On April 18, 2017, President Trump signed the “Buy American Hire American” Executive Order (“EO”).  The EO restates the policy of the government to buy American.  Federal agencies are required to make an assessment of what the EO calls the “Buy American Laws” aimed at maximum use of United States materials. The EO states that “it shall be the policy of the executive branch to maximize, consistent with law . . . the use of goods, products, and materials produced in the United States,” however, no measurable definition of “maximize” was provided in the EO.  The EO also requires the Secretary of Commerce and the United States Trade Representative “to assess the impacts of all United States free trade agreements and the World Trade Organization Agreement on Government Procurement on the operation of Buy American Laws, including their impacts on the implementation of domestic procurement preferences.”  These reviews are designed to ensure that American companies are treated equitably by assessing the impact of these agreements on the Buy American Laws.

Importantly, the EO reaffirms that in order for iron and steel products to be considered “Produced in the United States,” all manufacturing processes must take place in the United States.  The reaffirmation of Buy American Laws will undoubtedly assist U.S. manufacturing, especially if the review of trade agreements results in any curtailment of foreign manufactures’ ability to be exempt from the Buy American Act.  The EO also has the potential to limit companies who previously benefited from U.S. Government procurements and grants through waivers and exemptions to Buy American requirements.  The EO sets up the following timeline from the date of the EO:

  • Within 150 days, agencies are to assess monitoring, enforcement and compliance with Buy American Laws; assess waivers and their impact on domestic jobs and manufacturing; and develop policies to ensure federal procurements and assistance awards maximize the use of materials produced in the United States.
  • Within 150 days, agencies findings are made pursuant to the assessments required and submitted to the Secretary of Commerce and Director of Office of Management and Budget.
  • Within 150 days, the Secretary of Commerce and U.S. Trade Representative assess the impact of free trade agreements and WTO Agreement of Government Procurement on Buy American laws.
  • Within 220 days, the Secretary of Commerce in consultation with Secretary of State, and U.S. Trade Representative, based on the assessments and findings required within 150 days, will make specific recommendations to strengthen Buy American Laws.

The goal of the aggressive timeline is to strengthen Buy American requirements by November 2017.  Agencies must complete their assessments and submit their findings within the same 150-day timeline.

The EO also seeks to limit the use of waivers of Buy American requirements, and requires agency heads to make the decision on whether a waiver is in the public interest.  Before issuing a waiver, the agency head must consider whether a significant portion of the cost advantage of a non-U.S. product is the result of dumped steel, iron or manufactured goods.

Bottom Line

It is reasonable to anticipate that this EO will result in the strengthening of Buy American requirements through stricter enforcement.  Additionally, review of the impact of trade agreements will likely result in an increase in U.S. manufacturers access to federal procurements, as well as federal grants used to fund transportation projects.  Staying up to date and following the developments of the EO timeline is critical for companies to take advantage of new opportunities to supply American products to the U.S. Government and federally funded projects.