§10b–1. Prohibition on procurement contracts; exceptions

(a) Federal contracts for goods or services of foreign origin

A Federal agency shall not award any contract-

(1) for the procurement of an article, material, or supply mined, produced, or manufactured-

(A) in a signatory country that is considered to be a signatory not in good standing of the Agreement pursuant to section 2515(f)(3)(A) ¹ of title 19; or

(B) in a foreign country whose government maintains, in government procurement, a significant and persistent pattern or practice of discrimination against United States products or services which results in identifiable harm to United States businesses, as identified by the President pursuant to section 2515(g)(1)(A) of title 19; or

(2) for the procurement of a service of any contractor or subcontractor that is a citizen or national of a foreign country identified by the President pursuant to section 2515(f)(3)(A) ¹ or 2515(g)(1)(A) of title 19, or is owned or controlled directly or indirectly by citizens or nationals of such a foreign country.

(b) Exceptions to prohibition

The prohibition on procurement in subsection (a) of this section is subject to sections 2515(h) and 2515(j) of title 19 and shall not apply-

(1) with respect to services, articles, materials, or supplies procured and used outside the United States and its territories;

(2) notwithstanding section 2515(g) of title 19, to an eligible product of a country which is a signatory country unless that country is considered to be a signatory not in good standing pursuant to section 2515(f)(3)(A) ¹ of title 19; or

(3) notwithstanding section 2515(g) of title 19, to a country that is a least developed country (as that term is defined in section 2518(6) of title 19).

(c) Authority of President or Federal agency heads to authorize contracts

Notwithstanding subsection (a) of this section, the President or the head of a Federal agency may authorize the award of a contract or class of contracts if the President or the head of the Federal agency-

(1) determines that such action is necessary-

(A) in the public interest;

(B) to avoid the restriction of competition in a manner which would limit the procurement in question to, or would establish a preference for, the services, articles, materials, or supplies of a single manufacturer or supplier; or

(C) because there would be or are an insufficient number of potential or actual bidders to assure procurement of services, articles, materials, or supplies of requisite quality at competitive prices; and

(2) notifies the Committee on Governmental Affairs of the Senate, as well as other appropriate Senate committees, and the appropriate committees of the House of Representatives, of such determination-

(A) not less than 30 days prior to the date of the award of the contract or the date of authorization of the award of a class of contracts; or

(B) if the agency's need for the service, article, material, or supply is of such urgency that the United States would be seriously injured by delaying the award or authorization, not more than 90 days after the date of such award or authorization.

(d) Limitation on authority of Federal agency heads to authorize contracts

The authority of the head of a Federal agency under subsection (c) of this section shall not apply to contracts subject to memorandums of understanding entered into by the Department of Defense (or any military department) and a representative of a foreign country (or agency or instrumentality thereof). In the case of any such contracts, any determinations and notice required by subsection (c) of this section shall be made by-

(1) the President, or

(2) if delegated, by the Secretary of Defense or the Secretary of the Army, Navy, or Air Force, subject to review and policy guidance by the organization established under section 1872(a) of title 19.

(e) Non-delegability of agency heads' authority

The authority of the head of a Federal agency under subsection (c) or (d) of this section may not be delegated.

(f) Other authorities to bar procurement from non-designated countries not affected

Nothing in this section shall restrict the application of the prohibition under section 2512(a)(1) of title 19.

(g) Ownership or control of contractors or subcontractors by citizens or nationals of foreign countries

(1) For purposes of this section with respect to construction services, a contractor or subcontractor is owned or controlled directly or indirectly by citizens or nationals of a foreign country if-

(A) 50 percent or more of the voting stock of the contractor or subcontractor is owned by one or more citizens or nationals of the foreign country;

(B) the title to 50 percent or more of the stock of the contractor or subcontractor is held subject to trust or fiduciary obligations in favor of one or more citizens or nationals of the foreign country;

(C) 50 percent or more of the voting stock of the contractor or subcontractor is vested in or exercisable on behalf of one or more citizens or nationals of the foreign country;

(D) the case of a corporation-

(i) the number of its directors necessary to constitute a quorum are citizens or nationals of the foreign country; or

(ii) the corporation is organized under the laws of the foreign country or any subdivision, territory, or possession thereof; or

(E) in the case of a contractor or subcontractor who is a participant in a joint venture or a member of a partnership, any participant of the joint venture or partner meets any of the criteria in subparagraphs (A) through (D) of this paragraph.

(2)(A) For purposes of this section, except as provided in paragraph (1), a determination of whether a contractor or subcontractor is a citizen or national of a foreign country or is owned or controlled directly or indirectly by citizens or nationals of a foreign country shall be made in accordance with policy guidance prescribed by the Administrator for Federal Procurement Policy after conducting one or more public hearings at which interested parties may present comments. Sections 556 and 557 of title 5 shall not apply to the conduct of any such hearing.

(B) The Administrator shall include in the policy guidance prescribed under subparagraph (A) definitions, procedures, standards, and rules that, to the extent the Administrator considers appropriate and consistent with the applicability of such policy guidance to all services (other than construction services), is the same as or similar to the definitions, procedures, standards, and rules that the Administrator has developed and issued for the administration of section 109 of the Treasury, Postal Service, and General Government Appropriations Act, 1988 (101 Stat. 1329–434).

(h) Definitions

As used in this section-

(1) the term "Agreement" means the Agreement on Government Procurement as defined in section 2518(1) of title 19;

(2) the term "signatory" means a party to the Agreement; and

(3) the term "eligible product" has the meaning given such term by section 2518(4) of title 19.

(Mar. 3, 1933, ch. 212, title III, §4, as added Aug. 23, 1988, Pub. L. 100–418, title VII, §7002(2), 102 Stat. 1545 ; amended Oct. 13, 1994, Pub. L. 103–355, title VII, §7206(a), 108 Stat. 3382 .)

Termination of Section

For termination of section by section 7004 of Pub. L. 100–418, see Termination Date note below.

References in Text

Section 2515(f)(3) of title 19, referred to in subsecs. (a)(1)(A), (2) and (b)(2), was amended generally by Pub. L. 103–465, title III, §341(b)(1), Dec. 8, 1994, 108 Stat. 4952 , and, as so amended, provisions formerly appearing in section 2515(f)(3)(A) of title 19 are contained in section 2515(f)(3)(B)(i)(I) of title 19.

Section 109 of the Treasury, Postal Service, and General Government Appropriations Act, 1988, referred to in subsec. (g)(2)(B), is section 109 of Pub. L. 100–202, which is set out as a note under section 601 of Title 40, Public Buildings, Property, and Works.

Prior Provisions

A prior section 4 of act Mar. 3, 1933, was renumbered section 5 and is set out as a note under section 10c of this title.

Amendments

1994-Subsec. (g)(2)(C), (3). Pub. L. 103–355 struck out pars. (2)(C) and (3) which read as follows:

"(C) The policy guidance required by subparagraph (A) shall be prescribed not later than 180 days after August 23, 1988.

"(3)(A) The Administrator for Federal Procurement Policy shall conduct an assessment of the current rules under sections 10a, 10b, 10b–1, and 10c of this title for making determinations of country of origin and alternatives to such rules. Such assessment shall identify and evaluate (i) reasonable alternatives to such rules of origin, including one or more alternative rules that require a determination on the basis of total cost, and (ii) the specific cost factors that should be included in determining total cost.

"(B) In conducting the analysis, the Administrator shall consult and seek comment from representatives of United States labor and business, other interested United States persons, and other Federal agencies. The Administrator shall hold public hearings for the purpose of obtaining such comment, and a transcript of such hearings shall be appended to the report required by subparagraph (C).

"(C) A report on the results of the analysis shall be submitted to the appropriate committees of the House of Representatives and to the Committee on Governmental Affairs and other appropriate committees of the Senate not later than 18 months after August 23, 1988. Such report shall include proposed policy guidance or any recommended legislative changes on the factors to be used in making determinations of country of origin."

Termination Date

Section to cease to be effective on Apr. 30, 1996, unless Congress, after reviewing report required by section 2515(k) of Title 19, Customs Duties, extends such date, see section 7004 of Pub. L. 100–418, set out as an Effective and Termination Dates of 1988 Amendment note under section 10a of this title.

Delegation of Functions

Functions of President under this section delegated to Secretary of Defense, see section 4–101(1) of Ex. Ord. No. 12661, Dec. 27, 1988, 54 F.R. 779, set out as a note under section 2901 of Title 19, Customs Duties.

Section Referred to in Other Sections

This section is referred to in sections 10b–2, 10c, 42, 428 of this title; title 10 sections 2324, 2533; title 15 sections 2507, 5528; title 19 sections 2512, 2513, 2515; title 20 section 6067; title 24 section 225h; title 25 section 1638b.

¹ See References in Text note below.