Sec. 1803 — Critical materials: tiered sourcing restrictions and requirements

Statutory text

(a) In general. Section 4872 of title 10, United States Code, is amended to read as follows:4872.Critical materials: tiered restrictions on sourcing from covered nations and other foreign nations; prohibition on sales

(a) Prohibition on sourcing covered materials from covered nationsExcept as provided in subsections (c), (d), (e), and (g), the Secretary of Defense may not procure covered material sourced from, by, or through a covered nation, or a covered item that contains covered material sourced from, by, or through a covered nation.

(b) Applicability. This section applies to prime contracts and subcontracts at any tier.

(c) Exceptions for certain items and material. Subsection (a) shall not apply to the procurement of a covered item that is—(1)a commercially available off-the-shelf item, other than a covered COTS item or product;(2)an electronic device, unless the Secretary of Defense, upon the recommendation of the Strategic and Critical Materials Board of Directors pursuant to section 10 of the Strategic and Critical Materials Stock Piling Act (50 U.S.C. 98h—1), determines that the domestic availability of a particular electronic device is critical to national security;(3)a neodymium-iron-boron magnet or samarium-cobalt magnet manufactured from recycled material if the milling of the recycled material and sintering of the final magnet takes place in the United States; or(4)tantalum, tungsten, niobium, or molybdenum produced from recycled material, if the contractor demonstrates to the Secretary that—(A)the recycled material was produced outside of any covered nation; and(B)the melting of the recycled material and any further processing and manufacturing of the recycled material takes place in the United States or in the country of a qualifying foreign government, as defined in section 4863

(m) (11) of this title.

(d) Tier 1 materials — prohibition on sourcing from covered nations; requirement that a minimum percentage be sourced from United States

(1) The Secretary may not procure Tier 1 material sourced from, by, or through a covered nation, or a covered item that contains Tier 1 material sourced from, by, or through a covered nation, except as provided in this subsection or in subsection (c) or (g).

(2) The Secretary may procure Tier 1 material sourced outside covered nations, or covered items that contain Tier 1 material sourced outside covered nations, but only if the percentage of cost of such material, as calculated under paragraph (3), that is produced by domestically owned entities is at least 50 percent.

(3) The percentage referred to in paragraph (2)—(A)shall be calculated as a fraction (and expressed as a percentage), in which—(i)the numerator is the total cost of all Tier 1 material in the procurement (including Tier 1 material contained in any covered item) that is produced by any domestically owned entity; and(ii)the denominator is the total cost of all Tier 1 material in the procurement (including Tier 1 material contained in any covered item); and(B)shall be calculated without including in either the numerator or denominator any Tier 2 material contained in a covered item excluded by subsection (c).

(e) Tier 2 materials — prohibition on sourcing from covered nations; exceptions for certain periods

(1) The Secretary may not procure Tier 2 material sourced from, by, or through a covered nation, or a covered item that contains Tier 2 material sourced from, by, or through a covered nation, except as provided in this subsection or in subsection (c) or (g).

(2) For each period specified in paragraph (3), the Secretary may procure Tier 2 material sourced from, by, or through a covered nation, or a covered item that contains Tier 2 material sourced from, by, or through a covered nation, but only if the percentage of cost of such material, as calculated under paragraph (4), that is produced outside covered nations is at least the percentage specified in paragraph (3).

(3) The periods referred to in paragraph (2), and the percentages associated with those periods, are as follows:(A)January 1, 2028, to December 31, 2028, 25 percent.(B)January 1, 2029, to December 31, 2029, 50 percent.(C)January 1, 2030, to December 31, 2030, 75 percent.(D)On and after January 1, 2031, 100 percent.

(4) The percentage of cost referred to in paragraph (2)—(A)shall be calculated separately for each category of Tier 2 material, with the calculation for a category including all Tier 2 material within that category and excluding all Tier 2 material not within that category; (B)shall be calculated as a fraction (and expressed as a percentage), in which—(i)the numerator is the total cost of all Tier 2 material in that category (including Tier 2 material contained in a covered item) that is sourced outside covered nations; and(ii)the denominator is the total cost of all Tier 2 material in that category (including Tier 2 material contained in a covered item); and(C)shall be calculated without including in either the numerator or denominator any Tier 2 material contained in a covered item excluded by subsection (c).

(5) (A)In addition to the certifications required by subsection (h), for any procurement of Tier 2 material (or covered item that contains Tier 2 material), for each category of Tier 2 material in the procurement and for each period specified in subparagraph (B) during which the prime contractor delivers such material to the Department under the contract, the Secretary shall require the prime contractor to—(i)certify that it has entered into a contractual agreement, or agreements, to obtain a supply of that category of Tier 2 material (or Tier 2 material contained in a covered item, as applicable) from sources outside covered nations in amounts sufficient to ensure that the prime contractor will be able to satisfy the percentages specified in paragraph (3); and(ii)provide documentation in accordance with subsection

(h) (4) that not less than the applicable percentage specified in paragraph (3) of that category of Tier 2 materia