Current Content
(a) Acquisitions in the following categories are not subject to the restrictions in 225.7003-2 :
(1) Acquisitions at or below the simplified acquisition threshold.
(2) Acquisitions outside the United States in support of combat operations.
(3) Acquisitions in support of contingency operations.
(4) Acquisitions for which the use of other than competitive procedures has been approved on the basis of unusual and compelling urgency in accordance with FAR 6.302-2.
(5) Acquisitions of items specifically for commissary resale.
(6) Acquisitions of items for test and evaluation under the foreign comparative testing program (10 U.S.C. 2350a(g)). However, this exception does not apply to any acquisitions under follow-on production contracts.
(b) One or more of the following exceptions may apply to an end item or component that includes any of the following, under a prime contract or subcontract at any tier. The restrictions in 225.7003-2 do not apply to the following:
(1) Electronic components, unless the Secretary of Defense, upon the recommendation of the Strategic and Critical Materials Board of Directors pursuant to 50 U.S.C. 98h-1 , determines that the domestic availability of a particular electronic component is critical to national security.
(2)(i) Commercially available off-the-shelf (COTS) items containing specialty metals, except the restrictions do apply to contracts or subcontracts for the acquisition of—
(A) Specialty metal mill products, such as bar, billet, slab, wire, plate, and sheet, that have not been incorporated into end items, subsystems, assemblies, or components. Specialty metal supply contracts issued by COTS producers are not subcontracts for the purposes of this exception;
(B) Forgings or castings of specialty metals, unless the forgings or castings are incorporated into COTS end items, subsystems, or assemblies;
(C) Commercially available high performance magnets that contain specialty metal, unless such high performance magnets are incorporated into COTS end items or subsystems (see PGI 225.7003-3 (b)(6) for a table of applicability of specialty metals restrictions to magnets); and
(D) COTS fasteners, unless—
(1) The fasteners are incorporated into COTS end items, subsystems, or assemblies; or
(2) The fasteners qualify for the commercial product exception in paragraph (b)(3) of this subsection.
(ii) If this exception is used for an acquisition of COTS end items valued at $5 million or more per item, the acquiring department or agency shall submit an annual report to the Principal Director, Defense Pricing, Contracting, and Acquisition Policy, in accordance with the procedures at PGI 225.7003-3 (b)(2).
(3) Fasteners that are commercial products and are acquired under a contract or subcontract with a manufacturer of such fasteners, if the manufacturer has certified that it will purchase, during the relevant calendar year, an amount of domestically melted or produced specialty metal, in the required form, for use in the production of fasteners for sale to DoD and other customers, that is not less than 50 percent of the total amount of the specialty metal that the manufacturer will purchase to carry out the production of such fasteners for all customers.
(4) Items listed in 225.7003-2 (a), manufactured in a qualifying country or containing specialty metals melted or produced in a qualifying country.
(5) Specialty metal in any of the items listed in 225.7003-2 if the USD(A&S), or an official authorized in accordance with paragraph (b)(5)(i) of this subsection, determines that specialty metal melted or produced in the United States cannot be acquired as and when needed at a fair and reasonable price in a satisfactory quality, a sufficient quantity, and the required form (i.e., a domestic nonavailability determination). In accordance with 10 U.S.C. 4863(m)(4), the term “required form” in this section refers to the form of the mill product, such as bar, billet, wire, slab, plate, or sheet, in the grade appropriate for the production of a finished end item to be delivered to the Government under this contract; or a finished component assembled into an end item to be delivered to the Government under the contract. See guidance in PGI 225.7003-3 (b)(5).
(i) The secretary of the military department concerned is authorized, without power of redelegation, to make a domestic nonavailability determination that applies to only one contract. The supporting documentation for the determination shall include an analysis and written documentation by the requiring activity, with specificity, why alternatives that would not require a domestic nonavailability determination are unacceptable.
(ii) A domestic nonavailability determination that applies to more than one contract (i.e., a class domestic nonavailability determination), requires the approval of the USD(A&S).
(A) At least 30 days before making a domestic nonavailability determination that would apply to more than one contract, the USD(A&S) will, to the maximum extent practicable, and in a manner consistent with the protection of national security and confidential business information—
(1) Publish a notice on the in the Governmentwide point of entry (GPE) (https://www.sam.gov) of the intent to make the domestic nonavailability determination; and
(2) Solicit information relevant to such notice from interested parties, including producers of specialty metal mill products.
(B) The USD(A&S)—
(1) Will take into consideration all information submitted in response to the notice in making a class domestic nonavailability determination;
(2) May consider other relevant information that cannot be made part of the public record consistent with the protection of national security information and confidential business information; and
(3) Will ensure that any such domestic nonavailability determination and the rationale for the determination are made publicly available to the maximum extent consistent with the protection of national security and confidential business information.
(6) End items containing a minimal amount of otherwise noncompliant specialty metals (i.e., specialty metals not melted or produced in the United States that are not covered by another exception listed in this paragraph (b)), if the total weight of noncompliant specialty metal does not exceed 2 percent of the total weight of all specialty metal in the end item. This exception does not apply to high performance magnets containing specialty metals. See PGI 225.7003-3 (b)(6) for a table of applicability of specialty metals restrictions to magnets.
(c) Compliance for commercial derivative military articles. The restrictions at 225.7003-2 (a) do not apply to an item acquired under a prime contract if—
(1) The offeror has certified, and subsequently demonstrates, that the offeror and its subcontractor(s) will individually or collectively enter into a contractual agreement or agreements to purchase a sufficient quantity of domestically melted or produced specialty metal in accordance with the provision at 252.225-7010 ; and
(2) The USD(A&S), or the secretary of the military department concerned, determines that the item is a commercial derivative military article (defense agencies see procedures at PGI 225.7003-3(c)). The contracting officer shall submit the offeror's certification and a request for a determination to the appropriate official, through agency channels, and shall notify the offeror when a decision has been made.
(d) National security waiver. The USD(A&S) may waive the restrictions at 225.7003-2 if the USD(A&S) determines in writing that acceptance of the item is necessary to the national security interests of the United States (see procedures at PGI 225.7003-3 (d)). This authority may not be delegated.
(1) The written determination of the USD(A&S)—
(i) Shall specify the quantity of end items to which the national security waiver applies;
(ii) Shall specify the time period over which the national security waiver applies; and
(iii) Shall be provided to the congressional defense committees before the determination is executed, except that in the case of an urgent national security requirement, the determination may be provided to the congressional defense committees up to 7 days after it is executed.
(2) After making such a determination, the USD(A&S) will—
(i) Ensure that the contractor or subcontractor responsible for the noncompliant specialty metal develops and implements an effective plan to ensure future compliance; and
(ii) Determine whether or not the noncompliance was knowing and willful. If the USD(A&S) determines that the noncompliance was knowing and willful, the appropriate debarring and suspending official shall consider suspending or debarring the contractor or subcontractor until such time as the contractor or subcontractor has effectively addressed the issues that led to the noncompliance.
(3) Because national security waivers will only be granted when the acquisition in question is necessary to the national security interests of the United States, the requirement for a plan will be applied as a condition subsequent, and not a condition precedent, to the granting of a waiver.
Change History
| Detected | Type | Summary |
|---|---|---|
| detected 2026-04-17 | PGI_MODIFIED | PGI 225.7003-3 updated: 36 lines added, 32 lines removed |
View diff--- previous +++ current @@ -1,46 +1,36 @@ -(b)(2) Report of COTS items. If a department or agency uses the exception at DFARS 225.7003-3(b)(2) for an acquisition of COTS end items valued at $5 million or more per item, the department or agency shall address use of the exception in a year-end report, to be prepared and submitted as follows: (A) Entitle the report "COTS Specialty Metal Exceptions Granted During Fiscal Year ____." (B) For each excepted COTS item purchased during the fiscal year, include in the report, at a minimum, the applicable-- -(1) Contract number and any applicable delivery order number; -(2) Dollar value; and -(3) Item description. (C) Submit the report by October 31 of each year to: Principal Director, Defense Pricing, Contracting, and Acquisition Policy ATTN: OUSD(A&S) DPCAP/CP 3060 Defense Pentagon Washington, DC 20301-3060. -(4) For samarium-cobalt magnets contained in an item listed in 225.7003-2(a) manufactured in a qualifying country, see paragraph (b)(6)(C) of this section. -(5) Domestic specialty metals nonavailable as and when needed. (A) Determining availability. -(1) FAR 15.402 requires that contracting officers purchase supplies and services at fair and reasonable prices. Thus, contracting officers must determine whether any increase in contract price that results from providing compliant specialty metal is fair and reasonable, given the circumstances of the particular situation. In those cases where the contracting officer determines that the price would not be fair and reasonable, the Secretary of the military department concerned may use that information in determining whether the unreasonable price causes the compliant metal to be effectively "nonavailable." Where these "reasonableness" limits should be drawn is a case-by-case decision. -(2) A similar approach may be used to determine whether delays associated with incorporating compliant specialty metals into items being acquired results in the metals being effectively nonavailable. (B)(1) A department or agency requesting a determination or approval from USD(A&S) in accordance with DFARS 225.7003-3(b)(5) shall submit the request, including the proposed determination, to-- Principal Director, Defense Pricing, Contracting, and Acquisition Policy ATTN: OUSD(A&S) DPCAP/CP 3060 Defense Pentagon Washington, DC 20301-3060. -(2) The Principal Director, Defense Pricing, Contracting, and Acquisition Policy (DPCAP), will forward the request to USD(A&S) as appropriate. (C) For domestic nonavailability determinations with regard to samarium-cobalt high performance magnets, see paragraph (b)(6)(D) of this section. -(6) Application of specialty metals restrictions to magnets. (A) The two most common types of high performance magnets are samarium-cobalt magnets and neodymium-iron-boron magnets. Only samarium-cobalt magnets contain specialty metals and are subject to the restrictions of 10 U.S.C. 4863 in this section, as well as the restrictions of 10 U.S.C. 4872 at 225.7018 . Neodymium-iron-boron magnets are only subject to the restrictions of 10 U.S.C. 4872 at 225.7018 , because they do not contain specialty metals. There are no other commonly used magnets that contain specialty metals. (B) Table. HPM = High performance magnet COTS = Commercially available off-the-shelf SmCo = Samarium Cobalt - -Magnet made of specialty metal is: - -Commercially available, SmCo HPM - -NOT Commercially available, SmCo HPM - -Incorporated into COTS subsystem or COTS end item - -NOT restricted - -* - -NOT incorporated into COTS subsystem or COTS end item - -Restricted - -Restricted - -Included in 2 percent minimum content? - -Cannot be included in 2 percent minimum content - -Cannot be included in 2 percent minimum content - -* By definition, COTS assemblies and COTS end items will not include a HPM that is not commercially available. (C) Samarium-cobalt magnets contained in an item manufactured in a qualifying country are still subject to the requirements of 10 U.S.C. 4872, because there is no exception in 10 U.S.C. 4872 for items manufactured in a qualifying country comparable to the exception at 225.7003-3 (b)(4) to the specialty metal restrictions of 10 U.S.C. 4863. (D) Even if samarium-cobalt magnets are determined to be domestically nonavailable under this section, the restrictions of 10 U.S.C. 4872 still apply unless samarium-cobalt magnets melted or produced outside a covered country are also determined to be nonavailable in accordance with 225.7018-4 . -(c) Compliance for commercial derivative military articles. -(i) A department or agency requesting a determination or approval from USD(A&S) in accordance with DFARS 225.7003-3(c) shall submit the request, including the proposed determination, to-- Principal Director, Defense Pricing, Contracting, and Acquisition Policy ATTN: OUSD(A&S) DPCAP/CP 3060 Defense Pentagon Washington, DC 20301-3060. -(ii) The Principal Director, DPCAP, will forward the request to USD(A&S) as appropriate. -(d) National security waiver. -(i) A department or agency shall request a national security waiver of the restrictions of 10 U.S.C. 4863 from USD(A&S) in accordance with DFARS 225.7003-3(d) in a timely manner after discovering or being informed of a specialty metals noncompliance in an item, or component thereof, listed at 225.7003-2 (a) and covered by 10 U.S.C. 4863. The department or agency shall submit the request, via the chain of command, including the draft determination and draft letters of notification to the congressional defense committees, as follows: Principal Director, Defense Pricing, Contracting, and Acquisition Policy ATTN: OUSD(A&S) DPCAP/CP 3060 Defense Pentagon Washington, DC 20301-3060 -(ii) The request shall include-- (A) The quantity of end items to which the waiver would apply; (B) The time period that the waiver will cover; (C) How and when the noncompliance was discovered-- -(1) By the subcontractor(s); -(2) By the contractor; and -(3) By the department or agency; (D) A complete description of all of the items or systems containing noncompliant specialty metals; (E) The contract number(s), date(s), duration, and subcontractor(s) associated with the noncompliance; (F) The manufacturer and country of origin of the noncompliant material, if known; (G) Whether the contractor flowed down the DFARS clause to the subcontractors and in what format (e.g., exact quote or substantially the same?); (H) A technical description of the affected parts, their role in the larger assembly, and their function in the end item; (I) Estimated cost and schedule to replace noncompliant parts if a national security waiver is not granted; (J) Operational and safety implications; (K) Other national security considerations (such as how the requested waiver will contribute to national security policy or operational security); (L) A description of the contractor's efforts to develop and implement a corrective plan to ensure future compliance; and (M) Information helpful to a determination as to whether any noncompliance was knowing and willful. -(iii) The Director, Defense Procurement and Acquisition Policy, will forward the request to USD(A&S) as appropriate.+(a) Acquisitions in the following categories are not subject to the restrictions in 225.7003-2 : +(1) Acquisitions at or below the simplified acquisition threshold. +(2) Acquisitions outside the United States in support of combat operations. +(3) Acquisitions in support of contingency operations. +(4) Acquisitions for which the use of other than competitive procedures has been approved on the basis of unusual and compelling urgency in accordance with FAR 6.302-2. +(5) Acquisitions of items specifically for commissary resale. +(6) Acquisitions of items for test and evaluation under the foreign comparative testing program (10 U.S.C. 2350a(g)). However, this exception does not apply to any acquisitions under follow-on production contracts. +(b) One or more of the following exceptions may apply to an end item or component that includes any of the following, under a prime contract or subcontract at any tier. The restrictions in 225.7003-2 do not apply to the following: +(1) Electronic components, unless the Secretary of Defense, upon the recommendation of the Strategic and Critical Materials Board of Directors pursuant to 50 U.S.C. 98h-1, determines that the domestic availability of a particular electronic component is critical to national security. (2)(i) Commercially available off-the-shelf (COTS) items containing specialty metals, except the restrictions do apply to contracts or subcontracts for the acquisition of-- (A) Specialty metal mill products, such as bar, billet, slab, wire, plate, and sheet, that have not been incorporated into end items, subsystems, assemblies, or components. Specialty metal supply contracts issued by COTS producers are not subcontracts for the purposes of this exception; (B) Forgings or castings of specialty metals, unless the forgings or castings are incorporated into COTS end items, subsystems, or assemblies; (C) Commercially available high performance magnets that contain specialty metal, unless such high performance magnets are incorporated into COTS end items or subsystems (see PGI 225.7003-3 (b)(6) for a table of applicability of specialty metals restrictions to magnets); and (D) COTS fasteners, unless-- +(1) The fasteners are incorporated into COTS end items, subsystems, or assemblies; or +(2) The fasteners qualify for the commercial product exception in paragraph (b)(3) of this subsection. +(ii) If this exception is used for an acquisition of COTS end items valued at $5 million or more per item, the acquiring department or agency shall submit an annual report to the Principal Director, Defense Pricing, Contracting, and Acquisition Policy, in accordance with the procedures at PGI 225.7003-3 (b)(2). +(3) Fasteners that are commercial products and are acquired under a contract or subcontract with a manufacturer of such fasteners, if the manufacturer has certified that it will purchase, during the relevant calendar year, an amount of domestically melted or produced specialty metal, in the required form, for use in the production of fasteners for sale to DoD and other customers, that is not less than 50 percent of the total amount of the specialty metal that the manufacturer will purchase to carry out the production of such fasteners for all customers. +(4) Items listed in 225.7003-2 (a), manufactured in a qualifying country or containing specialty metals melted or produced in a qualifying country. +(5) Specialty metal in any of the items listed in 225.7003-2 if the USD(A&S), or an official authorized in accordance with paragraph (b)(5)(i) of this subsection, determines that specialty metal melted or produced in the United States cannot be acquired as and when needed at a fair and reasonable price in a satisfactory quality, a sufficient quantity, and the required form (i.e., a domestic nonavailability determination). In accordance with 10 U.S.C. 4863(m)(4), the term "required form" in this section refers to the form of the mill product, such as bar, billet, wire, slab, plate, or sheet, in the grade appropriate for the production of a finished end item to be delivered to the Government under this contract; or a finished component assembled into an end item to be delivered to the Government under the contract. See guidance in PGI 225.7003-3 (b)(5). +(i) The secretary of the military department concerned is authorized, without power of redelegation, to make a domestic nonavailability determination that applies to only one contract. The supporting documentation for the determination shall include an analysis and written documentation by the requiring activity, with specificity, why alternatives that would not require a domestic nonavailability determination are unacceptable. +(ii) A domestic nonavailability determination that applies to more than one contract (i.e., a class domestic nonavailability determination), requires the approval of the USD(A&S). (A) At least 30 days before making a domestic nonavailability determination that would apply to more than one contract, the USD(A&S) will, to the maximum extent practicable, and in a manner consistent with the protection of national security and confidential business information-- +(1) Publish a notice on the in the Governmentwide point of entry (GPE) (https://www.sam.gov) of the intent to make the domestic nonavailability determination; and +(2) Solicit information relevant to such notice from interested parties, including producers of specialty metal mill products. (B) The USD(A&S)-- +(1) Will take into consideration all information submitted in response to the notice in making a class domestic nonavailability determination; +(2) May consider other relevant information that cannot be made part of the public record consistent with the protection of national security information and confidential business information; and +(3) Will ensure that any such domestic nonavailability determination and the rationale for the determination are made publicly available to the maximum extent consistent with the protection of national security and confidential business information. +(6) End items containing a minimal amount of otherwise noncompliant specialty metals (i.e., specialty metals not melted or produced in the United States that are not covered by another exception listed in this paragraph (b)), if the total weight of noncompliant specialty metal does not exceed 2 percent of the total weight of all specialty metal in the end item. This exception does not apply to high performance magnets containing specialty metals. See PGI 225.7003-3 (b)(6) for a table of applicability of specialty metals restrictions to magnets. +(c) Compliance for commercial derivative military articles. The restrictions at 225.7003-2 +(a) do not apply to an item acquired under a prime contract if-- +(1) The offeror has certified, and subsequently demonstrates, that the offeror and its subcontractor(s) will individually or collectively enter into a contractual agreement or agreements to purchase a sufficient quantity of domestically melted or produced specialty metal in accordance with the provision at 252.225-7010; and +(2) The USD(A&S), or the secretary of the military department concerned, determines that the item is a commercial derivative military article (defense agencies see procedures at PGI 225.7003-3(c)). The contracting officer shall submit the offeror's certification and a request for a determination to the appropriate official, through agency channels, and shall notify the offeror when a decision has been made. +(d) National security waiver. The USD(A&S) may waive the restrictions at 225.7003-2 if the USD(A&S) determines in writing that acceptance of the item is necessary to the national security interests of the United States (see procedures at PGI 225.7003-3 (d)). This authority may not be delegated. +(1) The written determination of the USD(A&S)-- +(i) Shall specify the quantity of end items to which the national security waiver applies; +(ii) Shall specify the time period over which the national security waiver applies; and +(iii) Shall be provided to the congressional defense committees before the determination is executed, except that in the case of an urgent national security requirement, the determination may be provided to the congressional defense committees up to 7 days after it is executed. +(2) After making such a determination, the USD(A&S) will-- +(i) Ensure that the contractor or subcontractor responsible for the noncompliant specialty metal develops and implements an effective plan to ensure future compliance; and +(ii) Determine whether or not the noncompliance was knowing and willful. If the USD(A&S) determines that the noncompliance was knowing and willful, the appropriate debarring and suspending official shall consider suspending or debarring the contractor or subcontractor until such time as the contractor or subcontractor has effectively addressed the issues that led to the noncompliance. +(3) Because national security waivers will only be granted when the acquisition in question is necessary to the national security interests of the United States, the requirement for a plan will be applied as a condition subsequent, and not a condition precedent, to the granting of a waiver. |
||