Order Code RL31236
The Berry Amendment: Requiring Defense
Procurement to Come from Domestic Sources
Updated April 30, 2008
Valerie Bailey Grasso
Specialist in Defense Acquisition Policy
Foreign Affairs, Defense, and Trade Division
The Berry Amendment: Requiring Defense
Procurement to Come from Domestic Sources
Summary
In order to protect the U.S. industrial base during periods of adversity and war,
Congress passed domestic source restrictions as part of the 1941 Fifth Supplemental
Department of Defense (DOD) Appropriations Act; these provisions later became the
Berry Amendment. The Berry Amendment requires DOD to give preference in
procurement to domestically produced, manufactured, or home grown products,
notably food, clothing, fabrics, and specialty metals. The Berry Amendment (Title
10 United States Code (U.S.C.) Section 2533a, Requirement to Buy Certain Articles
from American Sources; Exceptions) contains a number of domestic source
restrictions that prohibit DOD from acquiring food, clothing, fabrics (including
ballistic fibers), specialty metals, stainless steel, and hand or measuring tools that are
not grown or produced in the United States.
Some experts recommend changes in the Berry Amendment. The Gansler
Commission has studied the state of defense acquisition and made a number of
recommendations, among them loosening some provisions like the Berry
Amendment. In February 2008 DOD announced that the Undersecretary of Defense
for Acquisition, Technology, and Logistics is considering a change to Title 10 that
would broaden the exceptions provided under the Berry Amendment during so-called
emergency operations. Such emergency operations may include military action taken
against U.S. adversaries, military action in response to an attack with weapons of
mass destruction, or military action resulting from national emergencies declared by
the President.
The FY2008 National Defense Authorization Act (P.L. 110-181) contains a
provision (Section 803) which requires the Strategic Materials Protection Board to
perform an assessment of the viability of domestic producers of strategic materials,
the purpose of which is to assess which domestic producers are investing, or plan to
invest on a sustained basis, in the development of a continued domestic production
capability of strategic materials to meet national defense requirements. Such an
assessment may affect the granting of future waivers for certain items.
Some policymakers believe that policies like the Berry Amendment contradict
free trade policies, and that the presence and degree of such competition is the most
effective tool for promoting efficiencies and improving quality. On the other hand,
others believe that key U.S. sectors need the protections afforded by the Berry
Amendment. The debate over the Berry Amendment raises several questions
regarding the viability of the Berry Amendment, among them: (1) If the U.S. does not
produce a solely domestic item, or if U.S. manufacturers are at maximum production
capability, should DOD restrict procurement from foreign sources, and (2) to what
extent do U.S. national security interests and industrial base concerns justify waiver
of the specialty metal restriction? This report examines the original intent and
purpose of the Berry Amendment, legislative proposals to amend the application of
domestic source restrictions, as well as options for Congress. The report will be
updated as events warrant.
Contents
Major New Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Berry Amendment Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Controversy over the Berry Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
History of the Berry Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
When Was It Enacted and Why? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
How Does the Buy American Act Differ from the Berry Amendment? . . . . 7
What Is the Relevance of the Berry Amendment Today? . . . . . . . . . . . . . . . 8
Current Application of the Berry Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Department of Defense Views of the Berry Amendment . . . . . . . . . . . . . . 10
Legislative Actions in the 109th, 108th, 107th, and 106th Congresses . . . . . . 11
Other Views . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Options for Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Option 1: Take No Action, Retain the Berry Amendment as Enacted . . . . 17
Option 2: Eliminate Some Selected Restrictions . . . . . . . . . . . . . . . . . . . . . 17
Option 3: Adopt a “Componency Standard” . . . . . . . . . . . . . . . . . . . . . . . . 18
Option 4: Study the Lessening or Elimination of Provisions . . . . . . . . . . . . 18
Option 5: Study What Percentage of Domestic Clothing, Textiles, Food,
and Specialty Metals Is Sold to the Military . . . . . . . . . . . . . . . . . . . . 19
Option 6: Appoint a “Berry Amendment Commission” . . . . . . . . . . . . . . . 19
Option 7: Audit and Investigate Berry Amendment Contracts . . . . . . . . . . 19
The Berry Amendment:
Requiring Defense Procurement
to Come from Domestic Sources
Major New Developments
DOD has adopted a final rule to amend the Defense Federal Acquisition
Regulation Supplement (DFARS) to implement the Berry Amendment. The final rule
codifies the Berry Amendment into Title 10 of the U.S. Code.1
Media reports indicate that the Undersecretary of Defense for Acquisition,
Technology, and Logistics has considered legislative proposals to broaden the
exceptions provided under the Berry Amendment. Inside the Pentagon reports John
Young, DOD’s senior acquisition executive, has formally submitted proposals to be
considered as part of DOD’s submission for the FY2009 defense authorization bill.
One such proposal would grant DOD authority to waive the requirements of the
Berry Amendment during so-called emergency operations. Such emergency
operations may include military action taken against U.S. adversaries, military action
in response to an attack with weapons of mass destruction, or military action
resulting from national emergencies declared by the President. Another proposal
would authorize military procurement officials to give contracting preference to
indigenous groups for the purpose of expanding economic development in a
contingency operation.2
The FY2008 National Defense Authorization Act (P.L. 110-181) contains a
provision (Section 803) which requires the Strategic Materials Protection Board to
perform an assessment of the viability of domestic producers of strategic materials,
the purpose of which is to assess which domestic producers are investing, or plan to
invest on a sustained basis, in the development of a continued domestic production
capability of strategic materials to meet national defense requirements. Such an
assessment will be evaluated in any decision DOD makes to grant future waivers for
certain items. In light of the new requirements, DOD may review and amend existing
rules, although it is too early to determine exactly what the impact will be. It will
largely depend on how DOD seeks to interpret the new rules.
1 For further information, see the Defense Federal Acquisition Regulation Supplement;
Codification and Modification of Berry Amendment (DFARS Case 2002-D002). Federal
Register, March 3, 2008 (Volume 73, Number 42), Pages 11354-11356.
2 Young Seeks Legislative Changes to Streamline Contingency Buying. Inside the Pentagon,
February 28, 2008, Vol. 24, No. 9.
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The FY2007 Defense Authorization Act (P.L. 109-364) enacted a new
legislative provision which effectively moved the specialty metal provision out of the
Berry Amendment and into a separate section of Title 10.3 The specialty metals
provision provides protection for strategic materials critical to national security.
Highlights of Sec. 842, P.L. 109-364
Protection of Strategic Materials Critical to National Security
Funds appropriated may not be used for the procurement of strategic materials
“critical to national security” which are not reprocessed, reused, or produced in
the United States. Such items are (1) specialty metals, and (2) items critical to
national security, as determined by the Strategic Materials Protection Board.
The Secretary of Defense may invoke several exceptions: (1) “availability
exception” if sufficient quantity and quality are not available; (2) procurement
outside of the United States in support of combat operations or contingency
operations; (3) procurement by vessels in foreign waters; (4) procurement by
which the use of “other than competitive procedures” has been approved based on
an urgent and compelling need; (5) procurement necessary to comply with existing
agreements with foreign governments; (6) procurement by commissaries,
exchanges, and other non-appropriated fund instrumentalities; (7) procurement less
than the simplified acquisition threshold referred to in 10 U.S.C. 2304(g).
The first provision grants a one-time waiver of the specialty metals domestic
source requirements if such materials were incorporated in the items produced in the
United States before the enactment of this bill, with certain conditions: (1) the
contracting officer would have to determine, in writing, that it would not be practical
or economic to replace the specialty metals incorporating into the item with materials
that would meet the domestic source requirement, (2) the prime contractor and
subcontractor would have in plan a plan to ensure compliance with the requirements
of the Berry Amendment, and (3) that the lack of compliance is not knowing or
willful.
The second provision establishes the Strategic Materials Protection Board with
the following individuals: the Secretary of the Defense, Under Secretary of Defense
for Acquisition, Technology, and Logistics; Under Secretary of Defense for
Intelligence; and Secretaries of the Army, Navy, and Air Force.4 The Board is
3 Section 2533b. Requirement to buy strategic materials critical to national security from
American sources; exceptions.
4 The Board is charged with determining what items are designated as critical to national
security; analyzing risks and effect on national defense that the non-availability of such
items would pose; recommending to the President strategies for ensuring domestic
availability of such items; recommending other strategies to strengthen the industrial base;
and publishing in the Federal Register the list of items critical to national security.
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required to meet at least once every two years, and prepare and submit reports to
Congress. The first meeting of the Board was held on July 17, 2007.5
Berry Amendment Resources
Two new public resources provide answers to many of the most often-asked
questions on the Berry Amendment. DOD’s Office of Defense Procurement and
Acquisition Policy (DPAP) has prepared a “Frequently Asked Questions”
compendium of general information on the Berry Amendment. The questions and
answers ranged from origin and history, authority, policy, and exceptions;
comparisons with other domestic source restrictions like the Buy American Act; the
policy governing determinations of non-availability (DNAD); and many questions
often raised by suppliers and other industry personnel.6
Also, the U.S. Department of Commerce has launched a new website to provide
textile and other manufacturers a resource for the latest information on the Berry
Amendment. According to the website, this resource was compiled with the support
of the Commerce’s International Trade Administration’s Office of Textiles and
Apparel, DOD, Office of the Under Secretary of Defense for Acquisition,
Technology, and Logistics, DPAP; Army, Air Force, and Navy acquisition offices,
and others.7
Background
The Berry Amendment contains a number of domestic source restrictions that
prohibit DOD from acquiring food, clothing, fabrics (including ballistic fibers),
specialty metals, stainless steel, and hand or measuring tools that are not grown or
produced in the United States.8
Congress and DOD have long debated the need to protect the U.S. defense
industrial base by restricting certain federal procurement to U.S. markets through
legislation known as “domestic source restrictions.”9 Every defense appropriations
bill from 1942-2004 has included some mention of a preference for U.S. articles,
supplies, and materials. One particular group of domestic source restrictions was first
enacted into law on April 5, 1941, as part of the FY1941 Fifth Supplemental National
5 Strategic Materials Protection Board Studies Impact of New Bill. Inside the Pentagon.
Volume 23, Number 51, December 20, 2007.
6 The Defense Contract Management Agency has provided a list of items for which waivers
have been issued due to lack of a domestic supplier, as well as the corrective action plans
submitted by suppliers to meet compliance with the Berry Amendment. For further
information, see [http://www.acq.osd.mil/dpap/cpic/ic/berry_amendment_faq.html].
7 [http://www.otexa.ita.doc.gov/berry.htm].
8 10 U.S.C. § 2533a, Requirement to Buy Certain Articles from American Sources;
Exceptions.
9 For a discussion of domestic source restrictions, see “Defense Acquisition: Rationale for
Imposing Domestic Source Restrictions.” GAO/NSIAD-98-191, July 17, 1998, 20 pages.
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Defense Appropriations Act, P.L. 77-29. During the 2nd session of the 82nd Congress,
the Honorable Elias Y. Berry, Representative from South Dakota, introduced two
bills to amend the Buy America Act to include wool as a product or material,
produced or manufactured in the U.S.10 This amendment would come to be known
as the Berry Amendment.
On December 13, 2001, the passage of the FY2002 National Defense
Authorization Act codified and modified the Berry Amendment,11 making it a
permanent part of the United States Code. Under the Berry Amendment, the
Secretary of Defense has the authority to waive the requirement to buy domestically,
under certain conditions.12
The 2001 controversy over the procurement of black berets, the waiver authority
of the Secretary of Defense, as well as the presence of other domestic source
provisions have created considerable interest in the Berry Amendment. Some
policymakers believe that the Berry Amendment’s restrictions (like the specialty
metal clause) contradict free trade policies, and that the presence and degree of such
competition is the most effective tool for promoting efficiencies and improving
quality. Others believe that U.S.-based companies need the protections afforded by
the Berry Amendment. These two views have been the subject of ongoing debate in
Congress.
This report discusses the Berry Amendment’s original purpose and intent,
controversy over the black berets, and options available to Congress.
Controversy over the Berry Amendment
On October 17, 2000, the Army Chief of Staff, General Eric Shinseki,
announced that the black beret would become the standard headgear for the U.S.
Army. The Army planned to issue a one-piece beret to each of the 1.3 million active
10 Congressional Record. Proceedings and Debates of the 82nd Congress, Second Session.
Volume 98-Part 3. March 25, 1952 - April 22, 1952 (pages 3859-3861).
11 Within DOD regulations, the Berry Amendment can be found in the Defense Federal
Acquisition Regulation Supplement (DFARS), Restrictions on Food, Clothing, Fabrics,
Specialty Metals, and Hand or Measuring Tools. See DFARS, Part 225.7002.
12 10 U.S.C. § 2533(c)(d)(e)(f)(g)(h) Exceptions to the Berry Amendment are: when the
Secretary of Defense or the Secretary of the military department determine that satisfactory
quality and sufficient quantity of any such article or item or specialty metal cannot be
procured as and when needed at United States market prices; procurement outside the
United States in support of combat operations; procurement by vessels in foreign waters;
emergency procurement of perishable foods by an establishment located outside the United
States, for the personnel attached to such an establishment; procurement of specialty metals
or chemical warfare protective clothing produced outside the United States, under certain
circumstances; procurement which complies with reciprocal agreements with foreign
governments; procurement of certain foods; procurement for resales at commissaries,
exchanges, and other non-appropriated fund instrumentalities; procurement values that are
under the simplified acquisition threshold.
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duty and reserve soldiers during the spring of 2001, while a second beret would be
issued to each soldier in the fall of 2001. The Army was to pay approximately $23.8
million for about 4.7 million berets. DOD awarded the first contract to Bancroft, an
Arkansas-based company that had manufactured military headgear since World War
I. Other contracts were awarded to several foreign manufacturing firms; five of the
foreign firms had production facilities in the People’s Republic of China, Romania,
Sri Lanka, and other low-wage countries.
To purchase the black berets, the Defense Logistics Agency (DLA)13 granted
two waivers of specific restrictions in the Berry Amendment. The first waiver was
granted to DOD so that the Department could purchase military uniforms from
foreign sources. DLA granted this waiver when it determined that no U.S. firm could
produce a sufficient quantity of one-piece, black berets by the Army’s deadline. As
a result, there were protests from some segments of domestic manufacturing, military
and veterans groups, Members of Congress, and the public. The House Small
Business Committee held a hearing on May 2, 2001, to discuss the statutory authority
to waive Berry Amendment restrictions, as well as the concerns of the small business
community regarding the contract award process.
DLA granted the second waiver to allow Bancroft to retain its contract and
continue to produce the black berets for the Army, even though Bancroft used
materials from foreign sources. Bancroft, the sole U.S. manufacturer of the one-piece
beret, had procured materials from two overseas suppliers, who, in turn, had procured
material from other foreign sources. Bancroft’s president reported that, as early as
1976, DOD had been notified that some beret materials were procured from foreign
sources.
On October 4, 2002, DOD announced that the Bancroft Cap Company of Cabot,
Arkansas was awarded a $14.8 million dollar firm-fixed-price contract to
manufacture up to 3.6 million black, wool berets for the United States Army and the
United States Air Force. The contract was a two-year contract with three one-year
options. There were 154 proposals solicited, and thirteen vendors responded. The
contract is administered through the Defense Supply Center, Philadelphia, PA.14
By some, where DOD purchases its berets is viewed as a relatively minor
matter, when compared to where it purchases its electronics, specialty metals, and
other hardware used for logistics support, communications and weapons
modernization. However, to certain small businesses, the loss of such a contract to
foreign sources can be unacceptable.
13 The Defense Logistics Agency is a logistics combat support agency whose primary role
is to provide supplies and services to American military forces worldwide. See
[http://www.dla.mil].
14 DefenseLink. U.S. Department of Defense. Contracts for October 4, 2002.
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History of the Berry Amendment
When Was It Enacted and Why?
The Berry Amendment, which dates from the eve of World War II, was
established for a narrowly defined purpose: to ensure that U.S. troops wore military
uniforms wholly produced within the United States and to ensure that U.S. troops
were fed with food products solely produced in the United States.15 Other industries,
such as tools and specialty metals, were added later. Originally enacted on the eve of
World War II, it overrode exceptions added to the Buy American Act of 193316 for
products procured by the Department of Defense.
In 1941, House and Senate Members held spirited discussions17 over the passage
of what has come to be known as the Berry Amendment, although the precise identity
of the author of the amendment remains unknown.18 Several issues were raised
during the debate. Even though the U.S. was not at war, Congress was concerned that
the nation be prepared for adversity and thus provided the impetus for such
legislation. Some policymakers were also concerned that despite the enactment of the
Buy American Act in 1933, one department of the federal government had reportedly
purchased meat from Argentina. Likewise, another department had reportedly
contracted to purchase a large quantity of wool, about 50% of which came from
foreign sources. Questions were raised over the disposal of some 500,000,000
bushels of surplus wheat, with one policymaker noting that “wheat products and
wheat should be purchased from the production here in the United States when we
have such a surplus on hand and that our own farmers should be given preference.”19
In an expression of that concern, the original version of the House bill added a
15 On April 5, 1941, the Berry Amendment was first enacted as part of the Fiscal Year (FY)
1941 Fifth Supplemental National Defense Appropriations Act, P.L. 77-29, 10 U.S.C. §
2241 note. The Berry Amendment was made permanent when P.L. 102-396, Section 9005,
was amended by P.L. 103-139, Section 8005. Since then, Congress has regularly added or
subtracted Berry Amendment provisions. On December 13, 2001, the FY2002 National
Defense Authorization Act codified and modified the Berry Amendment, repealing Sections
9005 and 8109 of the above-mentioned bills. The Berry Amendment is now codified at 10
U.S.C. 2533a.
16 See discussion on the Buy American Act, in this report.
17 An example of a discussion of the issues surrounding the passage of the Berry
Amendment can be found in the Congressional Record, vol. 87, part 15. 77th Congress, 1st
Session, pp. 2460-2984 and pp. 2711-2720.
18 Legislative reference specialists suggest (but are not certain) that the amendment may
have been named after George Leonard Berry (D-TN), who was appointed to serve the
remainder of an unexpired U.S. Senate term (1937-38) due to the death of Nathan Buchman,
and was defeated for election in the Democratic presidential primary of 1938. At age 24,
Senator Berry had been elected president of the International Printing Pressmen and
Assistants’ Union in 1907, a position he held until his death in 1948.
19 Statement of James Francis O’Connor, Representative from Montana, March 21, 1941,
during congressional debate over the 1941 Fifth Supplemental National Defense Act (see
Congressional Record, vol. 87, part 15. 77th Congress, 1st Session, p. 2564.)
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provision which required the purchase of American agricultural products in fulfilling
national defense needs. (The Senate version initially deleted the provision, but later
reinstated it, broadening the bill to include all agriculture.) The bill was enacted into
law on April 5, 1941.
Largely as a result of the controversy surrounding the procurement of the black
berets, Representative Walter B. Jones introduced a bill to amend Title 10 of the
United States Code, thus making the Berry Amendment a permanent provision of
law. On April 3, 2001, Representative Jones introduced H.R. 1352, the purpose of
which was to codify and modify the provisions of the Berry Amendment. At the
introduction of the bill, Representative Jones stated that the black beret controversy
and the decision of the Defense Logistics Agency to waive the Berry Amendment
provisions and allow the procurement of berets from foreign sources highlighted the
need to review the current law and look for ways to improve the effectiveness of the
law. H.R. 1352 would also add a requirement that the Secretary of Defense notify the
House and Senate committees on Appropriations, Armed Services, and Small
Business before a waiver is made. The provisions of H.R. 1352 were enacted into law
as part of the FY2002 National Defense Authorization Act, P.L. 107-107.
How Does the Buy American Act Differ from the Berry
Amendment?
The Buy American Act (BAA) and the Berry Amendment are often confused,
and the terms are sometimes used interchangeably. The BAA, enacted in 1933, is the
principal domestic preference statute governing most procurement by the federal
government, while the Berry Amendment, enacted on the eve of World War II,
governs DOD procurement only.20 The BAA seeks to protect domestic labor by
giving preference to domestically produced, manufactured, or home-grown products
in government purchases, with certain exceptions. The Berry Amendment overrides
many of these exceptions, primarily for food, clothing, and specialty metals.
The two major differences between the BAA and the Berry Amendment are: (1)
The BAA applies only to federal government contracts to be carried out within the
U.S., while the Berry Amendment, which is for defense contracts only, is not limited
to contracts within the U.S.; and (2) The BAA requires that “substantially all” of the
costs of foreign components not exceed 50% of the cost of all components (thus, an
item can be of 51% domestic content and still be in compliance with the BAA) while
the Berry Amendment requires that items be 100% domestic in origin.
It should be noted that there are a number of other domestic source provisions
which generally govern specific types of procurement; these provisions are not
covered by the BAA or the Berry Amendment. These provisions will not be covered
20 The Buy American Act (41 U.S.C. §§ 10a through 10d, as amended), enacted in 1933, is
the major domestic source restriction governing procurement by all of the federal
government. It restricts U.S. government procurement by giving preference to domestically
produced, manufactured, or home-grown products. For further discussion of the Buy
American Act, refer to CRS Report 97-765, The Buy American Act: Requiring Government
Procurements to Come from Domestic Sources, by John Luckey.
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in this report but must be considered when determining whether or not a specific
domestic source provision affects a particular type of procurement.21
What Is the Relevance of the Berry Amendment Today?
Some observers argue that the Berry Amendment restrictions may not always
represent the best value to DOD or the federal government, nor is there always a
justifiable national security interest to preserve certain items currently under the
Berry Amendment. Nevertheless, others have asserted that U.S. workers and
businesses have an expectation that Congress will consider their interests in
determining procurement policies.
A number of Berry Amendment- restricted items may be in line with the original
purpose and intent, based on the end use products that are produced. For example,
certain items like chemical warfare protective clothing (composed of ballistic fibers,
made from textiles) may warrant further study. Specialty metals may be critical and
vital to the war-fighting effort if they are used for “high-tech” electronics and
communications. Food restrictions, on the other hand, are not critical and may make
it more difficult for DOD to take advantage of commercial business practices. In an
increasingly globalized economy, many food suppliers find it difficult to adhere to
this restriction as it deviates from standard commercial business practices, so some
may decline to sell to DOD. Many food suppliers who sell to DOD claim they are
often forced to adopt unique, costly, and inefficient business practices to do business
with the defense sector.22
Economic, social, and political factors come into play when examining the
purpose and intent of the Berry Amendment. If the U.S. becomes dependent on
purchasing equipment and supplies from foreign sources, what prevents an adversary
from cutting off U.S. access to such items or refusing to build militarily critical items
in times of crisis or conflict? Another argument for maintaining the Berry
Amendment restrictions is that they often benefit small, minority-owned, and
disadvantaged businesses which may depend on DOD for their viability. According
21 See 41 U.S.C. § 10a through 10d, and 10 U.S.C. § 2533, Determinations of Public Interest
under the Buy American Act. For further discussion of the Buy American Act, see CRS
Report 97-765, The Buy American Act: Requiring Government Procurements to Come from
Domestic Sources, by John Luckey. For further discussion of defense domestic source
provisions not covered by the Buy American Act or the Berry Amendment, refer to Title 10
of the United States Code.
22 According to Leslie G. Sarasin of the American Frozen Food Institute (AFFI), “The Berry
Amendment required DOD to procure foods, entirely of U.S. origin ingredients. Often, DOD
was forced to reject multi-ingredient, commercially available food items processed in the
U.S. because the domestic origin of all ingredients and components of the product could not
be demonstrated. This policy put DOD at odds with common commercial practice in the
food industry, which typically follows U.S. tariff law in determining questions of foreign
origin, and limited its access to the widest possible selection of products.” Memorandum to
the Defense Acquisition Regulations Council on AFFI comments on DOD’s proposed
interim rule regarding modification of the Berry Amendment, June 21, 2002. See DFARS
Case 2002-D002, at [http://www.affi.com/policy.asp].
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to congressional testimony, U.S. textile and apparel industries combined have lost
approximately 540,000 jobs during the 1990s.23
Some would argue that the Berry Amendment is still relevant today because of
the tragic events of September 11, 2001. There are also concerns over the possibility
of future acts of terrorism and the safety and security of the nation’s food supply.
Some specialty metals and steel products, items covered under the Berry
Amendment, are produced by distressed U.S. industries. One such company,
Bethlehem Steel, one of the largest U.S. steel manufacturers, filed for Chapter 11
bankruptcy protection, in part because of the competition from cheaper, foreign-made
and possibly subsidized steel.24 Additionally, the procurement of certain items like
ballistic fibers (found in body armor, which is critical to the protection of U.S.
military troops) is restricted to domestic producers under the Berry Amendment.
Generally, proponents of the Berry Amendment have argued that these types of
restrictions are necessary to maintain a viable industrial base, and that the Berry
Amendment serves as some protection for critical industries by keeping them healthy
and viable in times of peace and war.
However, critics argue that the Berry Amendment can undercut free market
competition and may produce other negative effects, such as reducing business
incentives to modernize, causing inefficiency in some industries due to a lack of
competition, and causing higher costs to DOD (because the military services may pay
more for “protected” products than the market requires). Critics also contend that the
Berry Amendment promotes U.S. trade policies that might undermine international
trade agreements.25
23 Statement of Evan Joffe, Marketing Manager of Springfield, LLC, before the House
Committee on Small Business, May 22, 2001.
24 Behr, Peter. Bethlehem Steel Files for Bankruptcy; Struggles With Competition From
Imports, Labor Costs Exacerbated by Aftermath of Attacks. Washington Post, October 16,
2001, p. E01. Bethlehem Steel, a 97-year-old company based in Bethlehem, PA, was the 25th
steel company to file for bankruptcy protection since 1998. The company listed $4.3 billion
dollars in assets, $6.75 billion dollars in liabilities, including an unfunded health care
obligation of $1.85 billion dollars.
25 The delays associated with the procurement of body armor for U.S. troops in Iraq have
been a source of congressional criticism during the 108th Congress. According to Vice
Admiral Keith W. Lippert, United States Navy, who is the Director of the Defense Logistics
Agency, the Army has adequately equipped all of the U.S. troops with the Interceptor Body
Armor. In his testimony on March 30, 2004, before the House Armed Services
Subcommittee on Readiness, he reported that “As we prepared (for Operation Iraqi
Freedom), we built on lessons learned from previous conflicts. Our preparations were good
in some areas, but needed to improve in others. I’ve discussed our joint planning with the
Services in advance of the operation. In some cases, actual demand for items exceeded
projections. For example, the Small Arms Protective Inserts — the SAPI plates you’ve all
heard about — the estimated FY2003 requirements were seventeen million dollars. For a
very good reason, the protection of our American war fighter — The Army increased their
requirement for Interceptor Body Armor. Today all troops in Iraq are equipped with
Interceptor Body Armor. To meet the increased requirement, funded requisitions began
coming to us in January 2003. By November 2003, we actually bought three hundred
(continued...)
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For these reasons, some believe that this is not the time to change the provisions
of the Berry Amendment, arguing that the U.S. should maintain its current capacity,
at a minimum, to feed and clothe its military forces.
Current Application of the Berry Amendment
Department of Defense Views of the Berry Amendment
DOD officials have expressed contrasting views about the necessity for the
Berry Amendment. Former Secretary of Defense Richard Cheney26 issued a 1989
report to Congress called “The Impact of Buy American Restrictions Affecting
Defense Procurement.” The report suggested that an alternative to the Berry
Amendment would be a specifically targeted approach to provide DOD with the
ability to establish assured sources of supply for mobilization purposes through
existing mobilization base planning under the Defense Production Act.27 The report
concluded that “statutory and regulatory policies and other federal and DOD
acquisition regulations like the Berry Amendment, which prohibit or impede foreign-
source participation in U.S. defense contracting, constitute a considerable departure
from the concept of full and open competition.”
In 1997, the DOD Acquisition Reform Executive Focus Group’s final report
called for the elimination of some Berry Amendment restrictions on food, clothing,
and textiles, while retaining restrictions on specialty metals and measuring tools.
A former DLA Deputy Director, Major General (Ret.) Charles R. Henry,
testified that the Berry Amendment was critical to the maintenance of a “warm” U.S.
industrial base during periods of adversity and war. He summed up his opinion, as
follows:
The point here is that, through the Berry Amendment, our defense procurement
establishment is able to maintain a stable of independent, competing producers
who understand the mil-specs of different items and who have the commitment
to service the U.S. military. They are there for our military when there is a surge
in requirements — as there was with Desert Storm — and they must be there
during peacetime.28
25 (...continued)
seventy million dollars of the SAPI plates - using exigency contracts, awarded within thirty
days, with an average delivery beginning within eighty-three days. The Army Audit Agency
conducted a special inspection of body armor and found that we were timely in making
awards and that quality products were delivered on time. However, SAPI production right
now is constrained by the availability of raw materials, mainly the ceramic tiles contained
in the plates. At present, known worldwide production of qualified ballistic packages is
limited to twenty-five thousand SAPI sets (or fifty thousand plates) per month.”
26 Secretary of Defense, March 1989 - January 1993.
27 For further discussion on the Defense Production Act, see CRS Report RS20587, Defense
Production Act: Purpose and Scope, by David E. Lockwood, 6 p.
28 Testimony before the Oversight and Investigations Subcommittee, House Committee on
(continued...)
CRS-11
Legislative Actions in the 109th, 108th, 107th, and 106th
Congresses
A number of domestic source provisions governing the Berry Amendment were
proposed and/or enacted into law during the 109th, 108th, 107th, and 106th sessions of
Congress. One common theme among the bills was the broadening of the Secretary
of Defense’s waiver authority (authority to waive the Berry Amendment) when he
believes that there is an unusual and compelling reason to procure items from foreign
sources.
Section 832 of P.L. 109-163, the FY2006 National Defense Authorization Act,
requires the Secretary of Defense to train certain members of the defense acquisition
workforce (those who “participate personally and substantially in the procurement
of textiles”29) on the requirements of the Berry Amendment. Section 833 requires the
Secretary of Defense to post public notifications of any contracts for clothing
materials and components covered under the Berry Amendment. “Clothing materials
and components” includes included materials and components not normally
associated with clothing. Notices shall be posted on the Internet site maintained by
the General Services Administration, [http://www.fedbizopps.gov/].
The Department of Defense (DOD) Federal Acquisition Regulation Supplement
(DFARS) 225.7002 has been revised to include a more nuanced and detailed list of
items, components, and materials covered under the provisions of the Berry
Amendment.30
DOD has adopted a final rule, without change, to implement Sections 826 and
827 of the FY2004 National Defense Authorization Act. The interim rule was
published in the Federal Register on May 13, 2004, followed by a 60-day comment
period. The final rule adds new exceptions to the acquisition of food, speciality
metals, and hand or measuring tools when needed to support contingency operations
28 (...continued)
Education and the Workforce. Hearing on Federal Prison Industries’ Proposed Military
Clothing Production Expansion - Assessing Existing Protections for Workers, Business, and
FPI’s Federal Agency Customers. October 5, 2000.
29 Section 832, P.L. 109-163.
30 According to the DOD policy on Program Acquisition and International Contracting
(PAIC), “Unless a specific exception in law applies, the products, components, or materials
listed below must be grown, reprocessed, reused, or produced wholly in the United States
if they are purchased with funds made available (not necessarily appropriated) to DOD.
These rules apply to both prime contractors and subcontractors. The items listed are food,
clothing, tents, tarpaulins, covers, natural fibers or yarns, natural fiber products, natural
fabrics, synthetic fabrics, fabric blends, individual equipment (covered in Federal Supply
Class 8465) made from or containing fibers, yarns, fabrics, or materials (including all fibers,
yarns, fabrics, or materials therein), specialty metals (as defined in DFARS 252.225.7014),
stainless steel flatware, hand tools, and measuring tools. Office of the Under Secretary of
Defense for Acquisition Technology and Logistics, Defense Procurement and Acquisition
Policy, revised January 13, 2005. [http://www.acq.osd.mil/dpap/paic/berryamendment.htm].
CRS-12
or when the use of other than competitive procedures is based on unusual and
compelling urgency.31
The House version of H.R. 4200, the proposed FY2005 DOD Authorization bill,
contained a provision that would have limited the ability of the Secretary of Defense
to purchase defense items from countries that impose offset regulations or policies
on purchases of defense items from the United States. The Senate version of H.R.
4200 did not contain this provision. The final version contains a provision that
requires the Secretary of Defense to develop a defense acquisition trade policy
designed to eliminate any adverse impact of offset agreements in defense trade.
Another provision in the House version of the bill would have required the Secretary
of Defense to delay phasing out of the restriction of acquisition of polyacrylonitrile
(PAN) carbon fiber from foreign sources for three years. The Senate version did not
contain this provision. The final version contains a provision that would delay the
phase out of the domestic source restriction for PAN carbon fibers for 30 days, after
the Secretary of Defense provides to the House and Senate Armed Services
Committees a report on an assessment of the domestic and international industrial
structure that produces PAN carbon fibers and market trends for the product.
The Senate version of H.R. 4200 contained a provision that would have
provided the Secretary of Defense the authority to waive the application of statutory
domestic source requirements and domestic content requirements for those countries
who have signed a Declaration of Principles on defense trade with the United States.
The House version of the bill contained no such provision; the Senate receded.
The House version of H.R. 4200 contained a provision that would have
amended the Berry Amendment to require the Secretary of Defense to notify
Congress and the public when the Secretary of Defense exercised certain waiver
authority. The Senate version of the bill contained no such provision; the House
receded.
P.L. 108-287, the Fiscal Year (FY) 2005 Department of Defense (DOD)
Appropriations Act, (H.R. 4613), prohibits the procurement of carbon alloy, or armor
steel plate not melted and rolled in the United States (U.S.) or Canada, unless this
restriction is waived by the appropriate departmental Secretary within the Department
of Defense; requires the Secretary of Defense to submit to Congress a report on the
amount of DOD purchases from foreign entities in FY2005, for which the provisions
of the Buy American Act were waived; prohibits the spending of appropriated funds
unless the entity is in compliance with the Buy American Act; prohibits the
procurement of ball and roller bearings from foreign sources unless the restriction is
waived by the Secretary of Defense; prohibits the purchase of any supercomputer
unless manufactured in the United States; and grants authority to the Secretary of
Defense to waive limitations on the procurement of defense items from foreign
sources, under certain conditions.
31 U.S. Department of Defense. DFARS; Berry Amendment Changes. DFARS Case 2003-
D099. Published in the Federal Register, vol. 69, no. 180, September 17, 2004.
CRS-13
The FY2004 National Defense Authorization Act (P.L. 108-136) amends the
Berry Amendment by making exceptions for the procurement of covered items for
the purpose of contingency operations and for unusual and compelling urgency of
need. In addition, the act makes the procurement of waste and byproducts of cotton
and wool fiber for use in the production of propellants and explosives inapplicable
to the requirements of the Berry Amendment, and grants certain exceptions for the
procurement of ball bearings and roller bearings, procured for use in foreign
products, that is produced by a company that does not satisfy the requirements set for
manufacturers in the national technology industrial base.
H.R. 2658, the FY2004 Department of Defense Appropriations Act (P.L. 108-
87), includes the following key provisions: (1) restrictions on the procurement of
carbon, alloy, or armor steel plating; (2) prohibitions on the application of Buy
American requirements to the procurement of any fish, shellfish, or seafood products
during FY2004; (3) prohibitions on the purchase of welded shipboard anchor and
mooring chain 4 inches in diameter and under, unless the anchor and mooring chain
are manufactured in the United States from components that are substantially
manufactured in the United States; (4) prohibitions on the procurement of carbon,
alloy, or armor steel plate that were not melted and rolled in the United States or
Canada, for use in any government-owned facility under DOD’s control; (5)
prohibitions against the use of certain funds without compliance with the Buy
American Act; and (6) waiver of the Buy American Act when there are reciprocal
defense procurement agreements with certain foreign countries. Also, P.L. 108-87
requires reports to Congress on the amount of foreign purchases made in FY2003,
and on contracts for Iraq reconstruction and recovery efforts that are funded in whole
or part with DOD funds.
The final version of the FY2004 National DOD Authorization Act (P.L. 108-
136) includes a variety of domestic source provisions. Section 813 requires the
Secretary of Defense to establish a “Military System Essential Breakout List” of
critical technologies and components vital to our national defense, including the
origin of each item; Section 821 identifies and lists foreign countries that restrict the
sale of military goods or services to the U.S. because of counter-terrorism or military
operations, and contains a prohibition on the procurement of items from certain
identified countries; Section 822 provides an incentive program for major defense
acquisition programs to use machine tools and other capital assets produced within
the U.S.; Section 824 requires the Secretary of Defense to conduct a study of the
adequacy of the beryllium industrial base; Section 826 amends the Berry Amendment
by making exceptions for the procurement of covered items for the purpose of
contingency operations, when the procurement is under circumstances described as
of an unusual and compelling urgency. Section 827 grants an exception to the Berry
Amendment for procurement of waste and byproducts of cotton and wool fiber for
use in the production of propellants and explosives, and Section 828 grants an
exception to 10 U.S.C. 2534 for the procurement of ball bearings and roller bearings
used in foreign products.32
32 10 U.S.C. § 2534, Miscellaneous Limitations on the Procurement of Goods Other than
United States Goods.
CRS-14
The Defense Transformation for the 21st Century Act of 2003 (S. 927) was
introduced on April 28, 2003, and referred to the Senate Armed Services Committee.
Some provisions of S. 927 were passed in the FY2004 National DOD Authorization
Act.
H.R. 4546, the FY2003 National DOD Authorization Act (P.L. 107-314),
extended an Army pilot program that permitted the sale of manufactured articles and
the services of certain industrial facilities without regard to domestic source
restrictions (see Section 111).33 The act required the DOD Inspector General to
annually review the pilot program and submit a report to Congress; in the DOD
Inspector General’s review, the effectiveness of the Army pilot program was lauded,
and recommendations were made to improve the program.34
Several provisions affecting the Berry Amendment were enacted in the FY2003
Department of Defense Appropriations Act (H.R. 5010, P.L. 107-248). Section 8016
prohibited the procurement of welded shipboard anchor and mooring chain 4 inches
in diameter and under, unless manufactured from components that are substantially
manufactured in the U.S.; Section 8030 prohibited the procurement of carbon, alloy
or armor steel plates, for use in any DOD-controlled, government-owned facility,
unless the materials were melted and rolled in the U.S. or Canada. Section 8033
requires DOD to submit a report to Congress on the amount of purchases from
foreign entities in FY2003. Section 8046 required that any expenditure of funds be
in compliance with the Buy American Act and authorized the Secretary of Defense
to determine whether persons convicted of intentionally affixing “Made in America”
labels on products not made in America should be debarred from DOD contracting.
Section 8060 prohibited the procurement of ball and roller bearings, unless produced
by a domestic source and being of domestic origin.
In the conference report that accompanied H.R. 5010 (H.Rept. 107-732), House
and Senate conferees discussed the application of the Berry Amendment to the Multi-
Year Aircraft Lease Pilot Program, which was authorized in H.R. 3338, the FY2002
DOD Appropriations Act (P.L. 107-117). Congress later approved Section 308 of
H.R. 4775, the FY2002 DOD Supplemental Appropriations Act (P.L. 107-206) to
clarify Berry Amendment restrictions on the use of foreign-sourced specialty metals
in any commercial aircraft leased under the Boeing Lease Program. The Lease
Program permitted Boeing to use foreign-sourced specialty metals, such as Russian
titanium, on military aircraft.
Critics of the Boeing Lease Program argued that the decision to use Russian
titanium bypassed the Berry Amendment, which required DOD to give preference to
domestically produced, manufactured, or home grown products, notably food,
clothing, fabrics, and specialty metals. The language of H.Rept. 107-732
acknowledged that Congress concurred with the views of the Air Force, and that the
33 This provision was initially enacted in Section 141 of the FY1998 Defense Authorization
Act (P.L. 105-85; 10 U.S.C.§ 4543 note)
34 U.S. Department of Defense. Audit on the Status of Extended Pilot Program on Sales of
Manufactured Articles and Services at Army Industrial Facilities. Office of the Inspector
General, Report No. D-2003-103.PDF, June 27, 2003, 23 p.
CRS-15
decision to use foreign-sourced specialty metals was based on certain unique
financial and time-sensitive requirements.35
In the 107th Congress, the proposed FY2002 National Defense Authorization
Act (H.R. 2586) contained a provision that, if enacted, would have codified the Berry
Amendment, modified it to require advance congressional notification of all waivers,
and included parachutes on the list of items covered.36 The Senate later passed an
amended version that would codify certain Berry Amendment requirements. To
resolve the waiver issue, House and Senate conferees stated their expectation that
DOD would comply with waiver notification requests from the House or Senate and
ensure that no U.S. manufacturer could provide the required item in sufficient
quantity or quality before granting a future waiver to the Berry Amendment. An
amended waiver requirement became law when the Berry Amendment was codified
through the passage of the FY2002 National Defense Authorization Act (P.L. 107-
107).
The 106th Congress acted to tighten certain Berry Amendment provisions. The
FY1998 National Defense Authorization Act37 directed the DOD Office of the
Inspector General to conduct an audit of the FY1998 procurement of military
clothing by the Army, Navy, Air Force and Marine Corps to determine whether
contracting officers complied with the Berry Amendment and the Buy American Act.
The first audit found that 59 percent of those contracts reviewed did not include the
appropriate contract language (or clause) to implement the Berry Amendment,
resulting in some 43 violations valued at $1.4 million, and concluded that many of
the violations occurred because contracting officials were not fully knowledgeable
of the requirements of the Berry Amendment. The audit findings noted that DOD
procurement officials had agreed to issue policy guidance to contracting officers,
emphasizing the importance of complying with the Berry Amendment. A second
audit was later conducted. The second audit found that approximately 60% of all
contract actions reviewed did not include the appropriate contract clauses to
implement the Buy American Act nor the Berry Amendment.38
35 See H.Rept. 107-732 for a discussion on the”Application of the Berry Amendment to
Multi-Year Aircraft Lease Pilot Program.” For further discussion on the Boeing tanker lease
proposal, see CRS Report RL32056, The Air Force KC-767 Tanker Lease Proposal: Key
Issues for Congress, by Christopher Bolkcom.
36 Section 805, H.R. 2586.
37 P.L. 105-85, enacted November 18, 1997.
38 U.S. Department of Defense. Audit of the Procurement of Military Clothing and Related
Items by Military Organizations. Office of the Inspector General. Report No. 99-023,
October 29, 1998, 53 p. The House Armed Services Committee requested that a second
audit be conducted because of the number of violations identified in the DOD Inspector
General’s Report No. 99-023. As a result of the second audit, The Inspector General
recommended that the Acquisition Executives for the Army, Navy, Air Force, and the U.S.
Special Operations Command establish review procedures or additional training for
solicitations and contract awards made subject to the Buy American Act and the Berry
Amendment, and that the Assistant Secretaries for Financial Management and the
Comptroller of the Army and Air Force investigate these matters for potential violations
(continued...)
CRS-16
Other Views
Some proponents of the Berry Amendment believe that the U.S. military should
not be dependent on foreign sources for critical textile products and that dependency
on foreign sources for military items could lead to problems with supply, demand,
delays, and a potentially adversarial relationship with suppliers during times of war
or military mobilization. Furthermore, some believe that the Berry Amendment
should be expanded to include other important industries and that new federal
agencies like the Department of Homeland Security should be covered by the
provisions of the Berry Amendment.
However, others (i.e., some domestic and foreign companies) have criticized the
Berry Amendment, stating that it undercuts free market competition, may promote
discriminatory practices, robs businesses of incentives to modernize, causes
inefficiency in some industries due to a lack of competition, and results in higher
costs to DOD, because the military services pay more for “protected” products than
the market requires. Some critics of the Berry Amendment also argue that the U.S.
will lose its technological edge in the absence of competition and alienate foreign
trading partners, thereby provoking retaliations and loss of foreign sales. They assert
that the Berry Amendment will ultimately reduce the ability of the U.S. to negotiate
and persuade its allies to sell or not sell to developing countries. They contend that
the Berry Amendment promotes U.S. trade policies that undermine the international
trade agreements. Furthermore, restrictions on food mean that in most cases it is
illegal for DOD to purchase an item or food if it is a foreign item or if it has any
foreign ingredient or processing. On the other hand, critics have also expressed
concern over the increased levels of imported, ready to wear goods, and the prevalent
“sweat shop conditions” of foreign markets.
A GAO report has questioned whether the Berry Amendment is sufficient
protection for the defense industrial base and whether alternatives and solutions exist
to keep critical industries healthy and viable in times of peace and war. The report
was in response to a request from the House Armed Services Committee, directing
GAO to determine whether DLA is properly implementing applicable statutory and
regulatory guidance for best value purchases and to solicit DLA views on the
domestic clothing and textile supplier base. GAO officials acknowledged that the
Berry Amendment was a positive factor in helping DOD to maintain a domestic
supplier for some of DOD’s unique military needs; however, officials pointed out
that the overall domestic clothing and textile industry was in decline due to declining
employment and production levels, as well as the implementation of various free
trade agreements that may affect different levels of the domestic supply chain. As a
result, DLA has initiated a study to examine both clothing and textile industries.39
38 (...continued)
under the Antideficiency Act. For further discussion about the second audit, see U.S.
Department of Defense. Audit of the Buy American Act Issues on Procurements of Military
Clothing. Office of the Inspector General. Report No. D-2002-066PDF. March 20, 2002, 76
p.
39 Contract Management: DLA Properly Implemented Best Value Contracting for Clothing
(continued...)
CRS-17
Options for Congress
The Army’s black beret controversy, which revealed that the berets are not
100% domestic in origin, and the resulting waiver of Berry Amendment restrictions
to allow DLA to procure the berets from foreign sources raised questions which have
not been settled, as to the original purpose, intent, and value of the Berry
Amendment. Congress may choose to examine the domestic source restrictions under
the Berry Amendment and other procurement provisions and to determine whether
they help or hurt the defense industrial base, including relationships with foreign
trading partners.
Option 1: Take No Action, Retain the Berry Amendment as
Enacted
Congress may choose to take no action, to retain the current provisions of the
Berry Amendment as enacted in law.
Option 2: Eliminate Some Selected Restrictions
Congress might eliminate some selected restrictions, such as the restrictions on
food. Eliminating the restrictions on purchasing food items (with less than 100%
domestic content) would allow U.S. food suppliers to use more commercial business
practices that are more cost effective. This move would arguably promote more
competition and interest in selling food to DOD. For example, some in DOD believe
that elimination of the food restriction would allow food suppliers a greater and more
practical latitude to use foreign ingredients and processing, in line with current
commercial practice. Many food suppliers find this restriction to be the least
practical, and even trade associations of food suppliers have stated that this
restriction makes it more difficult to do business with DOD. The Pentagon believes
that the food provisions of the Buy American Act would continue to provide U.S.
food suppliers a significant advantage over foreign suppliers.
Likewise, Congress could eliminate or modify the clothing restriction, allowing
DOD to find the best item for the most competitive price.40 DOD has reportedly
known for 25 years that it does not produce a solely domestic beret.41 One alternative
39 (...continued)
and Textiles and Views the Supplier Base as Uncertain. Report to the Chairman and
Ranking Minority Member, Committee on Armed Services, House of Representatives. U.S.
General Accounting Office, GAO-03-440, February 2003. 18 p.
40 However, the American Manufacturing Trade Action Coalition [http://www.amtacdc.org]
advocates for the preservation of the Berry Amendment and the Buy American Act, so that
the U.S. military does not become dependant on foreign sources for critical textile products.
41 At the May 2, 2001 hearing before the House Committee on Small Business, Ms. Michele
Goodman from Atlas Headwear, Inc. (a small business supplier based in Phoenix, Arizona)
testified that American companies could have fulfilled the Army’s black beret requirement
(continued...)
CRS-18
would be for restricted items to be classified according to a prioritized system, with
“high-tech” and “low tech” classifications, which each could have different waiver
requirements. Some military uniform components, such as the beret, could be
classified as “low-tech,” and therefore could be procured without a waiver. This
option would be opposed by groups such as the American Manufacturing Trade
Action Coalition and the National Council of Textile Organizations.
Option 3: Adopt a “Componency Standard”
Congress might revise the Berry Amendment and amend the provisions to say
that manufactured articles are considered domestic if “substantially all” of their
components have been mined, produced, or manufactured domestically. This is
similar to the requirements of the Buy American Act and could eliminate future
procurement issues like those encountered in the Army black beret procurement.
Such a provision was proposed in the House-passed version of H.R. 1588, the
FY2004 National Defense Authorization Act. Section 829, titled “Requirement
Relating to Purchases by Department of Defense Subject to Buy American Act,”
would have broadened the definition of what makes an item “domestic” in origin. In
Section 829, an item was defined as domestic and covered under the Buy American
Act if it was at least 65% domestic in origin. Adoption of this provision would have
provided DOD the authority to procure items that may be a combination of both
domestic and foreign in origin. This provision alone would represent a significant
departure from the 100% domestic requirement of the Berry Amendment, and more
closely parallel the provisions of the BAA.42 However, this provision was dropped
in the final version of the bill.
Option 4: Study the Lessening or Elimination of Provisions
Congress could solicit the opinions of trade associations, labor organizations,
and industry experts on the selected use of Berry Amendment restrictions and use of
the waiver requirement. Many industry experts say that this approach is preferable
to an “all or nothing” stance taken by some interest groups.
The American Apparel and Footwear Association (AAFA) supports the
preservation of the Berry Amendment. AAFA believes that the controversy
surrounding the procurement of the berets has helped shore up support for such a
change in the law. The association has suggested that Congress might want to
consider whether one particular restriction adversely impacts a U.S. company or its
41 (...continued)
had DLA’s Defense Supply Center of Philadelphia been given enough time to proceed
properly, and had the U.S. Army been more open minded about the type of beret it wanted.
Her company attempted to bid for the beret contract, without success. See the prepared
statement of Michele Goodman, “Black Beret Procurement: Business as Usual at the
Pentagon?” House Committee on Small Business, May 2, 2001.
42 The Buy American Act requires the federal government to procure items that are
“substantially” composed of domestic materials, while the Berry Amendment requires that
the Department of Defense procure items that are wholly (100%) domestic.
CRS-19
workers that might have become dependent upon the provisions of the Berry
Amendment for their economic well-being.43
Option 5: Study What Percentage of Domestic Clothing,
Textiles, Food, and Specialty Metals Is Sold to the Military
Congress might determine whether these markets are wholly dependent on the
military or whether they represent a statistically significant portion of the total
market. For example, during Desert Storm the apparel and textile industry proved
that its surge capacity could rapidly respond to a major contingency and a sudden
call-up for servicemen and women. The industry started with nine manufacturers
producing two million camouflage fatigues in 1988; by 1991, the number of
manufacturers increased to sixteen, producing some five million camouflage fatigues.
Congress may also want to explore the impact of Berry Amendment restrictions on
U.S. relationships with foreign trading partners.
Option 6: Appoint a “Berry Amendment Commission”
Congress might appoint a commission to study the effects of the Berry
Amendment restrictions on the U.S. industrial base, national security, and the
military’s war-fighting capability. The commission could assess the economic, social,
and political impact of current restrictions and make recommendations to the
Congress. The commission could determine whether current coverage of the Berry
Amendment is appropriate or whether it should be expanded or contracted.
Option 7: Audit and Investigate Berry Amendment Contracts
Congress could investigate all military procurement contracts for compliance
with the Berry Amendment. Noting that congressional testimony suggested that DLA
had known that the Bancroft Cap Company has used foreign suppliers for the past
twenty-five years implies that there may be other similar instances that have been
overlooked or underreported. Congress could direct the Government Accountability
Office44 or the DOD Inspector General to conduct an audit of a representative sample
of contracts awarded for each restricted item under the Berry Amendment, including
whether end products incorporated materials from foreign sources.
43 AAFA Legislative Update, March/April/May 2001.
44 Effective July 7, 2004, the General Accounting Office’s legal name is the Government
Accountability Office.