The FAR Buy American Act, 41 USC 10(a)-10d (2000 and Supp. I 2001), provides for the acquisition of American materials and goods for public use. The exception to the rule is that such an acquisition is inconsistent with the public interest or the cost is unreasonable.
If there is a domestic offer that is not the low offer, and the restrictions of the Buy American Act requirements apply to the low offer, the contracting officer must decide the cost reasonableness of the domestic offer by adding an evaluation factor (of either 6 or 12 percent for civilian agency procurements, Federal Acquisition Regulation FAR 25.105(a), or 50 percent for Department of Defense procurements, DFARS 225.105) to the low offer.
FAR Part 25 Basic FAR Buy American Requirements Analysis in GAO Bid Protests
Under the FAR Buy American Act requirements, the price of the domestic offer is reasonable if it does not exceed the evaluated price of the low offer after addition of the evaluation factor. FAR Part 25.105(c). In the case of manufactured end products, the FAR uses a two-part test to define a domestic end product:
1. The article must be manufactured in the United States, and
2. The cost of domestic components (i.e., components mined, produced, or manufactured in the U.S.) must exceed 50 percent of the cost of all components. FAR Part 25.003 and 25.101; see also DFARS 225.101 and 41 USC 10(a).
The FAR defines “component” as an article, material, or supply incorporated directly into an end product. FAR 25.003. In government contract bid protests involving an end product derived from a single component or material, GAO looks at the FAR Buy American Act requirements to see whether the component/material has undergone substantial changes in physical character in determining whether manufacturing has occurred. See A. Hirsh, Inc., B-237466, Feb. 28, 1990, 90-1 CPD ¶ 247 at 3; 45 Comp. Gen. 658 (1966).
Two Distinct Phases Test for Buy American Act Requirements 41 USC 10a
GAO protest decisions show that under the Buy American requirements, when the original material is of foreign origin and there is no evidence of two distinct manufacturing phases yielding two distinct products, then there is noncompliance with the two-pronged test for defining a domestic end product.
When filing a bid protest or intervening in a case where the Buy American requirements are at issue, arguments about the two-part test is critical to sustaining the protest under 41 USC 10a.
For help filing a bid protest about the FAR Buy American Act requirements, contact our GAO bid protest lawyers at 1-866-601-5518. FREE INITIAL CONSULTATION.