On January 25, 2021, President Joe Biden issued an Executive Order (EO) stating that the “United States Government should, whenever possible, procure goods, products, materials, and services from sources that will help American businesses compete in strategic industries and help America’s workers thrive.” The EO tightens Buy American requirements by enhancing enforcement efforts, increasing domestic content requirements for U.S. goods, and making it more difficult to obtain waivers. The EO, “Executive Order on Ensuring the Future is Made in All of America by All of America’s Workers,” also establishes a centralized Made in America office within the Office of Management and Budget (OMB) to track compliance with the policy. It refers to domestic preferences related to federal procurement, federal grants and other forms of federal assistance, and implements the following actions:
- Requires the Federal Acquisition Regulatory Council (FAR Council) to consider proposing amendments to the Federal Acquisition Regulations (FAR) for tighter requirements for domestic content.
- Appoints a new senior leader in the Executive Office of the President in charge of the government’s Made in America policy approach.
- Increases oversight of potential waivers to domestic preference laws.
- Connects new businesses to contracting opportunities by requiring active use of supplier scouting by agencies.
- Reiterates the President’s support for the Jones Act.
- Directs a cross-agency review of all domestic preferences.
For additional details on these points, see the related White House Fact Sheet. Perhaps, the most immediate impact of the Executive Order is the establishment of a Made in America Office in the Office of Management and Budget (OMB) that will centralize the review of federal agencies’ waivers of the Buy American requirements. Before an agency may grant a waiver, the agency must provide the Made in America Office with a description of its proposed waiver “and a detailed justification for the use of goods, products, or materials that have not been mined, produced, or manufactured in the United States.” Before proceeding further, the relevant agency must await notice from the OMB Director, through the Made in America Office, either that (i) issuing the proposed waiver would be consistent with the applicable law and policy, or (ii) issuing the proposed waiver would not be consistent with the applicable law or the policy and that the proposed waiver is being returned for further consideration. To the extent permitted by law, any disagreements or conflicts between the Made in America Office and the head of any agency regarding proposed waivers will undergo further review toward a resolution of the matter. Such information will also be published by the General Services Administration (GSA) in order that manufacturers and other interested parties can identify proposed waivers and whether those waivers have been granted.
Within the next six months, the head of each federal agency must submit to the Made in America Office a report detailing its implementation of, and compliance with, Made in America laws, and any ongoing use of longstanding or nationwide waivers of any Made in America laws, with a written description of the consistency of such waivers. Thereafter, on a bi‑annual basis, each federal agency must submit a report on the agency’s: (i) ongoing implementation of, and compliance with, Made in America laws; (ii) analysis of goods, products, materials and services not subject to Made in America laws or where requirements of the Made in America laws have been waived; and (iii) analysis of spending as a result of waivers issued pursuant to the Trade Agreements Act of 1979.
In brief remarks to the press, President Biden stated: “The federal government every year spends approximately $600 billion in government procurement to keep the country going safe and secure. And there’s a law that’s been on the books for almost a century now: to make sure that that money was spent … to support American jobs and American businesses. But the previous administration didn’t take it seriously enough. Federal agencies waived the Buy American requirement without much pushback at all.” He added, “That is going to change on our watch.”
This EO lays the groundwork for the eventual further tightening of restrictions regarding domestic preferences and “loopholes” that allow agencies to buy foreign-made end products. Practically, these proposed changes may be somewhat limited for contractors whose contracts are exempt from Buy American restrictions based on the Trade Agreement Act (TAA) and other international obligations as they are not specifically targeted in the EO. For government contractors and U.S. manufacturers that are subject to the BAA, these proposed changes could potentially have a significant impact on existing supply chains that were developed in reliance on long-standing Buy American rules.