It won’t make headlines, but the landscape for defense suppliers just changed. DoD acquisitions generally fall under the Berry Amendment or Buy American Act. These guidelines require 100% of raw components and manufacturing labor to be derived in the U.S. However, the rules are different now. A recent determination made by the Administrator for Federal Procurement Policy ruled that the Buy American Act “component test” is inapplicable to acquisitions of commercially available off-the-shelf items (COTS).
What does this mean???
The raw materials that go into certain finished products don’t have to be Made in the USA. This is a huge shift in policy. I’m sure a lot of analysis went into this. It’s a very fine balancing act supporting the current needs of our country while still adhering to the principle of self-defense. The reality today (which I am very well aware of) is that it is very difficult to make a 100% Made in USA product. There is simply not a strong enough textile base in this country anymore. Across the entire spectrum of textile components (fabric, velcro, fasteners, molded plastics, thread, etc), there is only a tiny fraction of suppliers there once was. My frustration grows day by day as more businesses exit textiles and smart people leave the industry for good.
The Dept of Defense is certainly recognizing this and clearly is frustrated by how difficult it is to buy items that otherwise are common in the marketplace. In these times of global threats, our military can’t go without the supplies they need. And they need them fast too.
Back to my world…When I am presented with an opportunity to make an item, often the biggest challenge is not making the item (we can sew as well or better than anywhere on this globe), but sourcing the components. Leave the price differences aside. The bigger effect of a ravaged textile base is fewer choices, higher minimums, and longer lead times. You can’t find what you need or get it when your customer has to have it. This doesn’t work well for government entities that like to take a long time to make decisions. When the decisions are finally made, they need it yesterday. No one will solve the bureaucracy issue. Instead, more frequently than not, I get to explain the bad news and look like the bad guy.
It’s important to remember that the ruling applies to off-the-shelf items only, not the significant amount of items that are made custom for our U.S. military. So we’re only talking about a smaller segment of the DoD budget. Selfishly and from a short-term perspective, this creates more opportunities as a finished product manufacturer. However, long term it’s going to make things even more difficult for our manufacturing supply base, and for me, making the custom items. That’s not good news for our country.
Obviously, there’s not a perfect decision. Soldiers can’t go without. While long term, we need to ensure we have the manufacturing base to defend ourselves against the growing threats of this world.
I’d love to hear what you think.