Buy American Act Compliance Regulations
The Whay Law Firm assists businesses in determining product compliance with the Buy American Act. Whether you are bidding on a federal, state, or local government contract, BAA compliance regulations can be complex and nuanced. Violating BAA law, intentionally or not, may cause significant financial loss to prime contractors and/or sub-contractors on a U.S. government contract, or state and local contracts. Contact our government contract attorneys to learn how to avoid BAA penalties.
What is the Buy American Act?
Following is a brief overview of the Buy American Act (BAA) and how it affects government contractors.
The BAA (41 U.S.C. § 10a et seq.) was passed during the Great Depression at the end of Herbert Hoover’s presidency. The law represents a preference for materials being procured by the U.S. government for public use to be made within the United States. Similarly, third-party purchases must also comply with the law. An example of a third-party transaction is when a contractor purchases materials for a highway and other government-funded transit programs. Frequently, when funds appropriated by or otherwise made available by Congress are utilized, the BAA is in force.
The Whay Law Firm has extensive expertise in BAA compliance determinations. Understanding the product manufacturing process is central to determining compliance, but for general understanding, we’ve outlined the basics, along with some exceptions below. The safest path to compliance is to engage our government contract attorneys for a product-specific compliancy determination.
Exceptions to the BAA
There are exceptions to the Buy American Act regulations. For example:
- Trade Agreements Act: the TAA is the codification of the World Trade Organization Government Procurement Agreement and is implemented at FAR 52.225-5. With it, the President can waive BAA requirements for certain goods from designated countries. As long as the procurement provides U.S.-made or products from designated countries, BAA requirements are satisfied.
- Price Reasonableness: price reasonableness is considered if a product made in the U.S. is more expensive than a similar product made elsewhere. In some cases, the government agency may purchase the foreign product. To evaluate compliance when procurement is subject to the BAA and the lowest price is that of a foreign made product, the contracting officer adds 6% or 12% to the price of the foreign product.
- Department of Defense: the DoD has significantly different requirements from any civilian agency. DoD procurements subject to the BAA require that 50% of the component costs of end products be from the United States or a Qualifying Country.
Government contract proposal requirements may vary, so have your attorneys review the RFP carefully to make sure you are not over-certifying. For example, BAA requirements may be waived in certain circumstances. Some examples of waiver:
- In favor of public interest, which may be determined by the head of a government agency
- Non-availability (listed in FAR 25.104 and DFARS 225.104)
- Unreasonable costs, determined by the Contracting Officer in accordance with FAR 25.105 / Subpart * 25.5 and DFARS 225.105 / Subpart 225.5
- Foreign products for commissary
- IT commercial information
- H3 Don’t Risk BAA Violation and Penalties
Do you know all the requirements of the state or local contract on which you are bidding? If federal government funds are being used, you may need to ensure you are complying with BAA. Call the Whay Law Firm before you submit your government contract bid. We will review the contract and your product manufacturing process to make a Buy American Act compliance determination. With our legal guidance, you can feel confident that you are avoiding BAA non-compliance penalties.
