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Caleb McCullough
By Caleb McCullough December 16, 2024

Biden strengthened Buy American rules, but contractors still manufacture outside U.S.

President Joe Biden strengthened requirements for the government to buy U.S.-made goods, but the government still issues federal contracts to companies that make products outside the country. 

Biden's economic agenda emphasized rebuilding the nation's manufacturing capacity and keeping manufacturing jobs in the U.S. As part of that, he promised to give government contracts only to companies that make all their products in the U.S.

Biden did not stick to that promise. 

To buy only items made entirely in the U.S., or from companies that manufacture only in the U.S., would be impossible in the modern economy, William Reinsch, a trade specialist at the Center for Strategic and International Studies, said. Multinational corporations with manufacturing bases in several countries around the world often receive the most government contracts. 

Even when companies build products in the U.S. they often use global supply chains and source parts from outside the country. 

Nevertheless, Reinsch said Biden "probably did more than previous presidents to try to reach 100%" of contracts going to companies that manufacture in the U.S.

Biden worked to strengthen existing requirements that the government buy products that are mostly made in America. The Buy American Act, passed during the Great Depression in 1933, has required the U.S. government to buy more U.S.-made products. There have long been loopholes, exemptions and loose definitions of what counts as U.S.-made. 

Biden signed an executive order early in his presidency aimed at tightening Buy American rules.

His administration also issued a federal rule increasing what percentage of a product had to be American made to qualify for the Buy American law. The rule said that to comply with the law, a product must have at least 60% of its components made in the U.S., up from the previous 55% requirement. By 2029, that standard will increase to 75%.

Some top government contractors have manufacturing plants around the world. Defense contractors such as Lockheed Martin Corp. and Raytheon Technologies Corp. have their defense manufacturing largely based in the U.S., but also operate manufacturing bases abroad.

Dell Technologies, which has received billions in federal contracts, operates factories in India, Poland, Malaysia and Ireland. Drugmaker Pfizer has production plants worldwide, including in India, France and Germany.

The federal government often also grants waivers to Buy American rules if a good — such as bananas, cocoa beans and chrome ore — is not readily available from a domestic source. But in October, Biden's administration proposed a rule to reduce the list of exempt items. The proposed change removed 70 products from the exemption, yielding the shortest list since the rules began. The rule has not taken effect yet and is open for public comments until Dec. 23. 

The $1.2 trillion Bipartisan Infrastructure Law Biden signed in 2021 included a "Build America Buy America" stipulation that requires the construction materials used in federally funded infrastructure projects to be sourced from the U.S.

Although Biden took steps to strengthen Buy American rules, he did not fulfill his promise that "not one" contract would go to a contractor that doesn't have products fully made in the U.S., a pledge that one expert called impossible in the modern economy.  We rate this Promise Broken.

PolitiFact chief correspondent Louis Jacobson contributed to this report.

Our Sources

Acquisition.gov, Part 25 - Foreign Acquisition, Nov. 12, 2024

White House, Executive Order on Ensuring the Future Is Made in All of America by All of America's Workers, Jan. 25, 2021

White House, FACT SHEET: Biden-Harris Administration Issues Proposed Buy American Rule, Advancing the President's Commitment to Ensuring the Future of America is Made in America by All of America's Workers, July 82, 2021

Lockheed Martin, Lockheed Martin in Poland, accessed Dec. 11, 2024

Raytheon UK, Weapons, accessed Dec. 11, 2024

Dell, Public Supplier List, accessed Dec. 11, 2024

Pfizer, Pfizer Global Sites, accessed Dec. 11, 2024

White House, Fact Sheet: Biden-Harris Administration Proposes to Further Strengthen "Made in America" with Shortest Exception List in History, Oct. 21, 2024

White House, FACT SHEET: Biden-Harris Administration's Progress Creating a Future Made in America, July 24, 2024

Email interview with William Reinsch, Scholl chair in international business at the Center for Strategic and International Studies, Nov. 21, 2024

Jon Greenberg
By Jon Greenberg June 21, 2021

White House moves on new Buy American guidelines

The same day that President Joe Biden sat down at the G-7 meeting in England to renew America's ties with its closest economic and geopolitical partners, back home, his administration released a plan to have the U.S. buy fewer foreign-made goods. 

A June 11 memo from the Office of Management and Budget was Biden's latest step toward making good on a campaign promise. 

"The president has control of $600 billion, handing out contracts for construction, Biden said Nov. 2, 2020. "For everything from building aircraft carriers, to public housing. Well, here's the promise I'm making to you, not one single contract will be let to a contractor who doesn't have products that are all made in America."

Since 1933, in the depths of the Great Depression, the U.S. has had the Buy American Act. It requires the government to buy American made goods whenever possible.

But there are waivers and exceptions. If, for example, the goods aren't made in the U.S., or the domestic versions are much more expensive, then agencies can buy the product outside America's borders. There is also a broad exception for many defense and other national security related products.

In his first week in office, Biden signed an executive order aimed at reducing the loopholes that allow government agencies to buy foreign made goods.

The June 11 memo laid out the steps it would take over the next several months. Those included building a website to make it easier to see what sort of waivers agencies had requested, and targeting foreign-made goods that could likely be made in the U.S. The ultimate goal, the memo said, is  to "increase U.S.-made content and limit the use and impact of waivers."

It's important to not be misled by Biden's reference to $600 billion in contracting. That includes both goods and services. The scope of the Buy American Act is much narrower. The Government Accountability Office said that as of 2017, about 40% of all government contracting, about $200 billion, was subject to the act. 

And of the $200 billion, only $7.8 billion were foreign made goods. The buying of goods used outside the U.S.( for example, a military base buying local products) accounted for about half of the $7.8 billion. Waivers pure and simple accounted for $700 million.

The numbers today would be different, but the GAO report suggests that tightening waiver rules will have a limited impact on overall federal spending patterns.

Still, Wiley, a large Washington law firm with a sizeable practice of companies selling to the government, told its clients to be on their guard with the new policy.

"While there are many open questions about what this will mean in practice, the bottom line is that it is likely going to be more difficult for agencies to waive Made in America laws," the firm wrote June 15.

William Reinsch, a trade specialist at the Center for Strategic and International Studies, said waivers are the smaller part of the administration's agenda. The bigger issue is defining what counts as domestic.

"If an item is assembled in the U.S. with more than 50% U.S. content, the entire item counts as 'American' for Buy American Act purposes," Reinsch said. "What that means is that items with as much as 49% foreign content are considered American products. That is what the administration plans to change."

Those changes fall under a related promise we are tracking on tightening the Made in America rules. One detail to note however: That definition is unlikely to fall to zero foreign content to be considered American-made. So, Biden's full promise to buy products that are "all made in America" doesn't appear to be in the cards.

As for this promise on buying American, we rate it In the Works.

 

Our Sources

White House, New Steps to Help Ensure the Future is Made In America, June 11, 2021

White House Office of Management and Budget, Increasing opportunities for domestic sourcing, June 11, 2021

Acquisition.gov, Part 25 - Foreign Acquisition, March 10, 2021

White House, Executive Order on Ensuring the Future Is Made in All of America by All of America's Workers, Jan. 25, 2021

Wiley LLP "Made in America" Follow-Through: OMB Guidance on Steps to Strengthen U.S. Supply Chains, Reduce Domestic Content Waivers, June 15, 2021

Congressional Research Service, The Buy American Act and Other Federal Procurement Domestic Content Restrictions, March 31, 2021

Government Accountability Office, Actions Needed to Improve Exception and Waiver Reporting and Selected Agency Guidance, December 2018

Government Executive, Federal Contract Spending Reaches Its Highest Level Ever in Fiscal 2019, June 26, 2020

Office of Sen. Sherrod Brown, Brown, Portman, Peters, Braun Reintroduce 'Build America, Buy America' legislation, April 22, 2021

Federal Aviation Administration, AIP Buy American Preference Requirements, May 18, 2021

Email exchange, William Reinsch, Scholl chair in international business, Center for Strategic and International Studies, June 21, 2021

 

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