On behalf of the American Apparel & Footwear Association, and the U.S. manufacturers who constitute the AAFA Government Contracts Committee (GCC), I am pleased to submit these comments in response to the September 29, 2021, Federal Register Notice of Proposed Rule (86 FR 53931) Modification of Small Purchase Threshold Exceptions (DFARS Case 2021–D010).
AAFA is the national trade association representing apparel, footwear, travel goods, and other sewn products companies, and their suppliers, which compete in the U.S. and global markets. We represent approximately 300 companies, including many who proudly make uniforms – clothes and shoes – for the U.S. military. They do so under the auspices of the Berry Amendment, which requires the U.S. armed forced to purchase domestically made textiles, apparel, footwear, and related gear.
Having worked closely with Congress to advocate for and secure the legislative change (Section 817 of the National Defense Authorization Act) for Fiscal Year (FY 2021) (Pub. L. 116-283) under which this rule is based, we support the Proposed Rule.
The legislation accomplished 4 things:
A. Delink the Berry Small Purchase Threshold from the Simplified Acquisition Threshold
B. Lower the Berry Small Purchase Threshold from $250,000 to $150,000.
C. Subject the Berry Small Purchase Threshold to a quinquennial review for inflation.
D. Clarify that contracts cannot be broken up so that they can be tendered under the Small Purchase Threshold and thereby avoid domestic sourcing and manufacturing opportunities.
We offer four comments below, which we believe will clarify and improve its operation and more closely align it with Congressional intent on the above 4 items. We’ve also included a letter that we led last year, and which was signed by 15 associations and unions, to show the breath of support for this change (which was then known as Section 814 of the House version of the NDAA).
First, the Proposed Rule is necessary to align DFARS subpart 225.70 with section 817 of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2021 (Pub. L. 116–283). Simply put, alignment of the DFARS with the statute cannot not be accomplished by any means other than such modification.
The proposed modification imposes no excessive burden on small business. As noted in the discussion accompanying the proposal, the higher threshold of $250,000 had been in effect only a few months, and the number of acquisitions that were potentially eligible for the higher threshold was limited due to that short window. Rather than a burden, the lower threshold will now assure more opportunities for U.S. small businesses to participate in Department of Defense procurement under the Berry Amendment. We strongly agree with this statement that is included in the proposed rule and note that this is the reason why Congress decided to pass Section 817:
DoD expects the reduction required by section 817 to result in an increase in the number of procurements of domestically sourced end products that are subject to 10 U.S.C. 2533a.
Second, the Rule can be improved by inserting the phrase "Small Purchase Threshold of" before "$150,000".
The caption of Section 817 denotes the change as "MODIFICATION TO SMALL PURCHASE THRESHOLD EXCEPTION…". Adding the phrase "Small Purchase Threshold" in the FAR itself is consistent with the statutory language.
In Paragraph b of Section 817 of the NDAA Congress subjects this Small Purchase Threshold to quinquennial reviews and adjustments based on changes in the Consumer Price Index. In some future time, when the amount is no longer $150,000 due to inflation adjustment, it will be useful to have a name for this threshold. Calling this threshold, the Small Purchase Threshold will insure that printed matter or website materials that reference it will not become obsolete and contain inaccurate information in five years.
We often find contracting officers and others referring to Congress's action in Section 817 as a reduction in the Simplified Acquisition Threshold. This is incorrect and likely to result in confusion. Congress did not change the SAT, rather, Section 817 decouples the threshold for the Berry Amendment from the SAT and creates a new, and separate, lower threshold. Denoting the Berry Amendment threshold as the "Small Purchase Threshold" avoids potential confusion with the SAT, which is still in effect for many acquisitions.
Third, the Rule should clarify that contracts cannot be split up to get under the new Small Purchase Threshold. One of the reasons why Congress dropped the level from $250,000 to $150,000 for Berry Amendment solicitations was to make it harder to break up contracts into smaller contracts that could then be tendered under the threshold. There has long been concern that the Berry Amendment may be circumvented by breaking contracts up to artificially stay below the threshold.
In general, such activity is impermissible. In fact, Section 817 also explicitly included a probation of this very practice for clarification:
A proposed procurement of an item in an amount greater than $150,000 may not be divided into several purchases or contracts for lesser amounts in order to qualify for this exception.
We strongly recommend that, at the appropriate place, the FAR be amended to reflect this clarifying requirement to ensure full compliance and understanding on the part of contracting officers.
Finally, we take this opportunity to say that this level is still higher than we would like, particularly in the case of procurements of home textiles by military bases, which are almost always under the threshold but cumulatively (when all individual base procurements are aggregated) exceed it. We believe additional work and study needs to be done to make sure these procurements are purchased from U.S. manufacturers made with U.S. materials.
As noted above, the contracting model for our industry is built on the Berry Amendment (10 U.S.C. §§2533a), a longstanding provision that requires the Defense Department to supply our troops with U.S.-made textiles, apparel and other sewn products, and footwear. This provision is premised on the fact that the United States cannot mount a credible national security posture if we do not have domestic access to the textiles and related materials that clothe and equip our warfighters. In recent years, those textiles have become increasingly sophisticated, enabling our troops a better ability to communicate, withstand attacks, mount offenses, shield themselves from the enemy, and heal wounds. Our ability to raise and deploy competitive forces around the world is directly related to the strength of the industry the Berry Amendment enables.
As you can imagine, the Berry Amendment supports the employment of tens of thousands of Americans in manufacturing facilities throughout the United States and remains popular across a wide cross-section of Congress. It also enjoys broad support throughout the military, as the Berry Amendment ensures a steady supply of comfortable, high-quality, and high-performance uniforms and products as well as a capacity that allows this industrial base to surge in times of urgency.
Keeping the Berry Amendment strong, and making sure loopholes like the small purchase threshold, are limited is vital for warfighter readiness and the healthy of this industrial base.
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