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Buy American Act


DMB044

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The Buy American Act is not part of the stimulus bill ("ARRA"). Rather, section 1605 of ARRA has a Buy America provision in it that reads as follows:

"(a) None of the funds appropriated or otherwise made available by this Act may be used for a project for the construction, alteration, maintenance, or repair of a public building or public work unless all of the iron, steel, and manufactured goods used in the project are produced in the United States."

After listing three exceptions, it then states: "(d) This section shall be applied in a manner consistent with United States obligations under international agreements." (d) was added in the 11th hour after concerns that the provision would set off trade wars.

Section 1605's wording is closer to the Buy America provisions in statutes that provide federal funding, such as transportation-related projects under the FTA. Also note that section 1605 only applies to construction, whereas the Buy American Act applies to supply contracts as well.

ARRA provides funds in two primary ways. First, it provides money to federal agencies for their own spending. Second, it provides funds to federal agencies to disperse to state and local governments and other entities in the form of grants, loans, and other vehicles. Thus ARRA is being implemented in two ways. Provisions related to federal spending, i.e. acquisitions, are being implemented in the FAR. The Buy America provisions are the subject of a new subpart in Part 25 -- subpart 25.6. Provisions related to federal funding are being implemented via OMB guidance to federal agencies in a new 2 CFR part 176. The Buy America provisions are at 176.60 through 176.170.

There are some differences between the Buy American Act for government acquisitions, and ARRA's Buy America provisions. However the FAR implementation of ARRA does retain the exception for trade agreement countries if the project is over the trade agreements threshold -- $7,443,000 (except for Caribbean Basin countries).

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In response to your question about an American distributor, I would not read it that way. The Buy America provision in ARRA states that the goods must be "produced" in the US. Both the FAR and the OMB implementation state that goods must be produced or manufactured in the US. The focus is on the place of manufacture, not the source of the purchase or the location of the seller.

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