It’s been over a year since President Obama signed the American Recovery and Reinvestment Act (ARRA) into law. One of its key components is a “Buy American” requirement, requiring domestic “iron, steel or manufactured goods” to be used in ARRA-funded projects (ARRA section 1605), which has proven to be a serious headache for integrators and acquisition personnel supporting ARRA projects. Just check out this recent GAO report about how domestic preference has delayed or complicated several major ARRA projects, and the practice caused the US and Canada to review their government procurement agreements. The question is: does “Buy American” apply to my project?
There’s no short answer to that question, but here’s four questions to help you figure things out:
Does ARRA fund my project?
If you answered “yes,” then the “Buy American” provision might apply. If not, you’re in the clear, because ARRA language only applies to ARRA funds.
Are my goods or services being used for a construction project or a “Public Building?
If you answered “yes,” then the “Buy American” provision might apply. Federal Acqusition Regulations distinguish between “supplies” and “construction materials,” and in practice, the US Government applies the “Buy American” provision only to construction projects. So if you’re working on an ARRA-funded project to improve rural broadband access, you’re probably in the clear. It’s also worth noting that ARRA only looks at the country of origin for the finished product, not its components, so if you’re buying materials from a U.S.-based manufacturer anyway, there’s no cause for alarm.
What’s the total dollar value of my project?
If the prime contract is worth at least $7.443 million, then you’re eligible for an exception for iron, steel or manufactured goods. The goods can be build either in the US or in a free-trade agreement (FTA) country, i.e. Canada. Three exceptions to the rule if your project is worth less than $7.443 million:
- Requiring domestic goods is against public interest (as determined by the US Government)
- Domestic alternatives do not exist (a Domestic Nonavailability Determination or DNAD)
- Using domestic-made products increases the overall cost of the project by 25% or more.
Who’s my customer?
If you’re working for a state or local government, those FTA exceptions I mentioned aren’t typically available. It doesn’t matter if a state or local government would prefer to use components manufactured in a FTA country, practically speaking it’s not an option. According to Sheppard Mullin, “The other three exceptions…may still be available to allow use of certain foreign-made products, but these exceptions are narrow and difficult to satisfy.”
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