Windows and doors supplied for government projects may be subject to the Buy American Act. This Act requires the government to purchase products manufactured in the U.S. that are “substantially all” from articles, materials or supplies mined, produced or manufactured in the U.S. The Federal Acquisition Regulations (FAR) Council has long interpreted these requirements to mean a domestic end-product must be manufactured in the U.S. and that at least 50 percent of the end product’s components are of U.S. origin. Change is coming.
Note: The “substantially all” threshold in the Buy American Act and E.O. 13381 should not be confused with the FTC’s more stringent “all or virtually all” threshold for making a “Made in USA” claim. While they both address components of U.S. origin, the Buy American Act only applies to some government contracts and the Made in USA analysis is specific to use of the “Made in USA” logo on product or marketing materials.
Changes to the Act
Signed on July 15, 2019, Executive Order 13381 changes the FAR Council’s long-standing interpretation in two significant ways. First, the definition of “components” is now being split into two categories:
Iron and steel products must be made of at least 95 percent components of U.S. origin.
All other end products must be made of at least 55 percent components of U.S. origin.
The FAR council is also to consider whether the thresholds should be raised even higher.
The other big change is to an exception in the Act that allows the government to purchase products that don’t meet the U.S. origin threshold where use of a U.S. product is unreasonably expensive when compared to a foreign-made product. There is already a mathematical equation that determines whether the exception can be invoked. The Executive Order alters those factors in ways that suggest the exception will rarely apply.
Finally, the FAR Council is now being encouraged to update the regulations to carry out the goals of the Act, and the Administration’s policy, to the maximum extent of the law. Government agencies were given until January 11, 2020 to develop recommendations about how the regulations are to be revised. A public comment period and opportunity for input will happen before issuance of a final rule.
Fenestration companies providing products for use at government projects should review those contracts to determine if the sale is subject to the Act. If yes, a company should confirm that the products sold meet the new thresholds and requirements of EO 13381.