By: Paul Hawkins
On January 19, 2021, the Federal Acquisition Regulation (FAR) Council published a final rule that implemented a 2019 Executive Order meant to strengthen Buy American Act (BAA) enforcement and standards. The new rule raises the domestic content threshold to 55% for general products and construction materials and a whopping 95% for predominantly iron/steel products. The new rule also significantly increases the price preferences for offerors offering “domestic end products” (from 6% to 20% for large businesses and 12% to 30% for small businesses). Additionally, the new rule includes further updated guidance regarding iron and steel products among other changes.
On the heels of this newly published rule, President Biden signed an Executive Order on Monday, January 25, 2021, doubling down on and seeking to expand further the previous administration’s domestic preference policies for government procurements. Among other potential changes, the Executive Order directs the FAR Council to further amend the FAR’s BAA provisions by revamping the component test itself and raising again the domestic content thresholds and price preference levels. Contractors should expect even more changes in the coming months.
The BAA (as implemented in the FAR) generally places a price preference on so-called “domestic end products.” In order to be considered “domestic end products,” such products must be comprised of domestically mined or produced components exceeding certain percentage thresholds as referred to above. While this requirement seems simple, it is anything but, and it has historically been a compliance headache for government contractors especially suppliers and construction contractors. It should also be noted that the BAA is only part of a constellation of statutes and regulations implementing domestic preference policies and country of origin requirements, which also include the Trade Agreements Act (TAA), the Berry Amendment, the Defense Department’s Balance of Payments Program, and the separate but similar “Buy America” requirements under the federal Department of Transportation (DOT).
If you have specific Buy American Act (BAA) or other domestic preference and country of origin compliance questions, please contact Paul Hawkins, Tara Chadbourn, or David Hearne at (757) 410-8066 or firstname.lastname@example.org, email@example.com, or firstname.lastname@example.org.