Trade Agreement TAA Compliant Countries :: Buy American Act Countries – Are You TAA. BAA Compliant?

Avoid Costly Mistakes, Hefty Fines, and Jail Time When Facing Trade Agreement TAA Compliant Deficiencies and Buy American Act Investigations, Civil and Criminal Cases. Federal Law Enforcement Agencies are now Targeting Contractors for not being BAA Compliant. Many companies make dangerous mistakes and find themselves facing costly penalties, jail time, and fines for BAA TAA compliance violations (including losing lucrative federal contracts in a bid protest.)

Many federal contractors guess whether or not their products comply with BAA or TAA requirements.  The DOJ is actively prosecuting small businesses are large government contractors with False Claims Act charges. When applying the rule for establishing Buy American Act countries and the TAA countries of origin, contractors doing business with the federal government should understand the basics of Buy American Act (BAA compliance.) Government contractors also find themselves facing BAA Investigations by the Department of Justice (DOJ) or other federal enforcement agencies for not complying with the rules. This can be an expensive and costly experience if your company does not have the proper checklists and training in place.

Starting around January 2020, small businesses and large contractors competing for federal government contracts must make that their goods meet the qualifying country requirements or risk disqualification from the federal contracting bidding processes. If your company wins a federal contract, you must still be able to defend a BAA protest or government investigation that challenges compliance with the Buy American Act countries or source of origin requirements. See also new rules in 2022.

1933 Buy American Act 48 CFR part 25 – Are You BAA Compliant?

The Buy American Act, 48 CFR part 25 applies to all U.S. federal government agency purchases of goods (articles, materials, or supplies) valued over the U.S. micro-purchase threshold (currently set at US$10,000). When purchased by federal entities for public use, the qualifying countries of the BAA require that these goods be produced or manufactured in the United States To be considered as being produced in the U.S., goods must be manufactured in the U.S. and at least 50% – 55% of the cost of their components must come from the U.S.

There are exceptions to Buy American qualifying country requirements. You can still become BAA compliant if waivers are granted by the contracting officer for the public interest, or if the cost of U.S. products is unreasonable compared to equivalent foreign products.

BAA country requirements waivers could be granted if your products are not produced in the U.S. in sufficient and reasonably available commercial quantities of satisfactory quality.

Buy American Act qualifying countries requirements do not apply to Canada for U.S. federal purchases covered by the revised World Trade Organization Agreement on Government Procurement (WTO GPA), to which Canada, the U.S. and 46 other countries are Parties (see below). When bidding on U.S. federal procurements covered by these agreements, Canadian suppliers benefit from the same treatment as American suppliers

Federal regulatory and Fair Trade enforcement authorities are now targeting small and large businesses and in some cases bringing criminal charges against companies and their executives. You want to avoid this disastrous result at all costs. When you submit a bid to the government, chances are that the Buy American Compliance Clause is incorporated. The submission of the offer constitutes an agreement to supply domestic end items. In bid protest litigation, if you do not provide information for the agency to validate or indicate that you are in compliance, it will be justified not granting you the award. See an example of a GAO case here.

Buy American Act (2021)

Under the BAA, a product. was required to meet a two-prong test to meet the “domestic end product test: (1) the end product must be manufactured in the U.S.; and (2) the product must also satisfy the domestic content requirement. In January 2021, the new Administration created two separate categories for the domestic content requirement: (1) for products that are made wholly or predominantly of iron or steel, the domestic content must be greater than 95% of the total cost of the end product; and (2) for any other manufactured products, the cost of those components must be more than 55% of the total product cost – unless the manufactured product is a commercially available off-the-shelf product (“COTS”) (See FAR 2.101).

The Final Rule does increase the domestic content requirement for other manufactured products – eventually imposing a 75% domestic content requirement to satisfy the second prong of the BAA. The FAR Council created an escalation process, which mandates (eventual) compliance with the 75% requirement by the calendar year 2029:

The BAA now uses a two-part test to define a domestic end product.

1. The article must be manufactured in the United States
2. The cost of domestic components must exceed 60% percent of the cost of all the components

What Is BAA Compliance?

The issue of BAA Compliance is substantially important in federal procurements; the statute requires the government to give a preference to supplies and construction materials that are “domestic end products” for use in the United States of America.

What are the Penalties for Buy American Act Non-Compliance?

The federal government awards billions in government contracts on an annual basis worth of contracts every year. Companies that win contracts but fail to demonstrate that they are BAA compliant can face several dangerous penalties including fines, suspension and debarment, criminal penalties and liability; investigation from the Department of Justice (DOJ) and other federal law enforcement offices; termination of government contracts, and public exposure and reputation. Having a Buy American Act compliance attorney that can provide guidance for BAA compliance of your day-to-day operations can be a great benefit.

Prime contractors are still on the hook for the liability of their subcontractors and manufacturers not complying with the Buy American Act countries compliance list. This does not mean that the subcontractor is off the hook. Flow-through clauses may allow the government to still target subcontractors for Buy American violations.

Examples of cases where companies violated the BAA countries or origin list include a military supplier who ended up paying $850,000 to settle breach of contract and False Claims Act allegations in New Jersey. In that case, a vehicle parts supplier was found selling items that were manufactured in prohibited Buy American Act countries.

Buy American BAA Certificates

Some contracts, such as those for the acquisition of supplies, require a Buy American certificate. The certificate is an attestation that each end product, barring those listed in the BAA certificate, is a product of the U.S. Non-domestically sourced end products are listed on the certificate along with their country of origin. These claims should be supported by due diligence into the origin of supplied goods and are legally binding.

Construction contracts are not required to submit a BAA certificate, however, contractors are obligated to submit a waiver at the time of offer submission. They must provide sufficient data for the government to evaluate their submission. Agencies are empowered to challenge a contractor’s submission when they have reason to believe the source of end products has been misrepresented.

What is a Buy American Act Compliance Letter?

Federal contractors must submit a Buy American Axt compliance letter when supplies or materials are covered by the BAA. This document is required to be submitted with your proposals/bids to the government under the Federal Acquisition Regulation (FAR) (48 CFR Part 25.1101(a) and 52.225-2). Under the FAR. you must certify according to the following:

(a) (1) The Offeror certifies that each end product, except those listed in paragraph (b) of this provision, is a domestic end product.

           (2) The Offeror shall list as foreign end products those end products manufactured in the United States that do not qualify as domestic end products.

           (3) The terms “domestic end product,” “end product,” and “foreign end product” are defined in the clause of this solicitation entitled “Buy American-Supplies.”

      (b) Foreign End Products:

More Scrutiny for Buy American Requirements

Initially signed in 1933, the Buy American Act applies to articles, materials, and supplies made for public use. An earlier executive order issued in 2017 required all agencies to assess their compliance with the Buy American Act and related legislation. While the order did not change the law, it signaled a shift toward greater scrutiny and enforcement of existing sourcing regulations and policy.

In past iterations of the act, allegations of non-compliance generally came from competing businesses or whistleblowers; however, the government also monitors activity. This means businesses that win contracts should be prepared to prove the country of origin of their products.

Buy America Vs Buy American Act

Numerous pieces of legislation place requirements on companies to source domestically or from allies. The Federal Trade Agreements Act is looked at differently than the BAA (TAA) in that it prohibits the government from procuring end products from non-designated countries but allows the government to purchase products from other “designated countries.” Under the Trade Agreements Act, the US President is authorized to waive domestic sourcing requirements including the BAA, to purchase eligible products from countries that have signed International Trade Agreements like the World Trade Organization Government Procurement Agreement (WTO GPA), NAFTA, Caribbean Basin Initiative, or others with the United States. The Act for the most part applies to federal government procurements that exceed the simplified acquisition threshold.

The Buy America Act is a set of requirements related to transportation projects, generally at the local and state levels. Buy America prevents government agencies from releasing funds for these projects unless “the steel, iron, and manufactured goods used in the project are produced in the United States.”

For BAA compliance, 100 percent of manufactured goods must be sourced from the U.S. and more than 70 percent of rolling stock (e.g. train control, communications, and other related equipment). Per FAR 52.225-2, a contractor will certify that:

             (1) each end product, except those listed in paragraph (b) of this provision, is a domestic end product.

           (2) The Offeror shall list as foreign end products those end products manufactured in the United States that do not qualify as domestic end products.

           (3) The terms “domestic end product,” “end product,” and “foreign end product” are defined in the clause of this solicitation entitled “Buy American-Supplies.”

There is still much confusion about the applicability of Buy America Act vs Buy American Act. The following bullets can simplify the application of the two areas. See 48 CFR part 25

• Buy American requirements apply to direct procurement (including purchase orders) by the United States federal government greater than US$10,000.  The underlying rules tend to guide and facilitate more American jobs and purchasing of American-made products. The rule focuses more on construction projects. The Buy American Act applies when the federal government is participating in the procurement of products or construction of a federal facility. The goods or products are qualified as domestic  so long as they are 100% manufactured in the United States and with at least 50% domestic content.
• Buy America requirements on the other hand apply to purchases of iron, steel and other manufactured products that are permanently incorporated into infrastructure projects. The rule also applies to contractor projects with the federal government, states and municipalities with funds issued by certain U.S. federal departments and agencies such as the U.S. Environmental Protection Agency (EPA), the U.S. Federal Transit Administration (FTA), the U.S. Federal Highway Administration (FHWA), the U.S. Federal Railroad Administration (FRA), Amtrak and the U.S. Federal Aviation Administration (FAA). Under the Buy America Act, end products must be 100% manufactured in the United States, and all steel and iron components MUST be mined, melted, and manufactured in the United States. 

See More on Buy American Act Frequently Asked Questions (FAQs)

Trade Agreements Act – Are You TAA Compliant?

The TAA generally applies to federal procurement for goods and services at or above $204,000, or construction projects equal to or above $7,864,000. The TAA does not apply to federal acquisitions that are small business set-asides, federal acquisitions of arms, ammunition, or war materials, or purchases indispensable for national security or for national defense purposes; (3) the government’s purchase of end products for resale; (4) federal acquisitions from Federal Prison Industries, Inc., or Nonprofit Agencies Employing People Who Are Blind or Severely Disabled; (5) other government acquisitions not using full and open competition; and (6) certain services listed in FAR 25.401(b).

If the Trade Agreements Act rules do not apply, then the Buy American Act applies.

TAA compliant meaning under federal GSA contracting rules means that your “final products” sold on your GSA schedule can only be produced in China, India, Indonesia, Iran, Iraq, Malaysia, Russia, Pakistan, and South Asia – to mention a few.

Articles that are entirely the creation, output, or manufacture of the United States or a designated country, or Articles that are “substantially transformed” into a new or distinct article of commerce in the United States or a designated country with a name, character, or use that differs from the original article or articles.
What is meant by “significantly altered” is frequently a topic of discussion. The GSA defines “significantly transformed” as a product that has undergone significant name, character, or usage change to constitute a new and different commerce article. For certain contractors, the term can still be challenging. We advise consulting your consultant or looking up FAR 52.225-5 on Trade Agreements if you have any doubts about whether your items pass the TAA compliance review. Naturally, we are always available to assist with any inquiries you may have regarding TAA.

What does a “TAA Compliant Product” Mean? When applying TAA rules, if your product comes from a designated country, it is considered “TAA compliant”. If you meet this requirement, then you are authorized to sell your product via your GSA contract.  You, as the contractor, are liable if your product is not TAA compliant.   Your products must be made in the U.S. or a designated country.   You should have a QA program in place to check your products for TAA compliance.

Your goods or services sold to the United States is TAA-compliant if manufactured or substantially transformed in the United States or manufactured in a TAA-designated country.  TAA designated countries include those that the United States has specific trade agreements in place and statutorily regard those designated TAA countries as reliable or acceptable procurement sources.

“Substantially transformed” is dealt with on a case-by-case basis. Courts have realized that no one case can be a broad brush for every situation that arises. When your business has a unique process in place before selling to the US government, you may want to invest in experienced BAA and TAA lawyers to assess whether you are BAA or TAA compliant.

To be TAA compliant, all of your products must qualify as U.S.-made or designated country-end products. TAA generally does not allow non-TAA-compliant products to be purchased if compliant products are offered.

To comply with the “U.S.-made or designated country end product rule”, the product must be manufactured in the United States or the designated country, or the product must be substantially transformed in the United States or the designated country into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was transformed. To be TAA compliant, the Country of origin is the country in which the end product was last “substantially transformed.” This is somewhat different from than application of the BAA, the “substantial transformation” test.  TAA compliance does not depend upon the relative value of the components. Be aware that simply because your product is TAA compliant, it does not automatically mean that the product is BAA compliant.

Do You Always Have to Meet TAA Compliance Rules? Can CO Issues a Waiver Under Fair Trade Agreements Act Rules? 

Government contracting officers have wide discretion to waive TAA compliance requirements for the Buy American Act qualifying countries’ laws and Buy American Act country of origin requirements under FAR 25  if he or she determines that the price of the lowest-priced domestic offer is unreasonable, or if there is another exception under Fair Trade and TAA rules. See more information contained in DFARS 251.225-7001.

Certain end products and construction materials from other countries can receive a nondiscriminatory evaluation when there are domestic offers.

• For FAR Buy American compliance, the acquisition’s dollar value drives which trade agreement applies.

There are various tests when finalizing a decision as to whether there is a violation of the Buy American Act countries list rule or Fair Trade compliance regulations. 

• Develop sound internal compliance policies
• Avoid liability for subcontractors and suppliers

The US government wants to know where all products are made. With the recent change in government and the continuing goal to make products in America, companies should be aware of the BAA compliance requirements, Trade America Act penalties, and liability for not properly identifying approved Buy American Act countries of origin. See Consequences of Procurement Fraud Schemes & Avoiding Criminal Liability.

• In 2005, three major suppliers of office products settled violation claims in the amount of $22 million.
• Companies find themselves in trouble mostly because they have no internal policies and controls to make sure that the business is not violating the rules and making sure that subcontractors and suppliers also follow the regulations.

List of BAA TAA Compliant Countries and List of Buy American Act Countries (BAA Compliant) 

DFARS Trade Agreement ACT TAA Compliance Countries – What is the Buy American Act Countries List Under FAR 25 Regulations? Are You BAA Compliant?

BAA TAA Designated country means any of the following countries:

           (1) A World Trade Organization Government Procurement Agreement (WTO GPA) country (Armenia, Aruba, Australia, Austria,, Belgium, Bulgaria, Canada, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hong Kong, Hungary, Iceland, Ireland, Israel, Italy, Japan, Korea (Republic of), Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Moldova, Montenegro, Netherlands, New Zealand, Norway, Poland, Portugal, Romania, Singapore, Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Taiwan (known in the World Trade Organization as “the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu (Chinese Taipei)”), Ukraine, or United Kingdom);

           (2) A Free Trade Agreement (FTA) country (Australia, Bahrain, Canada, Chile, Colombia, Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Korea (Republic of), Mexico, Morocco, Nicaragua, Oman, Panama, Peru, or Singapore);

           (3) A least developed country (Afghanistan, Angola, Bangladesh, Benin, Bhutan, Burkina Faso, Burundi, Cambodia, Central African Republic, Chad, Comoros, Democratic Republic of Congo, Djibouti, Equatorial Guinea, Eritrea, Ethiopia, Gambia, Guinea, Guinea-Bissau, Haiti, Kiribati, Laos, Lesotho, Liberia, Madagascar, Malawi, Mali, Mauritania, Mozambique, Nepal, Niger, Rwanda, Samoa, Sao Tome and Principe, Senegal, Sierra Leone, Solomon Islands, Somalia, South Sudan, Tanzania, Timor-Leste, Togo, Tuvalu, Uganda, Vanuatu, Yemen, or Zambia); or

           (4) A Caribbean Basin country (Antigua and Barbuda, Aruba, Bahamas, Barbados, Belize, Bonaire, British Virgin Islands, Curacao, Dominica, Grenada, Guyana, Haiti, Jamaica, Montserrat, Saba, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Sint Eustatius, Sint Maarten, or Trinidad and Tobago).

Designated country end product means a WTO GPA country end product, an FTA country end product, a least developed country end product, or a Caribbean Basin country end product.

Designated BAA and TAA Countries? What are They?

The designated countries are ones that are:

• World Trade Organization Government Procurement Agreement Countries (Australia, Germany, South Korea, Japan)
• Free Trade Agreement Countries (like Mexico, Canada, or Singapore)
• Least Developed Countries (Afghanistan, Cambodia, Samoa, Yemen, etc.)
• Caribbean Basin Countries (Antigua and Barbuda, Aruba, Bahamas, Curacao and such).

TAA compliance countries are designated countries and the United State. A current list TAA compliant countries list in FAR, part 25. Correspondingly, non TAA compliant countries are countries outside of this list, for instance, China, Russia, North Korea.

Buy American Country China and BAA Restrictions

Is Your Company BAA Compliant?

TAA compliant countries under FAR 25, and other Fair Trade Agreements Act regulations (Trade America Act), the Act limits the purchase of supplies that are non-domestic end products that will be used in the United States. This is very important when selling products to the government under a GSA Schedule. Contractors should also be aware of countries of origin that may impact the outcomes of cases alleging violations of the Act.  This is but one reason to have internal policies and controls to become BAA compliant. See How Does the President’s View on Buy American Statute and Buy America Impact Government Contractors?

Under other government contracting rules, knowing the various TAA compliance countries of origin when purchasing supplies and end products for sale to the federal government. See information about COTS CONTRACTS. Whether you are selling construction materials or IT products under the Trade Agreement Act, becoming BAA compliant is essential when doing business with the federal government.  Companies are now being subject to federal investigations and allegations of BAA non-compliance which leads to False Claims Act violations. Get more information about Buy American Act compliance items such as end products and meeting the 50% or 55% rule.

To establish TAA compliance, courts look at the Act’s list of qualifying countries of origin under the “substantial transformation” test. For purposes of reporting, government contractors should look at whether the manufacturing of end product is made in the USA or overseas, without looking at the origin of the components. This is especially true for Buy American Act construction materials and IT products. Learn about dealing with Buy American Act disputes in a bid protest. 

Are You Involved in a Qui Tam Buy American Act Case or BAA Criminal Investigation?

When the government targets a company that results from a qui tam case or the agency initiates a criminal investigation for BAA compliance issues, this is a serious matter that can involve both jail time and hefty civil fines. Our government contract lawyers can help by working with defense attorneys on your team.

Call Our TAA Compliance Lawyers and Buy American Act BAA Compliance Defense Attorneys 

For legal help becoming TAA and BAA Compliant under the Buy American Act countries list or if you need to Buy American consulting services, please call our BAA Buy American Act lawyers at 1-866-601-5518.