Domestic Content Legislation: The Buy American Act and Complementary Little Buy American Provisions

Congressional research reportApr 25, 2012

Ask Donna

What actually matters in this document.

Text

Domestic Content Legislation: The Buy

American Act and Complementary Little Buy

American Provisions

John R. Luckey

Legislative Attorney

April 25, 2012

Congressional Research Service

7-5700

www.crs.gov

R42501

CRS Report for Congress

Prepared for Members and Committees of Congress

Domestic Content Legislation: The Buy American Act and Complementary Provisions

Summary

Congress has broad authority to place conditions on the purchases made by the federal

government or with federal dollars. One of many conditions that it has placed on direct

government purchases is a requirement that they be produced in the United States. The most well

known of these requirements is the Buy American Act, which is the major domestic preference

statute governing procurement by the federal government. The Buy American Act applies to

direct purchases by the federal government of more than $3,000, providing their purchase is

consistent with the public interest, the items are reasonable in cost, and they are for use in the

United States. The act requires that “substantially all” of the acquisition be attributable to

American-made components. Regulations have interpreted this requirement to mean that at least

50% of the cost must be attributable to American content. While the act has only been

substantively amended four times since its enactment in 1933, every Congress in the intervening

years has seen fit to enact some form of additional domestic preference legislation.

Other domestic preference statutes, known as “Little Buy American Acts,” either impose a higher

domestic content requirement on procurements that are covered by the Buy American Act or

apply to indirect purchases (i.e., purchases not made by a federal entity, but which are made with

federal funds). The Buy America Act and the Berry Amendment, the most commonly recognized

of the Little Buy American Acts, are representative of the two most prominent categories of Little

Buy American Acts. The majority of Little Buy American Acts govern purchases not directly

made by a federal entity, but which use federal funds. The Buy America Act, which attaches a

domestic content requirement to purchases made with federal transportation funds, is illustrative

of this type of legislation. Unless the definitions of the Buy American Act are referenced, these

provisions generally require the purchase of 100% American-made products.

The second most common category of Little Buy American Act affects certain direct purchases of

the federal government (i.e., ones that are governed by the Buy American Act), for which

Congress has decided a greater percentage of American content should be required, as opposed to

the standard 50%. The Berry Amendment is probably the most recognized legislation in this

category. The Berry Amendment is a “super percentage” statute which limits the Department of

Defense when purchasing certain goods to such goods that are 100% American in origin.

This report summarizes (1) the Buy American Act, what it does and does not cover; (2) the Little

Buy American Acts found in permanent law, emphasizing what they govern, major exceptions

and why Congress felt them necessary in light of the requirements of the Buy American Act; and

(3) the temporary Little Buy American provision found in the American Recovery and

Reinvestment Act.

Congressional Research Service

Domestic Content Legislation: The Buy American Act and Complementary Provisions

Contents

Introduction...................................................................................................................................... 1

The Buy American Act .................................................................................................................... 2

Little Buy American Acts in Permanent Law .................................................................................. 2

Domestic Content Requirements for Non-Direct Purchases ..................................................... 3

Buy America Act: Restrictions on Department of Transportation Funds............................ 3

Other Restricted Funds and/or Entities ............................................................................... 6

Super Percentage Requirements ................................................................................................ 8

The Berry Amendment: 10 U.S.C. §§ 2533a and 2533b..................................................... 8

Other Department of Defense Buy American Requirements: 10 U.S.C. § 2534 .............. 10

6 U.S.C. § 453b: Department of Homeland Security........................................................ 11

Veterans’ Burial Flags: 38 U.S.C. § 2301.......................................................................... 12

Provisions Which Encourage the Use of American Made Goods ........................................... 12

Federal Crop Insurance Corporation: 7 U.S.C. § 1506(p)................................................. 12

Other Department of Agriculture Related Entities: 7 U.S.C. Ch. 98................................. 12

Housing Assistance Programs: 12 U.S.C § 1735e-1 ......................................................... 12

Small Business Financial Assistance Under the Small Business Act: 15 U.S.C. §

661.................................................................................................................................. 13

Arson Prevention Grants: 15 U.S.C. § 2221 ..................................................................... 13

Educate America Act: 20 U.S.C §§ 5801 et seq................................................................ 13

School Lunch Program Funds: 42 U.S.C. § 1760 ............................................................. 13

Domestic Content Requirements in Procurements of Products for Use Outside the

United States......................................................................................................................... 14

Foreign Assistance Act of 1961: 22 U.S.C. § 2381........................................................... 14

Engraving and Printing Currency , Postage Stamps, and Security Documents for

Foreign Governments: 31 U.S.C. § 5114 ....................................................................... 14

Renewable Energy Technology Transfer Program: 42 U.S.C. § 13316 ............................ 14

Clean Coal Technology Transfer Program: 42 U.S.C. § 13362 ........................................ 15

Environmental Technology Transfer Program: 42 U.S.C. § 13387................................... 15

The American Recovery and Reinvestment Act: P.L. 111-5.......................................................... 16

Contacts

Author Contact Information........................................................................................................... 16

Congressional Research Service

Domestic Content Legislation: The Buy American Act and Complementary Provisions

Introduction

Congress has broad authority to place conditions on the purchases made by the federal

government or with federal dollars. One of many conditions that it has placed on direct

government purchases is a requirement that they be produced in the United States. The most

familiar of these requirements is known as the Buy American Act,1 which is the major domestic

preference statute governing procurement by the federal government. The Buy American Act

applies to direct purchases by the federal government of more than $3,000, providing the

purchase is consistent with the public interest, the items or services are reasonable in cost, and

they are for use in the United States. The act requires that “substantially all” of the acquisition be

attributable to American-made components. Regulations have interpreted this requirement to

mean that at least 50% of the cost must be attributable to American content.

While the act has only been substantively amended four times2 since its enactment in 1933,3

every Congress in the intervening years has seen fit to enact some form of additional domestic

preference legislation. This legislation has been generally directed at purchases that for some

reason were not governed by the Buy American Act and often took the form of temporary law

that was enacted Congress after Congress, often as an appropriations rider to deny the use of

funds to purchase goods that were not of domestic origin. While this approach has not been

abandoned, the current trend appears to be to codify these “Little Buy American Acts” as

permanent law. 4

This report summarizes (1) the Buy American Act, what it does and does not cover; (2) the Little

Buy American Acts found in permanent law, emphasizing what they govern, major exceptions,

and why Congress felt them necessary in light of the requirements of the Buy American Act; and

(3) the temporary Little Buy American provision found in the American Recovery and

Reinvestment Act.5

41 U.S.C. §§ 8301 through 8305.

See, P.L. 100-418, Title VII; 102 Stat. 1545, 100th Congress, 2nd Session (1988), P.L. 103-355, 108 Stat. 3346-7, 103rd

Congress, 2nd Session (1994), P.L. 104-201, § 827, 110 Stat. 2611 104th Congress, 2nd Session (1996), and P.L. 110-28,

Title VIII, § 8306, 121 Stat. 112, 211, 110th Congress, 1st Session (2007).

Ch. 212, 47 Stat. 1520, 72nd Congress, 2nd Session (1933).

A good example of this process and current trend is legislation commonly referred to as the “Berry Amendment.”

This legislation requires the Department of Defense to purchase certain items that must be 100% American made. From

the 77th Congress, see, P.L. 29, ch. 41, 55 Stat. 123, 125, 77th Congress, 1st Sess. (1941), through the 102nd Congress,

see, P.L. 102-396, 106 State 1876, 1900, 102nd Con., 2nd Sess. (1992), every Congress passed a Berry Amendment

appropriations rider. In the 103rd Congress, the Berry Amendment was made permanent law, see, P.L. 103-139, Title

VIII, § 8005, 107 Stat.1438, 103rd Cong., 1st Sess. (1993), and codified in 10 U.S.C. § 2533a in P.L. 107-107, Div, A,

Title VIII, § 832, 115 Stat.1189, 107th Cong. 1st Sess. (2001). For a discussion of the Berry amendment, see, CRS

Report RL31236, The Berry Amendment: Requiring Defense Procurement to Come from Domestic Sources, by Valerie

Bailey Grasso.

P.L. 111-5, § 1605, 123 Stat.115, 303, 111th Cong. 1st Sess. (2009).

Congressional Research Service

Domestic Content Legislation: The Buy American Act and Complementary Provisions

The Buy American Act

Essentially, the Buy American Act6 attempts to protect domestic labor by providing a required

preference for American goods in direct government purchases. In determining what are

American goods, the place of mining, production, or manufacture is controlling. The nationality

of the contractor is not considered when determining if a product is of domestic origin.7

Manufactured articles are considered domestic if they have been manufactured in the United

States from components, “substantially all” of which have been mined, produced, or

manufactured in the United States.8 The term “substantially all” is defined in the regulations to

mean that the cost of foreign components does not exceed 50% of the cost of all components.9

There are five primary exceptions to the Buy American Act. The act does not apply to

procurements when its application would be inconsistent with the public interest10 or

unreasonable in cost.11 The act does not apply to procurements of products for use outside the

United States or of products not produced or manufactured in the United States in sufficient and

reasonably available commercial quantities and of satisfactory quality.12 Lastly, the act does not

apply to procurements under $3,000.13 Also, the Trade Agreements Act of 197914 authorizes the

President to waive any otherwise applicable “law, regulation or procedure regarding Government

procurement” that would accord foreign products less favorable treatment than that given to

domestic products.15 In summary, the Buy American Act applies to direct purchases by the federal

government of more than $3,000, which are consistent with the public interest, reasonable in cost,

and for use in the United States.

Little Buy American Acts in Permanent Law

Over the years, Congress has enacted “Little Buy American Acts” to restrict procurements that do

not fall under the application of the Buy American Act or to adjust the percentage content

standard. The Buy America Act,16 which attaches a domestic content requirement to purchases

For a more detailed discussion of the Buy American Act, see, CRS Report 97-765, The Buy American Act: Requiring

Government Procurements to Come from Domestic Sources, by John R. Luckey.

See, E-Systems, Inc., 61 Comp. Gen. 431 (1982); and Patterson Pump Co., B-200165, 80-2 CPD ¶ 453 (1980).

41 U.S.C. §§ 8302 & 8303. This two part test is only applied to end products or construction materials. A component

is of domestic origin if it was manufactured in the United States, regardless of where its components were

manufactured. Hamilton Watch Co., B-179939, 74-1 CPD ¶ 306 (1974).

48 C.F.R. § 25.101.

41 U.S.C. § 8302. Generally referred to as a “public interest” exception or waiver.

Id. Generally referred to as an “unreasonable cost” exemption or waiver and is implemented through the use of price

differentials.

Id. Generally referred to as an “non-availability” exception or waiver.

41 U.S.C. § 8302(a)(2)(C) which incorporates the definition of 41 U.S.C. § 1902.

19 U.S.C. §§ 2501 et seq.

19 U.S.C. § 2511. A waiver under this authority is generally referred to as a “trade agreements waiver.” This

provision was implemented by E.O. 12260, 46 Fed. Reg. 1653 (1981). See, also, 48 C.F.R. § 25.4.

The Buy America Act is the popular name for a group of domestic content restrictions which have been attached to

funds administered by the Department of Transportation. See, 49 U.S.C. § 5323(j), Federal Transit Administration

funds, 23 U.S.C. § 313, Federal Highway Administration funds, 49 U.S.C. § 24305, AMTRAK funds, 49 U.S.C. §

24405, Federal Railroad Administration High Speed Rail Program, and 49 U.S.C. § 50101, Federal Aviation

(continued...)

Congressional Research Service

Domestic Content Legislation: The Buy American Act and Complementary Provisions

made with federal transportation funds, is illustrative of provisions that govern purchases not

made directly by a federal entity, but which use federal funds. The majority of the Little Buy

American Acts are this type of legislation. Unless the provisions specifically reference the

definitions of the Buy American Act, they generally require the purchase of 100% Americanmade products.

The Berry Amendment17 is a “super percentage” statute which requires that certain purchases of

the Department of Defense be 100% American in origin. The Berry Amendment is an example of

a provision where Congress has decided that a greater percentage of American content should be

required in acquisitions that are subject to the “big” Buy American Act.

Domestic content provisions that have become permanent law may be divided into three

categories: (1) domestic content requirements for non-direct purchases; (2) super percentage

requirements for direct purchases; and (3) provisions which encourage the use of American-made

goods. The following discussion identifies the specific fund or products governed by the

provision, and the types of waiver or exemption available (i.e., public interest, non-availability,

unreasonable cost, trade agreements, or other).

Domestic Content Requirements for Non-Direct Purchases

Buy America Act: Restrictions on Department of Transportation Funds

The Buy America Act is the popular name for a group of domestic content restrictions which have

been attached to funds administered by the Department of Transportation to make grants to states,

localities, and other non-federal government entities for various transportation projects. The Buy

American Act does not apply to these funds because, while the source of the money is federal,

purchases are not made directly by the federal government.

As noted above, unless otherwise stated, the Buy America Act provisions require 100% domestic

content. Typically, the Secretary of Transportation may waive the requirements if they are

“inconsistent with the public interest,” the “goods produced in the United States are not produced

in a sufficient and reasonably available amount or are not of a satisfactory quality,” or when

procuring certain items would increase the cost of the overall project by more than a certain

amount.18 Although waivers for goods produced in a foreign country may be made under certain

trade agreements, the Secretary is prohibited from providing a waiver for a country that has

violated the trade agreement by discriminating against similar American goods.19

(...continued)

Administration funds. See, also, the Department of Transportation’s Buy America webpage, http://dot.gov/buyamerica/.

10 U.S.C. §§ 2533a and 2533b.

See, e.g., 49 U.S.C. § 5323(j)(2).

See, e.g., 49 U.S.C. § 5323(j)(5).

Congressional Research Service

Domestic Content Legislation: The Buy American Act and Complementary Provisions

Federal Transit Administration Funds: 49 U.S.C. § 5323(j)

The steel, iron, and manufactured goods used in all Federal Transit Administration funded20

projects must be produced in the United States.21 Public-interest22 and non-availability waivers by

the Secretary of Transportation are authorized.23 A variant of the unreasonable cost waiver is

provided.24 A trade agreements waiver may not be made for goods from a country found to be in

violation of such agreement.25 The Secretary of Transportation may not prohibit a state from

imposing more stringent domestic content requirements.26

Federal Highway Administration Funds: 23 U.S.C. § 313

The steel, iron, and manufactured goods used in all Federal Highway Administration funded

projects must be produced in the United States.27 The Secretary of Transportation may issue

public-interest, non-availability, or unreasonable-cost waivers.28 A trade agreements waiver may

not be made for goods from a country found to be in violation of such agreement.29 The Secretary

of Transportation may not prohibit a state from imposing more stringent domestic content

requirements.30

AMTRAK Funds: 49 U.S.C. § 24305

Since AMTRAK is explicitly not a department, agency, or instrumentality of the United States

government,31 its purchases are not direct purchases of the federal government and are not

governed by the Buy American Act. However, U.S.C. § 24305 requires that Amtrak buy raw

materials mined or produced in the United States; or manufactured articles, material, and supplies

manufactured in the United States substantially32 from articles, material, and supplies mined,

All funds authorized under 49 U.S.C. §§ 5301 et seq., for example, urbanized area formula grants (§ 5307), clean

fuel grants (§ 5308), or capital investment grants (§ 5309).

49 U.S.C. § 5323(j)(1).

49 U.S.C. § 5323(j)(2)(A). When issuing a waiver based on a public interest determination, the Secretary shall issue

a detailed written justification as to why the waiver is in the public interest. The Secretary shall publish such

justification in the Federal Register and provide the public with a reasonable period of time for notice and comment. 49

U.S.C. § 5323(j)(3).

49 U.S.C. § 5323(j)(2)(B).

49 U.S.C. § 5323(j)(2). It may be waived when procuring rolling stock (including train control, communication, and

traction power equipment), if the cost of components and subcomponents produced in the United States is more than 60

percent of the cost of all components of the rolling stock, and final assembly of the rolling stock has occurred in the

United States, or including domestic material will increase the cost of the overall project by more than 25 percent.

Labor costs involved in final assembly are not included in calculating the cost of components. 49 U.S.C. § 5323(j)(4).

49 U.S.C. § 5323(j)(5).

49 U.S.C. § 5323(j)(7).

23 U.S.C. § 313(a).

23 U.S.C. § 313(b). The unreasonable cost waiver may be invoked if including domestic material will increase the

cost of the overall project by more than 25 percent. Labor costs involved in final assembly are not included in

calculating the cost of components. 23 U.S.C. § 313(c).

23 U.S.C. § 313(f).

23 U.S.C. § 313(d).

49 U.S.C. § 24301(a)(3).

The use of the word “substantially” indicates that 100% domestic content is not required and that the Buy American

Act definition is to be utilized.

Congressional Research Service

Domestic Content Legislation: The Buy American Act and Complementary Provisions

produced, or manufactured in the United States.33 This restriction applies only when the cost of

those articles, material, or supplies bought is at least $1,000,000.34 On application of Amtrak, the

Secretary of Transportation may exempt Amtrak from this requirement if the Secretary decides

that for particular articles, material, or supplies the requirement is inconsistent with the public

interest, unreasonable in cost, non-available, or rolling stock or power train equipment cannot be

bought and delivered in the United States within a reasonable time.35

Federal Railroad Administration High Speed Rail Program Funds: 49 U.S.C. §

24405

Grants under this program must contain the condition that the financed projects use only steel,

iron, and manufactured goods produced in the United States.36 This condition is only applied to

projects for which the costs exceed $100,000.37 The Secretary of Transportation may waive38 this

requirement using the public-interest, non-availability, or unreasonable-cost waivers.39 A tradeagreements waiver may not be made for goods from a country found to be in violation of a trade

agreement.40 The Secretary of Transportation may not prohibit a state from imposing more

stringent domestic content requirements.41

Federal Aviation Administration Funds: 49 U.S.C. §§ 50101 & 50103

Certain funds42 administered by the Federal Aviation Administration may only be used for a

project if steel and manufactured goods used in the project are produced in the United States.43

The facility or equipment qualifies as domestic if the cost of components and subcomponents

produced in the United States is more than 60% of the cost of all components of the facility or

equipment and final assembly of the facility or equipment has occurred in the United States. The

Secretary of Transportation may waive this requirement for reasons of the public interest, nonavailability, or unreasonable cost. A 25% price differential is used to measure the reasonableness

of the cost.44

49 U.S.C. § 24305(f)(2).

49 U.S.C. § 24305(f)(3).

49 U.S.C. § 24305(f)(4).

49 U.S.C. § 24405(a)(1).

49 U.S.C. § 24405(a)(11).

When issuing a waiver determination, the Secretary shall issue a detailed written justification as to why the waiver is

needed. The Secretary shall publish such justification in the Federal Register and provide the public with a reasonable

period of time for notice and comment. 49 U.S.C. § 24405(a)(4). Not later than December 31, 2012, the Secretary shall

submit to the Committee on Transportation and Infrastructure of the House of Representatives and the Committee on

Commerce, Science, and Transportation of the Senate a report on any waivers granted. 49 U.S.C. § 24405(a)(5).

49 U.S.C. § 24405(a)(2). The unreasonable cost waiver may be invoked if including domestic material will increase

the cost of the overall project by more than 25 percent. Labor costs involved in final assembly are not included in

calculating the cost of components. 49 U.S.C. § 24405(a)(3).

49 U.S.C. § 24405(a)(6).

49 U.S.C. § 24405(a)(8).

The referenced funds may be found in: 49 U.S.C. §§ 106(k), 44502(a)(2), or 44509; 49 U.S.C. §§ 47101 et seq.,

except § 47127; 49 U.S.C. §§ 48101 et seq., except §§ 48102(e), 48106, 48107, and 48110.

49 U.S.C. § 50101(a).

49 U.S.C. § 50101(b). Labor costs involved in final assembly are not included in calculating the cost of components.

(continued...)

Congressional Research Service

Domestic Content Legislation: The Buy American Act and Complementary Provisions

Section 50103 appears to have been a provision directed at a specific contract or group of

contracts.45 It is a fairly unusual provision because, in addition to considering the place of

manufacture, the place of incorporation also matters. “Domestic firm” is defined as a business

entity incorporated, and conducting business, in the United States.46 At least 51% of the final

product of the domestic firm must be produced in the United States.47 This provision is applicable

to contracts related to aviation research grants,48 catastrophic-failure prevention research grants,49

and grants to establish and operate regional centers of air transportation excellence.50 The

Administrator of the Federal Aviation Administration may give preference to a domestic firm,

even if a foreign firm would have been awarded the contract under competitive procedures, when

the Secretary of Commerce and the United States Trade Representative concur that the public

interest requires making the contract with the domestic firm, considering United States

international obligations and trade relations, and the difference between the bids submitted by the

foreign firm and the domestic firm is not more than 6%.51 However, if compelling national

security considerations require, or the Trade Representative decides that making the contract

would violate a multilateral trade agreement or an international agreement, then the special

preference for a domestic firm would not apply.52

Other Restricted Funds and/or Entities

Procurement of Photovoltaic Devices: 10 U.S.C. § 2534 note

The Department of Defense sometimes is the beneficial owner of a product even when DOD does

not purchase it directly. When photovoltaic devices are purchased by third parties for the benefit

of DOD, such as in energy savings performance contracts, utility service contracts, land leases,

and private housing contracts, to the extent that such contracts result in ownership of photovoltaic

devices by DOD, such contracts must comply with the Buy American Act.53

Workforce Investment Act and Other Funds: 20 U.S.C. §§ 9275

(...continued)

49 U.S.C. § 50101(c).

49 U.S.C. § 50103(d) (“This section applies only to a contract related to a grant … for which … an amount is … to

be made available for the fiscal years ending September 30, 1991, and September 30, 1992 … and a solicitation for bid

is issued after November 5, 1990.” Id.)

49 U.S.C. § 50103(a)(1), emphasis added.

49 U.S.C. § 50103(b).

49 U.S.C. § 44511.

49 U.S.C. § 44512.

49 U.S.C. § 44513.

49 U.S.C. § 50103(b).

49 U.S.C. § 50103(c).

10 U.S.C. § 2534 note. For the purposes of this section, the Department of Defense is deemed to own a photovoltaic

device if the device is installed on Department of Defense property or in a facility owned by the Department of

Defense, and reserved for the exclusive use of the Department of Defense for the full economic life of the device. P.L.

111-383, Div. A, title VIII, § 846, 124 Stat. 4137, 4285, 111th Cong., 1st Sess. (2011).

Congressional Research Service

Domestic Content Legislation: The Buy American Act and Complementary Provisions

A provision prohibiting an entity receiving funds made available by the Workforce Investment

Act of 1998, P.L. 105-220, Title V, § 505, from spending those funds “unless the entity agrees that

in expending the funds the entity will comply with the Buy American Act” is codified at 20

U.S.C. § 9275(a).54 This prohibition applies to a number of programs, including certain

employment and training activities (such as Job Corps programs; programs for dislocated

workers; and programs for migrant and seasonal workers, veterans, Native Americans, and youth)

and adult education and literacy funds. In addition, there is a sense of the Congress provision that

the recipients of financial assistance should, in expending the assistance, purchase only

American-made equipment and products.55 The head of each agency is to provide each recipient

of assistance a notice that the assistance should be used in accordance with the sense of

Congress.56

District of Columbia Mental Health Services Funds: 24 U.S.C §§ 225 et seq.

The mayor of the District of Columbia shall insure that the requirements of the Buy American Act

are applied to all procurements made under the Saint Elizabeth’s Hospital and District of

Columbia Mental Health Services Act.57 A trade agreements waiver may not be made for goods

from a country found to be in violation of such agreement.58

Indian Health Care Facilities: 25 U.S.C. §§ 1631 et seq.

The Secretary of Health and Human Services shall insure that the requirements of the Buy

American Act apply to all procurements made with funds made available under 25 U.S.C. §§

1631 et seq.59

Water Pollution Prevention and Control Grants for Construction of Treatment

Works: 33 U.S.C. § §§ 1281 et seq.

Grants made under 33 U.S.C. §§ 1281 et seq. for any treatment works are to impose Buy

American-like provisions on purchases made with grant funds.60 The Administrator of the

Environmental Protection Agency may waive this requirement using the public-interest, nonavailability, or unreasonable-cost waivers.61

20 U.S.C. § 9275(a).

20 U.S.C. § 9275(b)(1).

20 U.S.C. § 9275(b)(2).

24 U.S.C. § 225h(a).

24 U.S.C. § 225h(b).

25 U.S.C. § 1638b.

33 U.S.C. § 1295 (“… no grant … shall be made under this subchapter for any treatment works unless only such

unmanufactured articles, materials, and supplies as have been mined or produced in the United States, and only such

manufactured articles, materials, and supplies as have been manufactured in the United States, substantially all from

articles, materials, or supplies mined, produced, or manufactured … in the United States will be used in such treatment

works.” Id. The use of the word “substantially” indicates that 100% domestic content is not required.)

33 U.S.C. § 1295.

Congressional Research Service

Domestic Content Legislation: The Buy American Act and Complementary Provisions

Disaster Relief Funds: 42 U.S.C. § 5206

Entities spending funds authorized under the Disaster Mitigation Act of 2000,62 or any provisions

amended by it, must comply with the Buy American Act.63

Local Public Works Grants: 42 U.S.C. § 6705(f)(1).

Grants made under the Public Works Employment Act of 197664 for any local public works

project are to impose Buy American-like conditions on the project.65 This requirement may be

waived by the Secretary of Commerce acting through the Economic Development Administration

on grounds of the public interest, non-availability of domestic materials, or unreasonable cost. 66

Super Percentage Requirements

The Berry Amendment: 10 U.S.C. §§ 2533a and 2533b

As noted above,67 the Berry Amendment has been around in some form since the beginning of

World War II. Over the years, the amendment has consistently required the Department of

Defense, when it purchased listed items, to buy items that are 100% domestic in origin. The list

has varied over the years, but generally has included products made of textiles or specialty

metals. The current version of the amendment is found in Sections 2533a and 2533b of Title 10 of

the United States Code. Section 2533b contains the rules governing specialty metals. Section

2533a governs all other listed products.

Under Section 2533a, the Department of Defense may not use appropriated or otherwise available

funds to purchase certain items if they are not grown, reprocessed, reused, or produced in the

United States. The covered items include food; clothing and the materials and components

thereof, other than sensors, electronics, or other items added to, and not normally associated with,

clothing (and the materials and components thereof); tents (and the structural components

thereof), tarpaulins, or covers; cotton and other natural fiber products, woven silk or woven silk

blends, spun silk yarn for cartridge cloth, synthetic fabric or coated synthetic fabric (including all

textile fibers and yarns that are for use in such fabrics), canvas products, or wool (whether in the

form of fiber or yarn or contained in fabrics, materials, or manufactured articles); any item of

individual equipment manufactured from or containing such fibers, yarns, fabrics, or materials; or

hand or measuring tools.68

Section 2533b prohibits the acquisition of a specialty metal that is not melted or produced in the

United States and that is to be purchased directly by the Department of Defense or a prime

contractor of the department, or end items, or components thereof, containing a specialty metal

Disaster Mitigation Act of 2000, P.L. 106-390, 114 Stat. 1552, 106th Cong., 2nd Sess. (2000).

42 U.S.C. § 5206(a).

P.L. 94-369, 90 Stat. 999, 94th Cong. 2nd Sess. (1976), codified at 42 U.S.C. §§ 6701 et seq.

42 U.S.C. § 6705(f)(1)(A).

42 U.S.C. § 6705(f)(1)(B).

Supra note 4.

10 U.S.C. § 2533a(a) & (b).

Congressional Research Service

Domestic Content Legislation: The Buy American Act and Complementary Provisions

not melted or produced in the United States, including aircraft, missile and space systems, ships,

tank and automotive items, weapon systems, or ammunition.69 For purposes of the section

specialty metal includes certain steel alloys; certain metal alloys consisting of nickel, iron-nickel,

and cobalt base alloys containing a total of other alloying metals (except iron) in excess of 10%;

titanium and titanium alloys; zirconium and zirconium base alloys.70

These provisions do not apply if the Secretary of Defense or the Secretary of the relevant military

department determines that the items are not available in satisfactory quality, sufficient quantity,

or as and when needed at a market price.71 Procurements made outside the United States in

support of combat operations or contingency operations,72 procurements where competitive

procedures do not have to be used because of unusual and compelling urgency of need,73 and

purchases under $3,00074 are not subject to these requirements. Items purchased for resale

purposes in commissaries, exchanges, or nonappropriated fund instrumentalities operated by the

Department of Defense are also exempt.75 Each provision contains its own limited trade

agreements exception.76

In addition to the common exemptions, Section 2533a exempts procurements by a vessel in

foreign waters77 and “[e]mergency procurements or procurements of perishable foods by, or for,

an establishment located outside the United States for the personnel attached to such

establishment.”78 This provision applies to contracts and subcontracts for the procurement of

commercial items, including off-the-shelf items.79

Section 2533b has a national security waiver not contained in 2533a.80 It also exempts purchases

of electronic components unless the Secretary of Defense, upon the recommendation of the

Strategic Materials Protection Board, determines that the domestic availability of a particular

10 U.S.C. § 2533b(a).

10 U.S.C. § 2533b(l).

10 U.S.C. § 2533a(c) provides exception to the extent that the Secretary of Defense or the Secretary of the military

department concerned determines that satisfactory quality and sufficient quantity of any such item grown, reprocessed,

reused, or produced in the United States cannot be procured as and when needed at United States market prices. 10

U.S.C. § 2533b(b) provides exception to the extent that the Secretary of Defense or the Secretary of the military

department concerned determines that compliant specialty metal of satisfactory quality and sufficient quantity, and in

the required form, cannot be procured as and when needed. This exemption applies to prime contracts and subcontracts

at any tier under such contracts.

10 U.S.C. §§ 2533a(d) and 2533b(c).

10 U.S.C. §§ 2533a(d)(4) and 2533b(c)(2).

10 U.S.C. §§ 2533a(h) and 2533b(f).

10 U.S.C. §§ 2533a(g) and 2533b(e).

10 U.S.C. § 2533a(e) provides a trade agreements exception is granted for chemical warfare protective clothing. 10

U.S.C. § 2533b(d)(l) provides a trade agreements exception if the acquisition is necessary to comply with agreements

with foreign governments requiring the United States to purchase supplies from foreign sources for the purposes of

offsetting sales made by the United States Government or United States firms under approved programs serving

defense requirements; or in furtherance of agreements with foreign governments in which both such governments agree

to remove barriers to purchases of supplies produced in the other country or services performed by sources of the other

country; and any such agreement with a foreign government complies, where applicable, with the requirements of

section 36 of the Arms Export Control Act (22 U.S.C. § 2776) and with section 2457 of title 10.

10 U.S.C. § 2533a(d).

10 U.S.C. § 2533a(c) & (d).

10 U.S.C. § 2533a(i).

10 U.S.C. § 2533b(k).

Congressional Research Service

Domestic Content Legislation: The Buy American Act and Complementary Provisions

electronic component is critical to national security.81 This provision applies to contracts and

subcontracts for the procurement of commercial items, subject to a limited commercially

available off-the-shelf exception.82 An item (not including high performance magnets) may be

purchased containing specialty metals that were not melted in the United States if the total

amount of noncompliant specialty metals in the item does not exceed 2% of the total weight of

specialty metals in the item.83

Other Department of Defense Buy American Requirements: 10 U.S.C. § 2534

The Department of Defense has a super percentage domestic content standard for procurements

of buses, chemical weapons antidotes, and certain components of naval vessels including air

circuit breakers, anchor and mooring chain, and components of vessels, to the extent they are

unique to marine applications (gyrocompasses, electronic navigation chart systems, steering

controls, pumps, propulsion and machinery control systems, and totally enclosed lifeboats).84

There is an exemption for purchases under $3,000.85

The Secretary of Defense may waive this requirement86 under several circumstances. Generally

waivers may be based on unreasonable costs or delays or if the procurement is for an amount less

than the simplified acquisition threshold and simplified purchase procedures are being used. Also,

the limitation may be waived if satisfactory quality items manufactured by an entity that is part of

the national technology and industrial base (includes Canadian companies) are not available,

application of the limitation would result in the existence of only one source for the item,

application of the limitation is not in the national security interests of the United States, or

application of the limitation would adversely affect a U.S. company. In the area of foreign

relations, a waiver may be granted in three circumstances. Waivers maybe granted if (1) U.S.

producers of the item would not be jeopardized by competition from a foreign country, and that

country does not discriminate against defense items produced in the United States to a greater

degree than the United States discriminates against defense items produced in that country; (2)

application of the limitation would impede cooperative programs entered into between the

Department of Defense and a foreign country; or (3) application of the limitation would impede

the reciprocal procurement of defense items under a memorandum of understanding providing for

10 U.S.C. § 2533b(g).

10 U.S.C. § 2533b(h). The section does not apply to contracts or subcontracts for the acquisition of commercially

available off-the-shelf items, other than contracts or subcontracts for the acquisition of specialty metals, including mill

products, such as bar, billet, slab, wire, plate and sheet, that have not been incorporated into end items, subsystems,

assemblies, or components; contracts or subcontracts for the acquisition of forgings or castings of specialty metals,

unless such forgings or castings are incorporated into commercially available off-the-shelf end items, subsystems, or

assemblies; contracts or subcontracts for commercially available high performance magnets unless such high

performance magnets are incorporated into commercially available off-the-shelf-end items or subsystems; and contracts

or subcontracts for commercially available off-the-shelf fasteners, unless such fasteners are incorporated into

commercially available off-the-shelf end items, subsystems, assemblies, or components; or purchased under a contract

or subcontract with a manufacturer of such fasteners, if the manufacturer has certified that it will purchase, during the

relevant calendar year, an amount of domestically melted specialty metal, in the required form, for use in the

production of such fasteners for sale to the Department of Defense and other customers, that is not less than 50 percent

of the total amount of the specialty metal that it will purchase to carry out the production of such fasteners.

10 U.S.C. § 2533b(i).

10 U.S.C. § 2534(a).

10 U.S.C. § 2534(g).

The Secretary of Defense may exercise the waiver authority only if the waiver is made for a particular item listed in §

2534(a) and for a particular foreign country. 10 U.S.C. § 2534(i).

Congressional Research Service

Domestic Content Legislation: The Buy American Act and Complementary Provisions

reciprocal procurement of defense items and the country does not discriminate against defense

items produced in the United States to a greater degree than the United States discriminates

against defense items produced in that country.87

6 U.S.C. § 453b: Department of Homeland Security

This section provides a Berry Amendment-type of restriction on certain purchases of the

Department of Homeland Security. DHS may not use funds appropriated or otherwise available

for the procurement of certain non-domestic items, if the item is directly related to the national

security interests of the United States.88 The item may not be purchased if the item is not grown,

reprocessed, reused, or produced in the United States. Covered items include clothing and the

materials and components thereof, other than sensors, electronics, or other items added to, and not

normally associated with, clothing (and the materials and components thereof); tents, tarpaulins,

covers, textile belts, bags, protective equipment (including but not limited to body armor), sleep

systems, load carrying equipment (including but not limited to fieldpacks), textile marine

equipment, parachutes, or bandages; cotton and other natural fiber products, woven silk or woven

silk blends, spun silk yarn for cartridge cloth, synthetic fabric or coated synthetic fabric

(including all textile fibers and yarns that are for use in such fabrics), canvas products, or wool

(whether in the form of fiber or yarn or contained in fabrics, materials, or manufactured articles);

or any item of individual equipment manufactured from or containing such fibers, yarns, fabrics,

or materials.89

Exception is made for non-available items,90 items with de minimis content of non-compliant

fibers,91 procurements outside of the United States by vessels in foreign waters or in an

emergency,92 and purchases below $3,000.93

The provision is applicable to contracts and subcontracts for procurement of commercial items.94

It is required to be applied in a manner consistent with U.S. obligations under international

agreements.95

10 U.S.C. § 2534(d).

6 U.S.C. § 453b.

6 U .S.C. § 453b(b).

6 U.S.C. § 453b(c) which exempts articles to the extent that the Secretary of Homeland Security determines that

satisfactory quality and sufficient quantity of any such article or item grown, reprocessed, reused, or produced in the

United States cannot be procured as and when needed at United States market prices. This section is not applicable to

covered items that are, or include, materials determined to be non-available in accordance with Federal Acquisition

Regulation 25.104 Nonavailable Articles. If the Secretary make a determination under this exception, he must post a

notification that the exception has been applied on the Internet site maintained by the General Services Administration

known as FedBizOps.gov (or any successor site), 6 U .S.C. § 453b(i).

6 U .S.C. § 453b(d) which authorizes the Secretary of Homeland Security to accept delivery of a covered items that

contains non-compliant fibers if the total value of non-compliant fibers contained in the end item does not exceed 10

percent of the total purchase price of the end item.

6 U.S.C. § 453b(e).

6 U.S.C. § 453b(f).

6 U.S.C. § 453b(g).

6 U.S.C. § 453b(k).

Congressional Research Service

Domestic Content Legislation: The Buy American Act and Complementary Provisions

Veterans’ Burial Flags: 38 U.S.C. § 2301

Under the Buy American Act, flags purchased by the Department of Veterans Affairs would be

required to be at least 50% American made. This provision prohibits the Secretary of Veterans

Affairs from procuring burial flags that are not wholly produced in the United States.96 A flag is

considered to be “wholly produced in the United States” only if the materials and components of

the flag are entirely grown, manufactured, or created in the United States; the processing

(including spinning, weaving, dyeing, and finishing) of such materials and components is entirely

performed in the United States; and the manufacture and assembling of such materials and

components into the flag are entirely performed in the United States.97 The Secretary may waive

this requirement if the Secretary determines that the requirement cannot be reasonably met or that

compliance with the requirement would not be in the national interest of the United States.98

Provisions Which Encourage the Use of American Made Goods

Federal Crop Insurance Corporation: 7 U.S.C. § 1506(p)

The Federal Crop Insurance Corporation (FCIC) is a government-owned corporation.99 As such,

its purchases are not direct purchases of the federal government and thus not subject to the Buy

American Act. In the general powers of the FCIC, Congress placed a sense of Congress that, to

the greatest extent practicable, all equipment and products purchased by the corporation using

funds made available to the corporation should be American-made and the corporation should

include similar language in its contacts and loan agreements.100

Other Department of Agriculture Related Entities: 7 U.S.C. Ch. 98

There are several Department of Agriculture related entities,101 similar in organization to the

FCIC, that are governed by chapter 98 of Title 7 of the United States Code, which contains a

sense of Congress that, to the greatest extent practicable, all equipment and products purchased

by these entities using funds made available to them under chapter 98 should be American

made.102

Housing Assistance Programs: 12 U.S.C § 1735e-1

This provision states that in the administration of housing assistance programs, the Secretary of

Housing and Urban Development “shall encourage the use of materials and products mined and

produced in the United States.”103

38 U.S.C. § 2301(h)(1).

38 U.S.C. § 2301(h)(3).

38 U.S.C. § 2301(h)(2). The Secretary shall submit to Congress in writing notice of such a determination not later

than 30 days after the date on which such determination is made.

7 U.S.C. § 1503.

100

7 U.S.C. § 1506(p).

101

For example, Consolidated Farm Service Agency (§ 6932), the Rural Utilities Service (§ 6942), the Rural Business

and Cooperative Development Service (§ 6944), and Rural Development Disaster Assistance Fund (§ 6945).

102

7 U.S.C. § 7012.

103

12 U.S.C. § 1735e-1.

Congressional Research Service

Domestic Content Legislation: The Buy American Act and Complementary Provisions

Small Business Financial Assistance Under the Small Business Act: 15 U.S.C. §

661

In this section, Congress sets out its intent that in the award of financial assistance under the

Small Business Act, when practicable, priority be accorded to small business concerns which

lease or purchase equipment and supplies which are produced in the United States and that small

business concerns receiving such assistance be encouraged to continue to lease or purchase such

equipment and supplies.104

Arson Prevention Grants: 15 U.S.C. § 2221

This section contains a sense of Congress that any recipient of an arson prevention grant should

purchase, when available and cost-effective, American-made equipment and products when

expending grant monies.105

Educate America Act: 20 U.S.C §§ 5801 et seq.

Under the sense of the Congress found in this act, no funds appropriated pursuant to the Educate

America Act should be expended by an entity unless the entity agrees that in expending the

assistance the entity will comply with the Buy American Act, and in the case of any equipment or

products that may be authorized to be purchased with financial assistance provided under the act,

entities receiving such assistance should, in expending the assistance, purchase only Americanmade equipment and products.106

School Lunch Program Funds: 42 U.S.C. § 1760

For school lunch programs, the Secretary of Agriculture is to require that a school food authority

purchase, to the maximum extent practicable, domestic commodities or products.107 The term

“domestic commodity or product” means an agricultural commodity that is produced in the

United States and a food product that is processed in the United States substantially using

agricultural commodities that are produced in the United States.108 This requirement is applicable

only to a school food authority located in the contiguous United States and for a purchase of a

domestic commodity or product for the school lunch program109 or the school breakfast program

under Section 4 of the Child Nutrition Act of 1966.110

104

15 U.S.C. § 661.

15 U.S.C § 2221(l).

106

20 U.S.C. § 6067.

107

42 U.S.C. § 1760(n)(2)(A) emphasis added. The effect of the emphasized words is to make this provision a goal

rather than a requirement.

108

42 U.S.C. § 1760(n)(1).

109

42 U.S.C. §§ 1751 et seq.

110

42 U.S.C. § 1773. Hawaii and Puerto Rico, while not covered by the general Buy American provision, are

permitted, and encouraged, to buy Hawaiian and buy Puerto Rican. 42 U.S.C. § 1760(n)(2)-(4).

105

Congressional Research Service

Domestic Content Legislation: The Buy American Act and Complementary Provisions

Domestic Content Requirements in Procurements of Products for

Use Outside the United States

Foreign Assistance Act of 1961: 22 U.S.C. § 2381

The Foreign Assistance Act of 1961 provided authority to the President to implement rules for the

United States Agency for International Development (USAID).111 Under this authority regulations

essentially creating a Little Buy American Act were made applicable to USAID for the source and

nationality of commodities and services financed by USAID programs. These rules were needed

because many USAID contracts take place outside of the United States. These special rules are

set out at 22 C.F.R. part 228 and apply to goods and services financed directly with program

funds under the act.112 Detailed rules restrict contracts and subcontracts by categories of countries

classified according to certain foreign policy considerations.113 Also, special rules require U.S.

procurement of agricultural commodities (with some exceptions), motor vehicles designed for

normal road speeds, and pharmaceutical products.114 Other rules set forth U.S.-flag requirements

for transporting procured goods,115 and yet other provisions set forth preference requirements for

placing marine insurance.116

Engraving and Printing Currency , Postage Stamps, and Security Documents

for Foreign Governments: 31 U.S.C. § 5114

The Secretary of the Treasury is authorized to produce currency, postage stamps, and other

security documents for foreign governments if the Secretary of the Treasury determines that such

production will not interfere with engraving and printing needs of the United States, and the

Secretary of State determines that such production would be consistent with the foreign policy of

the United States.117 All articles, material, and supplies procured for use in the production of

currency, postage stamps, and other security documents for foreign governments pursuant to this

authority shall be treated in the same manner as articles, material, and supplies procured for

public use within the United States for purposes of the Buy American Act. This program might

not otherwise be governed by the Buy American Act for two reasons: it does not involve direct

purchases and the contracts might be considered to be carried on outside the United States.118

Renewable Energy Technology Transfer Program: 42 U.S.C. § 13316

This program is not governed by the Buy American Act for two reasons: (1) it does not involve

direct purchases; and (2) the contracts are carried on outside the United States. The Secretary of

Energy, through the Agency for International Development, and after consultation with the

111

P.L. 87-195, § 621, 75 Stat. 445, 494, 87th Cong.1st sess. (1961), codified at 22 U.S.C. § 2381.

22 C.F.R. § 228.02.

113

22 C.F.R. § 228.03.

114

22 C.F.R. § 228.13.

115

22 C.F.R. §§ 228.21 & .22.

116

22 C.F.R. § 228.23.

117

31 U.S.C. § 5114(a)(2).

118

31 U.S.C. § 5114(a)(3).

112

Congressional Research Service

Domestic Content Legislation: The Buy American Act and Complementary Provisions

interagency working group, U.S. firms, and representatives from foreign countries, shall develop

mechanisms to identify potential energy projects in host countries. The authorized financial

assistance may be provided in combination with other forms of financial assistance, including

non-U.S. funding that is available to the project, and utilized to assist U.S. firms in the

development of innovative financing packages for renewable energy technology projects that

utilize other financial assistance programs available through the federal government.119 In

implementing this section, the Secretary, through the Agency for International Development, shall

ensure the maximum percentage, but in no case less than 50%, of the cost of any equipment

furnished in connection with a project authorized under this section shall be attributable to the

manufactured U.S. components of such equipment and the maximum participation of U.S.

firms.120

Clean Coal Technology Transfer Program: 42 U.S.C. § 13362

Like the Renewable Energy Technology Transfer Program, this program is not governed by the

Buy American Act for two reasons: (1) it does not involve direct purchases; and (2) the contracts

are conducted outside the United States. The Secretary of Energy, through the Agency for

International Development, and after consultation with the Clean Coal Technology working

group, U.S. firms, and representatives from foreign countries, shall develop mechanisms to

identify potential energy projects in host countries. The authorized financial assistance may be

provided in combination with other forms of financial assistance, including non-U.S. funding that

is available to the project, and utilized to assist U.S. firms in the development of innovative

financing packages for renewable energy technology projects that utilize other financial

assistance programs available through the federal government.121 In carrying out this section, the

Secretary, through the Agency for International Development, shall ensure the maximum

percentage, but in no case less than 50%, of the cost of any equipment furnished in connection

with a project authorized under this section shall be attributable to the manufactured U.S.

components of such equipment and the maximum participation of U.S. firms.122

Environmental Technology Transfer Program: 42 U.S.C. § 13387

This is another technology transfer program not governed by the Buy American Act for two

reasons: (1) it does not involve direct purchases; and (2) the contracts are performed outside the

United States. The Secretary of Energy, through the Agency for International Development, and

after consultation with the interagency working group, U.S. firms, and representatives from

foreign countries, shall develop mechanisms to identify potential energy projects in host countries

that substantially reduce environmental pollutants, including greenhouse gases. The authorized

financial assistance may be provided in combination with other forms of financial assistance,

including non-U.S. funding that is available to the project, and utilized in conjunction with

119

42 U.S.C. § 13316(c) & (d).

42 U.S.C. § 13316(j). In determining whether the cost of United States components equals or exceeds 50 percent,

the cost of assembly of such United States components in the host country shall not be considered a part of the cost of

such United States component.

121

42 U.S.C. § 13362(c) & (d).

122

42 U.S.C. § 13362(j). In determining whether the cost of United States components equals or exceeds 50 percent,

the cost of assembly of such United States components in the host country shall not be considered a part of the cost of

such United States component.

120

Congressional Research Service

Domestic Content Legislation: The Buy American Act and Complementary Provisions

financial assistance programs available through other federal agencies.123 In carrying out this

section, the Secretary, through the Agency for International Development, shall ensure the

maximum percentage, but in no case less than 50%, of the cost of any equipment furnished in

connection with a project authorized under this section shall be attributable to the manufactured

U.S. components of such equipment and the maximum participation of United States firms.124

The American Recovery and Reinvestment Act: P.L.

111-5

Section 1605 of the American Recovery and Reinvestment Act125 (ARRA) is the most well

known of the recent appropriation rider (temporary law) Little Buy American Acts. With this

enactment, Congress attached to all ARRA funds a Buy American requirement. It applies a super

percentage requirement to direct government purchases and to indirect purchases by non-federal

entities receiving these funds.

Section 1605 of ARRA provided that none of the funds appropriated or otherwise made available

by the act may be used for a project for the construction, alteration, maintenance, or repair of a

public building or public work unless all of the iron, steel, and manufactured goods used in the

project are produced in the United States.126 The requirement could be waived for public interest,

non-availability, or unreasonable cost (a 25% differential was used). If the head of a federal

department or agency determines that it is necessary to issue a waiver based on one of these

exceptions, the head of the department or agency was to publish in the Federal Register a detailed

written justification as to why the provision was being waived.127 The requirement is to be applied

in a manner consistent with U.S. obligations under international agreements.128

Author Contact Information

John R. Luckey

Legislative Attorney

jluckey@crs.loc.gov, 7-7897

123

42 U.S.C. § 13387(c) & (d).

42 U.S.C. § 13387(k). In determining whether the cost of United States components equals or exceeds 50 percent,

the cost of assembly of such United States components in the host country shall not be considered a part of the cost of

such United States component.

125

P.L. 111-5, § 1605, 123 Stat.115, 303, 111th Cong. 1st Sess. (2009). Because of the wide applicability of this

provision, a subpart, 25.6, was added to the Federal Acquisition Regulation (title 48 of the Code of Federal

Regulations). This new subpart applies to construction projects that use funds appropriated or otherwise provided by

ARRA.

126

Id. at (a).

127

Id. at (c).

128

Id. at (d).

124

Congressional Research Service

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.