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DoD is issuing a final rule to amend the Defense Federal Acquisition Regulation Supplement (DFARS) to implement Executive Order 13881, Maximizing Use of American-Made Goods, Products, and Materials. Executive Order 13881 requires an amendment to the Federal Acquisition Regulation (FAR) to provide that materials shall be considered of foreign origin if: (a) for iron and steel end products, the cost of foreign iron and steel used in such iron and steel end products constitutes 5 percent or more of the cost of all the products used in such iron and steel end products; or (b) for all other end products, the cost of the foreign products used in such end products constitutes 45 percent or more of the cost of all the products used in such end products. The FAR changes were accomplished under FAR Case 2019-016, published in the Federal Register at 86 FR 6180. This DFARS rule will make conforming changes to the DFARS. 

Statement of Need:

This rule is needed to implement Executive Order 13881, Maximizing Use of American-Made Goods, Products, and Materials, dated July 15, 2019, which requires an amendment to the Federal Acquisition Regulation (FAR) and the Defense Federal Acquisition Regulation Supplement (DFARS) to provide that under the Buy American statute, materials shall be considered of foreign origin if--

(A) For iron and steel products, the cost of foreign iron and steel used in such iron and steel products constitutes 5 percent or more of the cost of all the product’s domestic content; or

(B) For all other products, the cost of the foreign components used in such products constitutes 45 percent or more of the cost of all the product’s domestic content.

In addition, the Executive order provides that in determining price reasonableness, the evaluation factors of 20 percent (for other than small businesses), or 30 percent (for small businesses) shall be applied to offers of materials of foreign origin. The DFARS applies a 50 percent factor and requires no additional revisions. This rule makes conforming changes to the applicable clauses as a result of implementation of the Executive order requirements in the FAR.

Summary of the Legal Basis:

The legal basis for this rule is 41 U.S.C. 1303 and Executive Order 13881, Maximizing Use of American-Made Goods, Products, and Materials, dated July 15, 2019.

Alternatives:

There are no alternatives that would meet the requirements of Executive Order 13881.

Anticipated Costs and Benefits:

This rule increases the percentages for use in the domestic content test applied to offers of products and materials to determine domestic or foreign origin.  The rule will strengthen domestic preferences under the Buy American statute and provide both large and small businesses the opportunity and incentive to deliver U.S. manufactured products from domestic suppliers.  It is expected that this rule will benefit large and small U.S. manufacturers, including those of iron or steel. 

Risks:

N/A