Background

President Biden signed Jan. 25 an executive order strengthening Buy American requirements for federal government purchases of goods and services. A White House press release said this EO will “close loopholes” in the existing law “that allow companies to offshore production and jobs while still qualifying for domestic preferences.” At the same time, Biden said, the U.S. is “committed to working with our trading partners to modernize international trade rules, including those relating to government procurement, to make sure we can all use our taxpayer dollars to spur investment that promotes growth and resilient supply chains.”

Domestic Content. The EO directs the Federal Acquisition Regulatory Council to consider within 180 days proposing amendments to Buy American rules that would (1) replace the test used to identify domestic end products and construction materials with a test under which domestic content is measured by the value added to the product through U.S.-based production or U.S. job-supporting economic activity, (2) increase the amount of a product that must be made in the U.S. for a purchase to qualify under Buy American law, and (3) increase the price preferences for domestic end products and construction materials (i.e., the difference in price over which the government can buy from a non-U.S. supplier).

Waivers. Agency waivers of Buy American requirements will be reviewed by a new office to be created within the Office of Management and Budget. For each waiver agencies will have to provide a detailed justification for the use of goods, products, or materials that have not been mined, produced, or manufactured in the U.S. Biden said this review is designed to ensure that waivers “are only used in very limited circumstances,” such as “when there’s an overwhelming national security, humanitarian, or emergency need here in America.”

The new office will notify the agency of its decision within 15 days. Descriptions of proposed waivers and justifications will generally be made publicly available on a new website.

Before granting a waiver agencies will have to assess whether a significant portion of the cost advantage of a foreign-sourced product is the result of the use of dumped or injuriously subsidized steel, iron, or manufactured goods.

Manufacturers. Federal agencies are directed to utilize the Manufacturing Extension Partnership – a national network that supports small and medium-size manufacturers – to help them connect with new domestic suppliers who can make the products they need while employing U.S. workers. Biden said this provision is designed to include “communities that have historically been left out of government procurement — black, brown, Native American small businesses and entrepreneurs in every region of the country.”

Information Technology. The FAR Council is directed to promptly review existing constraints on extending Made in America requirements to information technology that is a commercial item and to develop recommendations for lifting those constraints.

Preference Review. Federal agencies must report every two years on their implementation of and compliance with Made in America laws, their spending as a result of Buy American waivers, and their recommendations for achieving the EO’s goals.

Copyright © 2021 Sandler, Travis & Rosenberg, P.A.; WorldTrade Interactive, Inc. All rights reserved.

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