UNDERSTANDING HOW RECENT CHANGES TO THE BUY AMERICAN ACT WILL AFFECT THE QUALIFICATION THREASHOLD OF AMERICAN MADE STAINLESS, GALVANIZED, AND BRIGHT CARBON STEEL WIRE ROPE.
On January 19th 2021, President Trump signed into law his July 2019 executive order making changes to the Buy American Act. The Buy American Act serves two primary functions - to define what is considered a domestic end product and to give a price preference to companies offering domestic products vs foreign items for use in the federal market.
Since the 1950's, the Buy American Act has defined a domestic item as one in which the cost of domestic components must exceed 50% of the cost of all components. With the executive order mentioned above, this threshold has been updated for most products to 55% of the cost of all components. However, iron and steel end products (Such are steel wire rope) were separated out into their own category. To be considered an iron or steel end product of domestic origin, the cost of domestic components must exceed 95% the cost of all components. The threshold for being considered an American Made end product is significant, because meeting this sourcing requirement will give American companies and American manufacturers preferential treatment during the procurement process.
The second pillar of the Buy American Act, the price preference, also saw a significant change. For procurement where the Buy American Act applies, the calculated bid pricing from a company offering a foreign end product (that not meeting the American Made content as defined above), will include an adder (increase) when compared to a domestic item offered against the same contract. That adder varies depending upon the size of the American Manufacturer making the product: from a large business the adder is 20%, and a 30% increase when compared to a domestic item offered by a small business.
For example, in the case of a procurement request issued for 1,000 feet of 3/4" type 302/304 6x37 wire rope for a new Corp of Engineers dam project, two bids are received: imported (product of Korea) material is offered at $20.00 per foot and large American manufacturer's product is offered at $23.00 per foot. In determining the award, the price used for comparison will be $24.00 (+20% of bid price for the Korean material) and $23.00 , with the award going to the large American manufacturer. Had the product been from a small American manufacturer, the imported material's bid would have been calculated at $26.00 (+30%) for comparison, again with the outcome being an award to the American Made manufacturer of wire rope.
This new standard is an increase from 6% and 10%, respectively. As a note, the price preference is used for evaluation purposes only, and is not the price the agency will actually pay.
These changes become effective on February 22nd - but more changes are expected later this year. On January 25th, President Biden signed an executive order directing further changes to the law. On the surface, it appears the changes will be far reaching. One of the high points from the order include the establishment of the Made in America Office to ensure enforcement of the Buy American Act, a mechanism that has been lacking at the contract level for many years, and will likely expose loopholes in the system, mainly in the exemption process for products "not reasonably available" in the United States. The order also discussed creation of methods to actively seek out domestic suppliers of wire rope and aircraft cable, and further increases to the Made in America pricing preference requirements addressed above.
With the focus on supporting American manufacturers and American workers through changes to the Buy American Act, Strand Core believes it's important to keep their customers current on the regulations that affect source and supply of American Manufactured Steel wire rope products. As an American Manufacturer, Strand Core's products qualify for the new 95% American Made requirement of this act -- in fact our stock stainless steel wire ropes are 100% Made in the USA! Should your next project be funded by federal dollars, or have any level of domestic material sourcing requirement, don't hesitate to contact us. We have products in stock and ready to ship to your facility or your job site, proudly Made in the USA by American Workers.