Order Code RL33751
The Specialty Metal Provision and the Berry
Amendment: Issues for Congress
Updated October 28, 2008
Valerie Bailey Grasso
Specialist in Defense Acquisition Policy
Foreign Affairs, Defense, and Trade Division

The Specialty Metal Provision and the Berry
Amendment: Issues for Congress
Summary
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). Section 843 of P.L. 109-364 directed the Secretary of Defense to establish
a Strategic Materials Protection Board to determine, analyze, and recommend
strategies to ensure the domestic availability of materials designated as critical to
national security. The Board met in July 2007 and issued a report in September
2007.
In July 2008, the Department of Defense (DOD) proposed 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 (U.S.) national security interests and industrial base
concerns justify waiver of the specialty metal provision; and (2) if the United States
does not produce a 100% domestic specialty metal, should DOD restrict procurement
from foreign sources? Debate over the specialty metal provision invites renewed
debate over the efficacy of domestic source restrictions and whether the rationale for
every restriction represents a balanced and reasonable approach.
Some policymakers believe that the specialty metal provision conflicts with 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
domestic specialty metal suppliers need the protections afforded by domestic source
provisions, and that keeping a robust, domestic specialty metal industry is a hedge
against any future enemy threat.
This report examines the specialty metal provision, potential oversight issues
for Congress, and options that Congress may choose to consider. This report will be
updated as events warrant.

Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Revisions to Existing Specialty Metal Rules . . . . . . . . . . . . . . . . . . . . . . . . . 1
FY2008 National Defense Authorization Act and Revisions to Existing
Specialty Metal Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Strategic Materials Protection Board . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
FY2007 National Defense Authorization Act and the Enactment of a New
Specialty Metal Provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Rationale for the Proposed House and Senate Versions of the Specialty
Metal Provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Background on Specialty Metal Provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Specialty Metal Defined . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Origin of the Specialty Metal Provision in the Berry Amendment . . . . 5
The Test of Reasonableness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
DOD’s Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Original Congressional Intent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Oversight Issues for Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Effect on the Defense Industrial Base . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Competition Affects Suppliers Differently . . . . . . . . . . . . . . . . . . . . . . 7
Doing Business with DOD Could Mean Maintaining Separate
Production Lines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Competition Between Foreign and Domestic Firms Is Affected by the
Berry Amendment Because the United States Is Not a
“Qualifying Country” Under the Berry Amendment . . . . . . . . . . . 8
Administration/Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Effect on Joint Ventures and Partnerships . . . . . . . . . . . . . . . . . . . . . . 10
The Administrative Burden . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Reliability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
In Urgent Situations and Times of War . . . . . . . . . . . . . . . . . . . . . . . . 11
Maintaining a Productive and Profitable Domestic Base . . . . . . . . . . 12
Domestic Restrictions Protect the U.S. Industrial Base . . . . . . . . . . . . 12
Options for Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Eliminate the Specialty Metal Provision . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Combine the Berry Amendment and the Buy American Act . . . . . . . . 14
Enforce the New Specialty Metal Provision . . . . . . . . . . . . . . . . . . . . . . . . 15
Amend the Defense Federal Acquisition Regulation Supplement, Part
225.872-1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Limit the Use of Non-Compliant Specialty Metal . . . . . . . . . . . . . . . . . . . . 16
Require More Congressional Oversight . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Congress Could Require Congressional Approval Before
Non-Compliant Specialty Metal Can Be Used in Certain
Defense Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Require More Transparency and Openness in the Use of Specialty
Metal for All Defense Contracts Regarding Costs and
Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Require DOD to Publicly Disclose When Waivers Are Granted . . . . 17
Require a Congressional Report for Each Platform/Component Where
Foreign Specialty Metals Are Used in Defense Contracts . . . . . 17
Grant a Time-Limited Period of Acceptance Under the Specialty Metal
Provision to Give DOD and Congress Time to Study the Upturns
and Downturns in the Market . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Grant Prime Contractors the Authority to Conditionally Accept
Non-Compliant End Items Without Fear of Substantial
Penalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Encourage the Use of Domestic Specialty Metal . . . . . . . . . . . . . . . . . 18
Appoint a Blue-Ribbon Berry Amendment Commission . . . . . . . . . . . . . . 19
List of Tables
Table 1. The Three Leading Domestic Titanium Companies . . . . . . . . . . . . . . . 13


The Specialty Metal Provision in the Berry
Amendment: Issues for Congress
Introduction
This report examines the specialty metal provision which was originally part of the
Berry Amendment;1 the potential oversight issues for Congress, and options that
Congress may wish to consider. The debate over the specialty metal provision may also
renew interest in the debate over the viability of other domestic source restrictions.
There is congressional interest in the specialty metal provision because: (1) the specialty
metal restriction affects major defense contractors who produce components for
commercial airplanes; (2) some prime defense contractors as well as subcontractors on
the second, third, and fourth tiers have stated that they were unable to comply with the
Berry Amendment specialty metal requirement; (3) DOD has authorized the use of
waivers to purchase non-compliant items (non-compliant specialty metal are metal that
do not meet the 100% domestic source requirement of the Berry Amendment); and (4)
the long-term impact of the specialty metal provision on the costs of defense equipment
and programs, particularly on the requirement that weapon system components be
certified as made in the United States.
As early as March 2006, DOD had learned that some items containing foreign
specialty metal were being delivered under some DOD contracts. As a result, the
Defense Contract Management Agency issued interim instructions which detailed a
policy and process for how DOD would provide contractors a “conditional
acceptance” for such metals.2
Revisions to Existing Specialty Metal Rules
In July 2008, DOD proposed to amend the Defense Federal Acquisition
Regulation Supplement (DFARS) to implement three provisions: Section 842b of the
FY2007 National Defense Authorization Act, and Sections 804 and 884 of the
1 The specialty metal provision of the Berry Amendment was enacted in the 1973 DOD
Appropriations Act, P.L. 92-570. For more information on the Berry Amendment, see CRS
Report RL31236, The Berry Amendment: Requiring Procurement to Come from Domestic
Sources
, by Valerie Bailey Grasso.
2 Defense Contract Management Agency. Specialty Metals Clause Compliance. March 10,
2006 (revised) at [http://guidebook.dcma.mil/225/instructions.htm].

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FY2008 National Defense Authorization Act.3 Comments for the proposed rule were
accepted through September 19, 2008.
FY2008 National Defense Authorization Act and Revisions to
Existing Specialty Metal Rules

P.L. 110-181, the FY2008 National Defense Authorization Act, contained two
new provisions which impact the specialty metal provision. Section 803 required 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 would be evaluated and
weighted in any decision to grant future waivers to the specialty metal provision.
Another provision, Section 804, amended the specialty metal provision to make
flexible the requirement that all specialty metal come from domestic sources. With
several exceptions noted, this provision does not apply to contracts or subcontracts
for the acquisition of commercially available “off-the-shelf” items, as defined in the
Office of Federal Procurement Policy Act, Section 35(c). Within 180 days, DOD is
required to review and amend existing rules for the domestic nonavailability
determinations that apply to the existing specialty metal provision. The long-term
impact of these new changes may not become evident until the Strategic Materials
Protection Board completes its assessment and DOD has determined how decisions
will be made regarding the use of such waivers.
Finally, Section 884 required DOD to publish a such notices on the Federal
Business Opportunities website.
Strategic Materials Protection Board. Section 843 of FY2007 National
Defense Authorization Act required the creation of a Strategic Materials Protection
Board to determine which items should be designated as critical to national security,
and to recommend changes for future domestic source restrictions. The Board held
its first meeting on July 17, 2007. The Board made the following decisions, as
described below.
! that the term “materials critical to national security” would be taken
to mean “strategic materials critical to national security” or simply
“strategic materials,” and would include those specialty metals listed
in 10 U.S.C. 2533b, and any other materials that the Board chose to
so designate;
! that the Board should initially focus its efforts on determining the
need to take action to ensure a long term domestic supply of
specialty metals as designated in 10 U.S.C. 2533b;
! to adopt certain Terms of Reference (Appendix) to shape its
deliberations; and
3 Proposed Rule. Defense Federal Acquisition Regulation Supplement: Restriction on
Acquisition of Specialty Metals (DFARS Case 2008-D003). Federal Register, Vol. 73, No.
140, July 21, 2008.

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! to direct the Board’s Executive Secretary to conduct an initial
analysis of national security issues associated with strategic
materials; and to report the results of that analysis at the next SMPB
meeting.4
FY2007 National Defense Authorization Act and the
Enactment of a New Specialty Metal Provision

Congress enacted provisions in the FY2007 National Defense Authorization Act
that changed the statutory authority for the special metal provision. P.L.109-364
created a new specialty metal provision separate from the Berry Amendment, moving
it into a separate section of Title 10.5 Also, Section 842b established a one-time
waiver of the Berry Amendment for non-compliant specialty metal incorporated into
items produced, manufactured, or assembled in the United States before the date of
the act’s enactment. DOD can grant waivers provided the noncompliance was not
knowing or willful.6
Rationale for the Proposed House and Senate Versions of the
Specialty Metal Provision. The House-version of the proposed FY2007 National
Defense Authorization bill, H.Rept. 109-452, contained a provision that would move
the statutory requirements for the procurement of specialty metal from the Berry
Amendment to a separate section of Title 10. H.Rept. 109-452 offered new language
to clarify that the Berry Amendment applied to prime contracts as well as
subcontracts. H.Rept. 109-452 stated that allowing foreign contractors to purchase
specialty metal, from any source, not only would defeat the intent of the Berry
Amendment, but also create a grave risk to national security. The report noted that
the committee was aware that certain suppliers claimed that they were inadvertently
non-compliant with the specialty metal requirement. The House provision would
have allowed a 12-month period for suppliers to become compliant with the specialty
metal requirement. It was the intent of the House that all current exceptions and
waivers to the Berry Amendment would remain.
The Senate-version of the bill, S.Rept. 109-254, proposed an amendment to
codify the specialty metal requirement in a newly-created section of Title 10. Facing
the dilemma of how to supply equipment needed to fight the war, the Senate drew
upon the original intent and purpose of the specialty metal provision, as interpreted
in a memorandum by then-Secretary of Defense Melvin Laird. This memorandum
gave DOD the authority to exercise some administrative flexibility in acquiring
critical equipment and components for military systems. The Laird memorandum is
a key to understanding how and why the provision came to be, as discussed in the
original memorandum here:
4 Office of the Under Secretary of Defense (Acquisition, Technology & Logistics.) First
meeting of the Strategic Materials Protection Board, September 2007, p. 2.
5 10 U.S.C. 2533b.
6 FARS 225.7003-4.

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The bulk of these specialty metals which are used in one form or another in
myriad items purchased by the Department of Defense are actually procured at
the subcontract level — often many subcontract tiers removed from the prime
contract — so as to make impracticable any precise evaluation of all such
purchases, even at enormous expense in both money and time. It is apparent,
from the legislative history of this provision, that it was not intended that this
Department achieve or attempt to achieve the impossible in its implementation.
Rather, it is clear that its purpose is to afford reasonable protection to the
specialty metals industry to help preserve our domestic production capacity to
satisfy mobilization requirements, without forcing a massive disruption of our
existing procurement methods and programs. An accommodation is therefore
needed to give maximum effect to this new requirement without losing sight of
other Congressional objectives that the Department of Defense function in an
efficient and economical manner in meeting its mission.7
S.Rept. 109-254 acknowledged that specialty metal suppliers were required by
DOD to certify that their products or components were compliant with the Berry
Amendment.
Background on Specialty Metal Provision
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 different provisions
that were covered under the Berry Amendment.8
Specialty Metal Defined. Specialty metals are defined in the Defense
Federal Acquisition Regular Supplement (DFARS). They include steel, metal alloys,
titanium and titanium alloys, and zirconium and zirconium base alloys.9
Under the Berry Amendment, specialty metal shall be melted in the United
States or its outlying areas, and any specialty metal incorporated in items shall be
melted in the United States or its outlying areas. This rule does not apply to specialty
metal which are either melted in a qualified country, incorporated in an article
manufactured in a qualifying country, or exempted by another enumerated
exception.10
7 Memorandum for Secretaries of the Military Departments and Directors of the Defense
Agencies, by Melvin Laird, Secretary of Defense. November 30, 1972. Excerpts of the
Laird memorandum appeared under “Items of Special Interest — Application and
Interpretation of the Berry Amendment” in P.L. 109-364, the FY2007 National Defense
Authorization Act. This and related research was conducted by Ann Eschete and M-J.
Oboroceanu of the Knowledge Services Group, Foreign Affairs, Defense and Trade
Division, Congressional Research Service.
8 For a history of the Berry Amendment, see CRS Report RL31236, Berry Amendment:
Requiring Defense Procurement from Domestic Sources
, by Valerie Bailey Grasso.
9 The Defense Federal Acquisition Regulation Supplement develops and maintains the
acquisition rules which govern DOD. See [http://www.acq.osd.mil/dpap/dars/index.htm]
10 DFARS 252.225-7014-Preference for Domestic Specialty Metals. The qualifying
(continued...)

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Application. Specialty metal is used in DOD contracts primarily for military
aircraft, weapons, and equipment, and within integrated circuits, wiring, and
electrical components. The Berry Amendment did not apply to purchases of specialty
metal by subcontractors, at any tier, except if used in producing items for six
applications: aircraft, missile and space systems, ships, tanks, weapons, and
ammunition. These six applications were identified in the Laird memorandum; when
enacted as part of the Berry Amendment, DOD estimated that the great bulk of the
specialty metal procured fell within these six major classes of programs. DOD
concluded that any attempt to identify and control the use of such metal, for the
remaining small quantities involved in other procurement, would not be cost-
effective nor justify the effort.
Origin of the Specialty Metal Provision in the Berry Amendment.
The specialty metal provision first appeared in the 1973 Defense Appropriations
Act.11 Congress was concerned with protecting domestic source materials for the
Vietnam War. At that time, the domestic specialty metal sector was hurt by
subsidized imports into the United States. In order to insure an adequate domestic
base for domestic items, Congress provided a guarantee to domestic suppliers for a
portion of DOD’s specialty metal business.
The Test of Reasonableness. From the inception of the specialty metal
provision, both Congress and DOD emphasized that a test of reasonableness would
be applied; that the specialty metal provision should not pose an administrative
burden upon DOD contractors nor the federal government.
DOD’s Actions. In a March 7th hearing before the Air and Land Forces
Subcommittee of the House Armed Services Committee, Lieutenant General Donald
J. Hoffman, Air Force Military Deputy, asked that Congress give its support to
relieving the Air Force from the more arduous aspects of the specialty metal waiver
process, as discussed below.
I would ask for the Committee’s continued help in one area, and that is the area
of specialty metals. In last year’s authorization act, Congress provided some
relief in the area of electronic components, where the source of minute amounts
of specialty metals cannot be traced throughout the commercial production
supply chain. This relief is certainly helpful, but I would ask that there be further
consideration for relief in the area of commercial products. Tracing the source
of metals and commercial products is very problematic for industry, particularly
where DOD is a very small part of their market. The cost of creating a separate
supply chain that is able to trace specialty metals down to the lowest tier, such
10 (...continued)
countries (DFARS 225.872-1) are Australia, Austria, Belgium, Canada, Denmark, Egypt,
Germany, Finland, France, Greece, Israel, Italy, Luxembourg, Netherlands, Norway,
Portugal, Spain, Sweden, Switzerland, Turkey, United Kingdom, and Northern Ireland.
11 P.L. 92-570, the 1973 DOD Appropriations Act, was amended to add the following text:
“Wood (whether in the form of fiber or yarn or contained in fabrics, materials, or
manufactured articles), or specialty metals not grown, reprocessed, reused, or produced in
the United States or its possessions.”

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as fasteners, is something industry has been unwilling to accept if it is to remain
commercially competitive.
While the Congress has authorized a waiver process, the justification and support
of the waivers can be very labor intensive. As an example, the waiver process
last year for the AMRAM (Advanced Medium Range Air-to-Air) missile, the
government contractor spent over 2,200 man hours to review 4,000 parts, and
produced a documentation to justify the waiver. This documentation was eight
inches tall in printed form. All this work was to justify a waiver for $14,000 on
an item that is valued at $566,000.12
Original Congressional Intent. Beginning with the 1973 Defense
Appropriations Act, the objective of Congress was to use a thoughtful and reasonable
approach in adding specialty metal to the list of items covered under the Berry
Amendment. In the initial debate over the specialty metal provision, Senator Jacob
Javits observed that the implementation of the provision would require thought and
reasonableness, as discussed here:
As an example, I would certainly hope that the Department of Defense in
administering this provision would take into consideration the fact that it would
be a virtual impossibility for a company participating in a defense contract to try
to ascertain for itself, let alone for the myriad of suppliers of small component
metals parts, that there was no small amount of metals used which would come
within the definition of specialty metals. I would hope that the Department of
Defense in the administration of this provision, while seeking to carry out the
broad intent of protecting the special metals industry, would have sufficient
flexibility and discretion under this provision so that they would not be required
to go to ridiculous extremes which would result in an almost impossible
administrative burden placed upon Government contractors, and the addition of
needless expenses to the Government in carrying out its procurement practices.13
Oversight Issues for Congress
The specialty metal provision of the Berry Amendment prohibits DOD from
procuring metal that is not produced in the United States.14 Such a policy alone is
difficult to manage; when coupled with the Secretary of Defense’s waiver authority
and a myriad of exceptions written into the law, the policy became difficult to
execute. The very nature of the specialty metal provision itself creates unanticipated
consequences for DOD and the defense industry.
12 Statement of Lieutenant General Donald J. Hoffman, Military Deputy, Office of the
Assistant Secretary of the Air Force for Acquisition, before the Subcommittee of Air and
Land Forces, House Armed Services Committee, March 7, 2007.
13 Excerpt from Senator Jacob Javits’ remarks on the passage of H.R. 16593, Making
Appropriations for the Defense Establishment for Fiscal Year 1973. 118 Congressional
Record S17967 (October 13, 1972).
14 10 U.S.C. § 2533a, Requirement to Buy Certain Articles from American Sources;
Exceptions.

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Three issues stand out as policy questions that Congress may choose to consider
in its oversight role. First, how does the specialty metal provision affect competition
among the different contractor tiers in the U.S. defense industrial base? Second,
what are the factors that contribute to the success or failure of the administration and
enforcement of the specialty metal provision? Third, how does one weigh the
reliability of having a domestic supplier base in times of urgent and compelling need,
coupled with the desire to promote global trade?
Competition
Effect on the Defense Industrial Base. Competition for defense work is
affected by the availability of sufficient quantity and quality of specialty metal; such
metal may be critical and vital to the war-fighting effort if they are used for “high-
tech” electronics and communications like personal digital assistants. Creating
separate electronic chips for military use only, with no foreign content, would be an
expensive undertaking, and some companies have elected not to do so even if it
means not being able to sell to DOD.
Competition Affects Suppliers Differently. Some members of the
defense industry often describe the specialty metal issue as a debate between
companies that advocate for global trade versus those that advocate for a dedicated
domestic industrial supplier base. On the one hand, some view major aerospace
companies as eager to seek waivers of domestic source restrictions because doing so
would increase their access to foreign markets for specialty metal. Some industry
leaders have maintained a view that domestic source restrictions like the Berry
Amendment are inconsistent with a policy to encourage global competition. Yet
some believe that the presence of competition, particularly from the foreign markets,
makes it more difficult for domestic suppliers to survive. Each supplier in the defense
industrial base views competition differently.
For example, major defense contractors contend that global competition for
commercial and defense work requires establishing and developing foreign trading
partners, and that the capacity of domestic suppliers to meet the needs of major
defense contractors is insufficient. Some contractors, especially those whose primary
market is the U.S. defense industry, know their client base, what they have to buy,
and thus are locked into one dedicated supply chain. Yet many other contractors,
particularly at the third and fourth tiers of the supply chain, market to both military
and commercial sectors; they find that carrying separate supply chains is cost-
prohibitive and poses a significant administrative burden. Some companies may not
know who the ultimately purchaser of their product will be, so they cannot be certain
whether the end use is for a commercial or military application. For a military
customer, each item or parts of an item must be traced to a 100% domestic content.
Doing Business with DOD Could Mean Maintaining Separate
Production Lines. The specialty metal provision as contained in the Berry
Amendment required a 100% compliance; there was no provision for non-compliant
metal. As an example, when DOD purchased avionics, electronics, components, and
subassemblies, items with specialty metal were required to be 100% domestic.
However, the integration of the global supply chain meant that cheaper, foreign
medal could make up virtually all products, and that there were fewer companies that

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could certify that all of the metal used in the production of their items were wholly
domestic in origin. Suppliers who wanted to sell to DOD and to the commercial
sector could be forced to maintain two separate production lines; this would raise
DOD’s costs.
Competition Between Foreign and Domestic Firms Is Affected by
the Berry Amendment Because the United States Is Not a “Qualifying
Country” Under the Berry Amendment.
The Berry Amendment permits the
procurement of products from certain qualifying countries. Qualifying countries are
defined as countries that have a Memorandum of Understanding or other
international agreement with the United States.15 Under the Berry Amendment,
qualifying countries are allowed to sell products to DOD, because DOD has
determined that it is not in the public interest to restrict the procurement of products
from qualifying countries. This decision affects U.S. companies in this way: the
United States is not listed as a qualifying country under the Berry Amendment. For
this reason, the Berry Amendment would appear to prohibit any U.S. company from
selling items to DOD, unless the company can certify that any items, composed of
any non-compliant specialty metal, are from qualifying countries only. This posed
a hardship for some domestic companies that could not meet this requirement.
The Berry Amendment also allowed for the procurement of specialty metal
melted in a qualifying country or incorporated in an article manufactured in a
qualifying country. If an item was made overseas in a qualifying country and
incorporated specialty metal not melted in America (or in a qualifying country), then
DOD may purchase that foreign-made item. The effect of this rule meant that
qualifying countries could use metal from any source, even a non-qualifying country,
and sell products to DOD.
Administration/Enforcement
Administration. Can DOD administer and properly execute the new specialty
metal provision? The new specialty metal provision may not be entirely enforceable,
because it may be nearly impossible to determine to any degree of certainty whether
the smallest of the nuts, bolts, screws, and fasteners that make up DOD weapons
systems and equipment are of 100% domestic content.
Waivers. Other problems include the use of waivers. The use of waivers to
accommodate both DOD and defense contractors suggests that the Berry Amendment
may be difficult to enforce. In April 2004, the Secretary of the Air Force approved
a permanent waiver of the requirements of the Berry Amendment for 23 commercial
aircraft systems, representing more than 1,200 aircraft in the Air force’s inventory.
The first waiver was granted in October 2002, when the Senate voted to grant Boeing
a waiver of the Berry Amendment to purchase Russian titanium on more than 100 of
its 767 air refueling tankers that were to be leased to the Air Force. At the time,
DOD and the Senate affirmed that this was an exception, that the Berry Amendment
would be consistently enforced in the future; yet another waiver was granted in
December 2002, allowing United Technologies Corporation to purchase Russian
15 DFARS 225.872-1.

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titanium to manufacture jet engines for the Boeing C-17.16 The Government
Accountability Office (GAO) later found that the Air Force granted waivers without
a thorough analysis of all available options.17
The debate over the specialty metal provision was largely fueled by voluntary
disclosures, made by companies who sell to DOD, that the companies were in
violation of the Berry Amendment specialty metal requirement. For example, the
National Semiconductor Corporation disclosed that specialty metal used in its
products do not meet the requirement. “To the best of our knowledge, no other
semiconductor manufacturer currently is capable of meeting that standard,” wrote
Gerry Fields, Vice-President; Texas Instruments and the Intel Corporation made
similar disclosures. Each company has stated that, due to the global supply chain for
their production line, they would be unable to meet present and future specialty metal
requirements.18 The Semiconductor Industry Association (SIA), which represents
about 85% of U.S.-based semiconductor industry, states that integrated circuits from
products made by SIA member companies may contain small quantities of non-
compliant specialty metal. Such quantities constitute a small percentage of the item’s
overall metal content. Further, SIA opines that the application of a domestic
preference to specialty metal, as currently applied by DOD and the FY2007 Defense
Authorization bill, does not take into account the economic realities that have shaped
the development of the specialty metal industry and indeed the entire global
technology sector.19
16 Haflich, Frank. “Latest Buy America” Waiver Fuels Probe of Metals Impact, American
Metals Market
, March 25, 2003.
17 Government Accountability Office. Defense Procurement: Air Force Did Not Fully
Evaluate Options in Waiving Berry Amendment for Selected Aircraft. GAO-05-957,
September 2005, 21 p. A list of Berry Amendment waivers granted by DOD since June
2003 appear in the Appendices of this report.
18 Memorandum on Berry Amendment/Buy American Act - DFARS Clause 252.225-7014,
Gerry Fields, Vice-President, Worldwide Quality Network and New Product Execution.
National Semiconductor Corporation, March 7, 2006; also, Request for Confirmation of
Compliance with the Berry Amendment, by Brent Thornton, Quality Assurance Manager,
HiRel, Defense, and Aerospace Products, March 23, 2006; Memorandum on Domestic
Preference for Specialty Metals, Texas Instruments, May 12, 2006.
19 SIA’s Position on the Berry Amendment, May 9, 2006. Since 1977, SIA has identified
itself as a leading voice for the semiconductor industry. SIA member companies comprise
more than 85% of the U.S. semiconductor industry. Collectively, the chip industry employs
a domestic workforce of 225,000 people. According to SIA, over 70% of U.S.
manufacturing facilities are on U.S. soil, but greater than 75% of the industry revenue is
affected by specialty metal provisions. These provisions affect military contracts and the
availability of commercial products for the military. SIA points out that procurement
regulations affect semiconductors in two ways: first, the military relies on a commercial off-
the-shelf (COTS) acquisition model for many components. Second, semiconductors are
used in downstream products supplied under military contracts and subcontracts. Because
of these trends, they note their customers have a more direct exposure to government
procurement than do semiconductor companies themselves. Accessed online at
[http://www.sia-online.org].

CRS-10
During FY2007, DOD approved a “Domestic Non-Availability Determination
(DNAD)” to permit the procurement of non-compliant (non-domestic) fasteners.20
As several suppliers voluntarily disclosed their use of non-compliant specialty metal
in defense weapon systems, DOD proposed a temporary modification to the specialty
metal provision through a series of interim instructions. On March 10, 2006, the
Defense Contract Management Agency issued guidance to its contracting officials
on how to handle the acceptance of non-compliant specialty metal, until a long-term
solution could be developed. On June 1, 2006, the Undersecretary of Defense for
Acquisition, Technology, and Logistics issued a memorandum which authorized a
“conditional acceptance and withholding of payment” based on two considerations:
(1) a financial consideration (or offset to the federal government) to support the
conditional acceptance, and (2) a comprehensive corrective action plan provided by
the contractor.21
Effect on Joint Ventures and Partnerships. Many of the companies that
signaled their inability to meet the specialty metal requirement were part of the Berry
Amendment Reform Coalition, an organization of industry associations that
represents thousands of companies that provide products, services, and personnel to
the federal government. The Coalition asserts that the specialty metal provision can
have a harmful effect on the ability of defense contractors to partner with other
companies. Prime contractors who rely on small and mid-size companies to deliver
components, such as fasteners and components from electronic circuit boards, find
compliance with the Berry Amendment may be nearly impossible. According to the
Coalition, because of Berry Amendment requirements, the cost of a fastener for a
military plane can be as much as 5 times more than the cost of a fastener for a
commercial airplane. Additionally, the cost of using domestic titanium (for a U.S.
company) can be as much as 40% higher than the cost of using non-domestic
titanium.22
20 [http://www.dcma.mil/dnad/]. DOD has issued DNADs for a number of items. In the
Fastener DNAD, it was determined that satisfactory quality and sufficient quantity of
specialty metal in the form of fasteners could not be procured as and when needed.
Subsection (b) of 10 U.S.C. 2533b states that if such a determination is made, subsection
(a) does not apply. Thus, the restriction in subsection (a) of 10 U.S.C. 2533b does not apply
to fasteners. Contracting officers may procure end items, and components thereof,
containing fasteners, notwithstanding the country where the specialty metals contained in
such items were melted or produced. DOD will revisit the basis for this DNAD if it learns
that the circumstances which formed the basis of the determination have changed. Thus, the
DNAD will be revised if and when compliant specialty metal of satisfactory quality and
sufficient quantity, in the required form, can be procured as and when needed.
21 Defense Contract Management Agency, Interim Instruction, Non-compliance with the
Preference for Domestic Specialty Metals Provision, DFARS 252.225-7014, revised March
10, 2006, 4 p.; and OUSD(A&TL). Memorandum on Berry Amendment Compliance for
Specialty Metals, by Kenneth J. Krieg, June 1, 2006, 2 p.
22 Senate Berry Amendment Streamlining Proposal: Myth versus Reality. A position paper
of the Berry Amendment Reform Coalition. July 18, 2006, 4 p. The Berry Amendment
Reform Coalition is an organization of about a dozen industry associations that reportedly
support alternative approaches that promote a reasonable and balanced solution.
[http://www.nedassoc.org/].

CRS-11
The Administrative Burden. The cost of compliance with administrative
requirements of the specialty metal provision could be unsustainable. Many
companies report that they are unable to develop a compliance measure that would
support a 100% across the board systematic reporting system of every type of metal
that is used in the melting process. Such a system of compliance would be difficult,
if not impossible to maintain. Further, since contractors have smaller percentages of
their business line devoted to DOD contracts, it is not cost-effective for contractors
to develop such a system. Many have signaled that if forced to do so, they would
terminate their business relationship with DOD and increase their capacity for
commercial work.
Enforcement. Failure to adhere to the specialty metal provision can be costly
to DOD contractors. For example, federal law required that parts made for the F-15
Eagle and the F/A-18 Hornet fighters be composed entirely of domestic titanium.
Boeing was required to use domestically melted titanium in C-17 transport plans, F-
15 fighters and F/A-18 fighter and attack planes during the 1990s, but failed to do so.
The federal government maintained that the delivery of non-conforming aircraft
violated the False Claims Act.23 Boeing was charged with violating the False Claims
Act because it used Russian-melted titanium in the manufacture of military aircraft.
While the case was under investigation, the federal government withheld a $9.6
million contract payment from Boeing. Boeing and the federal government reached
a $6 million settlement. Boeing also agreed to forfeit the remaining $3.6 million of
the contract payment.24
Reliability
In Urgent Situations and Times of War. The issue of reliability has been
the cornerstone of why domestic source restrictions, like the specialty metal
provision, are viewed by some as essential to the viability of the domestic defense
industrial base. Central to the issue of reliability is the basic premise upon which the
Berry Amendment was first adopted. 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.25 There were at least two congressional concerns: (1) that the United States
23 Title 31, U.S.C. 3729-3733. Under the False Claims Act, those who knowingly submit,
or cause another person or entity to submit, false claims for payment of government funds
are liable for three times the government’s damages, plus civil penalties of $5,500 to
$11,000 per false claim.
24 “Boeing to pay $6 million to settle Russian titanium charges.” St. Louis Journal,
September 29, 2004; and “Boeing reaches $6 million titanium settlement.” Metals Place,
September 29, 2004.
25 On April 5, 1941, the Berry Amendment was 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, passage of the FY2002
(continued...)

CRS-12
maintain a vibrant domestic industrial base by requiring that military troops wear
uniforms made in the United States, and consume food produced in the United
States; and (2) that the nation be prepared in the event of adversity or war. So the
dominant congressional belief has maintained that the United States has an obligation
to see that domestic industries remain productive.
Many view domestic source restrictions, like the specialty metal provision, as
a way to insure that, in urgent situations and times of war, the United States will have
access to critical items needed to ensure national security. Those who advocate for
maintaining a robust capability among the domestic sources for titanium, as an
example, argue that these companies will ensure that, should a global shortage of
titanium develop or if the United States loses a key trading partner, the United States
will not become unduly dependent on another country for a critical item.
Furthermore, having domestic suppliers who have the protection of the Berry
Amendment may ensure that domestic production lines remaining open and viable.
Maintaining a Productive and Profitable Domestic Base. An argument
that is often raised is that, as an example, the three domestic titanium producers
would not be viable if the Berry Amendment did not exist. Yet a look at the three
domestic titanium producers, as illustrated in Table 1, reveals that they are robust
companies that have different income streams, and are not wholly dependent on the
Berry Amendment. Industry estimates are that the domestic titanium producers have
about 16% of the defense market, worldwide, and about 99% of the DOD market.
One company, Allegheny Technologies, recently announced a $325-million
investment in a titanium sponge facility; this will help the company to increase it’s
capacity to handle additional work, particularly their melt capacity, with the result of
increasing their worldwide market share.26
Domestic Restrictions Protect the U.S. Industrial Base. There is a
third reason often expressed - that products consumed by Americans should be made
at home, and that the Berry Amendment represents jobs for the smaller, domestic
companies in America. However, when compared to the jobs generated by the major
defense contractors in the global supply chain, the number of local jobs is
proportionately smaller.
25 (...continued)
National Defense Authorization Act codified 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.
26 A Roundtable on the Buy American Act and Berry Amendment. Moderated by Robert
Dickman, Executive Director of the American Institute of Aeronautics and Astronautics,
September 2006.

CRS-13
Table 1. The Three Leading Domestic Titanium Companies
Specialty
Locations
Number of
Annual Sales
Metal
Employees
Companies
(approximate
number)
Allegheny
Headquartered in Pittsburgh,
9,500
$5.45 billion (as of
Technologies
PA; operations in Pennsylvania,
December 31, 2007)
Alabama, South Carolina,
Illinois, Massachusetts;
locations in Europe, Asia,
Australia
RTI
Headquartered in Niles, Ohio;
1,400
$505.4 million (as of
International
December 31, 2006)
composed of two business
Metals, Inc.
groups, the Titanium Group and
the Fabrication & Distribution
Group, at 18 locations in the
United States, Canada, Europe,
and Asia.
Titanium
Headquartered in Denver, CO;
2,400
$1,183.2 million (as
Metals Corp.
R&D in Henderson, NV; Mills
of December 31,
(TIMET)
in Nevada, Ohio, and
2006)
Pennsylvania; European
operations in England, Wales,
France, and Italy
Source: Financial and company website information, accessed on the Internet, January 31,
2008.27
Options for Congress
It is important to note that the specialty metal provision in the Berry
Amendment had been in place since 1972. Any change in the law will likely have
both upstream and downstream effects. How will the change affect prime contractors
and subcontractors on the second, third, and fourth tiers, as well as U.S. domestic
suppliers? It may take some time for DOD to implement the change in policy.
Six possible options for policymakers to consider are listed below: (1)
eliminate the specialty metal provision, or eliminate the Berry Amendment; (2)
combine the Berry Amendment and the Buy American Act into one statute; (3) enforce
a new specialty metal provision; (4) limit the inclusion of non-compliant specialty
metal; (5) require more congressional oversight; and (6) convene a blue-ribbon panel,
a “Specialty Metal Commission.”
27 The source for this information was the individual company websites as well as the
Hoover Financial Index. Also, additional research was conducted by Carolyn Smith of the
Knowledge Services Group, Foreign Affairs, Defense and Trade Division, Congressional
Research Service.

CRS-14
Eliminate the Specialty Metal Provision
Congress could eliminate the specialty metal provision. Congress could also
eliminate the Berry Amendment. Some question whether the Berry Amendment is
still a good policy, given the global supply chain; others question whether each item
needs the protection of a domestic source policy.
The effect: Eliminating the specialty metal provision or the Berry Amendment
would be met with fierce opposition, particularly from domestic suppliers without a
strong foreign market. Domestic source restrictions like the Berry Amendment, to
some extent, do help to insure that there is a dedicated domestic source for DOD
products.
Combine the Berry Amendment and the Buy American Act. One
option is to combine the Berry Amendment and the Buy American Act (BAA) into
one statute. The Berry Amendment is often confused with the BAA; often the two
legislative initiatives are referred to interchangeably. BAA is the major domestic
preference statute of the federal government, and prohibits the federal government
from procuring items that are less than 50% domestic in origin.28 The BAA governs
all federal government procurement, not just DOD’s procurement. Since the Berry
Amendment and BAA have similar goals, one solution would be to create one
standard — to marry the Berry Amendment and BAA into one domestic source
standard. For example, since the Berry Amendment requires a 100% compliance,
and the Buy American Act requires a 51% compliance, one alternative would be that
the combined Berry Amendment/BAA could have a 65% compliance requirement.
Legislative initiatives have been introduced to change the BAA. One example,
the Buy American Improvement Act of 2005, was introduced during the first session
of the 109th Congress; if enacted into law, this bill would have raised the Buy
American Act’s minimum domestic content standard from 51% to 75%, an amount
much closer to the 100% standard of the Berry Amendment. Senator Feingold
introduced this bill and offered the following comments:
The bill that I am introducing today, the Buy American Improvement Act, focuses
on the Federal Government’s responsibility to support domestic manufacturers
and workers and on the role of Federal procurement policy in achieving this goal.
The reintroduction of this bill, which I first introduced in 2003, is part of my
ongoing effort to find ways to stem the flow of manufacturing jobs abroad... This
(Buy American Act of 1933) is an important law but, regrettably, it contains a
number of loopholes that make it too easy for government agencies to buy
foreign-made goods. My bill, the Buy American Improvement Act, would
strengthen the existing act by tightening its waiver provisions. Secondly, my bill
would increase the minimum American content standard qualification under the
Act from the current 50 percent to 75 percent. The definition of what qualifies
as an American-made product has been a source of much debate. To me, it seems
clear that American-made means manufactured in this country. This
28 See CRS Report 97-765, The Buy American Act: Requiring Government Procurements
to Come from Domestic Sources
, by John R. Luckey.

CRS-15
classification is a source of pride for manufacturing workers around our country.
The current 50 percent standard should be raised to a minimum of 75 percent.”29
The effect: Although the bill did not survive, there was some support in the
Congress for raising the Buy American Act minimum domestic content standard.
While combining the two legislative initiatives appears to be a simpler solution,
DOD would likely object because, with a more restrictive requirement, procurement
costs for the federal government’s goods and services would likely increase.
Enforce the New Specialty Metal Provision
One new specialty metal provision became effective in the FY2007 National
Defense Authorization Act, while modifications to these provisions were enacted in
the FY2008 National Defense Authorization Act. The first provision prohibits DOD
from using funds for “end items or components” for aircraft, missile and space
systems, ships, tank and automotive items, weapon systems, or ammunition
containing a specialty metal not melted or produced in the United States.30 This
provision grants the Secretary of Defense the authority to give a “one-time waiver”of
the specialty metal domestic source requirement, under certain conditions.31
Finally, the new specialty metal provision authorizes the creation of a Strategic
Materials Protection Board. The Board would evaluate whether each item under the
Berry Amendment should be covered, and determines if and when new items should
be added. The Board should represent both public and private sectors, meet
periodically, and publish its proceedings in the Federal Register.
Implementation of the modifications to the specialty metal provision (found in
the FY2008 National Defense Authorization Act) will take a measured and studied
approach. Congress and DOD will need to come to terms with what these
modifications mean.
29 S. 395, The Buy American Improvement Act of 2005.
30 This provision prohibits DOD or a prime contractor from purchasing metal not wholly
domestic. A number of exceptions may be granted under the new provision. The exceptions
are: (1) when the available quantity and quality are insufficient; (2) for “unusual and
compelling circumstances;” (3) for existing reciprocal and offsetting trade agreements with
foreign governments; (4) with the requirements of section 36 of the Arms Export Control
Act (22 U.S.C. 2776) and with 10 U.S.C. 2457; (5) for commissaries, exchanges, and other
nonappropriated fund instrumentalities; (6) for purchases under the simplified acquisition
threshold; (7) for purchases of electronic components where the degree of specialty metal
content is “de minimis” in value, compared to the overall value of the lowest level electronic
component produced that contains such specialty metal.
31 The conditions are: (1) the metals were incorporated into items produced, manufactured,
or assembled in the United States before the date of enactment of this Act, and (2)
contracting officials determine that the contractor is not in compliance with the specialty
metals provision; that it would not be practical or economical to remove the non-compliant
specialty metals; and, that the contractor has submitted a plan to ensure compliance with the
specialty metals requirement; (3) the non-compliance is not knowing or willful, and (4) the
Undersecretary of Defense for Acquisition, Technology, and Logistics or the military
service acquisition executive gives final approval.

CRS-16
Amend the Defense Federal Acquisition Regulation Supplement,
Part 225.872-1. Congress could recommend that DOD amend the “List of
Qualifying Countries” by adding the United States as a “qualified country.” In this
way, domestic companies would have an opportunity to compete on an equal basis
in the global supply chain for specialty metal, and not have to pay more for materials
nor undergo a rigorous accounting of its sources for metal.
Limit the Use of Non-Compliant Specialty Metal
Congress could limit the use of non-compliant specialty metal. One approach
is the application of a market-based” standard — so that DOD can tie the amount of
non-compliant specialty metal permitted to the percentage of business that the
contractor has with DOD — so if a contractor acquires 16% of the DOD market, it
will be permitted to use compliant specialty metal for at least 16% of its total market
needs.
Require More Congressional Oversight
Congress Could Require Congressional Approval Before Non-
Compliant Specialty Metal Can Be Used in Certain Defense Contracts.
As an example set forth in 10 U.S.C. 2306(b) Congress enacted six legal criteria that
must be met for the Multi-Year Procurement Program (MYP) to be operational.32
Such a set of conditions could determine under what circumstances non-compliant
specialty metal could be used in defense contracts, and might include the following
criteria:
! That the use of non-compliant specialty metal will result in a
substantial savings of the total anticipated costs throughout the life
of the contract;
! That the percentage of specialty metal used for the weapons program
is expected to remain substantially unchanged during the contract
period, in terms of rate of production and procurement, and total
quantities;
! That the contract for the use of non-compliant specialty metal will
be subject to re-competition on a five-year basis, to give the
domestic specialty metal industry an opportunity to develop the
capacity and capability to meet future program requirements;
! That the estimates of both the cost of the contract and the anticipated
cost avoidance are realistic and supportable through independent
audits and investigations;
32 According to the Defense Acquisition University, a multi-year procurement (MYP) is “a
method of competitively purchasing up to 5 years’ requirements in one contract, funded
annually as appropriations permit.” Congress set up specific rules that must be met before
a program gains MYP status.

CRS-17
! That there is a reasonable expectation that throughout the life of the
contemplated contract period, the head of the military service will
request funding for the contract, at the level required, to avoid
contract cancellation;
! and, that the use of such non-compliant specialty metal, in this
particular weapons system, is critical to the national security of the
United States.
The effect: Congress has used six criteria to evaluate each weapon program’s
appropriateness for MVP status, and has reached conclusions as to when a weapons
program does not meet all of the requirements for MVP. The process has been
perceived, for the most part, as fair and balanced.
Require More Transparency and Openness in the Use of Specialty
Metal for All Defense Contracts Regarding Costs and Performance.
Congress could require that all Request for Proposals33 for defense contracts include
the specialty metal provision, where applicable, and publish the rules governing the
use of non-compliant specialty metal on the Federal Business Opportunities website.
Once the contracts are awarded, Congress could require that any modifications or
changes to the program that impact on the six designated criteria must be reported to
Congress within thirty days (rather than wait until the next cycle of congressionally-
directed hearings).
Require DOD to Publicly Disclose When Waivers Are Granted.
Congress could require publication of the number and types of waivers granted to
purchase items that are non-compliant, and tighten the waiver process so that waivers
are not granted for inappropriate or arbitrary reasons.
The effect: Requiring more transparency and openness may pose more of an
administrative burden on DOD. However, more transparency engenders more public
confidence in the process.
Require a Congressional Report for Each Platform/Component
Where Foreign Specialty Metals Are Used in Defense Contracts. One
approach that Congress may consider is to require DOD to produce a separate report
for each platform or component of a weapons program where foreign specialty metal
are used. For example, in the Future Combat System, where there are about 20-24
separate platforms, each platform would be supported by a separate report which
calculates the sources, types, and percentages of specialty metal content, both foreign
and domestic.
The effect: Examining the specialty metal content by platform will get at data
that is often buried in the aggregate numbers of larger reports on the entire weapons
program. The level and specificity of detail could pose an administrative burden on
DOD and defense contractors.
33 A Request for Proposal is a formal process for companies to submit bids for contracts.

CRS-18
Grant a Time-Limited Period of Acceptance Under the Specialty
Metal Provision to Give DOD and Congress Time to Study the Upturns
and Downturns in the Market.
A time-limited period of acceptance would mean
a periodic review of the specialty metal provision and its effect on the industrial base
on each protected item. It may be that all domestic source items need the protection
of the Berry Amendment or other domestic source restrictions, but not all of the time,
nor at the same time. Such granting of protection could be based on market forces
and more tied to forecasts of upturns or downswings in the market.
This would also give Congress an opportunity to study the effect of the Berry
Amendment and the specialty metal provision on socioeconomic subsidy programs
for small and minority-owned businesses.
The effect: It is difficult to predict the effect because the Berry Amendment has
never been tied to market forces or to the state of the economy.
Grant Prime Contractors the Authority to Conditionally Accept Non-
Compliant End Items Without Fear of Substantial Penalties. Congress
could shift the authority and responsibility to the prime contractor, rather than to
DOD, to provide a type of conditional acceptance of certain items. Congress could
also give the prime contractor the authority, under a prescribed set of circumstances,
to waive the responsibility of the “downstream contractor” on the 2nd, 3rd, or 4th tiers
of the supply chain, meaning that these contractors would not have to account for the
accounting of the percentages of non-compliant specialty metal used in end items.
Encourage the Use of Domestic Specialty Metal. Congress could
develop steps to further support a stronger domestic specialty metal industry; one
way is by encouraging the development technological capabilities and advances by
providing tax incentives for investment in scientific and manufacturing technology.
Congress could create a socioeconomic subsidy program to support the domestic
specialty metal suppliers; one approach would be to create a partnership between
DOD and domestic suppliers. Such an approach was described as a way to develop
a greater capacity to meet the delivery requirements for aviation parts in the military,
as noted in the FY2007 National Defense Appropriations Act, P.L. 109-289), where
the increased demand for domestic steel suppliers was highlighted:
The Department of Defense’s demand for iron-based alloy aviation specialty
steels has dramatically increased as a result of continuing deployments to the
overseas theaters of operation. Today, there is only one domestic supplier for a
unique process which utilizes vacuum inducted melt/vacuum arc re-melt, the
process which gives aviation grade steels their required properties. These
specialty steels are critical to building high technology U.S. military weapon
systems. Further, there has been a related and dramatic increase in the raw
material needed to make these specialty steels. Lead times for these raw materials
have grown from 3 months to 1 year. According to the Army, the overall effect
on lead times for spare part deliverables has swelled in some cases to greater than
24 months. As such, the conferees encourage the Department of Defense to
partner with domestic industry to develop a greater capacity to meet the delivery
requirements for aviation parts to the military within an acceptable time frame.
The conferees suggest that the Department explore a 50/50 cost share project

CRS-19
between the Federal government, private industry, and/or state governments as the
best means to create this capacity as rapidly as possible.34
Appoint a Blue-Ribbon Berry Amendment Commission
Congress could follow the example of the Packard Commission by creating an
independent body to study the specialty metal provision, the Berry Amendment, and
its impact on the defense industry.35 The advantage of an independent body is that
it can include members of the public and private sectors, congressional, defense
industry, and other experts. However, the body has to be perceived as being
independent, with the power to change existing policy.
34 H.Rept. 109-676.
35 In July 1985, President Reagan asked David Packard, Chairman of the Hewlett-Packard
Corporation and a former Deputy Secretary of Defense, to chair an independent Blue
Ribbon Commission which came to be known as the Packard Commission. The Packard
Commission was directed to conduct a broad study of defense management including the
budget process, procurement, organization and operation, and legislative oversight, and to
make recommendations for streamlining and improving defense management. Executive
Order 12526, July 15, 1986.