On December 30, 2021, the FAR Council issued a final rule to update the trade agreements thresholds implemented under the Trade Agreements Act (“TAA”).  The new thresholds take effect January 1, 2022.

The TAA thresholds are adjusted every two years and set the value a contract must meet or exceed in order for the World Trade Organization Government Procurement Agreement (“WTO GPA”) and free trade agreements (“FTAs”) to apply.  For supply, service, and construction contracts that meet or exceed the stated thresholds, Buy American Act (“BAA”) requirements are waived in accordance with the TAA, and the Government is required to treat eligible products and services from designated countries on an equal basis as domestic products and services.

The updated thresholds, to be listed in FAR 25.402(b), are provided below.

Trade Agreement Supply Contract (equal to or exceeding) Service Contract (equal to or exceeding) Construction Contract (equal to or exceeding)
WTO GPA $183,000 $183,000 $7,032,000
FTAs:
Australia FTA $92,319 $92,319 $7,032,000
Bahrain FTA $183,000 $183,000 $12,001,460
CAFTA-DR (Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua) $92,319 $92,319 $7,032,000
Chile FTA $92,319 $92,319 $7,032,000
Colombia FTA $92,319 $92,319 $7,032,000
Korea FTA $100,000 $100,000 $7,032,000
Morocco FTA $183,000 $183,000 $7,032,000
NAFTA:
—Canada* $25,000* $83,099* $10,802,884*
—Mexico $92,319 $92,319 $12,001,460
Oman FTA $183,000 $183,000 $12,001,460
Panama FTA $183,000 $183,000 $7,032,000
Peru FTA $183,000 $183,000 $7,032,000
Singapore FTA $92,319 $92,319 $7,032,000
Israeli Trade Act $50,000 — —

*The Canada thresholds remain unchanged in this rule because they are in the process of being modified by a separate rulemaking to match WTO GPA thresholds, in accordance with the United States-Mexico-Canada Agreement Implementation Act.  See 86 Fed. Reg. 70808 (Dec. 13, 2021).

While the changes to the TAA thresholds generally are not large, they still could be significant, as the thresholds represent a bright-line below which the Buy American Act applies with full force.  So long as the Government continues to aggressively pursue – and enforce – its “Made in America” policy, it is especially important for contractors to have a firm understanding of the scope and application of the BAA, TAA, and other domestic preference regimes – and to consider updating their internal processes accordingly.  We will continue to track developments and provide further updates in this space.

Tags: Buy American, Buy American Act, domestic content, Domestic Preferences, Domestic Sourcing, Free Trade Agreements, Made in America, Trade Agreements Act, WTO GPA
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Photo of Michael Wagner Michael Wagner

Mike Wagner helps government contractors navigate high-stakes enforcement matters and complex regulatory regimes.

Combining deep regulatory knowledge with extensive investigations experience, Mr. Wagner works closely with contractors across a range of industries to achieve the efficient resolution of regulatory enforcement actions and government…

Mike Wagner helps government contractors navigate high-stakes enforcement matters and complex regulatory regimes.

Combining deep regulatory knowledge with extensive investigations experience, Mr. Wagner works closely with contractors across a range of industries to achieve the efficient resolution of regulatory enforcement actions and government investigations, including False Claims Act cases. He has particular expertise representing individuals and companies in suspension and debarment proceedings, and he has successfully resolved numerous such matters at both the agency and district court level. He also routinely conducts internal investigations of potential compliance issues and advises clients on voluntary and mandatory disclosures to federal agencies.

In his contract disputes and advisory work, Mr. Wagner helps government contractors resolve complex issues arising at all stages of the public procurement process. As lead counsel, he has successfully litigated disputes at the Armed Services Board of Contract Appeals, and he regularly assists contractors in preparing and pursuing contract claims. In his counseling practice, Mr. Wagner advises clients on best practices for managing a host of compliance obligations, including domestic sourcing requirements under the Buy American Act and Trade Agreements Act, safeguarding and reporting requirements under cybersecurity regulations, and pricing obligations under the GSA Schedules program. And he routinely assists contractors in navigating issues and disputes that arise during negotiations over teaming agreements and subcontracts.

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Photo of Jennifer Bentley Jennifer Bentley

Jennifer Bentley is an associate in the firm’s Washington, DC office. She is a member of the Government Contracts Practice Group and Litigation and Investigations Practice Group. She also maintains an active pro bono practice.

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