Government Contracts Blog : Government Contracts Lawyer & Attorney : Sheppard Mullin Law Firm : Bids, Licenses, Awards, Conflict of Interest.

By David S. Gallacher

On March 25, 2010, the Office of Management and Budget ("OMB") offered three small, yet significant, amendments to the rules implementing the "Buy American" requirement of the American Recovery and Reinvestment Act of 2009 (Section 1605 of the "Recovery Act" or "ARRA"). See 75 Fed. Reg. 14323. The new rules do liberalize the requirement – at least a little bit – allowing increased flexibility in delivering products from Canada and Taiwan under State or local construction projects funded by the Recovery Act. But be aware that these new amendments are prospective – if you already have a contract funded by the Recovery Act, you will more than likely need to modify your contract to take advantage of these new revisions (assuming you are able). If you are pursuing future business opportunities funded by the Recovery Act, then you may be able to take advantage of the new rules. Easy, right? Not exactly. If you have to deal with these issues in real life, your head is probably already spinning. Let's sit down and talk for a minute. 
 

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Nearly one year ago on February 17, 2009, President Obama signed into law the American Recovery and Reinvestment Act of 2009 (Pub. L. No. 111-5), more commonly known as the Stimulus Act, the Recovery Act, or ARRA. One of the key features of the Act included a "Buy American" requirement, requiring domestically manufactured "iron, steel, or manufactured goods" to be used in Recovery Act funded projects (located at Section 1605 of the Act). This requirement has proven to be a collossal headache for vendors supporting Recovery Act projects and has also proven to be immensely complicated for the good men and women in Government (including those at the State and local levels), who are faced with the task of figuring out how, where, and when the Recovery Act Buy American requirement applies. 
 

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Effective January 1, 2010, the U.S. Trade Representative (USTR), Ronald Kirk, published new dollar thresholds determining the applicability of the Buy American Act (BAA), the Trade Agreements Act (TAA), and (potentially) other "Buy American" preferences to the United States' various international free trade agreements. See 74 Federal Register 68907 (December 29, 2009). The changes to the dollar thresholds are effective through the end of 2011, so it is doubtful that we will see any additional escalation until 2012. 
 

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In early July, we discussed that fact that Taiwan would soon be an approved country of origin for purposes of the Trade Agreements Act.  This was, in our view, good news and a welcome development.

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On June 16, 2009, Taiwan (aka Chinese Taipei) took the penultimate step in acceding to the World Trade Organization's Government Procurement Agreement (WTO GPA), which will eventually grant Taiwan "free trade partner" status under the Federal Acquisition Regulation (FAR) and allow companies selling to the U.S. Government to deliver products that are manufactured in Taiwan. The accession process is expected to be complete by July 15, 2009. After that date, and once the FAR is updated accordingly, "Made in Taiwan" will finally be an approved country of origin for products and services delivered to the U.S. Government.
 

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On February 17, 2009, President Obama signed into law the American Recovery and Reinvestment Act of 2009 (Pub. L. No. 111-5), known popularly by a variety of names, including “ARRA,” the “Recovery Act,” and the “Stimulus Act.” We have previously discussed many of the provisions relating to the Recovery Act at some length, especially the implementing regulations that were recently published this spring.
 

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On January 15, 2009, the Government issued a final rule adjusting the dollar thresholds at which the Trade Agreements Act ("TAA") applies to U.S. Government procurements.  See 74 Federal Register 2745.  The changes were originally enacted as an interim rule in February 2008 (see 73 Federal Register 10962 and 73 Federal Register 16747; see also 72 Federal Register 71166; 72 Federal Register 73904), raising the threshold to account for inflation from $193,000 to $194,000 for most procurements involving countries that have agreed to the World Trade Organization Agreement on Government Procurement ("WTO GPA").  For other Free Trade Agreements ("FTAs") with countries such as Australia, Mexico, and Singapore, the threshold is raised from $64,786 to $67,826.  Details on the application of the TAA and the revised thresholds are outlined in FAR Subpart 25.4.
 

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