Buy American - Hire American

Yesterday, the President issued an Executive Order stating that "It shall be the policy of the executive branch to buy American and hire American". The focus of this EO is on the American steel industry and the H1-B visa program.

Buy American Laws. In order to promote economic and national security and to help stimulate economic growth, create good jobs at decent wages, strengthen our middle class, and support the American manufacturing and defense industrial bases, it shall be the policy of the executive branch to maximize ... the use of goods, products, and materials produced in the United States.

Hire American. In order to create higher wages and employment rates for workers in the United States, and to protect their economic interests, it shall be the policy of the executive branch to rigorously enforce and administer the laws governing entry into the United States of workers from abroad.

 The EO requires that every executive agency "scrupulously monitor, enforce, and comply with Buy American Laws" and minimize the use of waivers. The EO includes requirements for goals, studies and related deadlines designed to show how well executive agencies are meeting the Buy American laws. It also tightens up the approval process for granting waivers to the Buy American Act.

Concerning the "Hire American" features, the EO requires the Secretary of State, the Attorney General, the Secretary of Labor, and the Secretary of Homeland Security to develop new guidance related to administering the immigration system, including methods to prevent fraud and abuse. The H-1B visa program was specifically called out for reform. The Administration desires to ensure that H-1B visas are awarded to the most skilled or highest-paid petition beneficiaries.

So what does this new EO mean for Government contractors and Government contracting, in particular. Perhaps not much in the near term. There have been many expressed concerns that the EO will make infrastructure more expensive. Some believe that it will be more difficult for federal contractors to use cheaper imported products - notably steel - when building infrastructure projects. Limiting competition, they contend, will result in increased costs.

The corruption associated with the H1-B program is well documented. Many related to fake letters promising jobs, a necessary prerequisite to obtaining the visa. And there is a perception that many foreigners coming into the U.S. under the H1-B program do not have the skills (e.g. hi-tech) envisioned by the program. Perhaps new policies for administering the program will reduce fraud in the system. However, no one really knows the extent to which foreigners on H1-B visas are working under contracts with the U.S. Government or whether they are taking away jobs from highly qualified Americans.