Specialty Metals Frequently Asked Questions
The United States has implemented extensive and complex rules aimed at restricting the use of non-domestic “Specialty Metals” in the defense acquisition process. The stated goal is to protect the U.S. defense industry from becoming overly dependent on foreign sources of supply, especially in times of conflict. These rules are codified in public laws such as the “Berry Amendment” (10 U.S.C. 2533a) and the National Defense Authorizations Acts of FY 2006 and 2007 (10 U.S.C. 2533b and revisions).
Since December 2006, the Department of Defense (DoD) has issued an increasing number of memos attempting to regulate, clarify and otherwise implement the intent of these laws. Most of the legislative and regulatory changes over the last two years have been the result of lobbying struggles in Washington and attempts to explain the application of the law to a very confused domestic defense supply base. The following Q&A is an attempt to assist defense manufacturers in understanding and complying with these laws.
Q: What are specialty metals?
A: Per DFARS 252.225-7014 (a) (2), “Specialty metals” means:
“(i) Steel—
(A) With a maximum alloy content exceeding one or more of the following limits: manganese, 1.65 percent; silicon, 0.60 percent; or copper, 0.60 percent; or
(B) Containing more than 0.25 percent of any of the following elements: aluminum, chromium, cobalt, columbium, molybdenum, nickel, titanium, tungsten, or vanadium;
(ii) Metal alloys consisting of nickel, iron-nickel, and cobalt base alloys containing a total of other alloying metals (except iron) in excess of 10 percent;
(iii) Titanium and titanium alloys; or
(iv) Zirconium and zirconium base alloys.”
Q: Where can I get a copy of DFARS clauses?
A: http://farsite.hill.af.mil/VFDFARA.HTM
Q: Which countries are “qualifying countries”?
A: Refer to DFARS 225.872-1 General
Q: What are the restrictions on using specialty metals on defense contracts?
A: Generally the restrictions apply to the country of origin where the specialty metal was melted or “smelted”. Only specialty metal melted in the U.S. or a “Qualifying Country” may be used in DoD weapons and space products unless other exemptions apply under law. Note: the exemptions to specialty metals laws have changed frequently and sometimes dramatically during the 2006-2008 fiscal years. It is essential that 2 contractors and suppliers know which clause, deviation and affectivity date applies to their various defense contracts.
Q: What effect do these restrictions have on the defense industry?
A: While the effects are wide ranging, generally the law favors “Qualifying Countries”, forces some suppliers to maintain dual inventories and impacts many prime contractors’ ability to meet schedules and stay competitive.
Q: Is this a quality issue?
A: No. This is a contractual compliance/non-compliance issue, not having anything to do with technical non-conformances.
Q: If the first melting occurs in Korea, but the metal is melted again in the U.S., is it considered compliant?
A: The foundry location where final melting is accomplished establishes domesticity. For titanium, if sponge is shipped to the United States for final smelting into ingots or finished stock, it is compliant. If domestic steel is remelted overseas to create a different specialty metal, it is NOT complaint (unless the melting is done in a qualifying country and the end product to DoD is not the metal itself). If domestic steel is remelted overseas to produce a product of the same material (i.e. in a casting operation) it is not compliant unless the casting is incorporated into a commercially available off-the-shelf item or subsystem.