‘Buy American’ Executive Order Brings Promo Industry Benefits
Last month, PPB Newslink reported on an executive order signed by President Biden that would increase the amount of U.S.-made products and component parts the federal government purchases. Examining the order to see what significant effect it may have on the industry, PPAI found that the policy actually falls in line with talking points on the global value chain that the Association and industry professionals have been taking to Washington, D.C., during the annual Legislative Education and Action Day (L.E.A.D.).
The “Buy American” executive order updates and refines existing federal laws that require government agencies to give preference to U.S. firms, and establishes the goals and standards necessary to use federal purchasing, and other forms of federal assistance with domestic preference requirements. The order also directs federal agencies to do away with the current test that is used for identifying American-made products, and replace it with a test that measures the value that is added to the product by American workers, after the product is brought into the U.S. This is a point PPAI has been trying to prove for a few years now and the Association considers this a good development for the industry.
President Biden’s executive order aims to bolster domestic manufacturing by tightening the rules involving federal government procurements. Under the order, the Federal Acquisition Regulatory Council, which has jurisdiction over procurement policy for the federal government, is directed to reconsider its description of what establishes a Made in America product. The order also instructs the Federal Acquisition Regulatory Council to increase the domestic content requirements that are used when making Made in America determinations for finished products and components.
The Federal Acquisition Regulation’s component test will be nullified by the new executive order. This test is used to identify domestic products and materials. The Federal Acquisition Regulatory Council has been directed to implement a replacement test that will measure the value added to the product by way of domestic production or economic activity that supports U.S. jobs. Under the new rules called for in the order, exemptions that allowed federal agencies to bypass the existing Buy American rules will be more difficult to obtain.
A new position within the White House Office of Management and Budget named the Made in America Director will be charged with enforcing the new policies implemented by the executive order. Companies that have procurement contracts with the federal government should review the new domestic content requirements and the new process for determining the added value to products through domestic production when those policies are made available by the Federal Acquisition Regulatory Council. The executive order gives the Administrator of General Services a 180-day deadline to submit to the Made in America Director a set of recommendations to ensure that products offered to the general public on federal property maximize the use of goods and services manufactured in the U.S.
PPAI will continue to monitor the Federal Acquisition Regulation for any developments and provide updates on the new rules when they are released.