IT, metal industries fighting over proposed Defense rule

The information technology industry and the specialty metals industry are sparring over a proposed Defense Department contracting change that would allow the Pentagon to buy commercial ready-made weapons components without having to determine whether they contain metals produced overseas.

IT companies support the proposed rule, while the Specialty Steel Industry of North America says the rule is flawed. The metal group's members produce stainless steel, nickel-based alloys, titanium and other specialty metals.

"We don't want to be dependent on foreign countries for certain parts that make ships sail or planes fly," said Jeff Green, a lobbyist for several specialty metals companies. The law applies to computers that operate major weapons systems.

Trey Hodgkins, vice president for federal government programs at the Information Technology Association of America countered: "We don't want the war fighter to experience an interruption because we're trying to figure out where the metal comes from."

"We know that companies right now are delaying delivery on items because they are unable to certify that the item is compliant," he added.

But Green argued, "To waive everything" that's a commercial ready-made item "would be the death Nell for certain strategic materials critical to national security."

The history of this debate goes back to a 1941 contracting provision intended to protect domestic military suppliers. The so-called Berry Amendment required that certain items purchased by the Defense Department must be made in America.

In 2006, Congress created a new provision that removed specialty metals and granted Defense the flexibility to choose weapons systems that both protect the domestic specialty metals industry and expedite the department's access to technology. The provision prompted concern from the IT industry.

So, Defense proposed a rule in July that would grant the department permission to bypass the specialty metals restriction when buying any commercial ready-made item.

The department's rationale is that the difficulty in tracking the origin of specialty metals used in parts will discourage vendors from selling to the military.

Defense and IT contractors maintain that vendors make purchasing decisions based on cost, quality and availability -- not the country in which specialty metals in the components were melted. Commercial items commonly acquired by the Defense Department, like computers and semi-conductors, may contain a small percentage of such components, "subjecting the manufacturers to costly and burdensome, if not impossible, tracking requirements," according to the DOD's proposal, which was published in the July 2 Federal Register.

Defense's acquisition regulations office is now evaluating public comments.

"With respect to the issue of tracking, most manufacturers, particularly in the aerospace sector, require traceability of specialty metals and know exactly where the metal comes from," according to comments filed by the metal industry.

But Alan Chvotkin, senior vice president and counsel at the Professional Services Council, said that not issuing an exemption "would prevent DoD from having access to the entire commercial marketplace to meet its needs for weapons systems."

David Marin, spokesman for House Oversight and Government Reform Committee ranking Republican Tom Davis of Virginia, said his boss would support the proposed exemption. "This change would be good for the war fighter and good for the taxpayer," Marin said.

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