Scope of the Buy American Act
Congress passed the Buy American Act (BAA) in 1933 to encourage purchasing of American-made goods. The act was altered significantly in 1979 when Congress passed the Trade Agreements Act (TAA).
The Trade Agreements Act applies to an acquisition — and usurps application of the Buy American Act — for supplies or services if the estimated value of the acquisition exceeds certain thresholds.
Currently, the thresholds are as follows:
- Procurement of supplies and services — $169,000
- Procurement of construction services — $6,481,000
These threshold amounts change about every two years to reflect the value of the U.S. dollar against the currencies of other nations. The estimated value includes the value of all contract options.
To fall under a TAA exemption, a supply or service must originate from a “designated country.” To see a list of such countries, go to FAR 25.003, Definitions, http://www.arnet.gov/far/current/html/Subpart_25_1.html. It’s a large list.
Ireland is an example of a designated country. Thus, in a federal procurement of a supply or service from Ireland with an estimated value above $169,000, or of construction services from Ireland with an estimated value above $6,481,000, the BAA does not apply — i.e., the company selling the supply or service is treated like an American company.
The North American Free Trade Agreement (NAFTA) has a similar effect on the Buy American Act, except that Canada and Mexico receive even more favorable treatment. Under NAFTA, the thresholds are $25,000 for Canadian supplies and $56,190 for Mexican supplies. The NAFTA threshold for construction acquisitions is $7,304,733 for both countries.