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Thread: IMPORTANT - NEW DoD RULES - COMMENT BY DEC 26th

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    Default IMPORTANT - NEW DoD RULES - COMMENT BY DEC 26th

    IMPORTANT - NEW RULES BY DoD FOR SALES OF SURPLUS PROPERTY - COMMENTS MUST BE SUBMITTED BY DEC 26th

    Sorry about not getting this out sooner. I received the email from GL(for once GL is looking out for US) at the end of this message Dec 22 and only got around to reading it closely tonight. The DoD is proposing new rules which will make it very difficult, if not impossible, to purchase Demil B and Q property, the stuff you need EUCs on, like trucks and other vehicles, engines, etc. The public is invited to provide comments on these proposed rules, BUT THE COMMENTS MUST BE SUBMITTED BY DEC 26th!

    The comments I submitted are below. I URGE EVERYONE OF YOU TO SUBMIT A COMMENT. The GL email provides very easy to follow steps to submit a comment, BUT DO IT TODAY! TOMORROW IS TOO LATE. Feel free to copy and paste my comments as written, modify as you feel necessary, or write you own comments, but JUST DO IT! Protect your ability to purchase MVs and other components!

    THE TEXT OF MY COMMENTS:

    I strongly object to the proposed rule making. The proposed rule is totally unnecessary and redundant, given that the same information is already required, or could be easily amended to be included in, the EUC (End User Certificate) already required for purchasers Demil B and Q property.

    I further make the following arguments regarding the proposed rules:

    1. The Qualified Trading Partners (QTP) requirements would only affect purchasers who intend to EXPORT Demil B and Q property. Those exporters are a very small percentage of the total number of purchasers of Demil B and Q property. The proposed rules would impose an onerous burden on the vast majority of Demil B and Q property who have no intention to and do not export the aforementioned property.

    2. The estimated number of respondents is greatly understated. The DoD states the estimated number of annual respondents a 2,040. This is pure bull poop. The number of State, local and tribal governments who bid on Demil B and Q property is at least in the 10s of thousands of bidders; the number of BUSINESSES governments who bid on this property is at least in the 10s of thousands of bidders; the number of INDIVIDUALS who bid on this property for personal use is in the HUNDREDS of thousands. For further proof of this claim, ask Government Liquidation and DSA how many registered bidders they have!

    3. The first mentioned requirement "Applicant must demonstrate it operates an established business enterprise or provides certification of valid personal use" is unconstitutionally vague. What constitutes an "established business enterprise"? Many business purchasers may operate a business which is not regulated by Federal, State or Local Governmental entities. How do these businesses certify they are an "established business enterprise"? And what constitutes an "established business"? How can a start up business qualify as an "established business"? How can an individual certify a purchase is for a "valid personal use"? Any of the requested information above is already provided, to the extent possible, in the EUC.

    4. Requirement 2: "Applicant must establish it ... has adequate export management controls in place to prelude improper transfers of USML and CCL items". Again, this applies to only a very small subset of bidders. Again, this is unconstitutionally vague. How do those few purchasers of Demil B and Q property for export demonstrate they have "established adequate export management controls"? How do private parties purchasing Demil B and Q property for personal use demonstrate they have "established adequate export management controls"?

    5. Requirement 3: "Applicants must demonstrate a history of compliance with export control laws". How can a new business which is just starting up with no existing "history of compliance with export control laws", a business which does not export Demil B and Q property, or an individual purchasing Demil B and Q property purely for personal use "demonstrate a history of compliance with export control laws"?

    6. Requirement 5, "Applicant does not history of acts involving fraud, etc.", and Requirement 6, "Applicant does not history of acts involving violence, terrorist activities, etc." are either already included, or could easily be incorporated into, the existing EUC process.

    7. Requirement 6: "Applicant must not have a history of insolvency or lack of financial capacity, etc". This is totally inapplicable. I have a history of a personal bankruptcy, this did not preclude me from bidding on many surplus lots, and winning two such lots, both of which were paid for in a timely manner. How does an applicant demonstrate they have the financial capacity to comply with this requirement? In addition, this requirement is totally unnecessary as this issue is ALREADY adequately addressed through the GL and DSA bid processes.

    8. Requirement 7: "Applicant must demonstrate a history of cooperation and compliance with contract terms and conditions"? How can a new prospective bidder "demonstrate a history of cooperation and compliance" if they have never bid on surplus items? Is the intent to allow only previous bidders to compete in future surplus sales? Or must a new bidder purchase a sufficient quantity of category "A" items which they do not want or need to be able to "demonstrate a history of cooperation and compliance with contract terms and conditions"?

    9. Requirement 8: ""Applicant must certify it has the legal capability and capacity to contract with the US Government ...". And how is a prospective buyer expected to demonstrate they have the "legal capability and capacity to contract with the US Government"? Again, this requirement is unconstitutionally vague.

    9. "Average Burden per response 1 hour", "Annual Burden hours 2040". Pure poppycock. The supporting documentation to comply with the QTP proposal, even IF such information were even available, would be closer to 20-40 hours per responder and closer to 1,000,000 to 4,000,000 total hours.

    10. "It has been certified this rule does not contain a Federal mandate that may result in the expenditure ... of more than $100 million per year". Again, pure poppycock. When one considers the total number of State, Local and tribal Governments, plus all the private business and individual purchasers affected by this proposed rule, times the amount of time to collect the necessary supporting documentation and prepare the QTP application, the total cost will greatly exceed $100 million annually.

    To summarize, the proposed rule is totally unnecessary. Most of what is required in the rule is already included in the EUC process. The proposed rule does nothing to prevent the misuse or improper exportation of Demil B and Q property and should not be considered for adoption.


    MESSAGE FROM GOVERNMENT LIQUIDATION

    http://www.govliquidation.com/

    Dear GL Demil Customer:

    On November 3rd we wrote to you regarding a proposed rulemaking that will significantly impact the approval procedures for purchasers Demil B and Q property. You are receiving this e-mail because you have purchased Demil B or Q property from us, or purchase property that the Government is transferring to Demil B or Q. We believe that you should review the proposed rules carefully and submit comments by the closing date, December 26th, 2006. We have attached a copy of the proposed rule.

    You may submit comments online as follows:
    http://www.regulations.gov/fdmspublic/component/main
    Agency: Department of Defense
    Document Type: Proposed Rules
    Keywords: DLA Procedures for Eligible Purchasers of Munitions List/
    Commerce Control List Items

    You should see docket number: DOD-2006-OS-0039. If you click on the word balloon in the far right "Comments" column, you may add a comment.
    We asked our Washington DC legal counsel for a brief review of the proposed rule. This is their report:

    “The Defense Logistics Agency (DLA) has issued a proposed rule (DOD-2006-OS-0039; 0790-A104 - DLA Procedures for Eligible Purchasers of Munitions List/Commerce Control List Items) that, if approved and issued as an interim or final rule, will require a prospective bidder to pre-qualify before participating in bidding on certain excess military property sold by Government Liquidation LLC (GL). The proposed rule, as drafted, will affect bidders seeking to purchase items controlled under the U.S. Munitions List (Cat. "B") and Commerce Control List (Cat. "Q"), but will not affect bidders for other categories of saleable excess military property, including uncontrolled (Cat. "A") items. Bidders for controlled items will need to apply and obtain pre-approval as a Qualified Trading Partner (QTP). This QTP qualification, valid for five-years (absent revocation), will complement rather than replace the End Use Certificate (EUC) requirement and Trade Security Control (TSC) review co
    nducted by DLA for each particular sale of Cat. B or Q items.

    Under the proposed rule, a bidder will need to submit a QTP letter application to DLA or GL (which will forward the application to DLA). The application will need to demonstrate that the bidder: (1) is an established business enterprise or has a valid personal use for the Cat. B or Q items; (2) is registered with the State Department Directorate of Defense Trade Controls and/or has adequate export controls procedures in place to handle Cat. B or Q items; (3-5) has not (as a company or with respect to principals or officers) violated export laws, committed acts of fraud, corruption, etc., or taken other actions contrary to national security; (6) has adequate financial means to properly manage and control Cat. B or Q items; (7) has complied with contract terms on past surplus purchases and has no history of financial insolvency; and ( is a U.S. company or citizen, not excluded from contracting with the U.S. Government. (Foreign entities/persons may receive QTP status for th
    e conditional purchase of Cat. "Q" items only).
    Government Liquidation filed its comments today. Comments may be viewed on the regulations.gov website, but, for your convenience, our comments are as follows: “We believe that the proposed rule(s) is/are excessive and reach beyond the scope necessary, are subjective, and unnecessarily injurious to small business. Contrary to the assertions cited in the supplementary information, the proposed rules are unlikely to materially reduce risk while significantly adversely impacting the lawful commerce in Munitions List/Commerce Control List items by US citizens and lawful residents.
    SPECIFICALLY:

    Public Law 96-354. "Regulatory Flexibility Act" (5 USC 601). Contrary to the assertion stated the proposal, if implemented, will almost certainly have a significant and material adverse impact on a substantial number of small businesses. Government Liquidation LLC, and DOD Surplus LLC are the contractors referred to in this proposed rulemaking. Over 99% of its customers are small businesses with 96% having less than twenty-five employees.
    Public Law 96-511. "Paperwork Reduction Act" 944 USC Chapter 35). The proposed rule assertion is that the average burden per respondent is one hour. The proposed rule indicates that a letter form of application is required with eight numbered requirements, which include several requirements for demonstrated ability and history. It frankly beggars belief that a small businessperson can complete this requirement in several hours, let alone one.

    The proposed rule adds redundant and unnecessary rules and requirements that are not required by law, and unreasonably add considerable adverse impact to the lawful trade in Munitions List/Commerce Control List items by US citizens and legal residents. All current purchasers of Munitions List/Commerce Control List items presently require a positive assessment from the DCAA assessment office, an enforcement arm of the DOD, after submitting an application for an End-User certificate. It is estimated that between 1% and 2% (and certainly no more than 5%) of all applicants indicate any intent to export on the application for an End-User certificate. Yet, in § 161.5 Technical Requirements it is clear that all applicants are treated as exporters, whether they have indicated any intent to export or not. Furthermore, a reasonable person may conclude that the requirements set out in § 161.5 are intended to deter or disqualify small businesses otherwise engaged in lawful business b
    uying and reselling Munitions List/Commerce Control List property in the first place.
    The stated requirements are subjective and subject to arbitrary application. The requirements listed in § 161.5 Technical Requirements are subjective and too open to change or interpretation. What constitutes an acceptable standard for a lawful, domestic small business with no intent to export is unclear or not stated and better guidelines are necessary. Additionally:
    There is no indication of a grace period of at least several months before the final rule takes effect to allow existing bidders to apply for Qualified Trading Partner status. The final rule should spell out when registration with the State Department Directorate of Defense Trade Controls (DDTC) is required (i.e., DDTC Registration is only required where the entity manufactures or exports defense articles, and mere acquisition for domestic sale of defense articles doesn't trigger registration requirements under DDTC Rules). If the final rule is going to require bidders to have export control policies, the rule or accompanying guidance should provide some detail as to the basic elements of such a policy. In addition, the rule should spell out what kinds of policies a non-exporting bidder would need versus an exporter, and also take into account the size of the organization. (We also note that DOD recently amended additional export compliance requirements on government cont
    ractors through a Defense Federal Acquisition Regulation Supplement amendment because of concerns that the guidance was too vague and might conflict with State Department guidance). Given that DLA will review the financial status of businesses, the rule or additional guidance should specify what the basic financial criteria are, and what documents an applicant should submit to demonstrate compliance.

    We strongly encourage you to submit your own comments by the closing date, particularly if you feel that the proposed rule will adversely impact your ability to conduct your lawful business or hobby. In that case, now would also be an appropriate time to send your elected Federal representatives a copy of your comments and to emphasize your concerns as a small businessperson.

    Government Liquidation * 15051 N Kierland Blvd # 300, Scottsdale, AZ 85254 * 480-367-1300



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    Default RE: IMPORTANT - NEW DoD RULES - COMMENT BY DEC 26th

    Bjorn

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