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US Guidance Forces a Strong Emphasis on Buy America

On 30 June 2017, the directors of the Department of Commerce (Commerce), and the Office of Management and Budget (OMB) issued a Memorandum, “Assessment and Enforcement of Domestic Preferences in Accordance with Buy American Laws.”

Executive Order 13788

This Memorandum implements guidance regarding President Trump’s recent Executive Order (EO) 13788. This EO indicates how agencies should maximize the use of domestically manufactured products when procuring goods and services through US Government contracts and grants.

This EO and US Government agency implementation directives urge minimization of the use of waivers to the Buy America rules. Most companies who primarily sell goods and services commercially will not usually be affected by a restructuring of waiver criteria because waivers to Buy America compliance are not often used by commercial companies who occasionally sell to the US Government. Most commercial companies will not go through the waiver process if their product does not meet BAA criteria. Usually, a commercial company will either already comply or not sell to the US Government if such compliance is required.

High Tech Companies

Also, the EO and implementation of it will not affect most high tech companies because of its emphasis on the use of American origin aluminum, iron, and steel which will have a significant effect on items utilizing such elements and components but, silicon and other hybrids are not mentioned in the EO.

The Trade Agreements Act

In any event, companies selling domestically sourced products to the US Government will benefit from this increased focus on Buy American. However, note that part of the Buy American conundrum is not only the Buy American Act (BAA) but also the Trade Agreements Act (TAA).

Under the TAA, the doctrine of substantial transformation is not affected by this EO. Therefore, if the product was substantially transformed in the US or a designated country, as addressed many times in prior Minutillo Newsletters, a company will still be in compliance and will be able to continue to sell substantially transformed product to the US Government despite this new EO.

The Future

What does this new emphasis on Buy America by President Trump mean for American industry?

  1. Under the TAA, look for a reduction in the number of countries considered designated to satisfy the TAA;

  2. More proclamations from President Trump reducing the TAA threshold now at $191, 000 for WTP GPA making the TAA applicable at the lower contract value threshold;

  3. Forced use of US mined or manufactured components and elements like iron, aluminum, steel, and cement for US Government procurement;

  4. As indicated above, tightening of Buy America waiver criteria making it harder to get such a waiver from a US Government agency.

More to Come from President Trump

Expect more proclamations and Executive Orders from the Trump administration with the stated or implied purpose of forcing US companies to use American mined and manufactured elements, materials, and components when selling product to the US Government.

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