In our last issue, our Practice Focus article featured the often-overlooked preference for domestic specialty metals implemented by the Berry Amendment and codified in the Specialty Metals Clause at DFARS § 252.225-7014. As we explained in our July 2006 issue, the preference for domestic specialty metals applies to any Department of Defense (“DoD”) contract that exceeds the simplified acquisition threshold (ordinarily $100,000) and that requires the delivery of any product containing specialty metals.

Since our last publication, the president has signed into law the John Warner National Defense Authorization Act for the Financial Year 2007, Public Law 109-364 (Oct. 17, 2006; Sec. 842, 120 Stat. 2083), which, among other things, amends the specialty metals clause to: (1) expand the products exempted from the Berry Amendment’s domestic preference requirements; (2) expand the DoD’s authority to grant waivers; and (3) provide a one-time waiver for non-compliant products. The new law, to be codified at 10 U.S.C. § 2533b, went into effect 30 days after the law’s enactment. The new law, signed on October 17, 2006, was codified at 10 U.S.C. § 2533b and went into effect 30 days after the law’s enactment.

Under the amended act and in general, there is now an exception for “commercially available electronic components” that contain a “de minimus” amount of specialty metal as compared to the overall value of the component. The amended act also expands DoD’s authority to issue waivers where there is a determination that there is no domestic source for the specialty metal. Significantly, the “domestic non-availability” exception, as it is commonly called, is now available to subcontractors, whereas prior to the amendment only prime contractors could qualify for a waiver.

Most significantly, however, the amended act permits a one-time waiver for companies with an inventory of non-compliant parts or items. To benefit from the waiver, however, the part or items must have been produced, manufactured or assembled in the United States prior to October 13, 2006; the contracting officer must determine that it is neither practical nor economical to remove or replace the non-compliant specialty metal; the company seeking the waiver must have an established plan in place to ensure future compliance; and the production or manufacture of the non-compliant item or component must not have been knowingly made non-compliant. These changes have not yet been incorporated into the Defense Federal Acquisition Regulations Supplement at DFARS 225.7002-.7003 and 252.225-7014.