Government Contracting Update: Understanding The New Buy American Executive Order And Its Impact On Commercial Off-The-Shelf Items

Written on August 8, 2019

President Trump issued an Executive Order on July 15th, directing the Office of Federal Procurement Policy (OFPP) to consider new rules that would expand the impact of the Buy American Act. How the Act is enforced today is already confusing for contractors and federal buyers. Companies selling Commercial Off-the-Shelf (COTS) items need to understand what the impact of this Executive Order is on how they sell to the federal government, so they can educate themselves and their federal customers. First, it is vital to understand that the domestic content requirements of the Buy American Act do NOT apply to COT’s acquisitions. That will remain the case even if OFPP decides to increase content requirements on products such as steel and iron. The Act also does not apply to the acquisition of COTS information technology. COTS IT has a blanket exemption from the Buy American Act. Next, the Act only applies to acquisitions up to a maximum dollar threshold of around $198,000 per transaction. Acquisitions above the maximum threshold are controlled by the Trade Agreements Act (TAA). It is important to note that the TAA and Buy American Act never apply to the same acquisition, except in cases where a company may add an open market item to a purchase order that otherwise contains items on an Indefinite Delivery Indefinite Quantity contract. These details are often not well understood, even by experienced government acquisition officials. Your company should be aware of the rules and regulations that govern your acquisitions and be able to show your government customer why rules like these do not apply. The new Executive Order should not change how sellers of COTS items do business with the federal government.

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