Restrictions on Specialty Metals (10 U.S.C. 2533b)

Reporting of Specialty Metals Non-compliances

Once DCMA becomes aware of a specialty metals non-compliance, its occurrence will be verified through DCMA internal processes by acquisition, legal and technical resources. Verified occurrences of specialty metals non-compliances will be communicated and reported to government departments and agencies and to government contractors through the utilization of Government Industry Data Exchange Program (GIDEP) Agency Action Notices (AANs). The AAN-Us will contain sufficient information such that all recipients will be fully aware of the details of specialty metals non-compliances. AANs distribute problem information issued by a Government department or agency to GIDEP participants who include Government and Government contractor members. Such notices may be restricted to Government only members of GIDEP (Agency Action Notice Limited distribution (AAN-L)) or may be released to all GIDEP participants (Agency Action Notice-Unlimited distribution (AAN-U)).

DCMA will communicate information to Government contractors, describing occurrences of verified specialty metals non-compliances by generating GIDEP AAN-Us. Specialty metals non-compliance AAN-Us will contain non-sensitive information only. Issuing these notices will allow DCMA to inform all Government contracted organizations who participate in the GIDEP.

DCMA workforce personnel will be informed of verified specialty metals non-compliances through the DCMA Forum, which is used to notify individuals of issues of significance that may require risk assessment and surveillance.

Contact the DCMA Headquarters GIDEP Program Manager, Quality Assurance Directorate, for specialty metals non-compliances at (804) 734-0411 or for more information.

Frequently Asked Questions Regarding the Specialty Metals Restriction

Historical Policy from January 29, 2008 to Present:

The Director, Defense Procurement and Acquisition Policy (DPAP) issued Class Deviation 2008-O0002, Implementation of New Specialty Metals Restriction on January 29, 2008. Class Deviation 2008-O0002 superseded Class Deviations 2006-O0004 and 2007-O0011 and implemented sections 804 and 884 of the FY 2008 National Defense Authorization Act (NDAA), (as well as section 842 of the FY 2007 NDAA not superseded by sections 804 and 884). This Class Deviation 2008-O0002 was effective as of January 29, 2008.

The broad Class Domestic Nonavailability Determinations (DNAD) for circuit card assemblies, fasteners, needle roller bearings, and Caterpillar diesel engine components, in effect on January 29, 2008, will expire on July 26, 2008. New procurement actions awarded on or after July 26, 2008, will not be able to rely on these broad DNADs. However, for contracts awarded prior to July 26, 2008, and where the award relied upon any of these Class DNADs, items can continue to be accepted after July 26, 2008.

Class Deviation 2008 further provides that, in line with the authority under FAR 1.108(d)(3), contracting officers may, at their discretion, modify a contract awarded prior to January 29, 2008 to include Class Deviation 2008-O0002 with appropriate consideration.

Section 804 also removed the prior implication that accepting noncompliant materials may create an Anti-deficiency Act violation.

Historical Policy from October 26, 2007 through January 28, 2008:

Contracts issued during this period fall under Class Deviation 2007-O0011, Waiver of Specialty Metals Restriction for Acquisition of COTS Items.

The Director, DPAP, provided Class Deviation 2007-O0011 on October 26, 2007. This Class Deviation made minor changes to the memo of Class Deviation 2007-O0004, by clarifying the correct date for the One-Time Waiver as October 17, 2006. The attachment to Class Deviation 2007-O0011 superseded the attachment to Class Deviation 2006-O0004 and listed 10 U.S.C. 2533b(a)(1) as a statute that is inapplicable to the acquisition of commercially available off-the-shelf (COTS) items, in accordance with 41 U.S.C. 431. It also revised Alternate I of the contract clause by adding a definition of "commercially available off-the-shelf item," and made Alternate I inapplicable to specialty metals contained in COTS items. This Class Deviation was followed by publication of a Federal Register notice on November 8, 2007 of DFARS Case 2007-D013, Waiver of Specialty Metals Restriction for Acquisition of Commercially Available Off-the-Shelf Items.

Contracts awarded between October 26, 2007, and January 28, 2008, can continue to rely on Class Deviation 2007-O0011, however, new procurement actions must follow the policy on specialty metals in place at the time of award. The question of whether a contract is "new" or "old" should be determined based on the definition of "contract" in the FAR (see FAR 2.101 and FAR 43.103). Thus, bilateral modifications of contracts would generally be considered "new" contracts. Exercise of priced options, in-scope change orders, and funding of later program years of multi-year contracts would generally not be considered "new" contracts.

Historical Policy from December 6, 2006, through October 25, 2007:

On December 6, 2006 Director, Director, DPAP provided Class Deviation 2006-O0004, Restriction on Procurement of Specialty metals. This Class Deviation addressed changes made to the domestic specialty metals restriction in Section 842 of the FY 2007 John Warner NDAA (Public Law 109-364), entitled "Protection of Strategic Materials Critical to National Security". The new law was effective on November 16, 2006. Subsequently, on January 17, 2007, the Director, DPAP issued a memorandum which provided factors to be considered when making domestic non-availability determinations under 10 U.S.C. 2533b (Specialty Metals Restriction). Contracts awarded between January 17, 2007, and January 28, 2008, can continue to rely on the policy in place during this period, however, new procurement actions must follow the policy on specialty metals in place at the time of award.

For any contract awarded after November 16, 2006, the Department can no longer continue the practice of withholding payment while conditionally accepting noncompliant end items or components of covered items.

Historical Policy effective prior to December 6, 2006:

Contracts awarded prior to December 6, 2006, fall under the specialty metal restrictions that existed in 10 U.S.C. 2533a (the "Berry Amendment").

On February 17, 2006, the Defense Contract Management Agency (DCMA) issued an interim instruction addressing the process for conditional acceptance of items containing noncompliant parts. A revision was issued on March 10, 2006.

In a memorandum dated June 1, 2006, the Director, DPAP, issued general guidance regarding compliance with the specialty metals restriction and aligned with DCMA's instruction. Conditional acceptance and withholding of payment for noncompliant parts is a method that can be used to accept needed equipment under these contracts. Compliance plans are required in such circumstances. However, new contracts or procurements added to contracts after December 6, 2006, would fall under one of the other historical policies above.

On August 18, 2006, the Director, DPAP issued a memorandum which stressed the importance of addressing contractor compliance with the specialty metals restriction of the Berry Amendment (10 U.S.C. 2533a) prior to award of contracts in order to ensure compliance with the Berry Amendment. Additionally, it states the contracting officer should inquire and verify that the contractor will deliver compliant items.

By memorandum dated September 21, 2006, Director, DPAP, provided additional pre-award guidance.

Domestic Non-Availability Determinations (DNADs)

In accordance with DFARS 225.7002-2(b), the secretaries of the military departments, without power of redelegation have authority to approve DNAD Determination and Findings for specialty metals applicable to one contract for their respective requirements. Read more.

National Security Waivers

The Under Secretary of Defense (AT&L) has approved six waivers since the DFARS final rule was published in 2009. With one exception, the waivers were for noncompliant high performance Samarium-Cobalt magnets.

DoD weapons programs affected: F-35, F-16, B-1B Reliability and Maintainability Improvement Program (RMIP), C-130J, AIM-9X, and the SM3-Block IIA missile.

Application of specialty metals restrictions to magnets.

HPM = High performance magnet
COTS = Commercially available off-the-shelf

Magnet made of specialty metal is: Commercially available, HPM
NOT Commercially available, HPM COTS, NOT HPM NOT COTS, NOT HPM
ncorporated into COTS assembly or COTS end item NOT restricted * NOT restricted *
NOT incorporated into COTS assembly or COTS end item Restricted Restricted NOT
Included in 2 percent minimum content? Cannot be included in 2 percent minimum content Cannot be included in 2 percent minimum content NOT
Can be included in 2 percent minimum content

* By definition, COTS assemblies and COTS end items will not include a HPM that is not commercially available or any other magnet that is not COTS.

      (c)  Compliance for commercial derivative military articles.

              (i)  A department or agency requesting a determination or approval from USD(AT&L) in accordance with DFARS 225.7003-3(c) shall submit the request, including the proposed determination, to—

                          Director, Defense Procurement and Acquisition Policy
                          ATTN: OUSD(AT&L) DPAP/CPIC
                          3060 Defense Pentagon
                          Washington, DC 20301-3060.

              (ii)  The Director, Defense Procurement and Acquisition Policy, will forward the request to USD(AT&L) as appropriate.

      (d)  National security waiver.

              (i)  A department or agency shall request a national security waiver from USD(AT&L) in accordance with DFARS 225.7003-3(d) in a timely manner after discovering or being informed of a specialty metals noncompliance in an item, or component thereof, listed at 225.7003-2(a). The department or agency shall submit the request, via the chain of command, including the draft determination and draft letters of notification to the congressional defense committees, as follows:

                          Director, Defense Procurement and Acquisition Policy
                          ATTN: OUSD(AT&L) DPAP/CPIC
                          3060 Defense Pentagon
                          Washington, DC 20301-3060

              (ii)  The request shall include—

                          (A)  The quantity of end items to which the waiver would apply;

                          (B)  The time period that the waiver will cover;

                          (C)  How and when the noncompliance was discovered—

                                (1)  By the subcontractor(s);

                                (2)  By the contractor; and

                                (3)  By the department or agency;

                          (D)  A complete description of all of the items or systems containing noncompliant specialty metals;

                          (E)  The contract number(s), date(s), duration, and subcontractor(s) associated with the noncompliance;

                          (F)  The manufacturer and country of origin of the noncompliant material, if known;

                          (G)  Whether the contractor flowed down the DFARS clause to the subcontractors and in what format (e.g., exact quote or substantially the same?);

                          (H)  A technical description of the affected parts, their role in the larger assembly, and their function in the end item;

                          (I)  Estimated cost and schedule to replace noncompliant parts if a national security waiver is not granted;

                          (J)  Operational and safety implications;

                          (K)  Other national security considerations (such as how the requested waiver will contribute to national security policy or operational security);

                          (L)  A description of the contractor’s efforts to develop and implement a corrective plan to ensure future compliance; and

                          (M)  Information helpful to a determination as to whether any noncompliance was knowing and willful.

              (iii)  The Director, Defense Procurement and Acquisition Policy, will forward the request to USD(AT&L) as appropriate.

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