Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA) have joined together to propose modifying the Federal Acquisition Regulation (FAR) to apply Executive Order (E.O) 13881, Maximizing Use of American Made Goods, Products, and Materials.

The amendment would affect domestic preferences in Government procurement. This EO and FAR addition is an effort to promote economic and national security, help stimulate economic growth, and create jobs by decreasing the amount of foreign-sourced content in a U.S. manufactured product.

On July 15, 2019, President Trump signed E.O. 13881. The E.O amends the Buy American Act to require an increase in established domestic content requirements and price preference for domestic products.

The Buy American Act was passed by congress during the Great Depression to help promote the American industry against foreign competitors. The act requires public agencies to purchase articles, materials, and supplies that were mined, produced, or manufactured in the United States. To make the American industry more competitive the act provides pricing preferences to offerors who certify their compliance with the domestic purchasing requirements. This act does not prohibit the purchase of foreign end products or use of foreign construction material, but should discourage the foreign market unless domestic products are not available, at higher cost, and/or if it is not in public interest to buy domestic products.

The E.O. makes the following changes to the Buy American Act FAR requirements:

  • Domestic Content Requirements
    • Domestic content requirements for Steel and Iron end products increase to 95 percent
    • Domestic content requirements for all other end products increase to 55 percent
    • No impact on the 50 percent preference for DoD procurements, as the DoD percentage exceeds the requirements of the E.O.
  • Price Preferences for Domestic End Products
    • Small business will gain price preference from 12 percent to 30 percent
    • Large businesses will gain price preference from 6 percent to 20 percent
  • Two-Part Test to define domestic end-product or domestic construction material
    • End Product is domestic if the cost of its components mined, produced, or manufactured in the United States exceeds 55 percent.
    • Construction Material is domestic if the cost of the components mined, produced, or manufactured in the United States exceeds 55 percent.
    • If either End product or Construction Material consists wholly or predominantly of iron or steel or a combination of both, then the cost of the components mined, produced, or manufactured (excluding fasteners) in the United States must exceed 95 percent

Aspects of the Buy American Statue that would remain unchanged are that COTS items are exempt from the two-part test and that the Buy American statute is waived when trade agreements apply to the purchase (See FAR 25.4)

If you would like to comment on the proposed rule change you may submit thoughts or concerns here with Regulations.gov.

If you have further questions on the amendment, how it affects government procurement, or other questions on the federal marketplace contact Coley  directly at [email protected] or by phone at 210.402.6766.

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