Domestic sourcing requirements are not new, but the Government is always developing new tools for increasing the sourcing of goods from the U.S. and allied countries. Both sides of the political aisle have marched to a drumbeat of increased domestic sourcing for the past several years. Most recently, the Biden Administration implemented Executive Order 14005
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.…
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.…
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.”…
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.…
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.
Last week, President Trump issued a new executive order, entitled “Strengthening Buy-American Preferences for Infrastructure Projects.” This order serves as an extension of the President’s earlier April 2017 “Buy American and Hire American” executive order, which we have previously analyzed in this space. The April 2017 order stated that “it shall be the policy of the executive branch to buy American and hire American,” and, among other things, directed agencies to “scrupulously, monitor, enforce, and comply with” domestic preference laws (referred to by the executive order as “Buy American Laws”) and to minimize use of waivers that would permit the purchase of foreign end products.
The President’s new order continues to emphasize the importance of “the use of goods, products, and materials produced in the United States,” but is specifically directed towards infrastructure projects that are recipients of federal financial assistance awards. As we have reported previously, federally-financed infrastructure has also been a stated area of focus for the Trump administration, although the Administration’s “Legislative Outline for Rebuilding Infrastructure in America” released last year curiously lacked any domestic preference requirements.
The new executive order makes up for this previous omission and then some: it has the potential to affect a vast number of programs and projects, and may in fact impose domestic sourcing requirements in areas—such as internet infrastructure—that are not typically targets for domestic preferences.…
Last month, GAO released a report analyzing federal agency implementation of the Buy American Act (“BAA”), 41 U.S.C. §§ 8301-8305. As we have previously reported, BAA enforcement is an area of focus for the Trump Administration, which has repeatedly emphasized the need to “Buy American and Hire American,” including in an April 2017 executive order. And for government contractors, compliance with the BAA and other domestic sourcing regimes also has been an increasingly common subject of litigation, particularly under the civil False Claims Act, as we have detailed in this space.
In keeping with this Buy American focus, GAO was commissioned to report on (A) the extent to which federal agencies procure non-domestic end products through the use of BAA exceptions and waivers, and (B) the ways in which the government’s largest buyers provide training and guidance to implement BAA requirements. Although GAO found that only a relatively small percentage of goods purchased were foreign end products, GAO also found that this number could have been misstated due to reporting errors and system limitations. Moreover, GAO found that the level of BAA training varied significantly among the agencies it canvassed. GAO’s findings, which are discussed in greater detail below, offer a window into the government’s view of its own compliance with the BAA’s complex and often confusing regulatory scheme.…
Pursuant to Sections 817 and 881(b) of the FY 2017 National Defense Authorization Act (“NDAA”), the Department of Defense (“DoD”) recently issued a proposed rule to amend certain sourcing restrictions found in DFARS subpart 225.70 and related clauses. Specifically the proposed rule would amend the DFARS to:
- extend the Berry Amendment’s domestic sourcing restrictions to the acquisition of certain athletic footwear for members of the Armed Forces, when the procurement is valued at or below the simplified acquisition threshold [Section 817], and
- recognize that Australia and the United Kingdom of Great Britain and Northern Ireland (the “UK”) are now members of the National Technology Industrial Base (“NTIB”), thereby permitting the United States to acquire certain items (that are subject to the sourcing restrictions in 10 U.S.C. 2534) if they are manufactured in the UK, Australia, Canada or the United States [Section 881(b)].
We provide our takeaways below.
Continue Reading Takeaways from DoD’s Proposed Changes to Certain Sourcing Restrictions