Foreign Nations:
G1………….	Certain munitions items purchased by foreign governments through domestic commercial channels for export.	Department of Commerce.
G2………….	Certain direct defense needs of foreign governments other than Canada.	Do.
G3………….	Foreign nations (other than Canada) production and construction.	Do.

[[Page 89]]

Co-Production:
J1………….	F-16 Co-Production Program.	Departments of Commerce and Defense.

Atomic energy programs:
E1………….	Construction………..	Department of Energy.
E2………….	Operations–including maintenance, repair, and operating supplies (MRO).	Do.
E3………….	Privately owned facilities	Do.

Domestic energy programs:
F1………….	Exploration, production, refining, and transportation.	Department of Energy.
F2………….	Conservation……….	Do.
F3………….	Construction, repair, and maintenance.	Do.

Other defense, energy, and related programs:
H1………….	Certain combined orders (see section 700.17(c)).	Department of Commerce.
H5………….	Private domestic production.	Do.
H6………….	Private domestic construction.	Do.
H7………….	Maintenance, repair, and operating supplies (MRO).	Do.
H8………….	Designated Programs	Do.
K1………….	Federal supply items	General Services Administration.
N1………….	Emergency preparedness activities.	Federal Emergency Management Agency.

——————————————————————————–

\1\ Department of Defense includes: Armed Services–Army, Navy
(including Marines and Coast Guard), and Air Force; Component
Agencies, including Defense Logistics Agency, National Security
Agency, Defense Advanced Research Projects Agency, Defense Information
Systems Agency, Defense Nuclear Agency, Defense Mapping Agency,
and On-Site Inspection Agency; and Associated Agencies, including
Central Intelligence Agency and National Aeronautics and Space
Administration.

[63 FR 31925, June 11, 1998]

Appendix I to Part 700–Form BXA-999–Request for Special Priorities
Assistance

[[Page 90]]

[GRAPHIC] [TIFF OMITTED] TR11JN98.008

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[GRAPHIC] [TIFF OMITTED] TR11JN98.009

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[GRAPHIC] [TIFF OMITTED] TR11JN98.010

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[GRAPHIC] [TIFF OMITTED] TR11JN98.011

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[63 FR 31926, June 11, 1998]