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Acquisition Policy Flash! 21-14

What's Changed?

Maximizing Use of American-Made Goods, Products, and Materials

Purpose: Notify the VA acquisition workforce of the issuance of a final rule amending the Federal Acquisition Regulation (FAR) to implement Executive Order (E.O.) 13881 addressing domestic preferences in Government procurement.

Affected FAR Parts: FAR parts 12, 25, and 52.

Effective Date: January 19, 2021.

Background: DoD, GSA, and NASA published a proposed rule at 85 FR 56558 on September 14, 2020, to implement E.O. 13881, Maximizing Use of American-Made Goods, Products, and Materials (84 FR 34257, July 18, 2019). In order to implement the E.O., this final rule, published at 86 FR 6180, January 19, 2021, revises the following FAR clauses; 52.212-3, 52.212-5, 52.213-4, 52.225-1, 52.225-2, 52.225-3, 52.225-4, 52.225-9, 52.225-11, 52.225-21, 52.225-22, 52.225-23 and 52.225-24, thereby implementing the Buy American statute by increasing the—

  1. Domestic content requirements; and
  2. Price preference for domestic products.
 

Increased Domestic Content Requirements

Under E.O. 13881, and this final rule, in order to meet the definition of “domestic construction material” or “domestic end product,” the cost of foreign iron and steel for iron and steel products must be less than 5 percent of the cost of all components in the product. For everything else, the domestic content requirement increases from 50 percent to more than 55 percent of the cost of all components. E.O. 13881 creates a new separate higher standard for iron and steel products. This distinction has existed for many years in domestic preference requirements governing certain Federal grant programs, such as the Federal Transit Administration’s Buy America regulations applicable to grantees.

Increased Price Preference for Domestic Offers

The Buy American statute does not prohibit the purchase of foreign end products or use of foreign construction material. Instead, it encourages the use of domestic end products and construction material by imposing a price preference for domestic end products and construction material. E.O. 13881 and this final rule increase the price preference from 6 percent to 20 percent for large businesses, and from 12 percent to 30 percent for small businesses.

Updated on 02/05/2021 to reflect a correction from Federal Acquisition Circular (FAC) 2021-04 published in the Federal Register on February 5, 2021. The publication corrects the effective date for FAR Case 2019-016 to read Effective date January 19, 2021; applies to solicitations issued on or after February 22, 2021, and resultant contracts.

Applicability: The changes in this rule apply to solicitations issued on or after February 22, 2021 and resultant contracts.

Action Required: Contracting officers are to comply with the requirements of the revised FAR parts.

Additional Information: Questions or concerns should be addressed to the Office of Acquisition and Logistics (003A), Procurement Policy and Warrant Management Service (003A2A) via email at va.procurement.policy@va.gov or (202) 632-5288.

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