15 C,F,R. Part 700

15 C.F.R. 700.txt

Defense Priorities and Allocations System

15 C,F,R. Part 700

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PART 700DEFENSE PRIORITIES AND ALLOCATIONS SYSTEM



Section Contents



Subpart APurpose


700.1 Purpose of this regulation.



Subpart BOverview


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 CDefinitions


700.8 Definitions.



Subpart DIndustrial 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 EIndustrial Priorities for Energy Programs


700.20 Use of priority ratings.

700.21 Application for priority rating authority.



Subpart FNational Emergency Preparedness and Critical Items


700.30 Priorities and allocations in a national emergency.

700.31 Metalworking machines.



Subpart G [Reserved]




Subpart HSpecial 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 will not be provided.

700.55 Assistance programs with Canada and other nations.



Subpart IOfficial Actions


700.60 General provisions.

700.61 Rating Authorizations.

700.62 Directives.

700.63 Letters of Understanding.



Subpart JCompliance


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 KAdjustments, Exceptions, and Appeals


700.80 Adjustments or exceptions.

700.81 Appeals.



Subpart LMiscellaneous 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 700Approved Programs and Delegate Agencies

Appendix I to Part 700Form BIS999Request 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. ), Executive Order 12919, 59 FR 29525, 3 CFR, 1994 Comp. 901, and

Executive Order 13286, 68 FR 10619, 3 CFR, 2003 Comp. 166; 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. 309;

and Executive Order 12656, 53 FR 226, 3 CFR, 1988 Comp. 585.

Source: 49 FR 30414, July 30, 1984, unless otherwise noted. Redesignated

at 54 FR 601, Jan. 9, 1989.

Subpart APurpose

top

700.1 Purpose of this regulation.

top

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

App. 2061, et seq .) (Defense Production Act), 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(14) of

the Defense Production Act provides that this term includes emergency

preparedness activities conducted pursuant to Title VI of the Stafford

Act and critical infrastructure protection and restoration.

(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 BOverview. 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; 71 FR 39527, July 13, 2006]

Subpart BOverview

top

700.2 Introduction.

top

(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 I 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 authorities 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.

[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as

amended at 63 FR 31921, June 11, 1998; 71 FR 39527, July 13, 2006]

700.3 Priority ratings and rated orders.

top

(a) Rated orders are identified by a priority rating consisting of the

ratingeither DX or DOand 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 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.

(c) All rated orders must be scheduled to the extent possible to ensure

delivery by the required delivery date.

(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]

700.4 Priorities and allocations in a national emergency.

top

(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]

700.5 Special priorities assistance.

top

(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.

700.6 Official actions.

top

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).

700.7 Compliance.

top

(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]

Subpart CDefinitions

top

700.8 Definitions.

top

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 Secretary of

Homeland Security, 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.

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; 71 FR

39528, July 13, 2006]

Subpart DIndustrial Priorities

top

700.10 Delegation of authority.

top

(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.

[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as

amended at 63 FR 31922, June 11, 1998; 71 FR 39528, July 13, 2006]

700.11 Priority ratings.

top

(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 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 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 symbolDO

and DXand the program identification symbol, such as A1, C2, or N1. 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; 71 FR 39528, July 13, 2006]

700.12 Elements of a rated order.

top

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;

(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]

700.13 Acceptance and rejection of rated orders.

top

(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

700.75].

(d) Customer notification requirements. (1) A person must accept or reject

a rated order and transmit the acceptance or rejection in writing (hard

copy), or in electronic format, 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 also

provide the reasons for the rejection, pursuant to paragraphs (b) and (c)

of this section, in writing (hard copy) or electronic format.

(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 06940053)

[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as

amended at 63 FR 31922, June 11, 1998; 70 FR 10864, Mar. 7, 2005]

700.14 Preferential scheduling.

top

(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.

(c) Conflicting rated orders. (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 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 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 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 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]

700.15 Extension of priority ratings.

top

(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.

700.16 Changes or cancellations of priority ratings and rated orders.

top

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

(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 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.

700.17 Use of rated orders.

top

(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 700.12, are

included on the order with the statement required in 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 700.13 and give preferential treatment only to the

rated quantities as required by this part. 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 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]

700.18 Limitations on placing rated orders.

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(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 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 700.51.]

(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) Jurisdiction limitations . (1) The priorities and allocations

authority for certain items have 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) (The Department of Agriculture and the Department of Commerce

have agreed that the Department of Defense may place rated contracts and

orders for food resources in support of troops, including but not limited

to, meals ready to eat (MREs), tray-packs (T-rations), A-rations, and

B-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);

and

(vi) Communications services (National Communications System under

Executive Order 12472 of April 3, 1984).

(2) The jurisdiction of the Department of Commerce and the Departments of

Energy and Agriculture over certain specific items included in the

categories listed above has been clarified by Interagency Memoranda of

Understanding.

(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; 71 FR 39528, July 13, 2006]

Subpart EIndustrial Priorities for Energy Programs

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700.20 Use of priority ratings.

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(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.

700.21 Application for priority rating authority.

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(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 a request to the Department of Energy. Further

information may be obtained from the U.S. Department of Energy, Office of

Electricity Delivery and Energy Reliability, 1000 Independence Avenue,

SW., Washington, DC 20585.

(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.

(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; 73 FR 34, Jan. 2, 2008]

Subpart FNational Emergency Preparedness and Critical Items

top

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

700.30 Priorities and allocations in a national emergency.

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(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.

(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 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 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) [Reserved]

[63 FR 31923, June 11, 1998, as amended at 71 FR 39528, July 13, 2006]

700.31 Metalworking machines.

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(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]

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Subpart HSpecial Priorities Assistance

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700.50 General provisions.

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(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 BIS999 (OMB control number 06940057)

to the local contract administration representative. Form BIS999 may be

obtained from the Delegate Agency representative or from the Department of

Commerce. A sample Form BIS999 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]

700.51 Requests for priority rating authority.

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(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.

(c) Rating authority in advance of a rated prime contract. (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.

700.52 Examples of assistance.

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(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:

(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.

700.53 Criteria for assistance.

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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.

700.54 Instances where assistance will not be provided.

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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;

(c) Gain competitive advantage;

(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]

700.55 Assistance programs with Canada and other nations.

top

(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,

Italy, The Netherlands, Sweden, and the United Kingdom in support of

approved programs.

(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.

(3) Any person in the United States ordering defense items in Canada in

support of an approved program 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, the supplier or vendor should contact the Canadian Public Works and

Government Services Canada, for authority to place rated orders in the

United States: Public Works and Government Services Canada, Acquisitions

Branch, Business Management Directorate, Phase 3, Place du Portage, Level

0A1, 11 Laurier Street, Gatineau, Quebec, K1A 0S5, Canada; telephone:

(819) 9566825; Fax: (819) 9567827.

(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, Acquisitions Branch, Business Management

Directorate, in accordance with its procedures.

(5) Persons in Canada needing special priorities assistance in obtaining

defense items in the United States may apply to the Canadian Public Works

and Government Services Canada, Acquisitions Branch, Business Management

Directorate, for such assistance. Public Works and Government Services

Canada will forward appropriate requests to the U.S. Department of

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 BIS999. Commerce will forward appropriate requests to

the Canadian Public Works and Government Services Canada.

(c) Foreign nations. (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 submit a request for such assistance or rating authority to

the Office of the Deputy Under Secretary of Defense (Industrial Policy):

Office of the Deputy Under Secretary of Defense (Industrial Policy), 3330

Defense Pentagon, Washington, DC 20301; telephone: (703) 6970051; Fax:

(703) 6954277.

(i) If the end product is being acquired by a U.S. government agency, the

request should be submitted to the Office of the Deputy Under Secretary of

Defense (Industrial Policy) through the U.S. contract administration

representative.

(ii) If the end product is being acquired by a foreign nation, the request

must be sponsored prior to its submission to the Office of the Deputy

Under Secretary of Defense (Industrial Policy) by the government of the

foreign nation that will use the end product.

(2) If the Department of Defense endorses the request, it will be

forwarded to Commerce for appropriate action.

(d) Requesting assistance in Italy, The Netherlands, Sweden, and the

United Kingdom. (1) The U.S. Department of Defense has entered into

bilateral security of supply arrangements with Italy, The Netherlands,

Sweden, and the United Kingdom that allow the U.S. Department of Defense

to request the priority delivery for U.S. Department of Defense contracts,

subcontracts, and orders from companies in these countries.

(2) Any person in the United States requiring assistance in obtaining the

priority delivery of a contract, subcontract, or order in Italy, The

Netherlands, Sweden, or the United Kingdom to support an approved program

should contact the Office of the Deputy Under Secretary of Defense

(Industrial Policy) for assistance. Persons in Italy, The Netherlands,

Sweden, and the United Kingdom should request assistance in accordance

with 700.55(c)(1).

[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as

amended at 63 FR 31924, June 11, 1998; 71 FR 39528, July 13, 2006; 71 FR

54904, Sept. 20, 2006]

Subpart IOfficial Actions

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700.60 General provisions.

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(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

700.71(c).

[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as

amended at 71 FR 39528, July 13, 2006]

700.61 Rating Authorizations.

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(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 700.51.

700.62 Directives.

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(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.

700.63 Letters of Understanding.

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(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 JCompliance

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700.70 General provisions.

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(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 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]

700.71 Audits and investigations.

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(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.

(c) In administering this regulation, Commerce may issue the following

documents which constitute official actions:

(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 MailReturn 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 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]

700.72 Compulsory process.

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(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 Strategic Industries and Economic Security, U.S. Department

of Commerce, in consultation with the Chief Counsel for Industry and

Security, 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; 67 FR 45633, July 10, 2002; 71 FR

39528, July 13, 2006]

700.73 Notification of failure to comply.

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(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]

700.74 Violations, penalties, and remedies.

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(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.

(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]

700.75 Compliance conflicts.

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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 KAdjustments, Exceptions, and Appeals

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700.80 Adjustments or exceptions.

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(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 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]

700.81 Appeals.

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(a) Any person who has had a request for adjustment or exception denied by

the Office of Strategic Industries and Economic Security under 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 Industry and Security, 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

Export 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.

(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; 71 FR 39528, July 13, 2006]

Subpart LMiscellaneous Provisions

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700.90 Protection against claims.

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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.

700.91 Records and reports.

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(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 06940053) 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 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]

700.92 Applicability of this regulation and official actions.

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(a) This regulation and all official actions, unless specifically stated

otherwise, apply to transactions in any 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.

700.93 Communications.

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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 Strategic Industries and Economic Security,

Room 3876, U.S. Department of Commerce, Washington, DC 20230, Ref: DPAS;

telephone: (202) 4823634 or fax: (202) 4825650.

[71 FR 39528, July 13, 2006]

Schedule I to Part 700Approved Programs and Delegate Agencies

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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 symbolApproved programDelegate agency

Defense programs:

A1AircraftDepartment of Defense.1

A2Missiles Do.

A3Ships Do.

A4TankAutomotive Do.

A5Weapons Do.

A6Ammunition Do.

A7Electronic and communications equipment Do.

B1Military building supplies Do.

B8Production equipment (for defense contractor's account) Do.

B9Production equipment (Government owned) Do.

C1Food resources (combat rations) Do.

C2Department of Defense construction Do.

C3Maintenance, repair, and operating supplies (MRO) for Department

of Defense facilities Do.

C9Miscellaneous Do.

International defense programs:

Canada:

D1Canadian military programsDepartment of Commerce.

D2Canadian production and construction Do.

D3Canadian atomic energy program Do.

Other Foreign Nations:

G1Certain munitions items purchased by foreign governments through

domestic commercial channels for exportDepartment of Commerce.

G2Certain direct defense needs of foreign governments other than

Canada Do.

G3Foreign nations (other than Canada) production and construction

Do.

Co-Production:

J1F16 Co-Production ProgramDepartments of Commerce and Defense.

Atomic energy programs:

E1ConstructionDepartment of Energy.

E2Operationsincluding maintenance, repair, and operating supplies

(MRO) Do.

E3Privately owned facilities Do.

Domestic energy programs:

F1Exploration, production, refining, and transportationDepartment of

Energy.

F2Conservation Do.

F3Construction, repair, and maintenance Do.

Other defense, energy, and related programs:

H1Certain combined orders (see section 700.17(c))Department of

Commerce.

H5Private domestic production Do.

H6Private domestic construction Do.

H7Maintenance, repair, and operating supplies (MRO) Do.

H8Designated Programs Do.

K1Federal supply itemsGeneral Services Administration.

Homeland security programs:

N1Federal emergency preparedness, mitigation, response, and

recoveryDepartment of Homeland Security.

N2State, local, tribal government emergency preparedness,

mitigation, response, and recovery Do.

N3Intelligence and warning systems Do.

N4Border and transportation security Do.

N5Domestic counter-terrorism, including law enforcement Do.

N6Chemical, biological, radiological, and nuclear countermeasures

Do.

N7Critical infrastructure protection and restoration Do.

N8Miscellaneous Do.


1Department of Defense includes: The Office of the Secretary of Defense,

the Military Departments, the Joint Staff, the Combatant Commands, the

Defense Agencies, the Defense Field Activities, all other organizational

entities in the Department of Defense, and, for purposes of this

regulation, the Central Intelligence Agency and the National Aeronautics

and Space Administration as Associated Agencies.

[63 FR 31925, June 11, 1998, as amended at 71 FR 39529, July 13, 2006; 72

FR 3944, Jan. 29, 2007]

Appendix I to Part 700Form BIS999Request for Special Priorities

Assistance

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View or download PDF


View or download PDF


View or download PDF


View or download PDF

[71 FR 39529, July 13, 2006]

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