(1)  The article must be manufactured in the United States; and

(2)  The cost of domestic components must exceed 50 percent of the cost of all the components.   

b.  Exceptions.   When one of the following exceptions applies, FAA may acquire a foreign end product without regard to Buy American Act restrictions:

(1)   A supply purchase of $3,000 or less; 

(2)   The Administrator, in a written, nondelegable determination, states that preference for a domestic end item(s) is not in the public interest;

(3)   The Contracting Officer (CO) determines that articles, materials, and supplies are:

(a)   For use outside of the U.S.;

(b)   Unreasonable in terms of cost (see subsection d., below); or 

(c)   End items or components not mined, produced, or manufactured in the U.S. in sufficient and reasonably available commercial quantities and of a satisfactory quality.  When a competitive acquisition results in no offers of domestic end products, the end products can be considered unavailable in the U.S..  The articles listed in subparagraph e. below are considered unavailable domestically; or

(4)   The purchase is for commercial information resources (AMS Policy Appendix C defines commercial item and AMS Procurement Guidance T3.2.1 A.3.b. defines information resources).

c.  Documentation.   The CO must document any exception to the Buy American Act.

d.  Determining Reasonableness of Cost.  

(1)  This subsection applies to all acquisition of articles, materials, and supplies not covered by the below paragraph e. "Excepted Articles, Materials, and Supplies."   If  an offer for a domestic end product is not the low offer, and an offer for a foreign end product is the low offer, the CO must determine the reasonableness of the cost of the domestic offer by adding to the cost of the low foreign offer, inclusive of duty, evaluation percentages as follows: 

(a)  6 percent, if the lowest domestic offer is from a large business concern; or

(b) 12 percent, if the lowest domestic offer is from a small business concern.  The CO must use this factor in small business set-asides if the low offer is from a small business concern not offering a domestic end product.  

The increased percentage is for evaluation purposes only in determining best value.  It does not affect any vendor's offered price.  Examples of best value reasonableness of cost evaluation scenarios are as follows:

Example 1.   Lowest domestic offer is from a small business concern.   Because a small business is offering a domestic end product, every vendor offering a foreign end product will have the price for the foreign product increased by 12% only for evaluation purposes.

Offeror	Business Size	Domestic End Product	Foreign End Product CLIN	Evaluation Factor	Offer Price	Evaluated Price (including applicable evaluation factor)
A	Large		x	12%	$100.00	$112.00
B	Small		x	12%	170.00	190.40
C	Large	x		N/A	200.00	200.00
D	Small	x		N/A	175.00	175.00

The new adjusted prices will be used for evaluation purposes against all other vendors, and not just the vendor offering the domestic end product. 

Example 2.  Small business set-aside, low offer is from a small business concern offering the product of a small business concern that is not a domestic end product.

Offeror	Business Size	Domestic End Product	Foreign End Product of another small business concern CLIN	Evaluation Factor	Offer Price	Evaluated Price (including applicable evaluation factor)
A	Small		x	12%	$100.00	$112.00
B	Small	x		N/A	150.00	150.00
C	Small		x	12%	200.00	224.00
D	Small	x		N/A	175.00	175.00

The new adjusted prices will be used for evaluation purposes against all other vendors, and not just the vendor offering the domestic end product.

Example 3.  Lowest domestic offer is from a large business concern.

Offeror	Business Size	Domestic End Product	Foreign End Product of another small business concern CLIN	Evaluation Factor	Offer Price	Evaluated Price (including applicable evaluation factor)
A	Large		x	6%	$100.00	$106.00
B	Large	x		N/A	150.00	150.00
C	Small		x	6%	200.00	212.00
D	Large	x		N/A	175.00	175.00

The new adjusted prices will be used for evaluation purposes against all other vendors, and not just the vendor offering the domestic end product.

 

(2)   The price of the domestic offer is reasonable if it does not exceed the evaluated price of the low foreign offer after addition of the appropriate evaluation factor.

(3)    The evaluation factor does not apply to offers of Canadian or Mexican end products, or to civil aircraft and related supplies of countries that are parties to the Agreement on Civil Aircraft.  Offers of these products are considered domestic end products for evaluation purposes (see below “Trade Agreements” section).

(4)  The CO must apply the evaluation procedures to each line item of an offer unless either the offer or the solicitation specifies evaluation on a group basis.  The evaluated cost of each offer received is adjusted by any applied Buy American Act evaluation factor for each CLIN, as described in this subsection.

(5)  After applying the evaluation factor to the cost or price, the CO may determine which offer represents the best value for award purposes.

e.  Excepted Articles, Materials, and Supplies.  The following articles, materials or supplies are not mined, produced, or manufactured in the U.S. in sufficient and reasonably available commercial quantities of a satisfactory quality.  These items may be treated as domestic products for purposes of the Buy American Act requirements:

a. The Buy American Act requires that only domestic materials may be used in construction, alteration, or repair in the United States. 

b. Exceptions.

(1)  Buy American does not apply to a construction material purchase of $3000 or less.

(2)  The Administrator is the only person who may waive application of the Buy American Act to a construction material when Buy American Act requirements are not in the public interest.

(3)  The Buy American Act restrictions do not apply when the CO determines that:

(a) It is unreasonable in terms of cost; i.e., the cost of domestic construction material exceeds the cost of foreign construction material by more than 6 percent, unless the agency head determines a higher percentage to be appropriate (see Executive Order 10582);

(b) It is impracticable to use a particular domestic construction material; or

(c) The construction material is not mined, produced, or manufactured in the U.S. in sufficient and reasonably available commercial quantities, of a satisfactory quality.

(4)  For construction contracts with an estimated acquisition value of $8,422,165, Canadian and Mexican construction materials may be treated as domestic for purposes of Buy American Act restrictions, pursuant to the NAFTA Implementation Act.

c. Documentation. The CO should briefly document the file as to the basis for exception taken.

d. Excepted Material. The CO should list excepted materials in the contract. Documentation justifying the exception will be available for public inspection.

e. Offerors may submit alternate offers based on use of equivalent domestic construction material to avoid possible rejection of the entire offer, if the Government determines that an exception permitting use of a particular foreign construction material does not apply.

f. Noncompliance

(1)  The CO is responsible for conducting Buy American Act investigations when available information indicates such action is warranted.

(2)  Unless fraud is suspected, the CO must notify the contractor of the apparent unauthorized use of foreign construction material and request a reply, to include proposed corrective action.

(3)  If an investigation reveals that a contractor or subcontractor has used foreign construction material without authorization, the CO must take appropriate action, including one or more of the following:

(a) Process a determination with regard to inapplicability of the Buy American Act

(b) Consider requiring the removal and replacement of the unauthorized foreign construction material.

(c) If removal and replacement of foreign construction material incorporated in a building or work would be impracticable, cause undue delay, or otherwise be detrimental to the interests of the Government, the CO may determine in writing that the foreign construction material need not be removed and replaced. Such a determination to retain foreign construction material does not constitute a determination that an exception to the Buy American Act applies, and this should be so stated in the determination. Further, such a determination to retain foreign construction material does not affect the Government's right to suspend and/or debar a contractor, subcontractor, or supplier for violation of the Buy American Act, or to exercise other contractual rights and remedies, such as reducing the contract price or terminating the contract for default.

(d) If the noncompliance is sufficiently serious, consider exercising appropriate contractual remedies, such as terminating the contract for default. Also consider preparing and forwarding a report for suspension and/or debarment, including findings and supporting evidence. If the noncompliance appears to be fraudulent, consider referring the matter to other appropriate agency officials, such as the officer responsible for criminal investigation and prosecution.

a. This section implements the Buy American provisions of the Aviation Safety and Capacity Expansion Act of 1990 (Subtitle B of Title IX of Pub. L. 101-508, the Omnibus Budget Reconciliation Act of 1990), and Pub. L. 102-581, The Airport and Airway Safety, Capacity, Noise Improvement, and Intermodal Transportation Act of 1992, Title I, Sec. 103 and 104, (FAA Buy American) as these apply to the obligation of funds made available in appropriations after November 5, 1990.

b. Pursuant to Pub. L. 101-508, and notwithstanding any other provision of law, the CO will not obligate any funds authorized to be appropriated for any project unless steel and manufactured products used in such projects are produced in the United States. Projects funded by the Research, Engineering and Development appropriation are excluded from this provision.

c. The Administrator delegated all authority under subparagraph 3.a. to the heads of contracting activities (Director of Acquisition Policy and Contracting; Regional Administrators; and Center Directors. These individuals have authority to waive application the FAA Buy American when finding that:

d. There is no restriction against a company offering foreign steel or manufactured products in its proposal. The FAA, however, may not award to that company unless it is pursuant to one of the exceptions listed under paragraph c. above.

e. For the purposes of this section, in calculating components costs, labor costs involved in final assembly will not be included in the calculation.

f. Any acquisition of steel or manufactured products of the FAA not subject to Pub. L. 101-508 should be treated as covered under the Buy American Act (unless a Buy American Act exception applies). In the event of a conflict, the "Buy American-Steel and Manufactured Products" clause will take precedence over other Buy American Act-related clauses.

a. The Balance of Payments Program is applicable to contracts for supplies, services, or construction for use outside the United States, and provides for the use of excess or near-excess foreign currency. The Balance of Payments Program restrictions have been waived under certain circumstances under the North American Free Trade Agreement (NAFTA) Implementation Act.

b. Acquiring Foreign End Products. The FAA may acquire foreign end products or services for use outside the U.S. if any of the following conditions is met:

c. Documentation. The CO should briefly document the file if an exception to the Balance of Payments Program is applied.

d. Construction Material. Contracts will require use of domestic construction materials for construction, repair, or maintenance of real property outside the United States, except when the cost of these materials (including transportation and handling costs) exceeds the cost of foreign construction materials by more than 50 percent. A differential greater than 50 percent may be used when specifically authorized by the CO.

e. Procedures.

f. Foreign Excess Currency Program

b. When the local currency increases in value in relation to the dollar, a violation of the Anti-Deficiency Act (31 U.S.C. 665) could occur. To avoid this possibility, the FAA should ensure the availability of adequate dollar appropriations to purchase local currency needed to make payments against the contract.

a. FAA acquisitions are subject to the following trade-related acts:

(1) The NAFTA Implementation Act (Pub. L. 103-182, 107 Stat. 2057) which involves offers of Canadian or Mexican end products; and

(2) The Agreement on Civil Aircraft (19 U.S.C. 2513) which involves aircraft and related supplies from countries participating in the Agreement.

b. FAA acquisitions are not subject to the following trade-related acts:

c. North American Free Trade Agreement.

(1) As required by the NAFTA Implementation Act, the CO will evaluate offers of the following NAFTA country end products without regard to the restrictions of the Buy American Act or the Balance of Payments Program as follows:

(a) NAFTA country construction materials under construction contracts with an estimated acquisition value of $8,422,165 or more.

(b) Canadian end products under supply contracts with an estimated value equal to or exceeding $25,000 and Mexican end products under supply contracts with an estimated value equal to or exceeding $64,786 or more.

(c)  Canadian and Mexican end products under service contracts with an estimated value equal to or exceeding $64,786.

(2) To determine whether NAFTA applies to the acquisition of products by lease, rental, or lease-purchase contract (including lease-to-ownership, or lease-with-option-to purchase), the CO should calculate the estimated acquisition value as follows:

(a) If a fixed-term contract of 12 months or less is contemplated, use the total estimated value of the acquisition.

(b) If a fixed-term contract of more than 12 months is contemplated, use the total estimated value of the acquisition plus the estimated residual value of the leased equipment at the conclusion of the contemplated term of the contract.

(c) If an indefinite-term contract is contemplated, use the estimated monthly payment multiplied by 48.

(d) If there is any doubt as to the contemplated term of the contract, use the estimated monthly payment multiplied by 48.

(e) If a contemplated acquisition includes an option clause, when calculating the threshold for application of NAFTA provisions include the value of all options.

d. Civil Aircraft and Related Articles. The Buy American Act does not apply to acquiring civil aircraft and related articles of countries or instrumentalities that are parties to the Agreement on Civil Aircraft pursuant to a waiver from the U.S. Trade Representative, on February 19, 1980 (45 FR 12349, February 25, 1980). Countries and Instrumentalities that are parties to the agreement (as of January 1, 1996) are Austria, Belgium, Bulgaria, Canada, Denmark, Egypt, Finland, France, Germany, Greece, Ireland, Italy, Japan, Luxembourg, Macao, the Netherlands, Norway, Portugal, Romania, Spain, Sweden, Switzerland, and the United Kingdom. The Office of the U.S. Trade Representative, Washington, DC 20506 can provide information on the current list of parties to the agreement; or the current list may be located at: http://usinfo.state.gov/products/pubs/trade/glossac.htm.   For the purpose of this waiver, an article is a product of a country or instrumentality when:

(1) It is wholly the growth, product, or manufacture of that country or instrumentality; or

(2) In the case of an article that consists in whole or in part of materials from another country or instrumentality, it has been substantially transformed 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 so transformed.

e. This section "Trade Agreements" does not apply to:

(1) Purchases below an applicable dollar threshold cited in a trade agreement;

(2) Purchases under small or small disadvantaged business programs;

(3) Purchases indispensable for national security or for national defense purposes, subject to policies established by the U.S. Trade Representative.

(4) Research and development contracts;

(5) Purchases of items for resale;

(6) Purchases from Federal Prison Industries, Inc. and nonprofit agencies employing people who are blind or severely disabled.

a. Except as authorized by the Office of Foreign Assets Control (OFAC) in the Department of the Treasury, the FAA and its contractors and subcontractors must not acquire any supplies or services if any proclamation, Executive order, or statute administered by OFAC, or if OFAC'S implementing regulations at 31 CFR Chapter V, would prohibit such a transaction by a person subject to the jurisdiction of the United States.

b. Except as authorized by OFAC, most transactions involving Cuba, Iran, and Sudan are prohibited, as are most imports from North Korea into the United States or its outlying areas.  In addition, lists of entities and individuals subject to economic sanctions are included online in OFAC's List of Specially Designated Nationals and Blocked Persons. More information about these restrictions, as well as updates, is available in OFAC's regulations at 31 CFR Chapter V and/or on OFAC's website.

c.  Questions concerning the restrictions for foreign purchases may be addressed to:

Department of the Treasury

Office of Foreign Assets Control

Washington, DC 20220

(202) 622-2490

a. Treaties and agreements between the United States. and foreign governments affect contracting within foreign countries. The CO should determine the existence and applicability of any international agreement to contracts being planned or processed, and ensure compliance with these agreements.

b. When applicable, the CO should conduct the necessary advance acquisition planning and coordination between the appropriate United States executive agencies and foreign interests as required by these agreements.

c. Many international agreements are compiled in the "United States Treaties and Other International Agreements" series published by the Department of State. Copies of this publication are normally available in overseas legal offices and United States diplomatic missions.

d. All contracts with Taiwanese firms or organizations must be awarded through the American Institute of Taiwan (AIT).  AIT is under contract to the Department of State.

a. The CO should, whenever possible, include the clause "Audit and Records" in negotiated contracts with foreign contractors.

b. Exceptions. The clause may be omitted from contracts with foreign contractors in the following instances (authority cited for the HOA is not delegable):

c. Congressional Notification. When the CO does not include clause "Audit and Records," the CO will prepare and forward a determination to DOT/M-60 for inclusion in a report to Congress explaining why the omission of the clause will serve the interest of the United States. The determination should:

a. "Canadian end product" means an article that (a) is wholly the growth, product, or manufacture of Canada, or (b) in the case of an article which consists in whole or in part of materials from another country or instrumentality, has been substantially transformed in Canada 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. The term refers to a product offered for purchase under a supply contract, but for purposes of calculating the value of the end product includes services (except transportation services) incidental to its supply; provided, that the value of those incidental services does not exceed that of the product itself.

b. "Civil aircraft and related articles" means (a) all aircraft other than aircraft to be purchased for use by the Department of Defense or the U.S. Coast Guard; (b) the engines (and parts and components for incorporation into the engines) of these aircraft; (c) any other parts, components, and subassemblies for incorporation into the aircraft; and (d) any ground flight simulators, and parts and components of these simulators, for use with respect to the aircraft, whether to be used as original or replacement equipment in the manufacture, repair, maintenance, rebuilding, modification, or conversion of the aircraft and without regard to whether the aircraft or articles receive duty-free treatment under section 601(a)(2) of the Trade Agreements Act of 1979.

c. "Components" means those articles, materials, and supplies incorporated directly into the end products, or in the case of construction those articles, materials, and supplies incorporated directly into construction materials.

d. "Construction" means construction, alteration, or repair of any public building or public work in the United States.

e. "Construction Materials" means an article, material, or supply brought to the construction site for incorporation into the building or work. "Construction Material" also includes an item brought to the site pre-assembled from articles, materials, and supplies. However, emergency life safety systems, such as emergency lighting, fire alarm, and audio evacuation systems, which are discrete systems incorporated into a public building or work and which are produced as a complete system, shall be evaluated as a single and distinct construction material regardless of when or how the individual parts or components of such systems are delivered to the construction site.

f. "Customs territory of the United States," as it applies to customs and duties, means the States, the District of Columbia, and Puerto Rico.

g. "Domestic construction material" means (a) an unmanufactured construction material mined or produced in the United States, or (b) a construction material manufactured in the United States, if the cost of its components mined, produced, or manufactured in the United States exceeds 50 percent of the cost of all its components. (In determining whether a construction material is domestic, only the construction material and its components shall be considered.) The cost of each component includes transportation costs to the place of incorporation into the construction material and any applicable duty (whether or not a duty-free entry certificate is issued).

h. "Domestic end product" means (a) an unmanufactured end product mined or produced in the United States, or (b) an end product manufactured in the United States, if the cost of its components mined, produced, or manufactured in the United States exceeds 50 percent of the cost of all its components. (In determining if an end product is domestic, only the end product and its components shall be considered.) The cost of each component includes transportation costs to the place of incorporation into the end product and any applicable duty (whether or not a duty-free entry certificate is issued). Scrap generated, collected, and prepared for processing in the United States is considered domestic.

i. "Domestic offer" means an offered price for a domestic end product, including transportation to destination.

j. "Domestic services" means services performed in the United States. If services provided under a single contract are performed both inside and outside the United States, they shall be considered domestic if 25 percent or less of their total cost is attributable to services (including incidental supplies used in connection with these services) performed outside the United States.

k. "End product" means those articles, materials, and supplies to be acquired for public use under the contract.

l. "Foreign construction material" means a construction material other than a domestic construction material.

m. "Foreign contractor" means a contractor or subcontractor organized or existing under the laws of a country other than the United States, its territories, or possessions.

n. "Foreign end product" means an end product other than a domestic end product.

o. "Foreign offer" means an offered price for a foreign end product, including transportation to destination and duty (whether or not a duty-free entry certificate is issued).

p. "Foreign services" means services other than domestic services.

q. "Instrumentality" does not include an agency or division of the government of a country, but may be construed to include arrangements such as the European Union.

r. "Manufactured product" as it applies to "Buy American-Steel and Manufactured Products" means an item produced as a result of the manufacturing process.

s. "Manufacturing process" as it applies to "Buy American-Steel and Manufactured Products" means the application of processes to alter the form or function of materials or of elements of the product in a manner adding value and transforming those materials or elements so that they represent a new end product functionally different from that which would result from mere assembly of the elements or materials.

t. "Mexican end product" means an article that (a) is wholly the growth, product, or manufacture of Mexico, or (b) in the case of an article which consists in whole or in part of materials from another country or instrumentality, has been substantially transformed in Mexico 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. The term refers to a product offered for purchase under a supply contract, but for purposes of calculating the value of the end product includes services (except transportation services) incidental to its supply; provided, that the value of those incidental services does not exceed that of the product itself.

u. "North American Free Trade Agreement (NAFTA) country" means Canada or Mexico.

v. "NAFTA country construction material" means a construction material that (a) is wholly the growth, product, or manufacture of a NAFTA country or (b) in the case of a construction material which consists in whole or in part of materials from another country or instrumentality, has been substantially transformed in a NAFTA country into a new and different construction material distinct from the materials from which it was transformed.

w. "NAFTA country end product" means a Canadian end product or a Mexican end product.

x. "Sanctioned European Union (EU) construction" means construction to be performed in a sanctioned member state of the EU and the contract is awarded by a contracting activity located in the United States or its territories.

y. "Sanctioned EU end product" means an article that (a) is wholly the growth product or manufacture of a sanctioned member state of the EU or (b) in the case of an article which consists in whole or in part of materials from another country or instrumentality, has been substantially transformed into a new and different article of commerce with a name, character or use distinct form that from which it was so transformed in a sanctioned member state of the EU. The term includes services (except transportation services) incidental to its supply; provided, that the value of these incidental services does not exceed that of the product itself. It does not include service contracts as such.

z. "Sanctioned EU services" means services to be performed in a sanctioned member state of the EU when the contract is awarded by a contracting activity located in the United States or its territories.

aa. "Sanctioned member state of the EU" means Austria, Belgium, Denmark, Finland, France, Ireland, Italy, Luxembourg, the Netherlands, Sweden, and the United Kingdom.

bb. "Petroleum terms"

cc. "United States" as it relates to the Buy American Act or the Balance of Payments Program means the United States, its possessions, Puerto Rico, and any other place subject to its jurisdiction, but does not include leased bases or trust territories.