Buy American

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.Continue Reading New Trade Agreements Act Thresholds Take Effect January 1, 2022

Under the January 2021 “Made in America” Executive Order 14005, President Biden established a new Made in America Office to oversee and administer domestic preference requirements in federal procurements.  Housed within the Office of Management and Budget (“OMB”), the Made in America Office was tasked with, among other things, reviewing and approving agency waivers of any Made in America Laws—including, for example, waivers of the Buy American Act (“BAA”) and Trade Agreements Act (“TAA”), as well as developing a publicly available website to post the descriptions of the proposed waivers and justifications for each.  Last week, the Made in America Office launched its new website, establishing for the first time a centralized, government-wide database of all proposed waivers of Made in America Laws.
Continue Reading The Made in America Office Website Is Live

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.Continue Reading Buy American Act Update: FAR Council Holds Public Meeting on New Proposed Rule

Last month, the Biden administration released its report on the results of its 100-day review of U.S. supply chains for critical products:  “Building Resilient Supply Chains, Revitalizing American Manufacturing, and Fostering Broad-Based Growth” (the “Report”).  Alongside the Report’s slate of policy recommendations, the Biden administration also announced immediate actions to strengthen supply chains and stimulate domestic competitiveness.

The Report is the result of President Biden’s February 24 “Executive Order on America’s Supply Chains” (the “Order”), which directed federal departments and agencies to conduct a review of supply chain risks in four critical product areas,[1] including pharmaceuticals and active pharmaceutical ingredients (“APIs”).  The Report and its recommendations further the Biden administration’s broader goal of rebuilding the U.S. industrial base, reducing reliance on foreign competitors, and bolstering national and economic security.

The U.S. Department of Health and Human Services (“HHS”) led the review of the supply chain for pharmaceuticals and APIs, which focused primarily on drugs, in particular small-molecule drugs and therapeutic biological products.  The Report makes a number of recommendations discussed herein that have the potential to impact pharmaceutical companies’ business plans and generate significant opportunities, though many such recommendations are long-term and will require dedicated funding so the actual impact of the Report’s suggestions remains to be seen.
Continue Reading Biden Administration 100-Day Supply Chain Assessment: Insights for Pharmaceutical Manufacturers

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.”Continue Reading White House Issues Guidance on Limiting Waivers of Domestic Sourcing Laws – What Contractors Need to Know

The American Rescue Plan, signed into law last month, includes $1.9 trillion in economic stimulus, healthcare, and related funding.  And just last week the Biden administration released an infrastructure proposal, the American Jobs Plan, that includes $2.3 trillion in transportation, connectivity, power, and other critical infrastructure investments.

Contractors are right to view these plans as massive opportunities — but should be cognizant of the regulatory strings that often attach to government spending.  In general, these can include Federal Acquisition Regulation (FAR) and agency-specific FAR supplements for federal procurements, as well as the nonprocurement uniform requirements (2 C.F.R. Part 200) and related agency-specific regulations that attach to Federal grant funds even when disbursed by state or local entities.

Now, some Congressional members are seeking to add new restrictions that would significantly overhaul the existing domestic preference regime for Federal procurements — mere weeks after the promulgation of new Buy American regulations and the release of a new Executive Order to further tighten the application of these rules.Continue Reading U.S. Senators Propose Trade-Pact Waivers Amidst Focus on Domestic Preference Laws

On January 25, 2021, President Biden issued a much-anticipated Executive Order announcing plans to strengthen the U.S. Government’s preference for domestically-sourced goods and services, including a proposal to tighten longstanding exceptions to domestic preference requirements.

Executive Order 14005 on Ensuring the Future Is Made in All of America by All …
Continue Reading President Biden Orders Tightening of Made in America Laws: What Contractors Need to Know

Last week, President Trump issued an executive order aimed at encouraging the expansion American manufacturing of essential medical products — Executive Order on Ensuring Essential Medicines, Medical Countermeasures, and Critical Inputs Are Made in the United States (August 6, 2020) (the “Order”).  The Order sets forth an ambitious plan requiring extensive agency action on a tight timeline that suggests a significant impact.  Closer examination of the Order raises significant questions about the practicalities of implementation and the realistic impact of the Order once the substantial stated exceptions are taken into account.

The List

The heart of the Order is a list of Essential Medicines, Medical Countermeasures (“MCMs”), and Critical Inputs to which the Order’s requirements apply — but the key components of this list do not yet exist.  Instead, the Order directs the Food and Drug Administration (“FDA”) to produce the list within 90 days and to include on the list Essential Medicines, MCMs, and Critical Inputs “that are medically necessary to have available at all times in an amount adequate to serve patient needs and in the appropriate dosage forms.”

The Order provides the following definitions that give some insight into what may be on the FDA’s eventual list:
Continue Reading Trump Administration Increases Uncertainty for Pharmaceutical Manufacturing

On Monday, the U.S. Court of Appeals for the Federal Circuit issued an opinion in Acetris Health, LLC v. United States, No. 2018-2399 (Fed. Cir. Feb. 10, 2020) (“Acetris”), that would permit pharmaceutical manufacturers to source a drug’s active pharmaceutical ingredient (“API”) from India, China and other non “designated countries” and yet still offer the end product for sale to the U.S. Government.  Under the Trade Agreements Act (“TAA”), if a drug’s API was sourced from outside of the United States or a designated country, at least some Government agencies previously had taken the position that the U.S. Government could not purchase it.  In Acetris, the Federal Circuit explained that the TAA inquiry should turn not on where the API (or some other component) is sourced, but instead on where the pill (or other end product) is manufactured.  Consistent with this approach, the court held that a pill manufactured in the United States was compliant with the TAA and implementing regulations even though the pill’s API was sourced from India.

Although the full implications of the Acetris decision are not yet clear, there is no doubt that the ruling alters the TAA compliance landscape and offers broader lessons outside of the pharmaceutical manufacturing context.  Consequently, the decision warrants close attention by contractors seeking to maximize supply chain efficiency.
Continue Reading A New Path to TAA Compliance: U.S.-Made End Products in Acetris

A long-standing dispute over the approach to country of origin determinations under the Trade Agreements Act (“TAA”) may soon be resolved, as the Federal Circuit recently heard oral argument in one of two cases presently examining key aspects of this statute.  Among other questions presented, the court may decide the standard for determining whether a product may be considered a U.S.-made end product — a question that could have far reaching implications for product manufacturers across all industries.
Continue Reading How Much Is Enough? Federal Circuit Appeal May Decide Level of U.S. Manufacturing Required Under the TAA