What Are Buy America Requirements?
By law, American-made municipal castings must be used in many federal, state and local-level public works infrastructure projects that are funded or financed with U.S. taxpayer dollars.
Products covered by the law include:
- Manhole covers
- Iron and steel inlet grating
- Iron and aluminum lampposts and lamppost bases
- Various miscellaneous iron products
- Catch basin frames and grates
Severe penalties exist for contractors who fail to comply with the “Buy America” provisions of the law.
What Are Buy American Preferences?
Many states and the federal government give a preference for the goods and services of their state or the nation in their procurements. In a typical example, whereas a state procuring agency typically seeks the lowest bidder when awarding a contract, state preference laws often operate to treat more favorably those bidders offering domestically-produced materials as opposed to those offering foreign-origin materials.
The federal Buy American Act and other “Buy America” laws attached to federal-aid programs provide preferences for the use of U.S.-mined or domestic end products used in the United States in government procurement Some, like the preference applied to Federal Highway Administration aid, apply to specific materials (e.g., iron and steel). Many states also have Buy America-type policies. For instance, the Pennsylvania Steel Procurement Act requires that each state contract for the construction or alteration of a public work require the use of steel products produced in the United States.
Why Pass Buy American Requirements?
Domestic Preferences Creates Jobs
Applying a domestic content requirement does much to maintain and expand manufacturing jobs in the United States. Simply giving domestic firms a preference in government contracting creates jobs. Domestic content requirements maximize the economic stimulus effects of government spending and work to create jobs here at home rather than abroad.
Studies demonstrate that applying content requirements to federal infrastructure spending multiplies the job creation effect of the infrastructure spending alone. A 2009 report from the Alliance for American Manufacturing outlined that roughly 18,000 new jobs would be created for every $1 billion in new infrastructure spending, and that manufacturing employment gains increase by 33 percent when domestic content is maximized.
Domestic Preferences Reflect Our Shared Environmental And Worker Safety Priorities And Laws
When domestic content requirements are applied, they ensure that U.S. materials get a preference in U.S. taxpayer-financed public works procurements. Such requirements thereby also ensure that U.S. environmental and labor standards are not just a burden to U.S business looking to compete in a global economy, but rather a standard for doing business with the globe’s biggest customer.
Federal and state taxpayer dollars should not be used to reward companies who have moved their operations, investment dollars, and jobs to foreign countries, or to reward foreign producers that completely disregard environmental standards, as well as worker and workplace safety standards. Rather, taxpayer-financed government procurements should reward those companies and workers who play by the rules with a commonsense preference to use American-manufactured products in projects financed with taxpayer dollars.
Domestic Procurement Preferences Are Consistent with the International Trade Rules
The general rule under international law is that the United States and other members of the World Trade Organization (“WTO”) can favor their respective domestic suppliers over foreign suppliers of goods and services in government procurements. And they do. Annual reports by the United States Trade Representative reveal that many of our trading partners currently maintain a variety of governmental procurement restrictions that exclude the products and services of U.S. manufacturers.
Indeed, the United States has entered into a series of international agreements to commit itself to treat foreign suppliers no less favorably than it treats its own domestic suppliers (called “national treatment”), especially over the last twenty years. These international agreements principally include the WTO’s Agreement on Government Procurement (“GPA”) and a series of bilateral and regional trade agreements that also address government procurement – such as NAFTA.
Despite these agreements, U.S. courts have recognized that states are nonetheless permitted to impose domestic preferences where they are acting as market participants in government contracting.
Accordingly, states are free to require domestic preferences in their contracting and do not violate any obligations made under international agreements – even those dealing with government procurement.
Click here for a list of programs covered by federal Buy America laws.
Click here for a list of state “Buy America” statutes that apply to certain state-level government procurements.