Buy American Act - Definition of "End Product"

[Steve Miller]

I am employed by a prime contractor supporting DOE.  I have a question about clause FAR 52.225-1, “Buy American-Supplies.”  Here is the definition of an end product:

     “End product means those articles, materials, and supplies to be acquired under the contract for public use.”

Does the phrase, “…acquired under the contract for public use…,” apply to just what’s delivered to the Government or does it apply to all material/supplies a contractor may acquire to perform under the contract even if they are not delivered to the Government?

Currently, the subcontractor is buying equipment and material to confirm that it has designed and can produce a new type of thermoelectric generator. In this phase, the deliverables are presentations and reports.  In the next phase, the subcontractor will be issued a contract to produce the generators.  I think the end product is the generator that will be produced in the next phase.  If so, that means that the materials and supplies bought during this phase to develop and test the design are not end products, but I'm not sure.

Since this is a cost-type contract, I realize the Gov’t obtains title to the material and equipment.

A small portion of the cost is for raw material from a country friendly to the USA.  Under this contract, it will be used to produce sample components for testing.

[Fara Fasat]

Preliminary question -- what is the approximate value of each phase? The work sounds technical and complex, especially producing a new type of thermoelectric generator. The threshold for the applicability of the Trade Agreements Act instead of the Buy American Act is $183,000. If your values exceed that, your concern is the TAA not the BAA.

And forget about whether you think a country is friendly to the US. Follow the BAA or TAA.

[Steve Miller]

This first phase is $5M.  After that, it gets much, much more expensive.  The other country is the Netherlands.

[Steve Miller]

And thanks for insight so far!  I did not realize that the TAA is the one to watch.

 

[Steve Miller]

Sorry, I was thinking of another contract.  The first phase is over $100M.

 

[Fara Fasat]

Either one is just a bit over the TAA threshold. 😏 Is 52.225-5 in your contract? If not I would check with your CO to see why. Maybe there's a reason this particular acquisition is only subject to the BAA. 

Now for a big caveat: this forum can only give general advice. For specifics you need to consult with someone experienced in the BAA/TAA so you can go over the details of your contract and the work you are performing. 

That said -- the end item is usually a line item deliverable, but not always. Sometimes it can be a system and sometimes it can be  the individual products. Check with your CO and get confirmation of what the BAA/TAA will apply to. If your CO is unsure or will not commit to an answer (and many COs do not understand the BAA and TAA), you and your consultant will have to do the best you can. Document everything, including your communications with the CO.

If in fact the TAA applies to your contract, then for a product the key is the country of origin of the end item. In most cases the origin of components does not matter, but make sure nothing comes from a prohibited source, as there are more and more prohibitions affecting acquisitions. For services, the origin is the country in which the entity performing the services is established.

Good luck.

[Steve Miller]

Thanks for all the advice!  My experience is the same as yours:  the "end product" or "end item" is a deliverable.  But, I wanted to see if things have changed.  It's been decades, since I've dealt with this.

In this case, the deliverable is a 30% design.  Various supplies and equipment will be bought to test the technology involved in the design, but none will be delivered as an end item.  Of course, since this is a cost-type contract, the Gov't has title to everything.  Still, I will argue that the Buy American Act and the WTO GPA do not apply, because no supplies will be furnished to the Gov't.

Since 2006, I've benefited from the advice given on this forum.  This is my first post.  As always, the advice is invaluable!!!

 

[Fara Fasat]

1. Even though no products will be delivered, I don't know how the BAA/TAA handle property that the government gets title to. The government owns it, so technically it is an acquisition.

2. The WTO GPA does apply to services. See the table at 25.401(b) for the services that are covered or exempt.

3. It sounds like you are performing services, which the TAA does apply to. Find out from your CO why only the BAA clause is in your contract. Research and Development is one of the exempt services (see (5) in the table), so maybe your work is considered R&D.

[Neil Roberts]

On 4/14/2023 at 2:41 PM, Steve Miller said:

I am employed by a prime contractor supporting DOE.  I have a question about clause FAR 52.225-1, “Buy American-Supplies.”

 

How did your company fill out the certificate in 52.225-2 in its proposal to the Government?