What you need to know about Buy America?

It's been a several years since the American Recovery and Reinvestment Act (ARRA) of 2009 went into effect and although most of the ARRA money has been spent by the states, we still get enough questions about Buy American.

One of the most important, and often most confusing, things you need to know is that there is not just one concept of "Buy American". The original Buy American Act was signed by President Hoover in 1933. Another act, called the Buy America Act, went into effect in 1983 but it only applies to mass transit, so we will ignore this one completely here. There is also a Buy American Clause in the ARRA.

This is not meant to be a legal assessment of any kind. It is just meant to clarify some questions people have asked us and why we often answer those questions with more questions.

Let's start with the Buy American Act of 1933. This act requires that the Federal government buy American made products whenever possible and defines American made as at least 50% of a product and/or it materials to originate in the US. It also allows for products made in countries that have trade agreement with the US, such as NAFTA, if it is a Federal project with a contract value over $7,443,000.

Under the Buy American clause in the ARRA, none of the ARRA funding can be used unless all of the manufactured goods on the project are produced in the US. There are a few exceptions that have to do with cost and availability of products, but the clause is a mere 223 words.

Basically, the way it works is that under the Buy American Act of 1933, products from Mexico, Canada, and any other country that has a trade agreement with the US is acceptable for Federal projects over $7,443,000. Under the ARRA Buy American clause, state projects funded by ARRA can only use US manufactured products.

On top of these two official “Buy American” statements, many federal departments have their own definition of buy American as well.

It's easy to see now why we often answer Buy American questions with more questions. As a manufacturer with one plant in Mexico and who buys electrical components from all over the world, the answer to "Do you meet Buy American?" is "It depends on which Buy American..."