Sept 23 -- DoD, GSA, and NASA issued a proposed rule on July 30, 2021, amending the Federal Acquisition Regulation (FAR) to implement an Executive order (E.O.) addressing domestic preferences in Government procurement. The deadline for submitting comments is being extended from September 28, 2021 to October 28, 2021 to provide additional time for interested parties to provide comments on the FAR case. https://www.federalregister.gov/documents/2021/09/23/2021-20567/federal-acquisition-regulation-amendments-to-the-far-buy-american-act-requirements-extension-of-time
July 30 -- The Federal Acquisition Regulatory Council invites public comment by September 28, 2021 on a proposed rule that amends the Federal Acquisition Regulation (FAR) to implement an Executive order (E.O.) addressing domestic preferences in Government procurement. A virtual public meeting will be held on August 26, 2021, from 9 AM to 3 PM EST.
On January 25, 2021, the President signed Executive Order (E.O.) 14005, the Future Is Made in All of America by All of America's Workers (86 FR 7475, January 28, 2021). The E.O. contemplates a series of actions to enable the United States Government to maximize the use of goods, products, and materials produced in the United States in order to strengthen and diversify domestic supplier bases and create new opportunities for U.S. firms and workers.
These actions include (i) regulatory amendments to the implementation of the Buy American Act in FAR part 25 to fit the current realities of the American economy; (ii) the creation of a Made in America Office within the Office of Management and Budget to provide centralized, strategic, and holistic management of domestic sourcing activities across Federal procurement, Federal financial assistance, and maritime policies; (iii) a public website with information on all proposed waivers to the Buy American Act and other Buy American Laws, as defined in the E.O., that helps more U.S. firms access Federal contracting and provides data to the Made in America Office to inform policy development for domestic sourcing; and (iv) a review by the Federal Acquisition Regulatory Council (FAR Council), in consultation with the Made in America Office, of the longstanding statutory exemption from the Buy American Act for commercial information technology (IT) to determine if the original purpose or other goals of the exemption remain relevant in the current economic and national security environment.
This proposed rule addresses section 8 of the E.O., which requires the FAR Council to strengthen the impact of the Buy American Act. The dollars the Federal Government spends on goods and services are a powerful tool to support American workers and manufacturers. Contracting alone accounts for nearly $600 billion in Federal spending. Federal law requires government agencies, in some circumstances, to give preferences to American firms; however, these preferences have not always been implemented consistently or effectively.
Section 8 of E.O. 14005 requires the FAR Council to consider amending the FAR to—
(1) Replace the component test used to identify domestic end products and domestic construction materials with a test under which domestic content is measured by the value that is added to the product through U.S.-based production or U.S. job-supporting economic activity.
(2) Increase the threshold for the domestic content requirement.
(3) Increase the price preferences for domestic end products and domestic construction materials.
The purpose of the proposed rule amendments is to promote the procurement by the Government of goods, products, and materials from sources that will help American businesses compete in strategic industries and help America's workers thrive. Improved Buy American rules will help ensure that Federal procurement plays an important role as part of the Administration's policy to build back the American economy so it can continue to lead the global marketplace, supporting U.S.-based businesses—small and large, urban and rural, including those that have been historically disadvantaged. In pursuit of those goals, this proposed rule would provide for—
An increase to the domestic content threshold, a schedule for future increases, and a fallback threshold that would allow for products meeting a specific lower domestic content threshold to qualify as domestic products under certain circumstances -- This rule proposes to increase the domestic content threshold initially from 55 percent to 60 percent, to increase the threshold to 65 percent in two years, and to increase the threshold to 75 percent five years after the second increase. This rule also proposes to allow, until one year after the increase of the domestic content threshold to 75 percent, for the acceptance of the former domestic content threshold in instances where end products or construction materials that meet the new domestic content threshold are not available or are of unacceptable cost.
A framework for application of an enhanced price preference for a domestic product that is considered a critical product or made up of critical components -- The rule provides for a framework through which higher price preferences will be applied for end products and construction material deemed to be critical or made up of critical components. The process for identifying critical items and critical components to receive the price preference would use the quadrennial critical supply chain review instituted in E.O. 14017, America's Supply Chains (86 FR 11849), as well as the National COVID Strategy. OMB will lead a subsequent assessment to further distill the list of products designated critical to those products for which procurement is likely to make a meaningful difference toward strengthening U.S. supply chains. The products that will receive a price preference will be determined in a separate rulemaking, to allow time for the supply chain review and trade pact waiver review to be completed first. Not all critical products identified through the supply chain review will necessarily qualify for the preference. The process for determining critical products will also determine the enhanced price preference for each critical item or end product with critical components. Once the list is established in the FAR, the list will be published in the Federal Register for public comment no less frequently than once every four years to reflect changes to the list.
A postaward domestic content reporting requirement for contractors -- In order to gain insight into the actual domestic content of products sold under contract and thereby support the Administration's broader supply chain security initiatives, this rule requires contractors to provide the specific domestic content of critical items, domestic end products containing a critical component, and domestic construction material containing a critical component, that were awarded under a contract.
The proposed rule does not seek to replace the “component test” in FAR Part 25 at this time. Instead, the FAR Council seeks additional information regarding the strengths and shortcomings of the “component test,” as currently structured, and requests public comment on how domestic content might be better calculated. In particular, input is sought regarding the desirability and feasibility of replacing the “component test” with a test that measured domestic content by a “value added” calculation.
The FR notice requests answers from the public to two sets of questions at https://www.federalregister.gov/d/2021-15881/p-67
Federal Acquisition Regulation: Proposed Amendments to the FAR Buy American Act Requirements and request for information and comments: https://www.federalregister.gov/documents/2021/07/30/2021-15881/federal-acquisition-regulation-amendments-to-the-far-buy-american-act-requirements
Buy American, Trade Agreements, and Duty-Free Entry data collection -- draft supporting statement https://www.dropbox.com/s/eaclkgw454xrliu/FAR%20case%202021-008%20%28p%29_Supporting%20Statement-newIC.pdf?dl=0
Domestic Content Reporting Requirement -- draft supporting statement https://www.dropbox.com/s/tts69eszntieksd/FAR%20case%202021-008%20%28p%29-IC%209000-0024%20Supporting%20Statement.pdf?dl=0
Federal Acquisition Regulatory Council https://www.acquisition.gov/far-council
FAR Council membership consists of the OMB Administrator for Federal Procurement Policy, the Secretary of Defense, the Administrator of National Aeronautics and Space, and the Administrator of General Services.
Executive Order on Ensuring the Future Is Made in All of America by All of America’s Workers, January 25, 2021 https://www.whitehouse.gov/briefing-room/presidential-actions/2021/01/25/executive-order-on-ensuring-the-future-is-made-in-all-of-america-by-all-of-americas-workers/
Fact Sheet: Biden-Harris Administration Announces Supply Chain Disruptions Task Force to Address Short-Term Supply Chain Discontinuities, June 8, 2021 https://www.whitehouse.gov/briefing-room/statements-releases/2021/06/08/fact-sheet-biden-harris-administration-announces-supply-chain-disruptions-task-force-to-address-short-term-supply-chain-discontinuities/
OMB, Increasing Opportunities for Domestic Sourcing and Reducing the Need for Waivers from Made in America Laws, M21-26, June 11, 2021 https://www.whitehouse.gov/wp-content/uploads/2021/06/M-21-26.pdf
Fact Sheet: Biden-Harris Administration Issues Proposed Buy American Rule, Advancing the President’s Commitment to Ensuring the Future of America is Made in America by All of America’s Workers, July 28, 2021 https://www.whitehouse.gov/briefing-room/statements-releases/2021/07/28/fact-sheet-biden-harris-administration-issues-proposed-buy-american-rule-advancing-the-presidents-commitment-to-ensuring-the-future-of-america-is-made-in-america-by-all-of-americas/
Remarks by President Biden on the Importance of American Manufacturing, July 28, 2021 https://www.whitehouse.gov/briefing-room/speeches-remarks/2021/07/28/remarks-by-president-biden-on-the-importance-of-american-manufacturing/
Celeste Drake, Made in America Director, The Future of Our Economy Depends On Reinventing American Manufacturing and Innovation, July 29, 2021 https://www.whitehouse.gov/omb/briefing-room/2021/07/29/the-future-of-our-economy-depends-on-reinventing-american-manufacturing-and-innovation/