Government Contracts FAR Rule Would Implement EO 13881 Buy American Changes
Monday, October 5, 2020

FAR Rule Would Implement EO 13881 Buy American Changes

By Government Contracts Editorial Staff

The Department of Defense, General Services Administration, and National Aeronautics and Space Administration are proposing to amend the Federal Acquisition Regulation to implement Executive Order 13881, Maximizing Use of American-Made Goods, Products, and Material. The Buy American statute (41 USC 83) requires agencies to procure articles, materials, and supplies that were mined, produced, or manufactured in the U.S., substantially all from domestic components, subject to exceptions for nonavailability of domestic products, unreasonable cost of domestic products, and when it would not be in the public interest to buy domestic products. Offerors that certify their compliance with the statute’s domestic purchasing requirements receive pricing preferences. EO 13881 changed FAR clauses implementing the Buy American statute by increasing the domestic content requirement for iron and steel end products to 95 percent. For everything else, the domestic content requirement was increased from 50 percent to exceeds 55 percent of the cost of all components. The EO also increased the price preference for domestic products from 6 percent to 20 percent for large businesses and from 12 percent to 30 percent for small businesses. The EO did not impact the 50 percent preference for DoD procurements, because the DoD percentage exceeds the EO’s requirements.

Thresholds Increased. The rule would amend the definitions of “domestic construction material” and “domestic end product,” and related cross-references and policy discussions, in FAR 25.001, FAR 25.003, FAR 25.101, FAR 25.201, FAR 52.212-3, FAR 52.225-1 through FAR 52.225-4, FAR 52.225-9, and FAR 52.225-11, to include the new 55-percent domestic content requirement for items other than iron and steel end products. The rule would also amend FAR 12.505, FAR 25.001, FAR 25.100, FAR 25.101, FAR 25.200, FAR 25.201, FAR 52.225-1, FAR 52.225-3, FAR 52.225-9, and FAR 52.225-11 to partially restore the domestic content test for commercially available off-the-shelf items as it pertains to iron and steel products. The rule rolls back the domestic content test waiver to give full effect to the EO’s requirement for domestic iron and steel products to not contain more than 5 percent foreign iron and steel. The rule would continue to waive the domestic content test for iron and steel fasteners.

Evaluation Subfactors. Further, the rule proposes to amend FAR 25.105, FAR 25.204, FAR 25.604, FAR 25.605, FAR 52.225-9, FAR 52.225-11, and FAR 52.225-21 through FAR 52.225-24 to increase the evaluation factors to be applied to offers of foreign end products or construction material when determining whether the cost of offered domestic end products or construction material is unreasonable. For acquisitions of end products, a 20-percent factor would be applied to a foreign offer if the potential domestic awardee is other than a small business, and a 30-percent factor would be applied if the potential awardee would be a small business. The 30-percent preference for small businesses would not apply to construction material. Finally, with respect to projects funded with monies from section 1605 of the American Recovery and Reinvestment Act of 2009 (PL 111-5) the rule would increase the 6-percent factor to 20 percent in FAR 25.604, FAR 25.605, and FAR 52.225-21 through FAR 52.225-24. A complete listing of all of the FAR sections impacted by the rule appears in the table below. Comments on the proposed rule referencing FAR Case 2019-016 are due November 13, 2020. See ¶70,006.359 for the text of the rule.

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