Parties to the WTO Government Procurement Agreement (GPA), led by the European Union and echoed by Australia, Canada, Switzerland and the United Kingdom, criticized US implementation of the Build America, Buy America Act (BABA) at a November meeting of the WTO procurement committee. Their criticism focused on whether the United States was complying with its GPA obligations in its application of BABA's ‘Buy America’ preference to federally funded infrastructure projects. In responding that the US is applying the preference consistent with its international obligations, the US representative pointed to the latest guidance issued in October by the Office of Management and Budget (OMB). Although OMB has issued three sets of implementation guidance, uncertainty remains as to how the US will ensure compliance with the GPA in applying the domestic preference. This post assesses the latest guidance.
The Office of Management and Budget (OMB) has issued three sets of guidance on the implementation of the BABA preference: initial guidance in April 2022, final guidance in August 2023 (embedded in the Code of Federal Regulations—2 CFR part 184), and supplemental guidance on October 25. The latest guidance rescinds and replaces OMB’s initial guidance, removes direct conflicts with that earlier guidance, and provides updated guidance, including on the waiver process. OMB emphasized that if any conflict arises between its earlier guidance and its final guidance, “the guidance in part 184 prevails.”
In its supplemental instructions, OMB addressed one complaint with its final guidance by including a section on “Consistency with International Agreements” that provides: “Pursuant to Section 70914(e) of BABA, this guidance must be applied in a manner consistent with the obligations of the United States under international agreements.” Yet, OMB continued to insist that a public interest waiver is required where an international agreement applies to a particular infrastructure project.
Moreover, as described in an earlier post, there is no certainty that a public interest waiver will be issued for goods covered by an agreement. OMB's latest guidance provides no assurance that such waivers would be issued. It maintains that: “If a recipient is a State that has assumed procurement obligations pursuant to the Government Procurement Agreement or any other trade agreement, a waiver of a Made in America condition to ensure compliance with such obligations may be in the public interest (emphasis added).” And, even if it is in the public interest, the granting of a waiver is not a simple or straightforward process, as detailed in the guidance.
It remains to be seen whether the requirement of public interest waivers will be effective in enabling the US to comply with its international obligations. The test will be the extent to which suppliers from trade agreement partners are able to persuade procuring entities and federal agencies (and the final arbiter— OMB's Made in America Office) that an infrastructure project is covered by agreement and are granted public interest waivers.
Jean Heilman Grier
November 14, 2023
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