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DoD Finalizes Rule on Specialty Metal Restrictions

The Department of Defense has issued a final rule that amends the Defense Federal Acquisition Regulation Supplement to address statutory restrictions on the acquisition of specialty metals not melted or produced in the United States. The rule implements Section 842 of the National Defense Authorization Act for Fiscal Year 2007 (PL 109-364), and Sections 804 and 884 of the National Defense Authorization Act for Fiscal Year 2008 (PL 110-181). Section 842 of the FY 2007 Act added new provisions at 10 USC 2533b to address requirements for the purchase of specialty metals from domestic sources. Section 804 of the FY 2008 Act also made amendments to 10 USC 2533b with regard to its applicability to commercial items, electronic components, items containing minimal amounts of specialty metals, items necessary in the interest of national security, and items not available domestically in the required form. In addition, Section 884 added a requirement for DoD to publish a notice on the Federal Business Opportunities Web site (http://www.FedBizOpps.gov) before making a domestic nonavailability determination. The rule removes the previous specialty metals policy from DFARS 225.7002-1 through DFARS 225.7002-3, and adds the new policy at DFARS 225.7003-1 through DFARS 225.7003-5. The policy currently at DFARS 225.7003, addressing waiver of 10 USC 2534, is relocated to DFARS 225.7008, with no substantive changes to content. New clauses are added at DFARS 252.225-7008 through DFARS 252.225-7010, and at DFARS 252.225-7029.
Extensive Comments

DoD received extensive comments in response to the proposed rule (70,020.251) and has made a number of changes to the final version. The definition of "electronic component" in the clause at DFARS 252.225-7009 has been clarified to specifically exclude high performance magnets, and the substance of the clause must now be included in subcontracts, for items containing specialty metals, to the extent necessary to ensure compliance of the end products to be delivered to the government. Also, a change to paragraph (e) of the clause clarifies that flowdown is required to the extent necessary to comply with contract requirements. In addition, the commercial derivative military article exception at DFARS 225.7003-3(c)(1)(i) and DFARS 252.225-7010 has been reworded for consistency with 10 USC 2533b, and the reporting requirements of the clause at DFARS 252.225-7029 have been amended. In connection with the rule, DoD has also made changes to the DFARS companion resource, Procedures, Guidance, and Information, at PGI 225.7002, PGI 225.7002-1, PGI 225.7002-2, PGI 225.7002-3, PGI 225.7003-2, and PGI 225.7003-3. For a complete listing of the provisions impacted by this final rule, see the regulation table below. The rule is effective July 29, 2009, and the full text of the rule appears at 70,016.524.

(The news featured above is a selection from the news covered in the Government Contracts Report Letter, which is published weekly and distributed to subscribers of the Government Contracts Reporter. )


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