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Big “A” Acquisition Conference May 4 -5, 2011
The Buy American Act Congress passed the Buy American Act (BAA) in 1933 to encourage purchases of American-made goods by the Federal Government. The act was altered significantly in 1979 when Congress passed the Trade Agreements Act (TAA). The BAA applies to acquisitions over the micro-purchase threshold of $3, 000. When it applies, the Buy American Act does not stop a federal agency from purchasing a foreign product.
Trade Agreements Act Congress passed the Trade Agreements Act (TAA) in 1979 to meet certain requirements under the General Agreement on Tariffs and Trade (GATT). The TAA gave the President the authority to waive the BAA requirements for certain procurements and that waiver authority was delegated by the President to the U. S. Trade Representative (USTR). The USTR has waived the BAA for eligible products in acquisitions covered by various trade agreements such as the World Trade Organization Government Procurement Agreement (WTO GPA, which includes 39 countries, including, most recently, Taiwan), North American Free Trade Agreement, and the Israeli Trade Agreement Act, etc.
Clearing up the Terminology Confusion Definitions are in FAR 25. 003 · BAA – “Domestic End Product” · TAA – “U. S. -made end product” and “Designated Country end product” · BAA “Exception” vs. “Exemption” from BAA (or “Waiver” of BAA) BAA – “Domestic End Product”: A "domestic end-product" is one that is (1) an unmanufactured end product mined or produced in the U. S. ; or (2) an end product manufactured in the U. S. if it is composed of at least 50 percent U. S. -made component. Component is “an article, material, or supply incorporated directly into an end product or construction material”. FAR 25. 003.
Details on the Terminology TAA – “U. S. -made end product”: an article mined, produced or manufactured in the US or that is substantially transformed in the US into a new and different article of commerce with a name, character or use distinct from that of the article or articles from which it was transformed. [FAR 25. 003] TAA – “Designated Country end product”: a WTO GPA country end product, an FTA country end product, a least developed country end product, or a Caribbean Basin country end product. Lists of countries for each type are in the Definitions FAR 25. 003. BAA “Exception” vs. “Exemption” from BAA or “Waiver” of BAA Applicability of the BAA & TAA: · BAA applies to purchases over $3, 000 · TAA Thresholds – Under the TAA, the requirements (additional cost evaluation penalty foreign offers) of the BAA are waived for purchases over specific thresholds. The thresholds are based on type of contract (for supplies, services or construction) and the country of origin.
Exceptions The exceptions to the BAA are as follows: 1) Public Interest as determined by the head of the agency; 2) Nonavailability of domestic sources, as determined by class or an individual determination by the Contracting Officer; 3) Unreasonable cost; 4) Commissary resale of the product; 5) Information Technology that is a commercial item.
TAA Exemption To fall under a TAA exemption, a supply or service must originate from a "designated country. " See FAR 25. 003, Definitions, for the lists of such countries.
The Trade Agreements Act classifies three types of products: 1. U. S. -made end product: an article mined, produced or manufactured in the US or that is substantially transformed in the US into a new and different article of commerce with a mane characteristic or use distinct from that of the article or articles from which it was transformed. 2. Designated country end products: WTO GPA country end product, an FTA country end product, a least developed country end product or a Caribbean Basin Country End Product (i. e. produced in a country that has signed the GPC). 3. Noneligible products: produced in a country that has not signed the GPC.
Evaluating Domestic and Foreign Offers for Supply Contracts FAR Subpart 25. 5 lays out the procedure for evaluating foreign offers for supply contracts. The BAA provides a cost evaluation preference for domestic offers only. The Contracting Officer (CO) may rely on the vendor’s certification of BAA & TAA compliance but may investigate if any evidence or information casts doubt on the veracity of the vendor’s certification
Trade Agreements Act Thresholds Procurement of supplies and services -- $- 203, 000 Procurement of construction services -- $-7, 804, 000
Look to the FAR and Legal Counsel for Guidance The Department of Commerce follows the Buy American Act (BAA) as implemented by the Federal Acquisition Regulation (FAR). The Department has no separate policy or processes for Buy American Act issues. The Department’s acquisition offices have access to legal counsel (OGC, Contract Law Division) when they need assistance in applying the complex analysis involving BAA issues, including the BAA’s interrelation with the Trade Agreements Act (TAA).