Biden’s Buy American Policy & What it Means for Contractors

On January 25, 2021, President Biden signed an Executive Order (EO) “Ensuring the Future is Made in All America by All of America’s Workers”, which seeks to bolster U.S. manufacturing through the federal procurement process. Note that, just six day earlier, on January 18, the Federal Acquisition Regulation (FAR) Counsel issued a final rule implementing former President Trump’s July 2019 EO, titled “Maximizing Use of American-Made Goods, Products, and Materials” (EO No. 13881) on the then-current Buy American standards. For context, Trump’s proposed revisions – adopted and implemented by the FAR Council earlier this year – imposed three (3) significant changes worth noting: (1) increasing the percentage of domestic content (other than iron or steel) from 50% to 55% that an end product must contain in order to qualify as a “domestic end product”; (2) implementing an even higher increase in the domestic content requirement for iron and steel products to at least 95% U.S. “predominately” iron or steel product; and (3) increasing the price evaluation preference for domestic offerors from 6% to 20% (for other than small business) and 30% (for small businesses). The FAR’s rule became effective January 21, 2021, and applies to solicitations issued on or after February 22, 2021, and resulting contracts let. Biden’s EO rescinds Trump’s EO No. 13881 “to the extent inconsistent with [Biden’s] EO.” However, when dissected, it is clear Biden’s Buy American plan does little to modify thresholds inconsistent with the Trump Administration; rather, the White House’s latest EO implements changes in the form of BA administration. Nonetheless, Biden’s EO does expressly note that it supersedes and replaces Trump’s EO on the same issues.

Notably, Biden’s EO creates a Made in America Office (MAO) under the Office of Management and Budget (OMB)¹ for the purpose of overseeing domestic preference laws and waivers by federal agencies. The EO, further, directs the FAR Council to consider replacing the component test requirements currently found at FAR Part 25 to ensure that domestic end products contact the requisite domestic content required. Biden’s EO goes on to request that the FAR Council (1) “increase the numerical threshold for domestic content requirements for end products and construction materials” and “increase the price preference for domestic end products and construction materials.” The Biden Administration’s EO, however, does not specify numbers for domestic content requirements or price preferences (i.e. greater than 55% domestic content or more than a 30% price preference for small businesses). It is unclear if – or by how much – these percentages will increase from those adopted by the FAR Council’s latest rule per the Trump administration’s July 2019 EO on these very issues. Biden’s EO also increases transparency in the exemption and waiver process, requiring waivers and their respective justification be available for public view via MAO’s website.

For now, it is clear our new Administration has done little to substantively change Buy American laws, as the EO focuses on waiver oversight, enforcement, and transparency. Government contractors and suppliers should closely monitor formally-approved changes to ensure compliance As the FAR Council may opt to revisit its recently adopted regulations and/or “consider” replacing the component test itself, affected contractors should keep abreast of any component test related revisions.
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¹ In comparison, the Trump EO “directed each agency to go back and look at their own processes and strengthen them where necessary.”