More than a month after President Biden issued an Executive Order focused on expanding the Buy American and Buy America statutes and regulations, questions remain as to current applicability of the Buy American rules in the Federal Acquisition Regulation (FAR).
On January 19, 2021, six days prior to President Biden's Executive Order, the FAR Council issued a Final Rule amending the Buy American regulations under FAR part 25—changes that were prompted by President Trump's Executive Order 13881 in July 2019.
This rule increased the domestic content threshold from 50 percent to more than 55 percent for most products (except products mainly made of iron and steel), and the price preference for large businesses increased from 6 percent to 20 percent and increased from 12 percent to 30 percent for small businesses. The content threshold for end products or construction materials that consist wholly or predominantly of iron or steel (or a combination of both) increased from 50 percent to 95 percent.
President Biden's order states that the July 2019 Executive Order is "superseded to the extent [it's] inconsistent" with the recent executive order. Government contracts containing clauses consistent with the new rule were anticipated by February 22, 2021. However, on January 20, 2021, the Biden Administration issued a regulatory freeze and requested agencies consider postponing new rules' effective dates for 60 days—leaving implementation of the new FAR rule unclear.
Similarly, the timeline for the implementation of the changes included in President Biden's Executive Order is also unknown at this time. The order directs the FAR Council to "consider" making changes to the FAR within the next 180 days. The requested changes include:
- (1) Changing the current component test to a test "under which domestic content is measured by the value that is added to the product through U.S.-based production or U.S. job-supporting economic activity";
- (2) Increase the numerical threshold for domestic content requirements for end products and construction materials; and
- (3) Increase the price preference for domestic end products and domestic construction materials.
Although the order requests the FAR Council make such changes within 180 days, any changes to the regulations will need to go through the formal rulemaking process, which is lengthy.
The order also establishes a "Made in America Office" within the Office of Management and Budget, to be led by a new Made in America Director. Among other tasks, the Made in America Director will create a consistent process for the review of Buy American waiver requests.
The full text of President Biden's Executive Order is available here.