October 25, 2021

Volume XI, Number 298

Advertisement
Advertisement

October 22, 2021

Subscribe to Latest Legal News and Analysis
Advertisement

Proposed Rule Implementing Portion of "Made in America" Executive Order: Its Impact on Federal Contractors and Their Supply Chains

On 30 July 2021, the Federal Acquisition Regulatory (FAR) Council published a proposed rule revising the regulations implementing the Buy American Act (BAA). The proposed rule responds to President Biden’s “Made in America” Executive Order (E.O.) 14005 from 25 January 2021. 

KEY TAKEAWAYS

The proposed rule would affect government contractors and their supply chains that perform contracts subject to the BAA. The proposed rule outlines three changes to current BAA regulations: 

1. Increased Domestic Content Requirements

The proposed rule would increase the percentage of domestic material an item must contain in order to qualify as a “domestic end product.” Specifically, the rule proposes an increase to 60 percent. The rule also proposes an increase to 65 percent in two years, as well as an increase to 75 percent five years after the second increase. For more information on how to prepare for these percentages, reach out to our team. 

2. Enhanced Price Preference for Select Critical Products

The proposed rule would apply an enhanced price preference for domestic end products categorized as “critical items” or containing “critical components.” While the proposed rule does not list the critical items or components affected by the price preference, it does state that the identification process would utilize the quadrennial critical supply chain review established in E.O. 14017 (America’s Supply Chains) as well as the national COVID-19 strategy. The propose rule indicates that the creation of the list and the specifics of the enhanced price preference will be addressed in further rulemaking.

3. New Domestic Content Reporting Requirement. 

The proposed rule would require companies supplying “critical items” or end products containing “critical components” to report the specific domestic content of those items. The reporting requirement would be limited to “critical items” and “critical components.” 

INDUSTRY IMPACT

The proposed rule will impact companies performing federal contracts subject to the BAA. These include supply contracts and construction contracts under a certain dollar threshold as well as certain categories of contracts like small business set-asides. Of the affected contractors, the proposed rule would have the most significant impact on suppliers of “critical items” and “critical components.” While the proposed rule would potentially make these products more competitive in the federal marketplace, they will also be subject to heightened reporting requirements. Subcontractors and suppliers doing business with federal prime contracts may also be impacted by flow-down requirements of the proposed rule. 

SUBMITTING A COMMENT

Comments on the proposed rule must be submitted by 28 September 2021. Additionally, the FAR Council and the Made in America Office will host a virtual public meeting on 26 August 2021 to solicit feedback on these changes as well as other aspects of the Made in America E.O.

Copyright 2021 K & L GatesNational Law Review, Volume XI, Number 221
Advertisement
Advertisement
Advertisement
Advertisement
Advertisement
Advertisement

About this Author

Associate

Melody Alemansour is an associate in the firm’s Washington, D.C. office. She is a member of the Government Contracts and Procurement Policy and International Trade practice groups.

Prior to joining the firm, Melody worked as a consultant for a financial and emerging technologies company in Washington, D.C. Through this role she conducted research on various regulatory and business affairs pertinent to the financial services industry, as well as drafted language for notice and comment rulemaking. Additionally, Melody previously served as a summer...

202-778-9105
Amy Conant Hoang Government Contracts Attorney K&L Gates Washington DC
Associate

Amy Conant Hoang is a Washington, D.C.-based member of K&L Gates’ government contracts and procurement policy group. Ms. Hoang provides “cradle to grave” counsel to clients in the defense, information technology and professional services industries. Ms. Hoang concentrates her practice on:

  • Bid protests at the Government Accountability Office and Court of Federal Claims
  • Corporate ethics and compliance
  • Internal investigations
  • DCAA audit responses
  • Transactional due diligence
  • Domestic preference (“Buy American”)...
202-778-9468
Advertisement
Advertisement
Advertisement