Buy American Act: Actions Needed to Improve Exception and Waiver Reporting and Selected Agency Guidance

GAO-19-17 Published: Dec 18, 2018. Publicly Released: Dec 18, 2018.
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Fast Facts

The law requires federal agencies to buy domestic products. But federal agencies can buy foreign products sometimes, e.g., when domestic items are not available at a reasonable cost or when international trade agreements waive the Buy American Act restrictions.

According to the federal procurement database, foreign products comprised less than 5% of what the government bought in fiscal year 2017. The real amount could be higher than that, in part, because of data errors. For example, some agencies had inaccurately recorded waiver information.

We recommended ways to improve reporting and compliance with the act.

 

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Highlights

What GAO Found

According to data reported in the Federal Procurement Data System-Next Generation (FPDS-NG) in fiscal year 2017, foreign end products accounted for less than 5 percent—about $7.8 billion—of federal obligations for products potentially subject to the Buy American Act. Federal agencies procured foreign products using exceptions to Buy American Act requirements, as well as through waivers or when the Buy American Act did not apply, as shown in the figure.

Federal Obligations for Foreign End Products, Fiscal Year 2017

Federal Obligations for Foreign End Products, Fiscal Year 2017

The amount of foreign end products purchased could be greater than reported in FPDS-NG, however, due to reporting errors and system limitations. GAO found that 6 of the 38 contracts reviewed from the Departments of Defense (DOD), Health and Human Services (HHS), Homeland Security (DHS), and Veterans Affairs (VA) inaccurately recorded waiver or exception information. FPDS-NG system limitations compound these errors because it does not fully capture Buy American Act data. Among other things, the database does not always enable agencies to report the use of exceptions or waivers on contracts for both foreign and domestic products, reducing data accuracy. The Office of Management and Budget (OMB) is considering strategies to improve Buy American Act data.

The four agencies GAO reviewed varied in their approaches to Buy American Act training and guidance. DOD reports that it will have trained more than 18,000 personnel by the end of 2018. DHS reports training almost 1,400 people—approximately 94 percent of its contracting staff—as of April 2018. Some VA courses mention the Act, but none is focused specifically on implementing its requirements. HHS does not have agency-level training or guidance on the Act. GAO found that contracting officers for the contracts it reviewed face challenges implementing Buy American Act requirements. Having specific and targeted Buy American Act guidance and training can better ensure that agencies meet the Act's requirements.

Why GAO Did This Study

The Buy American Act of 1933, as amended, is the main U.S. law promoting domestic purchasing. The Act permits agencies to buy foreign end products only under certain exceptions, such as when domestic items are not available at a reasonable cost. Further, U.S. trade agreements waive the Buy American restrictions for certain products.

GAO was asked to review implementation of the Buy American Act. This report assesses the extent to which (1) the federal government procures foreign products through Buy American Act exceptions and waivers; and (2) selected agencies provide training and guidance to implement the Act.

GAO reviewed laws, regulations, and policies related to the Buy American Act and analyzed data for fiscal year 2017 from FPDS-NG. GAO also analyzed a non-generalizable sample of 38 contracts from DOD, HHS, DHS, and VA—the agencies with the most obligations for products in fiscal year 2017. The 38 awards selected include a mix of foreign and domestic products, as well as dollars obligated. Finally, GAO interviewed cognizant contracting and policy officials from the selected agencies.

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Recommendations

GAO is recommending that OMB take steps to improve Buy American Act data and that HHS, DHS, and VA improve agency guidance and training on implementing the Act. All of the agencies either concurred or generally concurred with GAO's recommendations.

Recommendations for Executive Action

Agency Affected Recommendation Status
Office of Management and Budget
Priority Rec.
This is a priority recommendation.
The Director of the Office of Management and Budget should instruct the Office of Federal Procurement Policy: (1) To facilitate additional training to improve the understanding of the contracting workforce regarding the Buy American Act requirements; and (2) To facilitate clarifying revisions to FPDS-NG, where needed, and provide training and guidance for recording Buy American Act information in FPDS-NG to improve the accuracy of the Buy American data. (Recommendation 1)
Open
The Office of Federal Procurement Policy (OFPP) within OMB generally concurred with our recommendation, but as of April 2022, needs to take actions to implement it. Specifically, OFPP needs to facilitate additional training to ensure the contracting workforce at federal agencies is able to identify whether a Buy American Act exception or trade agreement waiver is applicable and subsequently, record this information accurately in FPDS. OFPP needs to facilitate clarifying revisions to FPDS to reduce data entry errors and ensure the data collected are complete and accurate. Until OFPP takes these actions, the contracting workforce at federal agencies may face challenges applying Buy American Act requirements appropriately and recording related information in FPDS accurately--potentially hindering congressional oversight.
Department of Homeland Security The Secretary of Homeland Security should clarify existing guidance in the Homeland Security Acquisition Manual or update training to help contracting officials: (1) Identify the factors that should be considered in order to determine the applicability of the Trade Agreements Act and waiver of the Buy American Act; (2) Document determinations of the use of Buy American exception for domestic non-availability and ensure the required approvals are obtained, particularly when such determinations are evidenced through justifications for other than full and open competition; and (3) Identify sources of information available for determining product origin and the steps they should take to verify information that is inconsistent. (Recommendation 2)
Closed – Implemented
In July 2019, DHS addressed all three parts of our recommendation, either by updating its Buy American Act training, guidance, or both. For example, DHS updated its Buy American Act training to include: (1) factors that should be considered when determining the applicability of the Trade Agreements Act and the available Buy American Act waiver; (2) available sources of information for determining product origin; and (3) a practice scenario in which a vendor provides inconsistent country of origin information to remind contracting officials to confirm the origins of end products. Further, DHS developed a template for FAR-required written justification for contracts awarded under other than full and open competition to contain a section for identifying use of the Buy American Act domestic non-availability exception, if applicable, and appropriate levels at which use of the domestic non-availability exception must be approved.
Department of Veterans Affairs The Secretary of Veterans Affairs should clarify existing guidance, or provide training or other instruction, to help contracting officials: (1) Address the applicability of the Buy American Act requirements and provide instruction on how to implement the requirements, including in any training developed to implement the Veterans First policy; (2) Identify the factors that should be considered in order to determine the applicability of the Trade Agreements Act and waiver of the Buy American Act; and (3) Identify sources of information available for determining products' origins and the steps they should take to verify information that is inconsistent. (Recommendation 3)
Closed – Implemented
The Department of Veterans Affairs (VA) concurred with our three-part recommendation and has taken actions to address each part of the recommendation. VA revised its "Procurement Policy Memorandum 2017-12", on April 9, 2019, to better clarify its existing Buy American Act guidance and highlight key factors contracting staff should consider when determining the applicability of Buy American Act exceptions and waivers. Additionally, in October 2019, VA provided GAO information on new training to be offered at the agency's acquisition academy that includes specific instruction pertaining to the use of Buy American Act exceptions and waivers. Finally, in 2020, VA revised the guidance in Acquisition Insider 2020-06 (Rev. 1) on "Compliance with Buy American Laws" to address our recommendation that the agency clarify guidance or provide training to help contracting officers identify sources of information regarding product origin and the steps to be taken to verify inconsistent product origin information.
Department of Health and Human Services The Secretary of Health and Human Services should provide guidance, training, or other instruction to help contracting officials: (1) Identify the factors that should be considered in order to determine the applicability of the Trade Agreements Act and waiver of the Buy American Act; (2) Document determinations of the use of Buy American exceptions for domestic non-availability and ensure the required approvals are obtained; and (3) Identify sources of information available for determining products' origins and the steps they should take to verify information that is inconsistent. (Recommendation 4)
Open
HHS concurred and has taken steps to implement this recommendation. HHS emailed department heads of the contracting activity and their deputies, in February 2019, to notify them that department contracting professionals would be required to complete the Buy American Statute course, FAC063, offered by the Federal Acquisition Institute. This course includes content to assist contracting officials with determining whether the Trade Agreements Act waiver or other BAA exceptions apply when acquiring foreign end products. As of February 2021, HHS reported 90 percent of their contracting staff have completed the course. HHS also developed three checklists-based on whether the procurement is for supplies, services, or construction materials-that contracting officials are required to complete and include within the contract file. These checklists walk contracting officials through the process of determining whether the BAA exception for domestic non-availability may apply to the procurement of a foreign end product, as well as the required documentation and approvals that must be obtained when this exception applies. Further, these checklists require the contracting official to certify that they have reviewed product origin information within the System for Award Management (SAM). In June 2022, HHS reported actions are underway to ensure agency contracting staff are aware of the steps they can take when the product origin information in SAM is not consistent with other contract documentation or is missing entirely. Agency officials estimate they will draft and vet guidance for inclusion into the agency's FAR supplement during the first quarter FY23. We continue to believe that it is important for HHS to provide contracting officials with this additional guidance, since product origin information in SAM is not always reliable or might not be recorded at all.

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