Biden Administration Proposes Significant Increases to Buy American Domestic Content Requirements – Takeaways for Contractors and Subcontractors
From Pillsbury’s Global Trade and Sanctions Blog
On July 30, 2021, the Biden Administration published a Proposed Amendment to the Federal Acquisition Regulation (FAR) (Proposed Rule) that, among other things, would impose significantly increased U.S. content requirements for U.S. Government procurements when the Buy American Act of 1933 (BAA) applies. These increases follow a trend of tightening domestic content rules that started during the Trump Administration.
Contractors and subcontractors should analyze these proposed changes and assess the impact on contracts and supply chains. In this regard, companies need to continue to be mindful about which Made in America regime applies. For example, the new content requirements do not affect procurement when the Trade Agreements Act (TAA) applies. [1]
Below are key takeaways:
- Phased Domestic Content Increases up to 75 Percent for BAA Contracts. The domestic content threshold for end products and construction materials to qualify as U.S.-made would increase from 55 to 75 percent over a seven-year period. Further, contractors would have to comply with the content levels that apply during each year of their contracts.
- Enhanced Price Preferences and Reporting Requirements for “Critical Items” and “Critical Components” – Articles Deemed Critical to the U.S. Supply Chains. The Proposed Rule would create enhanced price preferences for “critical items and components,” which are items deemed critical to U.S. supply chains. It will be important to monitor the critical supply chain assessments by the Administration that may inform this list.
- Opportunity for Industry to Comment and Engage. Contractors and subcontractors should make use of the request for comments to engage and inform the government’s approach to enhanced Made in America requirements.
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