The United States Department of Defense is proposing to amend and soften the Defense Federal Acquisition Regulation Supplement (DFARS) sourcing restriction on ball and roller bearings (48 CFR 225).

Back in January, DFARS clarified the country of origin requirements for bearings used in subcomponents, basically stating that country of origin requirements also apply to bearings used in subcomponents as well as bearings purchased directly and separately.

article: DFARS clarifies origin requirements for subcomponent bearings
Currently, DFARS is very restrictive on bearings -- the main bearing components must be manufactured in the United States or Canada. The sole exception is commercial items (other than bearings) purchased as complete units (such as an automobile); in that case, there is no restriction on the sources of the bearings. Bearings are not unique in that respect; many, many other components have specific sourcing requirements attached.

That DFARS restriction was designed to piggyback on another less strenuous requirement which expired back in 2005. The proposed change to the DFARS restriction would eliminate the expired restriction and instead make DFARS more like the Buy American Act, which is more lenient.

The DoD said: "It is more and more difficult to acquire commercial bearings in which all the main bearing components are 100% manufactured in the U.S. or Canada. U.S. and Canadian manufacturers of commercial bearings are increasingly going offshore for components, such as retainers, that do not represent the core competency of the bearing manufacturer. It is often not possible to obtain domestic commercial bearings that do not contain some nondomestic components. The Government does not constitute a large enough share of the market to influence significantly this decision by manufacturers of commercial bearings."

Revising the restriction would allow more flexibility down the supply chain without creating any significant changes, and in fact should help increase competition for bearing sources.

The new proposal is that "domestic sourcing" will come to mean a ball or roller bearing must be manufactured in the U.S. or Canada, and that the cost of all its U.S. and Canadian components must add up to at least 50% of the bearing's total cost.

This looser restriction, from 100% to 50% of the cost, for bearings puts it more in line with the restrictions for other similar products, and more in line with the Buy American Act.

So far, in their initial analysis, the DoD said they don't expect the change to have any significant impact on any number of smaller government suppliers.

Implementing the looser rule, the DoD said, "Both large and small businesses may find greater numbers of sources from which to obtain ball and roller bearing components. Greater sourcing choices may enable small businesses to compete more successfully for DoD ball and roller bearing acquisitions."

As far as bearing components are concerned, however, the DoD did admit: "Manufacturers of domestic bearing components may face increased competition from manufacturers of nondomestic bearing components. However, many of the bearing components that are being outsourced are no longer readily available from domestic sources."

The DoD said it believes manufacturers of noncommercial products will be able to find bearings more easily, and will then also be able to avoid the constant hassle of filing for nonavailability determinations in order to supply a product that is only available with non-U.S. bearings.

The Defense Acquisition Regulations Council expects to wrap up the comment period for this change by early July. Comments should be addressed to dfars@osd.mil and include "DFARS Case 2006-D029" in the subject line.