Federal Acquisition Regulation: Amendments to the FAR Buy American Act Requirements, 12780-12798 [2022-04173]

Agencies

• DEPARTMENT OF DEFENSE
• General Services Administration
• National Aeronautics and Space Administration

[Federal Register Volume 87, Number 44 (Monday, March 7, 2022)]
[Rules and Regulations]
[Pages 12780-12798]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-04173]


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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 13, 25 and 52

[FAC 2022-05; FAR Case 2021-008, Docket No. 2021-0008, Sequence No. 1]
RIN 9000-AO22


Federal Acquisition Regulation: Amendments to the FAR Buy 
American Act Requirements

AGENCY: Department of Defense (DoD), General Services Administration 
(GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Final rule.

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SUMMARY: DoD, GSA, and NASA are issuing a final rule amending the 
Federal Acquisition Regulation (FAR) to implement an Executive order 
addressing domestic preferences in Government procurement.

DATES: Effective: October 25, 2022.

FOR FURTHER INFORMATION CONTACT: Ms. Mahruba Uddowla, Procurement 
Analyst, at 703-605-2868 or by email at [email protected], for 
clarification of content. For information pertaining to status or 
publication schedules, contact the Regulatory Secretariat Division at 
202-501-4755 or [email protected]. Please cite FAC 2022-05, FAR Case 
2021-008.

SUPPLEMENTARY INFORMATION:

I. Background

    In his first week in office, President Biden signed Executive Order 
(E.O.) 14005, Ensuring the Future is Made in All of America by All of 
America's Workers, launching a whole-of-Government initiative to 
strengthen the use of Federal procurement to support American 
manufacturing. With over $600 billion in annual procurement spending, 
almost half of which is in manufactured products from helicopter blades 
to trucks to office furniture, the Federal Government is a major buyer 
in a number of markets for goods and services and the single largest 
purchaser of consumer goods in the world. Leveraging that purchasing 
power to shape markets and accelerate innovation is a key part of the 
Administration's industrial strategy (https://www.atlanticcouncil.org/commentary/transcript/brian-deese-on-bidens-vision-for-a-twenty-first-century-american-industrial-strategy/) to grow the

[[Page 12781]]

industries of the future to support U.S. workers, communities, and 
firms.
    On July 30, 2021, DoD, GSA, and NASA published a proposed rule at 
86 FR 40980 to implement section 8 of E.O. 14005, which directs the 
Federal Acquisition Regulatory Council (FAR Council) to strengthen the 
impact of Federal procurement preferences in the Buy American statute 
for products and construction materials that are domestically 
manufactured from substantially all domestic content. Consistent with 
section 8, the proposed changes to the implementation of the Buy 
American statute were designed to support greater domestic production 
of products critical to our national and economic security and help 
ensure America's workers thrive. This final rule makes limited changes 
from the proposed rule and amends the FAR to implement--
     A near-term increase to the domestic content threshold 
following a short grace period during which contractors and the 
workforce prepare for the increase and a schedule for future increases;
     A fallback threshold that would allow for products meeting 
a specific lower domestic content threshold to qualify as domestic 
products under certain circumstances; and
     A framework for application of an enhanced evaluation 
factor (price preference) for a domestic product that is considered a 
critical item or made up of critical components.

A. Increase to the Domestic Content Threshold

    This rule increases the domestic content threshold initially from 
55 percent to 60 percent, then to 65 percent in calendar year 2024 and 
to 75 percent in calendar year 2029. See FAR 25.101(a)(2)(i) and 
25.201(b)(2)(i). The initial increase to 60 percent will occur several 
months from publication of the final rule, to allow industry time to 
plan for the new threshold and to provide workforce training on the new 
fallback threshold.
    The increase of the domestic content threshold ultimately to 75 
percent is consistent with the Infrastructure Investment and Jobs Act 
(Pub. L. 117-58) (IIJA) which was enacted on November 15, 2021. Section 
70921 of this statute includes a ``sense of Congress'' that the FAR be 
amended to increase the domestic content requirements for domestic end 
products and domestic construction material to 75 percent.
    A supplier that is awarded a contract with a period of performance 
that spans the schedule of domestic content threshold increases will be 
required to comply with each increased threshold for the items in the 
year of delivery. For example, a supplier awarded a five-year contract 
in 2027 will have to comply with the 65 percent domestic content 
threshold initially, but in 2030 will have to supply products with 75 
percent domestic content. However, in response to comments received, in 
instances where this requirement to comply with changing domestic 
content thresholds throughout its life would not be feasible for a 
particular contract, the rule at FAR 25.101(d) and 25.201(c) provides 
for a senior procurement executive to allow the application of an 
alternate domestic content test in defining ``domestic end product'' or 
``domestic construction material'' after consultation with Office of 
Management and Budget's Made in America Office (MIAO). The alternate 
domestic content test would allow the supplier to comply with the 
domestic content threshold that applies at the time of contract award, 
for the entire period of performance for that contract. The MIAO will 
work with the agencies to develop an appropriate process for 
consultation.

B. Fallback Threshold

    This rule also allows, until one year after the increase of the 
domestic content threshold to 75 percent, for the use of the 55 percent 
domestic content threshold (i.e., the threshold in effect prior to the 
effective date of this rule) in instances where an agency has 
determined that there are no end products or construction materials 
that meet the new domestic content threshold or such products are of 
unreasonable cost. See FAR 25.106(b)(2) and (c)(2), and 
25.204(b)(1)(ii) and (b)(2). For example, if a domestic end product 
that exceeds the 60 percent domestic content threshold is determined to 
be of unreasonable cost after application of the price preference, then 
for evaluation purposes the Government will treat an end product that 
is manufactured in the United States and exceeds 55 percent domestic 
content, but not 60 percent domestic content, as a domestic end 
product. The fallback threshold requires offerors to indicate which of 
their foreign end products exceed 55 percent domestic content. The 
fallback threshold only applies to construction material that does not 
consist wholly or predominantly of iron or steel or a combination of 
both and that are not commercially available off-the-shelf (COTS) 
items, as well as to end products that do not consist wholly or 
predominantly of iron or steel or a combination of both and that are 
not COTS items.
    Section 70921 of the IIJA also envisions use of a fallback 
threshold, and suggests that the threshold should be set at 60 percent 
and continue indefinitely, but does not mandate this approach; it is 
simply offered as a ``sense of Congress''.
    This rule retains the approach to the fallback threshold set forth 
in the proposed rule: A consistent 55 percent threshold that is 
available until 2030 for use where domestic products at a higher 
threshold are not available or the cost to acquire them would be 
unreasonable. DoD, GSA, and NASA find this approach achieves the best 
balance between giving small disadvantaged businesses and other market 
participants a reasonable chance to adjust their supply chains to meet 
the higher content requirements and rewarding entities who lead their 
industries in adopting higher content levels. Equally important, 
sunsetting the fallback will send a clear signal to the Federal 
marketplace that the Federal Government is fully committed to suppliers 
who increase their reliance on domestic supply chains. Other 
Administration efforts to strengthen our economic and national security 
will support this transition to greater investment in domestic markets 
and make increased reliance on domestic supply chains feasible and 
desirable. These efforts include, among others, strategic actions by 
the Supply Chain Task Force pursuant to E.O. 14017 to address supply 
chain disruptions for critical products and components, investments in 
workforce training and apprenticeships by the Department of Labor to 
ensure workers can transition quickly and succeed in good quality jobs, 
and small business supports, including the creation of a manufacturing 
office at the Small Business Administration to help small manufacturers 
access Federal contracts, financing, and business development support.

C. Enhanced Price Preference for Critical Products and Critical 
Components

    The rule provides for a framework through which higher price 
preferences will be applied to end products and construction material 
deemed to be critical or made up of critical components. A subsequent 
rulemaking will establish the definitive list at FAR 25.105 of critical 
items and critical components in the FAR, along with their associated 
enhanced price preference(s). When a final rule goes into place 
establishing the list and

[[Page 12782]]

preference factors at 25.105, the higher price preference for critical 
items or critical components shall be used.
    The final rule does not include language from the proposed rule to 
require postaward reporting on the specific amount of domestic content 
in critical end products, construction material, or components 
receiving the enhanced price preference. Reporting remains a priority 
for helping the Federal Government more clearly understand the extent 
to which entities in its supplier base are increasing reliance on 
domestic sources for critical items and components. For this reason, 
coverage on this requirement will be deferred to the rulemaking that 
establishes the definitive list at FAR 25.105 of critical items and 
critical components so that respondents can better understand and 
comment on the scope and scale of reporting and have that input 
considered by the regulatory drafters before a requirement is 
finalized.
    See the proposed rule for more information about the changes and 
about the Buy American statute (for its applicability and exceptions 
see 86 FR 40980 at page 40981).
    Seventy respondents submitted comments on the proposed rule.

II. Discussion and Analysis

    The Civilian Agency Acquisition Council and the Defense Acquisition 
Regulations Council (the Councils) reviewed the public comments in the 
development of the final rule. A discussion of the comments and the 
changes made to the rule as a result of those comments are provided as 
follows:

A. Summary of Significant Changes

    The following significant changes from the proposed rule are made 
in the final rule:
     Domestic content threshold grace period. The proposed rule 
envisioned an immediate increase to the domestic content threshold from 
55 percent to 60 percent, with the increase to 65 percent scheduled to 
begin in approximately two years in calendar year 2024 and the increase 
to 75 percent scheduled to begin five years after that increase, in 
calendar year 2029. In response to the comments received to the 
proposed rule, the Councils have provided for a delayed effective date 
(i.e., a grace period) before the initial increase to 60 percent occurs 
in the final rule. Ordinarily, rules take effect 30 days after 
publication of the final rule. Delaying the effective date until after 
the beginning of the next fiscal year will allow industry to prepare 
for the new domestic content threshold and give the acquisition 
workforce time to be trained for the new concepts contained in this 
rule, helping to ensure a smoother transition to the rule's new 
requirements. The schedule for domestic content threshold increases to 
65 percent and 75 percent remains unchanged from the proposed rule and 
is reflected in the amendments throughout FAR part 25 and to FAR 
clauses 52.225-1, 52.225-3, 52.225-9, and 52.225-11.
     Use of an alternate domestic content test to apply the 
domestic content threshold in effect at contract award throughout the 
life of a contract. The proposed rule required a contract with a period 
of performance that spans the schedule of threshold increases to comply 
with each increased threshold for the items in the year of delivery. In 
response to the comments received to the proposed rule, the final rule 
adds a process by which an agency's senior procurement executive may, 
after consultation with the MIAO, allow for application of an alternate 
domestic content test. In the event use of an alternate domestic 
content test is authorized, the contract would require compliance with 
the domestic content threshold in effect at time of contract award for 
the entire life of the contract. Amendments are made to FAR 25.101, 
25.201, 25.1101, and 25.1102 to implement the alternate domestic 
content test. Alternates to FAR clauses 52.225-1, 52.225-3, 52.225-9, 
and 52.225-11 are created for those contracts where use of an alternate 
domestic content test is authorized. Due to the new Alternates, 
conforming changes were made to FAR 13.302-5 and FAR clauses 52.212-5 
and 52.213-4.
     Clarifications regarding application of the fallback 
threshold. As part of implementing the fallback threshold, the proposed 
rule would have required offerors to identify which of their foreign 
end products and foreign construction material met the fallback 
threshold. The final rule clarifies that this identification would only 
be required for end products and construction material where the 
fallback procedures are used, i.e., for end products and construction 
material that do ``not consist wholly or predominantly of iron or steel 
or a combination of both'' and are not COTS items. To reflect these 
clarifications, the final rule makes amendments at newly-designated FAR 
25.106 and 25.204; FAR provisions 52.212-3, 52.225-2, and 52.225-4; and 
FAR clauses 52.225-9 and 52.225-11. The proposed rule also did not 
contain any guidance on what the use of the fallback procedures would 
mean in relation to the procedures associated with exceptions to the 
Buy American statute, specifically the exception for nonavailability. 
Language has been added at FAR 25.103(b)(2)(i) and 25.202(a)(2), 
clarifying that a nonavailability determination is not required when 
the fallback procedures are used.
     Postaward reporting requirement. The proposed rule 
included two new clauses that would require contractors to provide the 
specific domestic content of critical items, domestic end products 
containing a critical component, and domestic construction material 
containing a critical component, that were awarded under a contract. 
The final rule removes this requirement and will instead propose this 
requirement in the subsequent rule establishing the list of critical 
items and critical components in the FAR, along with their associated 
enhanced price preference.

B. Analysis of Public Comments

1. Support for the Rule
    Comment: Some respondents were supportive of the rule in general, 
though many had specific feedback--whether supportive or not--that is 
captured in the remaining categories of comments. One respondent was 
supportive of the rule as long as the Government still maintained a 
level of quality for the products it buys and protected against price 
gouging. Another respondent strongly recommends that the policy changes 
to the Buy American requirements closely align with U.S. national 
security objectives.
    Response: The Councils acknowledge the respondents' support for the 
rule.
2. Concerns With the Rule
    Comment: Some respondents expressed general concerns with the rule. 
These respondents did not believe the rule would impact their specific 
industry or entire manufacturing sector, believed the rule 
overcomplicates an already complicated process, or believed the Buy 
American statute itself and/or its existing implementation is already 
problematic. One respondent was concerned that the rule is too broad 
and that it may cause delays to acquisitions and increased pricing. One 
respondent believed the rule was overly burdensome and may invite 
protectionist policies from trading partners. A few respondents 
expressed concerns that the rule would have adverse results such as 
higher proposal prices and a reduction in the competitiveness of U.S. 
companies.

[[Page 12783]]

    Response: The Councils acknowledge the respondents' general 
concerns with the rule. The Councils address respondents' feedback on 
specific aspects of the rule in the following categories of comments.
3. Domestic Content Threshold
    Comment: Many respondents provided comments on the aspect of the 
rule that proposed increases to the domestic content threshold:
    Approximately half the respondents supported increasing the 
domestic content threshold over time, as proposed. One of these 
supported increasing the threshold only if the exception to the Buy 
American statute under the Trade Agreements Act remains. A couple of 
these respondents encouraged increasing the domestic content threshold 
to 75 percent earlier than the proposed date of 2029 (i.e., earlier 
than the proposed 7 years after the initial increase to 60 percent). 
The other half were not supportive of increasing the domestic content 
threshold over time.
    The majority of the respondents that were not supportive urged that 
the increases to the domestic content threshold happen over a longer 
period of time than proposed, as domestic suppliers cannot currently 
meet the higher thresholds and manufacturers would need more time to 
secure adequate domestic suppliers and make the requisite changes to 
their supply chains. According to one respondent, failure to provide 
industry the appropriate amount of preparation time to comply with the 
higher domestic content thresholds could result in ``material 
shortages, delayed deliveries, overextended suppliers, and inflationary 
pricing.'' One of these respondents specifically recommended that the 
increases to the domestic content threshold happen in 3 to 5 year 
intervals, and another respondent asked that the increase occur over a 
10-year span instead of 7 years, but the others did not provide 
specific alternate timeframes for consideration.
    Many of these respondents expressed concerns with possible 
unintended consequences of increasing the domestic content threshold to 
the amounts and along the timeline proposed. One concern is that the 
higher thresholds will cause increased costs for compliance, which will 
reduce the number of businesses that participate in the Federal 
marketplace, especially small businesses, thereby limiting the 
availability of domestic products and the competitiveness of innovative 
commercial products offered to the Federal Government. Another concern 
is that the imposition of higher domestic content thresholds will 
invite similar retaliatory actions from trading partners, which would 
limit U.S. businesses' access to the global government procurement 
market. Some of the respondents expressed concerns specific to those 
U.S. businesses who maintain a global supply chain and/or those that 
participate both in the commercial marketplace and the Federal 
marketplace. According to these respondents, complying with the higher 
domestic content thresholds for the Federal market would cause these 
businesses to consider restructuring operations, including their supply 
chains, to separate commercial sales from Government sales. These 
respondents predict that such a separation would occur because the 
commercial market does not have similar requirements for domestic 
content and would not support the higher prices that would flow from 
compliance with such requirements. A couple of respondents also pointed 
out that instead of complying with the higher domestic content 
requirements, businesses could find it more beneficial to reduce their 
current level of domestic content in order to reduce their cost enough 
to make their foreign end product competitive even after application of 
the price preference provided by the Buy American statute to domestic 
products.
    A number of these respondents stated that the increased domestic 
content thresholds would be difficult, if not impossible, to comply 
with because of a shortage of available domestic components and 
subcomponents.
    A couple of the respondents believed that the higher domestic 
content thresholds would not promote U.S. manufacturing and would not 
accomplish the Administration's stated objective. One of those 
respondents urged an adoption of the ``substantial transformation'' 
standard instead of the use of a component test.
    Response: The Councils believe that the concerns raised regarding 
the level and schedule for threshold increases are largely addressed by 
the fallback threshold, which recognizes that some market participants, 
especially socioeconomic small businesses from underserved communities 
and other small businesses, may need additional time beyond what is 
provided in the schedule to make adjustments to their supply chains. 
Those contractors that are not ready or otherwise make a business 
decision not to modify their supply chains will still be able to bid on 
Federal contracts and could still enjoy a price preference if their end 
product meets the current definition of domestic end product (i.e., 
exceeding 55 percent domestic content). In the event that the 
Government does not receive any offers of domestic end products or the 
domestic end products are of unreasonable cost, the Government will 
treat the end products that have at least 55 percent domestic content 
as a domestic end product for evaluation purposes. See Section I.B. 
Fallback Threshold, earlier in this preamble. This approach will help 
prevent scheduled increases in the content threshold from taking work 
away from domestic suppliers who are actively adjusting their supply 
chains and avoid unintentionally raising the foreign content of Federal 
purchases through increased use of waivers. As more companies come into 
compliance with the higher thresholds over time, there will be a more 
competitive environment to sustain fair and reasonable pricing for 
products with higher domestic content. For these reasons, the final 
rule reflects the same threshold increases and schedule for those 
increases as the proposed rule. However, the Councils have decided to 
delay the effective date of the rule, which would delay implementation 
of the initial increase of the domestic content threshold to 60 percent 
by several months. This short grace period is expected to allow more 
time for industry to prepare for the increased domestic content 
threshold.
    Comment: Some of the respondents expressed concerns with the aspect 
of the proposed rule which required that a supplier holding a contract 
with a period of performance that spans the schedule of domestic 
content threshold increases will be required to comply with each 
increased threshold for the items in the year of delivery. These 
respondents specifically called out indefinite-delivery, indefinite-
quantity (IDIQ) contracts and fixed-price contracts as being adversely 
affected by such a requirement. A couple of these respondents explained 
that requiring a contract to comply with changing domestic content 
thresholds during the contract period of performance presents an 
administrative burden on contractors to track compliance through lower 
tiers, considering subcontractors and suppliers, as well as creating an 
administrative burden on both the Government and contractors in terms 
of having to renegotiate and modify the existing contracts to reflect 
the changing requirements. Another respondent believed that such a 
requirement placed an unreasonable burden on companies bidding on 
fixed-price contracts because these companies would need to identify

[[Page 12784]]

a supply chain that meets the highest domestic content requirement and 
price that out for its proposal although the highest requirement might 
be several years away. These respondents recommended that a contractor 
only be required to comply with a single domestic content threshold--
the one in effect at award--throughout the performance period of a 
contract.
    Response: In light of the points raised by the public with regard 
to this requirement, the Councils acknowledge there are some instances 
where it is not feasible to require a contract that is subject to the 
Buy American statute to meet changing domestic content thresholds 
throughout its period of performance. In recognition of such instances, 
the final rule creates a process whereby an agency senior procurement 
executive, after consultation with the MIAO, may allow for application 
of an alternate domestic content test to the definition of ``domestic 
construction material'' and ``domestic end product'' and require the 
contractor to comply only with the domestic content threshold that is 
in effect at contract award for the entire contract term.
    Comment: One respondent asked for clarification regarding the 
applicability of the changes in the proposed rule to existing IDIQ 
contracts and other multi-year contracts. Specifically, the respondent 
asked whether the new requirements would apply to delivery orders 
issued after the effective date of this final rule against IDIQ 
contracts awarded prior to the effective date of this final rule. The 
respondent stated that because applying the new requirements would 
impact pricing for the IDIQ contractors, they recommend that orders 
include a price adjustments clause that would allow both agencies and 
contractors to deal with any price increases stemming from changing the 
domestic content requirements.
    Response: In accordance with the convention stated at FAR 1.108(d), 
FAR changes apply to existing contracts at the discretion of 
contracting officers, unless otherwise specified. This final rule does 
not otherwise specify a different application of the FAR change to 
existing contracts than the convention.
4. Fallback Threshold
    Comment: A few respondents provided comments on the aspect of the 
rule that created the concept of a fallback threshold. Most of those 
comments were supportive. A couple of the respondents further 
recommended keeping the fallback threshold beyond the proposed one-year 
period after the last increase of the domestic content threshold. One 
of these respondents believed that companies would need more than one 
year to comply with the 75 percent domestic content threshold while the 
other respondent believed that the fallback threshold should be used on 
an as-needed basis in the future to account for ``periods of economic 
difficulty or increased input prices.'' A few of these respondents 
recommended that the fallback threshold increase over time to match the 
increases to the domestic content threshold, i.e. fallback threshold 
increases from 55 percent to 60 percent in 2024, and to 65 percent in 
2029.
    One of the respondents stated that while the fallback threshold 
allows time for companies to comply with the changing domestic content 
thresholds, it does not address the cost of the changes, such as those 
associated with engineering, vendor qualification, first article 
inspections, testing and fixturing, etc. The respondent recommended 
lower domestic content thresholds instead of a fallback threshold. With 
regard to the recommendation for increasing the fallback threshold over 
time to match the increases to the domestic content threshold, the 
respondent acknowledged that having multiple transitional thresholds 
and fallbacks would add complexity towards administration, supplier 
coordination, and associated reporting. Another respondent stated that 
the fallback threshold would not incentivize contractors because it 
does not address the issue of disparate product costs between the U.S. 
and lower-cost countries. Instead, this respondent recommended 
replacing the fallback threshold with a tiered system of price 
preferences, starting from a price preference to those contractors who 
have less than 35 percent domestic content and then scaling up to the 
highest tier of price preferences for those who have more than 90 
percent domestic content.
    Response: Based on the predominantly supportive public comments for 
a fallback threshold, the congressional support for use of a fallback 
that is articulated in the sense of Congress in section 70921 of the 
IIJA, and the important role a fallback will play in giving small 
businesses and other market participants time to make adjustments to 
their supply chains, the Councils have retained in the final rule the 
concept and procedures for the fallback threshold from the proposed 
rule. The Councils believe the fallback threshold, as set forth in the 
proposed rule, should: (1) Help prevent scheduled increases in the 
content threshold from taking work away from domestic suppliers who are 
actively adjusting their supply chains; and (2) avoid unintentionally 
raising the foreign content of Federal purchases through increased use 
of waivers while domestic suppliers adjust. With regard to the 
recommendation that the fallback threshold increase over time to match 
the increases to the domestic content threshold, the Councils have 
determined that an increasing fallback threshold could, by adding 
complexity to the rule's provisions, make firms' efforts in supply 
chain coordination, solicitation certifications, and contract 
administration more difficult, rather than less. That said, the 
fallback threshold will be a temporary measure designed to limit 
foreign content while contractors transition to U.S.-based supply 
chains.
5. Framework for Enhanced Price Preference for Critical Items and 
Critical Components
    Comment: Several respondents provided comments on the aspect of the 
rule that proposed a framework for providing enhanced price preferences 
for a domestic product that is considered a critical item or made up of 
critical components.
    About half of the respondents were supportive of the framework and 
concept. Many of these respondents recommended specific items or 
categories of items be added to the eventual FAR list of critical items 
and critical components: Hull, mechanical and electrical vessel 
components and systems, including engines and propulsion components; 
personal protective equipment; essential medicines; ammonium 
perchlorate and sodium perchlorate; tantalum and niobium; tungsten; 
titanium and superalloys; rare earths and material; and steel. One 
respondent recommended that the enhanced price preference be 25 percent 
for large businesses and 35 percent for small businesses, an addition 
of 5 percentage points to the current price preference provided in the 
FAR for acquisitions subject to the Buy American statute. One 
respondent was supportive of the concept as long as the exception to 
the Buy American statute under the Trade Agreements Act remains. 
Another respondent recommended that critical items and critical 
components be excluded from the United States' trade obligations. That 
respondent also urged a ``whole of Government'' approach to the 
designation of items on the critical list, pointing out that E.O. 14005 
requires a review and update of the list of domestically nonavailable 
articles at

[[Page 12785]]

FAR section 25.104, which the respondent believes contains many items 
that are the ``focus of the initiatives to strengthen U.S. supply 
chains and sources of critical inputs.''
    A few respondents expressed concerns with the concept of providing 
enhanced price preference for critical items and components. Some of 
the respondents stated that it was premature to create a framework and 
difficult to comment on the framework and evaluate its effect until the 
list of critical items and components, and their associated enhanced 
price preferences, are known. A few of the respondents believed that 
the concept seems to add administrative burden in terms of time and 
effort needed to track enhanced preferences, additional compliance 
costs for the U.S. Government and the Federal acquisition supply chain, 
and create unintended consequences. As alternatives to the concept, 
these respondents recommend instead providing contracting officers the 
ability to identify specific products or categories that will receive 
additional price preferences and then tailor their solicitation; or 
pursuing other public policies that would attempt to enhance domestic 
manufacturing by increasing access to highly-skilled affordable 
workforce, simplifying government regulations, or lowering the cost of 
raw materials and energy. As examples of such policies, respondents 
cited incentives like research and development investment credits, tax 
breaks, loans, subsidies, etc.
    A couple of respondents pointed out that providing enhanced price 
preferences would have limited benefit when there is only one supplier 
of a critical item; however, one of the respondents acknowledged that 
the enhanced price preference could be beneficial in encouraging 
domestic investment for critical items that are primarily imported. One 
respondent commented that identifying critical components would be 
difficult for design-build construction contracts and recommended 
exempting those types of contracts from this concept. Another 
respondent appeared to instead recommend that ``electronic connectors, 
harness associated with the assembly, and cabling'' be identified as 
items for the critical list. Another comment from this respondent was 
that any implementation of an enhanced price preference should be 
limited to the most critical and sensitive items; mandating a price 
preference could lead to the U.S. losing access to a superior product 
developed and produced by an ally. That respondent suggested that 
creating a ``critical list'' of items must include confirmation that a 
domestic supply is and will be available.
    One respondent, with regard to the proposed requirement for 
offerors to identify when a proposed end product contains a critical 
component, commented that the establishment of a separate 
representation process can create administrative burden and cost for 
vendors, as associated compliance mechanisms will be required to assure 
the accuracy of such separate representations. It was not clear to this 
respondent what benefit is achieved with the creation of this process, 
or whether any associated cost implications have been assessed. Another 
respondent commented that contractors are unable to comply with the 
``reporting requirements,'' appearing to refer to the reporting 
requirement associated with identifying which offered item contains a 
critical component.
    Response: The Councils are retaining in the final rule the 
framework for enhanced price preference for critical items and critical 
components as contained in the proposed rule. The various 
recommendations for items/components to be deemed critical will be 
shared with the appropriate parties that will make such decisions.
    The Councils note that the public will have another opportunity to 
provide feedback on this framework, and any associated reporting 
requirement(s), in the subsequent rulemaking that will establish the 
list of critical items and critical components in the FAR, along with 
their associated enhanced price preference. That separate FAR rule will 
present more context for the public to provide more informed feedback 
on the subject.
    Comment: As requested in the preamble of the proposed rule, a few 
of the respondents provided feedback on the process for identifying 
items and components for the critical list, the frequency of 
adjustments to the critical list, and how to apply the enhanced price 
preferences.
    Response: As stated in the proposed rule, establishing a list of 
critical items and critical components, along with their associated 
enhanced price preference, will be determined in a separate FAR 
rulemaking. The feedback provided by these respondents will be 
considered in the development of that separate/forthcoming FAR proposed 
rule.
6. Postaward Reporting Requirement
    Comment: Several respondents provided comments on the aspect of the 
rule that proposed a requirement for postaward reporting on critical 
items and items containing critical components.
    A few respondents were supportive of the requirement. One 
respondent believed they could easily comply given that they have 100% 
domestic content but urged that the reporting requirement be designed 
in a way to be least burdensome on small businesses--for example, by 
making the reporting period no sooner than one year instead of 15 days. 
Another respondent stated that reporting is an effective way of 
ensuring greater compliance with the Buy American statute since 
transparency is a component of enforcement; this respondent further 
recommended that the reports be made public. One respondent, while 
supportive of the requirement as a first step, believed that it is too 
narrow in scope and that data related to contract adherence to the 
existing Buy American statute is inadequate. A couple of the 
respondents stated that reporting requirements associated with the Buy 
American statute already have very low difficulty of compliance, and it 
is unlikely that the proposed changes will significantly increase that 
burden on any businesses, small and disadvantaged or otherwise. One of 
these respondents recommended better transparency and public reporting 
be coupled with efforts to engage unions and shop floor workers in 
monitoring compliance with the Buy American statute. The respondent 
encouraged agencies to share information with unions, including 
compliance reports and the contracting agency's expectations about 
where contract work, including the supply chain for manufactured 
supplies on Federal contracts, is being performed.
    A majority of the respondents that commented on the postaward 
reporting requirement expressed concern with the requirement. A number 
of the respondents stated that the full impact of the reporting 
requirement could not be known without first knowing how and what 
products and components will be listed as critical. One respondent 
provided an example that the burden of the requirement could be great 
if it turned out that there are ``many critical components within 
various end items'' or ``there are many end products that contain a 
critical component''; the respondent also pointed out that the 15-day 
reporting period could limit competition where contractors are 
furnishing end products with a lead time outside of the proposed 
reporting requirement. Another respondent urged the Councils to provide 
industry an opportunity to provide feedback on the proposed 15-day 
timeframe for reporting

[[Page 12786]]

once the list of critical items and components is established, because 
without knowing the scope and scale of the list, contractors will not 
know if that timeframe is feasible.
    Some of the respondents requested further clarity on the proposed 
requirement. One of the respondents asked what defines a critical item 
and what to do about reporting on contract ``obsolete items'' or when 
the critical item list changes. Another respondent requested the 
Government clarify the ``types, detail, and level of reporting.'' 
Another respondent asked whether a contractor's ultimate inability to 
deliver a product with the domestic content amount specified in the 
report would be considered a breach of contract.
    Some of the respondents stated that the postaward reporting 
requirement would increase administrative burden and cost to 
contractors. One of these respondents specifically recommended that 
COTS products not be subject to the reporting requirement because it 
would result in a great deal of time and money spent. A couple of the 
respondents commented on potential negative impacts of the requirement. 
One of the respondents stated that increased reporting requirements, 
which flow down to subtiers, would make it more difficult for them to 
work with small businesses. The respondent explained that the reporting 
requirement would negatively impact small businesses because they would 
have to absorb the cost of validating the domestic content of all their 
components up front. This respondent also stated that the requirement 
would present a barrier to entry for many prospective suppliers. 
Another respondent stated that the requirement could limit competition 
where a contractor is furnishing an end product with a lead time that 
is outside the proposed reporting timeframe of 15 days. This respondent 
stated that limited competition will also be likely due to the 
additional compliance costs and risks. According to this respondent, 
the requirement could result in increased prices from the Federal 
contracting community, which in turn could put them at a disadvantage 
with competitors in other markets, such as commercial markets.
    A few of the respondents pointed out the difficulty of obtaining 
country-of-origin information for components from their suppliers, who 
are either unwilling or unable to provide the necessary information.
    A few of the respondents expressed concerns over the security of 
the required information. One of these respondents worried about 
forcing equipment manufacturers to reveal potentially sensitive 
information about equipment manufacturing processes to the public, 
which could then be accessed by domestic and foreign competitors. A 
couple of the respondents also believed the required information is 
sensitive and critical, and that industry needs assurances that the 
information will be protected and secured. The respondents pointed out 
existing concerns about supply chain vulnerabilities, and that would-be 
adversaries as well as other contractors will want this competition-
sensitive information. One of the respondents urged the Government to 
consider the relative sensitivity and security of the reported data and 
implement a plan to appropriately protect and secure it, possibly by 
imposing restrictions on public access to supply chain/component data. 
This respondent stated that making the reported data accessible to the 
public could harm competition and create security concerns by forcing 
contractors to reveal key elements of a solution.
    Some of the respondents offered up alternatives to the proposed 
postaward reporting requirement. A couple of the respondents proposed 
alternatives to aspects of the proposed requirement, such as a longer 
timeframe for reporting than the proposed 15 days or simplification of 
the reporting lines (i.e. instead of having the pre-award 
certifications going to the contracting officer and the postaward 
reporting going to the MIAO). A few of the respondents proposed that 
instead of creating the reporting requirement, the Government should 
find other ways to accomplish its objective of gaining insight. One of 
the respondents recommended tailoring the Federal Procurement Data 
System (FPDS) and incentivizing contractors through something like a 
``Buy American certificate'' into voluntarily providing the required 
data. Another respondent recommended leveraging or mirroring and 
modifying the Federal Trade Commission's ``Made in the USA'' framework 
to implement domestic sourcing policies for Federal procurements. This 
respondent recommended that the MIAO establish a web portal or 
repository to enable a supplier that claims its product is ``Made in 
the USA'' to voluntarily register their product claim.
    One of the respondents wanted an exception for design-build 
construction contracts, stating that the reporting requirement would be 
impractical for such a contract. Another respondent believed the 
reporting requirement would be difficult for contractors to meet if the 
reporting pertained to domestic content of components rather than the 
end item. One respondent proposed a system that they had created as the 
method for providing transparency into supply chains. One respondent 
commented that contractors are unable to comply with the ``reporting 
requirements.''
    Response: Reporting remains a priority because it will help the 
Federal Government more clearly understand the extent to which entities 
in its supplier base are increasing reliance on domestic sources for 
critical items and components. However, in light of the questions and 
concerns raised by the public in the absence of information, including 
a specific list of critical items and components, sufficient to convey 
the scope and scale of reporting that would be required, the Councils 
have determined to remove the requirement from this rule. Instead, the 
postaward reporting requirement will be included in the subsequent 
rulemaking planned for establishing the list of critical items and 
critical components in the FAR, along with their associated enhanced 
price preference. It is expected that when provided the context of an 
actual list of critical items and critical components, the public can 
provide more informed input for consideration by MIAO, Office of 
Federal Procurement Policy (OFPP), and other policy offices on how best 
to shape the reporting requirements.
7. Comments on Other Topic Areas of E.O. 14005
    Comment: A majority of the 70 respondents commented on topics that 
were highlighted in the preamble of the proposed rule as topics that 
pertain to other sections of E.O. 14005 than the one that is 
specifically being addressed in this particular FAR rule and on which 
public feedback was sought. These topics consisted of the commercial 
information technology acquisition exemption from the Buy American 
statute; the partial waiver for COTS items; Made in America services; 
the role of trade agreements; the use of waivers to the Buy American 
statute in general; the effectiveness of current price preferences 
under the Buy American statute; and replacing the component test.
    Response: The Councils appreciate the comments offered in response 
to the questions posed to help the FAR Council, MIAO, and other 
interested Federal offices understand the public's views on important 
issues affecting Made in America policy beyond the actions addressed in 
this rulemaking. While no action is being taken in this FAR case with 
regard to the feedback

[[Page 12787]]

received on those areas, the FAR Council and the MIAO intend to 
consider the feedback received in those topic areas for other 
activities required by the E.O., as well as related initiatives to 
strengthen domestic supply chains.
8. Outside the Scope of This Rule and Other Activities Under E.O. 14005
    Comment: Several respondents submitted comments that did not 
address any aspect of this rule or any other action by the FAR Council 
that is contemplated under E.O. 14005. These comments included 
complaints about the existing Buy American statute, existing FAR 
implementation of the Buy American statute, and specific procurement 
actions; recommendations for FAR changes that go beyond what is 
required by E.O. 14005 or authorized by any statute; marketing 
campaigns; and recommendations for non-procurement actions to 
incentivize domestic production.
    Response: The respondents' comments are outside the scope of this 
FAR rule and are not necessary for implementation of section 8 of E.O. 
14005.

III. Applicability to Contracts at or Below the Simplified Acquisition 
Threshold (SAT) and for Commercial Products (Including Commercially 
Available Off-the-Shelf (COTS) Items) or for Commercial Services

    This rule amends the provisions and clauses at FAR--
     52.212-3, Offeror Representations and Certifications--
Commercial Products and Commercial Services;
     52.213-4, Terms and Conditions--Simplified Acquisitions 
(Other Than Commercial Products and Commercial Services);
     52.225-1, Buy American--Supplies;
     52.225-2, Buy American Certificate;
     52.225-3, Buy American--Free Trade Agreements--Israeli 
Trade Act;
     52.225-4, Buy American--Free Trade Agreements--Israeli 
Trade Act Certificate;
     52.225-9, Buy American--Construction Materials; and
     52.225-11, Buy American--Construction Materials Under 
Trade Agreements.
    Those provisions and clauses continue to apply, or not apply, to 
acquisitions at or below the SAT, to acquisitions for commercial 
products (including COTS items), and to acquisitions of commercial 
services as they did prior to this rule.
    This rule creates alternates for the clauses at FAR--
     52.225-1, Buy American--Supplies;
     52.225-3, Buy American--Free Trade Agreements--Israeli 
Trade Act;
     52.225-9, Buy American--Construction Materials; and
     52.225-11, Buy American--Construction Materials Under 
Trade Agreements.
    These alternates continue to apply, or not apply, to acquisitions 
at or below the SAT, to acquisitions for commercial products (including 
COTS items), and to acquisitions of commercial services, as their basic 
clauses did prior to this rule.

IV. Expected Impact of the Rule

    This rule adds two sets of changes to the FAR's implementation of 
the Buy American statute:
     An increase to the domestic content threshold that a 
product must meet to be defined as ``domestic''; a schedule for future 
increases (see FAR 25.101(a)(2)(i) and 25.201(b)(2)(i)); and a fallback 
threshold that would allow products meeting a specific lower domestic 
content threshold to qualify as a domestic product under certain 
circumstances (see FAR 25.106(b)(2) and (c)(2), and 25.204(b)(1)(ii) 
and (b)(2)); and
     A framework for application of an enhanced price 
preference for a domestic product that is considered a critical product 
or made up of critical components (see FAR 25.106(c) and 25.204(b)(2)).
    The impact of each set of changes is addressed individually below. 
DoD, GSA, and NASA sought information from the public to assist with 
this analysis. Feedback from the public was used to help further inform 
the regulatory drafters in the formation of this final rule.

A. Scheduled Increase to the Domestic Content Threshold and the Use of 
a Fallback Threshold

    The fundamental goal of the rule is to increase the share of 
American-made content in a domestic end product or construction 
material. The graduated increase, after a grace period before the 
initial increase, is intended to drive to this goal in a proactive but 
measured fashion so that contractors have adequate time to make 
adjustments in their supply chains. When this rule is implemented, 
domestic industries supplying domestic end products are likely to 
benefit from a competitive advantage.
    Federal Procurement Data System (FPDS) data for fiscal year 2020 
indicate there were 121,063 new contract awards for products and 
construction, valued over the micro-purchase threshold through the 
threshold at which the World Trade Organization Government Procurement 
Agreement applies, to which the Buy American statute applied. It is 
estimated that 37,503 of these awards were for COTS items. Because the 
domestic content threshold test does not apply to COTS items (except 
those involving iron/steel), those awards were subtracted from the 
121,063 total eligible awards. After removing potential COTS item 
acquisitions from the data, there are estimated to be 83,560 contract 
awards to 14,163 unique contractors.
    It is unclear if the pool of qualified suppliers would be reduced, 
resulting in less competition (and a possible increase in prices that 
the Government will pay to procure these products). The fallback 
threshold is intended to: (1) Help prevent scheduled increases in the 
content threshold from taking work away from domestic suppliers who are 
actively adjusting their supply chains; and (2) avoid unintentionally 
raising the foreign content of Federal purchases through increased use 
of waivers while domestic suppliers adjust. The fallback threshold will 
be a temporary measure designed to limit foreign content while 
contractors transition to U.S.-based supply chains.
    Based on responses received to the questions posed to the public, 
the FAR Council has considered implementing smaller increases in the 
content threshold as well as differently timed increases in the final 
rule, but determined that the size and schedule of the increases put 
forth in the proposed rule (i.e., initial increase to 60 percent, then 
increase to 65 percent in 2024, and then increase to 75 percent five 
years after the previous increase) reflect a reasonable approach to 
achieving the goals of section 8 of E.O. 14005 and increasing reliance 
on domestic supply chains.
    This determination was based on considerations such as potential 
impact on competition; potential impact on supplier diversity, 
including participation of small disadvantaged businesses and 
businesses in other underserved communities; lost opportunities for 
American workers; and other factors identified by public comment and 
other interested parties, including MIAO, which also has been 
considering the potential impact of the proposed rule. The Councils 
also considered the procurement provisions at issue and the sense of 
Congress expressed in the IIJA.
    At least three arguments point to the possibility that any 
increased burden with regard to the timed increase to the domestic 
content threshold, on contractors in particular, could be small if not 
de minimis.

[[Page 12788]]

    First, DoD, GSA, and NASA do not anticipate significant cost 
arising from contractor familiarization with the rule given the history 
of rulemaking and E.O.s in this area. The basic mechanics of the Buy 
American statute (e.g., general definitions, certifications required of 
offerors to demonstrate end products are domestic) remain unchanged and 
continue to reflect processes that have been in place for decades. 
Under the proposed rule, when deciding whether to pursue a procurement 
or what kind of product mix (i.e., domestic or foreign) and pricing to 
propose in response to a solicitation, offerors now will have to plan 
for future changes to the domestic content threshold during the period 
of performance of the contemplated contract, unless use of an alternate 
domestic content threshold, which is the threshold in effect at time of 
contract award, has been authorized. Those offerors that make a 
business decision not to modify their supply chains over time to comply 
with the scheduled increases to the domestic content threshold will 
still be able to propose an offer for Federal contracts but will 
generally no longer enjoy a price preference.
    Second, some, if not many, contractors may already be able to 
comply with the higher domestic content requirement needed to meet the 
definition of domestic end product under E.O. 14005 and the final rule. 
Laws such as the SECURE Technology Act, Public Law 115-390, which 
requires a series of actions to strengthen the Federal infrastructure 
for managing supply chain risks, are placing significantly increased 
emphasis on the need for Federal agencies and Federal Government 
contractors to identify and reduce risk in their supply chains. One way 
to reduce supply chain risk is to increase domestic sourcing of 
content. A U.S. Bureau of Economic Analysis study using 2015 data, 
https://www.commerce.gov/sites/default/files/migrated/reports/2015-what-is-made-in-america_0.pdf, found that on average, 82 percent of the 
value of U.S. manufacturing output consists of domestic content. This 
indicates that a domestic content threshold of 60 percent would not 
inflict additional burden on many contractors. Based on the assumption 
that the products purchased in 2021 will be similar to the products 
procured in the future, a preliminary analysis of available data in 
FPDS on the impact of an increase early in 2021 in the domestic content 
threshold from 50 percent to 55 percent did not reveal an uptick in 
waivers, suggesting companies may already be incorporating content that 
can meet at least the 55 percent level:

----------------------------------------------------------------------------------------------------------------
                                         Feb-Dec 2021       Feb-Dec 2020       Feb-Dec 2019       Feb-Dec 2018
                                     ---------------------------------------------------------------------------
                                         Total spend        Total spend        Total spend        Total spend
                                       (millions of $)    (millions of $)    (millions of $)    (millions of $)
----------------------------------------------------------------------------------------------------------------
Total...............................            $36,137            $40,120            $40,948            $44,517
Buy American Waived *...............               $161               $177               $155               $166
Percent Waived......................              0.44%              0.44%              0.38%              0.37%
----------------------------------------------------------------------------------------------------------------
* Waivers included here are Commercial Information Technology, Domestic Non-availability, Public Interest
  Determination, Resale, or Unreasonable Cost. They do not include waivers due to trade agreements or DoD
  qualifying country, which would not be impacted by a change in the content threshold.

    Third, it is anticipated that some contractors' products and 
construction materials may not meet the definition of domestic end 
product and construction material unless the contractors take steps to 
adjust their supply chains to increase the domestic content. Those 
contractors that make a business decision not to modify their supply 
chains will still be able to bid on Federal contracts and could still 
enjoy a price preference if their end product meets the prior 
definition of domestic end product (i.e., exceeding 55 percent). In the 
event that the Government does not receive any offers of domestic end 
products or the domestic end products are of unreasonable cost, the 
Government will treat the end products that have at least 55 percent 
domestic content as a domestic end product for evaluation purposes. 
Offerors now have an information collection burden of identifying when 
a foreign end product meets the fallback threshold (see section VIII of 
this preamble), but that burden should be offset by the benefit of 
potentially still receiving a price preference for those end products 
that would have been considered domestic prior to the increases to the 
domestic content threshold implemented in this rule.
    Offerors have an option to increase their reliance on domestic 
content and continue to offer domestic products, in which case they may 
benefit from the price preference for domestic products, or they may 
continue to offer the same product, which will now be evaluated as 
foreign but may still benefit from a price preference. DoD, GSA, and 
NASA do not have any data on how many currently domestic products would 
fall into this category or have any knowledge as to which option an 
offeror of such products would select, since this is a business 
decision for each offeror to make.
    In recognition of the feedback provided by the public, DoD, GSA, 
and NASA have decided to delay the effective date of this rule by 
several months. The expectation is that this grace period will allow 
the contracting community more time to plan for the new threshold and 
prepare for the new procedures. Coupled with the implementation of the 
fallback threshold, the grace period should help to minimize any 
increased burden associated with the higher domestic content 
thresholds.

B. Enhanced Price Preference for Critical Items

    The goal of the enhanced price preference for critical items and 
components is to provide a steady source of demand for domestically 
produced critical products. As explained above, the rule only creates a 
framework. A separate rulemaking will be undertaken to add critical 
products and components to the FAR and to establish the associated 
preferences. Therefore, the impact associated with this concept will be 
captured in the subsequent rulemaking.
    There is an information collection burden associated with offerors 
identifying when a domestic end product or domestic construction 
material contains a critical component (see section VIII of this 
preamble), but that burden should be offset by the larger price 
preference received for these items.
    Therefore, based on public comments received, DoD, GSA, and NASA 
have concluded that the initial assessment is correct that the cost 
impact of this rule is not significant, and any impact is predominantly 
positive.

[[Page 12789]]

V. Executive Orders 12866 and 13563

    Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess 
all costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). E.O. 
13563 emphasizes the importance of quantifying both costs and benefits, 
of reducing costs, of harmonizing rules, and of promoting flexibility. 
This is a significant regulatory action and, therefore, was subject to 
review under section 6(b) of E.O. 12866, Regulatory Planning and 
Review, dated September 30, 1993.

VI. Congressional Review Act

    As required by the Congressional Review Act (5 U.S.C. 801-808) 
before an interim or final rule takes effect, DoD, GSA, and NASA will 
send the rule and the ``Submission of Federal Rules Under the 
Congressional Review Act'' form to each House of the Congress and to 
the Comptroller General of the United States. A major rule cannot take 
effect until 60 days after it is published in the Federal Register. The 
Office of Information and Regulatory Affairs (OIRA) in the Office of 
Management and Budget has determined that this is not a major rule 
under 5 U.S.C. 804.

VII. Regulatory Flexibility Act

    DoD, GSA, and NASA have prepared a Final Regulatory Flexibility 
Analysis (FRFA) consistent with the Regulatory Flexibility Act, 5 
U.S.C. 601-612. The FRFA is summarized as follows:

    DoD, GSA, and NASA are amending the Federal Acquisition 
Regulation (FAR) to implement an Executive Order regarding ensuring 
the future is made in all of America by all of America's workers.
    The objective of this rule is to strengthen domestic preferences 
under the Buy American statute, as required by section 8 of E.O. 
14005, Ensuring the Future is Made in All of America by All of 
America's Workers, by providing--
     An increase to the domestic content threshold required 
to be met for a product to be defined as ``domestic'' and a schedule 
for future increases;
     A fallback threshold which would allow for products 
meeting a specific lower domestic content threshold to qualify as a 
domestic product under certain circumstances; and
     A framework for application of an enhanced price 
preference for a domestic product that is considered a critical 
product or made up of critical components.
    One respondent commented that they disagreed with the statement 
in the Initial Regulatory Flexibility Analysis (IRFA) that the rule 
will not have significant economic impact on a substantial number of 
small entities. The respondent believed the public burden of 
information collection created by the proposed reporting 
requirements was significantly more than what the IRFA estimated. 
Specifically, the respondent believed the aspect of the rule which 
increases the domestic content threshold over time will impact 
contractors more than that stated in the IRFA as the estimated time 
required for compliance.
    Since no data were provided by the respondent with regard to the 
estimated burden for the various information collection requirements 
created by this rule, the estimate was not revised. However, the 
final rule does remove the postaward reporting requirement so 
estimates related to that have been removed from this final 
regulatory flexibility analysis.
    With regard to the comment that the IRFA did not account for the 
additional compliance efforts that small businesses will need to 
apply for the increases to the domestic content threshold over time, 
this final regulatory flexibility analysis acknowledges that impact.
    Different parts of the rule are expected to apply to a different 
number and universe of small entities. The impacted small entities, 
by portion of the rule, are described below. But in general, the 
rule will apply to contracts subject to the Buy American statute. 
The statute does not apply to services, or overseas, nor does it 
apply to acquisitions of micro-purchases (contracts at or below 
$10,000) or to acquisitions to which certain trade agreements apply 
(e.g. World Trade Organization Government Procurement Agreement (WTO 
GPA)). The maximum possible number of small entities to which the 
rule will apply are the 31,103 active small business registrants in 
the System for Award Management (SAM) who do not provide services.

--Timed increase to the domestic content threshold and allowance of 
a fallback threshold. Federal Procurement Data System (FPDS) data 
for fiscal year 2020 indicates there were 86,490 new contract awards 
to small business for products and construction materials, valued 
over the micro-purchase threshold through the threshold at which the 
WTO GPA applies, to which the Buy American statute applied. It is 
estimated that 24,459 of these awards were for commercially 
available off-the-shelf (COTS) items. Because the domestic content 
threshold test does not apply to COTS items (except those involving 
iron/steel), those awards were subtracted from the 86,490 total 
eligible awards. After removing potential COTS item acquisitions 
from the data, there are estimated to be 62,031 contract awards to 
11,704 unique small businesses. In recognition of the feedback 
provided by the public, DoD, GSA, and NASA have decided to delay the 
effective date of this rule by several months. The expectation is 
that this grace period will allow the contracting community more 
time to acclimate to the new threshold and prepare for the new 
procedures. Coupled with the implementation of the fallback 
threshold, the grace period should minimize any increased burden 
associated with the higher domestic content thresholds.
--Enhanced preference for a critical product or component. This rule 
only creates a framework. Separate rulemaking will be done to add 
critical products and components to the FAR and to establish the 
associated preferences. However, the Government assumes that 10 
percent of the contract awards subject to Buy American statute will 
be for critical products or components. Therefore, the Government 
estimates that 8,649 (10 percent of 86,490) of awards to small 
businesses may be impacted. This translates to 1,632 unique small 
businesses.

    The final rule will strengthen domestic preferences under the 
Buy American statute and provide small businesses the opportunity 
and incentive to deliver U.S. manufactured products from domestic 
suppliers. It is expected that this rule will benefit U.S. 
manufacturers.
    This rule does not include any new recordkeeping or other 
compliance requirements for small businesses. Prior to this rule, 
small businesses already had to monitor compliance with contract 
requirements pertaining to the domestic content threshold for 
contracted items. However, the increases in the domestic content 
threshold implemented in this rule may result in disruption to 
existing contractor supply chains across impacted contracts, which 
in turn, may require more effort on small businesses to monitor 
compliance.
    This rule does contain a few additional reporting requirements 
for certain offerors, including small businesses.
    Small businesses who submit an offer for a solicitation subject 
to the Buy American statute already have to list the foreign end 
products included in their offer. This rule will require that the 
offeror also identify which of these foreign end products, that are 
not COTS items and do not consist wholly or predominantly of iron or 
steel or a combination of both, meet or exceed the fallback domestic 
content threshold. This rule will also require proposals to identify 
which offered domestic end products contain a critical component. 
Without that information, contracting officers will not be able to 
apply the ``enhanced price preference'' when applicable. These 
reporting requirements are not specific to small businesses so data 
does not exist to estimate the number of small businesses subject to 
these requirements. However, the data suggests that there will be 
approximately 8,800 impacted respondents total, small and other than 
small.
    There are no known significant alternative approaches to the 
final rule.

    Interested parties may obtain a copy of the FRFA from the 
Regulatory Secretariat Division. The Regulatory Secretariat Division 
has submitted a copy of the FRFA to the Chief Counsel for Advocacy of 
the Small Business Administration.

[[Page 12790]]

VIII. Paperwork Reduction Act

    The Paperwork Reduction Act (44 U.S.C. 3501-3521) applies. The rule 
contains information collection requirements. OMB has provided pre-
approval of the revised information collection requirements under OMB 
Control Number 9000-0024, Buy American, Trade Agreements, and Duty-Free 
Entry.
    The proposed rule contained a new information collection 
requirement that is no longer included in this final rule. As such, the 
Regulatory Secretariat Division has withdrawn its request to the Office 
of Management and Budget for approval of a new information collection 
requirement concerning ``Domestic Content Reporting Requirement.''

List of Subjects in 48 CFR Parts 13, 25, and 52

    Government procurement.

William F. Clark,
Director, Office of Government-Wide Acquisition Policy, Office of 
Acquisition Policy, Office of Government-Wide Policy.

    Therefore, DoD, GSA, and NASA amend 48 CFR parts 13, 25, and 52 as 
set forth below:

0
1. The authority citation for 48 CFR parts 13, 25, and 52 continues to 
read as follows:

    Authority:  40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 51 
U.S.C. 20113.

PART 13--SIMPLIFIED ACQUISITION PROCEDURES

0
2. Amend section 13.302-5 by revising paragraph (d)(3)(i) and adding 
paragraph (d)(4) to read as follows:


13.302-5   Clauses.

* * * * *
    (d) * * *
    (3) * * *
    (i) When an acquisition for supplies for use within the United 
States cannot be set aside for small business concerns and trade 
agreements apply (see subpart 25.4), substitute the clause at FAR 
52.225-3, Buy American-Free Trade Agreements-Israeli Trade Act, used 
with the appropriate Alternate (see 25.1101(b)(1)), instead of the 
clause at FAR 52.225-1, Buy American-Supplies.
* * * * *
    (4) When the senior procurement executive allows for application of 
an alternate domestic content test for the contract in accordance with 
25.101(d), so that the initial domestic content threshold will apply to 
the entire period of performance, the contracting officer shall fill in 
the 52.213-4(b)(1)(xvii)(B) for 52.225-1 Alternate I as follows: For 
contracts that the contracting officer estimates will be awarded in 
calendar year 2022 or 2023, the contracting officer shall insert ``60'' 
in paragraph (1)(ii)(A) of the definition of domestic end product. For 
contracts that the contracting officer estimates will be awarded in 
calendar year 2024, 2025, 2026, 2027, or 2028, the contracting officer 
shall insert ``65''. For contracts that the contracting officer 
estimates will be awarded after calendar year 2028 the contracting 
officer shall insert ``75''.

PART 25--FOREIGN ACQUISITION

0
3. Amend section 25.003 by--
0
a. Adding in alphabetical order definitions for ``Critical component'' 
and ``Critical item'';
0
b. In the definition ``Domestic construction material'' revising the 
first sentence of paragraph (1)(i)(B)(1); and
0
c. In the definition ``Domestic end product'' revising the first 
sentence of paragraph (1)(ii)(A).
    The additions and revisions read as follows:


25.003  Definitions.

* * * * *
    Critical component means a component that is mined, produced, or 
manufactured in the United States and deemed critical to the U.S. 
supply chain. The list of critical components is at 25.105.
    Critical item means a domestic construction material or domestic 
end product that is deemed critical to the U.S. supply chain. The list 
of critical items is at 25.105.
* * * * *
    Domestic construction material * * *
    (1) * * *
    (i) * * *
    (B) * * *
    (1) The cost of the components mined, produced, or manufactured in 
the United States exceeds 60 percent of the cost of all its components, 
except that the percentage will be 65 percent for items delivered in 
calendar years 2024 through 2028 and 75 percent for items delivered 
starting in calendar year 2029 (unless an alternate percentage is 
established for a contract in accordance with FAR 25.201(c)). * * *
* * * * *
    Domestic end product * * *
    (1) * * *
    (ii) * * *
    (A) The cost of its components mined, produced, or manufactured in 
the United States exceeds 60 percent of the cost of all its components, 
except that the percentage will be 65 percent for items delivered in 
calendar years 2024 through 2028 and 75 percent for items delivered 
starting in calendar year 2029 (unless an alternate percentage is 
established for a contract in accordance with FAR 25.101(d)). * * *
* * * * *

0
4. Amend section 25.100 by--
0
a. Removing the word ``and'' at the end of paragraph (a)(3);
0
b. Redesignating paragraph (a)(4) as (a)(5); and
0
c. Adding a new paragraph (a)(4).
    The addition reads as follows:


25.100   Scope of subpart.

    (a) * * *
    (4) Executive Order 14005, January 25, 2021; and
* * * * *

0
5. Amend section 25.101 by--
0
a. Removing from paragraph (a) introductory text the phrase ``Buy 
American statute and E.O. 13881'' and adding the phrase ``Buy American 
statute, E.O. 13881, and E.O. 14005'' in its place;
0
b. Revising the first sentence of paragraph (a)(2)(i); and
0
c. Adding paragraph (d).
    The revision and addition read as follows:


25.101   General.

    (a) * * *
    (2)(i) Except for an end product that consists wholly or 
predominantly of iron or steel or a combination of both, the cost of 
domestic components shall exceed 60 percent of the cost of all the 
components, except that the percentage will be 65 percent for items 
delivered in calendar years 2024 through 2028 and 75 percent for items 
delivered starting in calendar year 2029. But see paragraph (d) of this 
section. * * *
* * * * *
    (d)(1) A contract with a period of performance that spans the 
schedule of domestic content threshold increases specified in paragraph 
(a)(2)(i) of this section shall be required to comply with each 
increased threshold for the items in the year of delivery, unless the 
senior procurement executive of the contracting agency allows for 
application of an alternate domestic content test for that contract 
under which the domestic content threshold in effect at time of 
contract award will apply to the entire period of performance for the 
contract. This authority is not delegable. The senior procurement 
executive shall consult the Office of Management and Budget's Made in 
America Office before allowing the use of the alternate domestic 
content test.
    (2) When a senior procurement executive allows for application of 
an

[[Page 12791]]

alternate domestic content test for a contract--
    (i) See 25.1101(a)(1)(ii) or 25.1101(b)(1)(v) for use of the 
appropriate Alternate clause to reflect the domestic content threshold 
that will apply to the entire period of performance for that contract; 
and
    (ii) Use the fill-in at 52.213-4(b)(1)(xvii)(B) instead of 
including 52.225-1 Alternate I when using 52.213-4, Terms and 
Conditions--Simplified Acquisitions (Other Than Commercial Products and 
Commercial Services).

0
6. Amend section 25.103 by--
0
a. Adding a sentence to the end of paragraph (b)(2)(i); and
0
b. Removing from paragraph (c) ``25.105'' and ``Subpart 25.5'' and 
adding ``25.106'' and ``subpart 25.5'' in their places, respectively.
    The addition reads as follows:


25.103  Exceptions.

* * * * *
    (b) * * *
    (2) * * *
    (i) * * * A determination is not required before January 1, 2030, 
if there is an offer for a foreign end product that exceeds 55 percent 
domestic content (see 25.106(b)(2) and 25.106(c)(2)).
* * * * *


25.105   [Redesignated as 25.106]

0
7. Redesignate section 25.105 as section 25.106.

0
8. Add a new section 25.105 to read as follows:


25.105  Critical components and critical items.

    (a) The following is a list of articles that have been determined 
to be a critical component or critical item and their respective 
preference factor(s).
    (1)-(2) [Reserved]
    (b) The list of articles and preference factors in paragraph (a) of 
this section will be published in the Federal Register for public 
comment no less frequently than once every 4 years. Unsolicited 
recommendations for deletions from this list may be submitted at any 
time and should provide sufficient data and rationale to permit 
evaluation (see 1.502).
    (c) For determining reasonableness of cost for domestic end 
products that contain critical components or are critical items (see 
25.106(c)).

0
9. Amend newly redesignated section 25.106 by--
0
a. In paragraph (a)(1) removing the phrase ``paragraph (b) of this 
section'' and adding the phrase ``paragraphs (b) and (c) of this 
section'' in its place;
0
b. In paragraph (a)(2) removing the word ``Subpart'' and adding the 
word ``subpart'' in its place; and
0
c. Revising paragraphs (b) and (c).
    The revisions read as follows:


25.106  Determining reasonableness of cost.

* * * * *
    (b) For end products that are not critical items and do not contain 
critical components. (1)(i) If there is a domestic offer that is not 
the low offer, and the restrictions of the Buy American statute apply 
to the low offer, the contracting officer must determine the 
reasonableness of the cost of the domestic offer by adding to the price 
of the low offer, inclusive of duty--
    (A) 20 percent, if the lowest domestic offer is from a large 
business concern; or
    (B) 30 percent, if the lowest domestic offer is from a small 
business concern. The contracting officer must use this factor, or 
another factor established in agency regulations, in small business 
set-asides if the low offer is from a small business concern offering 
the product of a small business concern that is not a domestic end 
product (see subpart 19.5).
    (ii) The price of the domestic offer is reasonable if it does not 
exceed the evaluated price of the low offer after addition of the 
appropriate evaluation factor in accordance with paragraph (a) or 
(b)(1)(i) of this section. See evaluation procedures at subpart 25.5.
    (2)(i) For end products that are not COTS items and do not consist 
wholly or predominantly of iron or steel or a combination of both, if 
the procedures in paragraph (b)(1)(i) of this section result in an 
unreasonable cost determination for the domestic offer or there is no 
domestic offer received, and the low offer is for a foreign end product 
that does not exceed 55 percent domestic content, the contracting 
officer shall--
    (A) Treat the lowest offer of a foreign end product that is 
manufactured in the United States and exceeds 55 percent domestic 
content as a domestic offer; and
    (B) Determine the reasonableness of the cost of this offer by 
applying the evaluation factors listed in paragraph (b)(1)(i) of this 
section to the low offer.
    (ii) The price of the lowest offer of a foreign end product that 
exceeds 55 percent domestic content is reasonable if it does not exceed 
the evaluated price of the low offer after addition of the appropriate 
evaluation factor in accordance with paragraph (a) or (b)(1)(i) of this 
section. See evaluation procedures at subpart 25.5.
    (iii) The procedures in this paragraph (b)(2) will no longer apply 
as of January 1, 2030.
    (c) For end products that are critical items or contain critical 
components. (1)(i) If there is a domestic offer that is not the low 
offer, and the restrictions of the Buy American statute apply to the 
low offer, the contracting officer shall determine the reasonableness 
of the cost of the domestic offer by adding to the price of the low 
offer, inclusive of duty--
    (A) 20 percent, plus the additional preference factor identified 
for the critical item or end product containing critical components 
listed at section 25.105, if the lowest domestic offer is from a large 
business concern; or
    (B) 30 percent, plus the additional preference factor identified 
for the critical item or end product containing critical components 
listed at section 25.105, if the lowest domestic offer is from a small 
business concern. The contracting officer shall use this factor, or 
another factor established in agency regulations, in small business 
set-asides if the low offer is from a small business concern offering 
the product of a small business concern that is not a domestic end 
product (see subpart 19.5).
    (ii) The price of the domestic offer is reasonable if it does not 
exceed the evaluated price of the low offer after addition of the 
appropriate evaluation factor in accordance with paragraph (a) or (b) 
of this section. See evaluation procedures at subpart 25.5.
    (2)(i) For end products that are not COTS items and do not consist 
wholly or predominantly of iron or steel or a combination of both, if 
the procedures in paragraph (c)(1)(ii) of this section result in an 
unreasonable cost determination for the domestic offer or there is no 
domestic offer received, and the low offer is for a foreign end product 
that does not exceed 55 percent domestic content, the contracting 
officer shall--
    (A) Treat the lowest offer of a foreign end product that is 
manufactured in the United States and exceeds 55 percent domestic 
content as a domestic offer; and
    (B) Determine the reasonableness of the cost of this offer by 
applying the evaluation factors listed in paragraph (c)(1) of this 
section to the low offer.
    (ii) The price of the lowest offer of a foreign end product that 
exceeds 55 percent domestic content is reasonable if it does not exceed 
the evaluated price of the low offer after addition of the appropriate 
evaluation factor in accordance with paragraph (a) or (b) of this 
section. See evaluation procedures at subpart 25.5.

[[Page 12792]]

    (iii) The procedures in this paragraph (c)(2) will no longer apply 
as of January 1, 2030.

0
10. Amend section 25.200 by--
0
a. In paragraph (a)(3) removing the word ``and'';
0
b. Redesignating paragraph (a)(4) as paragraph (a)(5);
0
c. Adding a new paragraph (a)(4); and
0
d. In paragraph (c) removing the word ``Subpart'' and adding the word 
``subpart'' in its place.
    The addition reads as follows:


25.200   Scope of subpart.

    (a) * * *
    (4) Executive Order 14005, January 25, 2021; and
* * * * *

0
11. Amend section 25.201 by--
0
a. Removing from paragraph (b) introductory text the phrase ``statute 
and E.O. 13881 use'' and adding the phrase ``statute, E.O. 13881, and 
E.O. 14005 use'' in its place;
0
b. Revising the first sentence of paragraph (b)(2)(i); and
0
c. Adding paragraph (c).
    The revision and addition read as follows.


25.201   Policy.

* * * * *
    (b) * * *
    (2)(i) Except for construction material that consists wholly or 
predominantly of iron or steel or a combination of both, the cost of 
domestic components must exceed 60 percent of the cost of all the 
components, except that the percentage will be 65 percent for items 
delivered in calendar years 2024 through 2028 and 75 percent for items 
delivered starting in calendar year 2029, but see paragraph (c) of this 
section. * * *
* * * * *
    (c)(1) A contract with a period of performance that spans the 
schedule of domestic content threshold increases specified in paragraph 
(b)(2)(i) of this section shall be required to comply with each 
increased threshold for the items in the year of delivery, unless the 
senior procurement executive of the contracting agency allows for 
application of an alternate domestic content test for that contract 
under which the domestic content threshold in effect at time of 
contract award will apply to the entire period of performance for the 
contract. This authority is not delegable. The senior procurement 
executive shall consult the Office of Management and Budget's Made in 
America Office before allowing the use of the alternate domestic 
content test.
    (2) When a senior procurement executive allows for application of 
an alternate domestic content test for a contract, see 25.1102(a)(3) or 
(c)(4) for use of the appropriate Alternate clause to reflect the 
domestic content threshold that will apply to the entire period of 
performance for that contract.

0
12. Amend section 25.202 by adding a sentence to the end of paragraph 
(a)(2) to read as follows:


25.202   Exceptions.

    (a) * * *
    (2) * * * A determination is not required before January 1, 2030, 
if there is an offer for a foreign construction material that exceeds 
55 percent domestic content (see 25.204(b)(1)(ii) and 
25.204(b)(2)(ii)).
* * * * *

0
13. Amend section 25.204 by revising paragraph (b) to read as follows:


25.204   Evaluating offers of foreign construction material.

* * * * *
    (b)(1) For construction material that is not a critical item and 
does not contain critical components. (i) Unless the head of the agency 
specifies a higher percentage, the contracting officer shall add to the 
offered price 20 percent of the cost of any foreign construction 
material proposed for exception from the requirements of the Buy 
American statute based on the unreasonable cost of domestic 
construction materials. In the case of a tie, the contracting officer 
shall give preference to an offer that does not include foreign 
construction material excepted at the request of the offeror on the 
basis of unreasonable cost.
    (ii) For construction material that is not a COTS item and does not 
consist wholly or predominantly of iron or steel or a combination of 
both, if the procedures in paragraph (b)(1)(i) of this section result 
in an unreasonable cost determination for the domestic construction 
material offer or there is no domestic construction material offer 
received, and the low offer is for foreign construction material that 
does not exceed 55 percent domestic content, the contracting officer 
shall--
    (A) Treat the lowest offer of foreign construction material that is 
manufactured in the United States and exceeds 55 percent domestic 
content as a domestic offer; and
    (B) Determine the reasonableness of the cost of this offer by 
applying the evaluation factor listed in paragraph (b)(1)(i) to the low 
offer.
    (iii) The procedures in paragraph (b)(1)(ii) of this section will 
no longer apply as of January 1, 2030.
    (2) For construction material that is a critical item or contains 
critical components. (i) The contracting officer shall add to the 
offered price 20 percent, plus the additional preference factor 
identified for the critical item or construction material containing 
critical components listed at section 25.105, of the cost of any 
foreign construction material proposed for exception from the 
requirements of the Buy American statute based on the unreasonable cost 
of domestic construction materials. In the case of a tie, the 
contracting officer shall give preference to an offer that does not 
include foreign construction material excepted at the request of the 
offeror on the basis of unreasonable cost. See 25.105 for the list of 
critical components and critical items.
    (ii) For construction material that is not a COTS item and does not 
consist wholly or predominantly of iron or steel or a combination of 
both, if the procedures in paragraph (b)(2)(i) of this section result 
in an unreasonable cost determination for the domestic construction 
material offer or there is no domestic construction material offer 
received, and the low offer is for foreign construction material that 
does not exceed 55 percent domestic content, the contracting officer 
shall--
    (A) Treat the lowest offer of foreign construction material that is 
manufactured in the United States and exceeds 55 percent domestic 
content as a domestic offer; and
    (B) Determine the reasonableness of the cost of this offer by 
applying the evaluation factors listed in this paragraph (b)(2) to the 
low offer.
    (iii) The procedures in paragraph (b)(2)(ii) of this section will 
no longer apply as of January 1, 2030.
* * * * *


25.501   [Amended]

0
14. Amend section 25.501 by--
0
a. Removing from paragraph (c) the word ``Subpart'' and adding the word 
``subpart'' in its place; and
0
b. Removing from paragraph (d) the word ``Must'' and adding the phrase 
``When trade agreements are involved, must'' in its place.

0
15. Amend section 25.502 by revising paragraphs (c)(2) and (3) and 
(c)(4) introductory text to read as follows:


25.502   Application.

* * * * *
    (c) * * *
    (2) If the low offer is a noneligible offer and there were no 
domestic offers (see 25.103(b)(3)), award on the low offer. The 
procedures at 25.106(b)(2) and 25.106(c)(2) do not apply.
    (3) If the low offer is a noneligible offer and there is an 
eligible offer that

[[Page 12793]]

is lower than the lowest domestic offer, award on the low offer. The 
procedures at 25.106(b)(2) and 25.106(c)(2) do not apply.
    (4) Otherwise, apply the appropriate evaluation factor provided in 
25.106 to the low offer. The procedures at 25.106(b)(2) and 
25.106(c)(2) do not apply.
* * * * *

0
16. Amend section 25.503 by--
0
a. Removing from paragraph (a)(1) the word ``Subpart' and adding the 
word ``subpart'' in its place; and
0
b. Adding paragraph (d).
    The addition reads as follows:


25.503  Group offers.

* * * * *
    (d) If no trade agreement applies to a solicitation and the 
solicitation specifies that award will be made only on a group of line 
items or all line items contained in the solicitation, determine the 
category of end products (i.e., domestic or foreign) on the basis of 
each line item, but determine whether to apply an evaluation factor on 
the basis of the group of items (see 25.504-4(c), Example 3).
    (1) If the proposed price of domestic end products exceeds 50 
percent of the total proposed price of the group, evaluate the entire 
group as a domestic offer. Evaluate all other groups as foreign offers.
    (2) Apply the evaluation factor to the entire group in accordance 
with 25.502, except where 25.502(c)(4) applies and the evaluated price 
of the low offer remains less than the lowest domestic offer. Where the 
evaluated price of the low offer remains less than the lowest domestic 
offer, treat as a domestic offer any group where the proposed price of 
end products with a domestic content of at least 55 percent exceeds 50 
percent of the total proposed price of the group.
    (3) Apply the evaluation factor to the entire group in accordance 
with 25.502(c)(4).

0
17. Amend section 25.504-1 by--
0
a. In the table in paragraph (a)(1), revising the entry for ``Offer 
C'';
0
b. Revising paragraph (a)(2); and
0
c. Adding paragraph (c).
    The revision and addition read as follows:


25.504-1  Buy American statute.

    (a)(1) * * *

------------------------------------------------------------------------
 
------------------------------------------------------------------------
 
                              * * * * * * *
Offer C........................         $10,100  U.S.-made end product
                                                  (not domestic), small
                                                  business.
------------------------------------------------------------------------

    (2) Analysis. This acquisition is for end products for use in the 
United States and is set aside for small business concerns. The Buy 
American statute applies. Since the acquisition value is less than 
$25,000 and the acquisition is set aside, none of the trade agreements 
apply. Perform the steps in 25.502(a). Offer C is of 50 percent 
domestic content, therefore Offer C is evaluated as a foreign end 
product, because it is the product of a small business but is not a 
domestic end product (see 25.502(c)(4)). Since Offer B is a domestic 
offer, apply the 30 percent factor to Offer C (see 25.106(b)(2)). The 
resulting evaluated price of $13,130 remains lower than Offer B. The 
cost of Offer B is therefore unreasonable (see 25.106(b)(1)(ii)). The 
25.106(b)(2) procedures do not apply. Award on Offer C at $10,100 (see 
25.502(c)(4)(i)).
* * * * *
    (c)(1) Example 3.

------------------------------------------------------------------------
 
------------------------------------------------------------------------
Offer A........................         $14,000  Domestic end product
                                                  (complies with the
                                                  required domestic
                                                  content), small
                                                  business.
Offer B........................          12,500  U.S.-made end product
                                                  (not domestic, exceeds
                                                  55% domestic content),
                                                  small business.
Offer C........................          10,100  U.S.-made end product
                                                  (not domestic, with
                                                  less than 55% domestic
                                                  content), small
                                                  business.
------------------------------------------------------------------------

    (2) Analysis. This acquisition is for end products for use in the 
United States and is set aside for small business concerns. The Buy 
American statute applies. Since the acquisition value is less than 
$25,000 and the acquisition is set aside, none of the trade agreements 
apply. Perform the steps in 25.502(a). Offers B and C are initially 
evaluated as foreign end products, because they are the products of 
small businesses but are not domestic end products (see 25.502(c)(4)). 
Offer C is the low offer. After applying the 30 percent factor, the 
evaluated price of Offer C is $13,130. The resulting evaluated price of 
$13,130 remains lower than Offer A. The cost of Offer A is therefore 
unreasonable. Offer B is then treated as a domestic offer, because it 
is for a U.S.-made end product that exceeds 55 percent domestic content 
(see 25.106(b)(2)). Offer B is determined reasonable because it is 
lower than the $13,130 evaluated price of Offer C. Award on Offer B at 
$12,500.

0
18. Amend section 25.504-4 by adding paragraph (c) to read as follows:


25.504-4  Group award basis.

* * * * *
    (c) Example 3.

----------------------------------------------------------------------------------------------------------------
                                                                         Offers
                 Item                 --------------------------------------------------------------------------
                                                  A                        B                        C
----------------------------------------------------------------------------------------------------------------
1....................................  DO = $17,800...........  FO (>55%) = $16,000....  FO (<55%) = $11,200.
2....................................  FO (>55%) = $9,000.....  FO (>55%) = $8,500.....  DO = $10,200.
3....................................  FO (<55%) = $11,200....  FO (>55%) = $12,000....  FO (<55%) = $11,000.
4....................................  DO = $10,000...........  DO = $9,000............  FO (<55%) = $6,400.
                                      --------------------------------------------------------------------------
    Total............................  $48,000................  $45,500................  $38,800.
----------------------------------------------------------------------------------------------------------------
Key:
DO = Domestic end product (complies with the required domestic content).
FO > 55% = Foreign end product with domestic content exceeding 55%.
FO < 55% = Foreign end product with domestic content of 55% or less.


[[Page 12794]]

    Problem: The solicitation specifies award on a group basis. Assume 
only the Buy American statute applies (i.e., no trade agreements apply) 
and the acquisition cannot be set aside for small business concerns. 
All offerors are large businesses.
    Analysis: (see 25.503(d))
    STEP 1: Determine which of the offers are domestic (see 
25.503(d)(1)):

------------------------------------------------------------------------
                               Domestic (percent)       Determination
------------------------------------------------------------------------
A...........................  $17,800 (Offer A1) +  Domestic.
                               $10,000 (Offer A4)
                               = $27,800.
                              $27,800/$48,000
                               (Offer A Total) =
                               58%.
B...........................  $9,000 (Offer B4)/    Foreign.
                               $45,500 (Offer B
                               Total) = 19.8%.
C...........................  $10,200 (Offer C2)/   Foreign.
                               $38,800 (Offer C
                               Total) = 26.3%.
------------------------------------------------------------------------

    STEP 2: Determine which offer, domestic or foreign, is the low 
offer. If the low offer is a foreign offer, apply the evaluation factor 
(see 25.503(d)(2)). The low offer (Offer C) is a foreign offer. 
Therefore, apply the factor to the low offer. Addition of the 20 
percent factor (use 30 percent if Offer A is a small business) to Offer 
C yields an evaluated price of $46,560 ($38,800 + 20 percent). Offer C 
remains the low offer.
    STEP 3: Determine if there is a foreign offer that could be treated 
as a domestic offer (see 25.106(b)(2) and 25.503(d)(2)).

----------------------------------------------------------------------------------------------------------------
                                      Amount of domestic content
                                              (percent)                            Determination
----------------------------------------------------------------------------------------------------------------
A..................................  N/A........................  N/A.
B..................................  $9,000 (Offer B4)/$45,500    Can be treated as domestic.
                                      (Offer B Total) $ = 19.8%
                                      is domestic.
                                     AND
                                     $16,000 (Offer B1) + $8,500
                                      (Offer B2) + $12,000
                                      (Offer B3) = $36,500.
                                     $36,500/$45,500 (Offer B
                                      Total) = 80.2% can be
                                      treated as domestic.
                                     19.8% + 80.2% = 100% is
                                      domestic or can be treated
                                      as domestic.
C..................................  $10,200 (Offer C2)/$38,800   Foreign.
                                      (Offer C Total) = 26.3% is
                                      domestic.
----------------------------------------------------------------------------------------------------------------

    STEP 4: If there is a foreign offer that could be treated as a 
domestic offer, compare the evaluated price of the low offer to the 
price of the offer treated as domestic (see 25.503(d)(3)). Offer B can 
be treated as a domestic offer ($45,500). The evaluated price of the 
low offer (Offer C) is $46,560. Award on Offer B.

0
19. Amend section 25.1101 by--
0
a. Redesignating paragraphs (a)(1)(i) through (iii) as paragraphs 
(a)(1)(i)(A) through (C);
0
b. Redesignating paragraph (a)(1) introductory text as paragraph 
(a)(1)(i); and
0
c. Adding paragraphs (a)(1)(ii) and (b)(1)(v).
    The additions read as follows:


25.1101  Acquisition of supplies.

* * * * *
    (a)(1) * * *
    (ii) The contracting officer shall use the clause with its 
Alternate I to reflect the domestic content threshold that will apply 
to the entire period of performance, when the senior procurement 
executive allows for application of an alternate domestic content test 
for the contract in accordance with 25.101(d). For contracts that the 
contracting officer estimates will be awarded in calendar year 2022 or 
2023, the contracting officer shall insert ``60'' in paragraph 
(1)(ii)(A) of the definition of ``domestic end product.'' For contracts 
that the contracting officer estimates will be awarded in calendar year 
2024, 2025, 2026, 2027, or 2028, the contracting officer shall insert 
``65''. For contracts that the contracting officer estimates will be 
awarded after calendar year 2028 the contracting officer shall insert 
``75''.
* * * * *
    (b)(1) * * *
    (v) The contracting officer shall use the clause with its Alternate 
IV to reflect the domestic content threshold that will apply to the 
entire period of performance, when the senior procurement executive 
allows for application of an alternate domestic content test for the 
contract in accordance with 25.102(d). For contracts that the 
contracting officer estimates will be awarded in calendar year 2022 or 
2023, the contracting officer shall insert ``60'' in paragraph 
(1)(ii)(A) of the definition of ``domestic end product.'' For contracts 
that the contracting officer estimates will be awarded in calendar year 
2024, 2025, 2026, 2027, or 2028, the contracting officer shall insert 
``65''. For contracts that the contracting officer estimates will be 
awarded after calendar year 2028 the contracting officer shall insert 
``75''.
* * * * *

0
20. Amend section 25.1102 by adding paragraphs (a)(3) and (c)(4) to 
read as follows:


25.1102  Acquisition of construction.

* * * * *
    (a) * * *
    (3) The contracting officer shall use the clause with its Alternate 
I to reflect the domestic content threshold that will apply to the 
entire period of performance, when the senior procurement executive 
allows for application of an alternate domestic content test for the 
contract in accordance with 25.201(c). For contracts that the 
contracting officer estimates will be awarded in calendar year 2022 or 
2023, the contracting officer shall insert ``60'' in paragraph 
(1)(ii)(A) of the definition of ``domestic construction material.'' For 
contracts that the contracting officer estimates will be awarded in 
calendar year 2024, 2025, 2026, 2027, or 2028, the contracting officer 
shall insert ``65''. For contracts that the contracting officer 
estimates will be awarded after calendar year 2028 the contracting 
officer shall insert ``75''.
* * * * *
    (c) * * *
    (4) The contracting officer shall use the clause with its Alternate 
II to reflect the domestic content threshold that will apply to the 
entire period of performance, when the senior procurement executive 
allows for application of an alternate domestic content test for the 
contract in accordance with 25.201(c). For contracts that the 
contracting officer estimates will be awarded in calendar year 2022 or 
2023, the contracting officer shall insert ``60'' in paragraph 
(1)(ii)(A) of the

[[Page 12795]]

definition of ``domestic construction material.'' For contracts that 
the contracting officer estimates will be awarded in calendar year 
2024, 2025, 2026, 2027, or 2028, the contracting officer shall insert 
``65''. For contracts that the contracting officer estimates will be 
awarded after calendar year 2028 the contracting officer shall insert 
``75''.
* * * * *

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
21. Amend section 52.212-3 by--
0
a. Revising the date of the provision;
0
b. In paragraph (f)(1)(i) removing the word ``product'' and adding the 
phrase ``product and that each domestic end product listed in paragraph 
(f)(3) of this provision contains a critical component'' in its place;
0
c. Adding two sentences to the end of paragraph (f)(1)(ii);
0
d. Redesignating paragraph (f)(1)(iii) as paragraph (f)(1)(iv) and 
adding a new paragraph (f)(1)(iii);
0
e. Removing from the newly redesignated paragraph (f)(1)(iv) the phrase 
``The terms ``domestic end product,'' '' and adding the phrase ``The 
terms ``commercially available off-the-shelf (COTS) item,'' ``critical 
component,'' ``domestic end product,'' '' in its place;
0
f. Revising the table in paragraph (f)(2);
0
g. Redesignating paragraph (f)(3) as paragraph (f)(4) and adding a new 
paragraph (f)(3);
0
h. In the newly redesignated paragraph (f)(4) removing the word 
``Part'' and adding the word ``part'' in its place;
0
i. In paragraph (g)(1)(i)(A) removing second occurrence of the word 
``product'' and adding the phrase ``product and that each domestic end 
product listed in paragraph (g)(1)(iv) of this provision contains a 
critical component'' in its place;
0
j. In paragraph (g)(1)(i)(B) removing the phrases ``Peruvian end 
product,'' ``domestic end product,'' '' and adding in their places the 
phrases ``Peruvian end product,'' ``commercially available off-the-
shelf (COTS) item,'' ``critical component,'' ``domestic end product,'' 
'';
0
k. Adding two sentences at the end of paragraph (g)(1)(iii) 
introductory text and revising the table;
0
l. Redesignating paragraph (g)(1)(iv) as paragraph (g)(1)(v) and adding 
a new paragraph (g)(1)(iv); and
0
m. In the newly redesignated paragraph (g)(1)(v) removing the word 
``Part'' and adding the word ``part'' in its place.
    The revisions and additions read as follows:


52.212-3  Offeror Representations and Certifications--Commercial 
Products and Commercial Services.

* * * * *

Offeror Representations and Certifications--Commercial Products and 
Commercial Services (OCT 2022)

* * * * *
    (f) * * *
    (1) * * *
    (ii) * * * For those foreign end products that do not consist 
wholly or predominantly of iron or steel or a combination of both, 
the Offeror shall also indicate whether these foreign end products 
exceed 55 percent domestic content, except for those that are COTS 
items. If the percentage of the domestic content is unknown, select 
``no''.
    (iii) The Offeror shall separately list the line item numbers of 
domestic end products that contain a critical component (see FAR 
25.105).
* * * * *
    (2) * * *

------------------------------------------------------------------------
                                                          Exceeds 55%
          Line Item No.            Country of origin   domestic content
                                                           (yes/no)
------------------------------------------------------------------------
 
 
 
------------------------------------------------------------------------

[List as necessary]

    (3) Domestic end products containing a critical component:
    Line Item No. ___

[List as necessary]
* * * * *
    (g)(1) * * *
    (iii) * * * For those foreign end products that do not consist 
wholly or predominantly of iron or steel or a combination of both, 
the Offeror shall also indicate whether these foreign end products 
exceed 55 percent domestic content, except for those that are COTS 
items. If the percentage of the domestic content is unknown, select 
``no''.
    Other Foreign End Products:

------------------------------------------------------------------------
                                                          Exceeds 55%
          Line Item No.            Country of origin   domestic content
                                                           (yes/no)
------------------------------------------------------------------------
 
 
 
------------------------------------------------------------------------

[List as necessary]

    (iv) The Offeror shall list the line item numbers of domestic 
end products that contain a critical component (see FAR 25.105).
    Line Item No. ___

[List as necessary]
* * * * *

0
22. Amend section 52.212-5 by--
0
a. Revising the date of the clause;
0
b. Redesignating paragraph (b)(48) as paragraph (b)(48)(i) and removing 
from the newly redesignated paragraph (b)(48)(i) the date ``(NOV 
2021)'' and adding ``(OCT 2022)'' in its place;
0
c. Adding paragraph (b)(48)(ii);
0
d. Removing from paragraph (b)(49)(i) the date ``(NOV 2021)'' and 
adding ``(OCT 2022)'' in its place; and
0
e. Adding paragraph (b)(49)(v).
    The revision and additions read as follows:


52.212-5  Contract Terms and Conditions Required To Implement Statutes 
or Executive Orders--Commercial Products and Commercial Services.

* * * * *

Contract Terms and Conditions Required To Implement Statutes or 
Executive Orders--Commercial Products and Commercial Services (OCT 
2022)

* * * * *
    (b) * * *
    __ (48) * * *

[[Page 12796]]

    __ (ii) Alternate I (OCT 2022) of 52.225-1.
    __ (49) * * *
    __ (v) Alternate IV (OCT 2022) of 52.225-3.
* * * * *

0
23. Amend section 52.213-4 by--
0
a. Revising the date of the clause;
0
b. Redesignating paragraphs (b)(1)(xvii)(A) and (B) as paragraphs 
(b)(1)(xvii)(A)(1) and (2) and redesignating paragraph (b)(1)(xvii) 
introductory text as paragraph (b)(1)(xvii)(A) and;
0
c. In the newly redesignated paragraph (b)(1)(xvii)(A) removing the 
date ``(NOV 2021)'' and adding ``(OCT 2022)'' in its place; and
0
d. Adding paragraph (b)(1)(xvii)(B);
    The revision and addition read as follows:


52.213-4  Terms and Conditions--Simplified Acquisitions (Other Than 
Commercial Products and Commercial Services).

* * * * *

Terms and Conditions--Simplified Acquisitions (Other Than Commercial 
Products and Commercial Services) (OCT 2022)

    (b) * * *
    (1) * *
    (xvii) * * *
    (B) Alternate I (OCT 2022) (Applies if the Contracting Officer 
has filled in the domestic content threshold below, which will apply 
to the entire contract period of performance. Substitute the 
following sentence for the first sentence of paragraph (1)(ii)(A) of 
the definition of domestic end product in paragraph (a) of 52.225-1:
    (A) The cost of its components mined, produced, or manufactured 
in the United States exceeds __ percent of the cost of all its 
components. [Contracting officer to insert the percentage per 
instructions at 13.302-5(d)(4).])
* * * * *

0
24. Amend section 52.225-1 by--
0
a. Revising the date of the clause;
0
b. Adding in alphabetical order a definition for ``Critical component'' 
in paragraph (a);
0
c. In paragraph (a), in the definition of ``Domestic end product'' 
revising the first sentence of paragraph (1)(ii)(A); and
0
d. Adding Alternate I to the end of the section.
    The revisions and additions read as follows:


52.225-1  Buy American--Supplies.

* * * * *

Buy American--Supplies (OCT 2022)

    (a) * * *
    Critical component means a component that is mined, produced, or 
manufactured in the United States and deemed critical to the U.S. 
supply chain. The list of critical components is at FAR 25.105.
    Domestic end product * * *
    (1) * * *
    (ii) * * *
    (A) The cost of its components mined, produced, or manufactured 
in the United States exceeds 60 percent of the cost of all its 
components, except that the percentage will be 65 percent for items 
delivered in calendar years 2024 through 2028 and 75 percent for 
items delivered starting in calendar year 2029. * * *
* * * * *
    Alternate I (OCT 2022). As prescribed in 25.1101(a)(1)(ii) 
substitute the following sentence for the first sentence of 
paragraph (1)(ii)(A) of the definition of ``domestic end product'' 
in paragraph (a):
    (A) The cost of its components mined, produced, or manufactured 
in the United States exceeds __ percent of the cost of all its 
components. [Contracting officer to insert the percentage.]


0
25. Amend section 52.225-2 by--
0
a. Revising the date of the provision;
0
b. Revising paragraph (a)(1);
0
c. Adding two sentences at the end of paragraph (a)(2);
0
d. Redesignating paragraph (a)(3) as paragraph (a)(4) and adding a new 
paragraph (a)(3);
0
e. In newly redesignated paragraph (a)(4) removing the phrase ``The 
terms'' and adding the phrase ``The terms ``commercially available off-
the-shelf (COTS) item,'' ``critical component,'' '' in its place;
0
f. Revising the table in paragraph (b);
0
g. Redesignating paragraph (c) as paragraph (d) and adding a new 
paragraph (c).
    The revisions and additions read as follows:


52.225-2  Buy American Certificate.

* * * * *

Buy American Certificate (OCT 2022)

    (a)(1) The Offeror certifies that each end product, except those 
listed in paragraph (b) of this provision, is a domestic end product 
and that each domestic end product listed in paragraph (c) of this 
provision contains a critical component.
    (2) * * * For those foreign end products that do not consist 
wholly or predominantly of iron or steel or a combination of both, 
the Offeror shall also indicate whether these foreign end products 
exceed 55 percent domestic content, except for those that are COTS 
items. If the percentage of the domestic content is unknown, select 
``no''.
    (3) The Offeror shall separately list the line item numbers of 
domestic end products that contain a critical component (see FAR 
25.105).
* * * * *
    (b) * * *

------------------------------------------------------------------------
                                                          Exceeds 55%
          Line Item No.            Country of origin   domestic content
                                                           (yes/no)
------------------------------------------------------------------------
 
 
 
 
------------------------------------------------------------------------

[List as necessary]

    (c) Domestic end products containing a critical component:
    Line Item No. ___

[List as necessary]
* * * * *

0
26. Amend section 52.225-3 by--
0
a. Revising the date of the clause;
0
b. Adding in alphabetical order a definition for ``Critical component'' 
in paragraph (a);
0
c. In paragraph (a), in the definition ``Domestic end product'' 
revising the first sentence of paragraph (1)(ii)(A); and
0
d. Adding Alternate IV.
    The revisions and additions read as follows:


52.225-3   Buy American--Free Trade Agreements--Israeli Trade Act.

* * * * *

Buy American--Free Trade Agreements--Israeli Trade Act (OCT 2022)

    (a) * * *
    Critical component means a component that is mined, produced, or 
manufactured in the United States and deemed critical to the U.S. 
supply chain. The list of critical components is at FAR 25.105.
    Domestic end product * * *
    (1) * * *
    (ii) * * *
    (A) The cost of its components mined, produced, or manufactured 
in the United States exceeds 60 percent of the cost of all its 
components, except that the percentage will be 65 percent for items 
delivered in calendar years 2024 through 2028 and 75

[[Page 12797]]

percent for items delivered starting in calendar year 2029. * * *
* * * * *
    Alternate IV (OCT 2022). As prescribed in 25.1101(b)(1)(v) 
substitute the following sentence for the first sentence of 
paragraph (1)(ii)(A) of the definition of domestic end product in 
paragraph (a):
    (A) The cost of its components mined, produced, or manufactured 
in the United States exceeds __ percent of the cost of all its 
components. [Contracting officer to insert the percentage.]


0
27. Amend section 52.225-4 by--
0
a. Revising the date of the provision;
0
b. Revising paragraph (a)(1);
0
c. In paragraph (a)(2) removing the phrases ``Peruvian end product,'' 
``domestic end product,'''' and adding in their places ``Peruvian end 
product,'' ``commercially available off-the-shelf (COTS) item,'' 
``critical component,'' ``domestic end product,'''';
0
d. Redesignating paragraph (c) as paragraph (c)(1) and adding two 
sentences at the end of newly designated paragraph (c)(1);
0
e. Revising the table in newly designated paragraph (c)(1); and
0
f. Adding paragraph (c)(2).
    The revisions and additions read as follows:


52.225-4  Buy American--Free Trade Agreements--Israeli Trade Act 
Certificate.

* * * * *

Buy American--Free Trade Agreements--Israeli Trade Act Certificate (OCT 
2022)

    (a)(1) The Offeror certifies that each end product, except those 
listed in paragraph (b) or (c)(1) of this provision, is a domestic 
end product and that each domestic end product listed in paragraph 
(c)(2) of this provision contains a critical component.
* * * * *
    (c)(1) * * * For those foreign end products that do not consist 
wholly or predominantly of iron or steel or a combination of both, 
the Offeror shall also indicate whether these foreign end products 
exceed 55 percent domestic content, except for those that are COTS 
items. If the percentage of the domestic content is unknown, select 
``no''.
* * * * *

------------------------------------------------------------------------
                                                          Exceeds 55%
          Line Item No.            Country of origin   domestic content
                                                           (yes/no)
------------------------------------------------------------------------
 
 
 
------------------------------------------------------------------------

* * * * *
    (2) The Offeror shall list the line item numbers of domestic end 
products that contain a critical component (see FAR 25.105).
    Line Item No. ___

[List as necessary]
* * * * *

0
28. Amend section 52.225-9 by--
0
a. Revising the date of the clause;
0
b. Adding in alphabetical order definitions for ``Critical component'' 
and ``Critical item'';
0
c. In the definition ``Domestic construction material'' revising the 
first sentence of paragraph (1)(ii)(A);
0
d. Revising paragraph (b)(3)(i); and
0
e. Adding Alternate I to the end of the section.
    The revisions and additions read as follows:


52.225-9  Buy American--Construction Materials.

* * * * *

Buy American--Construction Materials (OCT 2022)

    (a) * * *
    Critical component means a component that is mined, produced, or 
manufactured in the United States and deemed critical to the U.S. 
supply chain. The list of critical components is at FAR 25.105.
    Critical item means a domestic construction material or domestic 
end product that is deemed critical to U.S. supply chain resiliency. 
The list of critical items is at FAR 25.105.
    Domestic construction material * * *
    (1) * * *
    (ii) * * *
    (A) The cost of its components mined, produced, or manufactured 
in the United States exceeds 60 percent of the cost of all its 
components, except that the percentage will be 65 percent for items 
delivered in calendar years 2024 through 2028 and 75 percent for 
items delivered starting in calendar year 2029. * * *
* * * * *
    (b) * * *
    (3) * * *
    (i) The cost of domestic construction material would be 
unreasonable.
    (A) For domestic construction material that is not a critical 
item or does not contain critical components.
    (1) The cost of a particular domestic construction material 
subject to the requirements of the Buy American statute is 
unreasonable when the cost of such material exceeds the cost of 
foreign material by more than 20 percent;
    (2) For construction material that is not a COTS item and does 
not consist wholly or predominantly of iron or steel or a 
combination of both, if the cost of a particular domestic 
construction material is determined to be unreasonable or there is 
no domestic offer received, and the low offer is for foreign 
construction material that is manufactured in the United States and 
does not exceed 55 percent domestic content, the Contracting Officer 
will treat the lowest offer of foreign construction material that 
exceeds 55 percent domestic content as a domestic offer and 
determine whether the cost of that offer is unreasonable by applying 
the evaluation factor listed in paragraph (b)(3)(i)(A)(1) of this 
clause.
    (3) The procedures in paragraph (b)(3)(i)(A)(2) of this clause 
will no longer apply as of January 1, 2030.
    (B) For domestic construction material that is a critical item 
or contains critical components. (1) The cost of a particular 
domestic construction material that is a critical item or contains 
critical components, subject to the requirements of the Buy American 
statute, is unreasonable when the cost of such material exceeds the 
cost of foreign material by more than 20 percent plus the additional 
preference factor identified for the critical item or construction 
material containing critical components listed at FAR 25.105.
    (2) For construction material that does not consist wholly or 
predominantly of iron or steel or a combination of both, if the cost 
of a particular domestic construction material is determined to be 
unreasonable or there is no domestic offer received, and the low 
offer is for foreign construction material that does not exceed 55 
percent domestic content, the Contracting Officer will treat the 
lowest foreign offer of construction material that is manufactured 
in the United States and exceeds 55 percent domestic content as a 
domestic offer, and determine whether the cost of that offer is 
unreasonable by applying the evaluation factor listed in paragraph 
(b)(3)(i)(B)(1) of this clause.
    (3) The procedures in paragraph (b)(3)(i)(B)(2) of this clause 
will no longer apply as of January 1, 2030.
* * * * *
    Alternate I (OCT 2022). As prescribed in 25.1102(a)(3), 
substitute the following sentence for the first sentence in 
paragraph (1)(ii)(A) of the definition of ``domestic construction 
material'' in paragraph (a):
    (A) The cost of its components mined, produced, or manufactured 
in the United States exceeds __ percent of the cost of all its 
components. [Contracting officer to insert the percentage.]


0
29. Amend section 52.225-11 by--
0
a. Revising the date of the clause;
0
b. Adding in alphabetical order definitions for ``Critical component'' 
and ``Critical item'' in paragraph (a);
0
c. In paragraph (a), in the definition ``Domestic construction 
material''

[[Page 12798]]

revising the first sentence of paragraph (1)(ii)(A);
0
d. Revising paragraph (b)(4)(i); and
0
e. Adding Alternate II.
    The revisions and additions read as follows:


52.225-11   Buy American--Construction Materials Under Trade 
Agreements.

* * * * *

Buy American--Construction Materials Under Trade Agreements (OCT 2022)

    (a) * * *
    Critical component means a component that is mined, produced, or 
manufactured in the United States and deemed critical to the U.S. 
supply chain. The list of critical components is at FAR 25.105.
    Critical item means a domestic construction material or domestic 
end product that is deemed critical to U.S. supply chain resiliency. 
The list of critical items is at FAR 25.105.
* * * * *
    Domestic construction material * * *
    (1) * * *
    (ii) * * *
    (A) The cost of its components mined, produced, or manufactured 
in the United States exceeds 60 percent of the cost of all its 
components, except that the percentage will be 65 percent for items 
delivered in calendar years 2024 through 2028 and 75 percent for 
items delivered starting in calendar year 2029. * * *
* * * * *
    (b) * * *
    (4) * * *
    (i) The cost of domestic construction material would be 
unreasonable.
    (A) For domestic construction material that is not a critical 
item or does not contain critical components. (1) The cost of a 
particular domestic construction material subject to the 
restrictions of the Buy American statute is unreasonable when the 
cost of such material exceeds the cost of foreign material by more 
than 20 percent;
    (2) For construction material that is not a COTS item and does 
not consist wholly or predominantly of iron or steel or a 
combination of both, if the cost of a particular domestic 
construction material is determined to be unreasonable or there is 
no domestic offer received, and the low offer is for foreign 
construction material that does not exceed 55 percent domestic 
content, the Contracting Officer will treat the lowest offer of 
foreign construction material that is manufactured in the United 
States and exceeds 55 percent domestic content as a domestic offer 
and determine whether the cost of that offer is unreasonable by 
applying the evaluation factor listed in paragraph (b)(4)(i)(A)(1) 
of this clause.
    (3) The procedures in paragraph (b)(4)(i)(A)(2) of this clause 
will no longer apply as of January 1, 2030.
    (B) For domestic construction material that is a critical item 
or contains critical components. (1) The cost of a particular 
domestic construction material that is a critical item or contains 
critical components, subject to the requirements of the Buy American 
statute, is unreasonable when the cost of such material exceeds the 
cost of foreign material by more than 20 percent plus the additional 
preference factor identified for the critical item or construction 
material containing critical components listed at FAR 25.105.
    (2) For construction material that does not consist wholly or 
predominantly of iron or steel or a combination of both, if the cost 
of a particular domestic construction material is determined to be 
unreasonable or there is no domestic offer received, and the low 
offer is for foreign construction material that does not exceed 55 
percent domestic content, the Contracting Officer will treat the 
lowest offer of foreign construction material that is manufactured 
in the United States and exceeds 55 percent domestic content as a 
domestic offer, and determine whether the cost of that offer is 
unreasonable by applying the evaluation factor listed in paragraph 
(b)(4)(i)(B)(1) of this clause.
    (3) The procedures in paragraph (b)(4)(i)(B)(2) of this clause 
will no longer apply as of January 1, 2030.
* * * * *
    Alternate II (OCT 2022). As prescribed in 25.1102(c)(4) substitute 
the following sentence for the first sentence of paragraph (1)(ii)(A) 
of the definition of domestic construction material in paragraph (a):

    (A) The cost of its components mined, produced, or manufactured 
in the United States exceeds __ percent of the cost of all its 
components. [Contracting officer to insert the percentage.]

[FR Doc. 2022-04173 Filed 3-4-22; 8:45 am]
BILLING CODE 6820-EP-P