FAR 25 - Buy American Act and Trade Agreements

[Vern Edwards]

@Don Mansfield@Lionel HutzSee Eyester, "NAFTA and the Barriers to Federal Procurement Opportunities in the United States," 31 Pub. Cont. L.J. 695, the section entitled, "Small Business Set-Aside Exemption," pp. 714 - 718.

It might shed some light on your debate, esp. with regard to the interpretation of FAR 25.401(a)(1).

[Lionel Hutz]

15 hours ago, Don Mansfield said:

The authority to make a least developed country designation comes from the TAA.

 

10 hours ago, Don Mansfield said:

19 U.S.C. 2511(b)(4) allows the President to designate least developed countries as eligible countries under the Trade Agreements Act of 1979, allowing non-discriminatory treatment of the products of such countries in acquisitions subject to the World Trade Organization Government Procurement Agreement. This statutory authority has been delegated to the USTR. The USTR selects the countries for such designation from the United Nations (UN) Least Developed Countries List.

The language you quoted does not support your first statement.  The UN designates countries as LDCs.  The USTR then may select countries off of the UN's list to make them eligible countries under the TAA.  If the USTR does not designate an LDC under the TAA, it is still a designated UN LDC, it just does not get the benefit of being an eligible country under the TAA.

Now, if you want to revise your statement to say that the authority to designate an LDC as a designated country under the TAA comes from the TAA, then yes, I agree with you.

Also, I think you have misconstrued my previous statement.  I stated that if the "waiver authority" of the TAA (i.e., 19 U.S.C. § 2511(a)) were struck down, 52.225-11 would not be affected.  The authority to designate an LDC as a designated country (19 U.S.C. § 2511(b)) is separate from the waiver authority and also affects the TAA's "Authority to bar procurement from non-designated countries." 19 U.S.C. § 2512(a)(1)(A)(i).

The BAA (41 U.S.C. § 8303(b)(1)(B)) expressly incorporates into its waiver the list of LDCs designated under the TAA and listed at FAR 25.4.  So, if the TAA designation authority were struck down, and there were no more TAA designated LDC's, then I'm sure FAR 25.4 and 52.225-11 would be amended to remove the list of countries.  But, in the end, the clause relies on the BAA, not the TAA, for its authority to waive the list of countries at 25.4.  In my opinion, referring to a list of TAA designated countries (as directed by the BAA) is not "implementing" the TAA.

Don, it is unclear to me what your position is.  Are you saying that 52.225-11 only implements the TAA?  Or, are you saying it implements both the TAA and the BAA at the same time?  If it is the latter, how do you account for the fact that the TAA and BAA have different tests to determine whether a material is foreign or domestic?  The TAA uses a substantial transformation test, while the BAA has a component cost percentage test.  There are situations in which material could be domestic under the BAA but foreign under the TAA, and vice versa. How would that work under a clause implementing both statutes?  I'd note that 52.225-11 implements the BAA's component test.

[Lionel Hutz]

2 hours ago, Vern Edwards said:

@Don Mansfield@Lionel HutzSee Eyester, "NAFTA and the Barriers to Federal Procurement Opportunities in the United States," 31 Pub. Cont. L.J. 695, the section entitled, "Small Business Set-Aside Exemption," pp. 714 - 718.

It might shed some light on your debate, esp. with regard to the interpretation of FAR 25.401(a)(1).

Thanks Vern, I'll take a look.

[Vern Edwards]

I don't think it will settle the issue for Don, but it might shed some light.

[Don Mansfield]

@Lionel Hutz,

Was on hiatus for a while. I wanted to get back to you, but don't feel that you need to respond.

On 3/21/2022 at 8:50 AM, Lionel Hutz said:

The UN designates countries as LDCs.  The USTR then may select countries off of the UN's list to make them eligible countries under the TAA.  If the USTR does not designate an LDC under the TAA, it is still a designated UN LDC, it just does not get the benefit of being an eligible country under the TAA.

No, the UN recognizes countries as LDCs. Under delegation from the President, the USTR designates countries as LDCs pursuant to the TAA 19 U.S.C. 2511(b)(4). Not all LDCs recognized by the UN have been designated as LDCs by the USTR.

On 3/21/2022 at 8:50 AM, Lionel Hutz said:

Don, it is unclear to me what your position is.  Are you saying that 52.225-11 only implements the TAA?  Or, are you saying it implements both the TAA and the BAA at the same time?

Your argument seems to be that the clause cannot implement the TAA because it implements the BAA. I don't follow that logic. Why can't the clause implement both? I think the clause implements the BAA and most of the statutes listed at FAR 25.400(a). That's why the clause usually needs to be revised each time the list at FAR 25.400(a) is revised or some action is taken pursuant to the authority in those laws (e.g., when the USTR designates a country as an LDC).

On 3/21/2022 at 8:50 AM, Lionel Hutz said:

If it is the latter, how do you account for the fact that the TAA and BAA have different tests to determine whether a material is foreign or domestic?  The TAA uses a substantial transformation test, while the BAA has a component cost percentage test.  There are situations in which material could be domestic under the BAA but foreign under the TAA, and vice versa. How would that work under a clause implementing both statutes?  I'd note that 52.225-11 implements the BAA's component test.

I assume you are referring to the "domestic content" test for BAA and the "substantial transformation" test associated with TAA. The clause has both tests. The definition of domestic construction material uses the BAA domestic content test. The definitions of Caribbean Basin country construction material, Free Trade Agreement country construction material, least developed country construction material, and WTO GPA country construction material all use the "substantial transformation" test. 

In any case, I appreciate the discussion and apologize for taking so long to respond.