Tactical Gear Sewing

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.

The federal Hubzone program was established for federal contractors located in econmically challenged areas. It is well intentioned. However, for many years, the system has been abused. The SBA simply did not have a process in place to audit whether or not the firms who applied for certification actually operated at the addresses they claimed to. Fortunately, someone must have taken notice at the General Accounting office (GAO). This past March, the GAO published a report exhibiting several cases of fraud and providing a handful of excellent recommendations. For those of us who follow the rules in federal contracting, this is a big breath of fresh air.

First, they are going to implement a series of spot checks. In fact, I personally received an unannounced visit from a rep in the local Chicago SBA office last month.

But there’s another important recommendation that also caught my attention. They are suggesting that the SBA audit awards to Hubzone firms to ensure that 50% of the personnel cost expended on contracts come from that company’s own payroll. This hopefully will eliminate any occurrrence of a company receiving a Hubzone set-aside award only to outsource the entire thing to another company. Unfortunately, this is a common occurrence as well.

For too long, the government procurement offices have had a policy of just collecting notarized statements with flase claims of compliance. This is a great step forward towards achieving what the original implementers hoped for. I got my fingers crossed that system integrity and transperency is back in place.