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Buy America Act (BAA)
What is the Buy America Act? It is an act that was introduced in 1933 during the Great Depression and was intended to promote and increase U.S. jobs and industry. The BAA applies to supply and construction contracts between $10,000 and the dollar threshold for Trade Agreements Act (TAA). Supply and construction contracts with an estimated value greater than the micro-purchase threshold, which is currently set at $10,000, and less than the TAA Threshold are subject to the BAA. The TAA Threshold, established bi-annually by the US Trade Representative (USTR), and is set for calendar years 2020 and 2021 at $182,000 for supply contracts and $7,008,000 for construction contracts. It has not yet been updated for 2022-2023.
For a good to qualify for BAA the Domestic End product or construction material must be mined or produced in the U.S. if it is an unmanufactured good (48 C.F.R. § 25.003). If the good is manufactured the End Product must then be manufactured in the U.S. and the cost of its components must exceed 55% of domestic mined, produced or manufactured goods (48 C.F.R. § 25.101(a).). The cost is measured at the component level only, the subcomponent cost is not considered.
Commercially available off-the-shelf (COTS) items are common, commodity-type products that are widely available in the commercial market. The Federal Acquisition Regulation (FAR) defines a COTS item as any item of supply, including construction material, that is:
- A commercial item as defined in Section 2.101(1) of the FAR.
- Sold in substantial quantities in the commercial marketplace.
- Offered to the federal government, under a contract or subcontract at any tier, without modification, in the same form in which it is sold in the commercial marketplace.
COTS items are exempt from the BAA’s component cost test. Consequently, COTS items need only be manufactured in the US to comply with the BAA. Contractors do not need to demonstrate that domestic components represent 55% of the item’s cost (48 C.F.R. § 25.001(c)(1)).
If you have any questions about applicability of BAA on your goods, would like any additional information on this topic or any other trade matter please call Allyn at 239-489-9900 or email email@example.com.
Contributor: Heather Oskvarek
About Allyn International
Allyn International is dedicated to providing high quality, customer centric services and solutions for the global marketplace. Allyn's core products include transportation management, logistics sourcing, freight forwarding, supply chain consulting, tax management and global trade compliance. Allyn clients range from small local businesses to Fortune 500 firms. Allyn conducts business in more than 20 languages and has extensive experience in both developed and emerging markets. Highly trained experts are positioned throughout North and South America, Europe and Asia. Allyn’s regional headquarters are strategically located in Fort Myers, Florida, U.S.A., Shanghai, P.R. China, Prague, Czech Republic, and Dubai, U.A.E. For more information, visit www.allynintl.com