Home > Top Story Archive >April 2, 2009

Top Story

The following story is from the April 2 issue of International Trade Reporter
Current Reports:

Government Procurement

Interim Rules Implementing Buy America
In Stimulus Published in Federal Register

Interim rules implementing “Buy America” provisions in the economic stimulus plan were published by the Department of Defense, General Services Administration, and National Aeronautics and Space Administration March 31 (74 Fed. Reg. 14,621, March 31, 2009).

The interim rules amend the Federal Acquisition Circular, the contracting rules controlling U.S. government procurement, to incorporate Buy America provisions included in the American Recovery and Reinvestment Act of 2009, Pub. Law No. 111-5.

The Buy America provisions have been a source of considerable debate as to whether the United States is turning away from free trade. U.S. trading partners have expressed concerns that the provisions could violate U.S. obligations under the World Trade Organization's Government Procurement Agreement (GPA) (see related report, this issue).

The respective agencies said that they had issued an interim rule without providing the opportunity for public comment because contracts for projects using economic stimulus funds would soon be ready to award.

The Buy America provisions require all iron, steel, and manufactured goods used in the project to be produced in the United States, consistent with U.S. obligations under international agreements.

The statute also provided for a waiver of the Buy America requirements if:

• iron, steel, or manufactured goods are not produced in the United States in sufficient quantity or quality to complete a project,

• the use of solely domestic iron, steel, or manufactured goods increase project costs by more than 25 percent, and

• applying the domestic preference is inconsistent with the public interest.

Recovery Act Designated Country Exemption

The rule contains a definition of “Recovery Act Designated Country” including countries that are part of the WTO's Government Procurement Agreement, have a free trade agreement with the United States, or are considered a least developed country (LDC), excluding the Caribbean Basin countries.

The rule states that the Buy America restrictions do not apply to recovery act designated country construction material.

It also defines “free trade agreement country construction material” as construction material wholly the growth, product, or manufacture, or is substantially transformed by a U.S. FTA partner, and carries a similar definition for GPA and LDC countries, excepting those construction materials from Buy America restrictions.

Parties to the GPA are the United States, the European Union and its 27 member states, Aruba, Canada, Hong Kong, Iceland, Israel, Japan, Liechtenstein, Norway, Singapore, South Korea, and Switzerland.

Other Exceptions to Restrictions

The new interim rules also contains a definition including “domestic manufactured construction material.” A “domestic manufactured construction material” requires all manufacture occur in the United States, except metallurgical processes, but does not require that the components that go into the manufactured construction material originate in the United States.

For countries not recovery act countries, the rules provides that foreign construction materials can be used if the contracting officer determine the costs of the project would increase more than 25 percent for the whole project. For projects where foreign construction material is to be used, the contractor is required to supply information on the foreign material to be used.

Submission of written comments to be considered in the formulation of a final rule should be submitted to http://www.regulations.gov and identified by FAC 2005-32, FAR Case 2009-008.

By Amy Tsui

For more information on the interim rule, contact Meredith Murphy, procurement analyst, at (202) 208-6925.

---

Contact the Webmaster at webmaster@bna.com
1801 S. Bell Street, Arlington, VA 22202 - Phone: 1-800-372-1033

Copyright © The Bureau of National Affairs, Inc. All Rights Reserved.