On October 1st, the “21st Century Buy American Act” (HR 3670) was introduced in the U.S. House of Representatives by Rep. David Cicilline (D-RI). Its aim is to strengthen the Buy American requirements found in various laws. Those laws require the purchase of American-made products by federal agencies and in federally funded state and local projects, unless an exception applies. The exceptions include: a U.S.-made product is unavailable; the cost of such a product is unreasonable; and the purchase of a domestic product would be inconsistent with the public interest. This post describes the changes the legislation would make in Buy American requirements.
Restrictions on Use of Public Interest Exception: Currently, there are no criteria for the use of the public interest exception. Each agency makes its own determination as to when the public interest is an appropriate basis for not applying the Buy American requirement. That would change under the proposed legislation as it specifies criteria for use of the exception. The criteria would apply to the Buy American Act of 1933 and the Buy American requirements attached to Federal Transit Administration (FTA) funds, Federal Highway Administration (FHWA) funds, Amtrak funds, Federal Railroad Administration (FRA) High Speed Rail Program funds, Federal Aviation Administration funds and water pollution prevention and control grants for construction of treatment works (under the Federal Water Pollution Control Act). Under the legislation, before applying a public interest exception, agencies would have to consider the short-term and long-term effects of the exception on employment within the U.S., taking into account information provided by entities that manufacture the product to be purchased and “determine that preserving or increasing employment within the United States is consistent with the public interest”.
Increase Domestic Content to 60%: Currently, in implementing the Buy American Act, federal regulations allow purchase of a foreign product, that is, one in which more than 50% of its cost is attributable to foreign content, only if an exception applies. The legislation would increase that percentage to 60%.
Restrictions on Use of Overseas Exception: Another provision of the legislation would restrict the exception to the Buy American Act for products purchased for use outside of the U.S. by establishing criteria for its use. The purchase of foreign products would be permitted only where there was an urgent need for national security reasons or the cost of a U.S.-made product exceeds the cost of a foreign product by more than 50%.
Publication of Buy American Act Exceptions or Waivers: The legislation would also require publication of each exception to, or waiver under, the Buy American Act. It would direct each agency that applies an exception or grants a waiver to submit a notification to the Director of the Office of Management and Budget (OMB), in which it would describe the procurement and the exception or waiver. OMB would have to post the notification on a central, publicly accessible website. Currently, there is no public notice of such exceptions or waivers. However, all FHWA and FRA waivers and all FTA public interest waivers are posted in the Federal Register.
The legislation should not affect U.S. obligations under trade agreements since the U.S. waives the application of the Buy American Act to products from countries that are parties to international agreements with procurement obligations. It also excludes the domestic source restrictions in highway and mass transit projects from U.S. commitments under those agreements.
The legislation has been referred to the Committee on Oversight and Government Reform, as well as to the Committee on Transportation and Infrastructure and the Committee on Financial Services.
Jean Heilman Grier
October 13, 2015