IV.  Regulatory Flexibility Act

DoD does not expect this rule to have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq. However, because this rule has impact on the application of domestic source restrictions, DoD has performed a final regulatory flexibility analysis, which is summarized as follows:

This rule revises the restriction on ball and roller bearings to implement the annual defense appropriations act restriction. The DFARS currently reflects the more stringent requirement of 10 U.S.C. 2534(a)(5), that the bearing and all main bearing components must be manufactured in the United States or Canada. This restriction expired on October 1, 2005. This rule interprets the annual defense appropriations act to allow a 50 percent component test similar to the Buy American Act component test.

The objective of the rule is to allow more flexibility to domestic bearings manufacturers in the acquisition of nondomestic components. The legal basis for the rule is section 8065 of the DoD Appropriations Act for Fiscal Year 2002 (Pub. L. 107-117) and the same restriction in subsequent DoD appropriations acts.

One respondent stated that the fact that the rule affects any small business supplier is worthy of consideration, not just a significant number. The analysis, however, did assess both positive and negative impact on small business entities. Generally, the impact is considered to be positive (see next paragraph). No changes were made to the rule as a result of the comment. The only alternative would be to do nothing, which would have worse results as more waivers are granted for nonavailability of domestic bearings.

The final rule affects manufacturers of bearings, bearing components, and noncommercial products that incorporate bearings.

Bearings. This rule applies only to bearings purchased as end products or noncommercial bearings incorporated in noncommercial end products or noncommercial components of noncommercial end products. Because this rule allows some element of nondomestic content in ball and roller bearing components, as long as the United States- or Canadian- manufactured bearing contains less than 50 percent nondomestic bearing components, both large and small businesses may find greater numbers of sources from which to obtain ball and roller bearing components. Greater sourcing choices may enable small businesses to compete more successfully for DoD ball and roller bearing acquisitions.

Bearing components. Manufacturers of domestic bearing components may face increased competition from manufacturers of nondomestic bearing components. However, many of the bearing components that are being outsourced are no longer readily available from domestic sources.

Manufacturers of noncommercial products incorporating bearings. Manufacturers of noncommercial products incorporating bearings (both large and small businesses) will find it easier to acquire domestic bearings and will less frequently need to request nonavailability determinations.

There is no significant economic impact on small entities as a result of this rule. The impact of this rule on small business is expected to be predominantly positive. If this rule is not implemented, the regulations will continue to meet the statutory requirements, but more domestic nonavailability waivers would continue to be required, which would mean that there would be no requirement to manufacture such bearings in the United States or Canada, or provide predominantly domestic components.