The Buy American Act and supplies

General considerations

The 1933 Buy American Act requires the purchase of American supplies (products) for U.S. federal procurement with a value of more than US$10,000.

A description of the Act and how it is implemented is contained in the Federal Acquisition Regulations Subpart 25.1 and in corresponding parts of agency acquisition regulations.

The Buy American Act may be waived when:

• the product is not available in the U.S.
• procuring a U.S. product is not economically feasible
• preference for a U.S. product is inconsistent with the public interest; or
• the cost of a U.S. product would be unreasonable compared to the price of an equivalent foreign product.

In the case of procurements for which the U.S. has undertaken commitments towards Canada under the revised WTO Agreement on Government Procurement (GPA), Buy American requirements are waived using the "public interest" exception.^{Footnote 1} In that case, Canadian suppliers are able to bid on the procurement on equal terms with U.S. suppliers. 

Price premium for non-U.S. supplies

When Buy American requirements apply and a procurement is not covered by the U.S.’ trade obligations, an amount may be added to the price of a non-U.S. offer before comparison with offers received for U.S. products. This is done to determine if a waiver for unreasonable cost may be granted.

Under these circumstances, a Canadian company normally would have 6% added to its offer price when being compared to an offer from a U.S. large business. If a Canadian offer is being compared to an offer from a U.S small business, 12% is normally added to the price of the Canadian offer.

It should be noted that while price premiums of 6% and 12% are the norm, the head of an agency can determine that higher premiums would be more appropriate. Such determination must be made in writing.

Products not available in the U.S.

In the Federal Acquisition Regulations Subpart 25.104, you will find a list of products determined to be "not available" in the U.S., which are the subject of a blanket waiver (note this list is not all-inclusive).

Other products may be deemed non-available. For example, a product developed by a Canadian company that has exclusive rights to its manufacture would also be considered "not available" in the U.S. and would fall under the non-availability exception if the U.S. government wished to buy it.

If a proposed procurement goes through normal procedures for full and open competition (including advertising for bids or offers) and no U.S. offer is received, the U.S. contracting officer can conclude that the product is "not available" in the U.S. and proceed on the basis of other offers received.