As we discussed a few months ago, the new administration is by all indications planning to use the government’s purchasing power to bolster American manufacturing.
President Biden has now signed an executive order (“EO”) that is the first step toward implementing that plan. It’s been getting a lot of attention, but is there any meat on this bone? Let’s find out.
At first blush, the EO would seem to be mostly a policy memo. It directs the government—and obviously the agencies that do the buying—to “maximize the use of goods, products, and materials produced in, and services offered in, the United States.” It also tells agencies to review recent agency actions to make sure they are consistent with that policy, consider cancelling actions that are not, and begin the process of updating regulations to implement this policy.
Not bad, but not exactly the sweeping change promised.
But if you look closer, there are some significant moves buried in the text including the creation of a new office to oversee Buy America Act waivers, and steps that will make the waiver process open to the public. These changes will make waiving Buy America provisions (and similar rules) more cumbersome and transparent.
According to the order, only senior agency leadership should have the authority to waive the Buy America Act. If those individuals believe a waiver is warranted, they will have to explain why to the newly created “Made in America Office” within the Office of Management and Budget (“OMB”).
The EO tells the OMB to create the office and name a director. Once it does so, it will have 45 days to publish a list of information that agencies must include in their waiver justifications. That information must include whether cost savings associated with buying a foreign made product are due to the use of shoddy materials.
OMB will set a deadline (max: 15 days) for the new office to get back to the agency as to the result of the waiver review. If OMB agrees that a waiver is warranted, then it will “notify the granting agency of that determination in writing.” But what about when the office thinks a waiver is inappropriate, you ask? It will “notify the granting agency of the determination and shall return the proposed waiver to the head of the agency for further consideration[.]” Then if the agency head disagrees, it has to write back to the Made in America Director.
In other words, the agency still gets to decide whether the waiver will be granted or not, albeit with the knowledge that granting the waiver will be seen as contrary to the EO’s intent. It’ll also be seen by the public. The EO directs the General Services Administration to create a website for public information regarding waivers and these decisions will be posted there for all to see.
In terms of regulatory changes, the EO also instructed the FAR Council to look at a new regulation that would change the “component test” used to identify U.S.-made products to a value-add test, increase the domestic content requirement, and increase the price preferences for domestic products and materials.
If I were a contractor, my ears would be perking up at the mention of those price preferences, but there’s not a lot of detail there as of yet. We’ll keep an eye on what the FAR Council comes up with.
What’s missing from this EO is the role of contractors. There does not seem to be a mechanism for them to argue for, or against, a waiver. If I were a U.S.-based manufacturer, I’d want to make sure there was a way to have my voice heard.
If you’d like to read the EO yourself, here it is.
If you have questions about this order, or other federal contracting matters, give us a call.