Biden Administration’s “Buy American” order
Companies may need to alter their sourcing and supply chain practices to meet new US government standards
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The Biden Administration’s “Buy American” order may raise the bar on domestic content standards for some contractors and manufacturers
An Executive Order signed by President Biden may require some companies to alter their sourcing and manufacturing practices to continue benefiting from US government preferences for domestic products.
To “maximize the use of goods, products and materials produced in” the US, the Order directs the Federal Acquisition Regulatory (FAR) Council to consider increasing domestic content thresholds and price preferences for federal purchases of goods, including construction materials for federal infrastructure projects, under the Buy American Act and similar laws. The Order also directs the FAR Council to consider changing the methodology used to measure the domestic content of a good for purposes of federal procurement, and establishes a new “Made in America Office” within the US Office of Management and Budget.
What this means for you
A shift to a ”value-added” methodology for determining whether products qualify as domestic under federal standards would measure content by the value added to a product “through US-based production or US job-supporting economic activity,” including through US-based labor, rather than just cost. The Order also contemplates more generous price preferences for US-produced goods and higher content thresholds for domestic end-products and construction materials. In addition, the new “Made in America Office” may increase scrutiny of and discourage waiver requests under the Buy American Act.
Steps to take now
The Order sets the stage for potentially significant changes to the US government’s enforcement of the Buy American Act and similar laws. If you are a federal contractor or manufacturer, you can begin preparing now by taking a careful look at your sourcing and manufacturing practices. You may need to adjust your sourcing and supply chain practices in order to continue benefiting from US domestic preferences, and brace for fewer waivers granted and more stringent enforcement. The Biden Administration’s efforts to use government procurement policies to bolster domestic production is likely to continue.
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