Buy American Act versus Buy American Laws

Buy American (BAA) or Buy America

This factsheet provides an understanding of Made in America Laws including the difference between

“Buy American” and “Buy America”

Executive Order 14005 (the Executive Order), Ensuring the Future Is Made in All of America By All of America’s

Workers, makes it the United States Government’s policy to use terms and conditions of Federal financial assistance

awards and Federal procurements to maximize use of goods, products, and materials produced in, and services offered

in, the United States. The Federal Government will work to, whenever possible and consistent with applicable law,

procure and support through financial assistance goods, products, materials, and services from sources that will help

American domestic businesses compete in strategic industries and help America's workers thrive.

The Executive Order is part

of a larger overall policy effort intended to promote domestic production in critical

industries, make supply chains more resilient, and address supply chain vulnerabilities, including those exposed by the

COVID-19 pandemic.

The Made in America Office is driving this effort to support America’s manufacturing companies and workers

through better implementation and enforcement of Made in America Laws. Made in America Laws include two main

domestic content preference types for goods: Buy American Act requirements for Government procurement and Buy

America requirements for Federal financial assistance. These domestic preferences have similar sounding names, but

are different in important ways. This fact sheet provides an overview of the basic differences between the two

preference types. Stakeholders seeking to supply the U.S. Government or its assistance recipients should inquire

directly with the agency or recipient in question for further information.

Buy American Act Requirements for Government Procurement

“Buy American” is the phrase used to describe domestic content preferences generally applied to direct Federal

procurement—that is, the goods that the U.S. Government buys for its own use. The Buy American Act (BAA) (41

U.S.C. §§ 8301–8305) is the primary law addressing domestic content preferences in Federal procurement. It

provides a preference for the purchase of domestic supplies (or domestic end products) and domestic construction

materials. The implementing regulations for the BAA in the Federal Acquisition Regulation (FAR) provide a two-par

test for determining if an end product (that does not consist wholly or predominantly of iron or steel or a combination

of both) qualifies as a domestic end product: (i) the end product must be manufactured in the U.S.; and (ii) effective

October 25, 2022 more than 60 percent of the cost of its components must be mined, produced, or manufactured in the

U.S.

The domestic content threshold increased to 60 percent on October 25, 2022, further increases to 65 percent in

calendar year 2024, and 75 percent in calendar year 2029. In the event no domestic products can meet the new

thresholds or the cost to acquire them would be unreasonable, there is a 55 percent fallback threshold in effect from

October 25, 2022 through December 31, 2029. For end products consisting wholly or predominantly of iron or steel

or a combination of both, the cost of domestic components must be 95 percent to qualify as a domestic end product.

The FAR provides similar standards for domestic construction materials.

Buy America Requirements for Federal Financial Assistance

“Buy America” is the phrase used to describe domestic preferences generally applied to awards made with Federal

financial assistance. There is no single “Buy America” statute. Rather, there are a number of statutes that require

certain Federal agencies providing Federal financial assistance to apply domestic content procurement preferences for

goods, products, and materials made in the U.S. The Infrastructure Investment and Jobs Act (IIJA)

, also known as the

Bipartisan Infrastructure Law (BIL), enacted on November 15, 2021, includes the Build America, Buy America Act,

which expands Buy America requirements government-wide to Federal financial assistance programs for

infrastructure.

See 48 CFR 25.003; see also Amendments to the FAR Buy American Act Requirements, 87 FR 12780 (Mar. 7, 2022), effective Oct. 25, 2022.

See 48 CFR 25.003.

See 48 CFR 25.003; 87 FR 12780 (Mar. 7, 2022); and FAR subpart 25.2.

Buy American Act

Buy America Laws

What Federal funding does the requirement apply to?

Generally, “Buy American Act” requirements apply to

direct Federal procurement—what the Federal

government buys for its own use.

“Buy America” requirements are domestic content

requirements that apply to certain Federal financial

assistance programs.

What is the requirement?

The Buy American Act (41 U.S.C. § 8301–8305)

requires a preference for domestic end products (i.e., an

article, material, or supply to be acquired for public

use) and domestic construction materials procured by

the Federal Government valued at more than the micro-

purchase threshold, which is $10,000, but may be

raised during an emergency, such as in response to a

major disaster.

There is no single “Buy America” statute. However,

the Build America, Buy America Act

(BABAA) is the

most expansive statute (i.e., covering multiple agencies

and domestic content preferences), requiring that

financial assistance programs for infrastructure

utilize

American-made iron, steel, construction materials, and

manufactured products.

What are the criteria?

Under FAR 25.003, for products that are not iron and

steel products, a product qualifies as a domestic end

product if the item is manufactured in the U.S. and

more than 60 percent of the cost of all the component

parts is also mined, produced, or manufactured in the

U.S. The standard for domestic end products increased

to 60 percent on October 25, 2022, further increases to

65 percent in calendar year 2024, and 75 percent in

calendar year 2029.

In the event no product is

available that can meet the new thresholds or the cost

to acquire them would be unreasonable, there is a 55

percent fallback threshold in effect from October 25,

2022 through December 31, 2029. For iron and steel

products, the applicable percentage for cost of

domestic components is 95 percent. The FAR provides

a similar standard for domestic construction materials.

Under BABAA, items purchased for use in a covered

infrastructure project must meet the following

requirements

(1) Iron and steel: All manufacturing processes, from

the initial melting stage through the application of

coatings, occurred in the U.S.

(2) Manufactured products: All products are

manufactured in the U.S., and the cost of its

components that are mined, produced, or manufactured

in the U.S. is greater than 55 percent of the total cost of

all components.

(3) Construction materials: All manufacturing

processes occurred in the U.S.

See

M-22-11 Initial Implementation Guidance on

Application of Buy America Preference in Federal

Financial Assistance Programs for Infrastructure for

more information. Additional information is also

available from the awarding agency on agency-specific

statutes and requirements.

Can the requirements be waived?

Yes, when necessary. The FAR includes exceptions for

nonavailability; unreasonable cost; public interest; and

commercial information technology. Other general

exceptions include acquisitions subject to certain trade

agreements; and the partial waiver for commercial off-

the-shelf (COTS) products. For additional information,

consult the agency making the purchase.

Yes, when necessary. In general, agencies may waive

application of the Buy America requirements on the

following bases: domestic non-availability,

unreasonable cost, and public interest. For additional

information, consult the awarding agency.

How does the Trade Agreements Act (TAA) apply?

For certain goods, services, and construction contracts

that exceed certain thresholds (See FAR 25.402 for

applicable thresholds as they vary depending on the

agreement), agencies cannot discriminate against

products and suppliers from designated countries,

The BABA provisions apply in a manner consistent

with United States obligations under international

agreements. Typically, Federal financial assistance

awards are generally not subject to international trade

agreements because these international obligations only

See Title IX-BABAA of div. G of the IIJA at §§ 70901-27 for details.

See Title IX-BABAA of div. G of the IIJA at Section 70912 for definition.

See 87 FR 12780 (Mar. 7, 2022), effective Oct. 25, 2022.

See M-22-11 Initial Implementation Guidance on Application of Buy America Preference in Federal Financial Assistance Programs for Infrastructure.

including countries party to the World Trade

Organization Agreement on Government Procurement

(GPA) or a U.S. Free Trade Agreement (FTA), and

certain least developed countries

. EO 14005 does not

change the operation of the TAA.

apply to direct procurement activities by signatories to

such agreements.

In certain circumstances, however, a number of States

have opted to obligate their procurement activities to

the terms of one or more international trade

agreements, and as such, are included in schedules to

the international trade agreements. In such cases,

agencies may propose waivers in the public interest to

allow State entities to comply with their international

trade obligations.

For additional information, consult the State in

question or the agency providing the funds.

Do items receive a price preference if they are domestically made?

Yes, for offers of domestic end products and

construction material subject to the BAA, an evaluation

factor (price preference) is applied. The preference is

50 percent in procurements conducted by the

Department of Defense.

For procurements conducted

by civilian agencies, the preference is 30 percent if the

offer is made by a small business and 20 percent if the

offer is made by an entity other than a small business.

Regulatory changes that will take effect at a future date

will authorize agencies to apply an enhanced price

preference to domestic end products and construction

material that is considered a critical item or made up of

critical components.

No, a price preference or evaluation factor is not

typically applied to awards of Federal financial

assistance. Agencies evaluate and make awards

consistent with their specific legal authorities.

See 48 CFR 25.402. See also 52.225-5 Trade Agreements.

See 48 CFR 225.502.

See 48 CFR 25.106 (effective Oct. 25, 2022). Prior to October 25, 2022, evaluation factors were addressed at 48 CFR 25.105.