Members of the Berry Amendment Reform Coalition are “cautiously optimistic” that the newly signed John Warner National Defense Authorization Act for Fiscal Year 2007 will put an end to months of delayed component sales and supply chain logjams.
“It appears that the language of the act provides the Department of Defense (DoD) with a fair amount of flexibility, but there is also some vague language that needs to be clarified, says Robin Gray, executive vice president of the National Electronic Distributors Association, Alpharetta, Ga. The Berry Amendment required that all specialty metals used in products sold to the DoD be of U.S. origin or from a list of qualifying countries. Though the amendment was decades old, in the past few years the DoD had begun requiring that all levels of the supply chain certify their compliance with this condition. The distribution industry and its representatives lobbied for months to make changes.
Clarity is still needed on the new law. For example, as it is written, it stipulates that funds appropriated or otherwise available to the DoD may not be used for procurement of end items, or components, including aircraft, missile and space systems, or ammunition, containing a specialty metal not melted or produced in the United States. This restriction does not, however, pertain to “purchases of electronic components,” according to the law.
Had the phrasing stopped there, members of the electronics supply chain would be entirely in the clear. However, the subsection further states that the specialty metal restriction “does not apply to procurements of commercially available electronic components whose specialty metal content is de minimis in value compared to the overall value of the lowest level electronic component produced that contains such specialty metal.” The DoD’s interpretation of the terms “de minimis” and “commercially available” will be the real determining factor as to whether the new law actually nullifies the specialty metals restriction for electronic components.
“Basically, now we must wait for the DoD’s interpretation of the law,” Gray says. And while there is little reason to believe that the DoD will choose a stricter rather than a more liberal interpretation of the key terms, “you never know,” Gray adds. “Washington is such a political arena, and with the recent change [at the top of] the DoD, there might be a different atmosphere.”
For example, Gray notes that if the DoD decided to set a specific percentage for “de minimis,” that would essentially set the issue right back to square one. “That would require record keeping proving that you do meet ‘de minimis’ content, which puts us back in the difficult position of trying to track the origins of these elements,” Gray says. Members of several electronics industry associations are hoping to bypass this possibility and have forwarded a letter to the DoD that outlines the way the industry believes the more ambiguous aspects of the law should be interpreted.
The DoD has reported that it will release a new set of regulations based on the current law by the beginning of December. A favorable interpretation by the DoD will not only pave the way for quicker and more cost-effective fulfillment to military and aerospace customers, but — more importantly — will mean that advanced technologies won’t be delayed in getting to the defense department and to our soldiers in the armed services, Gray notes. “Our nation’s cutting edge in the military is electronics based,” Gray says. “If they choose to require certification, they will be shackling the military and preventing them from getting the latest technology.”
For the full text of the law, go to GovTrak.us.
