Tuesday, August 13, 2013

The Buy American Act and Other Not-So-Innocuous Clauses

When selling goods to the U.S. Government, a contractor must be aware of many contractual provisions that affect performance upon the contract. Buried within boilerplate language are clauses that alter what appears on the face of the contract. For instance, the request for certain goods may not state that country of origin is material, but within the boilerplate there will be included the Buy American Act (BAA).

Traditionally, the U.S. Government has preferred supplies originating in America through the BAA. In recent times this restriction has been relaxed by the Agreement on Governmental Procurement (GPA) and other trading agreements. BAA is largely inapplicable to supplies originating in countries that are signatories to the GPA.

What does this mean for the potential bidder? You must ensure that your products are sourced from the U.S. or countries who are signatories to the GPA. To offer goods from other countries would make you non-compliant and subject to contractual penalties.

However, if your non-U.S. country of origin appears on the GPA you are not yet in the clear. There are other requirements and amendments that place further restrictions on the origin of certain goods or classes of goods.

The Berry Amendment and other DoD specific restrictions limit foreign purchases of certain items to protect America’s ability to respond to national emergencies. These restrictions, applicable to most defense oriented goods, are designed to ensure that the U.S. can mobilize its armed forces without depending upon the supply of goods from potentially hostile countries or across contested shipping channels. Some goods from close allies, such as Canada, are allowed as substitutes, but each specific situation requires careful analysis with all current and applicable regulations.

Before Submitting Your Bid

Before bidding on a contract for the supply of goods, you must understand the source requirements for the goods and know whether your offered solution will be compliant with the requirements. This is doubly important in defense contracting where the restrictions are tighter. Ignorance is not an excuse, and even
where the U.S. ‘forgets’ to include a standard term required by Congress, the contractor is charged with knowing the term should be included. If you are at all uncertain of the proposed contract or your bid, reach out to a professional consultant who can answer these questions and ensure you and your company don't wind up non-compliant.

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