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103D CONGRESS

1ST SESSION H. R. 903

To amend title III of the Act of March 3, 1933, commonly known as

the Buy American Act, to require Federal agencies to increase domestic

procurement in times of economic recession, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

FEBRUARY 16, 1993

Mr. MURTHA introduced the following bill; which was referred to the

Committee on Government Operations

A BILL

To amend title III of the Act of March 3, 1933, commonly

known as the Buy American Act, to require Federal

agencies to increase domestic procurement in times of

economic recession, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Fairness in Federal

5 Purchases Act of 1993’’.

6 SEC. 2. FINDINGS AND PURPOSE.

7 (a) FINDINGS.—The Congress makes the following

8 findings:
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1 (1) The Congress had high expectations for

2 commercial benefits from the Government Procure3 ment Code (in this section referred to as the

4 ‘‘Code’’) enacted as part of the Trade Agreements

5 Act of 1979, with a potential opening of

6 $20,000,000,000 to $25,000,000,000 in trade op7 portunities for United States export sales to foreign

8 government procurement entities.

9 (2) According to the Comptroller General of the

10 United States, in each year since implementation of

11 the Code on January 1, 1981, the United States has

12 spent approximately $18,000,000,000 in foreign

13 source procurement while in each such year United

14 States suppliers took in only $4,000,000,000 from

15 sales to overseas governments, for a total imbalance

16 in each such year of an estimated $14,000,000,000.

17 (3) Federal Government agencies have con18 firmed that—

19 (A) the Code has had less overall commer20 cial value than originally anticipated; and

21 (B) of the markets opened, the benefits

22 were disproportionately in favor of foreign sup23 pliers.

24 (4) The Congress has concerns about—
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1 (A) inadequate monitoring of foreign gov2 ernment compliance with the Code;

3 (B) inadequate efforts to enforce the rights

4 of the United States;

5 (C) the lack of United States Government

6 assistance to firms wishing to take advantage of

7 opened markets; and

8 (D) the continued lack of progress to open

9 foreign markets.

10 (5) The United States economy over the past

11 months has been in a condition of relative instabil12 ity, with negative growth resulting in lost jobs and

13 lost sales for both small and large businesses.

14 (6) After 13 years of limited opportunities for

15 United States companies overseas under the Code,

16 the time has come to address the matter of imbal17 ance with respect to the government procurement

18 practices of the United States’ trading partners and

19 to refocus United States Federal procurement policy

20 during this period of economic adjustment, in order

21 to enhance opportunities for small businesses and

22 areas of high unemployment.

23 (7) The use of United States Federal procure24 ment dollars to assist small businesses and preserve

25 the jobs of workers who traditionally have the fewest
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1 resources to withstand economic recession is a sound

2 practice and policy for the Government.

3 (8) The policy established by this Act will serve

4 to reduce the imbalance in government purchases

5 and thereby put domestic companies on an equitable

6 basis and help alleviate the United States balance of

7 payments problem.

8 (b) PURPOSE.—The purpose of this Act is to promote

9 fairness in Federal procurement by creating greater access

10 to Federal procurement funds for small businesses and

11 areas of high unemployment during economic downturns.

12 SEC. 3. REQUIREMENT THAT FEDERAL AGENCIES IN13 CREASE DOMESTIC PROCUREMENT AND PRO14 CUREMENT FROM SMALL-BUSINESS CON15 CERNS DURING ECONOMIC RECESSIONS.

16 (a) IN GENERAL.—Title III of the Act of March 3,

17 1933, commonly known as the Buy American Act (41

18 U.S.C. 10a–10c), is amended—

19 (1) by redesignating sections 5 and 6 as sec20 tions 6 and 7, respectively; and

21 (2) by inserting after section 4 the following

22 new section:
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1 ‘‘SEC. 5. REQUIREMENT THAT FEDERAL AGENCIES IN2 CREASE DOMESTIC PROCUREMENT AND PRO3 CUREMENT FROM SMALL-BUSINESS CON4 CERNS DURING ECONOMIC RECESSIONS.

5 ‘‘(a) GENERAL REQUIREMENT.—(1) Subject to para6 graph (2), upon the 1st occurrence after the date of the

7 enactment of the Fairness in Federal Purchases Act of

8 1993 of the notification described in subsection (b)(1), the

9 following requirements shall take effect:

10 ‘‘(A) Each head of a Federal agency shall de11 termine the amount of any difference between—

12 ‘‘(i) the amount such agency spent on pro13 curement of goods and services from foreign

14 government sources during the preceding fiscal

15 year; and

16 ‘‘(ii) the amount such foreign governments

17 spent on procurement of similar goods and

18 services from domestic sources during the pre19 ceding fiscal year, and

20 if the amount described in clause (i) exceeds the

21 amount described in clause (ii), shall decrease the

22 amount such agency spends on procurement from

23 foreign government sources and increase the amount

24 such agency spends on procurement from domestic

25 sources in order to eliminate the disparity between

26 the amount spent on procurement from foreign gov-
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1 ernment sources and the amount spent on procure2 ment from domestic sources.

3 ‘‘(B) Each head of a Federal agency shall de4 termine whether the amount such agency spent on

5 procurement of goods and services from small-busi6 ness concerns during the preceding fiscal year was

7 less than 35 percent of the total amount such agen8 cy spent on procurement of goods and services, and

9 if necessary, shall increase the amount such agency

10 spends on procurement of goods and services from

11 small-business concerns so that such amount equals

12 or exceeds 35 percent of such total amount.

13 ‘‘(C) In the case of any procurement contract,

14 the offered price of a domestic end product shall be

15 considered unreasonable only if the lowest acceptable

16 domestic offer exceeds the lowest acceptable foreign

17 offer, inclusive of duty—

18 ‘‘(i) by more than 6 percent, in the case of

19 a domestic offer from a large business that is

20 not a labor surplus area concern; or

21 ‘‘(ii) by more than 15 percent, in the case

22 of a domestic offer from a small-business con23 cern or from a labor surplus area concern.

24 ‘‘(2)(A) Except as provided in subparagraph (B), the

25 requirements of paragraph (1) shall cease to apply upon
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1 the expiration of the 36-month period beginning on the

2 date that the notification described in subsection (b)(1)

3 occurs.

4 ‘‘(B) The requirements of paragraph (1) shall cease

5 to apply upon the expiration of any of the following peri6 ods if during such period both the notifications described

7 in subsection (b)(2) occur:

8 ‘‘(i) The 18-month period beginning on the date

9 that the publication described in subsection (b)(1)

10 occurs.

11 ‘‘(ii) The 6-month period following the 18-

12 month period described in clause (i).

13 ‘‘(iii) The 6-month period following the 6-month

14 period described in clause (ii).

15 ‘‘(3) The Administrator for Federal Procurement

16 Policy shall provide to each head of a Federal agency the

17 information necessary to carry out paragraphs (1) and

18 (2).

19 ‘‘(b) NOTIFICATION.—(1) The notification described

20 in this paragraph is either—

21 ‘‘(A) the publication in the Federal Register by

22 the Secretary of Labor of an unemployment rate

23 equal to or in excess of 5 percent for the preceding

24 fiscal year quarter; or
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1 ‘‘(B) the publication in the Federal Register by

2 the Secretary of Commerce of a decline in the gross

3 national product during such fiscal year quarter.

4 ‘‘(2) The notifications described in this paragraph

5 are—

6 ‘‘(A) the publication in the Federal Register by

7 the Secretary of Labor of an unemployment rate of

8 less than 5 percent for the preceding fiscal year

9 quarter; and

10 ‘‘(B) the publication in the Federal Register by

11 the Secretary of Commerce of a stable or increasing

12 gross national product during 2 consecutive fiscal

13 year quarters.

14 ‘‘(c) DEFINITIONS.—For purposes of this section:

15 ‘‘(1) The term ‘domestic end product’ means—

16 ‘‘(A) an unmanufactured end product

17 mined or produced in the United States; or

18 ‘‘(B) an end product manufactured in the

19 United States, if the cost of its components

20 mined, produced, or manufactured in the Unit21 ed States exceeds 50 percent of the cost of all

22 its components, including transportation costs

23 to the place of incorporation into the end prod24 uct and any applicable duty (whether or not a

25 duty-free entry certificate is issued).
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1 ‘‘(2) The term ‘domestic offer’ means an of2 fered price for a domestic end product, including

3 transportation to destination.

4 ‘‘(3) The term ‘foreign end product’ means an

5 end product other than a domestic end product.

6 ‘‘(4) The term ‘foreign government source’

7 means entities comparable to United States Govern8 ment agencies covered by the Government Procure9 ment Code.

10 ‘‘(5) The term ‘foreign offer’ means an offered

11 price for a foreign end product, including transpor12 tation to destination and duty, whether or not a

13 duty-free entry certificate is issued.

14 ‘‘(6) The term ‘Government Procurement Code’

15 means title III of the Act of March 3, 1933, com16 monly known as the Buy American Act.

17 ‘‘(7) The term ‘labor surplus area’ means a

18 geographical area identified by the Secretary of

19 Labor as an area of concentrated unemployment or

20 underemployment or an area of labor surplus.

21 ‘‘(8) The term ‘labor surplus area concern’

22 means a concern that together with its 1st-tier sub23 contractors will perform substantially in labor sur24 plus areas. Performance is substantially in labor sur25 plus areas if the costs incurred under the contract
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1 on account of manufacturing, production, or per2 formance of appropriate services in labor surplus

3 areas exceed 50 percent of the contract price.

4 ‘‘(9) The term ‘small-business concern’ has the

5 meaning provided in section 3(a)(1) of the Small

6 Business Act.’’.

7 (b) CONFORMING AMENDMENT TO THE TRADE

8 AGREEMENTS ACT OF 1979.—Subsection (a) of section

9 301 of the Trade Agreements Act of 1979 (19 U.S.C.

10 2511(a)) is amended by inserting after ‘‘or practice’’ the

11 following: ‘‘(excluding section 5 of title III of the Act of

12 March 3, 1933, commonly known as the Buy American

13 Act)’’.

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