Passed by Congress in 1933, the Buy American Act created a national preference for the government to procure only domestic materials for use in public projects. The Buy American Act is often confused with the similarly named Buy America Act, but they are very different. This white paper explores the major differences between the two acts, as well as outlines key considerations government agencies and contractors should take into account under the new Administration.
Buy American vs. Buy America: What’s the Difference?
One of the major differences between Buy American and Buy America is how the act is applied. Buy American applies to the procurement of specified products purchased by the government or when a federal facility is being constructed. Buy America typically only applies to mass-transit projects initiated
by state and local governments, such as transit systems, highways, or railways. Buy American defines goods or products as being domestic when they are 100% manufactured in the United States with at
least 50% domestic content, and the act only applies to direct purchases by the federal government, not third parties. Under Buy America, end products must be 100% manufactured in the United States. Additionally, steel and iron components must be mined, melted, and manufactured in the United States with one exception: foreign-sourced materials may be allowed if they are valued at $2,500 or 0.1% or less of the contract value, whichever is greater. Another important difference between the two acts
is the waiver process. Under the Buy American Act, waivers can be issued by the president and/or the head of an agency if there is insufficient quantity or quality of a given product, or the materials are not in the public interest. The Department of Defense has created exceptions to the Buy American Act by negotiating memorandum of understandings with foreign governments. Waivers under the Buy America Act are much less common—and much more difficult to navigate. Waivers can be issued on a project-by-project basis or narrow areas of scope such as ferry boat construction. The penalties for non compliance, however, are serious for both acts. Penalties include, but are not limited to, contract termination, civil or criminal False Claims Act violations, suspension, or permanent debarment from
contracting. In 2016, the Department of Justice obtained more than $4.7 billion in settlements and judgments from cases under the False Claims Act.