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Buy American Act Exceptions, Restrictions & COTS Contract Waivers

free trade agreement NAFTA ActThere are certain situations when a Buy American waiver or Buy American Act exceptions can come into play. For example, the US and Canada have an agreement in place when the total cost of projects funded under the American Recovery and Reinvestment Act (ARRA) exceeds $7.358 million.

Iron, steel and manufactured goods from Canada are waived from Section 1605 of the American Recovery and Reinvestment Act. For federal procurement and government contracts, construction materials fall squarely into compliance and regulatory guidelines.

The Buy American and Hire American Executive Order – Impact to Companies

President Donald Trump’s Buy American and Hire American executive order creates an urgency for companies to make sure that they are complying with this heightened requirement especially with construction materials. The penalties will be stiff and there has now become a rush to develop internal policies and controls to avoid fines and penalties.
Government contractors can face increased chances of suspension and debarment for on-compliance.increases enforcement of current laws relating to domestic preferences for government procurement.
Every federal government contracting agency is now tasked with increased oversight and enforcing Buy American Laws. This means that getting waivers will more than likely be reduced.
Supplier, subcontractors and prime contractors performing federal government contracts will be severely impacted. Increasing corporate oversight and developing the right compliance and ethics programs can be the first hurdle in minimizing criminal and civil penalties. Our procurement attorneys and consultants can help.
  • Prompt response to federal contractor clients nationwide
  • Competitive rates
  • Free initial consultation

What We Do to Help

At Watson & Associates, LLC our legal team provides long-term legal advice and consulting services to small businesses and large government contractors involved in federal government construction projects or companies selling other products and services to the United States government. With a consistent focus on buying American made products, we are ready to help with the following:

  • Compliance with Federal import and export laws
  • COTS Contracts, construction materials, and GSA Schedule compliance
  • Consulting with companies seeking to conduct internal compliance investigations
  • Applying Buy American Act restrictions legislation to day-to-day operations
  • Consulting with corporate executives about potential changes that can minimize penalties and fines

Call us today for a free initial consultation. 1-866-601-5518.

Buy American waiver applications can be also be submitted for certain foreign made products, regardless of the product, procuring entity or source of funding.  See also 41  USC 1907. Exceptions to the Buy American Act certification rules could occur if federal agency heads decide that the use of a domestic product is:

  • Inconsistent with the public interest.
  • Insufficient or reasonably unavailable quantities of the domestic product or its quality are unsatisfactory.
  • Likely to increase the overall total cost of the project by 25%.

41 USC 1907  Buy American Act Exceptions, Buy America Waiver Request and FAR 25.202 Construction Materials Exceptions

Image result for exceptionsBusinesses can avail themselves to Buy American Act exceptions in certain situations. Construction materials that are 100% manufactured in the United States, and with greater than 50%  content made in the U.S. can be waived in contracts less than $10,079,365 unless:

  • the cost would be unreasonable unless the agency head determines otherwise. (When evaluating offers contracting officers will add 6% to the cost of foreign materials contained in the offer.); or
  • there are not sufficient reasonably available commercial quantities of a satisfactory quality; or
  • the agency head determines that it would be impracticable; or
  • the agency head determines it would be inconsistent with the public interest.

Government contract primes can submit a Buy American waiver request provided that it meets the specific criteria such as commercial off the shelf (COTS Contracts) items in accordance with 41 USC 1907.

FAR 25.202 Buy American Act Exceptions.

FAR acquisition regulationsThe FAR Website shows the following language regarding Buy American Act exceptions.

(a) When one of the following exceptions applies, the contracting officer may allow the contractor to acquire foreign construction materials without regard to the Buy American Act restrictions in the statute:

(1) Impracticable or inconsistent with public interest. The head of the agency may determine that application of the Buy American Act restrictions to a particular construction material would be impracticable or would be inconsistent with the public interest. The public interest exception applies when an agency has an agreement with a foreign government that provides a blanket exception to the Buy American statute.

(2) Nonavailability. The head of the contracting activity may determine that a particular construction material is not mined, produced, or manufactured in the United States in sufficient and reasonably available commercial quantities of a satisfactory quality. The determinations of nonavailability of the articles listed at 25.104(a) and the procedures at 25.103(b)(1) also apply if any of those articles are acquired as construction materials.

(3) Unreasonable cost. The contracting officer concludes that the cost of domestic construction material is unreasonable in accordance with 25.204.

(4) Information technology that is a commercial item. The restriction on purchasing foreign construction material does not apply to the acquisition of information technology that is a commercial item, when using Fiscal Year 2004 or subsequent fiscal year funds (Section 535(a) of Division F, Title V, Consolidated Appropriations Act, 2004, and similar sections in subsequent appropriations acts).

(b) Determination and findings. When a determination is made for any of the reasons stated in this section that certain foreign construction materials may be used, the contracting officer must list the excepted materials in the contract. The agency must make the findings justifying the exception available for public inspection.

(c) Acquisitions under trade agreements. For construction contracts with an estimated acquisition value of $7,358,000 or more, see subpart 25.4.

See How Does the President’s View on Buy American Act and Buy America Impact Government Contractors?

Contact us

For help with your Buy American Act exceptions,  BAA waiver and restrictions for construction materials, call our government contract law attorneys and consultants at 1-866-601-5518. FREE INITIAL CONSULTATION.

Buy American Certificate of Compliance & BAA Certificate 49 CFR 661.7

Buy American Requirements for Steel or Manufactured Products

Buy American Certification: When your company is selling steel, iron, or manufactured products under 49 CFR 661.3 and 49 CFR 661.5, the company Buy American Certification & BAA Certificate 49 CFR 661.7must also certify that is has complied with the requisite Buy American requirements.

BAA Certificate of Compliance with Buy America Requirements – 49 CFR 661.7

Government contractors must certify that it will comply with the BAA certificate requirements of  49 U.S.C. 5323(j)(1), and the applicable regulations in 49 CFR 661.

Buy American Certificate Requirements

In order to get your Buy American certificate, you have to certify that that each of your end products, except those listed as  foreign end products listed in section (b) of the form, are domestic end products and that for other than COTS items, you have considered components of unknown origin to have been mined, produced, or manufactured outside the United States.

The offeror shall list as foreign end products those end products manufactured in the United States that do not qualify as domestic end products, i.e., an end product that is not a COTS item and does not meet the component test in paragraph (2) of the definition of ‘‘domestic end product.’’ The terms ‘‘commercially available off-the-shelf (COTS) item, ’’ ‘‘component,’’ ‘‘domestic end product,’’ ‘‘end product,’’ ‘‘foreign end product,’’ and ‘‘United States’’ are defined in the clause of this solicitation entitled ‘‘Buy American Act—Supplies.’’

49 CFR 661.5

All steel and iron manufacturing processes must take place in the United States, except metallurgical processes involving refinement of steel additives.

The steel and iron requirements apply to all construction materials made primarily of steel or iron and used in infrastructure projects such as transit or maintenance facilities, rail lines, and bridges. These items include, but are not limited to, structural steel or iron, steel or iron beams and columns, running rail and contact rail. These requirements do not apply to steel or iron used as components or subcomponents of other manufactured products or rolling stock, or to bimetallic power rail incorporating steel or iron components.

For a manufactured product to be considered produced in the United States:

  1. All of the manufacturing processes for the product must take place in the United States; and
  2. All of the components of the product must be of U.S. origin. A component is considered of U.S. origin if it is manufactured in the United States, regardless of the origin of its subcomponents.

Buy American Certification of Non-Compliance Buy American Requirements

Alternatively, if government contractors cannot meet the Buy American certificate requirements if must also certify to that extent. There is a possibility that it may qualify for an exception to the requirement pursuant to 49 U.S.C. 5323(j)(2), as amended, and the applicable regulations in 49 CFR 661.7.

Having the right Buy American Act lawyer on your team can avoid the complexities and confusion. Once you certify that you meet the statutory requirements, then failure to do can cause serious implications.

When the government asks you to certify that your products meet  BAA certificate requirements, the question that arises is how should you respond?

There is no easy answer. Government contractors should not simply assume that because products are manufactured in the United States, that this is the end of the requirements analysis. Tracing the components and assessing the entire process is the better way of seeing whether you meet Buy American Act requirements.

  • Before you certify meeting the Buy American Certificate requirements, make sure that you have conducted the proper legal analysis.
  • A false representation to the government can result is serious penalties.

See How Does the President’s View on Buy American Act and Buy America Impact Government Contractors?

Get Consulting & Help  With Buy American Certificate

For help with 49 CFR Buy American certificate requirements for steel, iron and manufactured products in the United States, call Watson & Associates LLCC BAA consultants and lawyers at 1-866-601-5518.

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