225.7003-3 Exceptions.

(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 Materials Protection Board pursuant to 10 U.S.C. 187, 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 and Contracting, 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.

Parent topic: 225.7003 Restrictions on acquisition of specialty metals.