Valerie Bailey Grasso
Specialist in Defense Acquisition
In order to protect the U.S. industrial base during periods of adversity and war, Congress passed a set of domestic source restrictions which became known as the Berry Amendment. Specialty metal represented one of fourteen items previously covered under the Berry Amendment.
Congress took action in the FY2007 National Defense Authorization Act (P.L. 109-364) to move the specialty metal provision from the Berry Amendment (Title 10, United States Code [U.S.C.] 2533a) into a separate section of Title 10 (10 U.S.C. 2533b). Specialty metals are defined in Title 10 United States Code (U.S.C.) Section 2533b, and the definition is restated in the Defense Federal Acquisition Regular Supplement (DFARS).
The range of specialty metals include steel, metal alloys, titanium and titanium alloys, and zirconium and zirconium base alloys. Thousands of products used for defense, aerospace, automotive, and renewable energy technologies rely on specialty metals for which there are often few, if any, substitutes. The availability of sources of supply of some specialty metals, particularly the access to rare earth metals, is an issue raised in recent news reports and congressional hearings.
Effective July 2009, the Department of Defense (DOD) issued a final rule to amend the Defense Federal Acquisition Regulation Supplement (DFARS) to implement Section 842 of the FY2007 National Defense Authorization Act and Sections 804 and 884 of the FY2008 National Defense Authorization Act, P.L. 110-181. The FY2008 National Defense Authorization Act (P.L. 110-181) contained several provisions which may impact the procurement of specialty metal. Section 803 required the Strategic Materials Protection Board to perform an assessment of the viability of domestic producers of strategic materials; Section 804 changed the requirement that DOD procure all specialty metal from domestic sources. This provision does not apply to contracts or subcontracts for the acquisition of commercially available “off-the-shelf” items (with certain exceptions), as defined in the Office of Federal Procurement Policy Act, Section 35(c); and Section 884 requires DOD to publish a notice on the Federal Business Opportunities website before making any “nonavailability” determinations that would apply to multiple contracts.
The specialty metal provision raises several questions, among them: (1) to what extent do United States national security interests and industrial base concerns justify waiver of the specialty metal provision, (2) if the United States does not produce a 100% domestic specialty metal, should DOD restrict procurement from foreign sources, and (3) what factors should drive the determination of which specialty metals should fall under the specialty metal provision? Debate over the specialty metal provision invites and renews a debate over the efficacy of domestic source restrictions and whether the rationale for every restriction represents a balanced and reasonable approach.
This report examines the specialty metal provision, potential oversight issues for Congress, and options that Congress may choose to consider.
Date of Report: October 5, 2010
Number of Pages: 24
Order Number: RL33751
Price: $29.95
Follow us on TWITTER at http://www.twitter.com/alertsPHP or #CRSreports
Document available via e-mail as a pdf file or in paper form.
To order, e-mail Penny Hill Press or call us at 301-253-0881. Provide a Visa, MasterCard, American Express, or Discover card number, expiration date, and name on the card. Indicate whether you want e-mail or postal delivery. Phone orders are preferred and receive priority processing.
Specialist in Defense Acquisition
In order to protect the U.S. industrial base during periods of adversity and war, Congress passed a set of domestic source restrictions which became known as the Berry Amendment. Specialty metal represented one of fourteen items previously covered under the Berry Amendment.
Congress took action in the FY2007 National Defense Authorization Act (P.L. 109-364) to move the specialty metal provision from the Berry Amendment (Title 10, United States Code [U.S.C.] 2533a) into a separate section of Title 10 (10 U.S.C. 2533b). Specialty metals are defined in Title 10 United States Code (U.S.C.) Section 2533b, and the definition is restated in the Defense Federal Acquisition Regular Supplement (DFARS).
The range of specialty metals include steel, metal alloys, titanium and titanium alloys, and zirconium and zirconium base alloys. Thousands of products used for defense, aerospace, automotive, and renewable energy technologies rely on specialty metals for which there are often few, if any, substitutes. The availability of sources of supply of some specialty metals, particularly the access to rare earth metals, is an issue raised in recent news reports and congressional hearings.
Effective July 2009, the Department of Defense (DOD) issued a final rule to amend the Defense Federal Acquisition Regulation Supplement (DFARS) to implement Section 842 of the FY2007 National Defense Authorization Act and Sections 804 and 884 of the FY2008 National Defense Authorization Act, P.L. 110-181. The FY2008 National Defense Authorization Act (P.L. 110-181) contained several provisions which may impact the procurement of specialty metal. Section 803 required the Strategic Materials Protection Board to perform an assessment of the viability of domestic producers of strategic materials; Section 804 changed the requirement that DOD procure all specialty metal from domestic sources. This provision does not apply to contracts or subcontracts for the acquisition of commercially available “off-the-shelf” items (with certain exceptions), as defined in the Office of Federal Procurement Policy Act, Section 35(c); and Section 884 requires DOD to publish a notice on the Federal Business Opportunities website before making any “nonavailability” determinations that would apply to multiple contracts.
The specialty metal provision raises several questions, among them: (1) to what extent do United States national security interests and industrial base concerns justify waiver of the specialty metal provision, (2) if the United States does not produce a 100% domestic specialty metal, should DOD restrict procurement from foreign sources, and (3) what factors should drive the determination of which specialty metals should fall under the specialty metal provision? Debate over the specialty metal provision invites and renews a debate over the efficacy of domestic source restrictions and whether the rationale for every restriction represents a balanced and reasonable approach.
This report examines the specialty metal provision, potential oversight issues for Congress, and options that Congress may choose to consider.
Date of Report: October 5, 2010
Number of Pages: 24
Order Number: RL33751
Price: $29.95
Follow us on TWITTER at http://www.twitter.com/alertsPHP or #CRSreports
Document available via e-mail as a pdf file or in paper form.
To order, e-mail Penny Hill Press or call us at 301-253-0881. Provide a Visa, MasterCard, American Express, or Discover card number, expiration date, and name on the card. Indicate whether you want e-mail or postal delivery. Phone orders are preferred and receive priority processing.
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