Federal Contracting
July 15, 2021

New Guidance on Made in America Policies: Federal Contractors Stand to Benefit

In January, President Biden issued an executive order to cement “Buy American” policies while creating new layers of transparency in the waiver process, which to date has been convoluted and somewhat cryptic. New guidance from the Office of Management and Budget (OMB), released in June, lays out the implementation steps. For federal contractors, greater opportunities likely abound as the government pushes for domestic purchasing. Contracting officers and grant managers will also assume new responsibilities as the White House strengthens its stance on ensuring that “the Future Is Made in All of America by All of America’s Workers.”

America First Approach

Biden’s march to the Oval Office was punctuated with campaign pledges of restoring the might of American industry, reinvesting in infrastructure, creating new jobs, and decreasing independence on foreign economies. Biden’s predecessor regularly invoked similar language. The difference is that the current president spent his first 100 days in office drafting sweeping policies to propel words into action. The January 2021 executive order sets the tone:

“It is the policy of my Administration that the United States Government should, consistent with applicable law, use terms and conditions of Federal financial assistance awards and Federal procurements to maximize the use of goods, products, and materials produced in, and services offered in, the United States.  The United States Government should, whenever possible, procure goods, products, materials, and services from sources that will help American businesses compete in strategic industries and help America’s workers thrive.  Additionally, to promote an accountable and transparent procurement policy, each agency should vest waiver issuance authority in senior agency leadership, where appropriate and consistent with applicable law.”

Iterations of “Made in America” laws are nothing new. The Buy American Act, for example, was ratified in the 1930s. The Biden-Harris administration’s order, however, presents some enhancements.

  • The Director of the OMB is tasked with establishing a Made in America office within the OMB. The Director will also appoint a Made in America Director to oversee waivers, which must provide “a detailed justification for the use of goods, products, or materials that have not been mined, produced, or manufactured in the United States.”
  • Agencies will partner with the Hollings Manufacturing Extension Partnership (MEP), discussed in the Manufacturing Extension Partnership Improvement Act (title V of Public Law 114-329), to conduct supplier scouting in order to identify American companies, including small- and medium-sized companies, that are able to produce goods, products, and materials in the United States that meet Federal procurement needs.
  • The order replaces the “component test” in Part 25 of the FAR, which was used to identify domestic products and construction materials. The new rules introduce a test that measures the “value that is added to the product through U.S.-based production or U.S. job-supporting economic activity.”
  • The numerical threshold for domestic content requirements for end products and construction materials will increase.
  • The administration is also mandating an increase in price preferences for domestic end products and domestic construction materials.

In speaking with Jason Miller of Federal News Network, Celeste Drake, the newly appointed Director of the OMB’s Made in America Office, said the government is now taking a unified and holistic approach to increasing domestic purchases and creating genuine transparency in the process:

“It’s important for the Made in America office as part of the OMB to have that key point of contact, and that point of contact can then do what they need to do internally to implement the policy or to get the information,” she said. “It really says that this administration is trying to take concrete steps to make sure that the federal government is maximizing its use of goods, services and materials that are made in America. It’s not just a throwaway line or a talking point. The message to agencies is we’re going to do this, and that’s why you’ve got to have a senior accountable official because there needs to be somebody that’s responsible for saying, ‘Yes, we are doing the things we need to do to make it in America.’”

Clarity and New Oversight for Waivers

“The public’s most pressing concern is that they don’t have insight into the waiver process,” Drake also told Federal News Network. “The centralized process and the transparency is aiming to fix that. The public doesn’t know how hard contracting officers do work to comply with the Buy American Act and how hard they do work to identify suppliers, so by making sure that waivers are transparent and available to the public, we will ensure that domestic firms have an opportunity to find and fill gaps in the US supply chain. By analyzing the data we collect, we can help improve policies for domestic firms and workers as we work to build the economy back better.”

The waiver process represents perhaps the most fundamental change to policy, with visibility, accessibility, and insight at its core. However, the June 11 Memorandum for Heads of Executive Departments and Agencies (M-21-26) lays out a host of other milestones that must be met as part of the implementation.

Senior Accountable Official

Agencies must appoint a Senior Accountable Official (SAO) for domestic sourcing. The SAO will coordinate with the Made in America Director to implement a cohesive and comprehensive approach to advance the policy set forth in the executive order. The goal is to increase opportunities for U.S. manufacturing while reducing waivers. SAOs are expected to participate in product level reviews to explore new domestic sourcing opportunities, strengthen agency waiver processes, manage a waiver reduction strategy, and meet regularly with the Made in America Director to discuss progress on limiting the need for waivers and to share ideas for strengthening Made in America policies and practices. 

Agency Reports

By July 24, 2021, the head of each agency, through its SAO, must report on its use of Made in America laws, pursuant to Section 11 of the Executive Order. Reports focus on proactive steps the agency undertakes to strengthen and diversify existing domestic supplier bases. Reports also target the creation of new opportunities where gaps occur. Major reporting elements include internal management controls, conformance with waiver content requirements, waiver activity, and the agency’s analysis of non-availability waivers submitted. 

Waiver Standardization

Agencies will be required to standardize waivers and provide a list of details for proposed non-availability claims.

  • Identification of the agency and contracting activity, and program office
  • Description of the items or services
  • Impact to the mission if the agency can’t acquire the items or services
  • Country of origin and U.S. content, if any, of foreign items or services the agency intends to pursue
  • If the waiver is to be issued pre-award
  • Whether the supplier of the items or services is a small or disadvantaged business
  • The estimated value of the procurement (or portion of the procurement) covered by the waiver

Agencies must also identify the marketing research they performed prior to submitting a waiver. In the report, agencies will need to describe the market research activities and methods they used to identify domestically manufactured items capable of satisfying the requirement, including the timing of the research and conclusions reached on the availability of sources (e.g., sources are available but cannot offer sufficient quantity; sources are available but cannot offer sufficient quality; no sources can be identified).

Waiver Review and Transparency

The Made in America Office works with designated SAOs on the requirements and scope for transactional waiver reviews, including processes for posting descriptions of proposed waivers and their justifications. Waivers will become accessible on a public website developed by the General Services Administration (GSA).

The GSA’s forthcoming site will include information on all proposed waivers and whether those waivers have been granted.  The website will enable manufacturers and other interested parties to easily identify proposed waivers and determine if those waivers have been granted. The website will also provide publicly available contact information for each granting agency.

Good News for Federal Contractors

While these changes most directly impact the agencies themselves, federal contractors stand to win more than they may have in the past. The policy reflects a broader commitment to sourcing and utilizing small- and mid-sized U.S. businesses. And with heightened transparency and oversight, the procurement process could also help level the playing field in which contractors compete. 

Photo by David Everett Strickler on Unsplash

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