TO: BABA Members & Colleagues
FROM: UK Department for International Trade
August 24, 2021
As you may be aware, the U.S. have proposed changes to their federal government procurement regulations to strengthen Buy American purchasing preferences. It is not expected that this will significantly impact UK businesses bidding for U.S. federal government contracts. UK businesses continue to have access to a waiver from Buy American preferences that the U.S. applies for end-products from designated countries (including the UK) covered by the WTO Agreement on Government Procurement (GPA).
However, if you have concerns, we encourage you to contact the Department for International Trade (DIT) and recommend that you comment on the U.S. public consultation, open until September 28th. Instructions for doing so are at the end of this email.
The White House has provided a factsheet detailing the policy rationale for the amendments. Supplementary information and annexes detailing the amendments in full can be found here.
U.S. federal government departments and agencies are required by Part 25 of the Federal Acquisition Regulations (FAR) to purchase goods and construction materials that are ‘domestic end-products.’ These are known as Buy American rules. For manufactured end products, the Buy American rules currently use a two-part test to define a domestic end-product – (i) the article must be manufactured in the U.S.; and (ii) the cost of domestic components must exceed 55 percent of the total cost of all components (the domestic content threshold). Certain exceptions or waivers to applying Buy American preferences are available to federal government agencies, for criterion such as unreasonable cost (domestic price preferences must be applied first) or unavailability of supplies on the U.S. market.
The U.S. government is consulting on changes to Part 25 of the FAR to strengthen Buy American purchasing preferences. The proposed changes are:
- A phased increase to the domestic content threshold for most goods from 55%, to 75% over 7 years.
- An enhanced domestic price preference for certain products that are considered critical for security of supply chains (e.g. essential medical products). The federal government will be drawing up a list of critical products over the coming months.
- New post contract award reporting requirements for use of domestic content for those critical products.
However, the U.S. waives the application of Buy American purchasing requirements for end-products that are from designated countries, for procurements covered by the U.S.’ international trade obligations in the WTO GPA. The UK is a member of the GPA and is considered a designated country by the U.S. for federal procurement purposes. The coverage of the GPA includes all U.S. federal departments and their subordinate agencies, as well as most goods with a couple of exceptions, for contracts valued above the threshold of $182,000.
As a result, we do not expect these new measures to significantly impact UK businesses bidding for U.S. federal government contracts covered by the GPA. However, please do let us know if you have concerns or if this is not your experience. We are particularly interested in understanding:
- What is your experience when attempting to access the U.S. federal government procurement market, including documentation concerning the Buy American Act and Trade Agreements Act?
- Have you observed any recent changes concerning the procurement process for U.S. federal government contracts?
Separately, DIT is also interested in improving the UK’s trade environment at a U.S. State level, including state-level and sub-central government procurement. We would be interested in hearing your experiences of U.S. state-level procurement.
Written concerns regarding the proposed rule change and these questions can be sent to: Joelle Jefferis (email@example.com) and Peter Abbosh (firstname.lastname@example.org).
U.S. Public Consultation
The U.S. General Services Administration is holding a virtual public meeting, August 26th9:00 – 15:00 EST (14:00 – 20:00 BST). You can request attendance and a speaking slot, and/or submit written comment by contacting email@example.com, citing FAR Case 2021-008.