Effects both Buy America and Buy American Laws
On January 25, President Biden issued a “Made in America” executive order (EO) that seeks to strengthen Buy America and Buy American laws. Some aspects of the EO are similar to the Federal Acquisition Regulations (FAR) Rule issued under President Trump, which increases the domestic contents for construction materials. Among other things, this EO calls for greater scrutiny for Buy America(n) waivers issued by federal agencies, creates a public website listing the proposed waivers and their statuses, calls for a Federal Acquisition Regulations rule to amend Buy American to replace the “component test,” and directs agencies to review and make recommendations on existing Buy America(n) waivers. It is important to note that any changes to the Buy America(n) laws will need to go through the public rule making process before becoming effective. At this time, there is no direct or sizeable impact to federal-aid highway contractors from this action. The order seeks to tighten the already strict Buy America waiver process and directs the U.S. Department of Transportation (USDOT) to review how requirements could be strengthened in the future.
As stated above there is no immediate effect on federal contractors until a FAR rule is issued. However, any significant changes to the current Buy American laws will take time to understand, teach, train, and enforce. A sudden increase in domestic content requirement will likely disrupt the current production flow of goods, and it can have a major impact on bid prices if the percentages are increased too rapidly. If bids on federal projects are significantly above the expected amount, federal agencies will often have to pull the solicitation, revise the cost or scope, and then re-issue at a later time. In addition, the risk of False Claims suits may increase for federal contractors as many must certify in monthly billing that the Buy American, and other requirements, are fully followed.
AGC wants to ensure that any new Buy America or Buy American regulations do not uproot established construction contractor supply chains and government agency estimates can accurately account for such material and supply restrictions in infrastructure projects put out for bid.
For more information on how this may affect direct federal contracts, contact Jordan Howard at Jordan.howard@agc.org. For more information on how this may affect federal-aid/highway contracts, contact Cory Gattie at cory.gattie@agc.org.