Overview
This section establishes the policy that construction contracts performed in the United States must utilize domestic construction materials, as mandated by the Buy American statute and relevant Executive Orders. It defines the criteria for "domestic" status through a two-part test focusing on the place of manufacture and specific domestic content cost thresholds.
Key Rules
- General Requirement: Only domestic construction materials may be used in U.S. construction contracts unless a specific exception under FAR 25.202 applies.
- The Two-Part Test: To qualify as domestic, the material must be (1) manufactured in the U.S. and (2) meet specific domestic content cost thresholds.
- Standard Content Thresholds: For non-iron/steel materials, the domestic component cost must exceed:
- 60% for items delivered through 2023.
- 65% for items delivered in calendar years 2024 through 2028.
- 75% for items delivered starting in calendar year 2029.
- Iron and Steel Rule: For materials consisting predominantly of iron or steel, the cost of foreign iron and steel must be less than 5% of the total component cost.
- COTS Waiver: The domestic content test is waived for Commercially Available Off-the-Shelf (COTS) items, except for predominantly iron or steel items (excluding COTS fasteners).
- Threshold Increases: Multi-year contracts spanning threshold increase dates must comply with the higher standards at the time of delivery unless the Senior Procurement Executive authorizes an alternate test.
Practical Implications
- Compliance Monitoring: Contractors must track delivery dates closely, as a product that is compliant at the time of award may become non-compliant during a multi-year project as the domestic content threshold increases.
- Strict Iron/Steel Standards: Procurement teams must be particularly vigilant with iron and steel products, as the "de minimis" allowance for foreign content is very low (5%) and the standard COTS waiver for domestic content does not apply.