For more than 50 years, the Berry  Amendment consistently appeared in annual appropriations acts. The Berry Amendment includes a number of exceptions to the  requirement to buy certain domestically produced articles. Air Force Waiver Lacked Thorough Analysis

The Air Force did not conduct a thorough analysis of opportunities for  compliance with the Berry Amendment on a system-by-system basis in  approving a broad, permanent waiver covering 23 commercial derivative  aircraft systems. The Air Force initiated the waiver at the headquarters  level after it became aware of problems with implementing the Berry  Amendment. In supporting the waiver, the Air Force did not conduct  market research as called for in its policy, thoroughly review alternatives,  or include an explanation as to why it believed that alternatives did not  exist for each of the systems in the waiver. We identified several instances  that highlight the Air Force’s lack of thoroughness in its analysis to  support the waiver. In the  summer of 2003, the Air Force official who led the waiver effort told us he  visited an aircraft manufacturer, two of its subcontractors (including a  titanium producer), and an engine manufacturer to evaluate the difficulty  of complying with the Berry Amendment specialty metals requirement. Following these visits, the Air Force official concluded that other  contractors involved in the Air Force’s acquisition and support of  commercial derivative aircraft systems would also have difficulty  complying with the Berry Amendment. However, these legislative changes did not occur, and in April 2004 the  Secretary signed a permanent waiver that covered 23 commercial  derivative aircraft systems—which included 4 additional systems— exempting all of them from the Berry Amendment requirements. The  permanent waiver relied on the same findings as the temporary waiver. A senior Air Force  acquisition official told us that it was unnecessary to conduct market  research for each system because Air Force officials were knowledgeable  about the aerospace industry and did not need to contact the Department  of Commerce for assistance. To address DOD and Air Force policy requirements, the Air Force  included 13 memos from military user representatives in the waiver’s  supporting documentation, representing 22 of the 23 aircraft systems on  the waiver. Specifically, memos  representing 18 aircraft systems state that they had considered compliant  alternatives and rejected them as not feasible, without stating what those  alternatives were. Memos for 3 aircraft systems make no reference to  whether alternatives had been considered. The Air Force also did not question the contractors’ inability to be  compliant on military unique spare parts. The Air Force will also need to  purchase spare parts for the life of the aircraft system. Air Force Did Not Recognize Some Systems Were Already Covered under Other Regulatory Exceptions

By not conducting a system-by-system review, the Air Force was unaware  that some systems were already covered under other regulatory  exceptions to the Berry Amendment. The Air Force’s failure to follow established policies and its  decision to combine 23 aircraft systems in one waiver diminished the  persuasiveness of the waiver’s support. Specifically, we recommend that the  Secretary of Defense direct the Secretary of the Air Force to take the  following two actions:    Conduct an analysis of each commercial derivative aircraft system  included in the waiver to consider opportunities to achieve compliance  with the Berry Amendment requirements or to document why such  compliance is not possible. While the Air Force stated that the waiver is reasonable and necessary, our  report shows that the Air Force did not follow established policy when it  did not thoroughly analyze the opportunities for compliance on a system- by-system basis.
Why GAO Did This Study

In April 2004, the Secretary of the Air Force approved a permanent waiver of the requirements of the Berry Amendment for 23 commercial derivative aircraft systems, representing more than 1,200 aircraft in the Air Force's inventory. The Berry Amendment generally requires the Department of Defense (DOD) to purchase certain domestically grown or produced items, including specialty metals used in defense systems such as aircraft. Waivers to the Berry Amendment can be granted under certain circumstances. GAO was asked to evaluate the supporting evidence and analysis that the Air Force relied on to waive the Berry Amendment. GAO did not conduct a legal analysis of the waiver.

What GAO Found

The Air Force did not follow established policy when evaluating the need for a waiver of the Berry Amendment for 23 commercial derivative aircraft systems. Specifically, the Air Force did not thoroughly analyze the opportunities for compliance with the Berry Amendment on a system-by-system basis, thereby diminishing the persuasiveness of the waiver's support. The Air Force's review of its compliance with the Berry Amendment regarding these systems began in early 2003 when it became aware that some aircraft manufacturers could not meet the Berry Amendment requirements. Faced with this problem, a senior Air Force acquisition official visited an aircraft manufacturer, two of its subcontractors (including a titanium producer), and an engine manufacturer. The Air Force's conclusion, based on these visits and knowledge of the aerospace industry, was that other contractors involved in the Air Force's acquisition and support of commercial derivative aircraft systems would also have difficulty complying with the Berry Amendment. In September 2003, the Secretary of the Air Force signed a temporary waiver that was initiated at the headquarters level and covered 19 systems. That was followed in April 2004 with a permanent waiver of the Berry Amendment for these 19 systems plus another 4. Air Force policy calls for certain actions before issuing a waiver, including conducting market research and conducting an analysis of what alternatives are available and why they are not acceptable. In this instance, the Air Force did not conduct market research for each system, as it believed no company could produce compliant parts--a position not explained in the waiver's supporting documents. The Air Force documented an analysis of alternatives for only 1 aircraft system in the waiver. Memos representing 18 other aircraft systems state that alternatives to the waiver had been considered and rejected as not feasible but did not identify what the alternatives were, while memos for 3 additional aircraft systems make no reference to whether alternatives had been considered. The Air Force provided no documentation about its analysis of alternatives for the 1 remaining aircraft system in the waiver. After discussions with representatives for all 23 aircraft systems, GAO concluded that the Air Force did not document alternatives or thoroughly review possible options to achieve compliance with the Berry Amendment for many of the aircraft systems. GAO has identified several instances that highlight the Air Force's lack of thoroughness in its waiver process for the 23 aircraft systems. For example, the Air Force did not question contractors' inability to provide compliant spare parts when they were military unique and therefore not the same as the parts used in commercial aircraft. Also, the Air Force included some aircraft systems in the waiver that were already covered under other regulatory exceptions to the Berry Amendment.