The government is moving forward with further changes to Buy American Act (“BAA”) regulations.  But based on yesterday’s public meeting to discuss the July 30 notice of proposed rulemaking (“NPRM”) to revise existing BAA regulations, it remains to be seen exactly where those changes are headed.

As discussed in our prior client alert, the NPRM implements Executive Order 14005 (“Ensuring the Future Is Made in All of America by All of America’s Workers”) by proposing three major changes to existing BAA regulations: (1) higher domestic content thresholds; (2) enhanced price preferences for “critical” items and components; and (3) new domestic content reporting requirements for “critical” items and components.  The agenda for the public meeting covered each of these changes, as well as other questions raised in the NPRM related to BAA waivers and exceptions.

At the outset, Celeste Drake, Director of the recently established Made in America Office, provided prepared remarks regarding the goals of that office.  The goals include: (1) creating confidence and trust in Made in America Laws; (2) maximizing the use of domestic content to support economic recovery and expand the U.S. manufacturing base; and (3) institutionalizing the Made in America Office so that it is viewed as a valuable resource.

The FAR Council devoted the rest of the meeting to soliciting input from various stakeholders on the ten identified topic areas set out in the NPRM.  A variety of interests were represented among the commentators; some spoke as representatives of trade associations or unions, while others spoke in their own individual capacities as small business owners.  The nature of the NPRM’s questions for discussion — which included, for example, a question concerning the role of trade agreements and a question concerning the existing BAA waivers for commercial IT products and COTS products — necessarily resulted in a wide-ranging conversation.

As expected, commentators took different positions with respect to the proposed rule, with some speaking in favor of the proposed changes while others warned that the significant changes proposed in the NPRM could have a range of unintended consequences for industry and government customers.  In particular, some commentators suggested that an increase in domestic content thresholds to 75% might lead companies to exit the market if the cost of reaching that threshold are too high, and that BAA priorities must be considered in the context of U.S. international trade relationships and national defense priorities.  Others correctly noted that BAA requirements and other procurement rules are only one of many tools that the government may use to influence industrial development, and that the BAA rules in particular may impact some industries more significantly than others.  At the same time, many commentators — including union spokespersons and representatives of domestic manufacturing concerns — spoke in favor of the proposed increase to the domestic threshold, based on the perceived benefits for U.S.-based manufacturing.

Through it all, Ms. Drake and the representatives of the FAR Council appeared to be primarily in listening mode and gave away little about whether and how they intended to further revise the proposed rule in the next phase of the rulemaking process.  Moving forward, the FAR Council will need to determine not only how it manages domestic content thresholds and requirements related to “critical” items, but also whether and how it pursues further changes to BAA waivers and exceptions identified in the NPRM.

Written comments on the rule may be submitted through September 28, 2021, and we expect to see detailed comments filed by a variety of interested parties.  We will continue to monitor changes to the NPRM and other domestic preference developments and provide further updates in this space.

 

 

Tags: BAA, BAA waivers, Buy American, Buy American Act, Buy American and Hire American, domestic content, Domestic Preferences, Domestically-sourced goods, FAR, FAR Council, Federal Acquisition Regulation, Rulemaking, Supply Chain, Trade Agreements Act
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Photo of Michael Wagner Michael Wagner

Mike Wagner represents companies and individuals in complex compliance and enforcement matters arising in the public procurement context. Combining deep regulatory expertise and extensive investigations experience, Mike helps government contractors navigate detailed procurement rules and achieve the efficient resolution of government investigations and…

Mike Wagner represents companies and individuals in complex compliance and enforcement matters arising in the public procurement context. Combining deep regulatory expertise and extensive investigations experience, Mike helps government contractors navigate detailed procurement rules and achieve the efficient resolution of government investigations and enforcement actions.

Mike regularly represents contractors in federal and state compliance and enforcement matters relating to a range of procurement laws and regulations. He has particular experience handling investigations and litigation brought under the civil False Claims Act, and he routinely counsels government contractors on mandatory and voluntary disclosure considerations under the FAR, DFARS, and related regulatory regimes. He also represents contractors in high-stakes suspension and debarment matters at the federal and state levels, and he has served as Co-Chair of the ABA Suspension & Debarment Committee and is principal editor of the American Bar Association’s Practitioner’s Guide to Suspension & Debarment (4th ed.) (2018).

Mike also has extensive experience representing companies pursuing and negotiating grants, cooperative agreements, and Other Transaction Authority agreements (OTAs). In this regard, he has particular familiarity with the semiconductor and clean energy industries, and he has devoted substantial time in recent years to advising clients on strategic considerations for pursuing opportunities under the CHIPS Act, Inflation Reduction Act, and Bipartisan Infrastructure Law.

In his counseling practice, Mike regularly advises government contractors and suppliers on best practices for managing the rapidly-evolving array of cybersecurity and supply chain security rules and requirements. In particular, he helps companies assess and navigate domestic preference and country-of-origin requirements under the Buy American Act (BAA), Trade Agreements Act (TAA), Berry Amendment, and DOD Specialty Metals regulation. He also assists clients in managing product and information security considerations related to overseas manufacture and development of Information and Communication Technologies & Services (ICTS).

Mike serves on Covington’s Hiring Committee and is Co-Chair of the firm’s Summer Associate Program. He is a frequent writer and speaker on issues relating to procurement fraud and contractor responsibility, and he has served as an adjunct professor at the George Washington University Law School.

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Photo of Peter Terenzio Peter Terenzio

Peter Terenzio advises clients regarding the regulatory requirements that govern federal contractors and grantees. He focuses on helping clients navigate the Cost Accounting Standards (CAS) and the cost principles in FAR Part 31 and 2 CFR Part 200. He also routinely advises on…

Peter Terenzio advises clients regarding the regulatory requirements that govern federal contractors and grantees. He focuses on helping clients navigate the Cost Accounting Standards (CAS) and the cost principles in FAR Part 31 and 2 CFR Part 200. He also routinely advises on Other Transaction Authority (OTA) research, prototype, and production agreements.

Peter works on accounting, cost, and pricing matters, including providing day-to-day compliance advice; assisting with responses to audits and investigations and findings of potential noncompliance; and performing internal investigations of alleged violations. He also advises on other regulatory regimes, including the complicated prevailing wage rules imposed by the Davis Bacon Act (DBA) and Service Contact Act (SCA). He has particular experience with prototype OTAs issued in cutting edge fields, including quantum computing and biotechnology.

Peter also represents contractors in disputes arising under contracts and grants. He knows how to work closely with the client’s subject matter experts to prepare and submit detailed requests for equitable adjustment (REAs) to secure price or schedule relief. When contract disputes cannot be resolved amicably, he has helped clients in litigation before federal courts and the Boards of Contract Appeals.

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