# DLAD PGI

- PGI 25.7002-2 Exceptions. (DOMESTIC NON-AVAILABILITY DETERMINATIONS)

PGI 25.7002-2 Exceptions. (DOMESTIC NON-AVAILABILITY DETERMINATIONS)

(90) Requirement.

(91) Minimizing Berry Amendment or Specialty Metals Violations.

(90) Requirement

(a) The Berry Amendment requires designated items be of domestic origin, domestic content, and be manufactured or produced in the United States or its possessions unless an exception applies or unless a determination is made that the product cannot be acquired as and when needed in satisfactory quality and sufficient quantity at U.S. market prices (see DFARS 225.7002-1 for the restriction and 225.7002-2 for exceptions). This general requirement applies to any item of food, clothing (including the materials and components thereof; see DFARS PGI 225.7002-1 for examples distinguishing clothing from non-clothing items), tents, tarpaulins, covers, cotton, and other natural fiber products, woven silk or woven silk blends, spun silk yarn for cartridge cloth, synthetic fabric or coated synthetic fabric, including all textile fibers and yarns that are for use in such fabrics, canvas products, or wool, certain items of individual equipment, , and hand or measuring tools. The Director, DLA is authorized to make a domestic non-availability determination (DNAD) that will allow purchase of a covered item. Specialty metals, however, are now subject to a separate domestic sourcing restriction contained in 10 U.S.C. 2533b, and nonavailability determinations for specialty metals require USD(AT&L) approval.

(b) When a contracting activity has a requirement for an item covered by the Berry Amendment for which no exception exists, it cannot be bought unless a DNAD is approved. Formal DNAD requests must be submitted to HQ DLA (J-72). Contracting activities must first route DNADs through local coordination and review channels. J-7 will review the DNAD request, obtain appropriate coordination, and, if appropriate, forward it to the Director, DLA for approval. The contracting activity should submit the entire DNAD package, including the completed Service certifications (see DFARS 225.7002-2(b)(2)(ii)), at least two months months before it is needed. Also, if the domestic non-availability is anticipated to be permanent and no alternatives are possible, the field activity should separately prepare a corresponding FAR case for a permanent waiver request to add the item to FAR 25.104, Nonavailable articles, and include reference to that case in the Determination and Finding document, and the Report and Recommendation of the Contracting Activity. As described in more detail below, A DNAD package consists of:

* Executive Summary

* Determination and Findings

* Letters to the requiring activities with alternatives

* Written, certified responses from the requiring activities
* Report and Recommendation of the Contracting Activity Commander/Director

* Warstopper Analysis

(1) Determination and Findings (D&F): This document must concisely focus on the specifics for concluding the item is unavailable domestically. This document must be summary in nature, be no longer than 2 pages, and be prepared with the Times New Roman 13 point font. Further relevant and supporting details must be included in the Report and Recommendation of the Contracting Activity Commander/Director. The D&F must:

(i) Identify the articles or items (or class of items, if applicable) being procured and their domestic availability status..

(ii) Explain whether any Berry Amendment exceptions are applicable and, if they are, explain why they are not adequate to support the requirement.

(iii) Discuss current market research and its results (e.g., market research has not revealed any domestic sources.) A more detailed discussion of the market research efforts and results can be presented in the Report and Recommendation of the Contracting Activity Commander/Director.

(iv) Identify the total quantity (including readiness quantities) to be procured and length of time the waiver is needed (e.g., period of contract performance).

(v) Address the DEPSECDEF requirement in DFARS 225.7002-2(b)(2) that the contracting activity analyze alternatives not requiring a Berry Amendment waiver, and the customers’ certified written responses that domestic alternatives are not a satisfactory substitute for the requirement.

(vi) Clearly specify any limiting criteria for use of the requested DNAD, such as restricted to a particular contracting program, weapon system, time period, or other condition. DNAD determinations should generally not be limited to a particular garment or item so as to preclude use in a similar garment or item, if the market research and nature of the requirement demonstrate that the nonavailable item or material can reasonably be determined nonavailable for similar garments or items.

(2) The contracting activity’s letter to the requiring activity (and all other branches of the services that use the item): 1) advising that the required item requires a waiver to the Berry Amendment; and, 2) describing alternatives that do not require a waiver under the Berry Amendment.

(3) The requiring activity’s written response (and written responses from other branches of the Military services that use that item, as applicable), certifying that the proposed alternatives and any other known alternatives not requiring a Berry Amendment waiver are unacceptable and explaining why they are unacceptable. The responses must be signed by an individual with the authority to approve use of an alternate item for the service(s).

(4) Report and Recommendation of the Contracting Activity Commander/Director. This document should be signed by the Commander/Director of the Contracting Activity (or individual acting in that capacity). It provides for a more comprehensive and lengthy discussion of the facts than the D&F. There is no limit on the length of the Report and Recommendation of the Activity Commander/Director. This report should describe in reasonable detail:

(i) The supply and procurement situation; the contractor’s commercial practices; any special or unusual circumstances; results of market research conducted and constraints, if any; the reasonable conclusions drawn; exchanges between engineering support activities and customers concerning the possible existence of alternative items that do not require a Berry Amendment waiver. Attach copies of market research related documents and any other records, and letters from contractors that explain why they are unable to either obtain the product domestically or identify the source of their product or components (more relevant for prime vendor procurements), as appropriate.

(ii) Potential political ramifications, Congressional involvement, morale issues, small business concerns, mission failure, troop support issues, etc., as appropriate. The discussion must include a procurement impact statement that describes the outcome if the DNAD is not approved.

(iii) The activity Commander/Director must include a finding that the analysis of alternatives and customer’s certification that no alternatives are satisfactory is reasonable and acceptable based on the activity’s knowledge of the item and market research.

(5) Warstopper Analysis. Prior to submitting the DNAD request, ensure an analysis was conducted on the item to determine if the item is a candidate for a Warstopper investment that would result in obtaining domestic availability. Include with the package, even if it did not receive further approval from J-74 to proceed as a warstopper project, a clear statement that the item has or does not have wartime demand or Service identified war reserve material requirements and a statement by the Chief of the Industrial Base group that the item has or does not have a reasonable opportunity to implement an industrial base measure that meets the requirements found in the Industrial Capability Program – Warstopper Program Management One Book, Program Description and Approval Document.

(c) The contracting activity will provide a copy of their Executive Summary to J-72 as part of their DNAD request, including coordination by the HCA or equivalent and chief or supply chain counsel. A DNAD package will be assembled by J-72 for the HQ DLA Senior Procurement Executive’s (SPE) submission to the Director, DLA. HQ DLA (J-72) will staff the DNAD package for coordination with DLA Acquisition Policy Division (J-71), Acquisition Programs and Industrial Capabilities Division (J-74), DLA Office of General Counsel (DLA-DG), and DLA Office of Small & Disadvantaged Business Utilization (DLA-DB), and process for SPE signature to transmit it to the Director, DLA.

(d) Once the DLA SPE signs the DNAD package, it will be forwarded to the Director, DLA. The Director, DLA will approve or disapprove the DNAD request and advise the DLA SPE of the decision. The DLA SPE will then advise the contracting activity of the USD(AT&L) decision. J-71 will provide a copy of each approved DNAD to USD(AT&L) within 10 days of receiving the determination.

(e) For each DNAD that is granted, the contracting activity is required to submit an annual report in accordance with DLAD 25.7002-2(90)(c).

(f) The requestor of the DNAD shall also conduct follow-on discussions with J-74 concerning the feasibility of a warstopper project that could serve to limit the duration of the DNAD’s use.

90.1701 (91) Minimizing Berry Amendment or specialty metals violations.

(a) DLA contractors are becoming aware of the increased attention and visibility that the Berry Amendment domestic source restrictions are receiving, and of the restrictions imposed by this statute, and the DFARS implementing guidance. This heightened awareness has resulted in a number of contractors notifying DLA of their violation of this statute and requesting DLA grant a “waiver.”

(b) Identification of potential violations after contract award presents considerable difficulties for DLA. Once aware of a violation, DLA is presented with the challenge of not accepting the non-conforming end item(s) pending waiver consideration in order to ensure no Anti-Deficiency Act (ADA) violation occurs. This not only can result in delayed delivery to the customer, it also may place the contractor in an untenable financial position. To minimize the impact, the affected contracting activity must quickly analyze the market to verify that no domestic source is available and prepare a DNAD. In this situation, Contracting officers must ensure that any DNAD requested is for the minimum time frame needed (but not exceeding the maximum reasonable time period needed) for a contractor or industry to become compliant, if it found that the contractor(s) was unaware of the requirement, but once made aware, can comply with a domestic source within a suitable start-up period. Specialty metals is now a separate domestic sourcing restriction contained in 10 U.S.C. 2533b, requiring USD(AT&L) approval for any DNADs requested by DLA.

(c ) The following preaward steps should serve to minimize potential Berry Amendment or specialty metals violations after contract award. While the potential use of the suggestions below may depend on the size and complexity of the procurement, the suggestions provide a guide for your use.

(i) Pre-Proposal Conference: If a Berry Amendment or specialty metal covered item is to be procured and a pre-proposal conference held, the domestic source restrictions of the Berry Amendment should be highlighted to the attendees. This highlights the importance to the attendees, and allows for the correction of misunderstandings (e.g., different from the Buy American Act).

(ii) Full Text Clause Inclusion: The Berry Amendment is implemented by DFARS clause 252.225.7012 (252.225-7014 and its ALT 1 for specialty metals are separate restrictions from Berry) and 252.225-7015 for hand or measuring tools. Many activities incorporate these clauses by reference which requires the contractor to actively research the content of the clause. While it is the responsibility of the contractor to adequately understand all solicitation requirements, including the contents of 252.225-7012/7014/7015, the statutory background of the clause, the heightened attention compliance with the clause is receiving, and the significant difficulties non-compliance presents makes the clause an ideal candidate for full text inclusion in the solicitation.

(iii) Plain Language: The development and inclusion in solicitations of “plain language” that spells out the Berry Amendment and other domestic source restrictions is a consideration. However, such language must be used with caution and must have HQ DLA approval. Subtle changes in the wording of the domestic source restrictions could be legally and contractually misinterpreted by the contractor, causing conflict with the exact requirements of the clauses at DFARS 252.225-7012/7014/7015. Any such “plain language” wording would need to have significant legal review to confirm that nothing in the developed wording modifies the requirements of the clauses. Additionally, the “plain language” should only address the part of the Berry Amendment or domestic sourcing restriction that applies to the commodity being solicited.

(iv) Mandatory Discussion Item: When negotiated procurements are conducted for Berry Amendment covered items, domestic source restrictions as identified in DFARS 252.225-7012/7014/7015 should be a mandatory discussion item with the contractor. Contractors should be asked to confirm their understanding of the requirement in the documentation submitted with their final proposal revisions or other submitted documentation.

(v) Preaward Surveys: If a preaward survey is required in accordance with FAR 9.106, the contracting activity should consider requesting the survey to also confirm the prospective contractor’s ability to trace the origin of materials incorporated into the end product being acquired.

(vi) Evaluation Factor: The contracting activity can consider whether use of an evaluation factor that determines the contractor’s ability to verify the source of materials is appropriate. Additionally, such a factor should be used judiciously, considering the complexity of the manufacturing process and size of the procurement so as not to unduly burden less “at risk” procurements.

(vii) Additional considerations: The development or use of a formal contractor certification verifying compliance with the requirements of the Berry Amendment is not authorized (see FAR 1.107). If, however, there is any reason to doubt an offeror’s compliance with Berry Amendment requirements during the source selection process, the contracting officer must take steps to verify the offeror’s ability and willingness to comply, including making inquiry to the offeror and following up to ensure that offeror responses are adequate to support compliance.

(d) Post award actions relative to the domestic source restrictions of the Berry Amendment or specialty metals restriction fall into 2 general categories: 1) actions that may be taken to ensure continued contractor compliance during contract performance; and 2) action that should be taken once a potential violation is detected. Although it is clearly the performing contractor’s responsibility to ensure full compliance with all contract requirements, including the domestic sourcing restrictions specified in DFARS 252.225-7012/7014/7015, DLA can take reasonable steps, where appropriate, to validate the contractor’s continuing compliance. Such actions may reduce the potential for violations during performance. Violations detected during performance could result in Government non-acceptance of materials, delaying support to the warfighter, and non-payment to the contractor for the non-conforming items.

(e) Potential actions to ensure continued contractor compliance include:

(i) Domestic sourcing restrictions, especially Berry Amendment and specialty metal compliance should be a discussion item at post award conferences.

(ii) The Defense Contract Management Agency (DMCA) is delegated responsibility to review, approve or disapprove, and maintain surveillance of the contractor’s purchasing system per FAR 42.302(a)(50). The contracting activities should consider requesting additional on-going DCMA emphasis of the contractor purchasing system’s ability to implement domestic source restrictions, and continuing verification of such through random records audits, etc.

(iii) Prime vendor (PV) contracts present a unique challenge due to the multitude of parts and supplies that are frequently involved. The opportunity for domestic sourcing violations, particularly Berry Amendment violations, is even greater because of the commerciality of the products provided under these contracts. Contracting activities should consider developing contract provisions that require the PV contractor to periodically assess their suppliers’ compliance with Berry Amendment and other applicable domestic source restrictions. The nature and extent of the provisions would depend upon the particulars (i.e., number of items under contract, length of period of performance, extent that supplies to be provided are subject to Berry Amendment restrictions, etc.). Potential alternatives include periodic (e.g., quarterly) review of a certain percentage of total items under contract. The review could be as straightforward as the PV contractor sending the suppliers a standardized sheets explaining the restrictions of the Berry Amendment and other domestic sourcing restrictions and requiring the supplier to notify the prime contractor of any potential violation. The supplier could also be required to acknowledge receipt of the document by signing and returning it to the prime.

(f) Actions taken after contractor notification of a potential Berry Amendment or specialty metals violation:

(i) Verification: Ensure the item in question is subject to the restrictions of the Berry Amendment or other domestic sourcing restriction. Direct the contractor to positively determine the origin of the item in question.

(ii) Suspend Government acceptance: The Government, in accordance with FAR 46.407, should not accept items that have non-domestic content in violation of the Berry Amendment or specialty metals restriction. Continued Government acceptance without the required DNAD could create an ADA violation under the Berry Amendment. The contracting activity should consider the issuance of a stop work order pending resolution of the violation. Allowing the contractor to continue performance after notification of the violation could subject the Government to additional claimed contract costs and further exacerbate the violation.

(iii) Suspend Payment: The contracting activity should ensure the Defense Finance and Accounting Service does not issue payment for non-conforming products nor make any new unauthorized progress payments pending resolution.

(iv) Market Research: Determine whether the item in question has a domestic source available.

(v) Substitute Product: For those items where it is subsequently determined a domestic source is not available, contracting activities should coordinate the potential use of an alternate item with the technical specification office of primary responsibility.