The Buy American Act
and The
Buy America Act requires the U.S. government
to give preference to U.S. made products in its
purchases.
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The Buy American Act
was first passed in 1933 and signed into law by
President Hoover.
It requires the United States government
to give preference to U.S. made products in its
purchases.
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The Buy America Act
was enacted in 1983.
It requires the U.S. government to give
preference to U.S. made products in
mass-transit-related procurements valued over
$100,000 and funded at least in part by federal
grants.
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The Buy American Act does not address the issue
of American or foreign labor, only the issue of
American or foreign material.
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The nationality of the company is not germane to
Buy American Act determinations. It is
permissible for a contractor to use foreign
labor in the performance of a Government
contract overseas.
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The Davis-Bacon Act
is not applicable to contracts performed in
foreign countries and, therefore, would not
apply to an American base overseas.
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The Service Contract Act
is limited to contracts within the United States
and its territories and expressly excludes U.S.
bases within foreign countries.
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The Buy American Act does not stop a federal
buyer from purchasing a foreign product.
Instead, the buyer must add an evaluation
penalty to the cost of a product that is not a "domestic
end-product”.
A "domestic
end-product" is one that is (1) manufactured
in the U.S., and (2) composed of at least 50
percent U.S.-made components.
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Civilian agency buyers must add a 6-percent
penalty to an offered price for foreign-made
products or a 12-percent penalty if the
competing domestic vendor is a small business or
operates in a labor surplus area. Defense agency
buyers add a 50-percent penalty to the foreign
company's offered price. But the penalties make
winning a lot less likely. Not surprisingly
there is great incentive to classify products as
American-made.
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Under the new
Executive Order
signed by President Trump in 2016 only the head
of agencies will be allowed to approve waivers
of Buy American Laws.
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The Trade Agreements Act (TAA)
usurps application of the Buy American
Act. TAA Exempt certain countries from the Buy
America Act.
See TAA Designated Countries.
It also, permits the government to
procure products and services from overseas
companies if the cost exceeds the following
thresholds:
-Procurement of supplies and services --
$169,000
-Procurement of construction services --
$6,481,000
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The North America Free Trade Agreement (NAFTA)
also permits procurement from overseas sources
if the threshold exceeds:
-Procurement of supplies and services --
$25,000(Canada) $56,190(Mexico)
-Procurement of construction services --
$7,304,733
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Congress passed the TAA to meet certain
requirements under
The General Agreement on Tariffs and Trade
(GATT). The TAA requires federal
agencies to treat the products of countries that
have signed the GATT's Government Procurement
Code (GPC) as favorably as those produced in the
U.S.
Certain types of goods and services are
exempt.
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