I. Background

In order to implement section 846 of the National Defense Authorization Act for Fiscal Year 2011 (Pub. L. 111-383), this interim rule amends DFARS subpart 225.70 by adding a new section 225.7017, Utilization of domestic photovoltaic devices, as well as an associated provision and clause in DFARS part 252 and conforming changes to DFARS part 212.

Photovoltaic devices produce direct current electricity from sunlight, which can be used to provide power to things such as DoD-owned facilities or private housing.

As specified in section 846, a "covered contract" is defined in this interim rule as an energy savings performance contract, a utility service contract, or a private housing contract, if such contract will result in DoD ownership of photovoltaic devices, by means other than DoD purchase as end products. DoD is deemed to own a photovoltaic device if the device is--

(1) Installed on DoD property or in a facility owned by DoD; and

(2) Reserved for the exclusive use of DoD for the full economic life of the device.

Prior to this definition, ownership would have required transfer of title for the equipment to the Government. Under section 846, exclusive use of the power for the full economic life of the equipment equates to ownership and would then require compliance with 41 U.S.C. chapter 83, Buy American, unless DoD does not have exclusive rights to the power generated from the device (could be under any of the scenarios identified in (1) or (2) above) or the contract term is less than the full economic life of the photovoltaic device.

Land leases are not included in the DFARS definition of "covered contract," because the DFARS does not cover land leases. Contracts that include purchase of photovoltaic devices as end products are covered under the standard DFARS Buy American--trade agreements provisions and clauses.

Photovoltaic devices provided under any covered contract shall comply with the Buy American statute, subject to the exceptions to that statute provided in the Trade Agreements Act of 1979 (19 U.S.C. 2501 et seq.) or otherwise provided by law.

Exceptions are provided for qualifying country photovoltaic devices, Free Trade Agreement or designated country photovoltaic devices (depending on the estimated value of the photovoltaic devices), and other foreign photovoltaic devices, if covered by the Buy American statute and the cost of a domestic photovoltaic device would be unreasonable (i.e., 50 percent more than the cost of the foreign photovoltaic device).