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THE BERRY AMENDMENT and the Newest Rules on Specialty Metals A Brief Overview Presented By: Jessica A. VanLeeuwen Ju PowerPoint Presentation
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THE BERRY AMENDMENT and the Newest Rules on Specialty Metals A Brief Overview Presented By: Jessica A. VanLeeuwen June 2008. Opening Remarks. Rules apply OCONUS but with many exceptions Rules are detailed & challenging New Specialty Metal provisions are helpful but complex

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slide1

THE BERRY AMENDMENT

and the

Newest Rules on Specialty Metals

A Brief Overview

Presented By:

Jessica A. VanLeeuwen

June 2008

opening remarks
Opening Remarks

Rules apply OCONUS but with many exceptions

Rules are detailed & challenging

New Specialty Metal provisions are helpful but complex

This is a overview

historical notes
Historical Notes
  • Pub. L. 110-181 §§ 804 & 884; 10 USC 2533b, as amended
  • 1941-1972 – Food, Clothing & Fabrics
  • 1972 – Metals added by FY1973 NDAA
  • 2006 – DoD endorses conditional acceptance & withhold for metals
  • 2006 – FY2007 NDAA: SM Amendment 10 USC 2533b and creates One-Time Waiver
  • 2007 – Class Deviation & DFARS Final Rule for Full COTS Item Exception
  • 2008 – FY2008 NDAA: Amends 2533b to address “concerns” and limit COTS Exception
berry basics what is it
Berry Basics – What is it?

Statutory requirement (10 U.S.C. 2533a):

Restricts the Department of Defense

from using funds appropriated or otherwise available to DoD

for procurement of specific items

if not grown, reprocessed, reused, or produced in the U.S.

fiscal law impact ada violation
Fiscal Law Impact - ADA Violation

Berry prohibits the purchase of certain items with “….funds appropriated or otherwise available to the Department….”

It only applies to DoD, no other Federal Agencies

It applies if DoD sends funds to another Federal Agency

FMS funds are included

It is a violation of the Berry Amendment if DoD pays for equipment that is non-compliant

It may also be a violation of the Anti-Deficiency Act (31 U.S.C. 1341) which provides for:

Fines up to $5000.00

Imprisonment up to 2 years (31 U.S.C. 1350)

Adverse personnel actions

what items are restricted
What items are restricted?

Food

Clothingand the materials and components thereof, …

Tents/Tarpaulins/Covers

Cotton and Other Natural Fiber Products

Woven Silk or Woven Silk Blends

Spun Silk Yarn for Cartridge Cloth

Synthetic Fabric or Coated Synthetic Fabric

Canvas Products

Wool (including in manufactured articles)

Any Item of Individual Equipment containing any of the restricted fibers, fabrics, yarns, or materials

Hand or Measuring Tools

(Specialty Metals)

DFARS 225.7002-1(a)

restricted contracts
Restricted Contracts

Specialty Metals shall be melted or produced in United States or outlying areas (“the US”).

  • Mill Products
    • Specialty Metals in the form of bar, billet, slab, wire, plate and sheet
  • End Items of Six Types & their Components
    • Aircraft, Missile & Space Systems, Ships, Tank & Automotive, Weapon Systems, and Ammunition
  • Other Articles (“everything else”)
    • Major Program Articles that are not Big 6 End Items or Components
    • Non-Major Program Articles that are not Mill Products
berry vs buy american act
Berry vs. Buy American Act

Potential for confusion

Berry only applies to DoD / BAA applies to all Fed agencies

Berry covers specific items / BAA covers all supply purchases.

Berry does not provide a commercial item exception* / BAA does

Berry applies in addition to Buy American Act

Berry must be flowed to all sub-tier suppliers

Berry is more restrictive than the Buy American Act:

Requires 100% domestic content / BAA requires greater than 50% domestic component cost

No Qualifying Country exception*, except for chemical warfare protective clothing, and para-aramid fibers from the Netherlands

No contractor “certification” required as with Buy American Act

Vendor may be in compliance with Buy American Act yet be in violation of Berry Amendment

biggest concern specialty metal
Biggest Concern – Specialty Metal

Has arisen most often at sub level in programs where flow-down required:

Aircraft; missile and space systems; ships, tank-auto; weapons; ammo (DFARs 225.7002-2)

See also DFARS 252.244-7000 (subcontracts for commercial items)

It’s still the Prime’s problem

main problems
Main Problems

Prime didn’t flow down clause to subs

Prime contract used confusing or inappropriate language

Prime contract omitted required language – Christian Doctrine?

(GAO reported 60% of contracts had “problems”)

Prime not taking ownership (overseeing) sub compliance – getting a cert is not enough

General lack of understanding of the requirement

berry exceptions
Berry Exceptions

Simplified Acquisitions

Combat Operations - procurements made outside the US to support operations

Contingency Operations -only acquisitions of food, specialty metals, hand/measuring tools

Emergency Acquisitions –by activities located OCONUS for personnel of those activities

Urgent & Compelling Acquisitions -for food or hand or measuring tools, not clothing, textiles, or related items

Acquisitions of vessels in foreign Waters

Commissary Retail items

Qualifying Country – certain acquisitions in furtherance of an agreement with a qualifying country

other metal exemptions
Other Metal Exemptions

Commercial off the Shelf (COTS)

Market Basket Exemption –applies to commercial Item fasteners

Electronic components

2% Minimum threshold –“de minimis” exception permits DoD to accept delivery of items if weight of non-compliant specialty metal does not exceed 2% of the total weight of all specialty metal in the item

Nat’l Security Waiver -USD (AT&L) may approve acquisition of End Items (aircraft, ships, etc.) if necessary to US national security interests

Qualifying Country -Acquisitions of End Items or their components from a qualifying country. Not specialty metal itself as an end product.

qualifying countries exception
Qualifying Countries Exception
  • Broad exception applies to:
    • Items manufactured in a QC, regardless of the source of metals
    • Metals melted or produced in a QC
  • However, FY2008 NDAA & forward:
    • Basic clause no longer provides an exception for QC melted metals
    • Mill product deliveries directly to DoD must be US domestic melted
    • Implemented 29 Jan 2008
qualifying country exception
Qualifying Country Exception

For Berry (other than Specialty Metals), applies only to:

Chemical Warfare Protective Clothing

Para-Aramid fibers and yarns from the Netherlands

For Specialty Metals, applies to:

Acquisitions of the following items, or their components: aircraft, missile or space system, tank or automotive item, weapon system, or ammunition.

Not specialty metal as an end product

qualifying countries
Qualifying Countries

DoD has entered into reciprocal defense procurement memoranda of understanding with the following countries. They are treated equally with “domestic” sources for items containing specialty metals and some Berry restrictions (see DFARS 225.872-1):

Australia France Netherlands

Austria Germany Norway

Belgium Greece Portugal

Canada Israel Spain

Denmark Italy Sweden

Egypt Luxembourg Switzerland

Finland Portugal Turkey

United Kingdom

host nation agreements
Host Nation Agreements

Reciprocal agreement that make inapplicable the “buy national” laws do not affect the application of the Berry Amendment

Domestic Specialty Metals clause independent from the “qualifying country” under 225.872

availability dnad exception
Availability (DNAD) Exception
  • SM melted or produced in US cannot be acquired as and when needed:
    • in a satisfactory quality;
    • in a sufficient quantity; and
    • in the required form.
  • “Required form” was added by FY2007 NDAA and defined by FY2008 NDAA
  • Quality and Quantity part of standard since FY1973
availability dnad exception18
Availability (DNAD) Exception
  • “In the required form” means a mill product suitable for producing the finished end item or component.
  • Existing DNADs must be reviewed and amended as necessary to comply with the FY2008 rules
  • DNADs are PCO and Program Office actions, before or after award
availability dnad exception19
Availability (DNAD) Exception
  • Approval must be USD(AT&L) or Service Secretary, no delegation permitted
  • Multi-contract DNADs have greater limits:
    • Publish notice of intent in FedBizOpps.gov
    • Solicit information from interested parties including specialty metal mill producers
    • USD(AT&L) decides, including consideration of submitted and other relevant information
    • Transparency: Publication of determination and rationale to maximum extent practical
availability dnad exception20
Availability (DNAD) Exception
  • Class DNADs expire for use on new contracts 26 July 2008:
    • Populated Circuit Card Assemblies, Fasteners, Needle Roller Bearings, & Caterpillar COTS Diesel Engine Parts
  • PCOs may apply FY2008 rules to existing contracts
  • Applying FY2008 rules could eliminate the need for the above DNADs
one time waiver otw
One-Time Waiver (OTW)

FY2007 NDAA “get well” provision

  • Contracting officer determines:
    • Not practical to remove, replace, substitute
    • Prime and subcontractor have effective plans to ensure future compliance
    • Inadvertent non-compliance
    • Non-compliant SM incorporated in item at any level PMA in US before 17 OCT 2006
    • Final acceptance occurs after 17 OCT 2006 but before 30 SEP 2010 (continued)
one time waiver otw22
One-Time Waiver (OTW)
  • (continued)
    • Contracting officer determination approved by USD(AT&L), Service Acquisition Executive, or designee (e.g. DCMA)
    • Contracting officer publishes fedbizopps.gov notice within 15 days after approval
    • Final acceptance occurs after 17 OCT 2006 but before 30 SEP 2010
  • Contact DCMA specialty metals team if contractor seeks/submits OTW request
corrective action plan cap
Corrective Action Plan (CAP)
  • DCMA is responsible for processing broad-based CAPs
  • Required within 180 days of conditional acceptance and withhold
  • Required as the “effective plan to ensure compliance” in OTW process
  • Contact DCMA specialty metals team before approving CAP
conditional acceptance withhold
Conditional Acceptance & Withhold
  • Disposition of prior withholds
    • Delegated to DCMA where we approve OTW and broad-based CAP
    • Normally release withholds where article:
      • Falls within approved DNAD applied to contract
      • Determined to be compliant after withhold taken
      • PMA prior to 17 OCT 2006 & falls within OTW
      • Falls within applicable Exception to restrictions
      • Removed and replaced by compliant article
    • If not above, DCMA believes contract price reduction is proper
good news bad news
Good News – Bad News

FY08 NDAA introduces new Specialty Metal Exceptions

DoD Class Deviation 2008-O0002 implements the FY08 changes with specific authority for PCOs to apply a single standard to all contracts.

If 2008-O0002 is not applied by PCO, may need to administer 5 different sets of restrictions at a single contractor location.

appropriate consideration
Appropriate Consideration
  • PCOs may apply CD 2008-O0002, with appropriate consideration, to existing Ks
    • After deciding to apply, may delegate consideration decision to ACO
    • Generally no savings from non-compliance
    • Efficiency of contract administration is enhanced by single set of (FY2008) rules
    • CAP and/or related efforts enhance contract compliance
    • Administrative cost of processing mod
near term issues
Near Term Issues
  • Are Fabric and Fiber issues on the rise?
  • Will PCOs apply FY2008 standards to all?
  • Should we rely on Prime contractors to manage their subcontractors and suppliers?
  • Will industry establish Certification process for Fastener manufacturers market basket?