The White House issued initial guidance to implement President Biden’s Made in America order, focusing on increasing opportunities for domestic sourcing and reducing the need for waivers of Made in America laws. It calls for a phased-in implementation of the waiver review process, beginning with waivers of the Jones Act and the nonavailability of domestic products under the Buy American Act (BAA). This post looks at key elements of the guidance.
On June 11, the Office of Management and Budget (OMB) in a memorandum to agencies set out the initial priorities of its phased implementation of the president’s January 2021 order and outlined other forthcoming measures. It issued directives to agencies relating to the activities of its Made in America office, which as required by the president’s order will review all proposed waivers and their justifications.
According to the guidance, the Made in America office’s overall goal is “to increase reliance on domestic supply chains and reduce the need for waivers through a strategic process” by, for example, increasing transparency of waivers “to send clear demand signals to domestic producers.” It will phase-in a waiver review process that initially focuses on non-availability procurement waivers pursuant to the Buy American Act and waivers of the Jones Act. (Jones Act generally provides that no merchandise may be transported between points in the United States in any vessel unless it is U.S.-built and U.S.-owned.)
The guidance details information that agencies must include when submitting proposed waivers for review by the Made in America director. For waivers of the Jones Act, that consists of the nature of the transportation required by the agency, why the agency cannot acquire it on a Jones Act qualified vessel, why a waiver would be in the interest of national defense and impacts if the waiver were not granted. Similarly, for proposed nonavailability waivers, agencies must include information on the impact to the agency’s mission if the agency were not able to acquire the item and the country of origin and U.S. content (if any) of foreign end item intended for purchase.
OMB explained the renewed emphasis on Made in America laws as serving “as a key facet in a broader economic strategy to increase U.S. productivity and global competitiveness, as well as the resiliency of our manufacturing base to market volatility and manipulation.” It also pointed to the concern that “foreign near-peer competitors are increasingly creating and exploiting economic vulnerabilities in gaining undue influence over the global transportation system, which provides the access to worldwide supply chains that supports our national defense, vital emergency services, critical infrastructure, economy, and way of life.”
Going forward, OMB – with other agencies and interested stakeholders – will review both a 2009 waiver of the component test of the BAA for purchases of commercial off-the-shelf (COTS) products and a statutory exemption of commercial information technology from BAA requirements. They will consider the extent to which the waiver and exception remain relevant, the impact of narrowing or lifting them and the extent to which current conditions may support such restrictions to further promote Made in America policies. It will also work with agencies to review how to ensure their compliance with cargo preference requirements to maximize the use of U.S.-flag vessels.
Finally, OMB is working with the General Services Administration to develop a public website that will include information on all proposed waivers of Made in America laws and whether they have been granted. It is expected to be functioning in early FY 2022.
Jean Heilman Grier
June 15, 2021