Sun Federal

Buy American Act (BAA) and Trade Agreement Act (TAA)

As a general rule, under the BAA, agencies may acquire only domestic end items. For manufactured end products, the BAA uses a two-part test to define a domestic end product:

1. The article must be manufactured in the United States; and
2. The cost of domestic components must exceed 50 percent of the cost of all the components.

Unless another regulation prohibits the purchase of foreign end items, however, the contracting officer may not reject as non-responsive an offer of such items. In addition, the prohibition against the purchase of foreign goods does not apply if: the product is not available in sufficient commercial quantities; domestic preference would be inconsistent with the public interest; the product is for use outside the US; the cost of the domestic product would be unreasonable; or the product is for commissary resale. Due to the foregoing exceptions and qualifications, the BAA has been interpreted more as a preference than a prohibition.

The TAA provides another exception to the BAA. If the TAA applies to a purchase, only domestic products, qualifying country products, and products which, though comprised of over 50% foreign components, are "substantially transformed" in the US or a designated country. The TAA, unlike the BAA, acts as a prohibition in that products that are not domestic or "substantially transformed" in a designated country may not be purchased.

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