The presidential memoranda signed on January 24, 2017, by President Trump relating to the Keystone XL and Dakota Pipelines included a message of particular significance to the government contractor community: Buy American.
The Presidential Memorandum Regarding Construction of American Pipelines directs the Secretary of Commerce to “develop a plan under which all new pipelines, as well as retrofitted, repaired, or expanded pipelines . . . use materials and equipment produced in the United States, to the maximum extent possible and to the extent permitted by law.” After signing the presidential memoranda, President Trump stated, “I am very insistent that if we’re going to build pipelines in the United States, the pipe should be made in the United States.”
On the campaign trail, President Trump frequently touted his plans for restoring the manufacturing and industrial bases in the United States. Now, within days of taking office, President Trump appears to be following through on at least one of his two simple rules: “Buy American and hire American.” The administration’s preference for domestic materials and equipment on the pipeline projects may be telling of its plans for imposing new domestic preference requirements on government contractors, increasing enforcement of the Buy American Act, and perhaps curtailing the viability of the Trade Agreements Act, which allows contractors to procure materials and supplies from countries that have entered into a trade agreement with the United States under certain conditions.
Time will tell how the new administration will shape domestic preference requirements for government contractors. In the meantime, contractors should evaluate their compliance with existing domestic preference laws, regulations and contract requirements, prepare for potential new obligations, and anticipate heightened enforcement activity in this area.