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Buy American Laws Will Impact Supply Chains for Federal Contractors

The Department of Defense and the Department of Commerce, together with the White House, are taking steps to ensure enforcement of Buy American Laws. It requires the federal government make a preference for domestic goods & manufactured products.

August 4, 2017

Previously (here and here), we discussed the Trump administration’s renegotiation of NAFTA and the steps the President has taken to promote Buy American and Hire American.  Now the Department of Defense and the Department of Commerce, together with the White House, are taking steps to ensure enforcement of Buy American Laws.

On June 20, 2017, the Department of Defense issued a memorandum referencing the Buy American and Hire American Executive Order requiring agencies to “scrupulously monitor, enforce, and comply with Buy American Laws.”  The memorandum, entitled Improving Compliance with the Berry Amendment and Buy American Act, observes the need to be vigilant in the oversight and enforcement of Buy American Laws and advises guidance on implementation is forthcoming.  In the interim, Department of Defense agencies are directed to ensure applicable members of their contracting workforce complete the updated continuous learning modules on the Berry Amendment and Buy American Act.

On June 30, 2017, the Department of Commerce and Office of Management and Budget (“OMB”) jointly issued a memorandum providing guidance for federal agencies, entitled Assessment and Enforcement of Domestic Preferences In Accordance with Buy American Laws.  The memorandum emphasizes compliance with Buy American Laws are vital to “provide important benefits to the Nation” and explicitly names iron, steel, and manufactured goods as examples of domestic products.  Federal agencies are tasked with assessing their compliance with Buy American Laws and developing policy proposals to maximize domestic materials.  At the end of their assessment period, and no later than September 15, 2017, the agencies must report to the OMB and the Secretary of Commerce their findings and recommendations.

What are the applicable laws?

Buy American Laws are defined in the April 18, 2017 Executive Order 13788: Buy American and Hire American as all statutes, regulations, rules, and executive orders that require the federal government make a preference for domestic goods and manufactured products.

As a refresher, the primary law is the Buy American Act, passed in 1933, which generally imposes restrictions on federal government contracts to favor domestic end products.  All federal contractors will need to comply with the Buy American Act in federal acquisitions.

Companies contracting with the Department of Defense will also need to be aware of Berry Amendment.  Originally passed in 1941 and subsequently amended, the Berry Amendment imposes the same restrictions as the Buy American Act on the Department of Defense to favor end items, components, or materials that are wholly of U.S. origin.  Covered items include food, clothing, tents, other textiles, and hand or measuring tools.

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Tags:   US Manufacturing News    Buy American Law    Hire American
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