Among the numerous Executive Orders (EOs) President Joe Biden has signed since his inauguration is the directive entitled, “Ensuring the Future Is Made in All of America by All of America’s Workers.”
Dated Jan. 25, this action is aimed at fulfilling his campaign pledge to strengthen Buy American rules on the strength of the federal government’s $600 billion procurement budget.
The EO dictates the Biden Administration’s policy that the U.S. 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.”
It is also the administration’s hope that the EO will help boost the U.S economy out of the recession while making a significant investment in the long-term rebuild of the manufacturing sector.
Similar EOs signed by former President Donald Trump didn’t make a great impact because his administration waited to formalize changes until his second-to-last day in office; by contrast, Biden set a 180-day deadline, which was issued shortly after the Federal Acquisition Regulatory Council (FARC) finalized a rule to increase Buy American Act (BAA) domestic content requirements.
What are key implications for government contractors?
The EO promotes enforcement of the BAA’s objective and directs the FARC to propose notice and public comment amendments to the Federal Acquisition Regulation (FAR) provisions. That allows the BAA to replace the component test that had been used to identify domestically-produced end products and construction materials, and activities, with a value-added test – though the EO does not explain how such value would be calculated.
Additionally, the EO calls for the FARC to consider FAR amendments to increase the amount for domestic content requirements for end products and construction materials, as well as increase price preferences for domestic end products and domestic construction materials; and to review existing constraints on the extension of the Made in America Laws to information technology.
For more information, refer to the FARC’s recently published final rule, which heightens the BAA domestic content requirements and pricing preferences to implement Trump’s EO 13881, “Maximizing Use of American-Made Goods, Products, and Materials.”
It makes three critical changes: increasing the domestic content requirement to 55 percent for most products and to 95 percent for products consisting wholly or predominantly of iron or steel; removing the commercially available-off-the-shelf exception for products consisting wholly or predominantly of iron or steel; and increases price preferences for domestic products to 20 percent for large businesses and 30 percent for small businesses.
Biden’s EO does not invalidate this final rule, so it is not known whether these changes will be modified.
The Biden EO is written to make it harder to obtain a waiver of Made in American Laws. The EO calls for the head of the Office of Management and Budget (OMB) to establish a Made in America Office, run by a director. Before an agency grants a waiver, and unless the OMB director provides otherwise, the agency must provide the director with a description of its proposed waiver and detailed justification for the use of goods, products or materials that have not been domestically mined, produced or manufactured.
Additionally, the EO calls for the General Services Administration to develop a public website with information on proposed waivers and if they were granted.
The EO also directs agencies to identify suppliers of American-made products for the benefit of prime contractors, and for agencies to partner with the Hollings Manufacturing Extension Partnership to conduct scouting efforts.
Lastly, the EO imposes new reporting requirements on federal agencies that now must consider suspending, revising or rescinding any actions that are inconsistent with the aforementioned policy, then to consider additional action to enforce it, as well as submit biannual reports.
These new dictums could cause issues domestically and abroad. American companies feel that disruptions to their overseas supply chains might ensue and cautioned that shifting manufacturing facilities may not be possible; foreign countries like China and the European Union members (which were tagged with tariffs by Trump) may see the EO as a threat to trade opportunities.
Gloria Larkin is president and CEO of TargetGov and a national expert in business development in the government markets. Email [email protected].