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Proposed amendments to raise US content in federal purchases announced

Jul '21
US President Joe Biden. Pic: Shutterstock
US President Joe Biden. Pic: Shutterstock
The US administration has decided to raise American-made content in federal government purchases and bolster critical supply chains. President Joe Biden yesterday announced the most robust changes to the implementation of the Buy American Act in almost 70 years. His proposal would increase US content in federal purchases and support domestic production critical to US national and economic security.

The "Notice of Proposed Rulemaking (NPRM) marks just the first set of proposed reforms to procurement policy under the new administration to ensure taxpayer dollars help US businesses compete in strategic industries and help ensure domestic workers thrive.

"As the pandemic has demonstrated, federal procurement can strengthen the resiliency of domestic supply chains, and reduce the risk of Americans being adversely impacted by the actions of competitor nations during a time of crisis," a White House statement said.

The proposed rule directs several changes to strengthen Buy American requirements.

The Buy American statute says products bought with taxpayer dollars must ‘substantially all’ be made in the United States. However, products today qualify if just 55 per cent of the value of their component parts was manufactured in the United States. The NPRM proposes an immediate increase of the threshold to 60 per cent and a phased increase to 75 per cent.

This proposal would close a problematic loophole in the current regulation, while also allowing businesses time to adjust their supply chains to increase the use of US-made components, the government statement said.

If adopted, this change would create more opportunities for small- and medium manufacturers and their employees, including small and disadvantaged enterprises. To support this work, the Small Business Administration has created a new manufacturing office in its federal contracting division.

The proposed amendments strengthen domestic supply chains for critical goods with new price preferences. The NPRM proposes applying enhanced price preferences to select critical products and components identified by the Critical Supply Chain review and the pandemic supply chain strategy. These preferences, once in place, would support the development and expansion of domestic supply chains for critical products by providing a source of stable demand for domestically produced critical products.

Reporting challenges have hampered implementation of Buy American rules for decades. Currently, contractors only tell the government if they meet the content threshold rather than reporting the total domestic content in their products. The NPRM proposes to establish a reporting requirement for critical products.

The new reporting requirement would bolster compliance with the Buy American Act and improve data on the actual US content of goods purchased. More complete and accurate data would be used to target future improvements to support US entrepreneurs, farmers, ranchers and workers.

In his first week in office, Biden signed Executive Order 14005, Ensuring the Future is Made in All of America by All of America’s Workers, launching a government initiative to strengthen the use of federal procurement to support American manufacturing.

In April, Biden opened his new Made in America office to review proposed waivers of Made-in-America laws and helps agencies use taxpayer dollars to support US manufacturing.

Terming the president’s proposal as ‘a positive step forward’, the National Council of Textile Organisations (NCTO) appreciated the Biden administration’s commitment to closing loopholes and strengthening domestic supply chains.

“Using the provisions of the Buy American Act alone is not sufficient to address US national security needs. Our national security needs must foster investment in the capital-intensive raw material production processes upstream and downstream production in the supply chain. These upstream production processes are not only essential from an overall domestic capacity standpoint, but they are also the implementation point for a range of advanced technologies such as anti­-viral, anti-bacterial, and other functional fibre, yarns, fabrics, and finishes,” NCTO president and chief executive officer Kim Glas said in a statement.

Fibre2Fashion News Desk (DS)

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