Washington—Citing concerns over national security and the stability of the U.S. defense industry, Senator Evan Bayh (D-IN) today called on Secretary of Defense Robert Gates to rigorously enforce laws created to ensure that the U.S. maintains its technological edge in the production of high-performance metals used in advanced weapons systems.

In a letter sent today to Secretary Gates, Senator Bayh and Senator Hillary Clinton  (D-NY) expressed concerns that the U.S. Department of Defense (DOD) is not “properly complying with the laws passed by Congress to safeguard the nation’s defense industrial base. The DoD’s actions and policies may have the effect of subverting the law rather than enforcing it.”

Senators Bayh and Clinton cited concerns that the DOD considers imported metals to be domestic if they merely undergo late-stage finishing, skirting a congressional requirement to produce key weapons materials in the United States. They also chided the department for ignoring a congressional requirement to establish a Strategic Materials Protection Board as a means of identifying strategic threats to our defense supply chain.

Without adequate enforcement of the specialty metals provisions in current U.S. law, the United States risks reliance on foreign sources for metals essential to some of its most advanced weapons for defense of our country.  “If left unchecked, we fear that the DOD’s actions could threaten the continued existence of domestic specialty metals industry, leaving the DOD reliant on foreign sources,” the senators stated.

“The strategic and specialty metals industries employ tens of thousands of Americans, representing a bright spot in our eroding defense industrial base,” they wrote. “Not only do these workers manufacture vital strategic materials, they are worldwide leaders in innovation, research and development.  However, without the guarantees of the current law on specialty metals, the U.S. would lose these jobs and the technological expertise that comes with them.”
The text of the letter is as follows:

May 8, 2008

The Honorable Robert M. Gates

Secretary

U.S. Department of Defense

1000 Defense Pentagon

Washington, DC 20310

Dear Secretary Gates:

It is vital that the United States maintain its technological advantage in the production of titanium and other high-performance metals that are critical for making and maintaining our most advanced and sophisticated weapon systems.  We write today out of concern that the Department of Defense (DOD) is not properly complying with the laws passed by Congress to achieve this purpose and to safeguard the nation’s defense industrial base.  The DOD’s actions and policies may have the effect of subverting the law rather than enforcing it.  We urge you to undertake a complete review of this matter and promptly address the issues specified below.

The current law, formerly known as the Berry Amendment (10 U.S.C. 2533a) and since revised as the specialty metals provisions of 10 U.S.C. 2533b, ensures the availability of critical defense materials, such as titanium, high-performance magnets and armor plate to protect our troops from the threat of roadside bombs.  A guiding principle behind this law is to require the DOD to purchase specialty metals from American producers to preserve a domestic market for these critical materials and safeguard the continued existence of domestic industries that produce them.

The strategic and specialty metals industries employ tens of thousands of Americans, representing a bright spot in our eroding defense industrial base.  Not only do these workers manufacture vital strategic materials, they are worldwide leaders in innovation, research and development.  However, without the guarantees of the current law on specialty metals, the U.S. would lose these jobs and the technological expertise that comes with them.

In response to practical concerns raised by the DOD and some in the private sector, Congress has twice in the last two years reexamined and revised the specialty metals laws.  Each time, Congress reaffirmed our fundamental policies but updated them to address legitimate concerns stemming from the fact that we live in an era of increasing globalization and international competition in the defense market.  For example, in response to the department’s request for greater flexibility to procure certain items as needed to support our war fighters, Congress approved numerous exemptions—including a broad “national security” waiver that can be invoked when domestic sources are unable to deliver.

The Berry Amendment was modified to include specialty metals in the early 1970s and remains consistent with U.S. international obligations, as are its revised versions.  These laws have always applied only to a very small and clearly defined class of materials that are absolutely critical to the U.S.’s defense needs.  The definition of specialty metals has never been expanded. However, we believe that the current administration could be a better partner in the implementation of the specialty metals laws. If left unchecked, we fear that the DOD’s actions could threaten the continued existence of domestic specialty metals industry, leaving the DOD reliant on foreign sources. In the case of titanium, for example, a major U.S. supplier is a large, state-owned Russian company, which has no incentive whatsoever to put the needs of the U.S. military first.  

The revised statute that was adopted reflects a carefully crafted compromise that will ensure a long-term domestic supply of titanium, high-performance magnets and other strategic metals critical to national security—provided the law is implemented according to Congressional intent.  In order to ensure that the Department follows the intent of the law, we request that you address the following four specific concerns when drafting the interim and final rules implementing the new law:

First, any exemptions based on the principle of commercial-off-the-shelf (COTS) should be defined and implemented according to strict statutory definition.  An overly aggressive approach to this exception, permitting overly broad modifications suggested by DOD, would negate the rule and congressional intent.

Second, the department should investigate and explain how the long-standing definition of “production” of U.S. specialty metals was used in the drafting of interim and final rules for specialty metals.  We are concerned that DOD supports allowing imported foreign-melted metals to be considered “domestically produced” if they merely undergo some late-stage finishing in the U.S.  Final stage heat treatment of metals melted abroad does nothing to preserve the U.S. metals industry and is not a reasonable interpretation of the law.  

Third, congressional intent is to ensure procurement of domestically produced specialty metals such as titanium, certain alloys and high-performance magnets, not just the individual metallic elements they may contain.  Because the strategic and technological value to our country lies in ensuring our ability to melt and produce these materials domestically, the department must ensure that the focus of any “de minimis exception” be based on the melted material, rather than the individual elements combined to produce the item, as is the case with today’s specialty alloys.

Finally, we are disappointed by the department’s failure to comply with the requirement to establish a Strategic Materials Protection Board.  The board was intended as a means of identifying strategic threats to our defense supply chain.  To our knowledge, the department has largely ignored congressional intent.

Thank you for your consideration and continued service.  We look forward to your expeditious response.   Please do not hesitate to contact Jon Davey of Senator Bayh’s staff or Andrew Shapiro of Senator Clinton’s staff if you have any questions or concerns. 

Sincerely,

Evan Bayh

US Senator                                                                 

Hillary Rodham Clinton

US Senator

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