Nearly every Government contract that exceeds the micro-purchase threshold (currently set at $3,000) contains the "Buy American Act" clause (FAR 52.225-1). The Act restricts the purchase of supplies, that are not domestic end products, for use within the United States. A foreign end product may be purchased if the contracting officer determines that the price of the lowest domestic offer is unreasonable or if another exception applies. A listing of these exemptions is found in FAR 25.1. The Act also requires the use of only domestic construction materials in contracts for construction in the United States. Here again, there are a few exceptions.
The Buy American Act uses a two-part test to define a domestic end product.
- The article must be manufactured in the United States; and
- The cost of domestic components must exceed 50 percent of the cost of all the components.
The Act applies to all contractors including small business set-asides.
FAR 52.225-2 requires contractors to certify compliance with the Buy American Act.