DFARS 252.225-7052: Phased Compliance, Exceptions, and Flowdown

Compliance with DFARS 252.225-7052 means not delivering samarium-cobalt magnets, neodymium-iron-boron magnets, tantalum, tungsten metal powder, or tungsten heavy alloy that was processed in China, Russia, Iran, or North Korea, and being able to prove it through supplier documentation that traces each covered material back through its processing stages. The clause implements 10 U.S.C. 4872 and applies today to the melting and production stages of those materials. On January 1, 2027, it expands to also cover mining, refining, and separation, which is the change every contractor working with these materials needs to be preparing for now.¹

What the Clause Restricts

Five materials are covered: samarium-cobalt magnets, neodymium-iron-boron magnets, tantalum metals and alloys, tungsten metal powder, and tungsten heavy alloy (including any finished or semi-finished component containing it, meeting ASTM B777 or SAE-AMS-T-21014). The list is deliberately narrow. It does not sweep in every rare-earth element or specialty metal, but the materials it does cover sit at the heart of weapons performance.²

The four “covered countries” are North Korea, China, Russia, and Iran. China creates the most practical difficulty because it dominates global production of rare-earth magnets and processes a large share of the world’s tungsten and tantalum.²

The Two-Phase Rule Compliance Programs Have to Handle

The clause does not impose the same prohibition in 2026 that it will in 2027, and this is where compliance programs most often stumble.

Through December 31, 2026

You cannot deliver any covered material that was melted or produced in a covered country, and you cannot deliver an end item manufactured in a covered country that contains a covered material. “Melted or produced” targets the transformation stages where raw inputs become usable industrial material: melting samarium with cobalt to form an alloy, pressing tungsten powder, sintering magnet blanks.²

Beginning January 1, 2027

The prohibition also reaches materials mined, refined, or separated in a covered country. Under the current phase, tantalum ore mined in China could be used as long as the melting happened elsewhere. After 2027, that ore’s origin alone triggers a violation.¹

Every compliance review from here forward needs to address both phases, because the documentation you need after January 1, 2027 is deeper than what suffices today.

Exceptions You Can Actually Rely On

Several exceptions carve out situations where the sourcing restriction does not apply. Some are narrower than they appear, and several change in 2027.

Simplified Acquisition Threshold

Contracts valued at or below $350,000 are exempt. That threshold increased from $250,000 effective October 1, 2025.³ The exception applies at the contract level, not the individual delivery order. Contractors on larger indefinite-delivery contracts cannot rely on it just because a single order falls under the threshold.⁴

Commercially Available Off-the-Shelf Items

COTS items are generally exempt, with important carve-outs. Through December 31, 2026, the exception does not protect a COTS item that is 50 percent or more tungsten by weight. Starting January 1, 2027, that carve-out broadens to exclude any COTS item that is 50 percent or more of any covered material by weight.

Mill products (bars, billets, plates, sheets) also lose COTS protection under certain conditions. Through 2026, tantalum and tungsten heavy alloy mill products not yet incorporated into an end item are excluded from the COTS exception. Starting in 2027, that exclusion expands to mill products of any covered material.²

Electronic Devices

End items that qualify as electronic devices are exempt unless the contract states otherwise. The Secretary of Defense can override the exception for a particular electronic device if the Strategic and Critical Materials Board of Directors determines that domestic availability of that device is critical to national security.⁴

Recycled Neodymium-Iron-Boron Magnets

A neodymium-iron-boron magnet manufactured from recycled material qualifies for an exception if both the milling of the recycled material and the sintering of the final magnet take place in the United States.²

Purchases Outside the United States

Purchases made outside the United States for use outside the United States are exempt. This mainly supports contingency operations and forward-deployed forces.⁴

Building the Documentation Trail

Compliance comes down to documentation. For every covered material in a deliverable item, you need records that trace the material back through its processing stages and confirm none of those stages occurred in a covered country. At minimum that means supplier certifications identifying where the melting and production took place today, and where the mining, refining, and separation took place once 2027 arrives.

Match part numbers and batch codes against supplier certifications. That’s the paper trail that survives a government audit. Vague or incomplete supplier responses are a red flag. If a supplier cannot tell you where their tantalum was melted, that material should not go into a deliverable end item. The contractor carries the burden of proof, not the government.

For tungsten heavy alloys, confirm the material meets ASTM B777 or SAE-AMS-T-21014, because the clause’s definition of tungsten heavy alloy references those standards. If the alloy does not meet either specification, it may not be “covered” under the clause at all, but that determination requires technical analysis rather than an assumption.²

Flowdown to Subcontractors

Every prime contractor must insert the substance of the clause into subcontracts at any tier when the subcontracted items contain a covered material. This applies even to subcontracts for commercial products, unless a specific exception from paragraph (c) of the clause covers the item. The clause language cannot be altered except to identify the appropriate parties.²

In practice, a prime contractor delivering a missile system bears responsibility for verifying that a fourth-tier subcontractor’s tungsten powder was not melted in a covered country. This is where compliance programs most often fail. A supplier three levels down may not even know the restriction exists unless the prime builds it into purchase orders and actively monitors responses. Treating flowdown as a paperwork exercise rather than an operational requirement is how violations happen.

When Compliant Material Isn’t Available

When you genuinely cannot find compliant material in the right form, quality, and quantity at a reasonable price, the government can grant a nonavailability determination. It is not a blanket pass. It applies to a specific covered material for a specific end item, and the requesting activity must explain in writing why no compliant alternative will work.

The head of the contracting activity has authority to approve a nonavailability determination for an individual contract. Supporting documentation must include a written certification describing, with specificity, why alternatives that would not require a waiver are unacceptable. A copy goes to the Under Secretary of Defense for Acquisition and Sustainment through the Deputy Assistant Secretary of Defense for Industrial Policy.⁵

When the same issue affects more than one contract, the Under Secretary can issue a class determination. Before doing so, a notice of intent must be published on SAM.gov at least 30 days in advance, and interested parties, including domestic producers, can respond. Class determinations are rarer and get more scrutiny because they effectively waive the restriction across a product line or material type.⁵

What Non-Compliance Costs

Delivering hardware that contains covered material from a prohibited source exposes a contractor at several levels.

The immediate risk is contract-level action. The government can reject deliverables, withhold payment, or terminate for default. Under a default termination, the government has no obligation to pay for undelivered work and can require the contractor to cover excess reprocurement costs if the items have to be obtained elsewhere. Those excess costs can dwarf the original contract value when specialty metals are involved and compliant sources are limited.⁶

Beyond the individual contract, a contractor who knowingly delivers non-compliant material while certifying compliance risks liability under the False Claims Act, which carries treble damages and per-violation civil penalties adjusted annually for inflation. Violations can also trigger suspension or debarment, locking the contractor out of future government work. The financial exposure from a single compliance failure on a major weapons program can threaten the viability of the company.

Getting Ready for January 1, 2027

Three steps matter now. Map your supply chain deep enough to identify where covered materials are mined, refined, and separated, not just where they are melted. Update your subcontract flowdown language and supplier questionnaires to capture those upstream stages. If any segment of your supply chain runs through a covered country at the mining or refining stage, begin qualifying alternative suppliers now rather than waiting for the restriction to take effect.

Contractors with solid documentation of the melting and production stages are ahead, but that documentation alone will not be enough after January 1, 2027. The earlier you start asking suppliers about the full lifecycle of their materials, the less likely you are to face a last-minute scramble or an involuntary production halt.¹

1
Office of the Law Revision Counsel. 10 USC 4872 – Acquisition of Sensitive Materials From Non-Allied Foreign Nations
2
eCFR. 48 CFR 252.225-7052 – Restriction on the Acquisition of Certain Magnets, Tantalum, and Tungsten
3
Acquisition.GOV. Threshold Changes – October 1st, 2025
4
Acquisition.GOV. DFARS 225.7018-3 Exceptions
5
Acquisition.GOV. DFARS 225.7018-4 Nonavailability Determination
6
Acquisition.GOV. FAR Subpart 49.4 – Termination for Default