President Biden’s Bid to Enhance Made in America Preferences
On January 25, 2021, President Biden issued an Executive Order on “Ensuring the Future is Made in all of America by All of America’s Workers” (the “Order”) to advance the stated policy set forth in Section 1 of: “us[ing] terms and conditions of Federal financial assistance awards and Federal procurements to maximize the use of goods, products, and materials produced in, and services offered in, the United States.”
The Order includes several key components to further the stated policy, including: (1) Establishing a Made in America Office headed by the Made in America Director; (2) Creating a General Services Administration (GSA) public website to increase visibility into the processing for waiver of the requirements and waiver decisions; (3) Enacting changes to the Buy American Act’s (i) “component test”, (ii) domestic content threshold, and (iii) price preference for domestic end products and materials; (4) Raising American supplier visibility; and (5) Reviewing existing Made in America Law exceptions applicable to commercial information technology procurements.
Made In America Office and Buy American Act Waivers
Section 4 of the Order establishes the new Made in America Office within the Office of Management and Budget (OMB) with a focus on reviewing agencies’ proposed waivers of Made in America Laws (e.g., the Buy American Act) in connection with their procurement decisions. The Order requires agencies to provide the Made in America Director with “a description of its proposed waiver and a detailed justification for the use of goods, products or materials that have not been mined, produced or manufactured in the United States.” The Director is tasked with providing a list of information agencies must include when submitting their waiver descriptions and justifications. The Order also requires the Director to review each agency-proposed waiver and issue a written determination and explanation within 15 business days (or such shorter time period as the Director may impose). In the event of a disagreement between the agency and the Director, the agency “shall” inform the Director in writing and resolve the conflict in accordance with procedures similar to those set forth in section 7 of Executive Order 12866 of September 30, 1993 (Regulatory Planning and Review), which provides for Presidential and Vice Presidential resolution within 60 days.
GSA Waiver Website
Section 6 of the Order directs the GSA to develop a public website that includes information on all proposed waivers and whether the waivers were granted. The design is supposed to “enable manufactures and other interested parties to easily identify proposed waivers and whether those waivers have been granted.”
Better Supplier Visibility
Section 7 of the Order requires agencies to partner with the Hollings Manufacturing Extension Partnership (MEP) to gain more visibility into the American supplier pool, particularly small and medium size companies, that produce goods, products and materials in the United States. The MEP is a public-private partnership based at the National Institute of Standards and Technology. It operates centers located in all 50 states and Puerto Rico that focus on providing U.S. manufactures with resources “to develop new products and customers, expand and diversify markets, adopt new technology, and enhance value within supply chains.”
Buy American FAR Changes
Section 8 of the Order instructs the FAR Council to issue FAR amendments that would: (1) replace the current “component test” from Part 25 used to determine what constitutes domestic end products and domestic construction materials based on the source of components with a test that instead determines domestic content based on “value added to the product through U.S.-based production or U.S. job-supporting economic activity;” (2) increase the numerical threshold for domestic content for end products and construction materials; and (3) increase the price preferences for domestic end products and domestic construction materials.
Exception-less Commercial Item IT Procurements
Section 10 of the Order directs the FAR Council to develop recommendations on potentially lifting the current exceptions commercial IT products have to Made in America Laws. See, e.g., FAR § 25.103(e) (stating “the restriction on purchasing foreign end products does not apply to the acquisition of information technology that is a commercial item.”).
Out with the Old
Lastly, Section 14 of the Order revoked three executive orders issued under the Trump Administration: (1) Executive Order 13788 of April 18, 2017 (Buy American and Hire American); (2) Section 5 of Executive Order 13858 of January 31, 2019 (Strengthening Buy-American Preferences for Infrastructure Projects); and (3) Executive Order 13975 of January 14, 2021 (Encouraging Buy American Policies for the United States Postal Service).
Adding to the Preference for American-Made
This Order and the proposed FAR changes it included in Section 8 come on the heels of the FAR Council’s final rule (86 Fed. Reg. 6180, Jan. 19, 2021) to implement Executive Order 13881, Maximizing Use of American-Made Goods, Products, and Materials. Under the final rule, the cost of foreign iron and steel for iron and steel products has to be less than 5% of the cost of all the product’s components to satisfy the Buy American Act definition of “domestic end product” or “domestic construction material.” The final rule also requires the domestic content cost of non-iron and non-steel products to be more than 55% of the total component costs and raises the price preferences for domestic end products and construction materials for large businesses from 6% to 20% and for small businesses from 12% to 30%.
Contractors should keep an eye out as the implementation of the various directives issued in the Order unfold, especially the creation of the Made in America Office, and the FAR Council’s proposed rules modifying the Buy American Act and recommendations regarding commercial IT procurements. There will be opportunities for comment, so identifying the implications of these rules and recommendations and providing input before their finalization is something all impacted parties should consider.
Contact Roddy Stieger for more information.