Overview
FAR 25.401 identifies specific circumstances, types of acquisitions, and categories of services that are exempt from the requirements of international trade agreements. These exceptions ensure that domestic preferences and national security interests take precedence over trade agreement obligations in high-priority or sensitive procurement areas.
Key Rules
- Small Business Priority: Acquisitions set aside for small businesses are always exempt from trade agreement procedures, regardless of the dollar value.
- National Security and Defense: The subpart does not apply to the acquisition of arms, ammunition, war materials, or any purchase deemed indispensable for national security or defense purposes.
- Mandatory Sources: Purchases from Federal Prison Industries (UNICOR) or nonprofit agencies employing people who are blind or severely disabled (AbilityOne) are excluded.
- Limited Competition: Sole source acquisitions and acquisitions using limited competition authorized by FAR Subpart 6.2, 6.3, or 13.501(a) are exempt if the limitation precludes trade agreement procedures.
- Resale and Specific Exclusions: Products intended for resale and goods/services specifically excluded by the U.S. Trade Representative (USTR) for particular agencies are not covered.
- Excluded Service Categories: A detailed matrix (the U.S. schedule) excludes specific services from various agreements, including:
- All services purchased in support of military services overseas.
- Research and Development (R&D).
- Transportation and Utility services.
- Dredging.
- Management of specific government facilities (e.g., DOE, DOD, and NASA facilities).
Practical Implications
- Preference Logic: If a procurement is set aside for small businesses, the Trade Agreements Act (TAA) does not apply, meaning the Buy American Act (BAA) remains the primary domestic preference consideration.
- Service-Specific Due Diligence: Contracting officers must consult the exclusion table in paragraph (b) because a service might be excluded under the WTO GPA but covered under a specific Free Trade Agreement (FTA), or vice versa.
- Procurement Planning: Agencies must verify Federal Service Codes (FSC) against the exclusion list early in the acquisition process to determine whether they must provide non-discriminatory treatment to foreign end products or services.