Defense Federal Acquisition Regulation Supplement: Small Purchase Exception for the Acquisition of U.S. Flags (DFARS Case 2024-D013)

DEPARTMENT OF DEFENSE Defense Acquisition Regulations System 48 CFR Parts 212, 225, and 252 [Docket DARS-2026-0265] RIN 0750-AM10 Defense Federal Acquisition Regulation Supplement: Small Purchase Exception for the Acquisition of U.S. Flags (DFARS Case 2024-D013) AGENCY: Defense Acquisition Regulations System, Department of Defense (DoD). ACTION: Proposed rule. SUMMARY: DoD is proposing to amend the Defense Federal Acquisition Regulation Supplement (DFARS) to implement sections of the National Defense Authorization Acts for Fiscal Years 2024, 2025, and 2026. These sections provide a requirement for full domestic production of flags of the United States acquired by DoD, amend an exception to the requirement to buy certain articles from American sources, and expand the domestic sourcing requirement for seafood acquired for commissary resale. DATES: Comments on the proposed rule should be submitted in writing to the address shown below on or before August 24, 2026, to be considered in the formation of a final rule. ADDRESSES: Submit comments identified by DFARS Case 2024-D013, using either of the following methods: ○ Federal eRulemaking Portal: https://www.regulations.gov. Search for DFARS Case 2024-D013. Select “Comment” and follow the instructions to submit a comment. Please include “DFARS Case 2024-D013” on any attached documents. ○ Email: osd.dfars@mail.mil. Include DFARS Case 2024-D013 in the subject line of the message. Comments received generally will be posted without change to https://www.regulations.gov, including any personal information provided. To confirm receipt of your comment(s), please check https://www.regulations.gov, approximately two to three days after submission to verify posting. FOR FURTHER INFORMATION CONTACT: David Johnson, telephone 202-913-5764. SUPPLEMENTARY INFORMATION: I. Background DoD is proposing to revise the DFARS to implement section 832 of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2024 (Pub. L. 118-31), section 843 of the NDAA for FY 2025 (Pub. L. 118-159), and section 831 of the NDAA for FY 2026 (Pub. L. 119-60). Section 832 amends 10 U.S.C. 4862, known as the Berry Amendment, to add flags of the United States to the list of covered components or items at 10 U.S.C. 4862(b). The Berry Amendment mandates that DoD procure certain products—including food, clothing, fabrics, fibers, and hand tools—exclusively from domestic sources. Accordingly, section 832 requires that DoD must generally procure U.S. flags that are produced in the United States. Section 832 also revises the exception for small purchases provided in 10 U.S.C. 4862(h). Section 843 of the NDAA for FY 2025 clarifies that the exception at 10 U.S.C. 4862(d)(2) pertains to procurements by, or for, vessels in foreign waters. Section 831 narrows the commissary-resale exception at 10 U.S.C. 4862(g); as a result, this exception does not apply to seafood originating from certain countries. II. Discussion and Analysis With the addition of flags of the United States to the list of components or items covered by the Berry Amendment restriction, section 832 of the NDAA for FY 2024 requires that DoD contracting officers comply with 10 U.S.C. 4862 when procuring flags of the United States, unless an exception or a waiver applies. This proposed rule accordingly adds the U.S. flag to the items listed at DFARS 225.7002-1 as well as in the clause at 252.225-7012, paragraph (b). Section 832 also requires this restriction to flow down to subcontractors. Further, in lieu of the threshold of $150,000 at DFARS 225.7002-2(a), the restriction for the purchase of U.S. flags will apply to acquisitions that exceed $10,000. In accordance with 10 U.S.C. 4862(h)(2)(B), this proposed rule also allows for the possibility of a waiver. In particular, the secretary of the military department responsible for acquisition or, for the Defense Logistics Agency, the Component Acquisition Executive, may waive the restriction for the purchase of U.S. flags in an amount greater than $10,000. Given the implementation in this proposed rule of explicit Berry Amendment coverage for U.S. flags, this proposed rule removes from the DFARS a similar restriction based on DoD appropriations acts, e.g., section 8123 of the Department of Defense Appropriations Act, 2014 (Pub. L. 113-76, division C, title VIII). This restriction, as implemented in the DFARS, required contracting officers to procure U.S. flags “consistent with the requirements at 10 U.S.C. 4862.” Section 832 renders this similar restriction unnecessary in the DFARS. This proposed rule accordingly removes the reference to the restriction based on the appropriations act from DFARS 225.7002-1. The proposed rule also removes the clause at 252.225-7006, Acquisition of the American Flag, in favor of adding the U.S. flag to the list of items covered under the clause at 252.225-7012, Preference for Certain Domestic Commodities. The proposed rule changes the clause title to “Preference for Certain Domestic Components and Items.” This title better reflects both the nature of covered items presently listed at 10 U.S.C. 4862(b) and existing clause language, which does not actually include the word “commodity” except in the title. This proposed rule also removes the clause at 252.225-7015, Restriction on Acquisition of Hand or Measuring Tools, in favor of adding hand or measuring tools to the list of items covered under the clause at 252.225-7012. Therefore, this proposed rule consolidates clauses related to the Berry Amendment into a single clause for simplicity and convenience. This proposed rule amends the exception at DFARS 225.7002-2(h) to read “Acquisition by, or for, vessels in foreign waters.” This proposed change, which implements section 843 of the NDAA for FY 2025, clarifies the scope of the exception. Lastly, this proposed rule amends the exception at DFARS 225.7002-2(i), for acquisition of items specifically for commissary resale, to state that this exception does not apply to seafood originating in a covered country, i.e., the People's Republic of China, the Russian Federation, the Islamic Republic of Iran, or the Democratic People's Republic of Korea. This proposed change, which implements section 831 of the NDAA for FY 2026, is subject to waiver based on undue burden. III. Applicability to Contracts at or Below the Simplified Acquisition Threshold (SAT), for Commercial Products (Including Commercially Available Off-the-Shelf (COTS) Items), and for Commercial Services This proposed rule includes changes to the clause at 252.225-7012, Preference for Certain Domestic Commodities, and removal of the clauses at DFARS 252.225-7006, Acquisition of the American Flag, and 252.225-7015, Restriction on Acquisition of Hand or Measuring Tools. The clause at DFARS 252.225-7012 is currently prescribed at DFARS 225.7002-3(a) (225.7002-4 in the proposed rule) for use in all solicitations and contracts, including those using Federal Acquisition Regulation (FAR) part 12 procedures for commercial products and commercial services. DoD intends to apply the proposed rule to contracts at or below the SAT. The proposed rule will also apply to commercial products in accordance with 10 U.S.C. 4862. A. Applicability to Contracts at or Below the Simplified Acquisition Threshold The statute at 41 U.S.C. 1905 governs the applicability of laws to contracts or subcontracts in amounts not greater than the simplified acquisition threshold. It is intended to limit the applicability of laws to such contracts or subcontracts. The statute at 41 U.S.C. 1905 provides that if a provision of law contains criminal or civil penalties, or if the Federal Acquisition Regulatory Council makes a written determination that it is not in the best interest of the Federal Government to exempt contracts or subcontracts at or below the SAT, the law will apply to them. The Principal Director, Defense Pricing, Contracting, and Acquisition Policy (DPCAP), is the appropriate authority to make comparable determinations for regulations to be published in the DFARS, which is part of the Federal Acquisition Regulation system of regulations. DoD intends to make that determination. Therefore, this proposed rule will apply at or below the simplified acquisition threshold. B. Applicability to Contracts for the Acquisition of Commercial Products Including COTS Items and for the Acquisition of Commercial Services The statute at 10 U.S.C. 3452 exempts contracts and subcontracts for the acquisition of commercial products including COTS items, and commercial services from provisions of law enacted after October 13, 1994, unless the Under Secretary of Defense (Acquisition and Sustainment) (USD(A&S)) makes a written determination that it would not be in the best interest of DoD to exempt contracts for the procurement of commercial products and commercial services from the applicability of the provision or contract requirement, except for a provision of law that— • Provides for criminal or civil penalties; • Requires that certain articles be bought from American sources pursuant to 10 U.S.C. 4862, or that strategic materials critical to national security be bought from American sources pursuant to 10 U.S.C. 4863; or • Specifically refers to 10 U.S.C. 3452 and states that it shall apply to contracts and subcontracts for the acquisition of commercial products (including COTS items) and commercial services. The statute implemented in this proposed rule does not impose criminal or civil penalties, does not require purchase pursuant to 10 U.S.C. 4863, and does not refer to 10 U.S.C. 3452. It does require purchase pursuant to 10 U.S.C. 4862. Therefore, this proposed rule will apply to the acquisition of commercial products including COTS items. C. Determination Section 832 speaks to applicability to contracts and subcontracts in amounts not greater than the SAT. In particular, in lieu of the threshold of $150,000 at 10 U.S.C. 4862(h)(1), implemented at DFARS 225.7002-2(a), section 832 specifically applies the restriction for the purchase of U.S. flags to acquisitions that exceed $10,000. An exception for acquisitions at or below the SAT would therefore exclude contracts intended to be covered by the law, thereby undermining the overarching public policy purpose of the law. IV. Expected Impact of the Rule This proposed rule implements the addition of the flag of the United States to the list of items subject to the Berry Amendment restriction. As noted in section II of this preamble, this implementation in the DFARS replaces an appropriations-act restriction similar to the Berry Amendment restriction, although this restriction applies at a different dollar value. In accordance with section 832 of the NDAA for FY 2024 and 10 U.S.C. 4862(h)(2)(A)(i), this Berry Amendment restriction applies to contract actions for the U.S. flag above $10,000, whereas the appropriations-act restriction applies above $150,000. This extension to actions below $150,000 therefore reflects a change in impact from the existing restriction in the DFARS. This proposed rule simplifies DFARS clause selection and application by consolidating all Berry Amendment requirements into the clause at 252.225-7012, Preference for Certain Domestic Commodities. The clause at 252.225-7012 is prescribed for use in all solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial products and commercial services. This proposed rule clarifies the intent of the existing exception at DFARS 225.7002-2(h), relating to procurements by or for vessels in foreign waters. This change is unlikely to impact the public. Additionally, this proposed rule modifies the existing exception at DFARS 225.7002-2(i), relating to acquisitions for commissary resale. This change is unlikely to impact the public. V. Executive Orders 12866 and 13563 Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This is not a significant regulatory action and, therefore, was not subject to review under section 6(b) of E.O. 12866, Regulatory Planning and Review, as amended. VI. Executive Order 14192 This proposed rule is not expected to be subject to E.O. 14192, because the proposed rule is not a significant regulatory action under E.O. 12866. VII. Regulatory Flexibility Act DoD does not expect this proposed rule, when finalized, to have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq., because this proposed rule merely extends an existing prohibition on certain purchases exceeding $150,000 to those exceeding $10,000. However, an initial regulatory flexibility analysis has been performed and is summarized as follows: This proposed rule is required to implement section 832 of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2024 (Pub. L. 118-31), section 843 of the NDAA for FY 2025 (Pub. L. 118-159), and section 831 of the NDAA for FY 2026 (Pub. L. 119-60). Section 832 of the NDAA for FY 2024 amends 10 U.S.C. 4862 by adding U.S. flags to the list of covered items and revising the exception for small purchases to include the acquisition of U.S. flags. The restriction requires that contracting officers comply with 10 U.S.C. 4862 (commonly known as the Berry Amendment) when contracting for U.S. flags for DoD. This implementation in the DFARS replaces a similar restriction based on section 8123 of the Department of Defense Appropriations Act, 2014 (Pub. L. 113-76, division C, title VIII). However, the new restriction applies at a different dollar value. In lieu of the current threshold of $150,000 at DFARS 225.7002-2(a), the Berry Amendment restriction applies to acquisitions that exceed $10,000, requiring full domestic production of U.S. flags acquired by DoD, unless an exception or a waiver applies. Section 843 of the NDAA for FY 2025 clarifies that the exception at 10 U.S.C. 4862 paragraph (d)(2) pertains to procurements by, or for, vessels in foreign waters. Section 831 narrows the commissary-resale exception at 10 U.S.C. 4862(g); this exception does not apply to seafood originating from certain countries. The objective of the proposed rule is to implement the requirements of sections 832, 843, and 831. The legal basis for the proposed rule is section 832 of the NDAA for FY 2024, section 843 of the NDAA for FY 2025, and section 831 of the NDAA for FY 2026. To assess the potential impact on small entities, DoD reviewed data from the Federal Procurement Data System (FPDS) for all contracts to include modifications in fiscal years 2022, 2023, and 2024, including those for commercial products and commercial services, reflecting the relevant Product and Service Code and that exceed $10,000. The FPDS data reflect on average approximately 106 awards per year to an average of approximately 26 unique entities per year, of which DoD awarded approximately 95 contracts to 23 unique small entities per year. There are no reporting or recordkeeping requirements associated with this proposed rule. The proposed rule does not duplicate, overlap, or conflict with any other Federal rules. There are no significant alternatives that meet the requirements of the statute. DoD invites comments from small business concerns and other interested parties on the expected impact of this proposed rule on small entities. DoD will also consider comments from small entities concerning the existing regulations in subparts affected by this proposed rule in accordance with 5 U.S.C. 610. Interested parties must submit such comments separately and should cite 5 U.S.C. 610 (DFARS Case 2024-D013), in correspondence. VIII. Paperwork Reduction Act This proposed rule does not contain any information collection requirements that require the approval of the Office of Management and Budget under the Paperwork Reduction Act (44 U.S.C. chapter 35). List of Subjects in 48 CFR Parts 212, 225, and 252 Government procurement. Kimberly R. Ziegler, Editor/Publisher, Defense Acquisition Regulations System. Therefore, the Defense Acquisition Regulations System proposes to amend 48 CFR parts 212, 225, and 252 as follows: 1. The authority citation for 48 CFR parts 212, 225, and 252 continues to read as follows: Authority: 41 U.S.C. 1303 and 48 CFR chapter 1. PART 212—ACQUISITION OF COMMERCIAL PRODUCTS AND COMMERCIAL SERVICES 2. Amend section 212.301 by— a. Removing paragraph (f)(x)(C); b. Redesignating paragraphs (f)(x)(D) through (H) as (f)(x)(C) through (G), respectively; c. Revising newly redesignated paragraph (f)(x)(G); d. Removing paragraph (f)(x)(I); and e. Redesignating paragraphs (f)(x)(J) through (PP) as (f)(x)(H) through (NN), respectively. The revision reads as follows: 212.301 Solicitation provisions and contract clauses for the acquisition of commercial products and commercial services. (f) * * * (x) * * * (G) Use the clause at 252.225-7012, Preference for Certain Domestic Components and Items, as prescribed in 225.7002-4, to comply with 10 U.S.C. 4862. PART 225—FOREIGN ACQUISITION 3. Amend section 225.7001 by revising the definition of “Covered country” to read as follows: 225.7001 Definitions. Covered country means— (1) The Democratic People's Republic of North Korea; (2) The People's Republic of China; (3) The Russian Federation; and (4) The Islamic Republic of Iran (10 U.S.C. 4862, 4872, and 4875). 4. Revise section 225.7002-1 to read as follows: 225.7002-1 Restrictions. (a) The restrictions in paragraph (b) of this section implement 10 U.S.C. 4862 (the “Berry Amendment”). (b) Except as provided in 225.7002-2 or 225.7002-3, do not acquire— (1) Any of the following items, either as end products or components, unless the items have been grown, reprocessed, reused, or produced in the United States: (i) Food. (ii) Clothing and the materials and components thereof, other than sensors, electronics, or other items added to, and not normally associated with, clothing and the materials and components thereof. Clothing includes items such as outerwear, headwear, underwear, nightwear, footwear, hosiery, handwear, belts, badges, and insignia. For additional guidance and examples, see PGI 225.7002-1(a)(1)(ii). (iii)(A) Tents and the structural components of tents; (B) Tarpaulins; or (C) Covers. (iv) Cotton and other natural fiber products. (v) Woven silk or woven silk blends. (vi) Spun silk yarn for cartridge cloth. (vii) Synthetic fabric or coated synthetic fabric, including all textile fibers and yarns that are for use in such fabrics. (viii) Canvas products. (ix) Wool (whether in the form of fiber or yarn or contained in fabrics, materials, or manufactured articles). (x) Any item of individual equipment (Product or Service Code (PSC) 8465) manufactured from or containing any of the fibers, yarns, fabrics, or materials listed in this paragraph (b)(1). (2) Hand or measuring tools, unless the tools were produced in the United States. For additional guidance, see PGI 225.7002-1(b)(2). (3) The flag of the United States (PSC 8345), unless the flag was produced in the United States. For additional guidance, see PGI 225.7002-1(b)(3). 5. Amend section 225.7002-2 by— a. Revising paragraphs (a), (h), (i), (m)(1)(i), and (m)(1)(iv); and b. In paragraph (n), removing “(10)”. The revisions read as follows: 225.7002-2 Exceptions. (a) Acquisitions not exceeding— (1) $150,000, except for athletic footwear purchased by DoD for use by members of the Army, Navy, Air Force, or Marine Corps upon their initial entry into the Armed Forces (37 U.S.C. 418(b)(4)); and (2) $10,000 for acquisitions of the U.S. flag (10 U.S.C. 4862(h)). (h) Acquisitions by, or for, vessels in foreign waters. (i)(1) Acquisitions of items specifically for commissary resale. (2) The exception in paragraph (i)(1) of this section does not apply to seafood originating in a covered country. (m) * * * (1) * * * (i) Draperies, floor coverings, furnishings, and bedding (Product or Service Group (PSG) 72, Household and Commercial Furnishings and Appliances); (iv) Parachutes (PSG 1670); or 6. Revise section 225.7002-3 to read as follows: 225.7002-3 Waivers. (a) U.S. flags. The secretary of the military department responsible for acquisition or, for the Defense Logistics Agency, the Component Acquisition Executive (CAE), may waive the restriction in 225.7002-1(b)(3) for the purchase of U.S. flags in an amount greater than $10,000, if the secretary or CAE determines that such waiver is appropriate. (b) Seafood acquired for commissary resale. The Secretary of Defense may waive the restriction at 225.7002-2(i)(2) if the restriction would cause undue burden to a commissary located on a military installation outside the United States. 7. Add section 225.7002-4 to subpart 225.70 to read as follows: 225.7002-4 Contract clause. Unless an exception at 225.7002-2 or a waiver at 225.7002-3 applies, use the clause at 252.225-7012, Preference for Certain Domestic Components and Items, in solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial products and commercial services. 225.7009-4 [Amended] 8. Amend section 225.7009-4 in the introductory text by removing “Component Acquisition Executive” and adding “CAE” in its place. PART 252—SOLICITATION PROVISIONS AND CONTRACT CLAUSES 252.225-7006 [Removed and Reserved] 9. Remove and reserve section 252.225-7006. 10. Revise and republish section 252.225-7012 to read as follows: 252.225-7012 Preference for Certain Domestic Components and Items. As prescribed in 225.7002-4, use the following clause: Preference for Certain Domestic Components and Items (Date) (a) Definitions. As used in this clause— Component means any item supplied to the Government as part of an end product or of another component. End product means supplies delivered under a line item of this contract. Qualifying country means a country with a reciprocal defense procurement memorandum of understanding or international agreement with the United States in which both countries agree to remove barriers to purchases of supplies produced in the other country or services performed by sources of the other country, and the memorandum or agreement complies, where applicable, with the requirements of section 36 of the Arms Export Control Act (22 U.S.C. 2776) and with 10 U.S.C. 2457. Accordingly, the following are qualifying countries: Australia Austria Belgium Canada Czech Republic Denmark Egypt Estonia Finland France Germany Greece Israel Italy Japan Latvia Lithuania Luxembourg Netherlands Norway Poland Portugal Slovenia Spain Sweden Switzerland Turkey United Kingdom of Great Britain and Northern Ireland. Structural component of a tent— (1) Means a component that contributes to the form and stability of the tent ( e.g., poles, frames, flooring, guy ropes, pegs); and (2) Does not include equipment such as heating, cooling, or lighting. United States means the 50 States, the District of Columbia, and outlying areas. U.S.-flag vessel means a vessel of the United States or belonging to the United States, including any vessel registered or having national status under the laws of the United States. (b) Components and items. The Contractor must deliver under this contract only such of the following items, either as end products or components, that have been grown, reprocessed, reused, or produced in the United States: (1) Food. (2) Clothing and the materials and components thereof, other than sensors, electronics, or other items added to, and not normally associated with, clothing and the materials and components thereof. Clothing includes items such as outerwear, headwear, underwear, nightwear, footwear, hosiery, handwear, belts, badges, and insignia. (3)(i) Tents and structural components of tents; (ii) Tarpaulins; or (iii) Covers. (4) Cotton and other natural fiber products. (5) Woven silk or woven silk blends. (6) Spun silk yarn for cartridge cloth. (7) Synthetic fabric, and coated synthetic fabric, including all textile fibers and yarns that are for use in such fabrics. (8) Canvas products. (9) Wool (whether in the form of fiber or yarn or contained in fabrics, materials, or manufactured articles). (10) Any item of individual equipment (Federal Supply Class 8465) manufactured from or containing fibers, yarns, fabrics, or materials listed in this paragraph (b). (11) Hand or measuring tools. (c) Flag of the United States. The Contractor must deliver under this contract only U.S. flags (Product or Service Code 8345) that are produced in the United States. (d) This clause does not apply— (1) To items listed in section 25.104(a) of the Federal Acquisition Regulation, or other items for which the Government has determined that a satisfactory quality and sufficient quantity cannot be acquired as and when needed at U.S. market prices; (2) To incidental amounts of cotton, other natural fibers, or wool incorporated in an end product, for which the estimated value of the cotton, other natural fibers, or wool— (i) Is not more than 10 percent of the total price of the end product; and (ii) Does not exceed the threshold at Defense Federal Acquisition Regulation Supplement 225.7002-2(a); (3) To waste and byproducts of cotton or wool fiber for use in the production of propellants and explosives; (4) To foods, other than fish, shellfish, or seafood, that have been manufactured or processed in the United States, regardless of where the foods (and any component if applicable) were grown or produced. Fish, shellfish, or seafood manufactured or processed in the United States and fish, shellfish, or seafood contained in foods manufactured or processed in the United States must be provided in accordance with paragraph (d) of this clause; (5) To chemical warfare protective clothing produced in a qualifying country; or (6) To fibers and yarns that are for use in synthetic fabric or coated synthetic fabric (but does apply to the synthetic or coated synthetic fabric itself), if— (i) The fabric is to be used as a component of an end product that is not a textile product. Examples of textile products, made in whole or in part of fabric, include— (A) Draperies, floor coverings, furnishings, and bedding (Federal Supply Group 72, Household and Commercial Furnishings and Appliances); (B) Items made in whole or in part of fabric in Federal Supply Group 83, Textile/leather/furs/apparel/findings/tents/flags, or Federal Supply Group 84, Clothing, Individual Equipment and Insignia; (C) Upholstered seats (whether for household, office, or other use); and (D) Parachutes (Federal Supply Class 1670); or (ii) The fibers and yarns are para-aramid fibers and continuous filament para-aramid yarns manufactured in a qualifying country. (e) Fish, shellfish, and seafood. (1) Fish, shellfish, and seafood delivered under this contract, or contained in foods delivered under this contract— (i) Must be taken from the sea by U.S.-flag vessels; or (ii) If not taken from the sea, must be obtained from fishing within the United States; and (2) Any processing or manufacturing of the fish, shellfish, or seafood must be performed on a U.S.-flag vessel or in the United States. (f) Subcontracts. The Contractor must insert the substance of paragraph (c) of this clause in subcontracts requiring delivery of one or more U.S. flags. (End of clause) 252.225-7015 [Removed and Reserved] 11. Remove and reserve section 252.225-7015. [FR Doc. 2026-12825 Filed 6-24-26; 8:45 am] BILLING CODE 6001-FR-P