FEDERAL GOVERNMENT CONTRACTORS FACE EVOLVING BUY AMERICAN REQUIREMENTS

Government contractors face important changes to the “Buy American” requirements under federal contracts.  On January 19, 2021 the Federal Acquisition Regulatory Council (FAR Council) issued its Final Rule, making key changes to Buy American Act requirements. These changes are set to go into effect for solicitations and resulting contracts on or after February 22, 2021.

Here is what you need to know about the new changes to the “Buy American” requirements:

What are the 3 key changes to the Buy American Requirements?

1

Products that are wholly or predominately Iron or Steel are Subject to Stricter Rules.

The Final Rule includes a stricter set of requirements for products that are “wholly or predominantly of iron or steel or a combination of both.” For iron and steel products where iron and steel make up more than 50% of the total cost of the components of the product or material, the product qualifies as a “domestic end product” ONLY IF it is manufactured in the U.S. and less than 5% of the total component costs are for foreign iron and steel, excluding the value of commercial-off-the-shelf (COTS) fasteners.
2

Domestic Content Requirements have Increased.

For products that are not “wholly or predominantly of iron or steel, i.e. where cost of the iron and steel components are equal to or less than 50% of the total component costs, the percentage of total component costs attributable to domestic components in order to qualify as a “domestic end product” has been increased from 50% to 55%. So, if the total iron or steel cost of the components of a product is 50% or less, that product will qualify as a “domestic end product” if it is manufactured in the U.S. and made up of at least 55% domestic components or a COTS product.
3

Price Preferences for Domestic Products and Materials have Increased.

The price evaluation preference for suppliers of domestic end products for civilian agency purchases has increased to 20% for large businesses and 30% for small businesses. The U.S. Department of Defense price preference remains at 50%.

Implementation of these changes and interpretation of the rules will undoubtedly be complex and confusing. Adding to the uncertainty is the recent Executive Order signed by President Biden on January 25, 2021. The Executive Order sets up a process for review of proposed waivers to “Made in America Laws,” and requires the FAR Council to consider certain amendments to the FAR by July 25, 2021, all with the goal of ensuring federal government money is spent on goods made by American workers in America with American components.

IF YOU HAVE A CONTRACT SUBJECT TO THE REQUIREMENTS OF THE BUY AMERICAN ACT, YOU NEED TO BE AWARE OF THE EVOLVING LANDSCAPE WITH RESPECT TO WHAT QUALIFIES AS DOMESTIC PRODUCTS UNDER THE ACT AND INTERPRETATIONS OF THE NEW PROVISIONS.  

By Jane I. Milas, Garcia & Milas Managing Director 

Business Law Attorneys in New Haven, Connecticut

For help navigating the recent changes to the Buy American Act, the business attorneys at Garcia & Milas are ready to assist employers when navigating how to update new contacts to reflect these changes.

Garcia & Milas Law Firm has seasoned Business and Employment Law Attorneys in New Haven, Connecticut and surrounding areas. We advise and represent clients in a variety of business employment contexts.

Garcia & Milas practices before administrative tribunals and in state and federal courts. Visit our page to learn more about our Labor and Employment Law Practice.

Jane Milas Attorney New Haven, CT

Jane Milas

Managing Director

Jane I. Milas is the Managing Director of Garcia & Milas Law Firm located in New Haven, CT. She regularly advises employers on employment issues impacting their businesses, as well as assists them in complying with federal, state, and local labor and employment laws. Ms. Milas has been ranked as a New England Super Lawyer for 10 years.

Jane Milas

Jane Milas

Jane I. Milas is the Managing Director of Garcia & Milas Law Firm located in New Haven, CT. She regularly advises employers on employment issues impacting their businesses, as well as assists them in complying with federal, state, and local labor and employment laws. Ms. Milas has been ranked as a New England Super Lawyer for 10 years.

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