New Executive Order on Buy American

From Fred Waite and Kim Young, AWPA Counsel

President Biden issued an Executive Order, which will tighten restrictions on the Federal Government’s purchases by increasing domestic content requirements for contracts and requiring agencies to close loopholes for determining country of origin.

The order also sets a 180-day deadline for the Federal Acquisition Regulatory (FAR) Council to consider proposing new rules for increasing domestic content requirements and price preferences, as well as to consider ways to eliminate constraints on Buy American rules as they apply to commercial information technology items.

Biden has also instructed the FAR Council to consider replacing the Federal Acquisition Regulation’s current “component test” with one based on value added to the product by the US-based portion of production.

It appears that any new FAR Council actions will likely be in addition to its recent final rule which raised the domestic content requirement from 50% to 55% and to 95% for iron and steel.  That rule also raised the price preference for domestic products from 6% to 20% for large businesses and from 12% to 30% for small businesses, while retaining the 50% price preference for procurements by the US Department of Defense.

President Biden’s Executive Order will make it more difficult for Federal agencies to grant waivers because each waiver will be subject to review by a new Made in America Office in the Office of Management and Budget, which will be overseen by a new director of Made-in-America.

Further, waivers for foreign-sourced products, if they are considered to have a cost advantage over domestic sources, will also need a determination of whether that advantage is due to dumped or “injuriously subsidized” steel, iron, or manufactured products.  Any proposed or granted waivers will be made public by the General Services Administration.

We expect that the FAR Council will publish a notice of its process to consider new rules and that the public will have an opportunity to submit comments.

You can read the Executive Order here.