Buy American Push and U.S. Shipbuilding

On April 18, 2017, President Trump signed Executive Order 13788 (the Order) to promote greater enforcement of U.S. buy American laws. On June 30, 2017, Department of Commerce Secretary Wilbur Ross and Office of Management and Budget Director Mick Mulvaney issued a memorandum (the Memorandum) for all executive agencies ordering that certain steps be taken to comply with the Order. 

The primary federal statute mandating that U.S.-source products be purchased by the federal government is the Buy American Act of 1933. The Buy American Act contains a number of exceptions, including a public interest exception that encompasses products from certain foreign countries that have negotiated non-discrimination government procurement arrangements with the U.S., and an exception for when U.S.-source products are unavailable or only available at an “unreasonable” cost.

The Order set forth a policy to maximize, consistent with law, the procurement of goods, products and materials produced in the United States. In particular, section 3 of the Order directed each agency to monitor, enforce, and comply with buy American laws, and to minimize the use of exceptions and waivers consistent with applicable law. 

The Memorandum provides specific guidance on compliance with the Order and reminds agencies that they have until September 15, 2017 to comply. First, agencies must report on existing oversight of buy American laws, including providing copies of existing agency procedures, training materials, and reviews of agency compliance. Second, agencies must report on their record of granting waivers or exceptions to buy American laws. Third, agencies are required to identify improvement actions. 

Congress's annual Department of Defense Appropriations Acts have routinely included a provision requiring that money appropriated for naval vessels can only be used for vessels constructed or converted in the United States and that “major components” of such vessels must be fabricated in the United States. The domestic content of such vessels is further specified, or has been specified, in certain laws that have provided specific buy American requirements for air circuit breakers, welded anchor or mooring chain, propeller steering controls, propulsion and machinery systems, totally enclosed lifeboats, and other items. Although the Memorandum does not reference these requirements specifically, together with the Order it does encompass “all statutes, regulations, rules and Executive Orders relating to Federal procurement or Federal grants.”

The Memorandum also applies to federal financial assistance awards, presumably including the U.S. Maritime Administration’s Title XI commercial vessel government financing guarantee program. Agencies are directed by the Memorandum to inventory applicable buy American authorities relating to such federal financial assistance awards, to describe existing guidance, report on waivers and exceptions, and recommend steps to strengthen buy American authorities.