Perhaps one of the most complex areas of public procurement concerns domestic preferences for construction materials used on public projects. The federal government imposes domestic preference requirements when it constructs or funds the construction of public projects. There are different domestic preference requirements depending upon whether the contract is a federal government contract or contract with federal assistance. As the penalties for failing to comply with domestic preference requirements can be severe – including an order to rip out and replace non-conforming material, contract termination for default, and suspension and debarment of the contractor – it is critical that contractors understand the differences between the Buy American Act and the various Buy America statutes.

The Buy American Act is the statute that creates a national preference for the federal government’s procurement of domestic construction materials. Under the Buy American Act, the federal government must purchase domestic construction materials for public use unless a waiver has been granted. In order for a manufactured good to qualify as domestic, it must be manufactured in the US and the cost of the components mined, produced or manufactured in the US must exceed 50 percent of the cost of all the components.

The Buy American Act is different from Buy America. Buy America generally refers to the various domestic content restrictions that attach to US Department of Transportation grants to state and local government entities for the construction of transportation projects. However, Buy America requirements differ given that the Federal Transit Administration (FTA), the Federal Highway Administration (FHWA) and the Federal Aviation Administration (FAA) all have different Buy America statutes and regulations.

Jan-Mar 2016 Issue

Peckar & Abramson