Federal Register / Vol. 75, No. 167 / Monday, August 30, 2010 / Rules and Regulations 53153 

■ a. Revising the date of the clause to 

read ‘‘(Oct 2010)’’; 

■ b. Removing from paragraph (e)(1)(v) 

‘‘accurate cost’’ and adding ‘‘accurate 

certified cost’’ in its place; 

■ c. Removing from paragraph 

(e)(1)(vii)(C) ‘‘reason cost’’ and adding 

‘‘reason certified cost’’ in its place; and 

■ d. Removing from paragraphs 

(e)(1)(vii)(D) and (e)(1)(vii)(E) 

‘‘subcontractor’s cost’’ and adding 

‘‘subcontractor’s certified cost’’ in its 

place. 

[FR Doc. 2010–21026 Filed 8–27–10; 8:45 am] 

BILLING CODE 6820–EP–P 

DEPARTMENT OF DEFENSE 

GENERAL SERVICES 

ADMINISTRATION 

NATIONAL AERONAUTICS AND 

SPACE ADMINISTRATION 

48 CFR Parts 2, 5, 25, and 52 

[FAC 2005–45; FAR Case 2009–008; Item 

III; Docket 2009–0008, Sequence 1] 

RIN 9000–AL22 

Federal Acquisition Regulation; 

American Recovery and Reinvestment 

Act of 2009 (the Recovery Act)—Buy 

American Requirements for 

Construction Material 

AGENCIES: Department of Defense (DoD), 

General Services Administration (GSA), 

and National Aeronautics and Space 

Administration (NASA). 

ACTION: Final rule. 

SUMMARY: The Civilian Agency 

Acquisition Council and the Defense 

Acquisition Regulations Council (the 

Councils) have adopted as final, with 

changes, an interim rule amending the 

Federal Acquisition Regulation (FAR) to 

implement the American Recovery and 

Reinvestment Act of 2009 (Recovery 

Act) with respect to the ‘‘Buy 

American—Recovery Act’’ provision, 

section 1605 in Division A. 

DATES: Effective Date: October 1, 2010. 

Applicability Date: The rule applies to 

solicitations issued and contracts 

awarded on or after the effective date of 

this rule. Contracting officers shall 

modify, on a bilateral basis, in 

accordance with FAR 1.108(d)(3), 

existing contracts to include the 

appropriate FAR clause for future work, 

if Recovery Act funds will be used. In 

the event that a contractor refuses to 

accept such a modification, the 

contractor will not be eligible for award 

of any work that uses Recovery Act 

funds. 

FOR FURTHER INFORMATION CONTACT: For 

clarification of content, contact Ms. 

Cecelia L. Davis, Procurement Analyst, 

at (202) 219–0202. For information 

pertaining to status or publication 

schedules, contact the Regulatory 

Secretariat at (202) 501–4755. Please 

cite FAC 2005–45, FAR case 2009–008. 

SUPPLEMENTARY INFORMATION: 

A. Background 

This final rule implements the unique 

‘‘Buy American—Recovery Act’’ 

provision, section 1605 of the Recovery 

Act, by revising FAR subpart 25.6, and 

related provisions and clauses at FAR 

part 52, with conforming changes to 

FAR subparts 2.1, 5.2, 25.0, and 25.11. 

An interim rule was published in the 

Federal Register at 74 FR 14623, March 

31, 2009. The public comment period 

ended June 1, 2009. 

As required by section 1605, the final 

rule makes it clear that there will be full 

compliance with U.S. obligations under 

all international trade agreements when 

undertaking construction covered by 

such agreements with Recovery Act 

funds. The new required provisions and 

clauses implement U.S. obligations 

under our trade agreements in the same 

way as they are currently implemented 

in non-Recovery Act construction 

contracts. The Caribbean Basin 

countries are excluded from the 

definition of ‘‘Recovery Act designated 

country,’’ because the treatment 

provided to them is not as a result of a 

U.S. international obligation. 

B. Discussion and Analysis 

The Regulatory Secretariat received 

35 responses, but 2 responses lacked 

attached comments and 1 response 

appeared unrelated to the case. The 

responses included multiple comments 

on a wide range of issues addressed in 

the interim rule. Each issue is discussed 

by topic in the following sections. 

Table of Contents 

1. Comments on Section 1605 of the 

Recovery Act 

2. Applicability of Section 1605 of the 

Recovery Act 

a. Relation to the Buy American Act 

b. Applicability to Construction Projects/ 

Contracts 

c. Applicability to Construction Materials 

or Supplies 

d. Manufacture vs. Substantial 

Transformation or Tariff Shift 

e. Iron and Steel 

f. Components 

g. Summary Matrix of Requirements for 

Domestic Construction Material 

3. Applicability of International Agreements 

a. Trade Agreements 

b. G20 Summit Pledge 

4. Other Definitions 

a. Construction Material 

b. Public Building or Public Work 

c. Manufactured Construction Material/ 

Unmanufactured Construction Material 

5. Exceptions 

a. Class Exceptions 

b. Public Interest 

c. Nonavailability 

d. Unreasonable Cost 

6. Determinations That an Exception Applies 

a. Process and Publication 

b. Requests for Specific Exceptions 

7. Exemption for Acquisitions Below the 

Simplified Acquisition Threshold 

8. Remedies for Noncompliance 

9. Funding Mechanisms 

a. Modifications to Existing Contracts 

b. Treatment of Mixed Funding 

10. Interim Rule Improper 

11. Inconsistencies Between This Rule and 

Pre-Existing FAR Rule and the OMB 

Grants Guidance 

a. Inconsistency With Pre-Existing FAR 

b. Inconsistency With the OMB Grants 

Guidance 

12. Need for Additional Guidance 

1. Comments on Section 1605 of the 

Recovery Act 

Comments: Although the respondents 

expressed general support for the goals 

of the Recovery Act to stimulate the U.S. 

economy, many were concerned about 

the Recovery Act Buy American 

restrictions of section 1605. For 

example: 

Several entities representing other 

countries objected to the potential 

restrictions on trade. They alleged that 

the Recovery Act Buy American 

requirement in section 1605 is not in 

conformity with the U.S. pledge to 

refrain from raising new barriers in the 

framework of the Summit on Financial 

Markets and the World Economy, 

November 2008, and the G20 pledge, 

April 2009. They alleged that it will 

have a negative impact on the world 

trade and economy. One respondent 

stated that it is not rational for the U.S. 

to take trade protection actions such as 

the ‘‘Buy American—Recovery Act’’ 

provision, because it will not be useful 

for the American and global economy in 

promoting recovery from the current 

downturn. Another respondent stated 

that, to the extent 1605 imposes more 

restrictive requirements than previously 

existed, it represents a new barrier to 

trade in goods between the United 

States and Canada. One respondent 

found several aspects of section 1605 

problematic because of their ‘‘inherent 

lack of clarity.’’ 

Some United States industry 

associations also had concerns about 

section 1605. One objected that the reallife burdens of complying with these 

country-of-origin requirements cannot 

be overstated. This respondent 

concluded that, where the U.S. 

Government places a premium on 


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promoting its important socio-economic 

goals, this requires companies interested 

in selling in the Federal marketplace to 

segregate their inventories based on 

country of origin and implement costly 

compliance regimes. Another 

respondent noted a risk that the 

Recovery Act Buy American provisions 

may have numerous unintended 

consequences on the United States and 

harm American workers and companies 

and the global economy. A third 

respondent commented that ‘‘Congress’ 

well-meaning intentions, like all 

protectionist measures, could 

inadvertently hurt the downstream U.S. 

users.’’ 

Response: Comments on the merits of 

section 1605 of the Recovery Act are 

outside the scope of this case, because 

the Councils cannot change the law. 

This final rule is focused on the 

optimal implementation of section 1605 

in the FAR, i.e., the Councils have 

attempted to find the balance between 

domestic-sourcing requirements and 

simplicity and clarity of 

implementation, so that the rule does 

not become so onerous that it does more 

harm than good to U.S. industry. 

2. Applicability of Section 1605 of the 

Recovery Act 

a. Relation to the Buy American Act 

There are two main issues raised by 

respondents with regard to the 

applicability of the Buy American Act 

in contracts funded with Recovery Act 

funds. 

i. Does the Buy American Act apply to 

manufactured construction material 

used in Recovery Act projects? 

Comments: A few respondents 

contended that the Buy American Act 

still applies to goods covered by section 

1605 of the Recovery Act—that both 

standards must be met. These 

respondents objected that the interim 

rule deviated from existing law and 

regulations that should still govern the 

purchase of goods covered by the 

Recovery Act. According to these 

respondents, any final rule must, at a 

minimum, preserve the basic 

requirements of assembly in the United 

States and the 51 percent domestic 

component rule, because the Buy 

American Act still applies. Another 

respondent claimed that this rule cannot 

waive the Buy American Act’s 

component test without additional 

authority. 

Response: The Recovery Act sets out 

specific domestic source restrictions for 

iron, steel, and manufactured goods 

incorporated into Recovery Act 

construction projects. In many ways, 

these restrictions mirror the Buy 

American Act, but there are specific 

differences (no component test, different 

standards for unreasonable cost, no 

exception for impracticable, etc.). The 

Councils and OMB determined that it 

was reasonable to interpret section 1605 

as including all of the ‘‘Buy American— 

Recovery Act’’ restrictions that Congress 

intended to apply to iron, steel, and 

manufactured goods covered by the 

Recovery Act, i.e., these goods are not 

also covered by the Buy American Act. 

Since Congress was clearly aware of the 

Buy American Act when creating the 

Recovery Act domestic source 

restrictions and exceptions, if Congress 

had wanted the component test or other 

aspects of the Buy American Act to 

apply, they would have included them. 

Congress incorporated those aspects of 

the Buy American Act that they wanted 

to apply, and excluded or modified 

those aspects that they did not want to 

apply. The Councils have determined 

that section 1605 of the Recovery Act 

supersedes the Buy American Act with 

regard to the acquisition of 

manufactured construction materials 

used on a project funded with Recovery 

Act funds. Therefore, the component 

test does not apply to construction 

material used in projects funded by the 

Recovery Act. 

ii. Does the Buy American Act apply to 

unmanufactured construction material 

used in Recovery Act projects? 

Comments: Several non-U.S. 

respondents objected that the interim 

rule applies the Buy American Act to 

unmanufactured construction material. 

One of them stated that the interim rule 

has expanded the scope of the Recovery 

Act by way of arbitrary interpretation 

and constitutes an unjustified limitation 

of the use of foreign unmanufactured 

construction materials, given that the 

use of foreign unmanufactured 

construction materials is not prohibited 

by the Recovery Act. A respondent 

believed that ‘‘statutory authority does 

not exist to extend the provisions 

required by section 1605 to 

unmanufactured goods’’ and asked that 

this be struck from the final rule. 

Another objected that the additional 6 

percent evaluation factor applied to 

unmanufactured construction material 

is only stipulated in the FAR, and 

should not be permitted under the spirit 

of the ‘‘G20 Statement.’’ 

Response: Section 1605 did not 

address unmanufactured construction 

material. The interim rule coverage of 

unmanufactured construction material 

is not based on extending the coverage 

of section 1605, but on continuing to 

apply the Buy American Act to that 

material not covered by the Recovery 

Act. 

b. Applicability to Construction 

Projects/Contracts 

i. How To Identify a ‘‘Construction’’ 

Contract 

Comments: A respondent wanted to 

know whether the contracting agency 

will be required to affirmatively 

stipulate whether a contract is 

considered a ‘‘construction’’ contract 

and require that this language be flowed 

down to subcontractors. 

Response: Construction contracts are 

easily identifiable by the presence of 

construction provisions and clauses in 

the solicitation and contract, such as the 

clauses prescribed in FAR subpart 36.5 

as well as the Buy American Act 

provisions and clauses for construction 

contracts in FAR clauses 52.225–9 

through 52.225–12 or now the Recovery 

Act Buy American, FAR provisions at 

52.225–21 through 52.225–24. It is the 

responsibility of the prime contractor to 

comply with contract clauses and 

impose on subcontractors whatever 

conditions are necessary to enable the 

prime contractor to meet the contract 

requirements. 

ii. Use of terms ‘‘contract’’ and ‘‘project’’ 

Comments: Two respondents 

contended that the interim rule is 

unclear in several places regarding the 

scope of coverage because the terms 

‘‘projects’’ and ‘‘contracts’’ appear to be 

used interchangeably. 

• FAR 25.602(a) states that ‘‘None of 

the funds appropriated or otherwise 

made available by the Recovery Act may 

be used for a project for the 

construction, alteration, maintenance or 

repair of a public building or public 

work * * *’’ 

• FAR 25.603(c), implementing the 

Trade Agreements Act, states that ‘‘For 

construction contracts with an 

estimated acquisition value * * *’’ 

• FAR 52.225–21(b)(2) states, ‘‘The 

contractor shall use only domestic 

construction material in performing this 

contract * * *.’’ 

Response: Construction ‘‘project’’ is 

often a more inclusive term than 

construction ‘‘contract.’’ Large 

construction projects may involve more 

than one construction contract. The 

term ‘‘project’’ may also be used to 

denote a segment of a contract, if the 

funds are clearly segregated. To clarify 

this meaning, the Councils have added 

a statement in the policy section at FAR 

25.602 and also clarified in the 

provision and clause prescriptions at 

FAR 25.1102(e)(2) that the contract must 

indicate if the Recovery Act provision 


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and clause only apply to certain line 

items in the contract. 

The scope of this rule is established, 

in accordance with section 1605(a) of 

the Recovery Act, as applying 

restrictions to ‘‘a project for the 

construction, alteration, maintenance, or 

repair of a public building or public 

work.’’ The final rule has clarified at 

FAR 25.602 that the agency determines 

the scope of the project and conveys this 

to the contractor through the specified 

applicability of the Recovery Act 

provision and clause in the contract. 

However, the statute can only be 

implemented through clauses that go 

into a specific construction contract. 

Each contract can only impose 

requirements applicable to that 

particular contract. Therefore, the term 

‘‘contract’’ is used when the interim rule 

is addressing a requirement that is 

specific to a contractor or contract, 

particularly as used in the provisions 

and clauses. 

c. Applicability to Construction 

Materials or Supplies 

i. Equating ‘‘Manufactured Goods Used 

in the Project’’ to ‘‘Construction 

Material’’ 

Comments: There were many 

concerns about the interpretation in the 

interim rule of the applicability of 

section 1605 to manufactured goods, 

namely that the rule equates 

manufactured goods used in the project 

to construction material. 

A respondent contended that the 

narrow interpretation of manufactured 

goods ‘‘ignores common sense and wellestablished precedent.’’ According to the 

respondent, the rule equates 

manufactured goods to construction 

material and limits the applicability to 

construction materials that are 

incorporated into a public building or 

work. 

Another respondent stated that the 

rule should apply to all manufactured 

goods—not just construction materials, 

contending that manufactured goods 

‘‘used in the project’’ means ‘‘all hazmat 

suits, tool belts, masks, tarps, covers, 

safety straps, construction clothing, 

gloves, etc. purchased by the contractor 

as part of doing the work.’’ 

A respondent stated that regulations 

for public works projects must require 

that all manufactured goods, including 

textile products, must be manufactured 

in the United States, as intended by the 

Recovery Act. 

On the other hand, a respondent 

expressed concern that the perceived 

requirement that all manufactured 

products on the construction site are 

covered is proving disastrous for 

American equipment manufacturers. 

This respondent stated that construction 

equipment manufacturers provide the 

machines that improve operations and 

reduce costs of any infrastructure 

project. The process to verify and prove 

100 percent U.S. content of each piece 

of equipment is onerous. 

Some respondents expressed support 

for the Councils’ approach in FAR 

subpart 25.6 of treating iron, steel, and 

manufactured goods as another way of 

describing ‘‘construction material: As 

that term has been understood and 

applied with respect to 41 U.S.C. 10a– 

10d in FAR subpart 25.2 and its 

associated clauses.’’ 

Response: One of the goals in 

implementation of the Recovery Act was 

to make the definitions and procedures 

as close to existing FAR definitions and 

procedures as possible, except where 

differences are required by the Recovery 

Act. 

Therefore, when applied to a 

construction contract, FAR subpart 25.6 

and the associated construction clauses 

use the standard definition of 

‘‘construction material’’ at FAR 25.003 

that is familiar to contractors and 

contracting officers. There is a long 

series of Government Accountability 

Office (GAO) decisions and case law 

that then can be applied without 

completely starting over. For use in a 

construction contract, the Councils 

interpreted ‘‘manufactured goods used 

in the project’’ to be comparable to the 

long-standing definition of 

‘‘construction material’’ as an ‘‘article, 

material, or supply brought to the 

construction site by the contractor or a 

subcontractor for incorporation into the 

building or work.’’ Review of the 

existing case law clarifies the many 

possible nuances relating to 

construction material and its delivery to 

the site. Rather than ‘‘ignoring well 

established precedent,’’ the Councils 

relied on well-established precedent. 

The FAR has never applied domestic 

source restrictions to such items as 

hazmat suits, tool belts, masks, tarps, 

covers, safety straps, construction 

clothing, and gloves, which are used in 

a construction project by the contractor 

but are not incorporated into the 

construction project. Further, the 

interim rule did not apply the Recovery 

Act Buy American requirement of 

section 1605 to equipment used at the 

construction site, because it is not 

incorporated into the construction 

project. These items are not deliverables 

to the Government, but remain the 

property of the contractor. The 

contractor may already have purchased 

these items before commencement of 

the contract, and may continue to use 

them on subsequent contracts. 

Therefore, their purchase is not 

generally subject to restrictions in the 

terms of the contract. 

ii. Applicability to Supplies Purchased 

by the Government 

Comment: One respondent expressed 

concern that the interim rule, in the 

definition of construction material, 

stated that manufactured goods that are 

purchased by the Government are 

supplies and, therefore, excluded from 

the definition of manufactured goods, as 

used in section 1605. 

Response: The statement that items 

purchased by the Government are 

supplies, not construction material, has 

been a standard part of the definition of 

construction material for many years. It 

is a true statement that items purchased 

by the Government are not ‘‘construction 

material’’ as it is defined in the FAR. 

However, section 1605 does require that 

all manufactured goods incorporated 

into the project must be produced in the 

United States, whether purchased by the 

contractor as construction material or 

purchased by the Government as an 

item of supply. If the Government 

directly purchases manufactured goods 

and delivers them to the site for 

incorporation into the project, such 

material must comply with the ‘‘Buy 

American—Recovery Act’’ restriction of 

section 1605, even though it is not 

construction material as defined in the 

FAR. The final rule clarifies this in the 

policy section. Furthermore, for added 

clarity, the final rule deletes from the 

definition of ‘‘construction material’’ in 

FAR clauses 52.225–21 and 52.225–23 

the phrase about items purchased by the 

Government not being construction 

material, because it appears to cause 

confusion and because the information 

about actions the Government may take 

is not pertinent to the contractor for 

performance of the construction 

contract. 

iii. Contractor-Purchased Supplies for 

Delivery to the Government 

Comments: A respondent requested 

that the final rule clarify that, to the 

extent purchases of supplies made with 

Recovery Act funds are not covered as 

construction material, they are subject 

to normal Buy American Act/Trade 

Agreements Act requirements. 

Response: Contractor-purchased 

supplies that are for delivery to the 

Government, not for incorporation into 

the project, continue to be covered by 

the pre-existing FAR regulations on the 

Buy American Act and trade 

agreements, as applicable. This rule 

only applies to construction contracts 

funded with Recovery Act funds or 


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supplies purchased by the Government 

for incorporation into the project. 

d. Manufacture vs. Substantial 

Transformation or Tariff Shift 

There were many comments on the 

issue of manufacture and substantial 

transformation. 

i. Buy American Act and Substantial 

Transformation 

Comments: Several respondents 

believed that the Buy American Act 

includes a requirement for substantial 

transformation. One respondent stated 

that the rule should use the ‘‘longstanding definition’’ of a domestic 

manufactured good, i.e., final 

substantial transformation must occur in 

the United States. Another respondent 

stated that the Buy American Act of 

1933 includes a substantial 

transformation test. A respondent also 

stated that the Buy American Act 

requires substantial transformation in 

the United States. The respondent was 

concerned that the interim rule only 

requires assembly in the United States. 

Response: Whether or not the Buy 

American Act requires ‘‘manufacture’’ or 

‘‘substantial transformation’’ is not 

directly relevant to this rule, but only 

might be used as a matter of comparison 

for interpretation of section 1605. The 

Councils have determined that the Buy 

American Act does not apply to 

manufactured construction material. 

Many of the respondents, whether 

contending that the Buy American Act 

still applies or using the Buy American 

Act for purposes of comparison and 

interpretation, have misinterpreted the 

Buy American Act. The Buy American 

Act includes the requirement for 

domestic manufactured goods to be 

‘‘manufactured’’ in the United States. 

This term has been used consistently in 

the FAR as the first prong of the test for 

domestic manufactured end products 

and construction material. There is no 

substantial transformation test included 

in the Buy American Act. The term 

‘‘substantial transformation’’ only comes 

into the FAR to implement trade 

agreements. The rule of origin for 

designated country end products and 

designated country construction 

material requires products to be wholly 

the product of, or be ‘‘substantially 

transformed’’ in the designated country. 

Even under trade agreements, there is 

no requirement for substantial 

transformation of products produced in 

the United States, because U.S.-made 

end products are not designated country 

products. Actually, the definition of 

‘‘U.S.-made end product’’ allows either 

‘‘substantial transformation’’ or 

‘‘manufacture’’ in the United States to 

qualify as a U.S.-made end product, 

because the Buy American Act has been 

waived for U.S.-made end products 

when the World Trade Organization 

Government Procurement Agreement 

applies. However, this is not the case for 

domestic construction material. Even 

when trade agreements apply, domestic 

construction material must meet the 

Buy American requirements of domestic 

manufacture, not substantial 

transformation. Therefore, those 

respondents who argue that the Buy 

American Act requires substantial 

transformation are simply wrong. 

ii. Should ‘‘manufacture’’ in this rule 

include the standard of substantial 

transformation? 

Comment: Further elaborating on 

substantial transformation, two 

respondents recommended that the 

Councils should adopt a clear rule 

defining the concept of domestic 

manufacture consistent with the ‘‘wellestablished standard’’ of substantial 

transformation as the first part of the 

two-pronged test for domestic 

construction material. The respondent 

stated that the rule should not confer 

domestic status simply as a result of 

minor processing or mere assembly in 

the United States. According to these 

respondents, by not adopting substantial 

transformation, the interim rule has 

created ambiguity. These respondents 

pointed out a clear administrative 

process in the Federal Government for 

making substantial transformation 

determinations. They also stated that 

U.S. Customs and Border Protection 

(Customs) considers the totality of the 

circumstances and makes 

determinations on a case-by-case basis. 

The respondents questioned why the 

interim rule omitted any reference to 

substantial transformation. 

Three respondents recommended 

allowing either manufacture (perhaps 

combined with the component test) or 

substantial transformation. According to 

one of the respondents, allowing both 

models to determine when a product 

has been manufactured in the United 

States ensures greatest flexibility. This 

respondent believed that this is only 

relevant below the Trade Agreements 

Act threshold, i.e., above the threshold, 

the requirements defined under those 

pre-existing regulations would apply. 

Response: Section 1605 of the 

Recovery Act does not require 

substantial transformation. It requires 

that manufactured goods be ‘‘produced’’ 

in the United States. The Councils have 

interpreted the law to equate 

‘‘production’’ of manufactured goods to 

‘‘manufacture.’’ To the extent that the 

Recovery Act domestic source 

restriction is worded consistently with 

the Buy American Act, it is reasonable 

to implement in a similar fashion. 

‘‘Substantial transformation’’ has never 

been applied in the FAR to domestic 

construction material, just to designated 

country construction material that is 

subject to trade agreements. 

Therefore, the final rule continues to 

utilize the FAR language that parallels 

the pre-existing construction contract 

definition of domestic construction 

material, requiring manufacture in the 

United States. 

iii. Definition of Manufacture 

Comments: Other respondents were 

concerned about the definition of 

‘‘manufacture.’’ A respondent stated that 

the interim rule does not provide a clear 

definition of what constitutes 

manufacture, i.e., how to determine 

whether sufficient activity has taken 

place in the United States for a material 

to be considered produced in the United 

States. Likewise, two respondents noted 

the various interpretations of 

‘‘manufacture,’’ i.e., some believe it is 

similar or identical in concept to 

substantial transformation under 

Customs’ rules, while others believe it is 

closer to the Buy American Act— 

Construction clause test for 

manufacture. One of these respondents 

asked that the final rule clarify the 

definition. Yet another respondent 

stated that, although the rule does not 

define ‘‘manufacture,’’ the regulations 

suggest that the test will be similar to 

the requirement of U.S. manufacture 

applied under the Buy American Act. 

This may in some cases be less 

demanding than the substantial 

transformation test, which examines 

whether an article is transformed into a 

new and different article of commerce, 

having a new name, character, and use. 

Response: The Councils have 

considered in the past including a 

definition of ‘‘manufacture’’ in the FAR 

but did not do so because of the casespecific nature of its application. The 

definition may be different for canned 

beans than for an aircraft. However, for 

those who find the word ‘‘manufacture’’ 

confusing and cite the long-standing 

tradition of interpretation of ‘‘substantial 

transformation,’’ there is also a 

longstanding record of interpretation of 

‘‘manufacture’’ under the Buy American 

Act. (See for example B–175633 of 

November 3, 1975, which addressed the 

issue of whether a radio had been 

manufactured in the United States. The 

GAO did not find against the Army 

position that, if the final manufacturing 

process takes place in the United States, 

the end product is ‘‘manufactured in the 

United States.’’) 


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iv. Tariff Shift 

Comments: A respondent proposed 

that the rules of origin under 19 CFR 

part 102, currently used for NAFTA 

country-of-origin determinations, be 

applied to decisions regarding whether 

construction materials are considered 

domestic. According to the respondent, 

Customs is currently proposing that the 

CFR part 102 rules (also known as ‘‘tariff 

shift’’ rules) be applied for all countryof-origin determinations (See Federal 

Register at 73 FR 43385, July 25, 2008). 

Tariff shift rules consider the 

Harmonized Tariff Schedule of the 

United States classification of the article 

before and after manufacturing. If the 

classification shifts, then the article 

takes on a new country of origin. 

Response: Companies that contract 

with the Government are accustomed to 

the well-established meaning of the 

term ‘‘manufacture’’ as applied under 

the Buy American Act and now the 

Recovery Act. 

e. Iron and Steel 

i. Similarity to Federal Transportation 

Laws 

Comments: Three respondents 

pointed out that the section 1605 

restrictions on iron and steel are similar 

to the Recovery Act Buy American 

requirements within the statutory and 

regulatory framework of Federal 

transportation laws (U.S. Department of 

Transportation highways and transit 

program), which mandate that 100 

percent of the iron and steel used in a 

project be domestically manufactured 

and also impose comparable standards 

of unreasonable cost. 

Response: The drafters of the FAR 

interim rule recognized the similarity to 

the restrictions applicable to the Federal 

Transit Administration, and modeled 

the FAR interim rule restriction on iron 

and steel after 49 CFR part 661, ‘‘Buy 

America Requirements.’’ 

ii. 51 Percent Component Test 

Comments: One respondent wanted 

the FAR to go back to the 51 percent 

component test of the Buy American 

Act for what constitutes iron and steel 

products manufactured in the United 

States in order to ensure compliance 

with our international agreements, assist 

in getting projects started, limit delays, 

and ensure competition. 

Response: Reverting to the 51 percent 

component test of the Buy American 

Act to determine what constitutes iron 

or steel products manufactured in the 

United States would not fully 

implement section 1605 of the Recovery 

Act. Section 1605 singled out iron and 

steel. In addition to requiring that 

manufactured construction material be 

manufactured in the United States, the 

law requires that the iron and steel also 

be produced in the United States. If the 

51 percent component test of the Buy 

American Act were sufficient, then it 

would have been unnecessary to impose 

section 1605 at all. The Recovery Act 

could have continued to apply the Buy 

American Act without revision. 

iii. Iron or Steel as a Component of 

Construction Material That Consists 

Wholly or Predominantly of Iron or 

Steel 

Comments: One respondent also 

requested clarification that construction 

materials (such as welded steel pipe) 

that are produced in the United States 

using steel that was rolled in the United 

States from foreign slab are ‘‘produced 

in the United States’’ within the 

meaning of the Recovery Act. 

A respondent stated that the FAR rule 

should allow contractors to utilize 

imported steel slab as raw material feed 

stock—and substantially transform that 

slab in the United States into flat rolled 

steel (hot rolled, cold rolled, galvanized, 

etc.) products, which in turn are used by 

other manufacturers to produce a wide 

variety of construction materials. Absent 

such an approach, construction material 

using these steel products could be 

deemed foreign construction materials, 

simply because the steel slab from 

which it was made was imported. 

According to the respondent, this will 

result in U.S. buyers shying away from 

these U.S. manufactured construction 

materials, thus eliminating U.S. jobs. 

Another respondent, a carbon steel 

finishing mill, was concerned that steel 

can be either the construction material 

itself or a component of some other 

manufactured product (such as welded 

steel pipe). The respondent noted that a 

manufactured good may consist of only 

one component. 

One respondent approved of the 

distinction between ‘‘steel used as a 

construction material’’ and ‘‘steel used 

in a construction material’’ but 

requested clarification of the boundaries 

of these two categories in the final rule. 

The respondent proposed that the 

boundary should be between— 

• Steel goods delivered to the 

construction site directly from a steel 

mill (or its warehouse distributor) (e.g., 

structural steel items (H-beams, I-beams, 

etc.), reinforcing rod, and plate); and 

• Steel goods that have been further 

processed from intermediate, nonconstruction material products 

produced by a steel mill, into 

manufactured goods delivered to the 

construction site. 

Alternatively, the respondent offered 

another definition of ‘‘steel used in a 

construction material’’—‘‘all steel goods 

except steel goods delivered to the 

construction site directly from a steel 

mill (or its warehouse/distributor) for 

use as a construction material.’’ 

Response: The Councils agree that a 

clearer distinction is required for 

circumstances when the Recovery Act 

Buy American restriction of section 

1605 applies to iron or steel 

components. The intent of the interim 

rule was not to draw a line between iron 

or steel used as a construction material, 

and iron or steel used in a construction 

material, as suggested by one 

respondent, but between construction 

material that consisted wholly or 

predominantly of iron or steel and 

construction material in which iron or 

steel are minor components. The 

suggestion that manufactured steel 

goods not delivered to the construction 

site directly from the mill should be 

exempt would not be fulfilling the 

intent of the law. On the other hand, the 

requirement that every piece of iron and 

steel, no matter how miniscule, must be 

melted and rolled in the United States, 

would be quite unworkable, and would 

be counterproductive to the overall 

intent of the law. 

The interim rule separated 

manufactured construction material into 

two main categories: Iron or steel used 

as a construction material and ‘‘other’’ 

manufactured construction material. 

The interim rule made clear that 

manufactured construction material that 

consisted wholly of iron or steel must be 

produced in the United States, 

including all stages of production 

except metallurgical processes involving 

refinement of steel additives. It also 

stated that ‘‘other’’ manufactured 

construction material would require 

manufacture in the United States, but 

imposed no requirement on the 

components or subcomponents in this 

category of ‘‘other’’ manufactured 

construction material. 

The interim rule is not clear, however, 

with regard to treatment of construction 

material that consists predominantly, 

but not wholly, of iron or steel. Some 

respondents assumed that all 

construction material would fall in the 

‘‘other’’ category unless it was wholly of 

iron or steel. Others interpreted, as was 

intended, that the ‘‘other’’ category was 

to cover material which did not consist 

wholly or predominantly of iron or 

steel. 

The Councils re-examined the 

requirement of the statute and how best 

to convey these requirements in the 

regulations. Because iron and steel are 

singled out for specific mention in the 


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statute, the Councils conclude that a 

primary objective of the Act is to 

promote the use of domestic iron and 

steel. The Councils have determined 

that a clearer way to express the 

requirements of the law would be to 

interpret the requirement for iron or 

steel to be produced in the United States 

as being in addition to (rather than a 

subset of) the requirement for all 

manufactured construction material to 

be manufactured in the United States. 

The statute did not include the word 

‘‘other.’’ All manufactured construction 

material must be manufactured in the 

United States. This interpretation 

supports the requirement that iron or 

steel, whether or not it has reached the 

stage of being manufactured 

construction material, must be produced 

at all stages in the United States. This 

is similar to some other domestic source 

restrictions on particular materials or 

components such as the restrictions on 

domestic melting or production of 

specialty metals at 10 U.S.C. 2533b. The 

intent of the Councils was to balance 

full implementation of the law with 

feasibility of compliance. Therefore, the 

final rule applies this restriction on 

domestic production of iron and steel 

only when the iron or steel is a 

component of construction material that 

consists wholly or predominantly of 

iron or steel. (The respondent was 

correct that there may be just one 

component in a construction material). 

In view of this policy clarification, the 

proposal to treat foreign slab as a 

‘‘component’’ of other manufactured 

goods, not requiring production in the 

United States, is not acceptable, because 

the resultant construction material 

consists wholly or predominantly of 

iron or steel, and allowing foreign slab 

would not meet the objectives of the 

law. 

The Councils have made changes to 

the policy at FAR 25.602 to clarify the 

restriction on the production of iron and 

steel and have revised the definitions of 

‘‘domestic construction material’’ in FAR 

25.601 and paragraph (a) of the FAR 

clauses at 52.225–21 and 52.225–23, 

specifying that all of the iron or steel in 

manufactured construction material that 

consists wholly or predominantly of 

iron or steel shall be produced in the 

United States, but the origin of the raw 

materials of the iron or steel is not 

restricted. 

iv. Iron or Steel as Components of 

Manufactured Construction Material 

That Does Not Consist Wholly or 

Predominantly of Iron or Steel 

Comments: Some respondents 

objected to the provision in the interim 

rule that the Recovery Act Buy 

American restriction does not apply to 

iron or steel used as components of 

other manufactured goods. One 

respondent stated that the Recovery Act 

Buy American requirements of section 

1605 must apply to all iron and steel, 

including all iron and steel components 

and subcomponents used in 

manufactured construction material. 

One respondent believed that this 

provision of the interim rule creates a 

loophole, in that the use of foreign steel 

reinforcing bar (rebar) used in concrete 

slab would be allowed, because the steel 

rebar would be considered a component 

of a manufactured product (the concrete 

slab). 

On the other hand, a different 

respondent believed that the fact that 

the regulations permit foreign steel or 

iron used as components or 

subcomponents of other manufactured 

construction material to be considered 

domestic construction materials as long 

as the manufacturing is done in the 

United States is a sound and practical 

decision. This respondent commented 

that the rule allows U.S. companies 

flexibility to prudently source from both 

American and foreign vendors to 

manage costs, while promoting U.S. 

manufacture. 

Response: The interim rule would not 

allow foreign steel rebar (as a 

component of concrete slab) because the 

rule applies to construction material 

brought to the construction site. The 

steel rebar is brought separately to the 

construction site and is therefore itself 

construction material, not a component 

of the concrete slab, which is poured 

and formed on the construction site. 

As stated in the prior section, iron 

and steel components are only exempt 

from the restriction of section 1605 if 

the construction material does not 

consist wholly or predominantly of iron 

or steel. 

f. Components 

Comments: Three respondents agreed 

with the interim rule approach of not 

including a requirement relating to the 

origin of components. They argue that 

an expansive and practical definition of 

manufactured goods is needed to allow 

the contractor leeway in getting the 

project done on time and within budget. 

Many other respondents strongly 

argued for inclusion of a ‘‘component 

test,’’ often citing the Buy American Act 

as a precedent. 

• One respondent stated that the costs 

of all the domestic components in the 

final product must exceed 50 percent of 

the cost of all the components. 

• A respondent stated that Congress’ 

deliberate inclusion of the term 

‘‘manufactured goods’’ was plainly 

intended to be under the precedent 

established under the Buy American 

Act. Yet another respondent stated that 

the interim rule does not meet the 

requirements of section 1605 because 

domestic content requirements for 

components and subcomponents parts 

have been omitted. This respondent also 

objected that the interim rule has 

ignored a long history of applying a 

domestic content rule in determining if 

a good is produced in the United States 

for purposes of enforcing domestic 

source restrictions. According to the 

respondent, OMB acknowledges that the 

two-part test relied upon is from the 

Buy American Act, then simply waives 

the domestic content part of the 1933 

Act’s text. Desiring an expeditious flow 

of funding cannot trump the statutory 

requirement to procure domestically 

produced goods. Longstanding 

interpretation of domestic manufactured 

goods under the Buy American Act also 

comports with Congressional intent to 

save and create manufacturing jobs. 

• A respondent was disturbed that 

the interim rule explicitly rejected the 

use of a component test, one of the 

minimal Buy American Act standards 

for rule of origin. The respondent 

contended that allowing for the use of 

non-domestic component parts will 

have a significant impact on the jobcreation ability of the stimulus. 

• Two respondents stated that the 

Councils should adopt a clear rule 

defining the concept of domestic 

manufacture consistent with the wellestablished standard of substantial 

transformation and a 50 percent 

component content standard (by cost). 

The FAR should not confer domestic 

status simply as a result of minor 

processing or mere assembly in the 

United States. 

Response: The Councils in the interim 

rule did not, as respondents claim, 

acknowledge dependence on the twoprong Buy American Act test and then 

waive the component test. The Councils 

relied on the difference in wording 

between section 1605 and the Buy 

American Act. The preamble to the 

interim rule specifically stated: 

‘‘Because section 1605 does not specify 

a requirement that significantly all the 

components of construction material 

must also be domestic, as does the Buy 

American Act, the definition of 

domestic construction material under 

this interim rule does not include a 

requirement relating to the origin of the 

components of domestic manufactured 

construction material’’ (see Federal 

Register at 74 FR 14624, March 31, 

2009). The Buy American Act requires 

manufacture in the United States 

‘‘substantially all from articles, 


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materials, or supplies mined, produced, 

or manufactured * * * in the United 

States’’ (41 U.S.C. 10b). On the other 

hand, section 1605 only requires the 

manufactured goods to be ‘‘produced’’ in 

the United States. If Congress intended 

the component test to apply, it could 

have easily so stated in section 1605. 

Comments: In fact, a few respondents 

even suggested carrying the component 

test further than the Buy American Act 

interpretation of the 50 percent 

domestic component test. A respondent 

stated that statutory language could be 

interpreted to mean a 100 percent 

domestic content requirement. Another 

respondent stated that, if OMB wanted 

to be aggressive, it could write a rule 

with an even more stringent component 

test (see Berry Amendment), especially 

with respect to textile and apparel 

products. 

Response: Even if section 1605 were 

not silent on the issue of a 100 percent 

domestic component requirement, it 

would be almost impossible to comply 

with such a requirement in this current 

global economy. It would cause 

immense difficulty to American 

manufacturers, and section 1605 does 

not require it. 

Comments: One respondent was 

confused about the waiver by the 

Administrator of OFPP of the 

component test for COTS items because 

of the technical correction made to FAR 

25.001 by the interim rule. The 

respondent noted that the interim rule 

amends FAR 25.001(c)(1) by waiving the 

component test for commercially 

available off-the-shelf items for all 

procurements, regardless of whether the 

procurement is funded with Recovery 

Act funds. 

Response: The interim rule did not 

introduce the component test waiver for 

COTS items at FAR 25.001(c)(1). The 

final rule for that change was published 

in the Federal Register at 74 FR 2713, 

January 15, 2009, and became effective 

February 17, 2009. However, the 

rationale for that waiver may provide 

support for the decision that the 

component test is not appropriate for 

implementation of the Recovery Act. 

The Administrator of OFPP waived the 

component test of the Buy American 

Act for COTS items because ‘‘a waiver 

of the component test would allow a 

COTS item to be treated as a domestic 

end product if it is manufactured in the 

United States, without tracking the 

origin of its components. Waiving only 

the component test of the Buy American 

Act for COTS items, and still requiring 

the end product to be manufactured in 

the United States, reduces significantly 

the administrative burden on 

contractors and the associated cost to 

the Government.’’ The FAR procedures 

for evaluation of foreign offers in 

acquisitions of supplies covered by 

trade agreements is predicated on 

agencies treating offers of U.S.-made 

end products (i.e., offers that may not be 

domestic end products that meet the 

component test of the Buy American 

Act) more like the agencies treat eligible 

products (the trade agreements do not 

apply any component test to eligible 

products from designated countries). 

Today’s markets are globally integrated 

with foreign components often 

indistinguishable from domestic 

components. The difficulty in tracking 

the country of origin of components is 

a disincentive for firms to contract with 

the Government. 

Comments: A number of respondents 

that agreed with not including the 

component test for domestic products 

still requested a definition of 

‘‘component’’ in the rule. 

Response: There are two basic 

definitions of ‘‘component’’ in the FAR, 

at 2.101 and 25.003, and associated Buy 

American Act clauses. In the final rule, 

there is no separate definition of 

component in FAR subpart 25.6, so the 

definition at FAR 25.003 applies to FAR 

subpart 25.6. However, for increased 

clarity, the appropriate definition of 

‘‘component’’ has been included in the 

FAR clauses at 52.225–21 and 52.225– 

23. 

g. Summary Matrix of Requirements for 

Domestic Construction Material 

The following matrix summarizes the 

requirements for domestic construction 

material in projects that use Recovery 

Act funds. 

REQUIREMENTS FOR DOMESTIC CONSTRUCTION MATERIAL IN PROJECTS THAT USE RECOVERY ACT FUNDS

Type of construction 

material 

Applicable 

statute 

Production of construction 

material 

Production of 

iron/steel 

Production of other 

components 

Manufactured—wholly or 

predominantly iron or 

steel.

Section 1605 of Recovery 

Act.

Manufacture in U.S. .......... All processes in U.S. (except steel additives).No requirement. 

Manufactured—not wholly 

or predominantly iron or 

steel.

Section 1605 of Recovery 

Act.

Manufacture in U.S. .......... No requirement ................. No requirement. 

Unmanufactured ................ Buy American Act ............. Mined or produced in U.S. XXX ................................... XXX.

3. Applicability of International 

Agreements 

a. Trade Agreements 

Comments: As provided by section 

1605(d), the Recovery Act Buy 

American provisions must be applied in 

a manner consistent with United States 

obligations under international 

agreements. One respondent requested 

that the final regulations should ensure 

compliance with existing international 

obligations, but did not specify any 

shortcomings in the interim rule in this 

regard. Another respondent considered 

that the interim rule is creating great 

consternation with our international 

trading partners and could lead them to 

retaliate with their own protectionist 

measures. A third respondent claimed 

that the interim rule did not ensure 

consistency with international 

obligations. 

Response: As required by section 

1605, the FAR rule provides for full 

compliance with U.S. obligations under 

all international trade agreements when 

undertaking construction covered by 

such agreements with Recovery Act 

funds. The new required provisions and 

clauses implement U.S. obligations 

under our trade agreements in much the 

same way as they are currently 

implemented in non-Recovery Act 

construction contracts, with one 

exception. The Caribbean Basin 

countries are excluded from the 

definition of ‘‘Recovery Act designated 

country,’’ because the treatment 

provided to them is not as a result of 

any U.S. international obligation but is 

the result of a United States initiative. 

The new cost evaluation standards do 

not apply to manufactured construction 

material from Recovery Act designated 

countries. 

Comments: One respondent stated 

that, as drafted, the interim rule implied 

that all construction material from 

Recovery Act designated countries is 

exempt from the Recovery Act Buy 


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American requirements set forth in 

section 1605 and the Buy American Act. 

This implication is inconsistent with 

the law because, according to the 

respondent, not all Recovery Act 

designated country construction 

material is exempt. FAR subpart 25.4 

limits the foreign products eligible for 

equal consideration with domestic 

offers. Even if end products for resale or 

set asides for small business are 

produced in Recovery Act designated 

countries, for example, they would not 

be deemed eligible products per FAR 

subpart 25.4. Likewise, one respondent 

pointed out that FAR subpart 25.4 does 

not apply to procurements set aside for 

small businesses and requested 

clarification in the final rule on 

continuation of this policy. 

Response: The FAR subpart 25.4 

exception for resale of end products is 

inapplicable to construction contracts. 

FAR subpart 25.4 states that it does 

not apply to acquisitions set aside for 

small businesses. FAR 25.603(c) has a 

cross reference to FAR subpart 25.4. 

Comments: Two respondents 

considered that the situation created by 

the interim rule with regard to sources 

of iron and steel is unfair. Namely, 

designated countries have unrestricted 

ability to provide iron and steel from 

anywhere, whereas domestic sources 

must provide iron and steel melted in 

the United States. According to these 

respondents, this would incentivize 

designated country steel firms to stop 

shipping slabs to the U.S. and to 

substitute finished construction 

materials. The result would be a loss of 

U.S. jobs in both the steel-finishing and 

construction-material manufacturing 

sectors. 

Response: In its trade agreements, the 

United States commits to apply to 

products from designated countries the 

rule of origin that is used in the normal 

course of trade between these countries, 

i.e., ‘‘wholly the product of’’ or 

‘‘substantially transformed’’ in the 

designated country. In projects funded 

by the Recovery Act, we cannot add 

new restrictions on the products of our 

trading partners that are not applied to 

other procurements covered by our 

agreements. 

Comments: A respondent 

recommended that the final FAR rule 

should provide for the use of an 

inventory accounting methodology to 

determine the origin of fungible goods 

that are commingled American and 

foreign inventories. This respondent 

noted that NAFTA permits this 

methodology to avoid unfairly 

disqualifying companies that produce 

eligible products but commingle such 

products in inventories with foreign 

products. 

Response: The Recovery Act does not 

permit such methodology. 

b. G20 Summit Pledge 

Comments: The countries of the G20 

stated at the summit that they would 

refrain from raising new trade barriers to 

trade in goods and services. According 

to various respondents, the new law and 

the interim rule, by adding the 

restrictions on the production of iron 

and steel and increasing the test for 

unreasonable costs, raise new barriers to 

trade, even though the Recovery Act 

Buy American requirement must be 

applied consistent with U.S. 

international obligations. A respondent 

stated that overly restrictive 

implementation of the Recovery Act 

will undermine the ability of the U.S. 

companies with global supply chains to 

participate in the Recovery Act. 

According to a respondent, it will lead 

to closed markets overseas to the 

detriment of American exports, 

products, and jobs. 

A respondent stated that ambiguities 

in the interim rule were open to 

interpretation by Government agencies 

on multiple levels. In the absence of 

examples of permissible procurement 

from foreign sources, the business 

community must await test cases to 

determine whether, for example, the 

letter of the law in terms of the WTO 

GPA signatory exceptions to the 

exclusionary principles will truly apply. 

The respondent believed that this 

ambiguity serves as a de facto obstacle 

to foreign suppliers engaging in 

commerce or any form of business 

alliance with American bidders. 

A non-U.S. respondent stated that 

access to the U.S. procurement market 

has been further limited in areas not 

covered by the WTO GPA. Their 

preference would be non-application of 

the new requirements to European 

Union member countries. 

Two foreign respondents also wanted 

to emphasize that the United States 

should uphold the G20 statement in 

implementing the Recovery Act Buy 

American provisions. One stated that, 

for acquisitions below the WTO GPA 

threshold of $7,443,000 for 

construction, the new discriminatory 

procurement requirements would apply 

in relation to goods from Recovery Act 

designated countries. 

Response: These concerns essentially 

go back to the requirements of section 

1605 of the Recovery Act. The FAR rule 

must implement the law. Section 1605 

provides for application consistent with 

United States obligations under 

international agreements. Pledges at the 

G20 Summit do not constitute 

international agreements, as 

contemplated by section 1605. The FAR 

rule cannot create new exemptions. 

4. Other Definitions 

a. Construction Material 

Comments: Three respondents stated 

that, in some circumstances, if foreign 

pieces are delivered to the jobsite and 

assembled there instead of being 

delivered as part of an assembled 

construction material, those pieces 

would presumably be in violation. The 

respondents believe that this rule will 

encourage or force some assemblies to 

be done offsite in order to maintain 

compliance. They recommend allowing 

the contracting officer some level of 

discretion. 

Response: The definition of 

construction material in the rule as an 

article, material, or supply brought to 

the construction site by the contractor or 

subcontractor for incorporation into the 

building or work is unchanged from the 

first sentence of the current FAR 25.003. 

That is how Government construction 

subject to the FAR has worked for many 

years. 

Comments: One respondent further 

objected that the new FAR clause 

52.225–23 included a definition of 

construction material that singles out 

‘‘emergency life safety systems’’ as 

discrete and complete, allowing them to 

be evaluated as a single and distinct 

construction material, regardless of how 

and when the parts or components are 

delivered to the construction site. The 

respondent stated that there are 

numerous other types of systems, such 

as environmental control 

communications systems, that are 

integrated into the building in such a 

fashion that warrant being treated in a 

similar manner that the FAR should 

consider. 

Response: This is the current FAR 

definition of construction material (see, 

for example, FAR 52.225–9(a)). 

b. Public Building or Public Work 

Comment: A respondent stated that 

there is no definition or cross reference 

for ‘‘public building’’ or ‘‘public work.’’ 

Response: The interim rule at FAR 

25.602 referenced the definition of 

‘‘public building or public work’’ at FAR 

22.401. For the definition in the final 

rule, please see FAR 25.601. 

c. Manufactured Construction Material/ 

Unmanufactured Construction Material 

Comment: One respondent expressed 

concern that the definitions of 

manufactured and unmanufactured 

create no clear standard for determining 


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when a good is a domestic construction 

material. 

Response: The standard for 

determining whether a good is a 

domestic construction material is not 

found in the definitions of 

‘‘manufactured construction material’’ 

and ‘‘unmanufactured construction 

material.’’ It is found in the definition of 

‘‘domestic construction material’’ at FAR 

25.601 and in the policy at FAR 25.602. 

In the final rule, the Councils have 

expanded the definition of ‘‘domestic 

construction material’’ at FAR 25.601 to 

include the more detailed standards 

relating to iron and steel that were 

included in the policy statement. 

5. Exceptions 

a. Class Exceptions 

Comment: One respondent posited 

that blanket waivers or broad temporary 

waivers would be appropriate and 

should be broadly defined in the FAR. 

Another respondent noted that the 

statute was changed during conference 

to include, at paragraph (b), the phrase 

‘‘category of cases’’ for which section 

1605 would not apply and wondered 

why the FAR doesn’t mention or take 

advantage of this language. 

Response: The Councils note that 

neither the statute nor the FAR 

precludes the use of class waivers in 

appropriate circumstances. 

Comments: Four respondents stated 

that the FAR should include a de 

minimis waiver in order to limit 

detrimental impacts of a very smallvalue item preventing a company from 

providing an entire system on a project. 

One respondent suggested a waiver for 

any construction material that costs less 

than 10 percent of the entire project 

cost. Another respondent believed that 

such minimal use should not trigger the 

25 percent evaluation factor because 

such de minimis usage will not threaten 

the commercial viability of relevant U.S. 

industry. Two respondents used the 

example of piping where specific 

gaskets and fittings must be added on 

site and are not always manufactured 

domestically. 

Response: Because construction 

material is defined as the article, 

material, or supply delivered to the 

construction site, and there is no 

component test (except for iron or steel), 

it is not possible for the delivery of an 

entire system to be considered nondomestic because of a very small value 

foreign component of the system, as 

long as the component is not delivered 

separately to the construction site. 

Further, the clarification of ‘‘produced 

in the United States’’ (FAR 25.602(a)(1)) 

makes clear that iron and steel 

components will only be tracked if the 

construction material is a manufactured 

construction material that consists 

wholly or predominantly of iron or 

steel. 

b. Public Interest 

Comments: One respondent wanted a 

nationwide public interest waiver 

issued to enable Recovery Act funds to 

be deployed now, when most needed, 

rather than await publication of ‘‘Buy 

American regulations.’’ The respondent 

stated that ‘‘(t)he U.S. Environmental 

Protection Agency (EPA) has taken the 

prudent approach of using the ‘public 

interest’ exception to issue a nationwide 

waiver of the Recovery Act Buy 

American requirement for State 

Revolving Loan Fund projects for which 

debt was incurred between October 1, 

2008 and February 17, 2009.’’ 

Two respondents noted that the 

‘‘public interest’’ exception does not 

specify criteria for the agency head to 

use. One of these respondents asked if 

there are special procedures that should 

be included in the FAR. 

Response: The Councils believe that 

the first comment is moot, given that the 

Recovery Act regulations were 

published in the Federal Register at 74 

FR 14623, March 31, 2009. Further, the 

EPA class exception referred to by the 

respondent was for State Revolving 

Loan Fund projects, an area that is 

covered by the OMB guidance, not the 

FAR. 

With regard to the second comment, 

the Councils note that the language for 

this exception is modeled on the public 

interest exception currently in use for 

the Buy American Act at FAR 25.103(a). 

The public interest exception may only 

be authorized by the agency head (with 

power of redelegation) and is used 

infrequently. The FAR includes no 

special procedures so that agency heads 

retain appropriate flexibility. 

Comment: Another respondent 

wanted to know whether each State uses 

the same criteria or procedures. 

Response: The FAR is not used by 

State or local governments; it is used by 

Federal agencies to contract with 

appropriated funds. Each agency has a 

unique mission, and it would not be 

appropriate to require them all to use 

the same criteria. 

Comment: A respondent suggested 

that the public interest exception be 

interpreted flexibly, considering 

economic efficiency and overall quality 

of goods so that, ‘‘even if non-American 

iron, steel, and manufactured goods may 

not satisfy the 25 percent rule, they can 

still be accepted under the public 

interest exception.’’ 

Response: The public interest 

exception is designed to be used flexibly 

and only as a last resort when the 

nonavailability or unreasonable cost 

exceptions do not fit. However, it is not 

designed to circumvent the new 

statutory standards for determination of 

unreasonable cost of domestic 

construction material. 

c. Nonavailability 

Comments: Four respondents queried 

the nonavailability waiver at FAR 

25.603. One of these respondents 

believed that the nonavailability 

exception should be modified to require 

consideration of the geographical scope 

of the market in which production takes 

place so that foreign products are not 

unfairly discriminated against. 

Response: The Councils disagree. The 

statute contained no such provision, 

and to add one now would contradict 

the intention of the U.S. Congress in 

enacting the Recovery Act. The statute 

provides an exception for 

nonavailability of domestic 

manufactured construction material. 

This does not result in any 

discrimination against foreign 

construction material, but actually 

allows the purchase of foreign 

construction material when domestic 

manufactured construction material is 

unavailable. 

Comment: Another respondent 

recommended that the final rule provide 

for a time-limited, streamlined process 

for issuing nonavailability waivers. 

Response: The reason for issuing a 

nonavailability exception is that the 

items in question are truly not available 

‘‘in the United States in sufficient and 

reasonably available commercial 

quantities of a satisfactory quality.’’ 

(FAR 25.603(a)(1)). The Councils believe 

that contracting officers should not 

unfairly rush the process of determining 

whether these conditions apply to an 

item. 

Comment: Another point of view 

expressed by a respondent was that the 

final rule should require an offeror 

proposing a nonavailability waiver to 

provide, in addition to the items already 

listed, the following: (1) Supplier 

information or pricing information from 

a reasonable number of domestic 

suppliers indicating availability/ 

delivery date for construction materials, 

(2) information documenting efforts to 

find available domestic sources, (3) a 

project schedule, and (4) relevant 

excerpts from project plans, 

specifications, and permits indicating 

the required quantity and quality of 

construction materials. 

This respondent also requested that 

the contract list all foreign material 


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used, including construction material 

from designated countries. 

Response: The Councils’ intention 

was to use the same requirements for 

this exception as have been used for 

Buy American Act non-availability 

determinations for some 15 years. It 

would be an unnecessary burden to list 

designated country construction 

material, because section 1605 requires 

compliance with trade agreements, and 

there is no restriction on the use of 

designated country construction 

material when trade agreements apply. 

Comment: A respondent noted that it 

seems inconsistent, if designated 

country materials are not considered 

foreign construction items, not to 

consider them when making the 

determinations in FAR 25.603(a) and 

(b). 

Response: Designated country 

material is considered to be foreign. 

d. Unreasonable Cost 

Comment: One respondent stated that 

‘‘it is quite apparent that a preference for 

offers excluding foreign construction 

material lacks the necessary legal 

justification and constitutes an obvious 

prejudice against foreign construction 

material.’’ 

Response: The Councils disagree. The 

paragraphs in the solicitation provisions 

on evaluation of offers (FAR clauses 

52.225–22(c) and 52.225–24(c)) clearly 

state that the preference is for an offer 

that does not include foreign 

construction material excepted at the 

request of the offeror on the basis of 

unreasonable cost. This does not 

constitute a prejudice against all foreign 

construction material. Inclusion of 

Recovery Act designated country 

construction material will not cause the 

Government to discriminate against an 

offer. This is in accordance with the 

law, as promulgated by the U.S. 

Congress and applied consistent with 

U.S. international obligations. 

Comments: Two respondents stated 

that the evaluation of foreign 

construction materials, and the 

authority provided to submit alternate 

offers with equivalent domestic 

material, constitutes a prejudice against 

foreign construction material. 

Response: The Councils disagree and 

note that the FAR is implementing U.S. 

law. Further, the implementation 

scheme is fully compliant with U.S. 

international agreements. 

Comments: Two respondents 

commented that the 25 percent 

evaluation factor likely renders the 

unreasonable cost exception moot 

because it is so high that it will be 

impossible to meet. 

Response: The Councils had no 

discretion about the requirement to add 

25 percent to the contract cost when 

foreign iron, steel, or manufactured 

goods are proposed to be used in a 

construction project or public work. The 

factor is specifically required by the 

language of section 1605(b)(3) of Public 

Law 111–5. 

Comment: Another respondent 

suggested that the table at FAR 52.225– 

23(d) should include another category 

entitled ‘‘Recovery Act designated 

country material.’’ 

Response: The respondent gave no 

reason for this suggestion, and the 

Councils cannot accept the 

recommendation. The statute provides 

an exception for unreasonable cost of 

domestic material, not for unreasonable 

cost of designated country construction 

material. The statute requires a 

comparison of the price differential 

between domestic manufactured 

construction material (including iron 

and steel) and foreign manufactured 

construction material (other than 

designated country manufactured 

construction material). In an acquisition 

subject to trade agreements, the material 

that is obtained from designated 

countries is not part of the evaluation 

because it is not domestic construction 

material. 

6. Determinations That an Exception 

Applies 

a. Process and Publication 

Comments: Two respondents stated 

that the use of waivers should be 

encouraged and simplified. 

Response: The Councils have made 

the exception process as streamlined as 

is possible within the terms of the 

statute. Agencies already have authority 

to use class exceptions. 

Comments: Two respondents believed 

that the specific two-week timeframe for 

publication of a waiver in the Federal 

Register should be replaced with 

language requiring publication in the 

fastest practicable manner. In addition, 

the Office of Federal Procurement 

Policy (OFPP) requested that a copy of 

the nonavailability determination be 

provided to the OFPP Administrator. 

Response: The statute specifically 

called for publication in the Federal 

Register (Pub. L. 111–5, section 

1605(c)). However, the law does not set 

a time frame for such publication. The 

Councils agree with the respondents 

that timely publication is desirable, but 

the Federal Register often must 

accommodate workload priorities that 

are out of the control of contracting 

officers. Therefore, FAR 25.603(b)(2) is 

revised to require the agency head to 

provide the notice to the Federal 

Register within 3 business days after the 

determination is made. Except in 

unusual workload circumstances, this 

change should result in publication in 

the Federal Register in less than 2 

weeks. 

The final rule includes, at FAR 

25.603(b), a requirement to provide to 

the Administrator for Federal 

Procurement Policy and to the Recovery 

Accountability and Transparency Board 

a copy of a determination made in 

accordance with FAR 25.603(a) 

concurrent with its provision to the 

Federal Register. 

Comments: Six respondents 

demanded that OMB provide full 

transparency in the process of obtaining 

waivers of section 1605’s application by 

requiring that all waiver requests be 

posted publicly on line. Several of these 

respondents wanted the waiver request 

to be posted promptly and publicly on 

line (the internet or Recovery.gov); one 

wanted the waiver request to be posted 

within 3 days of its receipt; and one 

respondent wanted waiver requests to 

be e-mailed to any trade associations 

and domestic manufacturers desiring to 

be on an alert list. 

Response: While section 1605 does 

require publication of exceptions made 

to the requirement to use U.S.-produced 

iron, steel, and manufactured goods 

used in the project, there is no 

requirement in the statute to publish 

requests for an exception. Therefore, no 

change is being made to the FAR to 

introduce such a requirement. 

Comment: One respondent considered 

that FAR 25.604(a) confuses 

inapplicability with exceptions and 

appears to refer to one of the exceptions 

as a rationale for that ‘‘inapplicability’’ 

determination. The respondent believed 

that the concept of the Buy American 

clause not being applicable is distinct 

from a situation where the Buy 

American clause may apply, but an 

exception has been granted. 

Response: The FAR language for this 

case uses the exact wording from the 

current FAR Buy American Act 

coverage. Contracting officers are not 

waiving section 1605 of the Recovery 

Act or the Buy American Act, but 

determining whether an exception 

applies, and then, if an exception does 

apply, determining that section 1605 of 

the Recovery Act or the Buy American 

Act is inapplicable. 

b. Requests for Specific Exceptions 

Comments: Three respondents stated 

that the recent addition of commercial 

off-the-shelf (COTS) items to exceptions 

from the Buy American Act for 

construction materials (FAR 25.225–9 


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and –11) and the exception at FAR 

25.103(e) for commercial information 

technology (IT) should be available for 

Recovery Act-funded construction 

projects. 

Response: The Councils do not agree. 

The COTS item exception only exempts 

COTS items from the component test of 

the Buy American Act. This rule does 

not apply a component test to any of the 

manufactured construction material 

subject to section 1605 of the Recovery 

Act except iron and steel. By definition, 

unmanufactured construction material 

does not have components. 

With regard to the commercial IT 

exception, it applies only to the Buy 

American Act. The Recovery Act 

exceptions are explicitly stated in 

section 1605 and are not identical to the 

Buy American Act exceptions. 

Comments: Two respondents 

requested that commercial items, as a 

category, be exempt from coverage 

under section 1605. 

Response: The Councils decline to 

make this change, as the Congress did 

not exempt commercial items from 

section 1605 applicability. 

Comment: One of these respondents 

also asked that other typically nonconstruction materials not primarily 

made of iron or steel be excluded from 

coverage. 

Response: The Councils do not 

understand the respondent’s use of the 

term ‘‘other typically non-construction 

materials.’’ The Councils have used the 

standard FAR definition of 

‘‘construction material’’ without change. 

Under this definition, if it is 

incorporated into a public building or 

public work, then the material is 

construction material. 

Comment: One respondent 

recommended that the FAR waive 

application of section 1605 for all 

manufactured goods not made primarily 

of iron and steel. 

Response: The Councils decline for 

the reason that the Congress specifically 

included manufactured goods in the 

coverage of section 1605. 

Comment: A respondent wanted the 

Councils to issue a class waiver from the 

Buy American Act requirements for 

electronic fluorescent lighting ballasts. 

Response: The FAR includes, at FAR 

25.104(a), a list of items that have been 

determined nonavailable in accordance 

with FAR 25.103(b)(1)(i). A class 

determination made in accordance with 

the above reference does not necessarily 

mean that there is no domestic source 

for the listed items, but that domestic 

sources can only meet 50 percent or less 

of total U.S. Government and 

nongovernment demand. The 

respondent is free to make a request for 

a class determination. In addition, the 

offeror may request, and the contracting 

officer may grant, an exception on an 

individual contract in accordance with 

FAR 25.603. 

7. Exemption for Acquisitions Below the 

Simplified Acquisition Threshold 

Comments: Two respondents 

requested that the final rule exempt 

purchases under the simplified 

acquisition threshold (SAT) from the 

Recovery Act. 

Response: The determination was 

made under the interim rule that section 

1605 of the Recovery Act would apply 

to all contracts, including those below 

the SAT (see Interim Rule, 

Supplementary Information, Section C 

(see Federal Register at 74 FR 14625, 

March 31, 2009)). The Councils remain 

committed to this position in order to 

fully implement the goals of the 

Recovery Act. Therefore, any project, of 

whatever dollar value, financed with 

Recovery Act funds is subject to these 

limitations. 

8. Remedies for Noncompliance 

Comments: One respondent requested 

that the final rule include a safe-harbor 

provision protecting companies 

receiving Recovery Act funds without 

proper notice from the Government or 

the purchasing company. 

Response: The Councils believe that 

this is unnecessary, given the 

protections already built into the use of 

Recovery Act funds. First, any 

appropriation of Recovery Act funds 

receives a special designation that 

identifies it as Recovery Act money. In 

addition, FAR 4.1501, 5.704, and 5.705, 

along with the contract checklist issued 

by the Recovery Accountability and 

Transparency Board, require contracting 

officers to indicate, in the solicitation or 

award, which products or services are 

funded under the Recovery Act. 

Comment: One respondent stated that 

the regulations must provide adequate 

remedies, such as debarment, for noncompliance with section 1605. It 

claimed that only such meaningful 

remedies can serve to deter 

misbehavior. 

Response: All of the usual remedies 

available through the FAR or Federal 

law are equally available as remedies for 

noncompliance with section 1605 

regulations. No additional remedies are 

needed. 

Comment: One respondent 

recommended replacing the 

requirement, at FAR 25.607(c)(4), to 

refer apparent fraudulent 

noncompliance to ‘‘the agency’s 

Inspector General’’ rather than to ‘‘other 

appropriate agency officials.’’ 

Response: This recommendation has 

been partially accepted. While the 

agency Inspector General is available for 

referral of suspected fraud, it is not the 

only option in this situation. FAR 

25.607(c)(4) is revised to include both 

the agency’s Inspector General and other 

possible officials. 

9. Funding Mechanisms 

a. Modifications to Existing Contracts 

Comments: Three respondents 

strongly recommended that the 

Recovery Act limitations should not be 

applied to task orders issued under 

Governmentwide Acquisition Contracts 

(GWACs) or Multiple Award Contracts 

(MACs). 

Response: The Councils cannot make 

the change requested by these 

respondents because the Recovery Act 

restrictions follow the appropriations. 

Any construction project or public work 

funded with Recovery Act money must 

comply with the restrictions in section 

1605, whether the contracting vehicle 

for the project is a contract or task order. 

b. Treatment of Mixed Funding 

Comments: Seven respondents were 

concerned that the interim rule failed to 

provide any clarity about how projects 

with mixed funding (some Recovery Act 

funds and other Federal appropriations) 

would be treated. Several respondents 

expressed a strong preference for 

treating mixed-funded projects as not 

covered by the Recovery Act limitations. 

Response: Given that the statute was 

designed so that the section 1605 

limitations are tied to the source of 

funding, the Councils do not have the 

option of complying with respondents’ 

preference. Any Federal construction or 

public works contract effort that is 

funded by any funds, however 

miniscule, appropriated by the Recovery 

Act must, by law, comply with the 

section 1605 requirements. However, 

the regulations do provide that a 

contract may be funded with Recovery 

Act funds and non-Recovery Act funds 

if the funds are properly segregated by 

line item or sub-line item. In addition, 

contracting officers are required to 

indicate, in the solicitation or award, 

which products or services are funded 

under the Recovery Act. However, if the 

contracting officer does not properly 

segregate Recovery Act and nonRecovery funds, then the law requires 

the mixed-funded line items or 

contracts to be treated as if they were 

entirely Recovery-Act funded. (See 

discussion of ‘‘project’’ at 2.b. above and 

in the FAR text at 25.602–1(c).) 


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10. Interim Rule Improper 

Comment: One respondent believed it 

was inappropriate to publish an interim 

rule, as it deprived interested parties of 

the right to comment. The need to have 

rules available as soon as the Recovery 

Act funds were made available to 

Federal agencies for obligation, 

according to the respondent, was not a 

sufficient justification for the absence of 

prior public comment. 

Response: The Administration 

directed the Councils to publish an 

interim rule in order to provide 

contracting agencies with the necessary 

direction quickly. In any case, 

respondents were given an opportunity 

to comment fully on the interim rule, 

and each comment has been thoroughly 

considered by the Councils. 

11. Inconsistencies Between This Rule 

and Pre-Existing FAR Rule and the OMB 

Grants Guidance 

a. Inconsistency With Pre-Existing FAR 

Comments: One respondent objected 

that this rule will require wellintentioned and compliant companies to 

establish yet more processes and 

systems (many of which will be largely 

duplicative of existing Buy American 

Act/Trade Agreements Act compliance 

requirements) to comply with the 

Recovery Act. The respondent claimed 

that this creates significant cost burdens 

and delays in construction projects. 

Another respondent stated that any 

change in current supply chains made 

in order to comply with this rule will 

limit competition, cause delays, and 

increase costs. A respondent objected to 

the creation of yet another list of 

designated countries. 

Response: The Councils used preexisting FAR language and processes to 

the extent that it was possible to do so 

and still meet the requirements of the 

Recovery Act. The Recovery Act also 

specified the new requirements for iron 

and steel and the 25 percent contract 

evaluation factor. 

Recovery Act-designated countries 

were identified from the language of the 

statute, the Committee report, and 

consultation with the United States 

Trade Representative. Caribbean Basin 

countries were not included as Recovery 

Act-designated countries because they 

are not covered by an international 

agreement. 

b. Inconsistency With the OMB Grants 

Guidance 

Comments: Four respondents 

expressed a strong preference that the 

final rule should have the closest 

possible alignment with the OMB 

guidance governing grants under the 

Recovery Act. 

One respondent noted that the OMB 

grants guidance includes examples of 

‘‘public building.’’ The respondent 

would like to know whether a public 

building in the FAR is the same as a 

public building in the OMB guidance. 

Response: The Councils agree and 

note that the final rule was developed 

in close coordination with OMB grant 

officials. The Councils point out, 

however, that grants, financial 

assistance, and loans are not subject to 

the Buy American Act. Therefore, the 

coverage cannot be the same in these 

two regulations regarding 

unmanufactured construction material. 

Further, the OMB guidance applies to 

all assistance recipients, including 

States. Trade agreements do not apply 

uniformly at the State level. 

The final revised FAR provisions 

include the definition from FAR 22.401 

and add examples of public buildings 

and public works from the OMB grants 

guidance. 

It is our understanding that the OMB 

grants coverage will be conformed to the 

FAR terminology to use ‘‘manufacture’’ 

in lieu of ‘‘substantially transformed.’’ 

The Councils and OMB are not aware of 

any other areas where the OMB 

guidance and this FAR rule are not 

aligned. 

Comment: One respondent requested 

that the Councils consider requesting 

EPA, Federal Transit/Highways 

Administration, and other agencies that 

have issued their own guidance to 

withdraw it. 

Response: The Councils decline. 

There is no reason to request any agency 

to withdraw contracting guidance that is 

in compliance with the FAR. 

Language in the Recovery Act 

exempted the Federal Highway 

Administration (FHA) from section 

1605. It is appropriate that FHA 

maintain separate regulations. 

12. Need for Additional Guidance 

Comments: Two respondents stated 

that there is confusion about the scope 

of applicability of this rule and 

requested that the FAR more clearly 

spell out that contracting authorities are 

obliged to comply with international 

commitments and request relevant and 

user-friendly guidance. 

Response: The Councils note that 

changes in the final rule have 

differentiated projects that are subject to 

the Recovery Act rules from projects 

that are subject to existing Buy 

American Act and trade agreements 

requirements. The Councils have made 

it abundantly clear in the final rule and 

this preamble that Federal agencies 

must comply with international 

agreements when conducting 

procurements for Recovery Act projects 

that are covered by such agreements. 

Further, contracting authorities that 

do not comply with the FAR, and 

thereby with international 

commitments, should be reported and 

are subject to sanctions. 

Comment: One of those respondents 

thought that the FAR does not explain 

what regime must be followed in cases 

where an entity covered by the World 

Trade Organization Government 

Procurement Agreement (WTO GPA) 

conducts procurement jointly with an 

entity that is not covered by the WTO 

GPA. 

Response: If one entity in a joint 

procurement is covered by the GPA or 

another international agreement, but 

another entity that is also involved in 

the same procurement is not covered by 

the GPA or another international 

agreement, the procurement will be 

conducted in a manner that ensures that 

U.S. obligations under international 

agreements are honored. That means 

that in such a case, products from 

Recovery Act designated countries will 

not be subject to the restrictions of 

section 1605 of the Recovery Act. 

C. Applicability to Contracts at or 

Below the Simplified Acquisition 

Threshold 

Section 4101 of Public Law 103–355, 

the Federal Acquisition Streamlining 

Act (FASA) (41 U.S.C. 429), governs the 

applicability of laws to contracts or 

subcontracts in amounts not greater 

than the simplified acquisition 

threshold. It is intended to limit the 

applicability of laws to them. FASA 

provides that if a provision of law 

contains criminal or civil penalties, or if 

the Federal Acquisition Regulatory 

Council makes a written determination 

that it is not in the best interest of the 

Federal Government to exempt contracts 

or subcontracts at or below the 

simplified acquisition threshold, the 

law will apply to them. 

The FAR Council determined, for the 

interim rule, that it should apply to 

contracts or subcontracts at or below the 

simplified acquisition threshold, as 

defined at FAR 2.101. The public 

comments received did not cause the 

FAR Council to modify this position for 

the final rule. 

This is a significant regulatory action 

and, therefore, was subject to review 

under Section 6(b) of Executive Order 

12866, Regulatory Planning and Review, 

dated September 30, 1993. This rule is 

not a major rule under 5 U.S.C. 804. 


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D. Regulatory Flexibility Act 

The Department of Defense, the 

General Services Administration, and 

the National Aeronautics and Space 

Administration certify that this final 

rule will not have a significant 

economic impact on a substantial 

number of small entities within the 

meaning of the Regulatory Flexibility 

Act, 5 U.S.C. 601, et seq., because it will 

only impact an offeror that wants to use 

non-U.S. iron, steel, and manufactured 

goods in a construction project in the 

United States. The Councils stated in 

the interim rule their belief that there 

are adequate domestic sources for these 

materials, and the Office of Management 

and Budget (OMB) guidance M–09–10 

issued February 18, 2009, entitled 

‘‘Initial Implementing Guidance for the 

American Recovery and Reinvestment 

Act of 2009,’’ provides a strong 

preference for using small businesses for 

Recovery Act projects wherever 

possible. No comments to the contrary 

were received from small entities in 

response to the interim rule. 

E. Paperwork Reduction Act 

The Paperwork Reduction Act does 

apply; however, the information 

collection requirements imposed by the 

FAR provisions 52.225–22 and 52.225– 

24 are currently covered by the 

approved information collection 

requirements for FAR provisions 

52.225–9 and 52.225–11 (OMB Control 

number 9000–0141, entitled Buy 

America Act—Construction—FAR 

Sections Affected: Subpart 25.2; 52.225– 

9; and 52.225–11). No public comments 

were received regarding the data 

elements, the burden, or any other part 

of the collection. 

List of Subjects in 48 CFR Parts 2, 5, 25, 

and 52 

Government procurement. 

Dated: August 18, 2010. 

Edward Loeb, 

Director, Acquisition Policy Division. 

■ Therefore, DoD, GSA, and NASA 

amend 48 CFR parts 2, 5, 25, and 52 as 

set forth below: 

■ 1. The authority citation for 48 CFR 

parts 2, 5, 25, and 52 continues to read 

as follows: 

Authority: 40 U.S.C. 121(c); 10 U.S.C. 

chapter 137; and 42 U.S.C. 2473(c). 

PART 2—DEFINITIONS OF WORDS 

AND TERMS 

■ 2. Amend section 2.101 in paragraph 

(b)(2), in the definition ‘‘Component’’, by 

revising paragraphs (2) and (3); and 

adding paragraph (4) to read as follows: 

2.101 Definitons. 

* * * * * 

(b) * * * 

(2) * * * 

Component * * * 

(2) 52.225–1 and 52.225–3, see the 

definition in 52.225–1(a) and 52.225– 

3(a); 

(3) 52.225–9 and 52.225–11, see the 

definition in 52.225–9(a) and 52.225– 

11(a); and 

(4) 52.225–21 and 52.225–23, see the 

definition in 52.225–21(a) and 52.225– 

23(a). 

* * * * * 

PART 5—PUBLICIZING CONTRACT 

ACTIONS 

5.207 [Amended] 

■ 3. Amend section 5.207 by removing 

from paragraph (c)(13)(iii) the word 

‘‘Other’’. 

PART 25—FOREIGN ACQUISITION 

■ 4. Amend section 25.001 by adding a 

new sentence to the end of paragraph 

(c)(4) to read as follows: 

25.001 General. 

* * * * * 

(c) * * * 

(4) * * * If the construction material 

consists wholly or predominantly of 

iron or steel, the iron or steel must be 

produced in the United States. 

■ 5. Amend section 25.003 by revising 

the definition ‘‘Domestic construction 

material’’ to read as follows: 

25.003 Definitions. 

* * * * * 

Domestic construction material 

means— 

(1)(i) An unmanufactured 

construction material mined or 

produced in the United States; 

(ii) A construction material 

manufactured in the United States, if— 

(A) The cost of the components 

mined, produced, or manufactured in 

the United States exceeds 50 percent of 

the cost of all its components. 

Components of foreign origin of the 

same class or kind for which 

nonavailability determinations have 

been made are treated as domestic; or 

(B) The construction material is a 

COTS item; 

(2) Except that for use in subpart 25.6, 

see the definition in 25.601. 

* * * * * 

■ 6. Revise section 25.600 to read as 

follows: 

25.600 Scope of subpart. 

This subpart implements section 1605 

in Division A of the American Recovery 

and Reinvestment Act of 2009 (Pub. L. 

111–5) (Recovery Act) with regard to 

manufactured construction material and 

the Buy American Act with regard to 

unmanufactured construction material. 

It applies to construction projects that 

use funds appropriated or otherwise 

provided by the Recovery Act. 

■ 7. Amend section 25.601 by revising 

the definition ‘‘Domestic construction 

material’’; and adding, in alphabetical 

order, the definition ‘‘Public building or 

public work’’. 

The revised and added text reads as 

follows: 

25.601 Definitions. 

* * * * * 

Domestic construction material means 

the following: 

(1) An unmanufactured construction 

material mined or produced in the 

United States. (The Buy American Act 

applies.) 

(2) A manufactured construction 

material that is manufactured in the 

United States and, if the construction 

material consists wholly or 

predominantly of iron or steel, the iron 

or steel was produced in the United 

States. (Section 1605 of the Recovery 

Act applies.) 

* * * * * 

Public building or public work means 

a building or work, the construction, 

prosecution, completion, or repair of 

which is carried on directly or 

indirectly by authority of, or with funds 

of, a Federal agency to serve the interest 

of the general public regardless of 

whether title thereof is in a Federal 

agency (see 22.401). These buildings 

and works may include, without 

limitation, bridges, dams, plants, 

highways, parkways, streets, subways, 

tunnels, sewers, mains, power lines, 

pumping stations, heavy generators, 

railways, airports, terminals, docks, 

piers, wharves, ways, lighthouses, 

buoys, jetties, breakwaters, levees, and 

canals, and the construction, alteration, 

maintenance, or repair of such buildings 

and works. 

* * * * * 

■ 8. Revise section 25.602 to read as 

follows: 

25.602 Policy. 

25.602–1 Section 1605 of the Recovery 

Act. 

Except as provided in 25.603— 

(a) None of the funds appropriated or 

otherwise made available by the 

Recovery Act may be used for a project 

for the construction, alteration, 

maintenance, or repair of a public 

building or public work unless the 


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public building or public work is 

located in the United States and— 

(1) All of the iron, steel, and 

manufactured goods used as 

construction material in the project are 

produced or manufactured in the United 

States. 

(i) All manufactured construction 

material must be manufactured in the 

United States. 

(ii) Iron or steel components. (A) Iron 

or steel components of construction 

material consisting wholly or 

predominantly of iron or steel must be 

produced in the United States. This 

does not restrict the origin of the 

elements of the iron or steel, but 

requires that all manufacturing 

processes of the iron or steel must take 

place in the United States, except 

metallurgical processes involving 

refinement of steel additives. 

(B) The requirement in paragraph 

(a)(1)(ii)(A) of this section does not 

apply to iron or steel components or 

subcomponents in construction material 

that does not consist wholly or 

predominantly of iron or steel. 

(iii) All other components. There is no 

restriction on the origin or place of 

production or manufacture of 

components or subcomponents that do 

not consist of iron or steel. 

(iv) Examples. (A) If a steel guardrail 

consists predominantly of steel, even 

though coated with aluminum, then the 

steel would be subject to the section 

1605 restriction requiring that all stages 

of production of the steel occur in the 

United States, in addition to the 

requirement to manufacture the 

guardrail in the United States. There 

would be no restrictions on the other 

components of the guardrail. 

(B) If a wooden window frame is 

delivered to the site as a single 

construction material, there is no 

restriction on any of the components, 

including the steel lock on the window 

frame; or 

(2) If trade agreements apply, the 

manufactured construction material 

shall either comply with the 

requirements of paragraph (a)(1) of this 

subsection, or be wholly the product of 

or be substantially transformed in a 

Recovery Act designated country; 

(b) Manufactured materials purchased 

directly by the Government and 

delivered to the site for incorporation 

into the project shall meet the same 

domestic source requirements as 

specified for manufactured construction 

material in paragraphs (a)(1) and (a)(2) 

of this section; and 

(c) A project may include several 

contracts, a single contract, or one or 

more line items on a contract. 

25.602–2 Buy American Act. 

Except as provided in 25.603, use 

only unmanufactured construction 

material mined or produced in the 

United States, as required by the Buy 

American Act or, if trade agreements 

apply, unmanufactured construction 

material mined or produced in a 

designated country may also be used. 

■ 9. Revise section 25.603 to read as 

follows: 

25.603 Exceptions. 

(a)(1) When one of the following 

exceptions applies, the contracting 

officer may allow the contractor to 

incorporate foreign manufactured 

construction materials without regard to 

the restrictions of section 1605 of the 

Recovery Act or foreign 

unmanufactured construction material 

without regard to the restrictions of the 

Buy American Act: 

(i) Nonavailability. The head of the 

contracting activity may determine that 

a particular construction material is not 

mined, produced, or manufactured in 

the United States in sufficient and 

reasonably available commercial 

quantities of a satisfactory quality. The 

determinations of nonavailability of the 

articles listed at 25.104(a) and the 

procedures at 25.103(b)(1) also apply if 

any of those articles are acquired as 

construction materials. 

(ii) Unreasonable cost. The 

contracting officer concludes that the 

cost of domestic construction material is 

unreasonable in accordance with 

25.605. 

(iii) Inconsistent with public interest. 

The head of the agency may determine 

that application of the restrictions of 

section 1605 of the Recovery Act to a 

particular manufactured construction 

material, or the restrictions of the Buy 

American Act to a particular 

unmanufactured construction material 

would be inconsistent with the public 

interest. 

(2) In addition, the head of the agency 

may determine that application of the 

Buy American Act to a particular 

unmanufactured construction material 

would be impracticable. 

(b) Determinations. When a 

determination is made, for any of the 

reasons stated in this section, that 

certain foreign construction materials 

may be used— 

(1) The contracting officer shall list 

the excepted materials in the contract; 

and 

(2) For determinations with regard to 

the inapplicability of section 1605 of the 

Recovery Act, unless the construction 

material has already been determined to 

be domestically nonavailable (see list at 

25.104), the head of the agency shall 

provide a notice to the Federal Register 

within three business days after the 

determination is made, with a copy to 

the Administrator for Federal 

Procurement Policy and to the Recovery 

Accountability and Transparency Board. 

The notice shall include— 

(i) The title ‘‘Buy American Exception 

under the American Recovery and 

Reinvestment Act of 2009’’; 

(ii) The dollar value and brief 

description of the project; and 

(iii) A detailed justification as to why 

the restriction is being waived. 

(c) Acquisitions under trade 

agreements. (1) For construction 

contracts with an estimated acquisition 

value of $7,804,000 or more, also see 

subpart 25.4. Offers proposing the use of 

construction material from a designated 

country shall receive equal 

consideration with offers proposing the 

use of domestic construction material. 

(2) For purposes of applying section 

1605 of the Recovery Act to evaluation 

of manufactured construction material, 

designated countries do not include the 

Caribbean Basin Countries. 

■ 10. Amend section 25.604 by revising 

paragraph (c)(1), and by removing from 

paragraph (c)(2) ‘‘the unmanufactured’’ 

and adding ‘‘the domestic 

unmanufactured’’ in its place. 

The revised text reads as follows: 

25.604 Preaward determination 

concerning the inapplicability of section 

1605 of the Recovery Act or the Buy 

American Act. 

* * * * * 

(c) * * * 

(1) Manufactured construction 

material. The contracting officer must 

compare the offered price of the contract 

using foreign manufactured 

construction material (i.e., any 

construction material not manufactured 

in the United States, or construction 

material consisting predominantly of 

iron or steel and the iron or steel is not 

produced in the United States) to the 

estimated price if all domestic 

manufactured construction material 

were used. If use of domestic 

manufactured construction material 

would increase the overall offered price 

of the contract by more than 25 percent, 

then the contracting officer shall 

determine that the cost of the domestic 

manufactured construction material is 

unreasonable. 

* * * * * 

■ 11. Amend section 25.605 by— 

■ a. Revising paragraphs (a)(1) and 

(a)(2); 

■ b. Redesignating paragraphs (b) 

through (d) as paragraphs (c) through 

(e); 

■ c. Adding a new paragraph (b); and 


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■ d. Removing from the newly 

designated paragraph (c) ‘‘If two’’ and 

adding ‘‘Unless paragraph (b) applies, if 

two’’ in its place. 

The revised and added text reads as 

follows: 

25.605 Evaluating offers of foreign 

construction material. 

(a) * * * 

(1) Use an evaluation factor of 25 

percent, applied to the total offered 

price of the contract, if foreign 

manufactured construction material is 

incorporated in the offer based on an 

exception for unreasonable cost of 

comparable domestic construction 

material requested by the offeror. 

(2) In addition, use an evaluation 

factor of 6 percent applied to the cost of 

foreign unmanufactured construction 

material incorporated in the offer based 

on an exception for unreasonable cost of 

comparable domestic unmanufactured 

construction material requested by the 

offeror. 

(b) If the solicitation specifies award 

on the basis of factors in addition to cost 

or price, apply the evaluation factors as 

specified in paragraph (a) of this section 

and use the evaluated price in 

determining the offer that represents the 

best value to the Government. 

* * * * * 

■ 12. Amend section 25.607 by revising 

paragraph (c)(4) to read as follows: 

25.607 Noncompliance. 

* * * * * 

(c) * * * 

(4) If the noncompliance is 

sufficiently serious, consider exercising 

appropriate contractual remedies, such 

as terminating the contract for default. 

Also consider preparing and forwarding 

a report to the agency suspending or 

debarring official in accordance with 

subpart 9.4. If the noncompliance 

appears to be fraudulent, refer the 

matter to other appropriate agency 

officials, such as the agency’s inspector 

general or the officer responsible for 

criminal investigation. 

■ 13. Amend section 25.1102 by 

redesignating paragraph (e)(2) as 

paragraph (e)(3); adding a new 

paragraph (e)(2); and revising the newly 

designated paragraph (e)(3) to read as 

follows: 

25.1102 Acquisition of construction. 

* * * * * 

(e) * * * 

(2) If these Recovery Act provisions 

and clauses are only applicable to a 

project consisting of certain line items 

in the contract, identify in the schedule 

the line items to which the provisions 

and clauses apply. 

(3) When using clause 52.225–23, list 

foreign construction material in 

paragraph (b)(3) of the clause as follows: 

(i) Basic clause. List all foreign 

construction materials excepted from 

the Buy American Act or section 1605 

of the Recovery Act, other than 

manufactured construction material 

from a Recovery Act designated country 

or unmanufactured construction 

material from a designated country. 

(ii) Alternate I. List in paragraph (b)(3) 

of the clause all foreign construction 

material excepted from the Buy 

American Act or section 1605 of the 

Recovery Act, other than— 

(A) Manufactured construction 

material from a Recovery Act designated 

country other than Bahrain, Mexico, or 

Oman; or 

(B) Unmanufactured construction 

material from a designated country 

other than Bahrain, Mexico, or Oman. 

PART 52—SOLICITATION PROVISIONS 

AND CONTRACT CLAUSES 

■ 14. Amend section 52.225–21 by— 

■ a. Revising the section heading; 

■ b. Revising the heading and the date 

of the clause; 

■ c. In paragraph (a) by— 

■ 1. Adding, in alphabetical order, the 

definition ‘‘Component’’; 

■ 2. Removing the last sentence from the 

definition ‘‘Construction material’’; and 

■ 3. Revising the definition ‘‘Domestic 

construction material’’; and 

■ d. Revising paragraphs (b)(1)(i), 

(b)(1)(ii), and (b)(4). 

The revised and added text reads as 

follows: 

52.225–21 Required Use of American Iron, 

Steel, and Manufactured Goods—Buy 

American Act—Construction Materials. 

* * * * * 

Required Use of American Iron, Steel, 

and Manufactured Goods—Buy 

American Act—Construction Materials 

(Oct 2010) 

(a) * * * 

Component means an article, material, or 

supply incorporated directly into a 

construction material. 

* * * * * 

Domestic construction material means the 

following— 

(1) An unmanufactured construction 

material mined or produced in the United 

States. (The Buy American Act applies.) 

(2) A manufactured construction material 

that is manufactured in the United States 

and, if the construction material consists 

wholly or predominantly of iron or steel, the 

iron or steel was produced in the United 

States. (Section 1605 of the Recovery Act 

applies.) 

* * * * * 

(b) * * * 

(1) * * * 

(i) Section 1605 of the American Recovery 

and Reinvestment Act of 2009 (Recovery Act) 

(Pub. L. 111–5), by requiring, unless an 

exception applies, that all manufactured 

construction material in the project is 

manufactured in the United States and, if the 

construction material consists wholly or 

predominantly of iron or steel, the iron or 

steel was produced in the United States 

(produced in the United States means that all 

manufacturing processes of the iron or steel 

must take place in the United States, except 

metallurgical processes involving refinement 

of steel additives); and 

(ii) The Buy American Act (41 U.S.C. 

10a–10d) by providing a preference for 

unmanufactured construction material mined 

or produced in the United States over 

unmanufactured construction material mined 

or produced in a foreign country. 

* * * * * 

(4) The Contracting Officer may add other 

foreign construction material to the list in 

paragraph (b)(3) of this clause if the 

Government determines that— 

(i) The cost of domestic construction 

material would be unreasonable; 

(A) The cost of domestic manufactured 

construction material, when compared to the 

cost of comparable foreign manufactured 

construction material, is unreasonable when 

the cumulative cost of such material will 

increase the cost of the contract by more than 

25 percent; 

(B) The cost of domestic unmanufactured 

construction material is unreasonable when 

the cost of such material exceeds the cost of 

comparable foreign unmanufactured 

construction material by more than 6 percent; 

(ii) The construction material is not mined, 

produced, or manufactured in the United 

States in sufficient and reasonably available 

quantities and of a satisfactory quality; 

(iii) The application of the restriction of 

section 1605 of the Recovery Act to a 

particular manufactured construction 

material would be inconsistent with the 

public interest or the application of the Buy 

American Act to a particular unmanufactured 

construction material would be impracticable 

or inconsistent with the public interest. 

* * * * * 

■ 15. Amend section 52.225–22 by— 

■ a. Revising the section heading; 

■ b. Revising the heading and the date 

of the provision; 

■ c. Removing from paragraph (a) the 

word ‘‘Other’’; 

■ d. In paragraph (c) by— 

■ 1. Adding in paragraph (c)(1) 

introductory text ‘‘in accordance with 

FAR 25.604’’ after the word ‘‘applies’’; 

■ 2. Revising paragraph (c)(1)(i); 

■ 3. Adding in paragraph (c)(1)(ii) ‘‘an 

exception for the’’ after the words ‘‘based 

on’’; and 

■ 4. Redesignating paragraph (c)(2) as 

paragraph (c)(3); adding a new 

paragraph (c)(2); and revising the newly 

designated paragraph (c)(3); and 

■ e. Removing from paragraph (d)(1) 

‘‘paragraph (b)(2)’’ and adding 

‘‘paragraph (b)(3)’’ in its place. 


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53168 Federal Register / Vol. 75, No. 167 / Monday, August 30, 2010 / Rules and Regulations 

The revised and added text reads as 

follows: 

52.225–22 Notice of Required Use of 

American Iron, Steel, and Manufactured 

Goods—Buy American Act—Construction 

Materials. 

* * * * * 

Notice of Required Use of American 

Iron, Steel, and Manufactured Goods— 

Buy American Act—Construction 

Materials (Oct 2010) 

* * * * * 

(c) * * * 

(1) * * * 

(i) 25 percent of the offered price of the 

contract, if foreign manufactured 

construction material is incorporated in the 

offer based on an exception for unreasonable 

cost of comparable manufactured domestic 

construction material; and 

* * * * * 

(2) If the solicitation specifies award on the 

basis of factors in addition to cost or price, 

the Contracting Officer will apply the 

evaluation factors as specified in paragraph 

(c)(1) of this provision and use the evaluated 

price in determining the offer that represents 

the best value to the Government. 

(3) Unless paragraph (c)(2) of this provision 

applies, if two or more offers are equal in 

price, the Contracting Officer will give 

preference to an offer that does not include 

foreign construction material excepted at the 

request of the offeror on the basis of 

unreasonable cost of comparable domestic 

construction material. 

* * * * * 

■ 16. Amend section 52.225–23 by— 

■ a. Revising the section heading; 

■ b. Revising the heading and the date 

of the clause; 

■ c. In paragraph (a) by— 

■ 1. Adding, in alphabetical order, the 

definitions ‘‘Component’’, ‘‘Designated 

country’’, ‘‘Designated country 

construction material’’, and 

‘‘Nondesignated country’’; 

■ 2. Removing the last sentence from the 

definition ‘‘Construction material’’; 

■ 3. Revising the definition ‘‘Domestic 

construction material’’; and 

■ 4. Removing from the definition 

‘‘Recovery Act designated country’’ 

paragraph (2) the word ‘‘Israel,’’; 

■ d. Revising paragraph (b); 

■ e. Revising paragraph (c)(3); 

■ f. Removing from the table heading in 

paragraph (d) ‘‘Foreign and’’ and adding 

‘‘Foreign (Nondesignated Country) and’’ 

in its place; and 

■ g. In Alternate I by— 

■ i. Revising the date of the alternate; 

and 

■ ii. Revising paragraph (b). 

The revised and added text reads as 

follows: 

52.225–23 Required Use of American Iron, 

Steel, and Manufactured Goods—Buy 

American Act—Construction Materials 

Under Trade Agreements. 

* * * * * 

Required Use of American Iron, Steel, 

and Manufactured Goods—Buy 

American Act—Construction Materials 

Under Trade Agreements (Oct 2010) 

(a) * * * 

Component means an article, material, or 

supply incorporated directly into a 

construction material. 

* * * * * 

Designated country means any of the 

following countries: 

(1) A World Trade Organization 

Government Procurement Agreement (WTO 

GPA) country (Aruba, Austria, Belgium, 

Bulgaria, Canada, Cyprus, Czech Republic, 

Denmark, Estonia, Finland, France, Germany, 

Greece, Hong Kong, Hungary, Iceland, 

Ireland, Israel, Italy, Japan, Korea (Republic 

of), Latvia, Liechtenstein, Lithuania, 

Luxembourg, Malta, Netherlands, Norway, 

Poland, Portugal, Romania, Singapore, 

Slovak Republic, Slovenia, Spain, Sweden, 

Switzerland, Taiwan, or United Kingdom); 

(2) A Free Trade Agreement (FTA) country 

(Australia, Bahrain, Canada, Chile, Costa 

Rica, Dominican Republic, El Salvador, 

Guatemala, Honduras, Mexico, Morocco, 

Nicaragua, Oman, Peru, or Singapore); 

(3) A least developed country (Afghanistan, 

Angola, Bangladesh, Benin, Bhutan, Burkina 

Faso, Burundi, Cambodia, Central African 

Republic, Chad, Comoros, Democratic 

Republic of Congo, Djibouti, East Timor, 

Equatorial Guinea, Eritrea, Ethiopia, Gambia, 

Guinea, Guinea-Bissau, Haiti, Kiribati, Laos, 

Lesotho, Liberia, Madagascar, Malawi, 

Maldives, Mali, Mauritania, Mozambique, 

Nepal, Niger, Rwanda, Samoa, Sao Tome and 

Principe, Senegal, Sierra Leone, Solomon 

Islands, Somalia, Tanzania, Togo, Tuvalu, 

Uganda, Vanuatu, Yemen, or Zambia); or 

(4) A Caribbean Basin country (Antigua 

and Barbuda, Aruba, Bahamas, Barbados, 

Belize, British Virgin Islands, Dominica, 

Grenada, Guyana, Haiti, Jamaica, Montserrat, 

Netherlands Antilles, St. Kitts and Nevis, St. 

Lucia, St. Vincent and the Grenadines, or 

Trinidad and Tobago). 

Designated country construction material 

means a construction material that is a WTO 

GPA country construction material, an FTA 

country construction material, a least 

developed country construction material, or 

a Caribbean Basin country construction 

material. 

Domestic construction material means the 

following: 

(1) An unmanufactured construction 

material mined or produced in the United 

States. (The Buy American Act applies.) 

(2) A manufactured construction material 

that is manufactured in the United States 

and, if the construction material consists 

wholly or predominantly of iron or steel, the 

iron or steel was produced in the United 

States. (Section 1605 of the Recovery Act 

applies.) 

* * * * * 

Nondesignated country means a country 

other than the United States or a designated 

country. 

* * * * * 

(b) Construction materials. (1) The 

restrictions of section 1605 of the American 

Recovery and Reinvestment Act of 2009 (Pub. 

L. 111–5) (Recovery Act) do not apply to 

Recovery Act designated country 

manufactured construction material. The 

restrictions of the Buy American Act do not 

apply to designated country unmanufactured 

construction material. Consistent with U.S. 

obligations under international agreements, 

this clause implements— 

(i) Section 1605 of the Recovery Act by 

requiring, unless an exception applies, that 

all manufactured construction material in the 

project is manufactured in the United States 

and, if the construction material consists 

wholly or predominantly of iron or steel, the 

iron or steel was produced in the United 

States (produced in the United States means 

that all manufacturing processes of the iron 

or steel must take place in the United States, 

except metallurgical processes involving 

refinement of steel additives); and 

(ii) The Buy American Act by providing a 

preference for unmanufactured construction 

material mined or produced in the United 

States over unmanufactured construction 

material mined or produced in a 

nondesignated country. 

(2) The Contractor shall use only domestic 

construction material, Recovery Act 

designated country manufactured 

construction material, or designated country 

unmanufactured construction material in 

performing this contract, except as provided 

in paragraphs (b)(3) and (b)(4) of this clause. 

(3) The requirement in paragraph (b)(2) of 

this clause does not apply to the construction 

materials or components listed by the 

Government as follows: 

[Contracting Officer to list applicable 

excepted materials or indicate ‘‘none’’.] 

(4) The Contracting Officer may add other 

construction material to the list in paragraph 

(b)(3) of this clause if the Government 

determines that— 

(i) The cost of domestic construction 

material would be unreasonable; 

(A) The cost of domestic manufactured 

construction material is unreasonable when 

the cumulative cost of such material, when 

compared to the cost of comparable foreign 

manufactured construction material, other 

than Recovery Act designated country 

construction material, will increase the 

overall cost of the contract by more than 25 

percent; 

(B) The cost of domestic unmanufactured 

construction material is unreasonable when 

the cost of such material exceeds the cost of 

comparable foreign unmanufactured 

construction material, other than designated 

country construction material, by more than 

6 percent; 

(ii) The construction material is not mined, 

produced, or manufactured in the United 

States in sufficient and reasonably available 

commercial quantities of a satisfactory 

quality; or 

(iii) The application of the restriction of 

section 1605 of the Recovery Act to a 

particular manufactured construction 


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Federal Register / Vol. 75, No. 167 / Monday, August 30, 2010 / Rules and Regulations 53169 

material would be inconsistent with the 

public interest or the application of the Buy 

American Act to a particular unmanufactured 

construction material would be impracticable 

or inconsistent with the public interest. 

(c) * * * 

(3) Unless the Government determines that 

an exception to section 1605 of the Recovery 

Act or the Buy American Act applies, use of 

foreign construction material other than 

manufactured construction material from a 

Recovery Act designated country or 

unmanufactured construction material from a 

designated country is noncompliant with the 

applicable Act. 

* * * * * 

Alternate I (Oct 2010). * * * 

(b) Construction materials. (1) The 

restrictions of section 1605 of the American 

Recovery and Reinvestment Act of 2009 (Pub. 

L. 111–5) (Recovery Act) do not apply to 

Recovery Act designated country 

manufactured construction material. The 

restrictions of the Buy American Act do not 

apply to designated country unmanufactured 

construction material. Consistent with U.S. 

obligations under international agreements, 

this clause implements— 

(i) Section 1605 of the Recovery Act, by 

requiring, unless an exception applies, that 

all manufactured construction material in the 

project is manufactured in the United States 

and, if the construction material consists 

wholly or predominantly of iron or steel, the 

iron or steel was produced in the United 

States (produced in the United States means 

that all manufacturing processes of the iron 

or steel must take place in the United States, 

except metallurgical processes involving 

refinement of steel additives); and 

(ii) The Buy American Act by providing a 

preference for unmanufactured construction 

material mined or produced in the United 

States over unmanufactured construction 

material mined or produced in a 

nondesignated country. 

(2) The Contractor shall use only domestic 

construction material, Recovery Act 

designated country manufactured 

construction material, or designated country 

unmanufactured construction material, other 

than Bahrainian, Mexican, or Omani 

construction material, in performing this 

contract, except as provided in paragraphs 

(b)(3) and (b)(4) of this clause. 

■ 17. Amend section 52.225–24 by— 

■ a. Revising the section heading; 

■ b. Revising the heading and the date 

of the provision; 

■ c. Removing from paragraph (a) the 

word ‘‘Other’’; and 

■ d. Revising paragraph (c). 

The revised text reads as follows: 

52.225–24 Notice of Required Use of 

American Iron, Steel, and Manufactured 

Goods—Buy American Act—Construction 

Materials Under Trade Agreements. 

* * * * * 

Notice of Required Use of American 

Iron, Steel, and Manufactured Goods— 

Buy American Act—Construction 

Materials Under Trade Agreements 

(Oct 2010) 

* * * * * 

(c) Evaluation of offers. (1) If the 

Government determines that an exception 

based on unreasonable cost of domestic 

construction material applies in accordance 

with FAR 25.604, the Government will 

evaluate an offer requesting exception to the 

requirements of section 1605 of the Recovery 

Act or the Buy American Act by adding to 

the offered price of the contract— 

(i) 25 percent of the offered price of the 

contract, if foreign manufactured 

construction material is included in the offer 

based on an exception for the unreasonable 

cost of comparable manufactured domestic 

construction material; and 

(ii) 6 percent of the cost of foreign 

unmanufactured construction material 

included in the offer based on an exception 

for the unreasonable cost of comparable 

domestic unmanufactured construction 

material. 

(2) If the solicitation specifies award on the 

basis of factors in addition to cost or price, 

the Contracting Officer will apply the 

evaluation factors as specified in paragraph 

(c)(1) of this provision and use the evaluated 

cost or price in determining the offer that 

represents the best value to the Government. 

(3) Unless paragraph (c)(2) of this provision 

applies, if two or more offers are equal in 

price, the Contracting Officer will give 

preference to an offer that does not include 

foreign construction material excepted at the 

request of the offeror on the basis of 

unreasonable cost. 

* * * * * 

[FR Doc. 2010–21027 Filed 8–27–10; 8:45 am] 

BILLING CODE 6820–EP–P 

DEPARTMENT OF DEFENSE 

GENERAL SERVICES 

ADMINISTRATION 

NATIONAL AERONAUTICS AND 

SPACE ADMINISTRATION 

48 CFR Chapter 1 

[Docket FAR 2010–0077, Sequence 7] 

Federal Acquisition Regulation; 

Federal Acquisition Circular 2005–45; 

Small Entity Compliance Guide 

AGENCIES: Department of Defense (DoD), 

General Services Administration (GSA), 

and National Aeronautics and Space 

Administration (NASA). 

ACTION: Small Entity Compliance Guide. 

SUMMARY: This document is issued 

under the joint authority of the 

Secretary of Defense, the Administrator 

of General Services and the 

Administrator of the National 

Aeronautics and Space Administration. 

This Small Entity Compliance Guide has 

been prepared in accordance with 

section 212 of the Small Business 

Regulatory Enforcement Fairness Act of 

1996. It consists of a summary of rules 

appearing in Federal Acquisition 

Circular (FAC) 2005–45 which amend 

the FAR. Interested parties may obtain 

further information regarding these 

rules by referring to FAC 2005–45, 

which precedes this document. These 

documents are also available via the 

Internet at http://www.regulations.gov. 

DATES: For effective dates see separate 

documents, which follow. 

FOR FURTHER INFORMATION CONTACT: The 

analyst whose name appears in the table 

below. Please cite FAC 2005–45 and the 

specific FAR case number. For 

information pertaining to status or 

publication schedules, contact the 

Regulatory Secretariat at (202) 501– 

4755. 

LIST OF RULES IN FAC 2005–45 

Item Subject FAR case Analyst 

I .................... Inflation Adjustment of Acquisition-Related Thresholds ................................................................. 2008–024 Jackson. 

II ................... Definition of Cost or Pricing Data ................................................................................................... 2005–036 Chambers. 

III .................. American Recovery and Reinvestment Act of 2009 (the Recovery Act)—Buy American Requirements for Construction Materials.2009–008 Davis. 

SUPPLEMENTARY INFORMATION: 

Summaries for each FAR rule follow. 

For the actual revisions and/or 

amendments made by these FAR cases, 

refer to the specific item number and 

subject set forth in the documents 

following these item summaries. 

FAC 2005–45 amends the FAR as 

specified below: 

Item I—Inflation Adjustment of 

Acquisition-Related Thresholds (FAR 

Case 2008–024) 

This final rule amends the FAR to 

implement section 807 of the Ronald W. 


jlentini on DSKJ8SOYB1PROD with RULES3