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This chapter examines whether DoD is effectively enforcing statutory requirements (under the Berry Amendment and the Buy American Act) that require the U.S. government, and in particular, DoD, to procure generally only U.S. manufactured textiles and apparel.
The Berry Amendment was originally enacted in 1941, and it was effectively reiterated as a part of each subsequent defense appropriations act until it was codified as 10 U.S.C. 2533a in 2002 by section 832 of Public Law 107-107. Regarding purchases of textile and apparel items, the Berry Amendment requires that funds made available to DoD may not be used to purchase clothing; tents, tarpaulins, or 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 (whether in the form of fiber or yarn or contained in fabrics, materials, or manufactured articles); or items of individual equipment manufactured from or containing such fibers, yarns, fabrics, or materials unless it is grown, reprocessed, reused, or produced in the United States. That is, covered end items, components, and materials purchased with funds made available to DoD must be produced wholly in the United States. The Berry Amendment is implemented through the Defense Federal Acquisition Regulation Supplement (DFARS) at Subpart 225.7002.
The Berry Amendment contains several exceptions, including acquisitions that are at or below the simplified acquisition threshold and those items purchased outside the United States in support of combat operations.
In addition, waivers to Berry Amendment restrictions on foreign purchases are permitted if the Secretary concerned determines that items grown, reprocessed, reused, or produced in the United States cannot be acquired as and when needed in a satisfactory quality and sufficient quantity at U.S. market prices. However, waivers are uncommon. Waiver decisions may be made by the Under Secretary of Defense (Acquisition, Technology and Logistics), the Secretary of the Army, the Secretary of the Navy, or the Secretary of the Air Force without re-delegation.
The Buy American Act (41 U.S.C. 10a) establishes a preference for purchases of domestic end products (i.e., supplies produced in the United States substantially from components produced in the United States) valued in excess of the micro-purchase threshold for use within the United States. Under the regulation, an end product is considered manufactured in the United States if the cost of its qualifying country components and its components that are mined, produced, or manufactured in the United States exceeds 50 percent of the cost of all its components. The component test is applied for end products, not for the individual components themselves. The Buy American Act applies to all federal agencies as implemented through the Federal Acquisition Regulation (FAR) at FAR Subpart 25.1 and, for DoD, at DFARS Subpart 225.1. Exceptions, detailed at FAR Subpart 25.103 may be granted for the public interest, domestic non-availability, unreasonable cost, and resale.
As explained in detail by the FAR and DFARS as noted above, the Berry Amendment and Buy American Act are separate and distinct domestic preference requirements. They differ with regard to their scope, threshold, exceptions, and waiver authority. Generally, the Berry Amendment conveys stronger requirements for purchases of domestic textile and apparel products.
BIS asked firms to indicate whether or not they believe that DoD is effectively enforcing the Berry Amendment and the Buy American restrictions. Only firms that sell to DoD responded: survey results appear in Table V-1.
Table V-1. Enforcement of Berry Amendment and Buy American Restrictions |
||
| Survey Question | Survey Response (Response of firms for which question was applicable) |
|
|---|---|---|
| Yes | No | |
| Do you believe the Berry Amendment restrictions are being effectively enforced by the DoD? | 68% | 32% |
| Do you believe the Buy American restrictions are being effectively enforced by the DoD? | 72% | 28% |
| Source: U.S. DOC/BIS Industry Survey Data | ||
Of the 185 firms responding that the Berry Amendment is applicable to their business, 125 firms (or 68 percent) replied that DoD is effectively enforcing the amendment. Of the 184 firms responding that Buy American restrictions are applicable to their business, 132 (or 72 percent) replied that DoD effectively enforces the restrictions.
The 60 firms that responded that DoD was not effectively enforcing the Berry Amendment were then asked to provide specific examples of inadequate enforcement. Some firms indicated that it was difficult for them to provide specific examples because of their role in the production chain. Several of these firms mentioned that their belief was based on information appearing in the media, information provided by industry associations, third-party comments, and hearsay.
Firms that responded that DoD was not effectively enforcing the Berry Amendment were also asked to describe any actions they had taken to bring the lack of enforcement to the attention of the proper government agency or industry associations. Nearly half of these firms had taken no action, although a small number of them indicated that they would have filed a complaint if they knew what steps should be taken to file one. The other half reported having complained to DoD, the Defense Supply Center in Philadelphia, and Congressional representatives about Berry Amendment enforcement issues.
The 52 firms that responded that DoD did not effectively enforce Buy American restrictions were asked to provide specific examples of inadequate enforcement. As with the Berry Amendment, it could be difficult for firms low in the supply base to determine if the Buy American restrictions are being effectively enforced. The results, as shown in Table V-2, indicate that 41 firms (79 percent of those firms indicating ineffective enforcements) did not provide a specific example supporting that belief. The other 11 firms (21 percent) did cite specific examples of garments made overseas and of the use of foreign raw materials in the manufacture of goods supplied to the military.
Some of these firms expressed concerns that the Buy American regulations are difficult to understand. Others expressed doubt that the government can enforce the restrictions, citing the absence of public proceedings to verify that materials used in goods purchased by the government are in fact of U.S. origin.
Table V-2. Specific Examples of Inadequate Enforcement of Buy American Restrictions |
||
| Examples | Firms that Replied that Buy American Restrictions are NOT effectively enforced |
Percent |
|---|---|---|
| Provided a specific example | 11 | 21% |
| No specific example | 41 | 79% |
| Source: U.S. DOC/BIS Industry Survey Data | ||
BIS sought to complement the survey findings through on-site and telephone interviews. Companies interviewed included apparel suppliers to the armed forces, specialized military suppliers, and textile manufacturers. Both large and small companies were contacted.
During the site visits, all firms were asked the same questions about qualifying products under the Berry and Buy American restrictions and about obtaining waivers. The overwhelming majority of firms interviewed stated that because of extremely strong foreign competition in the commercial textile and apparel industries, U.S. defense suppliers are increasingly dependent on regulations such as the Berry Amendment for their survival.
Firms also often reported during the interviews that the process required to qualify products for compliance with the Berry Amendment and Buy American restrictions is straightforward. Most respondents also indicated that it is very difficult, or virtually impossible, to obtain a waiver for the Berry Amendment or Buy American restrictions. A textile firm dealing with high technology fibers and products did have experience with seeking a waiver, and said that obtaining a waiver was nearly impossible. The apparel firms interviewed reported that waivers are not generally a concern for them because a waiver will normally have been sought by either a government procurement office or a textile firm for a particular textile fiber or component to be used by the apparel firm in a final product.
Interviews with DoD personnel indicated that at the departmental and service levels, the Berry Amendment is being effectively enforced. Officials at both DoD Acquisition Offices and at DLA/DSCP said the process for granting waivers is very stringent. As mentioned earlier, waivers may only be granted by the Secretary of Defense, the Under Secretary of Defense for Acquisition, Technology, and Logistics, or the secretaries of the Military Departments now, and that authority cannot be re-delegated. Products purchased must be certified by the supplying company to be in compliance with the Berry Amendment for the article and for components separately purchased. These interviews revealed that some units deployed for training might purchase some bulk supplies or equipment through local outlets (for items such as work gloves), without regard to their country of origin due to expediency and perhaps in ignorance of Berry Amendment requirements by the procurement officials at the unit level. Respondents also said they were working to develop language changes to the amendment that would make requirements clearer to procurement officials at unit levels.
In February 2003, the U.S. General Accounting Office (GAO) reported (GAO-03-440) that the DLA had properly implemented “Best Value” contracting for textiles and apparel items, confirming the results of the interviews conducted with DoD personnel. Officials interviewed said they had received no direct complaints about possible violations of the Berry Amendment, but in affirmation of the results of the BIS Survey (see B.1 above), mentioned they had received secondary information that some firms felt competitors had won contracts by using materials or components supplied by foreign sources. By statute, the channel for submitting complaints is through the GAO, and DoD and DLA officials said that none have been forwarded to them by GAO.
The Defense Logistics Agency is performing a separate study of the Berry Amendment, which will be completed in late 2003.
Table V-3 lists the waivers to the Berry Amendment currently in effect for textile and apparel products.
Table V-3. Waivers to the Berry Amendment Currently in Effect |
|
| Textile and Apparel Products | Contract Year |
|---|---|
| F-22 Advanced Technology Anti-G Suit | date uncertain |
| Cambrelle | 2001 |
| Canvas, Goat Hair | 2001 |
| Cationic-Dyeable Polyester Tow | 2002 |
| COTS - Medical/Surgical Items | 2001 |
| Modacrylic Fiber | 2002 |
| Nylon 210 Denier High Tenacity | 2003 |
| Poromeric Material | 2002 |
| Rayon Yarn | 2001 |
| Textile-Related Components for Navy Aircrew Common Ejection Seat | 2003 |
| Source: U.S. Department of Defense | |
Table V-4 shows the total number of waivers granted since 1998. It also details the number of waivers granted each year. Since 1998, a total of 36 textile- and apparel-related waivers have been granted. Note the decrease in the number of waivers granted from 2001 to 2002.
Table V-4. Waivers to the Berry Amendment since 1998 |
||
| Year | All Items | Textile and Apparel |
|---|---|---|
| 1998 | 4 | 1 |
| 1999 | 7 | 3 |
| 2000 | 16 | 5 |
| 2001 | 8 | 8 |
| 2002 | 5 | 4 |
| 2003 | 2 | 2 |
| Exact Date Unknown | 18 | 13 |
| Total | 60 | 36 |
| Source: U.S. Department of Defense | ||