UNDERSTANDING HOW RECENT CHANGES TO THE BUY AMERICAN ACT WILL AFFECT THE QUALIFICATION THREASHOLD OF AMERICAN MADE STAINLESS STEEL WIRW ROPE HARDWARE.
On January 19th 2021, President Trump signed into law his July 2019 executive order making changes to the Buy American Act. The Buy American Act serves two primary functions - to define what is considered a domestic end product and to give a price preference to companies offering domestic products vs foreign items for use in the federal market. Since the 1950's, the Buy American Act has defined a domestic item as one in which the cost of domestic components must exceed 50% of the cost of all components. With the executive order mentioned above, this threshold has been updated for most products to 55% of the cost of all components. However, iron and steel end products (such are stainless steel wire rope terminals ) were separated out into their own category. To be considered an iron or steel end product of domestic origin, the cost of domestic components must exceed 95% the cost of all components. The threshold for being considered an American Made end product is significant, because meeting this sourcing requirement will give American companies and American manufacturers preferential treatment during the procurement process.
This new standard is an increase from 6% and 10%, respectively. As a note, The price preference is used for evaluation purposes only, and is not the price the agency will actually pay.
These changes become effective on February 22nd - but more changes are expected later this year. On January 25th, President Biden signed an executive order directing further changes to the law. On the surface, it appears the changes will be far reaching. One of the high points from the order include the establishment of the Made in America Office to ensure enforcement of the Buy American Act, a mechanism that has been lacking at the contract level for many years, and will likely expose loopholes in the system, mainly in the exemption process for products "not reasonably available" in the United States. The order also discussed creation of methods to actively seek out domestic suppliers, and further increases to the Made in America pricing preference requirements addressed above.