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Federal Agencies Issue Final Rule Implementing Buy American Requirement of the American Recovery and Reinvestment Act
On Monday August 30, 2010, the federal agencies responsible for the Federal Acquisition Regulations (FAR) issued a final rule implementing Section 1605 of the American Recovery and Reinvestment Act (ARRA), Pub. L. 111-5 (2009), otherwise known as the ARRA's Buy American requirement. The final rule applies to direct federal procurements using funds appropriated by the ARRA.
The final rule largely implements the provisions of an interim rule released in 2009 but also modifies it. The interim rule was issued and applied to federal procurement solicitations issued and contracts awarded on or after March 31, 2009. The final rule applies to ARRA funded solicitations issued and contracts awarded on or after October 1, 2010.
The final rule imposes a strict standard for determining whether a "wholly" or "predominantly" iron or steel construction material is domestic in origin. This standard stands to benefit domestic iron and steel companies to the extent that ARRA funds are still eligible and used for projects.
The councils acknowledged the "similarity to the restrictions applicable to the Federal Transit Administration (FTA) and the Federal Highway Administration (FHWA), thereby implicitly acknowledging Congressional intent to impose a 100% domestic content requirement for iron and steel products. Accordingly, the Councils implemented Section 1605 consistent with the strong domestic content requirements for iron and steel products required by the DOT Buy America provisions.
New FAR Provisions for Iron and Steel as Components of "Wholly or Predominantly" Iron or Steel Construction Material
Thus, under the final rule, the 100 percent domestic content requirement applies for iron and steel when the iron and steel is a component of construction material that "consists wholly or predominantly of iron and steel." Id. at 53158.
The final rule includes a revised FAR Part 25.601, Definitions, that defines "Domestic construction material" to include:
New FAR Part 25.602, Policy, further provides that:
The final rule provides this example relative to "predominantly" or "wholly":
Neither the revised FAR text of the final rule nor its explanation and justification provide further guidance on what constitutes "wholly" or, perhaps more importantly, "predominantly."
No Origin Requirements for Iron and Steel Components of Other Construction Material (Not Wholly or Predominantly Steel)
Iron and steel components of a construction material that does not consist wholly or predominantly of iron or steel have no domestic processing requirements. The final rule sticks closely to the application of interim rule with regard to these other types of construction material by imposing no requirement on the components or subcomponents of products fitting this category of "other" manufactured construction material.
The final rule provides this example relative to materials that are not "predominantly" or "wholly" iron or steel:
For additional information, please contact the MCA.