Buy America

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:

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 in taxpayer-funded infrastructure projects. Some, like the preference applied to Federal Highway Administration aid, apply to specific materials (e.g., iron and steel).   Others, like the historic Build America, Buy America Act, apply the preference broadly, covering not only iron and steel products but other nonferrous construction materials, as well as manufactured products. Many states and municipalities also have Buy America-type laws and ordinances. 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.

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Why Pass Buy American Requirements?

Domestic Preferences Create 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 direct and indirect economic impact of government spending. Such policies encourage production in the United States and capital investments that expand America’s manufacturing capabilities and create and preserve 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.

Domestic Preferences Reflect U.S. 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 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 International Trade Rules

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 USMCA.

Further, provisions, like Section 70914(e) of BABA, require domestic preference policies be applied in a manner consistent with the obligations of the United States under international 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 state “Buy America” statutes that apply to certain state-level government procurement.

Buy America Resources