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March 21, 2006, The U.S. Department of Defense (DoD) finalized the regulation that creates important new incentives for defense contractors to purchase U.S. made machine tools.
This regulation implements a provision of law inserted in to the FY2005 Defense Authorization by House Armed Services Committee Chairman Duncan Hunter (R-CA), who sought to provide incentives (during contract competitions) for defense contractors to purchase U.S. made machine tools for their production processes.
At the time of the law’s enactment, DoD was charged with establishing implementation guidelines in order to integrate the new policy into its acquisition regulations. AMT members may recall that DoD published its preliminary regulation in May of last year, and called for stakeholder comment on its proposed regulation at that time. AMT responded by submitting formal comments urging several strengthening changes, and also encouraged members to submit similar comments as part of a grassroots campaign.
With Chairman Hunter’s prodding, DoD incorporated some of AMT’s suggested changes. Now final, this regulation offers enhanced incentives for prospective customers to purchase U.S. made machine tools by elevating the importance of such purchases within DoD contract evaluations.
The overall market that may be impacted by this new regulation is significant. In 2003, for example, machine tool consumption by companies participating in defense contracting accounted for nearly $500 million in sales, or roughly 14% of that year’s total U.S. machine tool consumption.
Feel free to use this new regulation as a sales tool. There is no reason that it cannot be used as such, since purchasing a U.S. made machine tool could now potentially offer an edge to a company competing for a defense contract.
Questions on this new policy can be directed to: Jon Kurrle, Government Relations Director, at jkurrle@AMTonline.org or (703) 827-5227; or Paul Freedenberg, Vice President – Government Relations, at pfreedenberg@AMTonline.org or (703) 827-5282.
DoD Purchasing Preference Regulation
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