In May 2010, the government of the United States of America announced a change in the required local inputs to serve domestic customers.



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  • 0 neutral
  • 1 liberalising


See the hyperlinked items in the description.

Inception date: No inception date

Local sourcing

The two versions of the defense authorization act for Fiscal Year 2011 currently under consideration in the U.S. Congress would each relax aspects of the Buy-American restrictions for certain goods. The version approved by the House of Representatives would do so for the specialty metals contained in big-ticket items, while the version under consideration in the Senate would make it easier for the Department of Defense to procure abroad certain tools. 
The U.S. House of Representatives approved on May 28, 2010 its version (designated H.R.5136) of the National Defense Authorization Act for Fiscal Year 2011. Section 813 of that bill would relax an existing Buy-American requirement. Under current law the Department of Defense is barred from acquiring aircraft, tanks, weapons systems, etc. that contain specialty metals* unless those specialty metals are melted and produced in the United States. More precisely, the relevant provisions of the existing U.S. law (i.e., 10 USC 2533b) read as follows:
(a) Requirement.-Except as provided in subsections (b) through (m), the acquisition by the Department of Defense of the following items is prohibited:
(1)The following types of end items, or components thereof, containing a specialty metal not melted or produced in the United States: aircraft, missile and space systems, ships, tank and automotive items, weapon systems, or ammunition.
(2)A specialty metal that is not melted or produced in the United States and that is to be purchased directly by the Department of Defense or a prime contractor of the Department.
(b) Availability Exception.-
(1)Subsection (a) does not apply to the extent that the Secretary of Defense or the Secretary of the military department concerned determines that compliant specialty metal of satisfactory quality and sufficient quantity, and in the required form, cannot be procured as and when needed. For purposes of the preceding sentence, the term 'compliant specialty metal' means specialty metal melted or produced in the United States.
(2)This subsection applies to prime contracts and subcontracts at any tier under such contracts.
The new law would define the broad term "produced" in a way that narrows it down significantly, and in fact makes it virtually a synonym for "melted," by providing that:
The term 'produced', as used in subsections (a) and (b), means melted, or processed in a manner that results in physical or chemical property changes that are the equivalent of melting. The term does not include finishing processes such as rolling, heat treatment, quenching, tempering, grinding, or shaving.
The effect would thus be to allow the acquisition of these items that contain specialty metals if those metals were subject to various finishing processes (rolling, heat treatment, etc.) in a foreign country.
The version of the defense authorization bill that is under consideration in the Senate (S.3455) does not include the language described above, but does have a Buy-American relaxation. It would provide that "hand or measuring tools" are to be included in that category of goods that are otherwise subject to strict Buy-American restrictions but that (as provided in existing law) the requirement can be waived "to the extent that the Secretary of Defense or the Secretary of the military department concerned determines that satisfactory quality and sufficient quantity of any such article or item ... grown, reprocessed, reused, or produced in the United States cannot be procured as and when needed at United States market prices." The change would thus make it easier for these hand or measuring tools to be procured from non-U.S. sources. 
After the Senate approves its version of the bill the two chambers of Congress must reconcile any differences between their two versions in a conference committee. That reconciled bill will then be subject to final approval by the two chambers before it can be sent to President Obama for his approval.
* : Existing law defines "specialty metals" as follows:
(1) Steel-
(A)with a maximum alloy content exceeding one or more of the following limits: manganese, 1.65 percent; silicon, 0.60 percent; or copper, 0.60 percent; or
(B)containing more than 0.25 percent of any of the following elements: aluminum, chromium, cobalt, columbium, molybdenum, nickel, titanium, tungsten, or vanadium.
(2)Metal alloys consisting of nickel, iron-nickel, and cobalt base alloys containing a total of other alloying metals (except iron) in excess of 10 percent.
(3)Titanium and titanium alloys.
(4)Zirconium and zirconium base alloys.