US President Joe Biden’s focus on Buy American Act domestic preference regulations and agency practices of implementing regulations and issuing waivers is likely to lead to an increased focus on federal government contractors’ compliance with heightened requirements.
As we previously reported, on January 27, President Biden signed the Executive Order on Ensuring the Future Is Made in All of America by All of America’s Workers (EO). In an attempt to strengthen Buy American policies, the EO—one of the first steps in the president’s Build Back Better Recovery Plan—reflects a continued increase in focus on domestic preference requirements in the federal procurement process. Among other things, the EO seeks to create a centralized review and approval process for waivers to government contractors across agencies by designating a Made in America director within the Office of Management and Budget (OMB) and by requiring senior agency involvement in the waiver process. In his public statements prior to signing the EO, President Biden warned that the administration will curb the practice of federal agencies waiving Buy American requirements “with impunity,” and that he has directed the OMB to review waivers to ensure they are used only in “very limited circumstances.”[1]
Beyond a crackdown on existing waivers, the EO requires the Federal Acquisition Regulation (FAR) Council to review whether information technology that is a commercial item should remain exempt from the domestic preference requirements. The EO also directs the FAR Council to consider proposing changes to the FAR provisions that would (1) revise how to define and measure domestic content of end products; and (2) increase the domestic content required for end products or construction material.[2]
While the EO’s focus is generally on the Buy American Act (BAA), its overarching policy of scrutinizing waivers is certain to have implications for other regulations that involve foreign sourcing in the procurement process. For example, the Trade Agreements Act (TAA), generally applicable to contracts valued at $182,000 or more,[3] waives the BAA and its preference for end products manufactured in the United States for foreign-sourced items from countries that have entered into trade agreements with the United States (identified as “designated countries”).[4] At least one legislator recently raised concerns that the TAA has “significantly curtailed” the effectiveness of Buy American policies and called on President Biden to restrict TAA waivers.[5] For now, the EO’s only TAA reference is a requirement that federal agencies report information on their spending based on TAA waivers, broken out by country of origin, to the Made in America director within 180 days and then on a biannual basis. Signaling that the administration is likely to consider this analysis as it contemplates next steps, President Biden stated that he will engage with trading partners “to modernize international trade rules, including those related to government procurement, to make sure we can all use our taxpayer dollars...
