The Berry Amendment and Integrated Circuits
The Berry Amendment (10 U.S.C. sec. 2533a) requires that certain supplies purchased by the U.S. Dept. of Defense be sourced domestically from start to finish. But what may actually be happening is that essential supplies such as electronics and clothing must be withheld, because of these source restrictions, from much-needed areas such as Iraq and Afghanistan.
One issue with the Berry Amendment is that it restricts the sources of “specialty metals” to wholly domestic suppliers. A problem with this is that the manufacture of some integrated circuits (“ICs”) deposits trace amounts of titanium, a “specialty metal,” in the component. It is nearly impossible to discover the source of this titanium through the chain of suppliers, and therefore IC suppliers cannot know whether they are Berry-compliant or not.
ICs are everywhere, in nearly every electronic component. And Berry is specific that no exception can be made for electronics and communications equipment in aircraft, missile and space systems, ships, tank-automotive, weapons, and ammunition.
Furthermore, there is the issue where certain foreign countries can source specialty metals from non-US suppliers, defeating the pro-domestic industry intent of Berry. For example, a French manufacturer can source titanium from Russia, but a US manufacturer can only source titanium from a US-based supplier.
The Defense Contract Mgmt. Agency (“DCMA”) issued interim guidance that suppliers may withhold the cost of lowest auditable non-compliant specialty metal part against the cost of the contract. I.e., if a set of non-compliant screws costs $1 and the entire component is $10, then the contract can be sold for $9 each component. But since the titanium in ICs is difficult to audit, the lowest auditable part may be the entire IC.
The National Defense Authorization Act for Fiscal Year 2007 includes a section advising flexibile interpretation of the Berry restrictions, but it may take more legislation to ensure that components such as ICs can make it to places such as the Middle East conflict zone.
Hardware, Regulatory | paul | 
July 11, 2006 12:28 pm
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By Bankhead, October 9, 2009 @ 5:33 am
There is certainly much to know about this