Selling to the Government: What You Need to Know

How do the Buy America Act and the Berry Amendment affect your business if you’re trying to sell to the government?

Selling to the Government: What You Need to Know

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The topic of this installment on selling to the government is what many refer to as Federal Procurement Domestic Content Restrictions, or laws which restrict the procurement of goods by the federal government to those Made in the USA. 

Many have heard of the Buy America Act and others of the Berry Amendment, but they are often conflated because they sound alike. This article will help you sort it out and differentiate between the various rules. However, there are reams of documentation that govern the application of these laws, so you’ll probably want to do some in-depth research if any of these apply. 

As taxpayers, we should appreciate that the stated goal of the federal government when it spends taxpayer dollars is that they are “spent on American-made goods by American workers and with American-made component parts.”

Let’s start with the most commonly applied rule, the Buy America Act, which was passed into law in 1933 and is the first of the major domestic content restriction laws. It requires federal agencies to apply a price preference for “domestic end products” and construction materials. It’s pretty broad, and with our international supply chain, almost everything we use has foreign-sourced components. The general rule is that the 60% or more of the value of the item must come from U.S. sources. Naturally, with higher labor and production costs, this means that American goods cost more, so the government offers price preferences for domestic goods. 

You may have also heard of the Trade Agreement Act of 1979. Products that are afforded waivers from BAA restrictions are said to be “TAA Compliant.” There is a list of countries of origin that are included in TAA, and it is occasionally updated as we enter new treaties. 

The Berry Amendment originated during World War II and was passed as an amendment each year by Congress until 1993, when it became permanent law. It applies solely to the Department of Defense (DoD), requiring them to purchase certain items that have been entirely grown, reprocessed, reused or produced within the United States, with certain exceptions. DoD is also subject to a specialty metals restriction, which requires that certain types of steel and metal alloys contained in aircrafts, missile and space systems, ships, tank and automotive items, weapon systems, ammunition or any components thereof purchased by DoD be melted or produced in the United States. Those metal restrictions can be important when it comes to components, so it’s best to acquaint yourself with your supply chain if you provide metal components to the military. The same goes for clothing and individual equipment. Know the country of origin of any gear you want to sell to the military, and that will guide you on how to sell it. 

Passed into law in 2009 as part of the American Recovery and Reinvestment Act, the Kissel Amendment, named after its sponsor, then-Representative Larry Kissell (D-NC), required Department of Homeland Security (DHS), when using appropriated funds directly related to national security interests, to buy textiles, clothing and footwear from domestic sources in a similar vein to Berry. However, in practice, it has only applied to the Transportation Security Administration (TSA), because the federal government had entered into commitments under the World Trade Organization Agreement on Government Procurement (WTO GPA), which allowed the U.S. government to procure imported goods from the countries on the TAA list. Consequently, the rest of DHS followed Buy America Act rules. 

This eventually led to a new law passed last year called the Homeland Procurement Reform Act or HOPR Act. What it basically does is echo some of the requirements laid down in Berry and apply them to all of DHS to ensure that procurement of certain items, such as body armor and other protective gear, meets specified requirements, including that a fraction of procurement funds be used for items manufactured by U.S. small businesses. For instance, Customs and Border Protection uniforms have been manufactured in Mexico, of all places. That’s because prior to the enactment of HOPR, DHS was allowed to consider Mexico as part of the U.S. for procurement despite any operational concerns of uniforms falling into the wrong hands. 

Interestingly, DHS personnel are afforded an annual uniform budget. Realizing that American-made uniforms and accessories will be more expensive, the law also directs DHS to study increasing the annual uniform allowance by up to 50%. 

For each of these rules, there are exceptions. The most commonly encountered is the threshold, which is based on a dollar value. For BAA, it’s $10,000, meaning the domestic sourcing restriction doesn’t apply if the purchase is for less than $10,000. For Berry, it’s $150,000. These are often referred to “micro purchases.” However, in neither case can a government purchaser do an end-run around the law by breaking a big purchase up into a bunch of small ones. They can’t buy the same thing over again until the next fiscal year. Since this is generally accomplished with the Government Purchase Card, there is auditing of such transactions. 

Another BAA exception is for commercial information technology buys like computers and televisions. One of Berry’s more interesting exceptions is that DoD entities may procure textile-based products overseas if they will only be used overseas and will be destroyed rather than returned to the United States. This can be helpful when unforeseen specialized equipment is needed for a short duration, like extreme cold-weather or mountaineering gear. 

This article has offered a familiarization with the various forms of federal procurement domestic content restrictions. State and local governments may have similar directives establishing where products must be manufactured, so it’s best to familiarize yourself with any restrictions. Also, it never hurts to ask, as generally, domestically sourced products are more expensive than those made offshore. In some cases, you may be able to offer more than one option so that the government buyer can see the difference in price in cases where they want to provide price preferences to domestic products, like with the Buy America Act. 


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