Contracts & Legal

Buy American Act

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The Buy American Act (BAA) (41 U.S.C.10a – 10d) was passed in 1933 and restricts the purchase of supplies that are not domestic end products. It applies to all U.S. federal government agency purchases of goods valued over the purchase threshold, but does not apply to services. Under the Act, all goods for public use (articles, materials, or supplies) must be produced in the U.S., and manufactured items must be manufactured in the U.S. from U.S. materials. The BAA uses a two-part test to define a domestic end product.

  1. The article must be manufactured in the United States
  2. The cost of domestic components must exceed 50 percent of the cost of all the components
  3. Unmanufactured products mined or produced in the United States

DoD has issued a final rule amending DFARS 252.225-7000 and 252.225-7001 provision and clause which includes a partial waiver to the two part test. The waiver allows a Commercial Off-The-Shelf (COTS) item to be treated as a domestic end product if it is manufactured in the U.S., without tracking the origin of the item’s components.

Exceptions that allow the purchase of a foreign end product are listed at FAR 25.103 and DFARS 225.103. Under certain conditions, federal and/or DoD procurements may be waived:

  • Public Interest: The head of the agency determines that a domestic preference would be inconsistent with the public interest. This exception applies when an agency has an agreement with a foreign government that provides a blanket exception to the Buy American Act. DoD currently has the following agreements: World Trade Organization Government Procurement Agreement (WTO GPA), Free Trade Agreements (FTAs) with various countries (including Caribbean Basin Trade Initiative (CBTI)), Memorandum of Understandings (MOUs) with Qualifying Countries listed in DFARS 225.872 and North American Free Trade Agreement (NAFTA).
  • Non-availability: BAA does not apply with respect to articles, materials, or supplies not mined, produced, or manufactured in the U.S. in sufficient and reasonable available commercial quantities and of a satisfactory quality. FAR 25.104 and DFARS 225.104 list articles determined to be non-available.
  • Unreasonable Costs: If purchasing the material domestically would burden the government with an unreasonable cost. The unreasonable cost exception is implemented through the use of an evaluation factor applied to low foreign offers. The Contracting Officer may determine unreasonable cost in accordance with FAR 25.105/Subpart 25.5 and DFARS 225.105/Subpart 225.5.
  • Resale: The contracting officer may purchase foreign end products specifically for commissary resale.
  • Information Technology that is a commercial item.

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