'Buy American:' Parts not included

by Mark Silva

That Buy American provision in the $787-billion economic stimulus act may not be as protectionist as its sponsors thought it might be.

The Obama administration will allow products sold to the government under the stimulus plan's purchasing power to contain components made overseas, rules issued by the General Services Administration today specified, Bloomberg News notes.

The American Recovery and Reinvestment Act required a made in the U.S.A. standard for products purchased under the stimulus. The GSA could have required that not only the products, but also all of their components, are domestic.

The GSA rules will likely have little impact on contractors familiar with existing product-source rules, David Burgett, a lawyer at Hogan & Hartson LLP in Washington, has told Bloomberg News. "Theoretically, they could have come out with a much more complex rule," says Burgett, who advises companies on how to comply with these rules. "Companies have learned how to deal with these kinds of rules."

For instance: "The definition of domestic construction material under this interim rule does not include a requirement relating to the origin of the components of domestic
manufactured construction material.''

After Senate negotiators agreed to amend the legislation to certify that the Buy American order will be implemented "consistent with international obligations," the main effect of the law wass to exclude Chinese, Indian and Brazilian suppliers from the new contracts. European nations and Canada and Mexico have signed trade deals that guarantee their ability to bid on U.S. government contracts. China, India and many other developing nations haven't.

The rules were published today in the Federal Register.