Complying with Buy America / Buy American

posted...Apr 13, 2010

Buy America vs. Buy American

By Thomas Schmitz, Chief Operating Officer, Con-Tech Systems Ltd.

Buy America and Buy American are separate legislation and regulation requirements. Buy America applies solely to grants issued by the Federal Transit Administration and Federal Highway Administration. Buy American may be applied to all direct U.S. federal procurement.

Understanding Buy America
The Buy America Act requirements apply to iron and steel products and their coatings that are purchased for the federal-aid highway construction program (highways, bridges, transit systems and terminals). Under Buy America, federal-aid funds may not be obligated for a project unless iron and steel products used in such projects are manufactured in the United States.

An exception is that foreign-source materials, valued at the greater of $2,500 or 0.1 per cent of the original contract value, are permitted. Value is based on the value “as delivered to the project site,” and is the total for the project for all foreign-source materials. Under an alternate-bid procedure, foreign-source materials may be used if the total project bid using foreign-source materials is 25 per cent less than the lowest total bid using domestic materials.

The Buy America Act defines manufactured as any process that modifies the chemical content, physical shape or size, or final finish of a product. Manufacturing begins with the initial melting and mixing, and continues through the bending and coating stages (coating includes epoxy coating, galvanizing, painting, and any other coating that protects or enhances the value of the coated steel or iron product/component).

For more information, visit the Government of Canada web site at:
http://www.canadainternational.gc.ca/sell2usgov-vendreaugouvusa/procurement-marches/buyamerica.aspx?lang=eng

Understanding Buy American
The Buy American Act is a separate and distinct program from Buy America and has completely different rules. The Buy American Act, which covers specified products, requires the U.S. government to purchase domestic goods and services unless the head of the agency involved in the procurement has determined that the prices of the domestic suppliers are “unreasonable” or that the purchase would be “inconsistent with the public interest.” The act also contains exceptions in terms of trade agreements.

Trade agreements are, for example, the NAFTA agreement or WTO agreements recognized by the U.S. For more information, visit these U.S. government web sites:

Trade Agreements: Section 25.001 (b)
http://www.acquisition.gov/far/current/html/Subpart%2025_1.html

Trade Agreements: Section 25.400 (a) (1)
http://www.acquisition.gov/far/current/html/Subpart%2025_4.html

World Trade Organization on Government Procurement as mentioned in the Buy American Trades Agreement section:
http://www.wto.org/english/tratop_E/gproc_e/gproc_e.htm

Products made in Germany (and other countries) qualify under the Buy American Act and also qualify for projects funded by stimulus money. However, the question is how the executing agency implements the act. Although they have the freedom to disallow foreign manufactured products, it is our responsibility to educate them that the foreign products we supply are acceptable.