President Biden extended his ‘Buy America’ policies to research and development (R&D) funded by the federal government in an “invent it here, make it here” executive order. It sets out the administration’s policy that when new technologies and products are developed with US government support, they “will be manufactured in the United States whenever feasible and consistent with applicable law.” This post examines this latest iteration of Biden’s ‘Buy America’ policies, which is a softer requirement than the broad ‘Buy America’ mandate in the Bipartisan Infrastructure Act and the ‘Buy America’ requirements in the Inflation Reduction Act.
On July 28, 2023, the president signed the “Executive Order on Federal Research and Development in Support of Domestic Manufacturing and United States Jobs.” It aims to boost the incentive to manufacture domestically new inventions developed with federal funds. The Order calls for strengthening an existing US manufacturing requirement.
Congress has established various mechanisms to encourage the commercialization of technology and research resulting from the use of federal funds. One mechanism, provided for in the Bayh-Dole Act of 1980, involves licensing federally funded technologies and patented inventions to private businesses for commercialization. When federal contractors license those inventions to industry partners, Bayh-Dole imposes a US manufacturing preference. It prohibits contractors from licensing the exclusive right to use or sell a covered invention in the US unless the licensee agrees it will be “manufactured substantially” in the US. Federal agencies may waive the requirement “when domestic manufacture is not commercially feasible.”
A White House Fact Sheet outlined four core objectives of the R&D funding order:
(1) Improve transparency, cut red tape, and streamline reporting requirements in the Federal R&D process to better track progress towards our domestic manufacturing goals.
Accomplishing this goal will include modernizing the government reporting system – iEdison, a database designed around the reporting requirements of the Bayh-Dole Act and its implementing regulations and maintained by the National Institute of Standards and Technology. The order also facilitates collection of data on inventions and their manufacturing locations and requires agencies to transition their reporting to the iEdison portal by the end of 2025.
Agencies that make substantial R&D investments will be required to report annually, (beginning two years after the order) to the Made in America Director in the Office of Management and Budget on the use of inventions developed through their R&D awards and where products using those inventions are manufactured.
(2) Boost the incentive to manufacture new inventions in the United States when those inventions are developed using Federal funds.
The order encourages agencies to factor domestic manufacturing of inventions into their R&D award solicitations and to consider using the broad range of their authorities to purchase or invest in leading-edge technologies to support domestic production. In addition, to emphasize the importance of domestic manufacturing and encourage potential federal funding recipients to build that consideration into their long-term planning to commercialize inventions, the White House Office of Science and Technology Policy will seek to add domestic manufacturing to the government’s technology R&D roadmaps.
(3) Encourage the expansion of domestic production for critical industries while maintaining flexibility to build strong international R&D partnerships.
The order directs agencies, in deciding whether to expand domestic manufacturing requirements, to consider the US’s economic and national security interests, including whether certain critical or emerging technologies should be produced in the US.
The White House is also seeking to address the limited scope of the Bayh-Dole Act’s domestic manufacturing requirement. It does not apply to organizations with a non-exclusive license, federal funding awardees themselves, or organizations that takes an invention developed with US federal funding to market to sell solely overseas. As a remedy, the order encourages agencies to expand the domestic manufacturing requirement beyond exclusive licensees for critical and emerging technologies. Finally, the order “maintains the flexibilities to create critical international R&D partnerships that support supply chain resilience and economic security.”
(4) Make the domestic manufacturing waiver process clearer, timelier, and more consistent, including when production is not commercially feasible.
The order directs the Department of Commerce to develop common waiver questions for use across the US government. It sets out relevant criteria for such questions, including the use of the waiver, any potential economic or national security impacts to manufacturing the invention outside the US, and benefits that “will accrue to domestic manufacturing and United States jobs as a result of bringing the invention to market.”
When inventions will be manufactured abroad, waiver applicants must describe the conditions of such manufacturing, “including unionization of workplaces, health and safety standards, labor and wage laws, and environmental impacts” to support the goal of manufacturing inventions under conditions in line with US values.
The order also instructs the Commerce Department to develop public guidance on waiver decisions, including a list of factors for assessing whether domestic production of an invention is not commercially feasible.
Jean Heilman Grier
August 29, 2023