According to a recent article published by the Alliance for American Manufacturing, products purchased with federal taxpayer dollars will now need to be made with at least 60% American-made component parts in order to meet Buy American Act (BAA) requirements.
The requirement went into effect October 25, 2022 and reflects an increase from the previous requirement of 55%. This is the first of three planned gradual increases that are expected to culminate with a final requirement of 75% by 2029.
The BAA statute encourages federal agencies to procure manufactured end products or construction materials from U.S. suppliers. It is designed to increase reliance on domestic supply chains and ultimately reduce the need to spend taxpayer dollars on foreign-made goods.
“This increase in the domestic content threshold is a key part of the Administration’s strategic approach to leveraging federal purchasing power to invest in American industry and all of America’s workers,” Livia Shmavonian, the director of the White House’s Made in America Office, said in a statement to The Hill. “We’re sending a clear signal to the business community to drive new investments, to create good paying jobs, and to fill gaps in our supply chain – and it’s working.”
If our recent (and sometimes ugly) midterm elections taught us anything, it’s that all Americans, regardless of party affiliation, want to keep manufacturing strong in the U.S. According to another Alliance for Manufacturing article published immediately after the elections, democratic and republican candidates who championed policies aimed at reshoring fared very well at the polls.
As with most government statues, there are exceptions and allowances for waivers in the BAA, as noted in Federal Acquisition Regulation 25 (FAR 25.101). But many of these will be phased out over time, and manufacturers will need to increasingly focus on replacing their foreign suppliers with domestic ones.
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