As discussed in our prior client alert, the NPRM implements Executive Order 14005 (“Ensuring the Future Is Made in All of America by All of America’s Workers”) by proposing three major changes to existing BAA regulations: (1) higher domestic content thresholds; (2) enhanced price preferences for “critical” items and components; and (3) new domestic content reporting requirements for “critical” items and components.  The agenda for the public meeting covered each of these changes, as well as other questions raised in the NPRM related to BAA waivers and exceptions.

At the outset, Celeste Drake, Director of the recently established Made in America Office, provided prepared remarks regarding the goals of that office.  The goals include: (1) creating confidence and trust in Made in America Laws; (2) maximizing the use of domestic content to support economic recovery and expand the U.S. manufacturing base; and (3) institutionalizing the Made in America Office so that it is viewed as a valuable resource.

The FAR Council devoted the rest of the meeting to soliciting input from various stakeholders on the ten identified topic areas set out in the NPRM.  A variety of interests were represented among the commentators; some spoke as representatives of trade associations or unions, while others spoke in their own individual capacities as small business owners.  The nature of the NPRM’s questions for discussion — which included, for example, a question concerning the role of trade agreements and a question concerning the existing BAA waivers for commercial IT products and COTS products — necessarily resulted in a wide-ranging conversation.

As expected, commentators took different positions with respect to the proposed rule, with some speaking in favor of the proposed changes while others warned that the significant changes proposed in the NPRM could have a range of unintended consequences for industry and government customers.  In particular, some commentators suggested that an increase in domestic content thresholds to 75% might lead companies to exit the market if the cost of reaching that threshold are too high, and that BAA priorities must be considered in the context of U.S. international trade relationships and national defense priorities.  Others correctly noted that BAA requirements and other procurement rules are only one of many tools that the government may use to influence industrial development, and that the BAA rules in particular may impact some industries more significantly than others.  At the same time, many commentators — including union spokespersons and representatives of domestic manufacturing concerns — spoke in favor of the proposed increase to the domestic threshold, based on the perceived benefits for U.S.-based manufacturing.

Through it all, Ms. Drake and the representatives of the FAR Council appeared to be primarily in listening mode and gave away little about whether and how they intended to further revise the proposed rule in the next phase of the rulemaking process.  Moving forward, the FAR Council will need to determine not only how it manages domestic content thresholds and requirements related to “critical” items, but also whether and how it pursues further changes to BAA waivers and exceptions identified in the NPRM.

Written comments on the rule may be submitted through September 28, 2021, and we expect to see detailed comments filed by a variety of interested parties.  We will continue to monitor changes to the NPRM and other domestic preference developments and provide further updates in this space.

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Photo of Michael Wagner Michael Wagner

Mike Wagner helps government contractors navigate high-stakes enforcement matters and complex regulatory regimes.

Combining deep regulatory knowledge with extensive investigations experience, Mr. Wagner works closely with contractors across a range of industries to achieve the efficient resolution of regulatory enforcement actions and government…

Mike Wagner helps government contractors navigate high-stakes enforcement matters and complex regulatory regimes.

Combining deep regulatory knowledge with extensive investigations experience, Mr. Wagner works closely with contractors across a range of industries to achieve the efficient resolution of regulatory enforcement actions and government investigations, including False Claims Act cases. He has particular expertise representing individuals and companies in suspension and debarment proceedings, and he has successfully resolved numerous such matters at both the agency and district court level. He also routinely conducts internal investigations of potential compliance issues and advises clients on voluntary and mandatory disclosures to federal agencies.

In his contract disputes and advisory work, Mr. Wagner helps government contractors resolve complex issues arising at all stages of the public procurement process. As lead counsel, he has successfully litigated disputes at the Armed Services Board of Contract Appeals, and he regularly assists contractors in preparing and pursuing contract claims. In his counseling practice, Mr. Wagner advises clients on best practices for managing a host of compliance obligations, including domestic sourcing requirements under the Buy American Act and Trade Agreements Act, safeguarding and reporting requirements under cybersecurity regulations, and pricing obligations under the GSA Schedules program. And he routinely assists contractors in navigating issues and disputes that arise during negotiations over teaming agreements and subcontracts.

Photo of Peter Terenzio Peter Terenzio

Mr. Terenzio advises contractors across a broad range of different issues. His practice includes bid protests, contract claims and disputes, regulatory counseling, and internal investigations.

Before joining the firm, Mr. Terenzio clerked for Chief Judge Susan G. Braden of the Court of Federal Claims.