For firms that sell products to the federal government, country of origin is not a detail. It can decide whether an offer is acceptable at all. With product orders rising as the fiscal year heads toward September 30, this is a good time to understand the two main bodies of law involved and to confirm that your product records can support the representations you make.
The Buy American Act
The Buy American Act dates to 1933, enacted during the Depression to direct federal purchasing toward American industry. In general terms, it establishes a preference for domestic end products in federal supply contracts and for domestic construction materials in construction contracts. A product generally qualifies as domestic if it is manufactured in the United States and meets a domestic content test for its components. That threshold has been raised in steps in recent years, so check the current figure in FAR Part 25 rather than relying on an older number.
The Act does not ban foreign products outright. In many cases, the government applies a price evaluation factor that adds a percentage to the price of a foreign offer before comparing it with domestic offers. There are also exceptions, for instance when a product is not available domestically in sufficient quantity or quality, or when applying the preference would be inconsistent with the public interest. Commercially available off-the-shelf items are treated differently for parts of the component test.
The Trade Agreements Act
The Trade Agreements Act of 1979 implements the government’s commitments under international trade agreements. For acquisitions covered by those agreements, which depends on the type of item, the agency and dollar thresholds that are adjusted periodically, the government generally may acquire only U.S.-made or designated country end products, with limited exceptions. Designated countries include those that are parties to the relevant agreements. For covered purchases, the Buy American preference is waived for products from designated countries.
The test for where a product comes from under the Trade Agreements Act is substantial transformation: a product originates in the country where it was wholly grown or produced, or, if it contains materials from several countries, where it was substantially transformed into a new and different article of commerce. Customs authorities issue rulings that apply this test to specific products.
Why GSA Schedule holders pay close attention
Many products sold through GSA Schedules are subject to the Trade Agreements Act, which means schedule holders must be confident that each item comes from the United States or a designated country. Products made in countries that are not designated generally cannot be offered under covered contracts. Resellers carry this responsibility too, so ask manufacturers for country-of-origin documentation and keep it on file.
Questions to be ready to answer
- Where is each product manufactured, and where does final assembly or substantial transformation occur?
- For Buy American purposes, where do the components come from, and what share of the cost do they represent?
- Do your SAM.gov representations and offer-specific certifications match your records?
- Has a supplier changed factories, which could change the answer without notice?
Country-of-origin representations are statements to the government, and inaccurate ones can carry serious consequences. When a product’s origin is unclear, get advice from a lawyer or trade specialist before certifying. Current rules are in FAR Part 25 at acquisition.gov, and the Department of Defense applies additional domestic sourcing rules through the DFARS.