January 27, 2021

President Biden Signs Executive Order Strengthening Buy American Rules

Holland & Knight Alert
Nasim D. Fussell | Ronald A. Oleynik

Highlights

  • President Joe Biden signed an Executive Order on Jan. 25, 2021, "Ensuring the Future is Made in All of America by All of America's Workers" (E.O.), aimed at strengthening Buy American provisions.
  • The E.O. establishes the Biden Administration's policy that the U.S. government should spend taxpayer dollars on American goods made by American workers with American-made component parts, and seeks to tighten exceptions from, or waivers of, domestic preference requirements under U.S. procurement laws.

President Joe Biden signed an Executive Order on Jan. 25, 2021, "Ensuring the Future is Made in All of America by All of America's Workers" (E.O.), aimed at strengthening Buy American provisions. The E.O. was one of a number of actions intended to quickly follow through on pledges made on the campaign trail last year. President Biden announced last summer in his Plan to Fight for Workers by Delivering on Buy America and Make It in America that the Biden-Harris Administration would ensure that the federal government delivers on its obligation to use taxpayer dollars to buy American products and support American supply chains. This week's E.O. establishes the Biden Administration's policy that the U.S. government should spend taxpayer dollars on American goods made by American workers with American-made component parts, and seeks to tighten exceptions from, or waivers of, domestic preference requirements under U.S. procurement laws. Specifically, the E.O.:

  • Establishes within the Office of Management and Budget (OMB) a new Made in America office, headed by a Made in America Director.
  • Requires agencies, before granting waivers, to provide the Made in America Director with descriptions of proposed waivers and detailed justifications for the use of foreign goods, products or materials.
  • Creates parameters for the Made in America Director's review process, including the publication of a list of the information that agencies shall include when submitting proposed waivers and justifications; the establishment of deadlines for the review process; transparency requirements; notification requirements; and procedures for the resolution of conflicts or disagreements.
  • Requires agencies to assess whether a significant portion of the cost advantage of a foreign-sourced product is the result of the use of dumped or injuriously subsidized steel, iron or manufactured goods, and permits agencies to consult with the International Trade Administration in making such an assessment.
  • Requires the Administrator of General Services to develop a public website to include information on proposed waivers and their respective status, to the extent permitted by law and consistent with national security and executive branch confidentiality interests, as well as contact information for each agency.
  • Calls on agencies to partner with the Hollings Manufacturing Extension Partnership to identify American companies, including small- and medium-sized companies, that can produce goods in the United States to meet federal procurement needs.
  • Requires the Federal Acquisition Regulatory Council (FAR Council) to consider amendments, through public notice and comment, to the Federal Acquisition Regulation (FAR) to replace the "component test" used to identify domestic end products and domestic construction materials, increase domestic content requirements for end products and construction materials, and increase price preferences for domestic end products and construction materials.
  • In consultation with the Secretary of Commerce and the Made in America Director, requires the OMB Director to review any potential proposed amendment to the FAR list of domestically nonavailable articles, to determine whether there is reasonable basis to conclude that the article, material or supply is not mined, produced or manufactured in the United States in sufficient and reasonably available commercial quantities of a satisfactory quality.
  • Calls for a report by the FAR Council on recommendations to lift any existing constraints on the extension of domestic preference laws to commercial informational technology, a report by the head of each agency on the use of "Made in America Laws," and a biannual report by each agency on ongoing implementation of, and compliance with, such laws.
  • Requires, within 180 days of the E.O., the Administrator of General Services to submit recommendations for ensuring that products offered to the public on federal property are procured in accordance with the policy established in the E.O.
  • Revokes prior presidential and regulatory actions, including E.O. 13788 of April 18, 2017 (Buy American and Hire American), Section 5 of E.O. 135858 of Jan. 31, 2019 (Strengthening Buy-American Preferences for Infrastructure Projects), and E.O. 13975 of Jan. 14, 2021 (Encouraging Buy American Policies for the United States Postal Service).1

In a fact sheet preceding the E.O., the Biden Administration touted the relationship between the E.O. and the president's commitment to invest in American manufacturing, while also noting that the President "remains committed to working with partners and allies to modernize international trade rules — including those related to government procurement — to make sure all countries can use their taxpayer dollars to spur investment in their own countries." This may be an early indication of the Biden Administration's desire to review U.S. commitments under the World Trade Organization (WTO) Agreement on Government Procurement (GPA), which was recently highly scrutinized by the Trump Administration.

Conclusion and Takeaways

In summation, the E.O. does not make any changes to the specific domestic preference laws, but instead requires individual agencies to tighten their domestic preference rules. It should be noted that the E.O.'s use of the term "Made in America" will likely cause additional confusion in the already difficult to follow Buy America / Buy American / Berry Amendment / Specialty Metals ad hoc legislative world of domestic preference laws. "Made in America" is a standard administered by the U.S. Federal Trade Commission (FTC), and requires an almost unreachable standard of above 96 percent of all value of a good to be U.S. sourced (materials, parts, components, labor, etc.). Given the E.O., the U.S. government will now have a Made in America Director in charge of domestic preference laws that are different from the Made in America standard set by the FTC.

Holland & Knight's International Trade Group will continue to track the implementation of this policy in order to assist our clients with compliance. If you have questions, please do not hesitate to reach out to the authors or another member of the Holland & Knight team.


Notes

1 The Biden E.O. supersedes, to the extent inconsistent with, E.O. 10582 of Dec. 17, 1954 (Prescribing Uniform Procedures for Certain Determinations Under the Buy-America Act), and E.O. 13881 of July 15, 2019 (Maximizing Use of American-Made Goods, Products, and Materials).


Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.


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