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Posted on Monday, May 15, 2017

What President Trump’s “Buy American” Executive Order Means for Contractors

On April 19, 2017, President Trump signed his “Buy American and Hire American” Executive Order. The Executive Order does not actually change any existing Buy American laws, but states a renewed commitment to enforcing those laws that are already in place. Given the administration’s stated promises to promote U.S. manufacturing, Federal contractors should not wait to see how agencies implement this Executive Order before taking steps to ensure compliance.

The Executive Order emphasizes the current administration’s policy of enforcing and ensuring compliance with existing statutes, regulations, and rules establishing a preference for purchasing American-made products in the Federal government marketplace. The Executive Order defines Buy American laws as “all statutes, regulations, rules, and Executive Orders relating to Federal procurement or Federal grants including those that refer to ‘Buy America’ or ‘Buy American’ that require, or provide a preference for, the purchase or acquisition of goods, products, or materials produced in the United States, including iron, steel, and manufactured goods.”

The Executive Order is directed at agencies, not contractors; however, Federal contractors will arguably feel the greatest impact. Specifically, the Order directs agency heads to:

(i) assess the monitoring of, enforcement of, implementation of, and compliance with Buy American Laws within their agencies;

(ii) assess the use of waivers within their agencies by type and impact on domestic jobs and manufacturing; and

(iii) develop and propose policies for their agencies to ensure that, to the extent permitted by law, Federal financial assistance awards and Federal procurements maximize the use of materials produced in the United States, including manufactured products; components of manufactured products; and materials such as steel, iron, aluminum, and cement.

As a result of these directives, Federal contractors can expect agencies to increase their efforts in monitoring and enforcing contractor compliance. This may lead to an increase in civil or criminal False Claims Act violations, qui tam lawsuits, contract terminations, suspensions, and debarment. Thus, contractors should assess their existing Buy American compliance policies, procedures, and practices, and take steps to ensure that appropriate personnel understand these rules and regulations.

Contractors should act now to determine which Buy American and domestic preference rules apply to their contracts; confirm that Contracting Officers have inserted the correct clauses into any contracts or newly issued solicitations; review or create internal compliance processes, including providing training to appropriate personnel within the company, such as those involved in bidding on or managing contracts; and audit their existing contracts and programs to ensure compliance.

Each new administration comes in with its own goals. The Obama administration emphasized pro-employee policies that included numerous guidelines for Federal contractors and, through the use of Executive Orders, directed agencies to increase monitoring and enforcement of existing employment and labor laws. Since the early days of his presidential campaign, President Trump has stressed that his focus is on American manufacturing and the hiring of American workers, beginning with the Federal marketplace. As a result, Federal contractors can expect to see an increase in monitoring and compliance regarding existing Buy American policies and should not wait to take the necessary steps to ensure compliance.

Berenzweig Leonard is teaming up with Red Team Consulting for a monthly newsletter featuring upcoming contracts, key protest decisions, legal updates, events, and more. This post was published in the May 2016 Monthly Insights newsletter.  For more information on how to sign up for Monthly Insights, please click here.

Stephanie Wilson is the Co-Director of Government Contracts for Berenzweig Leonard, LLP, and can be reached at swilson@berenzweiglaw.com.