Making Made in America American

The Biden administration has published a Notice of Proposed Rulemaking to strengthen Buy American rules. What’s in it?

The first big thing it does is increase the level of domestic content a good has to be in order to be considered Made in America

Under Obama and before, this was at least 50%.

Trump raised it to 55% his last day in office.

Biden raises it to 60% immediately, then 65, then 75.

However, until 2030 (the year after the 75% threshold is phased in), suppliers can use the 55% threshold when a good isn’t available or is only available at an “unreasonable cost.”

The plan envisions applying a higher price preference for goods identified as critical under Biden’s new quadrennial critical supply chain review.

Details to be hashed out after the ongoing supply chain review and trade pact waiver review.

There’s also a new informational requirement to give procurement officials more visibility into contractors’ supply chains, by providing a more granular accounting of US vs. foreign critical items.

There remain a thicket of exceptions to Buy American, including waivers for commercially available items, which basically means anything that is not bespoke made-to-order for government contracts.

However, some of the data requirements will apply to providers of such goods. It appears about half of acquisitions between $10k thru $182k (which is what Buy American Act applies to) are “commercially available.”

A few additional percentage points of procurement has Buy American waived for other reasons.

The big question mark on all of this is: how much procurement falls under BAA versus a separate Trade Agreements Act definition? Under current state of data collection, from 90–10 percent or 10–90 percent of non-DOD are plausible breakdowns.

Luckily, a big part of the process this rule kicks off is aggressive information collection. On the other side of this process, we may have much better answers to these questions.

So, nothing revolutionary. But given the tangled mess that is Buy American, the new rule represents an understandable incrementalism to make sure procurement officers can adapt to the new requirements. Congress can go further by amending the Trade Agreements Act to require more US content for over $182k procurements, which could aid the administration in its efforts to get allies to agree to modernize trade rules.

(Adapted from this thread.)

I write about democracy, political economy, and trade. Fellow at the Roosevelt Institute and Roosevelt Forward.