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.
As part of the regulatory updates to Multiple Award Schedule (MAS) contracts, General Services Administration (GSA) announced in an Interact blog post on March 9, 2017, that contracting officers may require contractors re-representing their size status from small to large to submit a subcontracting plan after the re-certification. A number of other impactful changes will be incorporated in the upcoming round of solicitation refreshes.
In a March 22 webinar, GSA noted that several of the updates have already appeared in recent refreshes to a few solicitations – most notably the Professional Services Schedule. Refreshes to the remaining schedule solicitations are tentatively planned for April 2017. Here are the changes contractors should review carefully before accepting the mandatory modification:
UPDATE, May 24, 2016: Under direction from GSA’s Central Office, the Southwest Supply and Acquisition Center (SSAC) has issued a revised TAA letter to contractors reversing the deadlines and threatened contract cancellation from its previous letter. The new, more reasonable approach requests that contractors conduct an internal review on all products and then delete non-compliant items and correct any erroneous country of origin information in GSA Advantage.
A similar notice was issued today to contractors holding Furniture Schedules, which gives them 30 days to complete the review and make any necessary modifications. No additional documentation or express certification of compliance is required at this time.
Despite the softened approach, the Trade Agreements Act continues to be a critical compliance and liability area for federal contractors, especially in light of the recent publicity in this area. GSA staff has told us that they anticipate significant activity from GSA’s Office of Inspector General in this area. To the best of our knowledge, a similar letter will go out to all multiple award schedule holders shortly.
UPDATE, May 13, 2016: GSA’s public relations issue just got a lot worse. ABC News is now reporting on the GSA Advantage “Made in America” misrepresentations and how it is costing American jobs. Expect enforcement of TAA compliance to accelerate in light of all the negative press.
Contractors selling products on GSA Schedules need to be aware of a new, highly time-sensitive GSA initiative to verify compliance with the Trade Agreements Act (TAA). The TAA requires GSA contractors to only deliver products wholly manufactured or substantially transformed in the United States or other designated countries. FAR 52.225-5, Trade Agreements, defines substantial transformation as the process of changing an article “[consisting] wholly or in part of materials from another country…into a new and different article of commerce, with a name, character, or use distinct from the original article”.
In early May 2016, GSA sent draft letters on Trade Agreements Act (TAA) certifications to Multiple Award Schedule (MAS) contract holders with products contracts managed through GSA’s Southwest Supply and Acquisition Center (SSAC). The draft, linked here, will require contractors to:
Pursuant to the False Claims Act (FCA) it was alleged that a contractor sold the government goods that did not comply with the Trade Agreements Act, (TAA). The TAA forbids the government from acquiring goods produced in certain countries. This particular contractor had obtained TAA certifications from its suppliers. The contractor had also been told by GSA during a contractor assistance visit that they were TAA compliant. The court ruled that it was irrelevant whether the goods were TAA compliant or not because the contractor has a right to “reasonably” rely on the supplier certifications. The Court’s decision may be found here.
This is a rare FCA victory for contractors as most recent court decisions have found contractors to be liable based on an ever-expanding view of the FCA’s reach. However,
On July 15, 2009 the Office of the United States Trade Representative issued a determination regarding a waiver of discriminatory purchasing requirements with respect to the goods and services of Taiwan.
Taiwan, a member of the World Trade Organization (WTO) since 2008, submitted its instrument of accession to the WTO Agreement on Government Procurement (GPA) committee on June 15, 2009 and was subsequently approved. Now that Taiwan is a member of the GPA, any previous Trade Agreements Act prohibitions have been lifted.
An excerpt from from the Federal Register reads, “In accordance with section 301(b)(1) of the Trade Agreements Act, Taiwan (known in the WTO as Chinese Taipei) is so designated for the purpose of section 301(a) of the Trade Agreements Act.
If all the above regulatory and legal jargon is confusing, I have attached the notice from the Federal Register for your reading pleasure: Federal Register Notice
For a full listing of Trade Agreements Act designated countries, refer to Federal Acquisition Regulation (FAR) 25.003.