What the Buy American Act Makeover and the 2004 Election Have in Common

The Buy American Act rule changes proposed by the White House last week aim to require at least three-fourths of an item to be American for it to count as a “Domestic End Product.”

That would be a pretty big change—up from 55 percent—but the changes aren’t as significant as the president might have wanted. We’ll get in to it shortly. But first a quick digression:

A million years ago, I was the crime/fire/education/politics/lifestyle reporter for my hometown newspaper, The Pilot (one of the best small town newspapers in the country, if I do say so myself). Most of my writing was about local council meetings and petty crimes. But there was one big national story that I got to be a part of.

A handsome, charismatic, local boy had grown up to become a successful trial lawyer, U.S. Senator, and that summer he was running for president. I was one of a few reporters who got to cover the John Edwards campaign, as much as possible from the office in downtown Southern Pines, NC.

Sen. John Kerry had sewn up the nomination and the only drama left until Election Day was who would be his running mate. When he finally tapped Edwards, it was probably the paper’s biggest story in a decade—a local kid with a shot at the White House. And where was I? Four thousand miles away in London on vacation. I read about it in The Guardian.

I say all this not to rehash the 2004 election (or anything that happened after), rather, to note that I’ve always had unfortunate timing and that, at least, has not changed.

The very moment the White House published last week’s proposed rule changes—which it described as “the most robust changes to the implementation of the Buy American Act in almost 70 years”—I was giving a presentation that the National Contract Management Association World Congress on of all things The Buy American Act. The presentation concluded with my own speculation about what changes might be coming.

Maybe I should have waited a day and found out.

Regardless, the headline is that the new rule would require that 75 percent of a product be from America for it to be considered domestic, but what else is in the actual proposed rule?

As you might remember, the Executive Order President Joe Biden signed in his first week of office instructed the Federal Acquisition Regulation Council to consider three potential changes, 1) replacing the component test with a value added test, 2) increase the domestic content threshold, and 3) increase the price preference.

Two is definitely accounted for, but what of the others? According to the rule, there would be a “framework for application of an enhanced price preference for a domestic product that is considered a critical product or made up of critical components[.]” That sounds like a higher price preference but only in special circumstances.

As for replacing the component test—so far that’s looking about as likely as a John Edwards comeback. The FAR Council said it will not seek to replace the test “at this time” but wants public comment “on how domestic content might be better calculated to support America’s workers and businesses[.]”

So while Biden didn’t get all he asked for, he did get a big jump in the domestic content requirement. It would increase to 60 percent immediately with a phased increase to 75. He also got something he didn’t specifically call for but definitely has indicated he wants: accountability. Buy American Act compliance has always been a matter of certification. According to CNN, Biden said: “They just have to tell us that they hit the threshold. With nobody checking. They’ve got a new sheriff in town. We’re going to be checking. Instead of taking contractors at their word that they hit the threshold, we’re going to start making them give us the details so that we can do more to support American manufacturing.”

That’s kind of true but it’s also kind of not. The proposed rule would required contractors to report the “domestic content of critical items, domestic end products containing a critical component, and domestic construction material containing a critical component[.]”

So like the enhanced price preference, the reporting requirement would only apply to “critical” items as defined by a different executive order on critical supply chains. Not exactly new-sheriff-in-town levels of accountability.

Again, this is just a proposed rule. It could change. Hopefully I won’t be in London when it happens.