Is Your Motor Supplier Ready for the January DFARS Magnet Rule?

The DFARS rare earth magnet rule, DFARS 252.225-7052, restricts defense acquisition of samarium-cobalt (SmCo) and neodymium-iron-boron (NdFeB) magnets tied to China, Russia, Iran or North Korea. On January 1, 2027, the restriction widens. Today it covers magnets "melted or produced" in those countries. From that date it also covers material "mined, refined, separated, melted, or produced" there, so it reaches every step from the mine to the finished magnet.

For a tier-2 motor or actuator maker, that turns a familiar audit question into a much harder one. Through December 31, 2026, the customer needs to know where the magnet alloy was melted and the magnet made. From January 1 the customer also needs to know where the rare earth was mined, separated and refined. If your rotors, actuators or sensors use magnets you buy from a magnet house or a distributor, those answers sit two to four tiers above you, and your prime will expect you to have them.

This guide covers what changes, what 2026 added, and a four-step plan for getting a supplier base ready. That includes what to do when the compliant source you qualified has no capacity to sell you.

What changes on January 1, 2027

The clause text on acquisition.gov (clause date MAY 2024) covers five materials: samarium-cobalt magnets, neodymium-iron-boron magnets, tantalum metals and alloys, tungsten metal powder, and tungsten heavy alloy, along with any finished or semi-finished component that contains it. The covered countries are North Korea, China, Russia and Iran.

The 2027 dates are not new. They were set by the final rule in DFARS Case 2021-D015, published in the Federal Register and effective on May 30, 2024. Many suppliers have been treating it as a distant deadline, and it now arrives in about ten weeks.

The COTS change is easy to overlook. Under the current rule, the COTS exception only falls away for heavy tungsten content. From January the test is 50% or more covered material by weight, according to Crowell & Moring's analysis of the rule. Most motors will stay under that threshold, but a magnet sold as a COTS item, or a magnet-dense subassembly, may not.

Watch the clause number

Under the Revolutionary FAR Overhaul class deviations, the clause may appear in your contracts as DFARS 252.225-7961, "Restriction on the Acquisition of Certain Magnets, Tantalum, and Tungsten," rather than 252.225-7052. Wiley reports that the deviation also streamlined DFARS 225.7018-2 to make clear the mined, refined and separated prohibition starts on or after January 1, 2027, not December 31, 2026. A contract review that searches only for "7052" will miss deviation-clause contracts.

Exceptions that remain

• Electronic devices. The exception reads: "An electronic device, unless otherwise specified in the contract." That last phrase means the exception depends on each contract. A program can switch it off.

• Recycled NdFeB. The only recycled-material exception in the 2024 rule comes from the statute, 10 U.S.C. 4872(c)(3)(C). It covers NdFeB magnets made from recycled material, provided the recycled material is milled and the final magnet sintered in the United States.

• Flowdown. Under paragraph (d), contractors must include the clause in subcontracts and other contractual instruments for items that contain covered materials, commercial products included, unless an exception applies.

What 2026 added

Two federal actions this year raised the stakes on the existing clause.

The FY2026 NDAA

According to Pillsbury, the FY2026 NDAA added molybdenum, gallium and germanium to the materials covered under 10 U.S.C. 4872. The gallium and germanium restrictions take effect December 18, 2027. Molybdenum follows the existing timelines. The law also created a recycled-material exception for SmCo magnets when milling and sintering happen in the United States, and made national security waivers under section 4863 apply to section 4872 restrictions.

Keep the statute and the clause apart. The clause text cited in this article, dated MAY 2024, lists the original five materials and only the NdFeB recycled exception. Read the clause version that each contract actually incorporates, and ask your contracting officer how the statutory additions will be handled on your programs.

Executive Order 14415

Executive Order 14415, "Securing America's Defense Supply Chains and Ensuring Domestic Acquisition of Critical Materials," was signed July 20, 2026. Orrick reports that after January 1, 2027, waivers under 10 U.S.C. 4872 will only be issued if the contractor submits a formal mitigation plan that the Secretary or a designee accepts. The plan must:

• Identify the specific source of the noncompliant material.

• Document exhaustive efforts to obtain compliant material, or show that none was available.

• Describe the steps to remove the noncompliant material from the supply chain.

• Set a strict projected timeline.

Orrick says the requirement applies to subcontractors at every tier. Wiley and Holland & Knight both read the order to say that failing to qualify a domestic source does not, on its own, establish nonavailability.

The order also sets a longer timeline. Holland & Knight reports that supply-chain mapping policy is due January 16, 2027 and implementing regulations by April 16, 2027. Both firms describe a requirement for contractors to submit an indentured bill of materials that traces all components, parts, equipment, software and materials back to the origin of the raw materials, and to vet suppliers for risks such as foreign ownership, control or influence. Holland & Knight reports that the policy includes notification of significant supply-chain risks within 15 days and corrective action plans within 45 days.

Step 1: Map the BOM

Start with part numbers, not suppliers. Flag every item that contains SmCo or NdFeB: motor rotors, actuators, sensors, magnetic couplings, speakers and similar parts. Do the same for tungsten and tantalum content. Z2Data, a supply-chain data vendor, describes finding covered materials through full material declarations (FMDs) and then tracing those products up the supply chain.

For each flagged part, record:

• Which contracts carry the clause, under either 252.225-7052 or 252.225-7961.

• Whether the item might qualify for the COTS exception under the new 50% covered-material weight test, with the weight calculation on file.

• Whether you are relying on the electronic-device exception. If you are, check each contract for language that overrides it, and get the contracting officer's position in writing. Do not assume that because one program accepted it, the next one will.

• Whether the magnet is claimed as recycled, and if so, where the milling and sintering took place.

Step 2: Decide how far upstream to go

For magnets, the answer is all the way to the mine. A usable chain of custody looks like this:

• Mine (rare earth ore)

• Separation into individual rare earth oxides

• Refining into metal and alloy

• Magnet production: melting or strip casting, milling, sintering

• Magnet supplier or distributor

• Your rotor, actuator or subassembly

Today's rule asks about steps 4 through 6. The 2027 rule asks about all six. The middle of the chain is where Chinese content is hardest to rule out. CSIS estimated in October 2025 that China accounts for roughly 70% of rare earth mining, 90% of separation and processing, and 93% of magnet manufacturing. A magnet sintered outside China can still be made from oxide separated inside it.

Heavy rare earth additions need their own line in the trace. On April 4, 2025, China imposed export licensing on seven rare earths (samarium, gadolinium, terbium, dysprosium, lutetium, scandium and yttrium) and on magnets. Samarium is the "Sm" in SmCo, and dysprosium and terbium are common NdFeB additives. CSIS and Tech Times describe those April 2025 controls as still in effect. A supplier that traces its neodymium and praseodymium but not its dysprosium or terbium has not finished the job.

The CSIS analysis lists F-35, Virginia- and Columbia-class submarines, Tomahawk, radar, Predator UAVs and JDAM among the defense uses of rare earths. If your parts end up on any of these programs, expect your prime to ask early and in detail.

Step 3: Get origin declarations you can audit, and flow the clause down

Put the clause in your subcontracts and purchase orders for items that contain covered materials, including commercial-item buys, as paragraph (d) requires. Then replace the one-line "DFARS compliant" checkbox with a stage-by-stage declaration from each magnet supplier:

Z2Data describes the work as needing visibility into the second, third and fourth tiers, plus supplier engagement campaigns that check the answers rather than simply collecting them. Expect a first round of incomplete declarations, and budget the follow-up time.

If you run an AS9100 quality system, fold this into the supplier controls you already have instead of building a parallel process. Make stage-by-stage origin a condition of approved-supplier status for magnet sources. Require contractual notice before a supplier changes its source at any stage, including the oxide or alloy. Review the declarations at each periodic supplier re-evaluation. The indentured BOM that EO 14415 anticipates will need the same data, so collecting it once and in a consistent format saves rework in 2027.

Step 4: Build the nonavailability file before you need it

The hard case is common. You have qualified a non-China magnet source, but it cannot ship the quantity, grade or delivery schedule your program needs. The existing route for that situation is a nonavailability determination under DFARS 225.7018-4.

• Individual determination. The head of the contracting activity can make one for a single contract. It must be supported by an analysis and a written certification from the requiring activity explaining why the alternatives are unacceptable.

• Class determination. This requires approval from USD(A&S). A notice asking interested parties for information must be published in the GPE at least 30 days in advance, and the determination and its rationale are made public to the extent national security and confidential business information allow.

DFARS PGI 225.7018-4 lists the data required. Part A, which the contractor supplies, covers:

• The current noncompliant source: manufacturer, country of origin, specifications, delivery dates, quantities and pricing.

• Market research on compliant alternatives: manufacturers, specifications, delivery, quantities, unit pricing, and the cost and schedule of any redesign or requalification.

In Part B, the government analysis weighs quality, quantity, required form, timeliness, unit price, and the cost of redesign or requalification. Crowell & Moring advised in 2024 that contractors without compliant sources before January 1, 2027 should start "aggregating data to pursue and support a nonavailability determination." The firm gave that advice more than two years ago.

Build the same file so it also covers the four elements of an EO 14415 mitigation plan: the named noncompliant source, a record of exhaustive sourcing efforts, removal steps and a timeline. The market research, quotes and requalification estimates support both. Given how Wiley and Holland & Knight read the order, a file that amounts to "we tried to qualify a domestic source and could not" is unlikely to be enough. Document who you contacted, what they quoted, what they could deliver and when, and what it would cost to redesign around the gap.

Capacity reality check

The compliance plan only works if compliant magnets exist to buy. In April 2026, CSIS analysts Gracelin Baskaran and Meredith Schwartz warned that "unless significantly more capacity comes online in the next eight months, adhering to this requirement may not be feasible."

Here is the documented state of domestic supply:

• MP Materials, Independence (Fort Worth). MP began making NdFeB magnets there in December 2025, according to its Q2 2026 Form 10-Q. Its August 6, 2026 results release said magnet qualification "advanced through additional deliveries for customer qualification and regulatory testing." Put plainly, the plant was still in qualification. Tech Times reports that Independence targets commercial magnet sales in the second half of 2026, with capacity ramping toward 3,000 metric tons per year.

• MP Materials, 10X (Northlake, Texas). Under the July 10, 2025 MP and DoD partnership, the 10X magnet plant is expected to begin commissioning in 2028, bringing total US magnet capacity to an estimated 10,000 metric tons or so. The deal includes a 10-year NdPr price floor of $110/kg, and 100% of 10X output is to be bought by defense and commercial customers. The 10-Q says construction has started and that the Department of War must buy all 10X magnets or approve commercial syndication. A mid-market buyer should not plan on 10X volume before 2028, and should expect access to run through that offtake structure.

• USA Rare Earth, Stillwater, Oklahoma. Tech Times reports the company commissioned Phase 1a in March 2026, targeting 600 metric tons per year.

The calendar adds pressure. According to CSIS, China's October 2025 expanded controls, which included a foreign-direct-product-style rule on trace Chinese rare earth content, were suspended for one year after the Trump-Xi meeting. Tech Times reports that the suspension expires November 10, 2026, about seven weeks before the DFARS expansion takes effect.

For operators, that leads to three decisions:

• Dual-qualify now. A single compliant magnet source still in ramp-up is a schedule risk, not a solution. Qualify a second source in parallel, even if it costs more per unit.

• Push for longer-term supply agreements. With new domestic capacity committed through offtake arrangements, spot buying is the weakest position. Lock in allocation where you can, and tie it to the origin-declaration terms from Step 3.

• Budget for redesign and requalification. If a compliant grade differs from what your motor was designed around, the engineering and test cost belongs in this year's capex and program budgets. Those same figures go into the PGI Part A market research.

Checklist: from now to 2028

Related reading

• Can 3D Printed Solid Rocket Motors Reach Full Rate in 2027?

• How to Hedge Factory Power Costs Inside PJM

• Who Owns Lockout/Tagout When a Contractor Services Your Equipment?

• More Aerospace & Defense coverage

Sources

• DFARS 252.225-7052, Restriction on the Acquisition of Certain Magnets, Tantalum, and Tungsten (acquisition.gov)

• Federal Register: DFARS Restriction on Certain Metal Products (DFARS Case 2021-D015), May 30, 2024

• DFARS 225.7018-4, Nonavailability determination

• DFARS PGI 225.7018-4, Nonavailability determination

• Crowell & Moring: DoD Expands Restrictions on Supply Chain for Certain Magnets, Tantalum, and Tungsten

• Orrick: Defense Supply Chain Compliance, Critical Minerals Waiver Cessation Takes Effect January 1, 2027

• Holland & Knight: President Trump Signs Executive Order on Defense Supply Chains, Critical Materials

• Wiley: New Executive Order Expands Supply Chain Due Diligence for Defense Contractors

• Wiley: DFARS Overhaul Class Deviations

• Pillsbury: NDAA Expands Sourcing Restrictions for Critical Minerals and Batteries

• Z2Data: How the Top U.S. Manufacturers Are Preparing for DFARS 252.225-7052

• CSIS: Rare Earth Export Restrictions One Year Later

• CSIS: China's New Rare Earth and Magnet Restrictions Threaten U.S. Defense Supply Chains

• Tech Times: Rare Earth Magnets, China's November 10 Deadline and US Gap Money Can't Close

• MP Materials Q2 2026 Form 10-Q

• MP Materials Reports Second Quarter 2026 Results

• MP Materials and DoD partnership press release, July 10, 2025