Transcript No Slide Title

Berry Amendment
Presented By:
Dave Riley
Deputy District Counsel, DCMAW
Berry Amendment Outline
• Background
• General Application and Exceptions
• DoD Implementation
• Areas of Concern
• Disclaimer: The views I express are purely
my own. OSD leadership may not share my
opinion. Policy in this area is currently being
considered at the OSD level.
Berry Amendment: It’s not intuitive!
It’s odd that chopped liver might be covered;
silver bullets aren’t.
Berry Amendment Background
• Earliest version – 1940 Naval Appropriations Act.
• 1941: Restriction was included in the General
Appropriation Act. Thereafter, the annual Defense
Appropriation Acts contained the Berry
Amendment restrictions.
• 1992: Becomes a note to 10 U.S.C. § 2241.
• 2002: Codified at 10 U.S.C. 2533a (FY02 Defense
Authorization Act).
• Purpose: The legislative history of the Berry
Amendment indicates that the purpose of the
amendment was and is to maintain and support the
defense industrial base for those items it covers.
Who was E.Y. Berry?
• Ellis Yarnal Berry (R)
served as South
Dakota's Western
District Congressman
from 1951 - 1971.
Why is it called the Berry Amendment?
• Though the restriction existed prior to 1952 it was
during floor debates that Congressmen E.Y. Berry
introduced his amendment to DoD’s Buy American
restrictions.
• Prior to this amendment “Berry” only covered food
and clothing.
• The Berry Amendment to the DoD Buy American
Restrictions expanded the coverage to include
“clothing, cotton or wool (whether in the form of
fabric or yarn or contained in fabric, materials, or
manufactured articles).”
Berry Amendment (Basics)
• Restricts the use of DoD funds to
pay for certain items
• That are not grown, reprocessed,
reused, or produced in the U.S.
• To protect the related industrial
base in the U.S.
• Puts no direct requirements on
Contractor
• Only via contract terms does Berry
apply to primes/subs
Berry Amendment (Coverage)
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Food, Clothing, 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
Canvas Products
Wool (including in manufactured articles)
Individual Equipment manufactured from or
containing such fibers, yarns, fabrics, or materials
• Specialty Metals, including stainless steel flatware,
unless the metals were melted in manufacturing
facilities located within the United States
• Hand or Measuring Tools
Specialty Metals
• Application was added to Berry Amendment
coverage in 1972
• Consider the timing of this addition –
Vietnam War
Acquisition Exceptions
DFARS 225.7002-2 & 10 USC 2533a
• At/below Simplified Acquisition Threshold
• In support of Combat Operations
• Food, specialty metals, hand/measuring tools –

In support of Contingency Operations
Under other than competitive procedures
approved on the basis of unusual and
compelling urgency -- 10 USC § 2304(c)(2)
• Specialty metals and chemical warfare protective
clothing when acquisition furthers an agreement
with a foreign government (Qualifying Country
sources)

Acquisition Exceptions, Continued
• Domestic Non-Availability Determination
(DNAD) at Secretariat level
Satisfactory quality and sufficient quantity of the
protected articles or items, or of specialty metals
(including stainless steel flatware), cannot be
acquired as and when needed at U.S. market
prices.
 The U.S. Market Price exception is rarely utilized.
 Requestor must first consider alternatives that
would Not require a DNAD. Exception may be
considered only if requesting activity first
confirms such alternatives are unacceptable.

Acquisition Exceptions, Continued

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Waste and byproducts of cotton or wool fiber for
use in the production of propellants and
explosives.
Acquisitions of foods manufactured or processed
in the United States, regardless of where the foods
(and any component if applicable) were grown or
produced.

Under FY 2003 and subsequent DoD Appropriations
Acts, this exception does not apply to fish,
shellfish, or seafood manufactured or processed in
the United States or contained in foods
manufactured or processed in the United States.
More BERRY AMENDMENT Exceptions
• Outside the United States
In support of combat operations
 Procurements of food, Specialty metals (including
stainless steel flatware), or hand or measuring
tools in support of contingency operations.

Application and Exceptions
• DFARS 225.7002-2(c) - Acquisitions of items listed in
FAR 25.104(a), unless the items are hand or
measuring tools.
 FAR 25.104 – Nonavailable Articles
However, when an item is listed at FAR
25.104 conduct market research to
determine if the item is available in the
domestic marketplace (including
alternatives.)
 Examples: Cashew Nuts, Castor oil, altar
linen, quinine, cobra venom

Application and Exceptions
• The following Qualifying Countries are
treated equally with “domestic” sources for
specialty metal and other restrictions (see
DFARS 225.872-1):
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Australia
Belgium
Canada
Denmark
Egypt
Federal Republic
of Germany
France
Greece
Israel
Italy
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Luxembourg
Netherlands
Norway
Portugal
Spain
Sweden
Switzerland
Turkey
United Kingdom of
Great Britain and
Northern Ireland
Buy American Act (BAA)
• Passed during the Great Depression to both
save and create jobs for American workers.
• The Berry Amendment limits competition.
• The BAA merely gives a preference to U.S.
manufactured goods by adding a price
evaluation factor to foreign end products.
• Legislation – Great Depression relief vice
Industrial Base preservation.
• Primary intent – Jobs vice Strategic Defense

Originally designed to make sure food/uniforms
came from U.S. sources
Why do we need the Berry Amendment?
• Examples (from American Manufacturing
Trade Action Coalition):
Vietnam War – Sony withheld cameras used to
guide tactical missiles
 In 1983, the socialists in the Japanese Diet
blocked the sale of ceramic packaging used in
U.S. cruise missiles
 JDAM bomb production was stopped during Iraq
war because a Swiss industrialist refused to ship
critical part - disagreed w/Administration policy
 Hellfire Missile production was stopped during
West Coast dock strike because critical parts
sourced in Japan were awaiting off-loading

Recent Berry Issues
• Army black berets from China, Romania and
Sri Lanka
• Russian titanium fraud case of late 90s –
spawned the withhold methodology
• Specialty Metal issues arising primarily at
major subs
* Providing non-conforming goods is a fraud
indicator; investigative referrals have been
made in some instances
Biggest Concern – Specialty Metal
• Has arisen most often at sub level in
programs where flow-down required:
Aircraft; missile and space systems; ships, tankauto; weapons; ammo (Laird Memo – DFARs
225.7002-2)
 See also DFARS 252.244-7000 (subcontracts for
commercial items)

• It’s still the Prime’s problem
Main Problems
• Prime didn’t flow down clause to subs
• Prime contract used confusing or
inappropriate language – duty to inquire?
• Prime contract omitted required language –
Christian Doctrine?

(GAO reports 60% of contracts have “problems”)
• Prime not taking ownership (overseeing) sub
compliance – getting a cert is not enough
• General lack of understanding of the
requirement
DCMA Fire-proofing Guidance
• What we were trying to achieve:
Help PCOs to make appropriate determinations –
many “problem” contracts
 Try to foster consistency – we had received
complaints about disparate treatment (especially
on withhold calculations)
 Try to be pragmatic while complying with the
letter of the law – avoid ADA violations
 Get all ACOs working off the same sheet of music

DCMA Interim Guidance
• Supplants the fire-proofing memo as the
primary Berry guidance document
• Fire-proofing memo still good background
info
• Main issues addressed by guidance:
Authority to accept with a withhold
 Calculation of withhold
 Conditional acceptance language
 Accounting for withholds
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
WAWF test of invoicing process has been
successful
What ACOs Expect From PCOs
1. Tell us if a Berry Amendment exception
applies to this acquisition.
2. Tell us if you intend to obtain a DNAD
(Secretarial Exception).
3. Tell us if you want to reject the item.
4. If the answers to 1-3 are all no, tell us if we
are authorized to conditionally accept the
non-conforming part with a withhold
calculated per the DCMA Interim Guidance.
5. Execute contract mods, as appropriate.
What DCMA Will Do
• Work with DCAA, PCO and Primes to
determine appropriate withhold amounts
• Process Conditional Acceptance (modified
DD250) incorporating withhold after PCO
approval
• Perform normal quality function w/r/t
tendered product including release of
product from subs where source inspection
is authorized
Controversial Areas
• Amount of withhold:
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Contract end item, major sub-assembly, lowest level
auditable part, or metal only?
 What about FAR 46.407 (replace at no cost)?
Burdened amount from all subs and withheld at prime
level – impact of different accounting systems
• Lowest Level Auditable Part Plus Burden

This calculation is auditable, does not rely on an
estimate, includes all costs associated with the noncompliant part, and is in synch with replace option.
We create an ADA violation if we pay for items
containing non-domestic metals.
 Our withhold approach is based on DoJs position
in actual fraud case.

Related Issues
• What about FMS?

Statute restricts use of funds “appropriated
or otherwise available to DoD”
Industry position – FMS funds not “otherwise
available” to DOD
 DCMA defers to PCO on funds availability issues
 GAO opinions, case-law on false claims act, longstanding positions of Defense Security Assistance
Agency and DoJ are at odds with industry position
 FMF is distinct from FMS as to funding.
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The part is still contractually non-compliant.
Definition Issues
• What constitutes an ALT 1 major program?
DPAS rating is instructive but not necessarily
determinative.
 Not all contracts are rated – or rated correctly.
 DPAS system is a Dept of Commerce reg.
 Safe approach:

If contract rated DPAS A1-A6 – ALT 1 likely applies.
 If you think something has been ordered for an
ALT 1 program but it isn’t rated DPAS A1-A6, ask
PCO for a definitive determination.

More Definition Issues
• Why isn’t the US considered a qualifying
country? Won’t this drive business offshore?
This issue was considered by DAR Council.
 Making US a qualifying country would “gut” the
statutory intent.
 DAR Council considered and rejected
requirement for metal in article from qualifying
country to also be smelted in a qualifying
country.
 The qualifying countries list results from various
trade agreements.

Fiscal Issues
• The amount of withhold is so small it costs
more to work the fix than is being saved.
That may be so but fiscal law does not recognize
a de minimis rule.
 Contractors can make a business decision to set
the withhold amount at a higher component level
if obtaining auditable data for lowest level noncompliant part is difficult, not cost-effective, or
impossible.

Payment Issues
• WAWF does not allow for withholds on
conditional acceptances?
I am not a WAWF/MOCAS expert.
 Fixed Price Ks - Identify via an attached schedule
the withhold amount by line item and a revised
unit price. Attach to receiving report (DD250).
Voucher and DD250 need to match.
 Flexibly Priced Ks – back withhold amount out of
voucher consistent with billing instructions
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Any payment delays are due to contractual
noncompliance, not “the system.”
Payment Process
• Conditional Acceptance language (will likely need to be
attached to the acceptance document given space constraints
in the “Comments” Field ); a schedule (authorized by the
ACO/PCO) identifying the amounts to be withheld at the line
item level must also be attached in order for DFAS to pay the
invoice.
1. The DD250 is created in WAWF.
 2. Once created, the WAWF menu will show a
new Tab called “Misc. Info.”
 3. Click on “Misc. Info” tab and there will be an
“Add Attachment” button.
 4. Click on the “Add Attachment” button and
you will see the familiar Windows-type “Select
File to Attach/Browse” Button.

My View Looking Up
• My opinion only:
OSD is engaged and they know we are looking
for policy
 OSD knows how DCMA has recommended
conducting business in the interim
 Industry (AIA and others) has engaged OSD at
the AT&L level and above
 Serious people on both sides of the legislative
debate over Berry restrictions will be heard from

Recommended Reading
• 10 USC 2533(a)
• DFARS 252.225-7014; 225.7002; 252.2247000;
• 58 Comp. Gen. 81 (FMS)
• 32 Pub. Cont. L.J. 577 (2003)
• CRS Rpt to Cong. - Berry Amend. (4/21/2005)
• Gov’t Contractor, Vol. 46, No. 16 (4/21/2004)
• GAO NSIAD-87-191 (B-226033) (09/1987)
• GAO-05-957 - AF waiver issues (09/2005)
• Amer. Manuf. Trade Action Coalition Report