On June 11, 2021, the White House released new guidance on its plans to limit waivers of domestic sourcing laws, bolstering its January 2021 Executive Order on “Ensuring the Future is Made in All of America by All of America’s Workers.” The guidance, entitled “Increasing Opportunities for Domestic Sourcing and Reducing the Need for Waivers from Made in America Laws,” provides insight on how the Biden Administration intends to enforce domestic sourcing laws such as the Buy American Act (“BAA”) over the coming years.
We have previously written about the January 2021 Executive Order here. Among other things the Executive Order established a federal Made in America Office (“MIAO”) to review agency decisions to waive laws such as the BAA from procurements, grants, and other government contracting activities. It also directed the Office of Management and Budget to establish reporting and oversight procedures to promote enforcement of the Made in America Laws. The guidance fulfills that requirement.
Among other things, the guidance:
- Requires each agency to designate a Senior Accountable Official, an official responsible for coordinating with the Made in America Director to implement the waiver review process,
- Establishes the procedures for review of waiver requests by the Made in America Office (“MIAO”),
- Implements the Executive Order’s requirement that acquiring activities prepare agency reports on compliance with Made in America Laws, and
- Explains the process to develop the public database of all proposed waivers by early fiscal year 2022.
Importantly, the guidance creates an “initial phase” of implementation for the Executive Order, indicating that future phases will follow. In this “initial phase,” the Biden Administration will focus on (1) Jones Act waivers and (2) non-availability procurement waivers pursuant to the BAA proposed by the 24 agencies subject to the Chief Financial Officers (“CFO”) Act. During the first quarter of fiscal year 2022, the MIAO will phase in reviews of waivers proposed by non-CFO Act agencies and other types of waiver requests.
In a blog post announcing the guidance, the new Director of the Made in America Office, Celeste Drake, stated that the guidance is intended “to improve practices and processes to ensure that Made in America laws are not a mere compliance exercise,” as well as “reinforc[e] the actions announced in the 100-Day Supply Chain Review.”
Made in America Executive Order
President Biden’s January 25, 2021, Executive Order aims to “maximize” the U.S. Government’s purchasing of goods and services produced in the United States. The Executive Order established the MIAO to oversee and administer domestic preference requirements in federal procurements. The Executive Order generally requires agencies to obtain approval from the Made in America Director prior to granting a waiver of Made in America Laws. The term “Made in America Laws” is broadly defined in the Executive Order as covering all statutes, regulations, rules, and Executive Orders that refer to “Buy America,” “Buy American,” or include other domestic preference requirements.
The Executive Order also required the Made in America Director, within 45 days after appointment, to publish a list of the information and justification required to support a proposed waiver and a timeframe under which the Made in America Direction will notify the agency of the results of the review. Celeste Drake, a trade policy expert and former labor union official, was selected by President Biden as the Made in America Director on April 27, 2021. To the extent permitted by law and consistent with national security, the results of the waiver review will be made available on a public website.
Key Provisions of the Initial Guidance
The initial guidance details a phased approach to implementing the Executive Order starting summer 2021. Specifically, the guidance falls into four categories: (1) appointment of Senior Accountable Officials at each agency; (2) procedures for review and approval of waivers; (3) additional requirements for the initial and bi-annual agency reports on use of Made in America Laws; and (4) steps for development of the public website listing all proposed waivers and whether the waivers have been granted.
Senior Accountable Officials
The initial guidance requires agencies designate a Senior Accountable Official (“SAO”) for domestic sourcing by June 30, 2021, and send the name of the SAO to the MIAO. The SAO must be “sufficiently senior” so as to direct the agency’s activities regarding relevant Made in America Laws such as identifying opportunities to increase the agency’s reliance on domestic products and services by scouting suppliers, participating in inter-agency product level reviews, managing a waiver reduction strategy, and meeting regularly with the Made in America Director to discuss progress on implementing the waiver reduction strategy. The SAO is also responsible for ensuring that the agency complies with the below procedures for submitting waiver requests to the MIAO.
Review and Approval of Agency Waiver Requests
The guidance broadly defines the term “waiver” to include all “exceptions and waivers under applicable Made in America Laws,” including automatically-effective legal waivers. Indeed, the guidance lists various FAR provisions among the “waivers and exceptions,” including those implementing the Trade Agreements Act and the commercial information technology exception, which occur by operation of law. It remains to be seen how the Biden Administration will enforce its waiver review procedures for these kinds of exceptions, but the current “initial phase” does not require agencies to address them.
To sufficiently assess why the agency requires the waiver, the initial guidance details the required information that must be included by the agency. If a covered agency seeks a waiver on the grounds of non-availability it must submit the following information:
(1) identify the agency, contracting activity, and program office;
(2) provide a description of the end item or construction material being acquired including discussing the impact to the mission if not acquired, country(ies) of origin and U.S. content, the estimated value of the procurement, and, if pre-award, whether the supplier of the item(s) is a small or disadvantaged business;
(3) describe the market research activities used to identify domestically manufactured items satisfying the agency’s requirements;
(4) describe whether competition is anticipated or the procurement was conducted using competitive procedures;
(5) identify whether the solicitation will or did include a price preference for domestic end products and construction materials;
(6) explain, if pre-award, a U.S.-made end product would be rejected for reasons other than price; and
(7) identify the approving authority for non-availability determinations over $25,000.
CFO Act agencies requesting Jones Act waivers must provide a description of the transportation required, explain why the agency cannot acquire transportation on a Jones Act qualified vessel, justify why it is in the interest of national defense to waive the requirement, and provide any additional clarifying information.
The MIAO plans to complete review of the majority of waivers within 3 to 7 business days and not more than 15 days from submission.
Agency Reports on Use of Made in America Laws
Under Section 11 of the Executive Order, each agency must report on its use of Made in America Laws by July 24, 2021. The initial guidance provides a list of sections that must be included in the report. First, the report will identify all types of waivers of Made in America Laws that are relevant to the agency and the agency’s plan to manage waivers. This section includes a discussion of the agency’s process for maximizing use of domestic sources, explanation of the agency’s waiver review procedures, profile of waivers granted in fiscal year 2020, and summary of the types of products and/or construction materials for which non-availability waivers are used most frequently. Second, the report must describe the agency’s ongoing use of and justification for any longstanding or nationwide waivers. Third, the report will include the agency’s recommendations for maximizing the use of domestic goods, products, and services. Last, the report will detail the status and outcome of the agency’s review of actions inconsistent with the Executive Order including whether any agency actions will be suspended, revised or rescinded or if new actions are proposed.
In addition to the initial reports, Section 12 of the Executive Order requires each agency to file bi-annual reports on the agency’s ongoing implementation of and compliance with Made in America Laws. The initial guidance includes similar content requirements for these bi-annual reports.
Development of the Public Website
Under Section 6 of the Executive Order, the Administrator of General Services is required to develop a public website to report information on all proposed waivers and whether those waivers have been granted. The MIAO is responsible for reporting all proposed waivers after 5 days of receipt to GSA to post on the public website. The initial guidance explains that the website “will be designed to help manufacturers, resellers, and other interested parties, including potential domestic manufacturers who are not currently selling to Federal agencies, easily identify opportunities to do business in the Federal marketplace.”
As previously discussed, the new MIAO waiver procedures are intended to reduce agencies use of waivers of Made in America Laws by increasing scrutiny of such waiver requests. In addition to the increased scrutiny by the MIAO, proposed waivers and the results of the MIAO review will be published on a public website. The public database of waiver determinations has the potential to provide useful precedents for contractors that are considering whether to seek a waiver from an agency. However, given the added scrutiny of waiver decisions and public reporting, contractors should carefully consider the information provided to the agency in connection with the review process that could become public.