Government Contracts Monitor

Flow Down of Specialty Metals Requirements – Let’s Be Clear

July 22, 2014

DoD proposes to amend the flow down requirements of DFARS Clause 252.225–7009 entitled ‘‘Restriction on Acquisition of Certain Articles Containing Specialty Metals” to clearly limit a contractor’s ability to modify the language of the clause in the flowdown to subcontractors. This clause is used in DoD contracts that require the delivery of aircraft, missile or space systems, ships, tank or automotive systems, weapon systems, or ammunition, and components thereof, if such items contain specialty metals: Note that all specialty metals incorporated in items delivered under a DoD contract containing this clause must be melted or produced in the United States, its outlying areas, or a qualifying country unless one of the exceptions at subparagraph (c) of the clause applies.

DoD’s proposal is to revise subparagraph (e) of DFARS Clause 252.225–7009 to clarify the flowdown requirement to subcontracts. Currently subparagraph (e) directs contractors to “insert the substance of this clause in subcontracts” that are for items containing specialty metal “to the extent necessary to ensure compliance of the end products that the Contractor will deliver to the Government.”

In order to prevent misinterpretation of the current flow down requirement, subparagraph (e) has been rewritten to specify that when flowing down the clause to subcontractors the only modifications permitted are:

First, a contractor may exclude and reserve paragraph (d) Compliance for commercial derivative military articles;

Second, a contractor may modify the exception at (c)(6) regarding end items containing a minimal amount of otherwise noncompliance specialty metal, as necessary to facilitate management of the allowance for up to 2% of otherwise noncompliant specialty metal content in the end product, recognizing that the minimal content exception does not apply to specialty metals contained in high-performance magnets; and

No other alterations to the clause are permitted other than to identify the appropriate parties.

The objective of the amendment is to more fully implement the requirements of 10 U.S.C. 2533b, which restricts the acquisition of specialty metals not melted in the United States, its outlying areas, or a qualifying country, in order to strengthen the United States industrial base.

This rule applies to DoD contractors and subcontractors that provide aircraft, missile or space systems, ships, tank or automotive items, weapon systems, ammunition, or components thereof that contain specialty metals.

Comments are due on or before August 22, 2014. Information about this proposed amendment and how to submit comments can be found here

Lindsay Simmons is the attorney responsible for the content of this article.

Attorneys

Lindsay Simmons