ALERT: The Recovery Act’s Buy American Requirements - Do Your Products Qualify?

    View Author 15 May 2009

    Earlier this year, Congress passed and the President signed the American Recovery and Reinvestment Act of 2009, Pub. L. 111-5 (the “Recovery Act”), authorizing the spending of literally hundreds of billions of dollars in federal government contracts and grants. The Recovery Act contains a “Buy American” provision suggesting that iron, steel, and manufactured goods purchased with funds made available under the Recovery Act must be produced in the United States. That provision also provides, however, that this requirement “shall be applied in a manner consistent with United States obligations under international agreements.”

    In connection with federal government contracts and grants, the United States has long maintained a bewildering variety of “Buy American” programs that are intended generally to provide a preference to products that have been manufactured in the United States. Different standards apply under different programs. Thus, for many government contracts a manufactured product qualifies as American if it has been “substantially transformed” in the United States. Stricter standards apply, however, with respect to programs administered by the Department of Transportation’s Federal Highway Administration and Federal Transit Administration. Similarly, in the case of products sold to the U.S. Department of Defense that are manufactured from steel or other “specialty metals,” the Berry Amendment requires that the metal itself has been melted or poured in the United States.

    Layered on top of these “Buy American” requirements are exceptions for products manufactured in specific countries. As a general rule, products manufactured in countries that have entered into a Free Trade Agreement with the United States, countries that are signatories to the WTO Government Procurement Agreement, and countries that are beneficiaries under certain U.S. preferential tariff regimes compete equally with products manufactured in the United States. The countries that benefit from these exceptions are not always identical for each of the various U.S. government programs, however. For purposes of the Berry Amendment, for example, there is only a very short list of “qualifying countries.”

    U.S. government agencies have begun to issue regulations and guidance interpreting and implementing the Recovery Act’s new and different “Buy American” provision. These initial publications suggest an entirely new set of complications. Thus, different standards apply with respect to federal contracts on the one hand and funds dispersed under federal grants on the other. Moreover, different federal agencies are construing the Recovery Act’s Buy American requirements differently. Given the amount of money available under the Recovery Act, various clients have asked for our assistance in understanding its Buy American requirements and the steps they can take to assure that their products and services remain properly eligible for purchase with Recovery Act funds. Patton Boggs is building upon its historical expertise relating to Buy American requirements and its proximity and familiarity with U.S. policy makers to provide companies, both foreign and domestic, with timely and effective advice regarding the Recovery Act’s Buy American requirements.