Are You Ready for Increasing Buy American Act Content Requirements?
In this article, the author explains that contractors should confirm that the products currently being sold to the government comply with the new 60 percent domestic content requirement and also should keep in mind that the requirement will increase to 65 percent in 2024.
The domestic content requirements for government purchases subject to the Buy American Act (BAA) has increased, effective October 25, 2022. A March 7, 2022, final rule implemented significant domestic content threshold increases over a seven-year timeframe for procurements subject to the BAA requirements of FAR Part 25. These increases were based on President Biden’s January 25, 2021, Executive Order 14005, Ensuring the Future Is Made in All of America by All of America’s Workers. (Note that these changes apply to the BAA as implemented in non-Department of Defense (DoD) purchases—the rules for implementing the BAA in DoD acquisitions are set forth in the DFARS, and differ from the FAR implementation in several important respects.)
Unlike the Trade Agreements Act (TAA), which bans government purchases of non-compliant products, the BAA applies pricing preferences to encourage government agencies to purchase “domestic end products.” Thus, items that are not BAA compliant may still be purchased by government agencies, but they must be significantly less expensive. Currently, FAR Part 25 provides that large businesses offering domestic end products receive a 20 percent price preference and small businesses offering domestic end products receive a 30 percent price preference. The FAR sets forth a two-part test to determine whether a manufactured end product or construction material qualifies as a domestic end product: (1) the end product or construction material must be manufactured in the United States; and (2) the cost of any components mined, produced, or manufactured in the United States must exceed a certain percentage of the cost of all components.
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“Are You Ready for Increasing Buy American Act Content Requirements?” by Merle M. DeLancey, Jr. was published in the February 2023 edition of Pratt’s Government Contracting Law Report (Vol. 9, No. 2), an A.S. Pratt Publication, LexisNexis. Reprinted with permission.
This article was first published as a Blank Rome Government Contracts Navigator blog post on October 19, 2022.