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On March 7, 2022, the FAR Council published a Final Rule implementing further revisions to the Buy American Act (BAA), as contemplated by President Biden’s Executive Order titled Ensuring the Future is Made in All of America by All of America’s Workers, which he issued his first week in office. The Final Rule makes three key changes to the BAA regulations, which are for the most part consistent with the Proposed Rule:

  • Initiating a staged increase in the percentage cost of domestic components to qualify as domestic end products and construction materials from the current 55% to 60% and then to 65% in 2024 and 75% in 2029.  These thresholds do not apply to commercially available off-the-shelf (COTS) items or to items made predominantly of iron and steel – each of which has its own special rules. For contracts with a period of performance that spans a scheduled threshold increase, the general rule is that contractors will have to comply with each increased threshold for the items in the year of delivery, although contracting officers will have discretion to issue exceptions fixing the domestic content threshold to the one in effect at the time of award. Unlike the Proposed Rule, the Final Rule builds in a grace period (until the next fiscal year) before the 60% threshold goes into effect.
  • Easing transition to the new higher component cost thresholds, by providing the contracting officer authority – based on a determination that no end products or construction materials meet the increased threshold – to “fallback” the threshold to the current 55% to qualify as domestic. This fallback threshold will remain available until 2030.
  • Creating a framework for applying higher price preferences for domestic end products and construction materials that are deemed “critical” or that contain critical components. The list of critical items and components and the associated price preferences will be implemented through subsequent rulemaking. While the Proposed Rule contemplated post-award reporting on the specific amount of domestic content for critical end products, construction materials, or components, the Final Rule defers the reporting requirement to subsequent rulemaking to allow for more industry comments on the scope and scale of the reporting obligations.

The FAR Council noted that the majority of comments on the proposed rule were on potential changes that are not implemented in this Final Rule, such as eliminating the waiver for commercial item information technology (IT) end products and the waiver of the component test for COTS items. For now, end products and construction materials that qualify as COTS or commercial item IT remain unaffected by these changes. In addition, it is important to note that the Final Rule makes no changes to the regulations implementing the Trade Agreements Act (TAA), which apply to a broad swath of federal procurements, including all products and services sold under Federal Supply Schedule contracts administered by the General Services Administration.

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Photo of Alan W. H. Gourley Alan W. H. Gourley

Alan W. H. Gourley is a partner in the Washington, D.C. office of the law firm of Crowell & Moring and serves as a member of the Steering Committee for the firm’s Government Contracts Group. He graduated magna cum laude from Beloit College…

Alan W. H. Gourley is a partner in the Washington, D.C. office of the law firm of Crowell & Moring and serves as a member of the Steering Committee for the firm’s Government Contracts Group. He graduated magna cum laude from Beloit College in 1977 and from the University of Virginia School of Law in 1981. He is a member of the District of Columbia bar.

Photo of Adelicia R. Cliffe Adelicia R. Cliffe

Adelicia Cliffe is a partner in the Washington, D.C. office, a member of the Steering Committee for the firm’s Government Contracts Group, and a member of the International Trade Group. Addie is also co-chair of the firm’s National Security practice. Addie has been…

Adelicia Cliffe is a partner in the Washington, D.C. office, a member of the Steering Committee for the firm’s Government Contracts Group, and a member of the International Trade Group. Addie is also co-chair of the firm’s National Security practice. Addie has been named as a nationally recognized practitioner in the government contracts field by Chambers USA.

Photo of Liam O'Reilly Liam O'Reilly

William B. O’Reilly is a counsel in Crowell & Moring’s Washington, D.C. office, where he is a member of the firm’s Government Contracts Group.

Liam assists clients with all phases of government contracting, including contract formation and award controversies, performance counseling, and claims…

William B. O’Reilly is a counsel in Crowell & Moring’s Washington, D.C. office, where he is a member of the firm’s Government Contracts Group.

Liam assists clients with all phases of government contracting, including contract formation and award controversies, performance counseling, and claims and disputes litigation. His practice includes representing clients in bid protests before the Government Accountability Office and U.S. Court of Federal Claims. Liam also regularly advises clients on supply chain risk management, addressing issues such as cybersecurity, country of origin and domestic preferences, and counterfeit part detection and avoidance, as well as conducting internal investigations and mandatory disclosures for performance breaches and potential violations of the False Claims Act (FCA).