The Department of Defense issued a DFARS class deviation in March 2026 implementing supply chain provisions from a January 2026 executive order on critical material security. The deviation extends domestic sourcing restrictions — previously limited to specialty metals under DFARS 225.7003 — to rare earth elements, lithium battery components, and advanced semiconductor substrates used in defense systems. Coverage from Federal Register and Defense Daily.
What's now covered
- Rare earth elements: Neodymium, dysprosium, and terbium used in motors, actuators, and guidance systems — must be melted and processed in the U.S. or a qualifying country
- Lithium battery components: Cathode active material for batteries delivered on DoD contracts above $5M must use non-Chinese-origin material
- Advanced semiconductors: Logic chips at 7nm or below procured for defense systems must originate from U.S., Taiwan, South Korea, Japan, or EU fabs
Waiver process
DoD recognizes the 180-day timeline is aggressive. The class deviation includes a structured waiver process:
- Domestic non-availability waivers require market research documentation showing no U.S. source exists at reasonable cost and quality
- National security waivers (for sole-source or urgent programs) can be approved at the program executive officer level
- Waivers are contract-specific — a waiver on one contract does not carry to others
Action items
- Audit your bill of materials for affected DoD contracts — identify any rare earth, battery, or chip components sourced from restricted countries
- Engage your subcontractors and suppliers now — the 180-day clock is shorter than most supply chain redesign cycles
- Submit waiver requests early — DoD's DPAP office has indicated staffing is limited and review timelines may slip