The Buy American Act, passed in Congress in 1933, requires that the U.S. government, when procuring materials, purchase U.S. made products over foreign products. Essentially, it attempts to protect domestic labor by providing a preference for American goods in government purchases. In determining what classifies American goods, the place of mining, production or manufacture are taken into consideration.
SEC. 1605 of the American Recovery and Reinvestment Act of 2009 reads as follows:
USE OF AMERICAN IRON, STEEL, AND MANUFACTURED GOODS.
a) None of the funds appropriated or otherwise made available by this Act may be used for a project for the construction, alteration, maintenance, or repair of a public building or public work unless all of the iron, steel, and manufactured goods used in the project are produced in the U.S.,
b) Subsection (a) shall not apply in any case or category of cases in which the head of the Federal department or agency involved finds that—
1) applying subsection (a) would be inconsistent with the public interest;
2) iron, steel, and the relevant manufactured goods are not produced in the U.S. in sufficient and reasonably available quantities and of a satisfactory quality; or
3) inclusion of iron, steel, and manufactured goods produced in the U.S. will increase the cost of the overall project by more than 25 percent.
c) If the head of a Federal department or agency determines that it is necessary to waive the application of subsection (a) based on a finding under subsection (b), the head of the department or agency shall publish in the
Federal Register a detailed written justification as to why the provision is being waived.
d) This section shall be applied in a manner consistent with U.S. obligations under international agreements.
American Recovery and Reinvestment Act
On Feb. 13, 2009, Congress passed the American Recovery and Reinvestment Act of 2009. As a direct response to the economic crisis, the Recovery Act has three immediate goals:
- Create new jobs and save existing ones
- Spur economic activity and invest in long-term growth
- Foster unprecedented levels of accountability and transparency in government spending
The Recovery Act intended to achieve those goals by providing $787 billion in
- Tax cuts and benefits for millions of working families and businesses
- Funding for entitlement programs, such as unemployment benefits
- Funding for federal contracts, grants and loans
In 2011, the original expenditure estimate of $787 billion was increased to $840 billion to be in line with the President’s 2012 budget and with scoring changes made by the Congressional Budget Office since the enactment of the Recovery Act.
Exemptions to ARRA:
1) Where the head of the federal agency concerned determines adherence would be inconsistent to public interest.
2) Where iron, steel and material products are not produced in the U.S..
The full ARRA bill available online.
This statute requires that all iron and steel used on projects funded wholly or in part by the Federal Highway Administration, Federal Railroad Association or Federal Transit Administration must be made in America. The program was created in 1982 under The Surface Transportation Assistance Act. Section 165 of this act contains the basic Buy America statute that applied to Federally funded highway construction projects. In 1991, Congress enacted the Intermodal Surface Transportation Efficency Act (ISTEA), which narrowed the Buy America requirement to just steel and iron materials and clarified Congressional intent that the application of a coating is a manufacturing process and is protected under Buy America.
Exemption to the Buy America requirement:
1) The statute does not prevent a minimum use of foreign steel and iron materials if the cost of such materials used does not exceed one-tenth of one percent of the total contract cost or $2,500, whichever is greater.
2) The application of the provisions would be inconsistent with public interest.
3) Steel and iron products are not produced in the U.S. in sufficient and reasonably available quantities.