Biden strengthens ‘Buy American’ procurement rules

US president Joe Biden has signed an executive order to tighten existing ‘Buy American’ policies and strengthen government procurement rules.

Biden branded the executive order the “largest mobilisation of public investment in procurement, infrastructure, and R&D since World War Two”. 

Under the executive order, the US government must ensure it procures goods, products, materials and services from sources that will “help American businesses compete in strategic industries”.

Biden said while the federal government spends approximately $600bn every year in government procurement, ‘Buy American’ had not been properly utilised in the past. 

Under current rules, firms must demonstrate that at least 50% of components used were made in America, but “loopholes” in the policy meant least valuable parts could be included in the 50%. 

Using the example of a vehicle, Biden explained that it meant the most valuable parts, such as engines, steel, and glass, could be manufactured abroad.

“The content threshold of 50% isn’t high enough. And the way we measure the content doesn’t account for US jobs and economic activity,” he said. 

“The executive action I’m signing today will not only require that companies make more of their components in America, but that the value of those components is contributing to our economy, measured by things like a number of American jobs created and/or supported.”

Biden also announced the creation of a director of Made in America role, who will sit within the Office of Management and Budget (OMB) to oversee the initiative.  

“That starts with stopping federal agencies from waiving Buy American requirements with impunity… If an agency wants to issue a waiver to say, ‘We’re not going to buy an American product as part of this project; we’re going to buy a foreign product,’ they have to come to the White House and explain it to us,” he said. 

Requests for waivers to the Made in America rules must also be publicly posted, to give small US firms the opportunity to take on the work. 

The OMB has also been directed to review waivers to ensure they are only used in very limited circumstances, such as an “overwhelming national security, humanitarian, or emergency need”.

Biden added the Buy America rules would extend to communities that had “historically been left out of government procurement”, including black, brown, and Native American small businesses.

He also reiterated the need for the US to make its “own protective equipment, essential products and supplies” in response to the Covid-19 pandemic .

Last week, the president signed a flurry of executive orders after being sworn in, including an executive order to strengthen the US healthcare supply chain.

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