Legal Insights

By: Lindsay Simmons

On January 31, 2019 President Trump signed yet another Executive Order addressing Buy American issues: Buy American, Hire American [here]. This Order requires that federal agencies purchase U.S. goods and services in any and all infrastructure projects including, interestingly, cybersecurity projects. Among other things, this recent Order underscores the Trump Administration’s policy of enforcing and strengthening existing domestic preference requirements.  Some of the key practices agencies must follow are to –

            First, maximize the use of “iron and aluminum, as well as steel, cement, and other manufactured products,” produced in the U.S.  This applies downstream — to all contracts and subcontracts;

            Second, extend the domestic preference policy to any infrastructure project receiving “federal financial assistance” directly or indirectly (through state and local programs); and

            Third, report to the President on “any tools, techniques, terms, or conditions that have been used or could be used” to effectuate this policy.

The January 31^st Order augments and strengthens Trump’s first “Buy American and Hire American” EO released in April 2017.

Certain large, federally-funded infrastructure projects — such as rail, airport and highway projects — have long been subject to rigorous Buy American requirements, including the Buy America Act (which applies to Federal Transit Authority projects). With respect to these undertakings, the intent of the January 31^st Order appears to be to emphasize that compliance with domestic preference schemes is more important than ever before.

Against this backdrop of clear concern by the current Administration that agencies abide by and enforce Buy America requirements, government contractors and subcontractors, as well as those involved in projects that are federally-funded (in whole or in part), should ask the following questions:

• Are there any foreign-made electronic components in your end products?
• Do you supply software or cybersecurity solutions to a prime contractor, first tier subcontractor under a prime government contract or directly to the government under a prime contract?
• Have you in the past or are you currently executing a certificate of Buy American compliance?
• Prime contractors often require subcontractors and suppliers to certify compliance with Buy American preferences, often within purchase orders. What process do you have in place to make certain that Buy American certification decisions are being made by the appropriate personnel?
• Certain prime or higher tier subcontractor requests for Buy American certification may not be appropriate or applicable.  In order to ascertain what applies to you, you likely need information regarding the federal prime contract. Do you have it?
• Contractors and subcontractors need to determine whether to sign a certification which, if completed inaccurately, can lead to a False Claims Act violation. What process do you have in place?
• Have you audited your “Buy American” compliance?
• There are multiple “Buy American” schemes. You need to know which domestic preference system applies to your federally-funded projects. How do you make these determinations?
• Have your employees received Buy American training?
• Do you have the appropriate internal processes to, for example, make certain that employees involved in bidding on or managing federally-funded projects have been trained in Buy American requirements?
• Are you a foreign company selling products to prime contractors working on federally-funded projects? If so, you need to know the domestic preference rules and how they apply to you when you are involved in such projects.
• Do your products include components from countries that are not on the list of “designated countries”, for example, China or India?  
• Are your products listed on the Veterans Administration Schedule?

President Trump’s January 31^st Executive Order is a warning:  contractors and subcontractors involved in federally-funded projects should anticipate an increase in the enforcement of the domestic preference rules.  What does this mean?  It means more scrutiny by agencies with respect to your bids and proposals, more scrutiny by your prime or higher tier subcontractors of your products, more requests for Buy American certifications and, last but by no means least, more prosecution by the government of missteps under the False Claims Act. 

Lindsay Simmons is responsible for the contents of this article.
©Jackson Kelly PLLC 2019