Buy American Provisions & Products Made in USA
The issue of federal agencies’ mandate to buy American made products will increase given the change in government.
Why buy American made products? Buy American and BAA construction provisions focus on making sure that transportation infrastructure projects are built with products made in USA. That means that Department of Transportation investments are able to support an entire supply chain of American companies and their employees.
Contractors selling to the US government must be more mindful of how the FAR Buy American provisions impact their current way of doing business. More than likely, the amount of bid protests filed at the GAO will increase and companies will also be subjected to more suspension and debarment actions. The following information will give new contractors some idea of what the agency must do to comply with the Buy American provisions.
The contracting officer should make a written determination as to whether the cost reasonableness of domestic bid offers, See FAR 25.105(a), or DFARS 225.105) to the low offer.
Buy American Legal and Consulting Services
When it comes to international trade and importing products from overseas to sell to the US Government, Watson & Associates’ Buy American lawyers and consultants help with:
- Construction regulatory compliance matters
- Legal advice about penalties and violations
- Aligning BAA construction rules with your-day-to-day operantions
- Litigating and defending bid protests about products made in USA
- Negotiation with government entities
- Understand how new buy American requirements impact your business
- Developing internal policies and controls
- Providing training uniquely designed for your company
Call for immediate help Toll-Free at 1-866-601-5518. FREE INITIAL CONSULTATION.
FAR PART 25 Bid Protest Analysis for Buying American Made Products
The Buy American provisions suggest that the price reasonableness of buying American made products is reasonable so long as it does not exceed the evaluated price of the low offer after addition of the evaluation factor. See FAR Part 25.105(c).
When you have manufactured end products, the FAR’s Buy America provisions suggest a two-part standard or test to define what is a domestic end product:
- The article must have been manufactured in the US, and
- The cost of domestic components (i.e., components mined, produced, or manufactured in the U.S.) must exceed 50 percent of the cost of all components. See FAR 003 and FAR 25.101; see also DFARS 225.101 and 41 USC 10(a).
Buy America provisions apply to iron and steel products and their coatings that are to be permanently incorporated into the construction project. In 1983, FHWA decided that Buy American provisions did not apply to raw materials and waived its application to manufactured products based on the public interest. Lack of adequate domestic supply resulted in a 1995 nationwide waiver for iron ore, pig iron, and reduced/processed/pelletized iron ore. In 1994, a nationwide waiver for specific ferryboat parts came into effect.
Definition of Products Made in USA
When analyzing if end products made in the USA, one looks at the Buy American Act provisions assess if the component or material has undergone any substantial change in its physical character. See A. Hirsh, Inc., B-237466, Feb. 28, 1990, 90-1 CPD ¶ 247 at 3; 45 Comp. Gen. 658 (1966).
Exception to Buy American Provisions
Although the BAA focuses in buy American made products, there is an exception to the Buy American provisions of the Statute. Under the exception, the contracting agency head can make a determination that the application of the Buy American Act would be totally inconsistent with the public’s interest. See 41 USC 8302(a); FAR 25.103(a); DFARS 25.103(a).
Government contracting agencies can avoid buying American made products if end products come from participating countries. Specifically, these countries must be part of “a reciprocal defense procurement memorandum of understanding or international agreement with the United States in which all of the countries [have] agree[d] to remove all barriers to purchases of supplies produced in the other country.” See DFARS 225.003(10).
Proposal Evaluation Tip for Filing a Bid Protest
FAR Part 25.502(a)(1) suggests that the first step in applying the Buy American provision evaluation during the proposal evaluation process of to first eliminate all offers that are unacceptable for reasons other than price.
Do the Buy American provisions apply to all projects funded by the Recovery Act?
The provisions only apply to projects for the construction, alteration, maintenance or repair of public buildings or public works funded by the Recovery Act. EERE financial assistance recipients (grantees), whose awards are governed by the OMB Interim Final Guidance at 2 CFR Part 176, Subpart B. For contractors performing Recovery Act funded work under contract with the Federal government, FAR Subpart 25.6 applies to BAA construction.
Do Buy American provisions apply to all goods and services?
The Buy American provisions only apply to iron, steel, and manufactured goods brought to a construction site for incorporation into a public building or public work. Products that do not fit the definition of manufactured goods are not covered. Similarly, services are not covered. While EERE strongly recommends employing domestic service providers when possible, there is no legal requirement to do so.
What are manufactured goods in BAA Construction?
According to the Buy American regulations published by OMB in 2 CFR 176, manufactured goods are brought to the construction site for incorporation into the building or work that has been processed into a specific form and shape; or combined with another raw material to create a material that has different properties than the properties of the individual raw materials. There is no requirement with regard to the origin of components or subcomponents in manufactured goods used on a BAA construction project, as long as the manufacturing occurs in the United States. The OMB Interim Final Guidance requires that manufactured goods be physically incorporated as into the project.
Additional BAA Information
For help litigating or defending a bid protest or other dispute regarding Buy American provisions for buying American made products made in USA, call Watson & Associates, LLC BAA Attorneys and consultants at 1-866-601-5518.