Determining if a plumbing or other product meets the rules of the Buy American Act (BAA) can be complicated. During the “Deciphering Key Provisions in the Buy American Act for Government Contractors” presentation at the PMI Legislative Forum in June, PilieroMazza attorneys Jon Williams and Anna Sullivan made understanding the rules a bit easier when they delivered tips to Plumbing Manufacturers International members.
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“We’ve seen a lot more questions around BAA and Trade Agreements Act (TAA) issues, certainly during the Trump administration. The focus has continued into the early days of the Biden administration,” said co-presenter Jon Williams, partner and chair of PilieroMazza’s Government Contracts Group.
BAA Basics
The Buy America Act of 1933 was Great Depression-era legislation designed to create and promote jobs for American workers, Williams explained. It applies to all U.S. products purchased through federal contracts.
He noted the importance of understanding one of the BAA basics: that it’s a preference – not an absolute requirement – when government agencies purchase “domestic end products.” So, the BAA doesn’t prohibit agencies from buying foreign-made products; instead, agencies get a price preference for buying domestic end products and pay a price penalty for purchasing foreign-made products.
There are two parts of a test to determine the country of origin for domestic end products. The first part is that the item must be manufactured in the U.S. Unfortunately, there’s no definition of what it means to be “manufactured,” Williams said. It’s decided on a case-by-case basis and heavily dependent on the circumstances of the manufacturing process for a particular item. “We often look at Government Accountability Office standards and rulings on procurement decisions to help decide if something was manufactured in the U.S. It’s a less stringent test than the ‘substantial transformation’ test used for the TAA,” he added.
The second part of the test for manufactured products reviews the components and cost of the components. An executive order by former president Donald Trump that became final in January – and was still in place as of June – made a change so that the cost of an item’s components that are mined, produced or manufactured in the U.S. must exceed 55% of the cost of all its components – instead of 50%, which was the old rule. Williams noted that this test applies to most PMI members’ products.
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Compliance pointers
Complying with the rules can be a bit tricky, too, according to co-presenter Anna Sullivan, associate of PilieroMazza’s Government Contracts Group. She provided a few handy tips for plumbing manufacturers that work with the government under either the BAA or TAA.
At the solicitation stage, she suggested raising any questions regarding applicability with the procuring agency or prime contractor and then making sure the certification is accurate. “Unless a contractor specifically lists a product as being non-compliant with the BAA or TAA, it will be certified as compliant by default,” she said.
It’s also helpful for manufacturers to establish and follow internal policies and procedures; train employees to identify which laws apply and any relevant exceptions, waivers and tests; and maintain accurate records of origin of components and end products, she further advised.
“No one will be squeaky clean. You just need to show you were trying to keep track and do the best you can,” Sullivan said.
Expert taken from the article “Experts Give Tips on Buy American Act Contracts” by Judy Wohlt for PMI Communications. To access the full article, please visit this link.
