Complying with the Berry Amendment.

• Author: Corrigan, Joe
• Position: ETHICS CORNER

Among the thorniest compliance challenges facing government contractors is the thicket of domestic preference programs, including the Buy American Act, Trade Agreements Act, General Agreement on Tariffs and Trade, Free Trade Agreements, Defense Authorization Acts and Appropriations Acts, and the Berry Amendment.

For ethics and compliance program purposes, certain intertwined laws add complications. For example, the Buy American Act and Berry Amendment may allow a contractor to import anchor chain but the annual defense appropriations bill routinely bars spending appropriated funds on anchor chain. Navigating these intricacies is central to any corporate compliance program. Companies must understand the source of their supplies and products because violations, even if unintended, can be extremely costly in time and money.

Of all domestic preference laws and regulations, the Berry Amendment may concern defense contractors most. Named after a 1950s congressman, the Berry Amendment limits the use of government funds to acquire foreign origin food products, clothing, fabrics, fibers, yarns, hand tools, measuring tools, and specialty metals, including components of these commodities. For specialty metals, Berry requires the metal to be melted in a U.S. facility.

The Berry Amendment includes few of the generous exceptions allowed for end products and components of U.S. allies and trading partners found in other domestic preference laws such as the Buy American Act and Trade Agreements Act. The most notable exception is unavailability of suitable U.S. goods in sufficient quantities at U.S. market prices. This Berry exception requires a written domestic nonavailability determination from a Defense Department or military department official. Another Berry exception allows items procured outside the United States in support of combat, contingency or emergency operations, but not U.S. procurements even if intended for combat operations. For instance, defense acquisition managers view the body armor protection systems covered by Berry Amendment restrictions.

Another exception: specialty metals melted in or incorporated into an article manufactured in a qualifying country--generally U.S. NATO allies and a few other countries included for foreign policy reasons. As these exceptions demonstrate, compliance with Berry is fact specific and requires careful analysis and staff training by companies selling Berry-covered products.

Berry's restrictions on...