The Buy American Act has a number of exceptions and waivers. The United States spends hundreds of billions of dollars each year in contracting alone. The Buy American Act is intended to keep federal dollars in the hands of American companies and manufacturers. The president’s new executive order on these issues, proposes making some significant changes to not only the rule, but to oversight.
Here are five things to look for in the new executive order:
- Closing of Loopholes and Increasing Thresholds.
- Currently, if an item is 6% or more expensive than a foreign-made item, a company can qualify for a waiver to purchase the foreign-made item. The threshold will increase but by how much, we do not have the new number yet.
- The statements also indicate it will update how to determine whether something is “Made in America.” Expect strengthened Made in America requirements.
- Establishes Director of Made-in-America in Officer of Management and Budget
- Establishing a Director indicates the President is serious about implementing these new rules. Rules are just words on paper without someone to enforce them. We will keep an eye on how much power is given to this new Director. We should caution, major overhauls should not be expected in the first year. Expect fact-finding and recommendations first.
- Establishes Central Review Agency
- Where does this agency live? Who does it report to? How will it fit in? The statement does not make this clear. The stated goal is to crack down on unnecessary waivers and directs GSA to publish waivers on its website.
- This is worth keeping an eye on, likely it will report to the Director, but I will be interested to see how this hierarchy develops.
- Preference Given to Manufacturing Extension Partnership
- This partnership supports small and medium-size manufacturers in all 50 states and Puerto Rico. The goal is to support and expand American manufacturing.
- Bi-Annual Cross-Agency Review
- Every six months, agencies will be required to report on their implementation of Made in America laws. This includes ensuring items sold on federal property are Made in America.
As with any new rule, the devil is in the details. Once the Executive Order is signed and begins to take shape, we will get a clearer idea of whether this order is for show, or has some teeth.