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Federal Acquisition Regulation: Amendments to the FAR Buy American Act Requirements rule (2022)

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The Federal Acquisition Regulation: Amendments to the FAR Buy American Act Requirements is a significant rule issued by the National Aeronautics and Space Administration (NASA), Department of Defense (DoD), and the General Services Administration (GSA), effective October 25, 2022, that amends the Federal Acquisition Regulation (FAR) to implement E.O. 14005, "Ensuring the Future is Made in All of America by All of America's Workers".[1]

HIGHLIGHTS
  • Name: Federal Acquisition Regulation: Amendments to the FAR Buy American Act Requirements
  • Code of Federal Regulations: 40 CFR 13, 40 CFR 25, 40 CFR 52
  • Agency: National Aeronautics and Space Administration (NASA)
  • Action: Final rule
  • Type of significant rule: Other significant rule

    • Timeline

    The following timeline details key rulemaking activity:

    • October 25, 2022: The final rule became effective.[1]
    • March 7, 2022: The National Aeronautics and Space Administration (NASA) published the final rule.[1]
    • September 28, 2021: The comment period ended.[1]
    • July 30, 2021: The DoD, GSA, and NASA published the proposed rule and opened the comment period.[1]

    Background

    The Buy American Act was signed into law in 1933 by President Herbert Hoover (R), requiring the federal government to purchase domestic products if possible.

    President Joe Biden (D) signed Executive Order (E.O.) 14005, Ensuring the Future Is Made in All of America by All of America's Workers on January 25, 2021. This E.O. amends the Federal Acquisition Regulation (FAR) part 25 for the modern age.[1]

    Summary of the rule

    The following is a summary of the rule from the rule's entry in the Federal Register:[1]

    “ DoD, GSA, and NASA are issuing a final rule amending the Federal Acquisition Regulation (FAR) to implement an Executive order addressing domestic preferences in Government procurement.[2] ”

    Summary of provisions

    The following is a summary of the provisions from the rule's entry in the Federal Register:[1]

    “

    The following significant changes from the proposed rule are made in the final rule:

    • Domestic content threshold grace period. The proposed rule envisioned an immediate increase to the domestic content threshold from 55 percent to 60 percent, with the increase to 65 percent scheduled to begin in approximately two years in calendar year 2024 and the increase to 75 percent scheduled to begin five years after that increase, in calendar year 2029. In response to the comments received to the proposed rule, the Councils have provided for a delayed effective date (i.e., a grace period) before the initial increase to 60 percent occurs in the final rule. Ordinarily, rules take effect 30 days after publication of the final rule. Delaying the effective date until after the beginning of the next fiscal year will allow industry to prepare for the new domestic content threshold and give the acquisition workforce time to be trained for the new concepts contained in this rule, helping to ensure a smoother transition to the rule's new requirements. The schedule for domestic content threshold increases to 65 percent and 75 percent remains unchanged from the proposed rule and is reflected in the amendments throughout FAR part 25 and to FAR clauses 52.225–1, 52.225–3, 52.225–9, and 52.225–11.

    • Use of an alternate domestic content test to apply the domestic content threshold in effect at contract award throughout the life of a contract. The proposed rule required a contract with a period of performance that spans the schedule of threshold increases to comply with each increased threshold for the items in the year of delivery. In response to the comments received to the proposed rule, the final rule adds a process by which an agency's senior procurement executive may, after consultation with the MIAO, allow for application of an alternate domestic content test. In the event use of an alternate domestic content test is authorized, the contract would require compliance with the domestic content threshold in effect at time of contract award for the entire life of the contract. Amendments are made to FAR 25.101, 25.201, 25.1101, and 25.1102 to implement the alternate domestic content test. Alternates to FAR clauses 52.225–1, 52.225–3, 52.225–9, and 52.225–11 are created for those contracts where use of an alternate domestic content test is authorized. Due to the new Alternates, conforming changes were made to FAR 13.302–5 and FAR clauses 52.212–5 and 52.213–4.

    • Clarifications regarding application of the fallback threshold. As part of implementing the fallback threshold, the proposed rule would have required offerors to identify which of their foreign end products and foreign construction material met the fallback threshold. The final rule clarifies that this identification would only be required for end products and construction material where the fallback procedures are used, i.e., for end products and construction material that do “not consist wholly or predominantly of iron or steel or a combination of both” and are not COTS items. To reflect these clarifications, the final rule makes amendments at newly-designated FAR 25.106 and 25.204; FAR provisions 52.212–3, 52.225–2, and 52.225–4; and FAR clauses 52.225–9 and 52.225–11. The proposed rule also did not contain any guidance on what the use of the fallback procedures would mean in relation to the procedures associated with exceptions to the Buy American statute, specifically the exception for nonavailability. Language has been added at FAR 25.103(b)(2)(i) and 25.202(a)(2), clarifying that a nonavailability determination is not required when the fallback procedures are used.

    • Postaward reporting requirement. The proposed rule included two new clauses that would require contractors to provide the specific domestic content of critical items, domestic end products containing a critical component, and domestic construction material containing a critical component, that were awarded under a contract. The final rule removes this requirement and will instead propose this requirement in the subsequent rule establishing the list of critical items and critical components in the FAR, along with their associated enhanced price preference.[2]
    		 ”

    Significant impact

    See also: Significant regulatory action

    Executive Order 12866, issued by President Bill Clinton (D) in 1993, directed the Office of Management and Budget (OMB) to determine which agency rules qualify as significant rules and thus are subject to OMB review.

    Significant rules have had or might have a large impact on the economy, environment, public health, or state or local governments. These actions may also conflict with other rules or presidential priorities. Executive Order 12866 further defined an economically significant rule as a significant rule with an associated economic impact of $100 million or more. Executive Order 14094, issued by President Joe Biden (D) on April 6, 2023, made changes to Executive Order 12866, including referring to economically significant rules as section 3(f)(1) significant rules and raising the monetary threshold for economic significance to $200 million or more.[1]


    The text of the Federal Acquisition Regulation: Amendments to the FAR Buy American Act Requirements rule states that OMB deemed this rule: significant, but not economically significant:

    “ This is a significant regulatory action and, therefore, was subject to review under section 6(b) of E.O. 12866, Regulatory Planning and Review, dated September 30, 1993.[2] ”

    Text of the rule

    The full text of the rule is available below:[1]

    See also

    External links

    Footnotes

    1. ↑ 1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 “Federal Register,” “Federal Acquisition Regulation: Amendments to the FAR Buy American Act Requirements,” March 7, 2022
    2. ↑ 2.0 2.1 2.2 Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source.
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