une 2017 A CO's Guide: Navigating the Buy … American...une 2017 A CO's Guide: Navigating the Buy American and Trade Agreements Acts By Carol Barton, PhD, CPCM This Advisory explores

June 2017

A CO's Guide:

Navigating the Buy American and Trade Agreements ActsBy Carol Barton, PhD, CPCM

This Advisory explores what

acquisition professionals need to know

to navigate and apply the

requirements of the Buy American statute, including provisions in the

ARRA, Trade Agreements Act,

free trade agreements, and (for DoD

buys) the Berry Amendment.

In short: If it isn’t 100 percent

“Made in America,” read

this Advisory before you buy!

In a global economy complicated by the current geopolitical environment, issues con-cerning the federal government’s ability to award contracts for end items and services to other than domestic suppliers, and (particularly in the reality of shifting threats) con-

cerning an agency’s ability to purchase products or services from foreign sources often arise. This situation is likely to be exacerbated by the Trump administration’s determina-tion to keep “America First,” and the President’s directive that we “Buy American/Hire American.”

The Buy American Act (codified as the Buy American statute), Trade Agreements Act (TAA), and free trade agreements (FTAs), as implemented by Federal Acquisition Regula-tion (FAR) 25, together with the Berry Amendment (which is unique to the Department of Defense (DoD)), provide a sometimes confusing set of guidelines that contracting officers (COs) must interpret to properly solicit, evaluate, and award contracts for products and services partially or fully produced or performed in foreign countries. As currently written, they restrict “the purchase of supplies that are not domestic end products for use within the United States”1 and require, “with some exceptions, the use of only domestic con-struction materials in contracts for construction in the United States.”2 Note that although there is a Buy American statute, the term “Buy American” is also used generically to describe a variety of laws and regulations that impose domestic content requirements.

This Advisory explores what acquisition professionals need to know to navigate and apply the complex requirements of the Buy American statute, TAA, FTAs, and — for DoD buys — the Berry Amendment, which is to say, the four primary laws that govern the purchase of U.S.- versus foreign-made goods, as the legislation and regulations are currently written. It also addresses requirements relating to the Buy American provisions of section 1605 of the American Recovery and Reinvestment Act (ARRA).

What is the impact of the recent Executive Order on Buy/Hire American?On April 18, 2017, President Trump signed Executive Order (EO) 13788, “Buy American and Hire American,” meant to maximize the use of goods, products, and materials produced in the U.S. in federal procurements and grants. The EO has no immediate impact on procurement. Rath-

er, it calls on agencies to “scrupulously monitor, enforce, and comply with Buy American laws.” Within 60 days, the secre-tary of Commerce and director of the Office of Management and Budget (OMB) will provide agencies guidance on how to make assessments and develop required policies.

Within 150 days: • Agency heads must submit assessment

findings to the secretary of Commerceand OMB director

https://www.gpo.gov/fdsys/pkg/FR-2017-04-21/pdf/2017-08311.pdf

https://www.federalregister.gov/documents/2017/04/21/2017-08311/buy-american-and-hire-american

https://www.federalregister.gov/documents/2017/04/21/2017-08311/buy-american-and-hire-american

https://www.acquisition.gov/sites/default/files/current/far/html/Subpart 25_1.html#wp1118586

June 2017 VIRTUAL ACQUISITION OFFICETM2

Advisory

• The secretary of Commerce and U.S. Trade Represen-tative (USTR) will assess the impacts of all U.S. FTAs and the World Trade Organization Government Procure-ment Agreement (WTO GPA) on the operation of Buy American lawsThen, within 220 days, the secretary of Commerce

must submit a report to President Trump with specific recommendations to strengthen implementation of Buy American laws. The EO also states that the head of each agency with authority over federal financial assistance awards or procurements will determine public interest waivers from Buy American laws.

As of the publication of this Advisory, the Civilian Agency Acquisition Council and Defense Acquisition Reg-ulations Council have not initiated any change to the FAR based on the EO, nor has the administration issued further policy or guidance. VAO will continue to monitor and re-port on related developments.

QUICK-ACCESS GUIDELooking for a specific question and answer? Click on any of the

links below to go straight to that question and its response.

- What is the impact of the recent Executive Order on Buy/Hire American?

- What is the federal policy on buying U.S.- versus foreign-made goods and services?

- What is the focus or purpose of each law?

BUY AMERICAN STATUTE - What does it mean that the Buy American statute estab-

lishes a preference for purchase of domestically made products?

- When does the statute apply? - Are there any exceptions? - So if I buy commercial off-the-shelf IT, I don’t have to

worry about the Buy American statute? - What about commercial off-the-shelf items? - How does a CO determine if the price of a domestic offer

or construction materials is reasonable?

CONSTRUCTION MATERIALS UNDER ARRA - When do the Buy American requirements of ARRA apply? - Are there any exceptions? - How do these requirements differ from the standard Buy

American statute requirements for construction materials?

TRADE AGREEMENTS - When do trade agreements apply? - Do trade agreements apply to services? - Are there exceptions to the applicability of trade agree-

ments?

PROCESSES AND PROCEDURES - Do the trade agreements impose any special require-

ments regarding the acquisition process? - When the Buy American statute and/or trade agree-

ments apply, what solicitation provisions and contract clauses must I include?

- There appear to be several specific terms that refer to the origin of products. Can you explain these?

- In the previous example, why is a U.S.-made end product evaluated as a foreign end product?

- How can I determine whether the product the offeror proposes is a domestic end product, U.S.-made product, designated country end product, or foreign end product?

- What are the steps in evaluating and awarding contracts subject to the Buy American statute and/or trade agree-ments?

- What if the solicitation or offer specifies that award can be made only on the basis of a grouping of contract line items, or on all line items as a block (i.e., all or nothing)?

- If I am placing an order under the Federal Supply Sched-ule (FSS) program, how do I ensure I select a contractor whose products or services comply with TAA?

BERRY AMENDMENT - What is the Berry Amendment? - Are there any exceptions? - What are the differences between the Buy American

statute and Berry Amendment? - If I am from a DoD buying activity but am spending non-

DoD money, is the Berry Amendment applicable? - What is the Balance of Payments Program? - Are there other restrictions on DoD

acquisitions I should be aware of?

“It shall be the policy of the executive branch to maximize, consistent with law, through terms and conditions of Federal financial assistance awards and Federal procurements, the use of goods, products, and materials produced in the United States.” — Executive Order, April 18, 2017

What is the federal policy on buying U.S.- versus foreign-made goods and services?In general, government agencies are required to give pref-erence to the acquisition of U.S. products and services, unless:

• The U.S. entered into reciprocal commitments on gov-ernment procurement (such as the WTO GPA)

• The U.S. has negotiated a trade agreement with the country or international trade cooperative in question, or a treaty (such as the North American Free Trade Agreement (NAFTA) with Canada and Mexico)

• The foreign source is among those designated as “least-developed countries” or “Caribbean Basin coun-tries” in FAR 25.003. In those cases, the products and services of the ex-

empted countries are evaluated equally with U.S. products and services (no preference is given to the U.S. product or service). The application of these principles is more com-

https://www.wto.org/english/tratop_e/gproc_e/gp_gpa_e.htm

https://www.wto.org/english/tratop_e/gproc_e/gp_gpa_e.htm

https://ustr.gov/trade-agreements/free-trade-agreements/north-american-free-trade-agreement-nafta

https://ustr.gov/trade-agreements/free-trade-agreements/north-american-free-trade-agreement-nafta


VIRTUAL ACQUISITION OFFICETM June 2017 3

Advisory

plicated than such a summary might suggest, however. In addition to myriad restrictions and qualifications as to what is and is not an acceptable product or service, there are several computational requirements for determining whether an end item manufactured in the U.S. with for-eign components meets the definition of “domestic,” and certain dollar thresholds spur additional requirements. With the caveat that these rules are subject to change in the near future as a result of the EO, this Advisory pro-vides an overview of each.

What is the focus or purpose of each law?The Buy American Act, enacted by Congress in 1933, es-tablishes a preference for the purchase of domestically produced goods over foreign goods in U.S. government procurement. Passed during the Great Depression, it aims to ensure that the federal government supports domestic companies and workers by buying U.S.-made goods.3

The TAA of 1979 was signed into law to approve and implement trade agreements negotiated under the Trade Act of 1974.4 Title III of the TAA acknowledges that the Buy American statute can run counter to the objective of trade agreements established by the U.S. with other countries.

Thus, it authorizes the President to waive government procurement regulations for the purchase of “eligible

products” from “designated countries” if those regula-tions result in less favorable treatment than that accorded either to U.S. products or to products from countries party to the WTO GPA. In other words, the President can waive requirements if, because of their preferential status under the Buy American statute, U.S. products would otherwise be evaluated more favorably than those from the coun-try with which the government has established a trade agreement. TAA essentially provides a waiver from the Buy American statute for designated trade partners, giv-ing their products the advantage of being considered on the same footing as U.S.-made products.

TAA further directs the President to prohibit procure-ment of otherwise eligible products that are not from designated countries, and authorizes deferrals and waiv-ers in specified circumstances. In addition, it authorizes the President to waive application of the Buy American statute for the procurement of civil aircraft and related ar-ticles from countries party to the Agreement on Trade in Civil Aircraft.5

FTAs — such as NAFTA — are negotiated by USTR with individual countries or a group of countries under the general authority of TAA. USTR also has the authority to waive the Buy American statute and other exclusionary and protectionist provisions for countries with an estab-lished FTA.

Important Definitions

End product: Articles, materials, and supplies to be acquired for public use.

Domestic end product: An unmanufactured end product mined or produced in the U.S., or an end product manu-factured in the U.S. if the cost of its components mined, produced, or manufactured in the U.S. exceeds 50 percent of the cost of all its components. Components of foreign origin of the same class or kind as those that the agency determines are not mined, produced, or manufactured in sufficient and reasonably available commercial quantities of a satisfactory quality are treated as domestic. Commercially available off-the-shelf (COTS) items are also domestic end products.

Foreign end product: An end product other than a domestic end product.

U.S.-made end product: An article that is mined, produced, or manufactured in the U.S. or that is substantially transformed in the U.S. into a new and different article of commerce with a name, character, or use distinct from that of the article or ar-ticles from which it was transformed. A manufactured product of a small business is a U.S.-made end product if it meets the test of the first sentence (mined, produced, manufactured or substantially transformed in the U.S.), but it is not a domestic

end product unless the cost of the domestic components exceeds 50 percent of the cost of all components.

Designated country end product: A WTO GPA country end product, FTA country end product, least developed country end product, or Caribbean Basin country end product.

Eligible product: A foreign end product, construction mate-rial, or service that due to applicability of a trade agreement to a particular acquisition is not subject to discriminatory treatment.

Designated country: Any country that is:• Covered by a WTO GPA• Covered by an FTA• Designated as a least developed country• Designated as a Caribbean Basin country

Domestic offer: An offer of a domestic end product.

Eligible offer: An offer of an eligible product.

Noneligible product: A foreign end product that is not an eligible product.

Noneligible offer: An offer of a non-eligible product.

Source: FAR 25.003

http://www.businessdictionary.com/definition/protectionism.html



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To simplify this discussion, acquisitions subject to TAA and FTAs are included in the term “trade agreements,” since their implementation essentially is the same (but at different dollar thresholds). Any necessary distinctions are noted.

Section 1605 of the ARRA of 2009 mandates that all iron, steel, and manufactured goods used in projects for the construction, alteration, maintenance, or repair of public buildings or public works within the U.S. that are acquired by means of funding appropriated under ARRA must be produced or manufactured in the U.S. Known as the Buy American provision, it was intended to stimulate the U.S. economy by increasing the creation and retention of jobs in the iron, steel, and manufacturing sectors of the U.S., but it, too, must be applied in a manner consistent with U.S. obligations under the various trade agreements.

The Berry Amendment — enacted just prior to the U.S.’s entrance into World War II as part of the 1941 Fifth Supplemental DoD Appropriations Act — was written to protect the U.S. industrial base during periods of adversity and war. It waives the requirement for DoD to buy do-mestically under a variety of circumstances, as discussed later.

What is a nonavailable article?

A nonavailable article is an article, material, or supply that the head of contracting activity has determined to not be mined, produced, or manufactured in the U.S. in sufficient and reasonably available commercial quantities of satisfac-tory quality (see FAR 25.103(b)). If the CO considers that the nonavailability of an article is likely to affect future acquisi-tions, he or she may submit a copy of the determination to either the Civilian Agency Acquisition Council or Defense Acquisition Regulations Council. The list of current nonavailable articles is found at FAR 25.104.

BUY AMERICAN STATUTE

What does it mean that the Buy American statute establishes a preference for purchase of domestically made products?As used in this context, “preference” does not mean that the purchase of domestic products is mandatory; it means that procuring agencies must give priority to products made domestically when feasible and practical. It is pos-sible to buy nondomestic goods when necessary, but to discourage this practice, a premium is added to the evalu-ated price of nondomestic products that may render them noncompetitive in many cases. If, after the price adjustment, the foreign product proves to be more advantageous, award can be made for the foreign product.

When does the statute apply?The Buy American statute applies only to the purchase of supplies, including construction materials, over the micro-purchase threshold when those supplies are to be used in the U.S. This includes the supply portion of a contract for services if the value of the supplies exceeds the micro-

purchase threshold. However, the statute does not apply to the acquisition of services, regardless of where the services are performed (i.e., within the U.S. or overseas), or to the acquisition of supplies if they are used outside the U.S.

Are there any exceptions?Yes. For acquisitions subject to the Buy American statute, agencies must purchase domestic end products unless one of these exceptions applies:

• The CO determines that the price of the lowest domes-tic offer or construction materials is unreasonable

• The head of the agency determines domestic prefer-ence would be inconsistent with public interest

• The item is considered to be a “nonavailable” article, or the construction material is nonavailable (see FAR 25.104 and the sidebar above)

• The item is specifically for commissary resale • The purchase is for information technology (IT) that is a

commercial item • The amount exceeds the trade agreement thresh-

olds, and an offer is either for a foreign end product or construction materials from a designated country. (In other words, the U.S. has a trade agreement with that country, or it is a least-developed or Caribbean Basin country.) In that case, the offer of the eligible foreign end product or construction materials must be consid-ered on an equal basis with the domestic end product or construction materials.6

So if I buy commercial off-the-shelf IT, I don’t have to worry about the Buy American statute? Correct. The restriction does not apply to the acquisition of commercially available IT subsequent to fiscal year 2004.7

https://www.gpo.gov/fdsys/pkg/PLAW-111publ5/pdf/PLAW-111publ5.pdf

http://web.ita.doc.gov/tacgi/eamain.nsf/BerryAmendment/Berry%20Amendment?Opendocument







Advisory

What about commercial off-the-shelf items?Commercially available off-the-shelf (COTS) items are defined in FAR 52.225-1 as any item of supply, including construction material, that meets the requirements of paragraph (1) of the definition at FAR 2.101; is sold in substantial quantities in the commercial marketplace; and is of-fered to the gove rnment without modi-fications in the same form in which it is sold in the commer-cial marketplace. It excludes bulk cargo, such as unpackaged agri-cultural and petroleum products (46 U.S.C. 40102(4)).

The “component test,” which refers to the definition of domestic end product under FAR 52.225-1, is waived for any end product identified as COTS under 41 U.S.C. 1907. The test requires that the cost of all components used in the manufacture of a domestic end product that are mined, produced, or manufactured in the U.S. exceed 50 percent of the total cost of all components it contains. In other words, no more than 49 percent of the end item may be composed of foreign materials or parts. If the end product is a COTS item, COs need not be concerned about the source components used to fabricate the item as long as the end product is manufactured in the U.S.

How does a CO determine if the price of a domestic offer or construction materials is reasonable?If the lowest price responsible offer is foreign, FAR 25.105 requires the CO to add the following surcharges, as ap-propriate, to the price of that offer, inclusive of customs duty8 —

• 6 percent, if the lowest domestic offer is from a large business concern

• 12 percent, if the lowest domestic offer is from a small business concern

The price of the domestic offer is reasonable if it is equal to or less than the evaluated price of the lower foreign offer after the surcharge (“evaluation factor,” in this context) has been added. In the same manner, COs in civilian agencies

must add 6 percent to the cost of the foreign construction materi-al before comparing those prices to their domestic equiva-lents. If the price of the domestic con-struction material still exceeds the evaluated price of the foreign c o n s t r u c t i o n material, it is considered un-

reasonable (see FAR 25.105(b)(2)),

and acquisition of the foreign construction material is permitted.

The CO must use this factor or another factor established in agency regulations in small business set-asides if the low offer is from a small business concern offering the product of a small business concern that is not a domestic end prod-uct (see FAR 19.5).

For DoD acquisitions, the domestic end product evalua-tion factor is 50 percent for both supplies and construction materials (DFARS 225.105).

CONSTRUCTION MATERIALS UNDER ARRA

When do the Buy American requirements of ARRA apply?The requirements of ARRA apply to construction projects performed in the U.S. under funds appropriated or other-wise provided via ARRA when the acquisition will exceed the micropurchase threshold. Buy American does not apply to the acquisition of services, regardless of where the ser-vices are performed, or to the acquisition of construction materials if the materials are used outside the U.S.

Are there any exceptions?Foreign construction materials are acceptable for purchase when:

https://www.acquisition.gov/sites/default/files/current/far/html/52_223_226.html#wp1192900


http://www.businessdictionary.com/definition/bulk-cargo.html

http://www.businessdictionary.com/definition/bulk-cargo.html



http://www.businessdictionary.com/definition/customs-duty.html



http://www.acq.osd.mil/dpap/dars/dfars/html/current/225_1.htm#225.105


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• Iron, steel, or manufactured goods produced in the U.S. and of satisfactory quality and sufficient quantity are not available

• The use of iron, steel, or manufactured goods produced in the U.S. would increase the cost of the contract by more than 25 percent

• Applying the domestic preference would be inconsis-tent with the public interest

How do these requirements differ from the standard Buy American statute requirements for construction materials?There are three major differences:1. For projects funded by ARRA, the head of the agency

must publish a notice in the Federal Register when-ever an exception is made for any of the reasons stated above. This notice must be placed within three business days after the determination is made, with a copy to the Office of Federal Procurement Policy (OFPP) administrator and the Recovery Accountabil-ity and Transparency Board.

2. The definition of “domestic manufactured construc-tion material” does not require that the cost of the individual components mined, produced, or manu-factured in the U.S. exceed 50 percent of the cost of the item’s total components (see the definition of “domestic construction material” in FAR 25.003), but it does require that all manufacturing processes take place in the U.S. (except for steel or iron used as components or subcomponents of other manufac-tured construction material).

3. If the CO has determined that an exception applies because the cost of certain domestic construc-tion materials is unreasonable, and the offer being considered includes foreign iron, steel, or other man-ufactured goods, a surcharge of 25 percent must be applied to the total offered price of the contract. In addition, the CO must add a surcharge of 6 percent to the cost of any foreign unmanufactured construction material incorporated in the offer before the evalua-tion is completed.

TRADE AGREEMENTS

When do trade agreements apply?U.S. foreign trade agreements (except for the Israeli Trade Act) apply to both supplies (including construction mate-

rials) and services, regardless of where the supplies are used or the services are performed. The Israeli Trade Act applies only to supplies.

For the acquisition of products for use overseas, TAA applies as long as the acquisition does not fall under any of its exceptions (detailed on page 7). The Act requires agen-cies to purchase only U.S.-made or designated country end products, unless no offers for such end products are received or submitted offers are insufficient to fulfill the government’s requirements. These restrictions apply to acquisitions exceeding the WTO GPA threshold, currently $191,000 for supplies and $7,358,000 for construction materials. However, it’s important to check FAR 25.403(c) at the time of the acquisition, since “most of these dollar thresholds are subject to revision by the U.S. Trade Rep-resentative approximately every 2 years.”9

For acquisitions below the respective WTO GPA thresholds, even if such acquisitions are covered by FTAs, the government is free to purchase supplies from any country (except prohibited sources) if the supplies are to be used overseas.

Definitions Related to ARRA

Domestic construction material: An unmanufactured construction material mined or produced in the U.S., or a construction material manufactured in the U.S.

Foreign construction material: A construction material other than a domestic construction material.

Manufactured construction material: Any construction ma-terial that is not unmanufactured construction material.

ARRA designated country: A WTO GPA country, FTA country, or least developed country. NOTE: Caribbean Basin countries are not included as designated countries.

Steel: An alloy that includes at least 50 percent iron, be-tween .02 percent and 2 percent carbon, and may include other elements.

Unmanufactured construction material: Raw material brought to the construction site for incorporation into the building or work that has not been processed into a specific form and shape or combined with other raw material to cre-ate a material that has different properties than those of the individual raw materials.

Do trade agreements apply to services?Yes, although the guidance for purchasing services is not as definitive as that provided for the purchase of supplies. While all existing trade agreements (except for the Israeli




Advisory

Trade Act) include provisions related to the purchase of services, the FAR does not provide guidance on how to evaluate trade agreement offers for services, nor do any FAR clauses specifically pertain to such transactions — though the purchase restrictions identified above for the acquisition of foreign supplies apply equally to foreign ser-vices.

To determine the origin of services, COs should use the country in which the firm providing the service is estab-lished, not the location at which the services are performed. (So, if a company headquartered in Oman is performing services in Bangladesh, for the purposes of determining the origin of services, the source would be Oman.)

The dollar thresholds that currently apply to each trade agreement are listed in Table 1 above.

Are there exceptions to the applicability of trade agreements?

Yes. Trade agreements do not apply to: • Small business set-asides • Acquisition of end products for resale • Acquisition of arms, ammunition, or war materials, or

national security or national defense purchases • Acquisitions from Federal Prison Industries (FAR 8.6)

and nonprofit agencies employing people who are blind or severely disabled (FAR 8.7)

• Other acquisitions not using full and open competition, if authorized by FAR 6.2 or 6.3In addition, each trade agreement lists specific servic-

es that are excluded, as shown in Table 2 on page 8.

Table 1: Trade Agreements Dollar Thresholds10

TRADE AGREEMENT SUPPLIES SERVICES CONSTRUCTION

WTO GPA* $191,000 $191,000 $7,358,000

Free Trade Agreements:

Australia FTA $77,533 $77,533. $7,358,000

Bahrain FTA $191,000 $191,000 $10,079,365

CAFTA-DR FTA (Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua) $77,533 $77,533 $7,358,000

Chile FTA $77,533 $77,533 $7,358,000

Colombia FTA $77,533 $77,533 $7,358,000

Korea FTA 100,000 $100,000 $7,358,000

Morocco FTA 191,000 $191,000 $7,358,000

NAFTA - Canada $25,000 $77,533 $10,079,365

NAFTA - Mexico $77,533 $77,533 $10,079,365

Oman FTA $191,000 $191,000 $10,079,365

Panama FTA $191,000 $191,000 $7,358,000

Peru FTA $191,000 $191,000 $7,358,000

Singapore FTA $77,533 $77,533 $7,358,000

Israeli Trade Act $50,000 N/A N/A

* This agreement implements the applicability and dollar thresholds of TAA to products and services of specific countries. It covers those designated countries for which a specific free trade agreement has not been negotiated.

(equal to or exceeding)






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Table 2: Services Excluded from Application of the WTO GPA and FTAs

SERVICE(Codes from the Federal Procurement Data System Product/

Service Code Manual are indicated in parentheses)

WTO GPA and Korea FTAs

Bahrain FTA; CAFTA-DR11;

Chile and Colom-bia FTAs; NAFTA; Oman, Panama and Peru FTAs

Singapore FTA Australia and Morocco FTAs

(1) All services purchased in support of military overseas X X X X

(2)(i) Automatic data processing (ADP) telecommunications and transmission services (D304), except enhanced (i.e., value-added) telecommunications services

X X

(ii) ADP teleprocessing and timesharing services (D305), telecommunications network management services (D316), automated news services, data services or other information services (D317), and other ADP and telecom-munications services (D399)

X X

(iii) Basic telecommunications network services (i.e., voice telephone services, packet-switched data transmission services, circuit-switched data transmission services, telex services, telegraph services, facsimile services, and private leased circuit services, but not information services, as defined in 47 U.S.C. 153(24))

* * X X

(3) Dredging X X X X

(4) (i) Operation and management contracts of certain government or privately owned facilities used for government purposes, including federally funded research and develop-ment centers

X X

(ii) Operation of all Department of Defense, Department of Energy, or National Aeronautics and Space Administra-tion facilities; and all government-owned research and development facilities or government-owned environmental laboratories

** X ** X

(5) Research and development X X X X

(6) Transportation services (including launching services, but not including travel agent services V503) X X X X

(7) Utility services X X X X

(8) Maintenance, repair, modification, rebuilding, and installa-tion of equipment related to ships (J019) X X

(9) Nonnuclear ship repair (J998) X X

* Acquisitions of these services are a subset of the excluded services at (2)(i) and (ii), and are not covered under WTO GPA. ** Acquisitions of these services are a subset of the excluded services at (4)(i), and are not covered under WTO GPA.

PROCESSES AND PROCEDURES

Do the trade agreements impose any special requirements regarding the acquisition process?

Yes. FAR 25.408 stipulates five areas of special require-ments that apply to acquisitions of products and services covered by trade agreements:1. Publicizing and response time: WTO GPA and FTA

acquisitions must comply with requirements of FAR 5.203(h). The time between publication of the syn-opsis and receipt of offers must be no less than 40





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days. However, if the acquisition falls within a general category identified in an annual forecast, the avail-ability of which is published, the CO may reduce this period to as few as 10 days.

2. Preparation and transmittal of synopses: All re-quirements for the preparation and transmittal of synopses as required by FAR 5.207 apply. In addition:

• If the solicitation will include FAR 52.225-3 or an equivalent agency clause, insert the following no-tice in the synopsis: “One or more of the items under this acquisition is subject to Free Trade Agreements.”

• If the solicitation will include FAR 52.225-5 or an equivalent agency clause, insert the following no-tice in the synopsis: “One or more of the items under this acquisition is subject to the World Trade Organization Government Procurement Agree-ment and Free Trade Agreements.”

Examples of U.S.-made end products: A dress manufactured in the U.S. but made from Chinese silk; and an unfinished sculpture created in the U.S., formed from non-U.S. stone.

• If the solicitation will include FAR 52.225-11, 52.225-23, or an equivalent agency clause, insert the following notice in the synopsis: “One or more of the items under this acquisition is subject to the World Trade Organization Government Procure-ment Agreement and Free Trade Agreements.”

3. Technical requirements: Agencies may not include technical requirements in solicitations solely to pre-clude the acquisition of eligible products.

4. Offers in English language and U.S. currency: Agencies must specify in solicitations that offerors must submit offers in the English language and U.S. dollars.

5. Unsuccessful offeror notice: Agencies must provide unsuccessful offerors from WTO GPA or FTA coun-tries notice in accordance with FAR 14.409-1 or FAR 15.503.

When the Buy American statute and/or trade agreements apply, what solicitation provisions and contract clauses must I include?Table 3 on page 16 shows the applicable solicitation provi-sions and contract clauses for use with awards subject to the Buy American statute or trade agreements, depending on the dollar thresholds and whether the acquisition is for supplies or services within or outside the U.S. The infor-mation in the table assumes that the exceptions in FAR 25.401 do not apply. Note, too, that agencies may have their own provisions and clauses.

There appear to be several specific terms that refer to the origin of products. Can you explain these?Yes. There are domestic end prod-ucts, U.S.-made end products, foreign end products, and desig-nated country end products:• Domestic end product:1) an unmanufactured end product mined or produced in the U.S., or 2) an end product manufactured in the U.S., if the cost of its components mined, produced, or manufactured domestically exceeds 50 percent of the cost of all its components. Components of foreign origin of the same class or kind as those the












Advisory

agency determines are not mined, produced, or manu-factured in sufficient and reasonably available commercial quantities of satisfactory quality are treated as domes-tic.

• U.S.-made end prod-uct: an article that is mined, produced, or man-ufactured in the U.S. or substantially transformed in the U.S. into a new and different article of com-merce, with a name, character, or use distinct from that of the article or articles from which it was transformed. (For e x a m p l e : An American sculptor takes a block of marble quarried in Italy or a block of teak grown in Myanmar and trans-forms it into a statue; a U.S. dress designer takes a bolt of silk manufactured in China, Japan, Italy, India, Spain, or France and turns it into a ball gown.)12

A manufactured product of a small business is a U.S.-made end product if it is mined, produced, manufactured, or substantially transformed in the U.S., but it is not a domestic end product unless the cost of the domestic components exceeds 50 percent of the cost of all com-ponents.

• Foreign end product: an end product other than a do-mestic end product.

• Designated country end product: a WTO GPA coun-try, FTA country, least developed country, or Caribbean Basin country end product.There is a subtle but important distinction between a

domestic end product and U.S.-made end product, relat-ing to how the country of origin is determined under the Buy American statute versus the trade agreements.

The Buy American statute uses a two-part test to define a domestic end product: 1) the product must be manufactured in the U.S.; and 2) the cost of its compo-nents mined, produced, or manufactured in the U.S. must exceed 50 percent of the cost of all its components. Under the trade agreements, the test to determine country of or-igin is “substantial transformation” (i.e., transforming an article into a new and different article of commerce with a name, character, or use distinct from the original article). It is important to know which is offered under a solicitation because it affects how the offers are evaluated when only the Buy American statute applies.

Remember that offerors provide this information in their representations and certifications. For example, say you have an acquisition subject to the Buy American stat-ute but not WTO GPA or any FTAs. The acquisition is a small business set-aside in accordance with FAR 19.5 for supplies for use in the U.S., and is less than $25,000 in value. You receive the following offers:

OfferDollar

AmountBusiness Type

Offered Product

A $12,000 U.S. small business

Domestic end product

B $11,700 U.S. small business

Domestic end product

C $10,000 U.S. small business

U.S.-made end product

Offer C is represented as a U.S.-made rather than do-mestic end product. Under the Buy American statute, it is evaluated as a foreign end product because, even though it is produced by a small business, the cost of its domestic components is less than 50 percent of the total cost of all components used to manufacture the item (see the defini-tion of a U.S.-made end product).

Further, because offer C must be evaluated as a for-eign end product under the Buy American statute, is being provided by a U.S. small business, and is the lowest-priced offer, it is subject to the 12 percent “evaluation factor” surcharge for the purpose of determining the reasonable-ness of the lowest-priced domestic end product (offer B). The resulting evaluated price of $11,200 for offer C re-mains lower than offer B. Accordingly, you would award on offer C at $10,000.

Domestic End Product Foreign End Product

The percentage of foreign-origin components determines the status of the end item.



Advisory

Construction projects covered by ARRA also have their own specific definitions, as outlined in FAR 25.601 (see the sidebar on page 6).

In the previous example, why is a U.S.-made end product evaluated as a foreign end product?When only the Buy American statute applies, a foreign end product is defined as anything that is not a domestic end product; that is, anything composed of less than 51 percent domestically produced components. That includes U.S.-made products (like the Italian marble statue or the Japanese silk ballgown in the examples above). When the trade agreements apply, the distinctions are not particu-larly relevant because agencies are required to purchase only U.S.-made or designated country end products, as op-posed to only domestic end products (the statue and the silk ball gown would qualify, as would a poncho made in Mexico or a calypso shirt from the Caribbean).

How can I determine whether the product the offeror proposes is a domestic end product, U.S.-made product, designated country end product, or foreign end product?Proactively, by ensuring that the solicitation includes the ap-propriate provisions (see Table 3 on page 16) and verifying that the offerors have completed them properly. Depend-ing on which solicitation provision applies, offerors must certify whether the products are domestic end products, U.S.-made products, designated-country end products, or foreign end products as part of their proposals.

The Government Accountability Office (GAO) has ruled that COs may rely on an offeror’s certification unless there is reason to believe an offeror will not offer compliant products. A February 2008 GAO decision held that:

When a bidder or offeror represents that it will furnish end products of designated or qualifying countries (in-cluding domestic end products) in accordance with the Trade Agreements Act, it is obligated under the contract to comply with that representation. If prior to award an agency has reason to believe that a firm will not provide compliant products, the agency should go beyond the firm’s representation of compliance with the Act; how-ever, where the CO has no information prior to award that would lead to such a conclusion, the CO may prop-erly rely upon an offeror’s representation without further investigation.13

However, it is sometimes difficult to determine whether an item is “substantially transformed in the

U.S. into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was transformed,” as evidenced by a June 2008 U.S. Court of Federal Claims (COFC) de-cision that reversed the GAO decision cited above. COFC cited the Supreme Court’s definition of the term “manu-facture”:

The relevant inquiry here is where the article last under-went a substantial transformation. The test contained in the statute itself is drawn from the Supreme Court’s defi-nition of the term “manufacture” under the Tariff Act of 1890: “Manufacture implies a change, but every change is not a manufacture and yet every change in an article is the result of treatment, labor and manipulation. … There must be transformation; a new and different article must emerge, ‘having a distinctive name, character, or use.’” … The proper inquiry is thus at what point the article ac-quires its distinct name, character, or use.14

When only the Buy American Act applies, a foreign end product is defined as anything that is composed of less than 51 percent domestically produced components.

Note that while GAO’s statement that a CO may rely on an offeror’s certification was upheld, the issue in the COFC decision (and the reason it overturned GAO’s decision) was that the awardee presented conflicting information in its certifications regarding the place of transformation. COFC held that the conflicts were such that the agency should have been aware of an issue with TAA compliance and resolved it before award.

What are the steps in evaluating and awarding contracts subject to the Buy American statute and/or trade agreements?The award process will depend on three factors: 1) the dol-lar value of the acquisition; 2) whether the acquisition is for supplies to be used within or outside the U.S.; and 3) whether the acquisition is for services, regardless of place of performance. Table 4 (on page 20) provides specific process steps, based on the premise that none of the ex-ceptions in FAR 25.401 applies. We also include process steps for construction materials subject to ARRA.

FAR 25.504 provides a variety of specific evaluation ex-amples useful in applying the steps in Table 4.





Advisory

What if the solicitation or offer specifies that award can be made only on the basis of a grouping of contract line items, or on all line items as a block (i.e., all or nothing)?Per FAR 25.503, take the fol-lowing steps:1. Reject the offer outright

if any part of the award would consist of prohib-ited end products.

2. If an offer restricts award to a group of line items or to all line items contained in the offer, determine for each line item whether to apply an “evaluation fac-tor” surcharge (see FAR 25.504-4, example 1).

• First, evaluate offers that do not specify an award restriction on a line item basis in accordance with FAR 25.502, determining a tentative award pattern by selecting for each line item the offer with the lowest evaluated price.

• Evaluate an offer that specifies an award restric-tion against the offered prices of the tentative award pattern.

• Compute the total evaluated price for the tenta-tive award pattern and the offer that specifies an award restriction.

• Unless the total evaluated price of the offer that specifies an award restriction is less than the total evaluated price of the tentative award pattern, award based on the tentative award pattern.

3. If the solicitation specifies that award will be made only on a group of line items or all line items contained in the solicitation, determine the category of end products on the basis of each line item, but determine whether to apply an evaluation factor on the basis of the group of items (see FAR 25.504-4, example 2).

• If the proposed price of domestic end products exceeds 50 percent of the total proposed price of the group, evaluate the entire group as a domestic offer. Evaluate all other groups as foreign offers.

• For foreign offers, if the proposed price of domes-tic end products and eligible products exceeds 50 percent of the total proposed price of the group,

evaluate the entire group as an eligible offer. • Apply the evaluation factor to the entire group in

accordance with FAR 25.502.

If I am placing an order under the Federal Supply Schedule (FSS) program, how do I ensure I select a contractor whose products or services comply with TAA?The General Services Administration (GSA) already has taken that into consideration in the award of FSS contracts. GSA assumes all contracts will have orders exceeding the Trade Agreements threshold ($191,000) in the aggregate.15 Therefore, it has made TAA applicable to all schedules. In accordance with the act, only U.S.-made or designated country end products or services are offered and sold under schedule contracts. GSA works with schedule con-tractors to ensure compliance with TAA.

The Berry Amendment is applicable only to DoD acquisitions, and includesdomestically produced products such as hand tools.

BERRY AMENDMENT

What is the Berry Amendment?The Berry Amendment, applicable only to DoD acquisi-tions, requires DoD to give procurement preference to certain domestically produced, manufactured, or home-








Advisory

grown products, including food, clothing, fabrics, and hand or measuring tools. The Berry Amendment has been codi-fied into law as 10 U.S.C. 2533a and implemented through DFARS 225.7002.

Over time, Congress has modified the requirements of the Berry Amendment:

• Section 833 of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2006 (Public Law 109-163) added language stating that the restriction applies to clothing “and the materials and components thereof, other than sensors, electronics, or other items added to, and not normally associated with clothing (and the materials and components thereof).”16

• Section 842 of the NDAA for FY 2007 (Public Law 109-364) deleted the restrictions relating to specialty metals and placed them in a new section, 10 U.S.C. 2533b.17

• Section 804 of the NDAA for FY 2008 (Public Law 110-181) revised section 2533b to address the availabil-ity and use of domestic nonavailability determinations, commercial item exceptions, purchases of fasteners, high performance magnets, electronic components, commercial derivative military articles, de minimis pur-chases, and national security waivers.18

Are there any exceptions?Yes. The Berry Amendment authorizes the secretary of Defense, the secretaries of the military departments, and the undersecretary of Defense (Acquisition, Technology, and Logistics) to waive the requirement to buy domesti-cally when satisfactory quality and sufficient quantity of domestically produced items cannot be purchased as and when needed at U.S. market prices.

Additional exemptions apply to acquisitions at or below the simplified acquisition threshold (SAT) or that fall into the categories listed in the sidebar at right.

Consult DFARS 225.7002-2 for a current list and expla-nation of conditions that apply to these exceptions.

What are the differences between the Buy American statute and Berry Amendment?There are three main differences:1. The Buy American statute applies to all federal agen-

cy contracts; the Berry Amendment is limited to DoD contracts exceeding the SAT.

2. The Buy American statute applies to contracts carried out within the U.S.; Berry Amendment restrictions apply to defense contracts carried out both domesti-cally and overseas.

3. The Buy American statute requires that “substan-tially all” costs of foreign components not exceed 50 percent of the cost of all components; the Berry Amendment requires that 100 percent of an item’s content be domestic in origin.

If I am from a DoD buying activity but am spending non-DoD money, is the Berry Amendment applicable?Yes. When another agency’s funding is made available to DoD, the Berry Amendment applies. It also applies when DoD provides funding to another agency to buy items. This includes items acquired under foreign military sales.19

What is the Balance of Payments Program?The Balance of Payments Program (BOPP) restricted the purchase of supplies and construction materials that were not domestic end products for use outside the U.S. Its restrictions were similar to those of the Buy American

Berry Amendment exemptions

Exemptions include acquisitions of the following:• Nonavailable articles listed in FAR 25.104(a)• Outside the U.S. in support of combat operations• Perishable foods by or for activities located outside the

U.S. for personnel of those activities• Food or hand or measuring tools in support of contingen-

cy operations or on the basis of unusual and compelling urgency

• Emergency acquisitions by activities located outside the U.S. for personnel of those activities

• By vessels in foreign waters • Items specifically for commissary resale• Incidental amounts of cotton, other natural fibers, or

wool incorporated in an end product • Waste and byproducts of cotton or wool fiber for use in

the production of propellants and explosives• Foods manufactured or processed in the U.S., regardless

of where the foods (and any component if applicable) were grown or produced

• Fibers and yarns that are for use in synthetic fabric or coated synthetic fabric if the fabric is to be used as a component of an end product that is not a textile product or para-aramid fibers and continuous filament para-aramid yarns manufactured in a qualifying country

• Chemical warfare protective clothing when the acquisi-tion furthers an agreement with a qualifying country

• Interagency, state, or local purchases executed by DoD as a result of the transfer of contracts from GSA or for which DoD serves as an item manager for products on behalf of GSA


http://legal-dictionary.thefreedictionary.com/De+Minimis

http://www.acq.osd.mil/dpap/dars/dfars/html/current/225_70.htm#225.7002-2


Advisory

statute; it used the same definitions and evaluation proce-dures, except that a 50 percent evaluation factor was used to determine unreasonable cost.

This program is described in the past tense because Federal Acquisition Circular (FAC) 2001-07, dated April 30, 2002, removed BOPP from the FAR.20 The FAR no longer requires COs to use balance of payments procedures to evaluate foreign offers when acquiring supplies for use outside the U.S.

However, BOPP was continued in DoD. DFARS 225.7500 requires the acquisition of only domestic end products for use outside the U.S., and only domestic construction material for construction to be performed outside the U.S., including end products and construction material for foreign military sales. Exceptions are listed in DFARS 225.7501; DFARS 225.7500 contains evaluation procedures, and Procedures, Guidance, and Information (PGI) 225.504 provides examples.

Are there other restrictions on DoD acquisitions I should be aware of?Yes. While the Berry Amendment probably is the most widely known restriction, DFARS 225.7000 addresses several other statutory restrictions that apply to DoD ac-quisitions of:

• Specialty metals • Foreign buses • Certain chemical weapons antidotes • Air circuit breakers for naval vessels • Anchor and mooring chains • Ball and roller bearings • Certain naval vessel components • Carbon, alloy, and armor steel plates • Supercomputers • Construction or repair of vessels in foreign shipyards • Military construction • Overseas architect-engineer services • Photovoltaic devices

Additional clarifications were made March 25, 2016, explaining when it is appropriate to omit DFARS 252.225–

7001 with regard to exceptions to the Buy American statute and BOPP. The clause at DFARS 252.225–7001 applies to acquisitions at or below the SAT and for commercial items, including COTS items. The changes merely clarify when it is appropriate to omit DFARS clause 252.225–7001 in ac-cordance with existing exceptions to the Buy American statute and BOPP, i.e., the clause does not apply: 1) when the acquisition is for supplies to be used within the U.S. and an exception to the Buy American statute applies; or 2) when the acquisition is for supplies to be used outside the U.S. and an exception to BOPP applies.

ConclusionWhile learning how and when to apply the Buy American statute, TAA, FTAs, ARRA, and the Berry Amendment can seem daunting, it can be summed up in one basic prem-ise: Give preference to U.S.-origin products and services unless the content of the product is less than 51 percent domestically produced; the U.S. has established a trade agreement with the source country; or the country is a least developed or Caribbean Basin country.

While there are, of course, permutations based on dol-lar value and other exceptions, keeping this rule of thumb in mind should help you navigate the confusion and en-sure your procurements' compliance with all regulations pertaining to the acquisition of foreign products and services. t

Contributors to earlier versions of this Advisory include Gladys Gines, Gloria Sochon, and Nancy Maples-Remley.

Additional VAO Resources

VAO’s Table of Domestic Procurement Restrictions shows the key provisions and considerations related to applicability of the Buy American statute, TAA, FTAs, Berry Amendment, spe-cialty metals, and other restrictions (including ball bearings).

Please see the following pages for article endnotes plus several Buy American statute- and trade agreement-related tables.

http://www.acq.osd.mil/dpap/dars/dfars/html/current/225_75.htm

http://www.acq.osd.mil/dpap/dars/dfars/html/current/225_75.htm



http://www.acq.osd.mil/dpap/dars/pgi/pgi_htm/PGI225_5.htm#225.504





https://www.gotovao.com/index.cfm?action=comment&v2&id=0390059656000443


Advisory

Endnotes

1. “A foreign end product may be purchased if the CO determines that the price of the lowest domestic offer is unreasonable or if another exception applies (see FAR 25.1).”

2. See FAR 25.2.3. The Buy American statute is codified into law as 41 U.S.C 83 8301-8305.4. The Trade Agreements statute is codified at 19 U.S.C. 13. See in particular subchapter I, sections 2511, et seq.5. For a listing of the specific countries in each category, see FAR 25.003, “Definitions.”6. See FAR 25.103.7. See section 535(a) of Division F, Title V, Consolidated Appropriations Act 2004, and similar sections in subsequent appropriations

acts.8. Available online.9. FAR 25.402—General. (a)(1) The Trade Agreements Act (19 U.S.C. 2501, et seq.) provides the authority for the President to waive

the Buy American statute and other discriminatory provisions for eligible products from countries that have signed an interna-tional trade agreement with the U.S., or that meet certain other criteria, such as being a least developed country. The President has delegated this waiver authority to the USTR.

10. This chart is based on dollar thresholds and FTAs in effect at the time of publication. Dollar thresholds change periodically, and new FTAs are added as negotiated. Always consult the current FAR for the thresholds and FTAs.

11. CAFTA-DR refers to the Central American/Dominican Republic FTA.12. Teak and silk are both listed as nonavailable items (that is, commodities not generally available in reasonable quantities in the

U.S.) under FAR 25.104(a).13. Matter of: Klinge Corporation (B-309930.2), GAO, February 13, 2008.14. See COFC Decision No. 08-134C, filed June 10, 2008.15. See https://www.gsa.gov/portal/category/100639.16. National Defense Authorization Act for FY 2006 (Public Law 109-163), January 6, 2006.17. John Warner National Defense Authorization Act for FY 2007 (Public Law 109–364), October 17, 2006.18. See http://www.gpo.gov/fdsys/pkg/PLAW-110publ181/pdf/PLAW-110publ181.pdf.19. See Berry Amendment Frequently Asked Questions.20. Available online.

The Advisory is published as part of the Virtual Acquisition Office™ subscription service, www.GoToVAO.com. Information and opinions are based on best available information, but their accuracy and completeness cannot be guaranteed. VAO recommends consulting the relevant sections of your agency’s FAR supplement and policies for amplifying details and guidance.

Contents ©2017 by the Virtual Acquisition Office™. All rights reserved.



http://uscode.house.gov/browse/prelim@title41/subtitle4/chapter83&edition=prelim

http://uscode.house.gov/browse/prelim@title19/chapter13&edition=prelim

http://farsite.hill.af.mil/reghtml/regs/far2afmcfars/fardfars/far/25.htm#P126_3769


http://www.gpo.gov/fdsys/pkg/PLAW-108publ199/pdf/PLAW-108publ199.pdf


http://farsite.hill.af.mil/reghtml/regs/far2afmcfars/fardfars/far/25.htm#P574_55332

http://uscode.house.gov/uscode-cgi/fastweb.exe?getdoc+uscview+t17t20+1727+50++%2819%29%20%20AND%20%28%2819%29%20ADJ%20USC%29%3ACITE%20%20%20%20%20%20%20%20%20

http://www.gao.gov/decisions/bidpro/3099302.pdf

http://www.uscfc.uscourts.gov/sites/default/files/opinions/BRUGGINK.KLINGE061008.pdf

https://www.gsa.gov/portal/category/100639


https://www.gpo.gov/fdsys/pkg/PLAW-109publ364/pdf/PLAW-109publ364.pdf


http://www.acq.osd.mil/dpap/cpic/ic/berry_amendment_faq.html

https://www.gpo.gov/fdsys/pkg/FR-2002-04-30/pdf/02-10370.pdf

https://gotovao.com


AdvisoryTable 3: Applicable FAR 25 provisions and clauses implementing the Buy American statute and trade agreements

Construction Materials for Use Within the U.S.

Dollar threshold

Acquisition will be

subject to:Process steps

Exceeds the micro-purchase

threshold but does not exceed

$25,000

• Buy American statute

• 52.225-1, Buy American — Supplies (contract clause)• 52.225-2, Buy American Certificate (solicitation provision)• 52.225-13, Restrictions on Certain Foreign Purchases (contract clause)• 52.225–20, Prohibition on Conducting Restricted Business Operations in Sudan — Certification

(solicitation provision)• 52.225-25, Prohibition on Contracting with Entities Engaging in Certain Activities or Transac-

tions Relating to Iran — Representation and Certification (solicitation provision)

$25,000 or more but less than $191,000


• FTAs (except Morocco, Bahrain, Panama, Peru, and Oman)

• 52.225-3, Buy American — FTAs — Israeli Trade Act (contract clause) - If the acquisition value is $25,000 or more but less than $50,000, use the clause with its

Alternate I. - If the acquisition value is $50,000 or more but less than $77,533, use the clause with its

Alternate II. - If the acquisition value is $77,533 or more but less than $100,000, use the clause with its

Alternate III.• 52.225-4, Buy American — FTAs — Israeli Trade Act Certificate (solicitation provision)

- If the acquisition value is $25,000 or more but less than $50,000, use the provision with its Alternate I.

- If the acquisition value is $50,000 or more but less than $77,533, use the provision with its Alternate II.

- If the acquisition value is $77,533 or more but less than $100,000, use the clause with its Alternate III.

• 52.225-13, Restrictions on Certain Foreign Purchases (contract clause)• 52.225–20, Prohibition on Conducting Restricted Business Operations in Sudan — Certification


tions Relating to Iran — Representation and Certification (solicitation provision)• 52.214-34, Submission of Offers in the English Language (solicitation provision; sealed bidding)• 52.214-35, Submission of Offers in U.S. Currency (solicitation provision; sealed bidding)• 52.215-1, Instructions to Offerors — Competitive Acquisition (paragraph(c)(5)) (solicitation provi-

sion; negotiation)

$191,000 or more


• All FTAs

• WTO GPA

• 52.225-5, Trade Agreements (contract clause)• 52.225-6, Trade Agreements Certificate (solicitation provision)• 52.225-13, Restrictions on Certain Foreign Purchases (contract clause)• 52.225–20, Prohibition on Conducting Restricted Business Operations in Sudan — Certification


tions Relating to Iran — Representation and Certification (solicitation provision)• 52.214-34, Submission of Offers in the English Language (solicitation provision; sealed bidding)• 52.214-35, Submission of Offers in U.S. Currency (solicitation provision; sealed bidding)• 52.215-1, Instructions to Offerors — Competitive Acquisition (paragraph(c)(5)) (solicitation provi-

sion; negotiation)


Advisory


Dollar threshold

Acquisition will be


Exceeds the micro-purchase threshold

but less than $7,358,000


• 52.225-9, Buy American — Construction Materials (contract clause)• 52.225-10, Notice of Buy American Requirement — Construction Materials (solicitation provi-

sion)• 52.225-13, Restrictions on Certain Foreign Purchases (contract clause)• 52.225-20, Prohibition on Conducting Restricted Business Operations in Sudan — Certification



$7,358,000 or more but

less than $10,079,365


• FTAs (except NAFTA, Bahrain, Oman, and Israel)

• WTO GPA

• 52.215-1, Instructions to Offerors — Competitive Acquisition (paragraph(c)(5)) (solicitation provi-sion; negotiation)

• 52.214-34, Submission of Offers in the English Language (solicitation provision; sealed bidding)• 52.214-35, Submission of Offers in U.S. Currency (solicitation provision; sealed bidding)• 52.225-11, Buy American — Construction Materials Under Trade Agreements, Alternate I (con-

tract clause)• 52.225-12, Notice of Buy American Requirement — Construction Materials Under Trade Agree-

ments, Alternate II (solicitation provision)• 52.225-13, Restrictions on Certain Foreign Purchases (contract clause)• 52.225-20, Prohibition on Conducting Restricted Business Operations in Sudan — Certification



$10,079,365 or more


• FTAs (except Israel)

• WTO GPA

• 52.225-11, Buy American — Construction Materials Under Trade Agreements (contract clause)• 52.225-12, Notice of Buy American — Construction Materials Under Trade Agreements (solicita-

tion provision)• 52.225-13, Restrictions on Certain Foreign Purchases (contract clause)• 52.225-20, Prohibition on Conducting Restricted Business Operations in Sudan — Certification

(solicitation provision)• 52.225-25, Prohibition on Contracting with Entities Engaging in Sanctioned Activities Relating to

Iran — Representation and Certification (solicitation provision)• 52.214-34, Submission of Offers in the English Language (solicitation provision; sealed bidding)• 52.214-35, Submission of Offers in U.S. Currency (solicitation provision; sealed bidding)• 52.215-1, Instructions to Offerors — Competitive Acquisition (paragraph(c)(5)) (solicitation provi-

sion; negotiation)


Advisory

Construction Materials for Use Within the U.S. subject to ARRA

Dollar threshold

Acquisition will be





• ARRA

• 52.225-21, Required Use of American Iron, Steel, and Manufactured Goods — Buy American — Construction Materials (contract clause)

• 52.225-22, Notice of Required Use of American Iron, Steel, and Manufactured Goods — Buy American — Construction Materials (solicitation provision)

• 52.225-13, Restrictions on Certain Foreign Purchases (contract clause)• 52.225-20, Prohibition on Conducting Restricted Business Operations in Sudan — Certification




less than $10,079,365



• WTO GPA

• ARRA

• 52.214-34, Submission of Offers in the English Language (solicitation provision; sealed bidding)• 52.214-35, Submission of Offers in U.S. Currency (solicitation provision; sealed bidding)• 52.215-1, Instructions to Offerors — Competitive Acquisition (paragraph(c)(5)) solicitation provi-

sion; negotiation)• 52.225-23, Required Use of American Iron, Steel, and Other Manufactured Goods — Buy Ameri-

can — Construction Materials under Trade Agreements (contract clause) (use Alternate I if there is excepted foreign construction material, unless the excepted foreign construction material is from a designated country other than Bahrain, Mexico, or Oman)

• 52.225-24, Notice of Required Use of American Iron, Steel, and Other Manufactured Goods• Buy American — Construction Materials under Trade Agreements, Alternate II (solicitation provi-

sion)• 52.225-13, Restrictions on Certain Foreign Purchases (contract clause)• 52.225-20, Prohibition on Conducting Restricted Business Operations in Sudan — Certification

(solicitation provision)• 52.225-25, Prohibition on Contracting with Entities Engaged in Certain Activities or Transactions

Relating to Iran — Representation and Certification (solicitation provision)

Exceeds $10,079,365



• WTO GPA

• ARRA

• 52.225-23, Required Use of American Iron, Steel, and Other Manufactured Goods — Buy Ameri-can — Construction Materials under Trade Agreements (contract clause) (use Alternate I if there is excepted foreign construction material, unless the excepted foreign construction material is from a designated country other than Bahrain, Mexico, or Oman)

• 52.225-24, Notice of Required Use of American Iron, Steel, and Other Manufactured Goods — Buy American e — Construction Materials under Trade Agreements (solicitation provision)



Relating to Iran — Representation and Certification (solicitation provision)• 52.214-34, Submission of Offers in the English Language (solicitation provision; sealed bidding)• 52.214-35, Submission of Offers in U.S. Currency (solicitation provision; sealed bidding)• 52.215-1, Instructions to Offerors — Competitive Acquisition (paragraph(c)(5)) (solicitation provi-

sion; negotiation)


Advisory

Supplies for Use Outside the U.S. and Services (Regardless of Place of Performance)

Dollar threshold

Acquisition will be


Does not exceed

$77,533• N/A



Relating to Iran — Representation and Certification (solicitation provision)

$77,533 or more but less than $191,000

• FTAs (except Morocco, Bahrain, Oman, Peru, and Israel)



Relating to Iran — Representation and Certification (solicitation provision)• 52.214-34, Submission of Offers in the English Language (solicitation provision; sealed bidding)• 52.214-35, Submission of Offers in U.S. Currency (solicitation provision; sealed bidding)• 52.215-1, Instructions to Offerors — Competitive Acquisition (paragraph(c)(5)) (solicitation provi-

sion; negotiation)

$191,000 or more

• All FTAs (except Israel)

• WTO GPA

• 52.225-5, Trade Agreements (contract clause)• 52.225-6, Trade Agreements Certificate (solicitation provision)• 52.225-13, Restrictions on Certain Foreign Purchases (contract clause)• 52.225-20, Prohibition on Conducting Restricted Business Operations in Sudan — Certification


Relating to Iran — Representations and Certifications (solicitation provision)• 52.214-34, Submission of Offers in the English Language (solicitation provision; sealed bidding)• 52.214-35, Submission of Offers in U.S. Currency (solicitation provision; sealed bidding)• 52.215-1, Instructions to Offerors — Competitive Acquisition (paragraph(c)(5)) (solicitation provi-

sion; negotiation)

Required When Applicable

Provision/Clause Required if

52.225-7, Waiver of Buy American Statute for Civil Aircraft and Related Articles (solicitation provision)

• The acquisition is for civil aircraft and related articles (see FAR 25.407), if the acquisition value is less than $191,000.

52.225-8, Duty Free Entry (contract clause)

• The acquisition is for supplies that may be imported into the U.S. and for which duty-free entry may be obtained in accordance with FAR 25.903(a), if the value of the acquisition exceeds the simplified acquisition threshold; or, does not exceed the simplified acquisition threshold, but the savings from waiving the duty is anticipated to be more than the adminis-trative cost of waiving the duty. When used for acquisitions that do not exceed the simplified acquisition threshold, the CO may modify paragraphs (c)(1) and (j)(2) of the clause to reduce the dollar figure.

52.225-18, Place of Manufacture (solicitation provision)

• The acquisition is predominantly for manufactured end products as defined in the provision (i.e., the estimated value of the manufactured end products exceeds the estimated value of other items to be acquired as a result of the solicitation).

52.225-14, Inconsistency Between English Version and Translation of Contract (contract clause)

• The acquisition anticipates translation into another language.

52.225-17, Evaluation of Foreign Currency Offers (solicitation provision)

• The acquisition permits the use of other than a specified currency. Insert the source of the rate to be used in the evaluation of offers.

Source: FAR 25.11 through FAC 2005-87


Advisory

Table 4: Steps in the evaluation and award of acquisitions subject to the Buy American statute and trade agreements

Supplies for use within the U.S.

Dollar threshold

Acquisition will be


Exceeds the micro-purchase threshold but does

not exceed $25,000


1. Eliminate all offers or offerors that are unacceptable for reasons other than price, such as nonresponsive, debarred or suspended, or a prohibited source. (Prohibited are most transac-tions involving Cuba, Iran, and Sudan and most imports from Burma and North Korea, unless authorized by the Office of Foreign Asset Controls [OFAC]). See FAR 25.7.

2. Rank the remaining offers by price. - If the low offer is a domestic offer, award on the low offer. - If the low offer is a foreign offer and there were no domestic offers, award on the low offer.

3. If the low offer is a foreign offer and there are domestic offers, apply the appropriate evaluation factor to the low foreign offer (6 percent, if the lowest domestic offer is from a large business concern; or 12 percent, if the lowest domestic offer is from a small business concern). - If the evaluated price of the low foreign offer remains less than the lowest domestic offer,

award on the low foreign offer. - If the price of the lowest domestic offer is less than the evaluated price of the low foreign

offer, award on the lowest domestic offer. - If a tie results between a domestic offer and a foreign offer, award on the domestic offer.

4. If the solicitation specifies award on the basis of factors in addition to cost or price, apply the evaluation factors as specified in this section and use the evaluated cost or price in determining the offer that represents the best value to the government.

Exceeds $25,000 but

less than $191,000


• FTAs (except Morocco, Bahrain, Panama, Peru, and Oman)

1. Eliminate all offers or offerors that are unacceptable for reasons other than price. (Prohibited are most transactions involving Cuba, Iran, and Sudan and most imports from Burma and North Korea, unless authorized by Office of Foreign Asset Controls [OFAC]).

2. Rank the remaining offers by price. - If the low offer is a domestic offer or an eligible foreign offer under an FTA or the Israeli

Trade Act, award on that offer. - If the low offer is a noneligible foreign offer and there were no domestic offers, award on the

low offer. - If the low offer is a noneligible foreign offer and there is an eligible foreign offer that is lower

than the lowest domestic offer, award on the low noneligible foreign offer. (The eligible for-eign offer does not get preferential treatment over the noneligible foreign offer; it is only in comparison to domestic offers that the preference applies.)

- Otherwise, apply the evaluation factors (i.e., if the low offer is a noneligible foreign offer and the next lowest offer is a domestic offer).

$191,000 or more


• All FTAs

• WTO GPA

1. Eliminate all offers or offerors that are unacceptable for reasons other than price. (Prohibited are most transactions involving Cuba, Iran, and Sudan and most imports from Burma and North Korea, unless authorized by OFAC).

2. Eliminate any offers for non-U.S.-made or non-designated country end products.3. Rank the remaining offers by price.

- Award on the low offer. No preference is given to the U.S.-made product. - If there were no offers of U.S.-made or designated country end products, make a nonavail-

ability determination and award on the low offer.


Advisory


Dollar threshold

Acquisition will be






2. Rank the remaining offers by price. - If the low offer is a domestic offer, award on the low offer. - If the low offer is a foreign offer and there were no domestic offers, award on the low offer.

3. If the low offer is a foreign offer and there are domestic offers, add 6 percent of the cost of the foreign construction material to the price. - If the evaluated price of the low foreign offer remains less than the lowest domestic offer,

award on the low foreign offer. - If the price of the lowest domestic offer is less than the evaluated price of the low foreign

offer, award on the lowest domestic offer. - If a tie results between a domestic offer and a foreign offer, award on the domestic offer.

4. If the solicitation specifies award on the basis of factors in addition to cost or price, apply the evaluation factors as specified in this section and use the evaluated cost or price in determining the offer that represents the best value to the government.


less than $10,079,365



• WTO GPA


2. Rank the remaining offers by price. - If the low offer is a domestic offer or an eligible foreign offer, award on that offer. - If the low offer is a noneligible foreign offer and there were no domestic offers, award on the


than the lowest domestic offer, award on the low noneligible foreign offer. (In other words, the eligible foreign offer does not get preferential treatment over the noneligible foreign offer; it is only in comparison to domestic offers that the preference applies.)

- Otherwise, apply the evaluation factor (i.e., if the low offer is a noneligible foreign offer and the next lowest offer is a domestic offer).

$10,079,365 or more



• WTO GPA


2. Rank the remaining offers by price. - If the low offer is a domestic offer or an eligible foreign offer, award on that offer. - If the low offer is a noneligible foreign offer and there were no domestic offers, award on the


than the lowest domestic offer, award on the low noneligible foreign offer. (In other words, the eligible foreign offer does not get preferential treatment over the noneligible foreign offer; it is only in comparison to domestic offers that the preference applies.)

- Otherwise, apply the evaluation factor (i.e., if the low offer is a noneligible foreign offer and the next lowest offer is a domestic offer).


Advisory

Construction Materials for Use within the U.S. subject to the ARRA

Dollar threshold

Acquisition will be


Exceeds the micro-purchase

threshold but less than

$7,358,000


• ARRA

If no preaward determination has been made to allow foreign construction materials:1. Eliminate all offers that do not offer domestic construction materials.2. Eliminate all remaining offers or offerors that are unacceptable for reasons other than price,

such as nonresponsive, debarred or suspended, or a prohibited source. (Prohibited are most transactions involving Cuba, Iran, and Sudan and most imports from Burma and North Korea, unless authorized by OFAC.)

3. Rank the remaining offers by price.4. Award on the low offer; or, if the solicitation specifies award on the basis of factors in addition

to cost or price, determine the offer that represents the best value to the government.If a preaward determination has been made to allow foreign construction materials based on the unreasonable cost of domestic construction materials:1. Eliminate all offers or offerors that are unacceptable for reasons other than price, such as

nonresponsive, debarred or suspended, or a prohibited source. (Prohibited are most transac-tions involving Cuba, Iran, and Sudan and most imports from Burma and North Korea, unless authorized by OFAC).

2. Rank the remaining offers by price. - If the low offer incorporates domestic construction materials and no foreign construction

materials, award on that offer. - If the low offer incorporates foreign construction materials, apply the following evaluation factors:

• 25 percent of the total offered price to the price if the offer contains foreign iron, steel or other manufactured goods; and

• 6 percent of the cost of any foreign unmanufactured construction materials3. Award on the low offer after application of the evaluation factors; or, if the solicitation specifies

award on the basis of factors in addition to cost or price, determine the offer that represents the best value to the government. If two or more offers are equal in price, give preference to an offer that does not include foreign construction materials.


less than $10,079,365



• WTO GPA

• ARRA

If no pre-award determination has been made to allow foreign construction materials:1. Eliminate all offers that do not offer domestic construction materials or that are not eligible

construction materials from a ARRA designated country.2. Eliminate all remaining offerors that are unacceptable for reasons other than price, such as

nonresponsive, debarred or suspended, or a prohibited source. (Prohibited are most transac-tions involving Cuba, Iran, and Sudan and most imports from Burma and North Korea, unless authorized by OFAC.)

3. Rank the remaining offers by price.4. Award on the low offer; or, if the solicitation specifies award on the basis of factors in addition

to cost or price, determine the offer that represents the best value to the government.If a pre-award determination has been made to allow foreign construction materials based on the unreasonable cost of domestic construction materials: 1. Eliminate all offers or offerors that are unacceptable for reasons other than price, such as


2. Rank the remaining offers by price. - If the low offer incorporates domestic construction materials or eligible construction materi-

als from a ARRA designated country, award on that offer. - If the low offer incorporates foreign construction materials that are not from a ARRA desig-

nated country, apply the following evaluation factors:• 25 percent of the offered price to the price if the offer contains foreign iron, steel or other

manufactured goods; and• 6 percent of the cost of any foreign unmanufactured construction materials

3. Award on the low offer after application of the evaluation factors; or, if the solicitation specifies award on the basis of factors in addition to cost or price, determine the offer that represents the best value to the government. If two or more offers are equal in price, give preference to an offer that does not include foreign construction material, or offers eligible construction materi-als from a ARRA designated country.


Advisory

Construction Materials for Use within the U.S. subject to the ARRA

Dollar threshold

Acquisition will be


$10,079,365 or more



• WTO GPA

• ARRA

If no preaward determination has been made to allow foreign construction materials:1. Eliminate all offers that do not offer domestic construction materials or that are not eligible

construction materials from a ARRA designated country.2. Eliminate all remaining offerors that are unacceptable for reasons other than price, such as

nonresponsive, debarred or suspended, or a prohibited source. (Prohibited are most transac-tions involving Cuba, Iran, and Sudan and most imports from Burma and North Korea, unless authorized by OFAC.)

3. Rank the remaining offers by price.4. Award on the low offer; or, if the solicitation specifies award on the basis of factors in addition to

cost or price, determine the offer that represents the best value to the government.If a preaward determination has been made to allow foreign construction materials based on the unreasonable cost of domestic construction materials:1. Eliminate all offers or offerors that are unacceptable for reasons other than price, such as


2. Rank the remaining offers by price. - If the low offer incorporates domestic construction materials or eligible construction materi-

als from a ARRA designated country, award on that offer. - If the low offer incorporates foreign construction materials that are not from a ARRA desig-

nated country, apply the following evaluation factors:• 25 percent of the offered price to the price if the offer contains foreign iron, steel or

other manufactured goods; and• 6 percent of the cost of any foreign unmanufactured construction materials

3. Award on the low offer after application of the evaluation factors; or, if the solicitation specifies award on the basis of factors in addition to cost or price, determine the offer that represents the best value to the government. If two or more offers are equal in price, give preference to an offer that does not include foreign construction material, or offers eligible construction materi-als from a ARRA designated country.


Advisory

Supplies for Use Outside the U.S. and Services (Regardless of Place of Performance)

Dollar threshold

Acquisition will be


Does not exceed

$191,000• N/A

1. Eliminate all offers or offerors that are unacceptable for reasons other than price. (Prohibited are most transactions involving Cuba, Iran, and Sudan and most imports from Burma and North Korea, unless authorized by OFAC.)

2. Award on the low offer, or apply best value decision. No preference is given to U.S.-made prod-ucts or services.

$191,000 or more

• All FTAs

• WTO GPA


2. Eliminate any offers for non-U.S.-made or non-designated country products or services.3. Rank the remaining offers by price, or apply best value decision.

- Award on the low offer, or apply best value decision. No preference is given to the U.S.-made product or services.

- If there were no offers of U.S.-made or designated country products or services, make a nonavailability determination and award on the low offer or best value decision.

Construction Materials for Use Outside the U.S.

Dollar threshold

Acquisition will be


Exceeds the micro-purchase threshold but does

not exceed $7,358,000

• N/A


2. Award on the low offer. No preference is given to U.S.-made products or services.


less than$10,079,365


• WTO GPA





$10,079,365 or more


• WTO GPA





NOTE: Agencies may establish different procedures in their agency regulations. Consult your agency regulations for any specific requirements.Source: FAR 25.502 and 25.605 through FAC 2005-95

Documents

une 2017 A CO's Guide: Navigating the Buy … American...une 2017 A CO's Guide: Navigating the Buy American and Trade Agreements Acts By Carol Barton, PhD, CPCM This Advisory explores