II 115th CONGRESS 2d Session S. 2731 IN THE SENATE OF THE UNITED STATES April 23, 2018 Ms. Baldwin introduced the following bill; which was read twice and referred to the Committee on Homeland Security and Governmental Affairs A BILL To expand domestic content requirements for certain shipboard components, and for other purposes.

1. Short title This Act may be cited as the Made in America Shipbuilding Act of 2018 . 2. Domestic shipbuilding requirement (a) In general The head of an executive agency may not enter into a contract related to the acquisition, construction, or conversion of a vessel unless the vessel is to be constructed or converted in the United States. (b) Executive agency defined In this section, the term executive agency has the meaning given the term in section 133 of title 41, United States Code. 3. Domestic sourcing requirement for shipboard components (a) In general Chapter 47 of title 41, United States Code, is amended by adding at the end the following new section: 4713. Domestic sourcing requirement for shipboard components (a) Requirement for United States manufacture (1) Limitation on procurements The head of an executive agency may procure any of the following components for vessels only if the items are manufactured in the United States: (A) In general The following components for vessels: (i) Air circuit breakers. (ii) Welded shipboard anchor and mooring chain with a diameter of four inches or less. (iii) Auxiliary equipment, including pumps, for all shipboard services. (iv) Propulsion system components (engines, reduction gears, and propellers). (v) Shipboard cranes. (vi) Spreaders for shipboard cranes. (vii) Capstans. (viii) Winches. (ix) Hoists. (x) Outboard motors. (xi) Windlasses. (B) Other components The following components of vessels, to the extent they are unique to marine applications: gyrocompasses, electronic navigation chart systems, steering controls, pumps, propulsion and machinery control systems, and totally enclosed lifeboats. (C) Valves and machine tools Items in the following categories: (i) Powered and non-powered valves in Federal Supply Classes 4810 and 4820 used in piping for naval surface ships and submarines. (ii) Machine tools in the Federal Supply Classes for metal-working machinery numbered 3405, 3408, 3410 through 3419, 3426, 3433, 3438, 3441 through 3443, 3445, 3446, 3448, 3449, 3460, and 3461. (2) Applicability to certain items Paragraph (1) does not apply to a procurement of spare or repair parts needed to support components for vessels produced or manufactured outside the United States. (3) Waiver authority The head of an executive agency may waive the limitation in paragraph (1) with respect to the procurement of an item listed in that paragraph if the head of the agency determines that any of the following apply: (A) Application of the limitation would increase the cost of the overall acquisition by more than 25 percent or cause unreasonable delays to be incurred. (B) Satisfactory quality items manufactured by a domestic entity are not available or domestic production of such items cannot be initiated without significantly delaying the project for which the item is to be acquired. (C) Application of the limitation would result in the existence of only one domestic source for the item. (D) Application of the limitation is not in the national security interests of the United States. (4) Implementation of waiver authority (A) Non-delegation of authority The head of an agency may not delegate the waiver authority under paragraph (3). (B) Publication Not later than 30 days after exercising the waiver authority under paragraph (3), the head of the agency shall publish in an easily identifiable location on the website of the agency information regarding the waiver, including a detailed justification for the waiver. (5) Annual report Not later than 180 days after the end of each fiscal year, the head of each executive agency that has used a waiver described in this section in the fiscal year shall submit to the Committee on Homeland Security and Governmental Affairs of the Senate and the Committee on Oversight and Government Reform of the House of Representatives a report on the total amount of waivers used and detailed information regarding and justification for the waiver. (b) Components containing specialty metals (1) Limitation on procurements The head of an executive agency may not enter into a contract for the procurement of end items or components for ships that contain a specialty metal not melted or produced in the United States. (2) Availability exception (A) In general Paragraph (1) does not apply to the extent that the head of an executive agency 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. (B) Applicability This paragraph applies to prime contracts and subcontracts at any tier under such contracts. (3) Exception for certain acquisitions Paragraph (1) does not apply to the following: (A) Acquisitions outside the United States in support of combat operations or in support of contingency operations. (B) Acquisitions for which the use of procedures other than competitive procedures has been approved on the basis of section 3304(c) of this title, relating to unusual and compelling urgency of need. (4) Exception relating to agreements with foreign governments Paragraph (1) does not preclude the acquisition of a specialty metal if— (A) the acquisition is necessary— (i) to comply with agreements with foreign governments requiring the United States to purchase supplies from foreign sources for the purposes of offsetting sales made by the United States Government or United States firms under approved programs serving defense requirements; or (ii) in furtherance of agreements with foreign governments in which both such governments agree to remove barriers to purchases of supplies produced in the other country or services performed by sources of the other country; and (B) any such agreement with a foreign government complies, where applicable, with the requirements of section 36 of the Arms Export Control Act ( 22 U.S.C. 2776 ) and with section 2457 of title 10. (5) Exception for small purchases Paragraph (1) does not apply to acquisitions in amounts not greater than the simplified acquisition threshold referred to in section 134 of this title. (6) Exception for purchases of electronic components Paragraph (1) does not apply to acquisitions of electronic components, unless the head of the agency, with the concurrence of the Secretary of Defense and upon the recommendation of the Strategic Materials Protection Board pursuant to section 187 of title 10, determines that the domestic availability of a particular electronic component is critical to national security. (7) Applicability to acquisitions of commercial items (A) In general Except as provided in subparagraphs (B) and (C), this section applies to acquisitions of commercial items, notwithstanding sections 1906 and 1907 of this title. (B) Exceptions This section does not apply to contracts or subcontracts for the acquisition of commercially available off-the-shelf items, as defined in section 104 of this title, other than— (i) contracts or subcontracts for the acquisition of specialty metals, including mill products, such as bar, billet, slab, wire, plate and sheet, that have not been incorporated into end items, subsystems, assemblies, or components; (ii) contracts or subcontracts for the acquisition of forgings or castings of specialty metals, unless such forgings or castings are incorporated into commercially available off-the-shelf end items, subsystems, or assemblies; (iii) contracts or subcontracts for commercially available high performance magnets unless such high performance magnets are incorporated into commercially available off-the-shelf end items or subsystems; and (iv) contracts or subcontracts for commercially available off-the-shelf fasteners, unless such fasteners are— (I) incorporated into commercially available off-the-shelf end items, subsystems, assemblies, or components; or (II) purchased as provided in subparagraph (C). (C) Inapplicability to certain fasteners This subsection does not apply to fasteners that are commercial items that are purchased 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 specialty metal, in the required form, for use in the production of such fasteners for sale to executive agencies and other customers, that is not less than 50 percent of the total amount of the specialty metal that it will purchase to carry out the production of such fasteners. (8) Exceptions for purchases of specialty metals below minimum threshold (A) In general Notwithstanding paragraph (1), the head of an executive agency may accept delivery of an item containing specialty metals that were not melted in the United States if the total amount of noncompliant specialty metals in the item does not exceed 2 percent of the total weight of specialty metals in the item. (B) Exception This paragraph does not apply to high performance magnets. (9) Streamlined compliance for commercial derivative military articles (A) In general Paragraph (1) shall not apply to an item acquired under a prime contract if the head of an executive agency determines that— (i) the item is a commercial derivative military article; and (ii) the contractor certifies that the contractor and its subcontractors have entered into a contractual agreement, or agreements, to purchase an amount of domestically melted specialty metal in the required form, for use during the period of contract performance in the production of the commercial derivative military article and the related commercial article, that is not less than the greater of— (I) an amount equivalent to 120 percent of the amount of specialty metal that is required to carry out the production of the commercial derivative military article (including the work performed under each subcontract); or (II) an amount equivalent to 50 percent of the amount of specialty metal that is purchased by the contractor and its subcontractors for use during such period in the production of the commercial derivative military article and the related commercial article. (B) Determination of amount of specialty metal required For the purposes of this paragraph, the amount of specialty metal that is required to carry out the production of the commercial derivative military article includes specialty metal contained in any item, including commercially available off-the-shelf items, incorporated into such commercial derivative military article. (10) National security waiver (A) In general Notwithstanding paragraph (1), the head of an executive agency may accept the delivery of an end item containing noncompliant materials if the head of the executive agency determines in writing that acceptance of such end item is necessary to the national security interests of the United States. (B) Requirements A written determination under subparagraph (A)— (i) shall specify the quantity of end items to which the waiver applies and the time period over which the waiver applies; and (ii) shall be provided to Congress prior to making such a determination (except that in the case of an urgent national security requirement, such certification may be provided to Congress up to 7 days after it is made). (C) Knowing or willful noncompliance (i) Determination In any case in which the head of an executive agency makes a determination under subparagraph (A), the head of the executive agency shall determine whether or not the noncompliance was knowing and willful. (ii) Not knowing or willful noncompliance If the head of the executive agency determines that the noncompliance was not knowing or willful, the head of the executive agency shall ensure that the contractor or subcontractor responsible for the noncompliance develops and implements an effective plan to ensure future compliance. (iii) Knowing or willful noncompliance If the head of the executive agency determines that the noncompliance was knowing or willful, the head of the executive agency shall— (I) require the development and implementation of a plan to ensure future compliance; and (II) consider suspending or debarring the contractor or subcontractor until such time as the contractor or subcontractor has effectively addressed the issues that lead to such noncompliance. (11) Specialty metal defined In this subsection, the term specialty metal means any of the following: (A) Steel— (i) 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 (ii) containing more than 0.25 percent of any of the following elements: aluminum, chromium, cobalt, columbium, molybdenum, nickel, titanium, tungsten, or vanadium. (B) 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. (C) Titanium and titanium alloys. (D) Zirconium and zirconium base alloys. (12) Additional definitions In this subsection: (A) The term United States includes possessions of the United States. (B) The term component has the meaning provided in section 105 of this title. (C) The term acquisition has the meaning provided in section 131 of this title. (D) The term required form — (i) shall not apply to end items or to their components at any tier; and (ii) means in the form of mill product, such as bar, billet, wire, slab, plate or sheet, and in the grade appropriate for the production of— (I) a finished end item delivered to the executive agency; or (II) a finished component assembled into an end item delivered to the executive agency. (E) The term commercially available off-the-shelf has the meaning provided in section 104 of this title. (F) The term assemblies means items forming a portion of a system or subsystem that can be provisioned and replaced as an entity and which incorporates multiple, replaceable parts. (G) The term commercial derivative military article means an item procured by the Department of Defense that is or will be produced using the same production facilities, a common supply chain, and the same or similar production processes that are used for the production of articles predominantly used by the general public or by nongovernmental entities for purposes other than governmental purposes. (H) The term subsystem means a functional grouping of items that combine to perform a major function within an end item, such as electrical power, attitude control, and propulsion. (I) The term end item means the final production product when assembled or completed, and ready for issue, delivery, or deployment. (J) The term subcontract includes a subcontract at any tier. (c) Use of United States steel, iron, aluminum, and manufactured products (1) In general The head of an executive agency may not enter into a contract related to the construction of a vessel unless the steel, iron, aluminum, and manufactured products to be used in the construction of the vessel are produced in the United States. (2) Exceptions The provisions of paragraph (1) shall not apply where the head of an executive agency finds— (A) that their application would be inconsistent with the public interest; (B) that such materials and products are not produced in the United States in sufficient and reasonably available quantities and of a satisfactory quality; or (C) that inclusion of domestic material will increase the cost of the overall project contract by more than 25 percent. (3) Implementation of exceptions (A) Non-delegation of authority The head of an agency may not delegate the authority to make a finding described in paragraph (2). (B) Publication Not later than 30 days after making a finding described in paragraph (2), the head of the agency shall publish in an easily identifiable location on the website of the agency information regarding the finding, including a detailed justification for the exception. (4) Annual report Not later than 180 days after the end of each fiscal year, the head of each executive agency that has made an exception finding described in paragraph (2) in the fiscal year shall submit to the Committee on Homeland Security and Governmental Affairs of the Senate and the Committee on Oversight and Government Reform of the House of Representatives a report on the total amount of exceptions used and detailed information regarding and justification for the exceptions. (5) Calculation of component cost For purposes of this subsection, in calculating components' costs, labor costs involved in final assembly shall not be included in the calculation. (6) Intentional violations If it has been determined by a court or Federal agency that any person intentionally— (A) affixed a label bearing a Made in America inscription, or any inscription with the same meaning, to any product used in projects to which this section applies, sold in or shipped to the United States that was not made in the United States; or (B) represented that any product used in projects to which this section applies, sold in or shipped to the United States that was not produced in the United States, was produced in the United States; that person shall be debarred from contracting with the Federal Government for a period of not less than 5 years. . (b) Clerical amendment The table of sections at the beginning of such chapter is amended by adding after the item relating to section 4712 the following new item: 4713. Domestic sourcing requirement for shipboard components. . 4. Conforming amendments related to Department of Defense provisions (a) Use of United States steel, iron, aluminum, and manufactured products (1) In general Chapter 137 of title 10, United States Code, is amended by adding at the end the following new section: 2339a. Use of United States steel, iron, aluminum, and manufactured products in shipbuilding (a) In general The head of an agency may not enter into a contract related to the construction of a vessel unless the steel, iron, aluminum, and manufactured products to be used in the construction of the vessel are produced in the United States. (b) Exceptions The provisions of subsection (a) shall not apply where the head of the agency finds— (1) that their application would be inconsistent with the public interest; (2) that such materials and products are not produced in the United States in sufficient and reasonably available quantities and of a satisfactory quality; or (3) that inclusion of domestic material will increase the cost of the overall project contract by more than 25 percent. (c) Implementation of exceptions (1) Non-delegation of authority The head of an agency may not delegate the authority to make a finding described in subsection (b). (2) Publication Not later than 30 days after making a finding described in subsection (b), the head of the agency shall publish in an easily identifiable location on the website of the agency information regarding the finding, including a detailed justification for the exception. (d) Annual report Not later than 180 days after the end of each fiscal year, the head of each executive agency that has made an exception finding described in subsection (b) in the fiscal year shall submit to the Committees on Armed Services of the Senate and the House of Representatives a report on the total amount of exceptions used and detailed information regarding and justification for the exceptions. (e) Calculation of component cost For purposes of this section, in calculating components' costs, labor costs involved in final assembly shall not be included in the calculation. (f) Intentional violations If it has been determined by a court or Federal agency that any person intentionally— (1) affixed a label bearing a Made in America inscription, or any inscription with the same meaning, to any product used in projects to which this section applies, sold in or shipped to the United States that was not made in the United States; or (2) represented that any product used in projects to which this section applies, sold in or shipped to the United States that was not produced in the United States, was produced in the United States; that person shall be debarred from contracting with the Federal Government for a period of not less than 5 years. . (2) Clerical amendment The table of sections at the beginning of such chapter is amended by adding after the item relating to section 2339 the following new item: 2339a. Use of United States steel, iron, aluminum, and manufactured products in shipbuilding. . (b) Miscellaneous limitations on the procurement of goods other than United States goods (1) In general Section 2534(a)(3)(A) of title 10, United States Code, is amended by adding at the end the following new clauses: (iv) Auxiliary equipment, including pumps, for all shipboard services. (v) Propulsion system components (engines, reduction gears, and propellers). (vi) Shipboard cranes. (vii) Spreaders for shipboard cranes. (viii) Capstans. (ix) Winches. (x) Hoists. (xi) Outboard motors. (xii) Windlasses. . (2) Applicability of previously sunsetted provisions Subsection (c)(2)(C) of section 2534 of title 10, United States Code, is amended by striking shall cease to be effective on October 1, 2005 and inserting “shall be in effect during— (i) the period beginning on the date of the enactment of this paragraph and ending on October 1, 1996; and (ii) the period beginning on the date of the enactment of the Made in America Shipbuilding Act of 2018. . 5. Applicability The requirements under this Act and the amendments made by this Act— (1) apply to contracts entered into on or after the date of the enactment of this Act; and (2) do not apply to— (A) contracts entered into before the date of the enactment of this Act; or (B) options included as part of such contracts as of such date of enactment.