Biden Announces Huge Buy American Change
The new rule could mean $120B more is spent with American businesses
When President Joe Biden was elected he named one of his priorities as bringing jobs back to the United States and promoting Buy American. Now seven months into his term, he has proposed a massive change to the Buy American program.
According to an announcement from the White House, President Biden will issue a new rule that would change the 1933 Buy American Act. Under the Act, the federal government can only purchase goods that are at least 55% made in the United States. However, Biden wants to amend that to increase it to 60% immediately and then incrementally increase it until the threshold hits 75%. This 15% increase would happen over the next decade. The Biden Administration touted this change as the biggest change to the Buy American policy in 70 years.
While a 20% increase might not seem like a lot when it comes to actual dollars and cents going into American businesses it becomes a lot of money. The White House says that the federal government spends about $600 billion in annual procurements on things ranging from helicopter blades to office supplies to trucks. So a 20% increase in spending in the United States means about $120 billion will stay with US businesses. The White House hopes that this increased spending in the United States will also help new small and medium-sized businesses get a piece of the federal spending pie. To do this the White House has set up a manufacturing office within the Small Business Administration that will deal just with federal contracting.
The rule would also close loopholes that occur in the reporting of the domestic content of a product. Currently, contractors only tell the government if they meet the content threshold rather than reporting the total domestic content in their products. Under the change, companies would now have to report where their products are coming from to prove that they meet the requirements of the Buy American program. The White House believes that they will get better data from these reports and that they will give them a better picture of where the government is spending its money and who it is helping.
While the rulemaking process requires a few months of public comments before it can become an official rule, the Biden administration has already informed departments to start using the stricter guidelines. For example, the Department of Energy recently bought new electric vehicles for its fleet and only bought ones that were made in the United States or had their batteries made in the United States. The Department will also purchase steel products, advanced computing, and hazardous materials isolation equipment manufactured in Texas, Iowa, Idaho, Louisiana, South Carolina, Ohio, Connecticut, and Wisconsin. More purchases under the new Buy American provisions can be found here.
The move by the President was praised by the AFL-CIO which said in a statement:
“President Biden is once again delivering on his promise of fighting for America’s working families. For years, we’ve received lip service on the importance of Buy American, but today the Biden administration is following through on the simple concept that American taxpayers’ dollars should be used to create jobs and advance production here at home. Today’s proposed rule finally would close loopholes that allow products bought with taxpayer dollars to be only 55% made in the United States, while still qualifying for government procurement under Buy American rules. This, along with strengthening the domestic supply chains by implementing new price preferences and increasing transparency and accountability, will continue to lead us to build a stronger, fairer economy with a robust manufacturing base. We look forward to this rule being enacted so we can create more family-supporting union jobs by continuing to build back better.”
With businesses struggling to hire qualified people following the pandemic, the Biden administration has also said that they are investing $430 million through the Department of Labor into apprenticeship programs to provide training for people that want to enter into the domestic manufacturing workforce. Some states that will see this funding include Colorado, Texas, California, Michigan, Idaho, and Nevada.