Government Contracts Monitor

The “Buy American and Hire American” Executive Order Is Here; Stay Tuned for What It Means for Federal Contractors and Grant Recipients

April 19, 2017

This Tuesday, President Trump signed a new Executive Order in Kenosha, Wisconsin. Speaking to a group of technical students and manufacturing employees prior to the signing ceremony, the President explained that the Order would “aggressively promote [the] use of American-made goods” and “ensure that American labor is hired to do the job.” Senior administration officials took up the President’s populist message, touting the “Buy American and Hire American” Executive Order as a remedy for American manufacturers and workers who have been hurt by lax enforcement of “Buy American Laws” and employer abuses of the H1-B visa program. Rather than taking direct action to address these issues, the Executive Order signals a more aggressive approach and initiates a number of specific reviews and assessments by federal departments with the goal of reforming current practices. Only time will tell, however, whether, how, and to what extent these new efforts impact federal contractors and grant recipients.

The new Order makes clear that the policy of the executive branch is “to buy American and hire American”.

In order to promote buying American, the Executive Order announces a policy “to maximize, consistent with law, through terms and conditions of Federal financial assistance awards and Federal procurements, the use of goods, products, and materials produced in the United States.” To that end, the Order focuses on changes in the implementation and contours of “Buy American Laws”, which are defined 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.”

Federal agencies are required to take specific actions according to a fairly aggressive schedule. The required actions include:

Every agency must “scrupulously monitor, enforce, and comply with Buy American Laws, to the extent they apply, and minimize the use of waivers, consistent with applicable law.”
Within 60 days, the Secretary of Commerce and the Director of the Office of Management and Budget, in consultation with the Secretary of State, the Secretary of Labor, the United States Trade Representative, and the Federal Acquisition Regulatory Council, must issue guidance to agencies about how to make the assessments and to develop the policies required by the Order.
Within 150 days, all agency heads must (i) assess their agency’s monitoring of, enforcement of, implementation of, and compliance with Buy American Laws; (ii) assess their agency’s use of waivers by type and impact on domestic jobs and manufacturing; and (iii) develop and propose policies “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.”
Within 150 days, all agency heads must also submit findings made pursuant to those assessments to the Secretary of Commerce and the Director of the Office of Management and Budget.
Within 150 days, the Secretary of Commerce and the United States Trade Representative must assess the impacts of all United States free trade agreements and the World Trade Organization Agreement on Government Procurement on the operation of Buy American Laws, including their impacts on the implementation of domestic procurement preferences.
Within 220 days, the Secretary of Commerce, in consultation with the Secretary of State, the Director of the Office of Management and Budget, and the United States Trade Representative, shall submit to the President a report on Buy American that includes findings from items (c), (d), and (e) above and specific recommendations to strengthen implementation of Buy American Laws, including domestic procurement preference policies and programs.
Subsequent reports on implementation of Buy American Laws shall be submitted by each agency head annually on November 15 throughout President Trump’s first term and in subsequent years as directed by the Secretary of Commerce and the Director of the Office of Management and Budget. The Secretary of Commerce shall submit to the President an annual report based on these submissions beginning January 15, 2019.

In addressing Buy American concerns, the Order places special emphasis on the judicious use of public interest waivers. More particularly, to the extent permitted by law, (i) “public interest waivers from Buy American Laws should be construed to ensure the maximum utilization of goods, products, and materials produced in the United States”; (ii) the head of the cognizant agency must “make the determination regarding public interest waivers” relating to the subject Federal financial assistance award or Federal procurement; and (iii) before granting such a waiver, the agency “must take appropriate account of whether a significant portion of the cost advantage of a foreign-sourced product is the result of the use of dumped steel, iron, or manufactured goods or the use of injuriously subsidized steel, iron, or manufactured goods” and “integrate any findings into its waiver determination as appropriate”.

With respect to hiring American, the Executive Order states that the policy of the executive branch is “to rigorously enforce and administer the laws governing entry into the United States of workers from abroad, including section 212(a)(5) of the Immigration and Nationality Act (8 U.S.C. 1182(a)(5)).” In order to advance this policy, the Order directs “the Secretary of State, the Attorney General, the Secretary of Labor, and the Secretary of Homeland Security [to], as soon as practicable, and consistent with applicable law, propose new rules and issue new guidance, to supersede or revise previous rules and guidance if appropriate, to protect the interests of United States workers in the administration of our immigration system, including through the prevention of fraud or abuse.” Similarly, with the goal of promoting “the proper functioning of the H1-B visa program”, the Order directs “the Secretary of State, the Attorney General, the Secretary of Labor, and the Secretary of Homeland Security [to], as soon as practicable, suggest reforms to help ensure that H-1B visas are awarded to the most-skilled or highest-paid petition beneficiaries.”

Perhaps not surprisingly, the Executive Order also expressly states that it will be “implemented consistent with applicable law and subject to the availability of appropriations” and that nothing in it “shall be construed to impair or otherwise affect: (i) the authority granted by law to an executive department or agency, or the head thereof; (ii) the functions of the Director of the Office of Management and Budget relating to budgetary, administrative, or legislative proposals; or (iii) existing rights or obligations under international agreements.

All of this makes it essentially impossible to gauge the Order’s ultimate impact with a reasonable degree of confidence. All that can be said for sure is that the new Administration wants to find ways to put “America first” via changes in the implementation and shape of relevant laws, regulations, and agency procedures. Given the acknowledged potential tension between putting America first and the requirements of existing law and international agreements, the range of potential outcomes is wide. Stay tuned. We will continue to monitor and report on developments.

Attorneys

Lindsay Simmons