Contractors Beware: OMB Outlines Plan to Reduce Waivers of and Exceptions to Made in America Laws

4 min

On June 11, 2021, the Office of Management and Budget (OMB) issued a memorandum to executive departments and agencies outlining next steps in implementing President Biden's January 25 Executive Order on Made in America Laws. Venable previously reported on the Executive Order here. OMB's memorandum is an initial step in establishing a new government-wide process for issuing waivers of various domestic preferencing laws. The focus is on setting up the Made in America Office (MIAO), which will oversee nonavailability waivers, and gathering information to inform MIAO on ways it can reduce the number of waivers issued and encourage the use of domestic supply chains. While executive agencies are the primary audience for OMB's memorandum, government contractors should know and understand how the Administration intends to implement the Executive Order's requirements, including its intended tightening of the use of waivers.

Waiver Processing.

Since MIAO will serve as the central hub for waivers, the memorandum informs agencies that MIAO will coordinate with designated officials at 24 agencies to develop a standard process for submitting waiver requests to the MIAO. Once the process is fine-tuned, all other agencies will follow it. Of note, waiver requests must include certain information, such as the impact to the mission if the agency cannot acquire the item, market research conducted, whether the intended supplier is a small or disadvantaged business, the estimated value of the procurement, and the expectation of price preference. Since requests for waivers are regularly prepared at only two points during the procurement process, agencies must also specify whether the waver is to be issued pre-solicitation or pre-award. Assuming all information is included to MIAO's satisfaction, MIAO's goal is to process waiver requests within 3-7 business days.

MIAO will also work with agencies and the General Services Administration on publishing descriptions of proposed waivers and justifications on a public website. The website is meant to provide transparency on waiver decisions and serve as a resource for interested parties, including domestic manufacturers, to easily identify opportunities to do business with the government.

Waiver Reports.

By July 24, 2021, each covered agency must issue a report on its current or planned steps to strengthen and diversify existing domestic supplier bases and create new opportunities where there are gaps. The report must include the following elements:

  • The agency's internal management controls, conformance with waiver content requirements, baseline waiver activity, and the agency's analysis of nonavailability waivers used
  • The agency's use of any long-standing or nationwide waivers of Made in America Laws
  • Recommendations to further effectuate the Executive Order, which could include working with industry and trade associations to identify untapped domestic manufacturing potential, identifying manufacturing gaps in critical requirements, interagency and intergovernmental market information sharing, building U.S. manufacturing competitiveness through financial assistance, etc.
  • A review of any agency actions that are inconsistent with the Executive Order and of any proposed agency actions to enforce the policy set forth in the Executive Order

Going forward, agencies must update their reports semiannually to address ongoing efforts to grow U.S. manufacturing and comply with Made in America Laws. These updates will address any changes to the information in the initial report, as well as new or revised processes and plans.

Other items of note include the following:

  • MIAO and agencies will develop an information-sharing process to better understand the competitiveness of domestic sources. This will involve the price of the most competitive domestic source when foreign products were purchased
  • While acquisition of commercial information technology is exempt from the Buy American Act (BAA), MIAO will collaborate with government officials and interested stakeholders to understand the continued relevance of the exemption and whether current conditions support narrowing that statutory exception
  • Similarly, MIAO will review the continued relevance and potential narrowing of a 2009 waiver of the component test of the BAA for commercial-off-the-shelf (COTS) products

While this memorandum may not directly impact government contractors now, it signals that any current waivers contractors rely on may not be here for long. Moreover, contractors should continue to monitor additional developments impacting exceptions to domestic preferencing laws, including the results of MIAO's review of commercial information technology and COTS exceptions.

*A special thank-you to Anna Kaye for her contributions to this article.