On Tuesday, April 18, 2017, President Trump signed an Executive Order, “Buy American and Hire American” (the “Order”), affirming the commitment of the federal government – and of the Trump administration specifically – to promoting the acquisition of American-made goods and services. While seen as a continuation of Trump’s campaign promises to bolster American manufacturing and production, the Order is unlikely to have an immediate impact on contractors, and any specific changes to the federal procurement system will develop over the coming months and years as a result of the Order.
Buy American and related domestic preference regimes require federal agencies to acquire or preference American-made products. Numerous exceptions to these regimes exist, however, particularly where federal agencies determine a waiver of the requirements is in the public interest or where a trade agreement exists with designated countries. The Order directs agencies to curtail and reassess the use of these exceptions through a series of agency-level assessments and recommendations within the next two to seven months. Until these assessments and recommendations are made, federal contractors will be left with little guidance as to what changes, if any, the Order will effect.
Notwithstanding the fact that the Order offers little concrete guidance for contractors, the Order nevertheless offers general parameters that contractors should consider. The results of the agency-level assessments and recommendations over the coming months almost certainly will lead to directives that agencies should issue fewer and fewer domestic preference waivers, should increase enforcement activity to ensure compliance, and should avoid procuring any materials made from foreign steel, iron or other manufactured goods that have been found to be unfairly traded. Ultimately, it will become more difficult for contractors and U.S. manufacturers that rely on global sourcing for raw materials and components to satisfy domestic preference requirements for federal government procurement opportunities. Accordingly, contractors are well-advised to assess their domestic preference compliance efforts and prepare for these expected changes.