President Trump’s executive order requiring enhanced enforcement of the Buy American Act (BAA) may be directed at executive agencies, however, it is also applicable to government contractors as well. The executive order requires each agency to assess its compliance with the BAA, especially in the area of waivers, and to develop a plan to maximize its enforcement. It is contractors, not the agencies, who will be subjected to maximum enforcement. Each agency’s current assessment and plans for maximizing enforcement need to be submitted to the Office of Management and Budget by September 15, 2017. Most experts agree that as a result, contractors are likely to see more “red tape,” longer procurement lead times, more costly proposals, and fewer waivers. Increased enforcement may include default terminations, suspension, debarment, and prosecutions under the False Claims Act.
Under these circumstances, contractors subject to BAA requirements should review their compliance now before the plans for enhanced enforcement are implemented. Although several FAR clauses address foreign source restrictions, the principal clause 52.225-1 Buy American – Supplies states that contractors must furnish end products mined, produced, or manufactured in the U.S. A product is manufactured in the U.S. is defined as having at least 50% of the cost of its components mined, manufactured, or produced in the U.S. FAR Part 25.103 offers some exceptions to the BAA requirement, including non-availability and unreasonable costs.
The government has effectively warned contractors that they will soon be aggressively enforcing the requirements of the BAA. We recommend that contractors develop or review their written policies and procedures related to the BAA requirement, review applicable purchasing files to verify compliance with the BAA, and provide BAA training to the purchasing staff. In some cases, market research to find domestic end products to replace products that previously received a waiver may be appropriate.
Forewarned is fair warned. Contractors should take this opportunity to ensure their BAA house is in order. For assistance in accessing your BAA compliance and other purchasing best practices, please contact Principal Consultant, Tom Marcinko at 301.231.6237 or firstname.lastname@example.org.
President Trump’s first executive order that directly affects government contractors was signed on Tuesday, April 18, 2017. Federal law and the associated Federal Acquisition Regulation (FAR) have long established a preference for the procurement of goods manufactured or produced in the United States. The most well-known domestic preference requirements are the Buy American Act (BAA) and the Trade Agreements Act (TAA), which are applied to government contractors via FAR 52.225-1 and FAR 52.225-5, respectively.
A new clause has been added to the Federal Acquisition Regulation (FAR) that requires certain contractors to provide “privacy training” to their employees. FAR 52.224-3 “Privacy Training” will be included in all contracts awarded after January 19, 2017, that involve access to a system of records or the handling of Personally Identifiable Information (PII). A system of records refers to records under the control of an agency from which information is retrieved by the name of an individual or by some other form of identifier assigned to that individual. Such contractors will now have to provide privacy training to employees that includes the following parameters.
Employees must receive privacy training prior to starting their assignment and annually thereafter. If Alternate I to the clause is used, the Government will provide the training. Otherwise, the contractor may obtain the training from a source of their own choosing. Regardless of the source, the training must include the items below.
Contractors are required to generate and maintain documentation demonstrating compliance with the training requirement.
The White House announced Monday morning that President Trump will propose increasing the defense budget by 10% or $54 billion. This increase in spending will be offset by corresponding reductions to discretionary non-defense spending. Details regarding what the increase in defense spending will be used for or what other programs will be cut were not shared. An official from the Office of Management and Budget (OMB) stated the current thinking is to allow the Pentagon to spend the additional $54 billion as they see fit. The statement issued by the White House quoted President Trump as saying the budget would also focus on law enforcement and veterans. Therefore, it appears programs in these areas will not be cut. Conversely, the statement did indicate that foreign aid would be substantially reduced though the OMB official noted that most agencies would see a substantial reduction in their budgets. President Trump has previously stated he would not cut Social Security or Medicaid and foreign aid is a small part of the budget, so the bulk of the cuts must come from other domestic programs.
A more detailed, though still summary budget is expected in mid-March and a final budget should be ready by April. However, even without details it is clear there will be more opportunities for defense contractors and less for civilian agency contractors, especially contractors working in the area of foreign aid. Stay tuned for more details.
Every 4 years on Inauguration Day, (January 20th) the Federal government offices in the Washington DC area are closed and the Federal employees who work there get an extra paid holiday. The fate of contractor employees who also work in these offices is less clear. Consequently, Aronson recommends that contractors who have employees working in Government offices take the following steps to ensure the office closings result in minimal disruption to the contractor, the contractor’s employees and the customer.