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.
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.
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.