CRS And Specialty Metals

Highlighting our recent score of numerous Congressional Research Reports again today (we've already looked at one on open-source intelligence and another on lead systems integrators).

We've also obtained one on specialty metals. In that Oct. 5 report, CRS notes:

Effective July 2009, the Department of Defense (DOD) issued a final rule 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 national security interests and industrial base concerns justify waiver of the specialty metal provision, (2) if the United States does not produce a 100% domestic specialty metal, should DOD restrict procurement from foreign sources, and (3) what factors should drive the determination of which specialty metals should fall under the specialty metal provision? Debate over the specialty metal provision invites and renews a debate over the efficacy of domestic source restrictions and whether the rationale for every restriction represents a balanced and reasonable approach.

Before listing the possible options for Congress, the report states:

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.

Consequently, CRS lists six possible options for policymakers to consider:

(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."

Inside the Pentagon reported in June that the Congressional Steel Caucus had sent Defense Secretary Robert Gates a letter, dated May 5, urging the Pentagon to use only American steel in the production of armor for troops and vehicles and to revamp rules that permit the use of imported steel. ITP interviewed DOD industrial base chief Brett Lambert for that article. From the story:

If there are recommended changes, the Pentagon would want to examine any proposals closely to ensure it will be able to maintain the required MRAP production rate of 1,000 per month, Lambert told ITP. The vehicles are considered essential for protecting troops from improvised explosive devices, the No. 1 cause of fatalities and casualties among U.S. and coalition forces in Iraq and Afghanistan.

The Pentagon has sent Capitol Hill a brief reply acknowledging it received the May 5 letter and noting there would be further follow up, but the department has not yet provided a substantial response, a congressional source said.

Rep. Pete Visclosky (D-IN), chairman of the Congressional Steel Caucus, Rep. Tim Murphy (R-PA), the caucus' vice chair, and 35 caucus members signed the letter, which expressed "deep concerns" about a DOD regulation that affects the procurement of steel armor plate.

"We believe that this regulation jeopardizes the safety of our troops and increases our reliance on imported steel, to the detriment of our national security and the American industrial base," the lawmakers wrote.

At a March 25 hearing on the state of the steel industry, the caucus discussed the Specialty Metals Amendment, as originally included under the Berry Amendment in 1973. The Specialty Metals Amendment aims to ensure that American steel is used to protect U.S. troops, and that American steel producers have the incentive to invest in the technology, capacity, and research and development to meet DOD needs, the letter states.