Buy American Act and “Made in America Laws”

Insights by: Lana Ray, Manager

Summary

Over the last few years, the Buy American Act and Made in America Laws have been the subject of discussion.  Our expert, Lana Ray, provided the following insight on the Executive Orders signed by both President Trump and President Biden. 

In the midst of transitioning administrations, the incorporation of former President Trump’s Executive Order 13881 Maximizing Use of American-Made Goods, Products and Materials into FAR Part 25 has essentially been “trumped” by President Biden’s new Executive Order 14005 Ensuring the Future Is Made in All of America by All of America’s Workers.

Although this new EO doesn’t specifically reverse any increased thresholds updated in the FAR last month, it does “supersede” any inconsistencies between the two EOs as well as potentially freezing the recent FAR update.

 

 

What You Should Know

What is interesting about EO 14005 is the structure President Biden is putting in place with this directive. With the intent of helping American businesses compete in strategic industries and America’s workers thrive, he has directed all federal agencies to take action within 180 days to support his objective.

There will be a new office formed – “Made in America Office” – which will be headed by the “Made in America Director” under the Director of the Office of Management and Budget (OMB). Not only will these Directors review all proposed waivers to “Made in America Laws” (a new slogan which includes statutes, EOs, etc. related to Buy American and other similar domestic preference rules), but they will be posting all proposed waivers and resulting decisions on a public website designed to promote transparency enabling manufacturers and others to easily review the status of any proposed waivers.

The EO also goes as far as to direct agencies to partner with the Hollings Manufacturing Extension Partnership (MEP) when scouting for American companies capable of producing goods, products and materials that meet Federal procurement needs. The MEP is poised to be a valuable tool for manufacturers and suppliers to gain marketing exposure for future government sourcing events.

There has already been plenty written regarding the recent FAR update increasing percentages applied to content calculations for qualifying items as domestic, new rules for steel and iron, as well as the significant change to the price preferences applied to both small (30%) and large (20%) U.S. businesses when comparing pricing to a foreign concern’s competitive offer.

In light of President Biden’s EO, these increases may be delayed until the FAR Council can make an informed decision as to how these price preferences satisfy his latest direction. It is yet to be seen if the FAR Council is going to consider suspending, revising or rescinding the recent update to the FAR in response to the EO.

Additional changes the EO directs the FAR Council to propose, and subsequently review, upon public comment include:

    • Replacing the “component test” with added-value test methodology;
    • Increasing domestic content requirements, even beyond the increased percentages recently enacted by the update to FAR Part 25;
    • Further increasing price preferences for both domestic end products and construction materials;
    • An update to the list of domestically nonavailable articles (FAR 25.104(a)) based upon future findings by the OMB and OFPP; and
    • Potentially lifting the current constraints on information technology that is a commercial item.

Conclusion

On the surface, it appears that the future of “Made in America Laws” is a positive one. It will not only enable American manufacturers and suppliers who use domestic products and materials to succeed when competing with foreign suppliers for U.S. contracts, but also increase the dollars that remain in the U.S. with American businesses and workers.

There are still a multitude of actions required of a wide variety of agencies and newly instituted offices before the FAR and other regulations will be updated, but the next few months should bring an exciting whirlwind of activity in response to this far-reaching executive order.

Have questions or need consulting expertise for Guidance on Buy American Act and “Made in America Laws, Legislation and Regulations?
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Capital Edge Consulting is a professional services company comprised of adept problem solvers who deliver tangible results to address today’s most complex U.S. government contracting challenges. Capital Edge helps clients address the challenging regulatory, contractual, and compliance requirements of U.S. federal contracts and we have experience working with a wide variety of industries that provide goods or services to the federal government including industries such as biotech and healthcare, nuclear energy, education, information technology, non-profit, professional services, defense, and software. 

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