The Pentagon Retreats

Tipping its hat to the small-business lobby, the Army will now seek American suppliers for its new black beret

The chapeau conflict is over. In what is a lukewarm victory at best, a leading small-biz advocate in the Senate announced May 1 that the Army has agreed to search for U.S. small businesses to fill future orders for hundreds of thousands of black berets.

The headgear was at the center of a controversy sparked by the Pentagon's decision to order more than 2 million black berets from foreign suppliers -- including a British company with a factory in China. Small-biz advocates protested the loss of potentially lucrative contracts to low-wage countries and some veterans voiced outrage over the use of a Chinese manufacturer in the midst of the standoff over the downed U.S. spy plane.

In addition to seeking U.S. makers for the berets in the future, the Pentagon also agreed to take steps to make it harder for its procurement staff to circumvent a law directing the military to buy from domestic suppliers, according to Sen. Christopher "Kit" Bond (R-Mo.), chairman of the Committee on Small Business. The Army has not cancelled any of the $23 million worth of contracts already awarded for the headgear, which will debut June 14 as part of the branch's new look.

"As the Defense Dept. goes out and assembles a network of small businesses that can supply these replacement [berets], they may be able to fill other contracts through the network they create," says Craig Orfield, a spokesman for the Senate's Committee on Small Business.

By Julie Fields in New York