I think this has to be the biggest bug in UDK that I have come across.
Deferred Rendering is the primary rendering technique for dynamic lighting in UDK DX11. You would imagine someone at Epic would have noticed that specular was broken. Especially when they bothered to put together that GDC tech demo in 2011 showing it off.
In fact, if you look at this screenshot of the demo (when materials lit by deferred rendering are colored in green), you can see the specular on the gun barrel looks to be working correctly.
I would benefit a lot from Deferred Shading, as in my game players can place lights wherever they like, so some players go crazy with them and tank the performance. Deferred Shading would alleviate a lot of that performance cost.
I would love to figure out how to fix it…
Update:
You can toggle Deferred Rendering using the console command: TOGGLEDEFERRED