Implementation Concerns 19

Conclusions 30

Recommendations for Executive Action 31

Agency Comments and Our Evaluation 32

Appendix I Objectives, Scope and Methodology 35

Appendix II Countries with Free Trade Agreements or Reciprocal Defense

Procurement Agreements with the United States 39

December 18, 2018

The Honorable Chris Murphy

Ranking Member

Subcommittee on the Legislative Branch

Committee on Appropriations

requirements for federal agencies to purchase domestically produced

goods, products, and materials.

The Buy American Act, enacted during the Great Depression in 1933, is

one of the most prominent domestic preference laws.

federal procurement of domestic products, but permits federal agencies to

procure foreign products under certain exceptions, such as where

domestic end products are not reasonably available in sufficient quantities

of a satisfactory quality. The restrictions also may be waived under

the executive branch to maximize the use of domestic goods in an effort

to, among other things, stimulate economic growth and create jobs in the

United States.

You asked us to review federal agency 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 Buy American Act requirements.

To assess the extent of the federal government’s procurement of foreign

end products through exceptions and waivers to the Buy American Act,

we analyzed data from the Federal Procurement Data System-Next

Generation (FPDS-NG) for fiscal year 2017, which represented the most

recent and complete data available at the time of our review. We

analyzed the fiscal year 2017 data to identify the dollars obligated. We

used the categories within the FPDS-NG “Place of Manufacture” and

obligations for foreign end products and the use of Buy American Act

exceptions and the Trade Agreements Act waiver. Because of the

reporting errors and data system limitations we identified, however, as

described later in this report, we are unable to precisely determine the

amount spent on foreign end products through the use of exceptions and

We supplemented our analysis by reviewing documentation from a non-

generalizable sample of 38 contracts from four selected agencies—the

Departments of Defense (DOD), Health and Human Services (HHS),

We selected these contracts to obtain a mix of awards that reported

foreign product acquisitions authorized by the various Buy American

exceptions or trade agreement waivers, and to ensure contracts that

reported the purchase of domestic end products were also represented.

We also interviewed cognizant contracting officials and analyzed contract

file documentation to determine how Buy American requirements were

implemented or waived.

To assess the extent to which selected agencies provide training and

guidance to implement the Buy American Act, we reviewed training

materials and acquisition regulations, policies, and guidance from the four

selected agencies—DOD, HHS, DHS, and VA—and interviewed officials

responsible for acquisition policy and training. We also reviewed the

2018 in accordance with generally accepted government auditing

standards. Those standards require that we plan and perform the audit to

obtain sufficient, appropriate evidence to provide a reasonable basis for

our findings and conclusions based on our audit objectives. We believe

that the evidence obtained provides a reasonable basis for our findings

and conclusions based on our audit objectives.

The Buy American Act of 1933 was enacted during the Great Depression

when there was a need to create and preserve jobs for American

workers, and it established a preference for the federal government to

that are purchased for use outside the United States

or

obtained through contracts under the micro-purchase threshold, which

End products that are not considered domestic under the Buy American

Act are treated as foreign. This characterization is based on the origin of

the end product—that is, where the product is manufactured or

produced—and not the vendor’s location. For example, a vendor located

in Finland may supply end products manufactured in the United States, in

products, there are situations in which agencies can procure foreign end

products through established exceptions to the Buy American

requirements. In addition, under the Trade Agreements Act of 1979, the

United States has waived domestic purchasing requirements—including

the Buy American Act—for certain acquisitions of foreign end products

from countries that are party to international trade agreements or are

considered designated countries by the U.S. Trade Representative.

In implementing the Buy American Act, the FAR sets forth several

Based on our analysis of FPDS-NG data, almost 40 percent of federal

contract obligations in fiscal year 2017—totaling approximately $196

billion—were for domestic and foreign end products, such as aircraft

parts, that may be subject to the Buy American Act. Less than 5 percent

of these obligations—approximately $7.8 billion—were reported as

foreign end products. This is consistent with the information agencies

reported in FPDS-NG in the previous 4 years, with foreign end products

accounting for approximately 3 to 8 percent of goods subject to Buy

American Act restrictions between fiscal years 2013 through 2016. The

foreign end products in fiscal year 2017 primarily came from South Korea,

The procurement of foreign end products is permitted by the flexibilities

available under the Buy American Act’s exceptions and waivers.

Agencies also procured foreign end products through means separate

from the exceptions allowed under the Buy American Act, primarily in

cases where the Act would not apply.

foreign end products based on trade agreements or another exception to

the Buy American Act requirements. Figure 3 shows how DOD and the

civilian agencies acquired foreign end products authorized by the various

exceptions and waivers of the Buy American Act.

From our review of FPDS-NG data, the civilian agencies are more likely

to cite one of the five Buy American Act exceptions or a trade agreement

waiver when buying foreign end products, and thus take corresponding

actions to document or approve the authority cited. For example, in our

review of contracts from four agencies, VA obligated $71,000 for medical

imaging equipment from Canada, and had to consider whether a trade

agreement waiver applied. The manufacturer was determined to be the

only source available and the contracting officer determined the

acquisition was authorized by a Buy American exception based on

domestic non-availability, which can require additional review.

then, may be authorized by exceptions such as domestic non-availability

when a required item does not come from a qualifying country. For

example, we reviewed a $744,000 DOD award for vehicle equipment that

was only available from South Africa—which is not one of the DOD

qualifying countries and not covered by any of the trade agreements—so

the acquisition was authorized by the domestic non-availability exception.

In addition, the civilian agencies also reported buying foreign end

products for use outside the United States but to a lesser extent than

DOD. For example, this included one of the contracts we reviewed, an

the Buy American Act, but we found that agencies may not always input

reliable information on the extent to which exceptions or waivers

authorized the acquisition of foreign end products. In addition, some

aspects of how FPDS-NG is structured could lead to additional data

reporting errors.

In the non-generalizable sample of 38 contracts and orders we examined

related to the Buy American Act was incorrectly reported in FPDS-NG. In

three of the six contracts, agencies recorded the wrong exception or

waiver, most often because of an error when reporting the place of

In the three remaining contracts, agencies misreported whether an end

product came from the United States or another country. For example,

DHS incorrectly recorded that an $18 million contract was for aircraft

accessories and other parts manufactured in the United States, even

though file documentation showed the contract was for Italian-produced

spare parts from the original equipment manufacturer. The Italian-

produced spare parts were available from existing inventory maintained

by the manufacturer and were needed immediately to meet a mandatory

operational requirement. Officials from DHS acknowledged the recording

oversight, attributed it to a mistake when entering information in FPDS-

NG, and have since corrected the error in response to our observation.

Additionally, FPDS-NG has system limitations that could hinder complete

and accurate reporting of Buy American Act information:

DOD, DHS, and VA officials told us they identified FPDS-NG reporting as

an area of concern. GAO Standards for Internal Controls in the Federal

Government state that management should use quality information to

support objectives, and that such data should be complete and

accurate.

In response to the 2017 Executive Order calling for federal agencies to

assess their implementation of the Buy American Act requirement, OFPP

officials told us they are identifying potential strategies for improving the

information agencies submit to FPDS-NG. As OFPP weighs potential

options for FPDS-NG reporting, implementing enhancements to reduce

The four agencies we reviewed—DOD, HHS, DHS, and VA—took

different approaches to provide training and guidance for the Buy

American Act requirements. Contracting officers faced challenges when

procuring products subject to the Buy American Act. For example, we

found instances in which contracting officers applied a waiver or

exception to contracts where the waiver did not apply and did not have

complete guidance for required determinations or reviews. There also

were challenges in confirming product origin information when vendors

did not provide consistent information.

The four agencies we reviewed varied in the mix of training and guidance

provided to aid contracting officers in implementing the requirements of

the Buy American Act. Three of the four agencies—DOD, DHS and VA—

supplemented the federal acquisition regulation, which implements the

requirements of the Buy American Act and Trade Agreements Act, with

training or guidance related to the Buy American Act. Most of the DHS

and DOD contracting officers we spoke to reported that they had attended

training and several found the guidance provided by the training to be

helpful. HHS and VA contracting officials described confusion due to the

lack of resources available at their respective agencies.

In 2017, in response to a series of recommendations from the DOD

Inspector General to re-emphasize Buy American Act training and

guidance, the Defense Acquisition University introduced an updated

training course that specifically focuses on the requirements and

be eligible under the Trade Agreements Act, such as non-eligible

products or products for national defense purposes.

For the other agencies in our review, we found that DOD’s updated Buy

American Act training and its acquisition supplement both address trade

agreement eligibility, but HHS does not yet have Buy American guidance

to address this topic. Federal internal control standards state that

agencies should communicate quality information internally to achieve

their objectives and that they should select the appropriate methods of

communication.

situations, such as when contracts are awarded without full and open

competition, this exception requires an approved written determination.

The FAR establishes requirements for domestic non-availability

determinations, but agencies can delegate the level of review required or

specify information to be included in the determination.

Three of the agencies we reviewed—DOD, DHS, and VA—provide

supplemental guidance on the process for making determinations,

including who must make the determination when applying a domestic

DHS guidance. According to DHS policy updated in 2018, determinations

of domestic non-availability must be concurred with by the HCA and

approved by the Chief Procurement Officer. Federal and DHS acquisition

regulations, however, state that some justifications can be approved at a

lower level. In the absence of further guidance, this difference in approval

levels could result in inconsistent application within the department.

In addition, as previously noted HHS does not yet have Buy American Act

guidance so the department does not provide information on how to make

determinations. According to federal internal control standards, agencies

should communicate quality information internally to achieve their

objectives and that they should select appropriate communication

buys is necessary to implement the Buy American Act, but contracting

officers do not always have access to accurate information on originating

countries. The FAR and the DFARS provide various clauses which, when

incorporated into contracts, require vendors to certify that the end

products they provide to the government are domestic and, if necessary,

declare the foreign countries from which they provide products.

frequently certify this information through the System for Award

Management (SAM), the government-wide system used to collect

that SAM certifications and offers did not always include accurate

information on end products from foreign countries. In 6 of the 38

contracts that we reviewed—from DHS, HHS, and VA—the vendors

certified that they only provided domestic end products although the end

products provided were foreign. In all of these cases, the contracting

officers knew that the acquisitions included foreign end products. For

example, we reviewed two DHS awards for spare aircraft parts from an

Italian-based company, one of which was reported in FPDS-NG under the

domestic non-availability exception to the Buy American Act, and the

other which was incorrectly reported as being manufactured in the United

States but has since been corrected. Contracting officials said they knew

the parts were made in Italy based on extensive experience contracting

with the company and, in part, because they had visited the production

location. Contracting officials—including some at HHS and VA—said they

use SAM as their primary source to determine whether the vendor is

offering domestic end products. Others reported some awareness of the

we reviewed does not address this need or provide information on how to

do so. Only the local training offered by DOD’s DLA addresses other

sources of information, which officials said was helpful because it is

specific to the industries with which they work. Instead, some officials

described how they rely on their experience to know how to verify

products’ origins but this can be problematic, particularly with newer staff.

For example, in one contract we reviewed VA contracting officials

acknowledged that a new contracting specialist at VA did not follow-up

when the product origin certification was not provided and assumed all of

the items procured were domestic. During the course of our review, the

Further, in 4 of the 38 contracts that we reviewed, it is not clear how

contracting staff took steps to obtain product origin information in

situations where it was not provided in SAM. In these cases—which

include contracts for both domestic and foreign end products—the

vendors had opted not to certify their product origins in SAM, but instead

said that they would provide the information with their individual

proposals. However, based on the information in the contract files, the

proposals did not include this information. For example:

Federal internal control standards state that agencies should

communicate the necessary quality information needed to achieve the

agency’s objectives, thereby enabling personnel to address risks.

Providing guidance regarding the situations in which contracting officers

should verify product origin information with vendors may help agencies

better meet the requirements of the Buy American Act.

Agencies have taken varied approaches for providing information to

contracting officers that navigate the complexities and nuances

associated with applying the different Buy American Act exceptions or

trade agreement waivers. DOD has added such detailed information

through its revised training course and policy guidance. Adding these

types of targeted information to address challenging areas would help

contracting officers at other agencies implement the Buy American Act’s

domestic preferences, as well as related exceptions and waivers. Further,

to accurately determine how exceptions and waivers apply requires

complete product origin information. Although the responsibility to certify

We are making four recommendations, one each to the Office of

Management and Budget, DHS, VA, and HHS.

The Director of the Office of Management and Budget should instruct the

Office of Federal Procurement Policy: