The executive order sets the stage for higher domestic content requirements for federal procurements.
President Trump issued an executive order last week that continues to deliver on his promise to ‘Buy American, Hire American’. The new order could set the stage for higher domestic content requirements for all federal government procurements, including federal projects like airports, roads, and bridges.
“It is the policy of the United States to buy American and to maximize, consistent with law, the use of goods, products, and materials produced in the United States. To those ends, my Administration shall enforce the Buy American Act to the greatest extent permitted by law,” the executive order states. To view the full executive order, click here.
Under the new order, most products will be treated as foreign origin if the cost of foreign materials used in the end product constitutes 45% or more of the cost of all the materials used in the end product, as opposed to the 50% threshold set by the Eisenhower Administration in 1954 (Executive Order 10582 of December 17, 1954 [Prescribing Uniform Procedures for Certain Determinations Under the Buy-American Act]).
The order also calls for a threshold to be placed on iron and steel end products, which were not previously covered under the Buy American Act. Under the new threshold, products shall be considered to be of foreign origin if the cost of foreign iron and steel constitutes 5% or more of the cost of all the materials used therein.
Under the order, the Federal Acquisition Regulatory Council is called to consider proposing the thresholds for notice and public comment by January 11, 2020 and for the council to “promptly issue” a final rule setting the new thresholds, if appropriate and consistent with applicable law and U.S. national security interests. The Federal Acquisition Regulatory Council will also review and revise the Federal Acquisition Regulations (FAR) as appropriate, “to most effectively carry out the goals of the Buy American Act and my Administration’s policy of enforcing the Buy American Act to its maximum lawful extent.”
The order also calls for various department heads, including the Secretary of Commerce, the Assistant to the President for Economic Policy, and the Assistant to the President for Trade and Manufacturing Policy, to submit a report detailing other potential changes to the FAR and shall include recommendations based on the feasibility and desirability of any decreases.