Buy American: What It Might Mean for Construction

Bethany Stough
November 2, 2017
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On April 18, 2017, President Trump signed the “Buy American and Hire American” Executive Order. With respect to Buy American, the executive order calls on federal agencies to “scrupulously monitor, enforce, and comply with [existing] Buy American laws, to the extent they apply, and minimize the use of waivers, consistent with applicable law.” To aid in this, the executive order requires:

  • The secretary of commerce and director of the office of management and budget to issue guidance to federal agencies on how to monitor, enforce and comply with Buy American laws. 
  • Federal agencies to assess their compliance with Buy American laws, develop policies to comply with Buy American laws, and to report their findings.
  • The secretary of commerce to submit a report to the president with recommendations on how to strengthen implementation of Buy American laws.

According to the timeline set in the EO, the president will likely receive a report from the secretary of commerce in November. Currently, there are no new Buy American requirements in effect until the president receives the report and determines how to proceed. 

The new Buy American EO seeks to more strongly and consistently enforce the requirements of current Buy American product purchasing laws currently on the books, including the Buy American Act of 1933, which was established during the Great Depression but has been modified throughout the years. According to Dodge Data & Analytics, as it stands today, the act's definition of American-made requires that “51 percent of the constituent components of a given product have to be made in America.” The product must also be “substantially transformed” in some way by American labor, meaning that the product must undergo some kind of change in this country.

Sources say it is difficult to predict how the enforcement of Buy American legislation will shape federal construction projects in the future.  

“In the long term, the more heightened enforcement of Buy American provisions likely means increased costs of procuring materials domestically and heightened risk of material shortages on federal projects,” says Amandeep S. Kahlon, associate for law firm Bradley Arant Boult Cummings LLP

Kahlon warns contractors who operate overseas to anticipate reactionary legislation or laws from countries with which they do business. Additionally, he says that when bidding future federal work, contractors may not be able to rely on past practices with respect to the granting of waivers.

In the construction industry, there also are concerns over steel, in particular, “too strict a definition of what constitutes U.S.-made steel products,” says Ken Simonson, chief economist of the Associated General Contractors of America. Simonson cited concerns with steel that might have been melted down from scrap metal that could have come from outside the United States, for example, and tracing its origins before that point.

The move was welcomed by labor unions, however. The United Steelworkers said that under current practice, “contractors often try to avoid the law through loopholes to buy cheap and often substandard foreign products like many from China.”

Thomas Gibson, chief executive of lobby group the American Iron and Steel Institute, said in a statement that Buy American provisions “are vital to the health of the domestic steel industry, and have helped create manufacturing jobs.”

Stough is managing editor for Glass Magazine, GlassMagazine.com and e-glass weekly. Write her at bstough@glass.org.