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08/11/2021
Proposed amendment to Buy American Act: What contractors need to know
On July 30, 2021, the DoD, GSA, and NASA proposed an amendment to the Buy American Act requirements. These revisions were in response to President Biden’s signed Executive Order 14005, Ensuring the Future Is Made in All of America by All of America's Workers, which encourages the Federal Government to maximize the purchases of domestic goods, products, and materials. The timing of this Executive Order could not have been better, as four days earlier changes to the Buy American Act were implemented by the FAR Council.
Here are the salient facts of the proposed changes:
- Increase in domestic content from 55% to 60%.
- A scheduled increase of domestic content to 66% in 2 years and another increase to 75% in 5 years.
- This requirement does not apply to commercially available off-the-shelf (COTS) items.
- This requirement will apply to commercial items and items below the simplified acquisitions threshold (SAT).
- The revision also contains a fallback threshold where, for one year after the increase, an item could be deemed domestic if that item met the previous threshold and if no other items are available or other items are deemed to be excessive.
The proposed amendment will create a framework that would increase the price preference for domestic items deemed critical or made up of components that are critical. Currently, domestic items receive a 20% price preference, and small businesses receive a 30% price preference. The contractor would identify if their item is critical, or contains components that are critical, so that the contracting officer applies the price preference to their bid.
In addition to the price preference for critical items, contractors can expect two new FAR clauses implementing a reporting requirement. Currently, there is limited information on the overall domestic items bought and whether the content meets the required threshold. By reporting this data, the government will be able to make better informed decisions on future Buy American changes, such as what enhanced price preference level for critical items is most efficient.
While these changes are substantial, the overall meaning of the Buy American Act has not changed. These revisions will allow for the federal government to maximize their purchasing of American made items, thus improving the overall economy. With the infrastructure bill looming, the timing could not be better. Input to these proposed changes are due to the government by September 28, 2021. More information can be found here.
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Kristen Soles
CPA, Partner - Managing Partner, Advisory - Global Consulting Solutions and Government Contracting Industry Leader
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This has been prepared for information purposes and general guidance only and does not constitute legal or professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is made as to the accuracy or completeness of the information contained in this publication, and CohnReznick LLP, its partners, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.