President Biden has signed an executive order that aims to strengthen federal Buy American-type requirements to give a lift to U.S. companies by toughening up on waivers from requirements and centralizing federal domestic-preference oversight in a new “Made in America Office” housed within the Office of Management and Budget.
[View White House fact sheet here and text of executive order here.]
In a provision that specifically would apply to construction materials and other products, the directive changes the way a product's domestic content is calculated, to include such factors as how many jobs its production would support.
The executive order, which Biden signed on Jan. 25, calls for federal procurements officials to propose a regulation creating a new test for determining the amount of a product's domestic-content. It states that under the envisioned new test U.S. content would be "measured by the value that is added to the product through U.S.-based production or U.S. job-supporting activity."
The order also seeks to increase the “numerical threshold” for domestic content for “end-products and construction materials.”
In addition, the directive revokes Buy American directives issued by then-President Donald Trump. They include a Buy American-Hire American order Trump signed in 2017 and a directive he issued in 2019 that applied to infrastructure projects. [See ENR 2/6/2019 story on Trump executive order here.]
Before signing the new order at the White House, Biden said that in 2018, the Dept. of Defense spent $3 billion on construction contracts to foreign companies, “leaving American steel and iron out in the cold.”
He added that under the Trump administration federal contracts awarded to foreign companies increased 30%. He added, “That is going to change on our watch.”
Biden also said the new “all-of-government Made in America” program will stop agencies “from waiving Buy American requirements with impunity, as has been going on.” Instead, he said the new office will make sure waivers “are only used in very limited circumstances.”
Centralized Waiver Office
Nick Goldstein, American Road & Transportation Association vice president for regulatory and legal issues, said in an interview that the Biden order, and Trump directives have similar goals—to promote use of American-made products, with a focus on the waiver process.
Goldstein says the Biden order appears to have “more of a centralized process" with the new Made in America Office "a one-stop shop for agencies to bring their waivers to.”
By comparison, the Trump orders “directed each agency to go back and look at their own processes and strengthen them where necessary," Goldstein adds.
The Biden directive applies to domestic-preference requirements under various federal laws, regulations and executive orders that relate to “federal financial assistance awards or federal procurement.”
By America and Buy American
The directive specifies that it applies to both “Buy American” and “Buy America” requirements, which are different programs.
Buy America applies only to the Federal Highway Administration and Federal Transit Administration. It specifically focuses on iron, steel and manufactured products.
Buy America includes projects carried out under the federal-aid highway program, in which states, not the FHWA, are the contract-awarding entity.
Buy American, on the other hand, refers to a wide range of federal funding and purchasing programs by other agencies. The program is subject to the overall Federal Acquisition Regulation, which governs direct federal contracting and other procurements.
Story corrected on 1/26/2021 to state that the executive order asks federal procurement officials to consider proposing a rule to change how a product's U.S. content is calculated. The order doesn't institute the change.
