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OMB Releases Guidance Requiring Agencies to Report “Buy American” and “Hire American” Compliance by September 2017

On June 30, 2017, the  Office of Management and Budget (OMB) released Guidance to ensure that federal agencies comply with rules for the Buy American and Hire American laws as established by President Trump’s April 18, 2017 Executive Order 13788, described here.  By September 15, 2017, all agency heads must submit a “Section 3 report” to OMB and the Secretary of Commerce to (i) assess the agency’s compliance with Buy American Laws, including use of exceptions and waivers; and (ii) develop and propose policies to maximize use of materials produced in the United States. 

When assessing compliance with the Buy American Act (BAA) and Hire American laws for federal procurements, there is a strong preference for domestic products.  Domestic products are those (i) manufactured in the United States; and (ii) where more than 50% of the components used to manufacture are also manufactured in the United States.  However, the OMB Guidance also lists seven exceptions to the BAA:

  1. Domestic non-availability;
  2. Unreasonable cost;
  3. Purchase of commercial IT;
  4. Resale of procurements;
  5. Public interest determination;
  6. Trade Agreements Act (TAA) waiver per an agreement to purchase from designated countries;
  7. Purchases at or below the micro purchase threshold (currently $3,500); and
  8. Procurements for use outside the United States.

By September 15, 2017, all agency heads must report on their procedures and guidance to assist the acquisition workforce in complying with the BAA and TAA, provide results from internal agency reviews, and describe the agency’s marketing and outreach efforts.  Agencies must also focus on enforcement mechanisms by stating whether their Contracting Officers record exceptions and waivers in the Federal Procurement Data System while confirming the dollar amount and product claimed as an exception or waiver.  Similarly for Federal Grants, agencies must report on their inventory, guidance, and compliance in light of the BAA Laws.  The agencies must also detail their waiver usage and provide steps to strengthen implementation of BAA laws.

Executive Order 13788 and the OMB Guidance emphasize the executive branch’s stated policy to award federal procurements and federal assistance for “the use of goods, products, and materials produced in the United States” while minimizing the use of waivers.  A comprehensive knowledge of the compliance requirements and appropriate exceptions are important to successfully operate within the acquisition workforce.  Companies should expect reviews of Buy American and Hire American compliance in the coming months as federal agencies prepare reports by the September 15, 2017 deadline.  Our firm is available to assess compliance with the Buy American and Hire American requirements.

Post by: Alex C. Mansfield