Buy American – Public Procurement International

Webinar — Buy American and the New U.S. Infrastructure Legislation

Program Recording

GW Law Webinar – Wed. 19 January 2022 – 9 am Eastern – 14:00 UK – 15:00 CET

500+ webinar registrants from five continents

President Biden recently signed into law the Infrastructure Investment and Jobs Act, Public Law 117-58 (Nov. 15, 2021), trillion-dollar legislation intended to rebuild U.S. infrastructure. This webinar will focus on Title IX of the new law, the “Build America, Buy America” Act (BABA), which will impose much broader domestic-preference requirements on items purchased using federal grants, tighten federal procurement requirements under the Buy American Act, and launch a review of U.S. agreements that have opened defense markets with U.S. allies around the world.

Part I of the BABA addresses procurement for infrastructure supported by federal financial assistance. As commentator Dustin Painter noted, unlike the “Buy American” requirements of Section 1605 of the 2009 American Recovery and Reinvestment Act, the domestic content requirements imposed by the BABA are “not limited to the funds appropriated or authorized” by the new legislation — and so the new law likely will have a broader impact on all federally funded infrastructure programs.

For a closer look at BABA issues:
click here

Under the new legislation, all iron and steel products and construction materials must be produced in the United States. Manufactured products will need to be manufactured in the United States, and at least 55 % of their component costs will need to be U.S.-origin.

Domestic-content waivers on projects funded with federal assistance will need to be published for comment (much as the Biden administration has begun to publish federal waivers for Buy American Act purposes). Waivers will be available only if applying the U.S. preference (1) will be inconsistent with the public interest, (2) iron, steel, manufactured products or construction materials are not produced in U.S. in sufficient and reasonably available quantity or satisfactory quality, or (3) inclusion of domestic products or materials will increase overall project cost by 25 percent.

In line with the new legislation, the U.S. Office of Management & Budget (OMB) guidance for federal grantees (set forth in Title 2 of the Code of Federal Regulations) may be amended to reflect the new domestic content requirements, which are to be applied consistently with international trade agreements. In the meantime, in a December 20, 2021 memorandum, OMB asked federal agencies for extensive data on the iron and steel, manufactured goods and construction materials used in federally supported infrastructure projects.

As former U.S. trade official Jean Heilman Grier noted in a recent post, under most current free trade agreements the United States has already excepted highways, mass transit and airport projects. This has meant that foreign firms may “participate in such projects but must comply with the ‘Buy America’ requirements.” Under the new legislation, Ms. Grier wrote, the “broader implication of the expansion of domestic preferences to all infrastructure projects that receive federal funds is that the U.S. would not likely be able to offer [those projects as market-opening concessions] in future procurement negotiations.”

Part II of the the BABA includes a suite of “Make It In America” provisions, which echo President Biden’s January 2021 Executive Order 14005. Under the legislation, a new “Made in America Office” is to be established in OMB, which will oversee more rigorous standards for Buy American Act (BAA) waivers. The new legislation also reflects a sense of Congress that the Buy American Act should be applied with a 75% domestic content requirement — a substantial increase from the traditional 50% requirement, which was increased by President Trump.

As with the requirements for federal grants, Buy American Act requirements under the new law are to be implemented consistently with standing international trade agreements. This means that the stronger Buy American requirements will not apply to procurements over the Trade Agreements Act threshold, which per FAR 25.402 is generally $183,000 for supplies.

Notably, the new legislation calls for a review of the impact of free trade agreements on U.S. procurement. That review will include reciprocal defense procurement agreements, which are the key to open international trade in defense materiel and services between the United States and its allies. Existing trade agreements are to be assessed for “equal and proportionate” access by U.S. suppliers. The new law also codifies longstanding exceptions to Buy American requirements, such as those for U.S. allies under the reciprocal defense procurement agreements, and general exemptions for least developed nations.

Panelists

Trade Policy in Procurement in the Biden Administration

“Assessing the Trade Agenda for Government Procurement in the Biden Administration,” paper presented by Chris Yukins at the Thomson Reuters Government Contracts Year in Review Conference (Feb. 2021)

The attached paper, prepared shortly before President Biden was inaugurated, discussed key trade issues for the incoming administration in public procurement. The piece reviewed major trade measures in procurement taken during the Trump administration – most of which were predictable from the time Trump was elected. The paper turned to the major trade challenges that face the Biden administration, in areas as diverse as climate change, cybersecurity and the protectionism in post-Brexit Europe, and then assessed how the Biden administration might address these challenges, especially given Joe Biden’s support for “Buy American” policies during the 2020 campaign. The paper also assessed how the new administration might cooperate on these difficult issues with the United States’ allies abroad. The paper concluded that the Biden administration’s main challenge was restoring confidence abroad in the United States as a responsible trading partner in procurement; once that goal was met, the paper argued, the more technical issues of trade in procurement would be much easier to address.

The paper’s concerns that the new administration might take a protectionist turn, per Joe Biden’s campaign promises, soon proved well-founded. On January 25, 2021, only a few days after entering office, President Biden signed an executive order calling for strengthened “Buy American” policies in U.S. procurement. Commenting on the order, The Economist wrote that while the order was “protectionist in spirit,” the United States’ existing trade commitments “mean that Mr Biden’s measures may not have much effect.” For background on the executive order– including the history of the Trump administration trade policies in procurement, and questions raised by the new order — please see the slides attached here.

The denouement to the Biden executive order suggests that, in the short term at least, the Biden administration will not go beyond the tighter Buy American Act requirements imposed by the Trump administration

The denouement to the Biden executive order suggested that, while it called for closer scrutiny of waivers and exceptions to the Buy American Act, in the short term at least the Biden administration would not go beyond the tighter Buy American requirements launched by President Trump in July 2019 under Executive Order 13881. President Trump’s order calling for stricter “Buy American” requirements was published as a proposed implementing Federal Acquisition Regulation (FAR) rule on September 14, 2020 (85 FR 56558), and the final FAR rule was published on January 19, 2021 (86 FR 6180). The final Trump rule, in keeping with his executive order, aggressively tightened domestic content requirements under the Buy American Act. President Biden took office the next day, on January 20, 2021. President Biden issued his “Buy American” executive order (EO 14005) several days later, on January 25, 2025. On or about that same date, the Biden administration undertook a FAR review to assess whether the Trump regulations needed to be reconsidered. By February 25, 2021 (roughly one month later) the Biden administration concluded that no further changes were needed to the “Buy American” regulations. FAR Case 2021-004, closed 2/25/21. The Biden administration thus appeared to close the book on further changes to the FAR “Buy American” rules, at least temporarily — perhaps at least until the broader policy reviews called for by the Biden order (such as a review of the “Buy American” exception for commercial information technology) are concluded.

Professor Piga Urges Italian Support for Small- and Medium-Sized Businesses in Response to Trump Buy American Initiative

In an editorial published in Italian newspaper Il Sole 24 Ore, Professor Gustavo Piga of the University of Rome – Tor Vergata, an activist in Italian politics and and a leader in the international procurement community, responded to an article by Christopher Yukins assessing the Trump administration’s latest Buy American initiative. Professor Piga argued that, though the actual impact of the Trump order might be minimal (as Professor Yukins pointed out), Italian policymakers should emulate U.S. support for small businesses, which the U.S. undertakes through protectionist preferences. Professor Piga closed: “GliStatiUniti lo insegnano chiaramente: non pensando per le piccole, smettiamo di pensare in grande.” (“The United States clearly teaches this: by not thinking of the small, we stop thinking big.”).