The Buy American Act limits the procurement of goods (materials, articles, or supplies) priced across the U.S. micro-purchase level. This act affects the federal ministry contracts for goods utilized in the US. The two conditions of the Buy American act are as follows:

• The goods should be manufactured in the U.S. Minimum of 50% of the cost of the components of goods must come from the U.S.
• The end product must be manufactured in the US and procurement should be intended within the US.

The purpose of the Buy American act is to provide special treatment to homely acquired goods and the U.S. manufactured materials. There are exceptions to purchasing materials. Exceptions include the following:

• When the cost of domestic materials surpasses the foreign offers.
• If the goods are for the foreign market.
• When domestic goods are not available.
• If the expected procurement value is less than the micro-purchase threshold.

Lately, the FAR Council presented a final rule which creates the significant  transformations in FAR’s Buy American demands (FAR 52.225-1, 52.225-3, 52.225-9 and 52.225-11) suitable for Executive Order 13881, “Maximizing Use of American-Made Goods, Products, and Materials.”

Increased Domestic Content Requirements

Under the new amendments in FAR clauses, the domestic content requirement which is also known as “component test” rises from 50% to 55%. Specifically, most goods and materials should consist of over 55% U.S.-origin components (by prices) measured domestically on the basis of the Buy American Act.

Discreet and Firm Demands for Mainly Iron and/or Steel Products and Materials

Under the latest rules, when you acquire a domestic material or product, a builder should check whether it includes totally or dominantly steel or iron or a combination of both.

If steel and iron component create 50% or less of the total price of the component, the material or goods is domestic if:

• It is produced in the US.
• It is made up of material or goods of at least 55% domestic components or the COTS goods.

But, if steel and iron create more than 50% of the total price of the components of a material or a product, it is “domestic” if: 

• It is produced in the U.S.
• Less than 5% of the total component prices are for foreign steel and iron (excluding price for COTS fasteners). 

In other words, at least 95% of the total component price should be for components other than foreign steel and iron.

Increased Cost Preferences for Domestic Materials and Goods 

The amends in FAR provisions improves the cost assessment options allocated to bidders of domestic goods and materials below the Buy American Act. Before these amendments, bidders received an assessment option of 6%, or 12% if the offeror was a small-scale business.

Under the new regulations, those cost estimation options for domestic construction materials rise to 20% for large-scale businesses and 30% for small-scale businesses.

These amends will create confusion as contractors control the new Buy American requirements. Compliance will be tough by amends presented by the Biden administration. The Government Contracting Group will guide you about different government contracting matters.