President Biden signed an executive order (EO) Jan. 25 designed to ensure that when the federal government spends taxpayer dollars they are spent on American-made goods with American-made components, closing loopholes that allow companies to offshore production and jobs while still qualifying for domestic preferences, according to the administration.
In comments the day of the signing, Biden said that in 2018, the Defense Department alone spent $3 billion on foreign construction contracts, “leaving American steel and iron out in the cold.”
Of the EO, he said, “Today we are getting to work to rebuild the backbone of America: manufacturing, unions and the middle class. It is based on the simple premise that will reward work, not wealth, in this country. The key plank of ensuring the future will be Made-in-America.”
He added, “I don’t buy for one second that the vitality of American manufacturing is a thing of the past. … It must be part of the engine of American prosperity now.”
The EO is part of Biden’s Build Back Better recovery plan. That plan includes building a strong industrial base and small-business-led supply chains to retain and create millions of good-paying union jobs in manufacturing and technology across the country; mobilizing American ingenuity to build modern infrastructure and an equitable, clean energy future; building a 21st century caregiving and education workforce; and advancing racial equity in America.
According to a news release about the EO, contracting alone accounts for nearly $600 billion in federal spending. While federal law requires government agencies to give preferences to American firms, implementation has not always been consistent or effective, while some requirements have not been substantially updated since 1954, according to the Biden administration.
The EO establishes the goals and standards needed to use federal purchasing, and other forms of federal assistance with domestic preference requirements, to proactively invest in American industry, and directs a process for updating these preferences to fit the current American economy.
The EO directs an increase in the threshold and price preferences for domestic goods and updates how the government decides if a product was sufficiently made in America. It also appoints a director of Made-in-America at the Office of Management and Budget who will oversee the implementation of the order and ensure the new rules are followed.
Additionally, the EO increases oversight of potential waivers to domestic preference laws by creating a central review of agency waivers of Buy-American requirements and directs the General Services Administration to publish relevant waivers on a publicly available website.
Agencies also are required to scout for suppliers and to use the Manufacturing Extension Partnership—a national network in all 50 states and Puerto Rico that supports small and midsize manufacturers—to help agencies connect with new domestic suppliers.
According to the administration, the president will continue to be a strong advocate for the Jones Act and its mandate that only U.S.-flag vessels carry cargo between U.S. ports, which supports American production and America’s workers. With the signing of the 2021 National Defense Authorization Act, the Jones Act also been affirmed as an opportunity to invest in America’s workers as we build offshore renewable energy, in line with Biden’s goals to build clean energy in America.
A cross-agency review of all domestic preferences also is required under the EO on a biannual basis. This review includes a requirement that agencies submit recommendations for ways to ensure items offered to the general public on federal property are Made in America and to consider service industries in addition to manufacturing.
The American Iron and Steel Institute (AISI), Washington, has voiced its support for the EO.
The association’s President and CEO Kevin Dempsey says, “Strong domestic procurement preferences for federally funded infrastructure projects, known as Buy America, are essential to ensure that taxpayer dollars are used to procure American steel and other made-in-America products—and have helped create manufacturing jobs. Recent studies have also shown that the American steel industry is the cleanest and most energy efficient of the leading steel industries in the world.”
He adds, “We are pleased that today’s executive order will tighten up the process for considering waivers to existing domestic preference requirements and will also increase domestic content requirements for defining what constitutes a product that is made in the United States. We applaud President Biden for affirming his commitment to ‘Build Back Better’ by enforcing and improving programs to ensure taxpayer dollars are used for products made in America—most significantly, the use of American steel.”