The Buy American Act and Buy America Provisions
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Other Key Information
Please note that Buy America and Buy American are separate legislation and regulation requirements. Buy America applies solely to grants issued by the Federal Transit Administration and Federal Highway Administration; Buy American may be applied to all direct U.S. federal procurement.
1933 Buy American Act
Reference United States Code Title 41-Public Contracts, Subtitle IV-Miscellaneous, Chapter 83-Buy American
The Buy American Act applies to all U.S. federal government agency purchases of goods valued over the micropurchase threshold, but does not apply to services. Under the Act, all goods for public use (articles, materials, or supplies) must be produced in the U.S., and manufactured items must be manufactured in the U.S. from U.S. materials. Many states and municipalities include similar geographic production requirements in their procurement legislation.
1933 Buy American creates a price preference that favors "domestic end products" from American firms on U.S. federal government contracts for:
- Unmanufactured products mined or produced in the United States;
- Manufactured products in which:
- the cost of its U.S. components exceeds 50% of the cost of all components of the item and the product is manufactured in the United States (FAR Subpart 25.003).
There are exceptions to Buy American, whereby waivers can be issued for products, projects or entire categories of technology, depending on the review process and the requirements of a given federal department or agency. For more information, please see Exceptions and Waivers.
Buy America Provisions
The Buy America Act was a provision of the Surface Transportation Assistance Act of 1982. Buy America provisions are applied to transit-related procurements valued over US$100,000, for which funding includes grants administered by the Federal Transit Authority (FTA) or Federal Highway Administration (FHWA). Buy America provisions are a condition of U.S. federal government grants to state, municipal or other organizations including transit authorities. Buy America provisions, such as requirements for 100% U.S. content for iron/steel and manufactured products, put Canadian goods and services at a serious disadvantage when they form all or part of a bid by any supplier, whether U.S. or Canadian.
Similar conditions prevail for airport projects that receive funds from the Federal Aviation Administration as authorized by the Airport and Airways Facilities Improvement Act. Such projects require that all steel and manufactured products have 60% U.S. content and that final assembly occur in the United States.
The Buy American Act, Buy America, NAFTA and the WTO GPA
Canada is now a signatory to the World Trade Organization GPA at the sub-federal level. In the U.S., 37 StatesFootnote 1 are covered to varying degrees by this agreement. For a list of covered entities at the U.S. state level, refer to the WTO GPA Annex 2 for the United States (DOC, 80 KB, 6 pages). This means that Canadian goods and supplies should be treated on equal footing with respect to U.S. domestic products for procurement opportunities with state level entities covered by the agreement, in addition to maintaining existing free access at the federal level, where the procurement value of the prime contract exceeds the established WTO thresholds (currently US$7.358 million). The WTO GPA however, does not give open access to municipal level procurement.
Under NAFTA, the U.S. requires that Canadian goods and suppliers be exempt from these requirements if procurement is being done directly by a listed U.S. federal department or agency and if the value of procurement exceeds NAFTA thresholds (currently US$25,000 for goods, US$77,533 for general services and US$10,079,365 for construction services).
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