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Government Contractors Need to Comply with the Buy American Act Now!

Buy American Act

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 tmarcinko@aronsonllc.com.

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