Black Beret update

Last year's Year in Review issue reported on the congressional scrutiny of the Chief of Staff's decision to make the new black berets the Army's standard headgear by 14 June 2001, the Army's first birthday of the new millennium. (1) A General Accounting Office (GAO) report detailed the facts and circumstances leading to the decision to purchase the berets from several foreign suppliers. (2) Three of the contract actions were non-competitive procurements, justified based on the "unusual and compelling urgency" to meet the Chief of Staff's deadline. (3) In addition, the Defense Logistics Agency (DLA) neglected to seek a Small and Disadvantaged Business Utilization Office review to determine the feasibility of small business participation. (4)

The DLA's use of a Berry Amendment waiver, which usually requires the Department of Defense (DOD) to purchase military clothing from domestic firms, also dismayed Congress. (5) At the time the DLA invoked the Berry Amendment waiver provision, such waivers were possible if the "Secretary concerned or [his] designee determine[d] that [the items] cannot be acquired when needed in a satisfactory quality and sufficient quantity grown or produced in the United States." (6) The DLA approved waivers (7) for all of the foreign companies, citing the 14 June 2001 deadline as the "emergency" justifying the waivers. (8) On 2 May 2001, the Army announced at a hearing that it would not outfit any of its three million troops with berets from foreign sources, particularly from Chinese manufacturers contracting with the British Company Kangol, Ltd. (9)

On 11 December 2001, GAO filed a follow-up report "to assess the current status of the black beret procurement as well as the status of DOD's efforts to ensure proper waivers of the Berry Amendment." (10) As of mid-October 2001, "2.1 million berets had been delivered to DLA, but less than 1 million [had] been distributed to Army, National Guard and Reserve personnel." (11) The reasons for the distribution delay were the cancellation of three contracts for failure to deliver the berets on time and the decision to not outfit any troops with Chinese-manufactured berets. (12) The report added, "DLA is in the process of contracting for additional berets so that it can distribute two berets to all personnel and have an adequate stock." (13) The Army has come closer to this goal, having recently announced the award of a contract for the manufacture of berets. (14) Even this decision, however, may cause certain members of Congress some angst. (15) Because of the beret controversy, the DOD is exercising tighter controls on Berry Amendment waivers. (16)

DOD IG Has Its Say on Buy American Act & Berry Amendment Violations

After last year's beret saga, the GAO's recent report was a welcome sign that the DOD was making progress on monitoring its procurement practices relating to foreign purchases. (17) Unfortunately, not all of the news during the past year was positive. On 20 March 2002, the DOD Inspector General (IG) issued a report evaluating the DOD's compliance with the Buy American Act (BAA) (18) and the Berry Amendment (19) during fiscal years 1998 and 1999. (20) The report discussed "698 of the procurements [of military clothing and related items], valued at $136.7 million, by 65 installations." (21) The report summarized violations as follows:

   [DOD] contracting officers continued to violate
   the Buy American Act on FY 1998 and
   1999 procurements of military clothing and
   related items. Of 698 contracts reviewed,
   416 (60 percent) did not include the appropriate
   contract clause to implement the Buy
   American Act or the Berry Amendment.
   Contracting Officers at 13 military installations
   procured military clothing and related
   items that were manufactured or produced
   abroad without determining whether items
   manufactured in the United States or a qualifying
   country were available, as required by
   the Buy American Act, or items manufactured
   in the United States were available, as
   required by the Berry Amendment. As a
   result, contracting officers awarded 28 contracts
   to contractors that supplied $593,004
   worth of items manufactured abroad that
   may have been available from contractors
   supplying items manufactured in the United
   States. The noncompliance with the Berry
   Amendment resulted in three potential violations
   of the Anti-Deficiency Act because the
   contracts were either funded directly with
   appropriated funds or working capital funds
   that were reimbursed with appropriated
   funds, which are not available for the procurement
   of foreign-made items. (22)

DOD Proposes Rule to Negate Unfair Treatment of Certain U.S. Products

On 30 July 2002, the DOD issued a proposed rule (23) that would amend the Defense Federal Acquisition Regulation Supplement (DFARS) to avoid "treating products substantially transformed in the United States less favorably than products substantially transformed in a designated, Caribbean Basin, or North American Free Trade Agreement country." (24) Existing DFARS policy places a fifty percent price evaluation preference for domestic end products over U.S.-made end products that do not qualify as domestic end products. (25) For acquisitions subject to the Trade Agreements Act (TAA), (26) however, an end product of a designated Caribbean Basin country (27) or North American Free Trade Act (NAFTA) country (28) is exempt from application of the fifty percent evaluation factor, regardless of the source of the product's components. The proposed change would eliminate the fifty percent price evaluation that the DOD gives to domestic end products subject to the TAA over U.S.-made end products with a foreign component content of fifty percent or greater. The goal is to provide a disincentive for companies that provide domestic end products containing foreign components to move their facilities to designated Caribbean Basin or NAFTA countries. Comments on the proposed rule were due on 30 September 2002. Major Modeszto.