{"id":914,"date":"2019-06-04T19:43:08","date_gmt":"2019-06-05T02:43:08","guid":{"rendered":"http:\/\/savingusmanufacturing.com\/blog\/?p=914"},"modified":"2019-06-04T19:43:08","modified_gmt":"2019-06-05T02:43:08","slug":"congress-must-strengthen-buy-america-act","status":"publish","type":"post","link":"https:\/\/savingusmanufacturing.com\/blog\/country-of-origin\/congress-must-strengthen-buy-america-act\/","title":{"rendered":"Congress Must Strengthen Buy America Act"},"content":{"rendered":"\n

The Buy American\nAct<\/a> was passed by Congress in 1933. It required the U.S. government to give\npreferential treatment to American producers in awarding of federal contracts.\nThe Act restricted the purchase of supplies that are not domestic products. For\nmanufactured products, the Buy American Act used a two-part test:  first, the article must be manufactured in\nthe U.S., and second, the cost of domestic components must exceed 50 percent of\nthe cost of all its components. <\/p>\n\n\n\n

After the end of the Cold War and the end of the subsequent\nGulf War in 1991, the provisions of the \u201cBuy America Act\u201d were eased to allow\npurchasing off the shelf commercial parts (COTS) from foreign countries by the\nDefense Department and other government agencies if they met the same fit and\nfunction of parts made to strict military specifications. Previously, parts,\nassemblies, and systems were required to be substantially made in the United\nStates or in a NATO country, such as Great Britain, France, or Germany. <\/p>\n\n\n\n

In the early 1990s, most commercial parts were still being\nmade in the United States, with some outsourcing to the Philippines, Hong Kong,\nand Singapore, so this change was pretty safe. However, permitting commercial\nparts to replace Military Specification parts probably drove out of business\nthe small companies that catered exclusively to the military and provided Traceability<\/em>\nof Origin<\/em> per Military Specifications\nfor parts supplied to government agencies, military contractors, and\nsubcontractors. This was all done in the name of cost savings. <\/p>\n\n\n\n

Gradually over the last 26 years, the manufacturing of most\ncommercial electronic components and microchips was transferred offshore, so\nthat now they are fabricated in China, Vietnam, or South Korea.  <\/p>\n\n\n\n

This is the root cause of counterfeit Chinese parts becoming\npart of the military\/defense industrial supply chain.<\/p>\n\n\n\n

The President has authority to waive the Act in response to\nthe provision of reciprocal treatment to U.S. producers. Under the 1979 GATT\nAgreement on Government Procurement, the U.S.-Israel Free Trade Agreement, the\nU.S.-Canada Free Trade Agreement, the North American Free Trade Agreement, the\nCentral American Free Trade Agreement, and the Korea Free Trade Agreement,\naccess to government procurement is granted by certain U.S. agencies for goods from\nthe partner countries to these agreements.<\/p>\n\n\n\n

It was reported by Reuters<\/a>\nin January 2014 that “The Pentagon repeatedly waived laws banning\nChinese-built components on U.S. weapons in order to keep the $392 billion\nLockheed Martin Corp F-35 fighter program on track in 2012 and 2013, even as\nU.S. officials were voicing concern about China’s espionage and military\nbuildup.\u201d <\/p>\n\n\n\n

To address weaknesses in the defense supply chain and to\npromote the adoption of aggressive counterfeit avoidance practices by the\nDepartment of Defense and the defense industry, an amendment to the National\nDefense Authorization Act for Fiscal Year 2012 <\/a> was adopted in the Senate and signed by\nPresident Obama. <\/p>\n\n\n\n

Instead of implementing the requirements of the Act, it\nappears that DOD “entered a new phase\u2026 characterized by globalization of\nsupply chains\u201d according to Richard McCormack, publisher and producer of the\nManufacturing & Technology News, May 20, 2015 edition<\/a>.<\/p>\n\n\n\n

McCormack reported on comments made by Bill Lynn, CEO of\nFinmeccanica North America and former Deputy Secretary of Defense from 2009\nuntil 2011, at the April 29, 2015 meeting of the Center for Strategic and\nInternational Studies in Washington, D.C.<\/p>\n\n\n\n

The defense sector and the U.S. military have “moved\nfrom being a net exporter of technology to a net importer,” Lynn stated,\nadding “When their R&D budgets are combined to total a scant $3\nbillion (or only 1.6 percent of revenue), the five biggest defense contractors\n— Boeing, Lockheed, Raytheon, L3 and Northrop — would not even make the list\nof the top 20 global companies that invest in R&D.”<\/p>\n\n\n\n

Lynn told the meeting, “Those are things where the\ncommercial industrial base is stronger than the defense industrial base and in\nmany ways the key to maintaining our future [defense] technology edge is to be\nable to import those technologies into our defense industrial base… Since\nmany of the underlying technologies now reside outside of the United States,\nDOD has to figure out how to deal with foreign corporations and state-owned\nenterprises that hold the keys to its success.”<\/p>\n\n\n\n

McCormack noted, “The Department of Defense and its\nmajor contractors are now dependent on foreign manufacturers for many of the\nmilitary’s most advanced weapons systems\u2026The defense industry is a shadow of\nits former self, representing less than 3.5 percent of the U.S. economy, a\nposition that continues to decline as defense budgets reach new lows with no\nchance of them growing faster than the economy.” <\/p>\n\n\n\n

Lynn commented that “DOD is slowly catching up to the\nstructural change caused by globalization of technology and supply chains. It\nis wrestling with the regulatory and procurement systems it has in place to\nmonitor and conduct business with foreign suppliers, but it has little time to\nwaste.”<\/p>\n\n\n\n

Lynn stated “that changing perceptions about foreign\ninvolvement in the defense industry are similar to what happened in the U. S.\nauto sector…Americans and their representatives in Congress were skeptical\nabout foreign nameplates. But as foreign auto companies started building\ntechnologies in the United States and hiring American workers, the tide turned\u2026\n“<\/p>\n\n\n\n

It is incomprehensible to me to compare what happened to the\nU. S. auto industry to what is happening to the U. S. defense industry. The\nwhole purpose of the defense industry is to protect our national sovereignty\nand national security. How can anyone in their right mind want to make our\ndefense supply chain vulnerable to the foreign country, namely China, that has\na written plan to replace the U.S. as the world’s super power? The Chinese have\nstolen our technology to build up their own military power as evidenced by the\nuncanny similarity of China\u2019s stealth fighter, the J-31and the Chengdu J-20\nfighter jet to the F-35 Lightning II advanced fighter jet.  <\/p>\n\n\n\n

Does anyone believe that we will get the parts and assemblies\nneeded by our defense industry when China has decided we are so weak that we\ncannot stop their aggression in Asia? We are not even safe to have parts\nsourced in Taiwan, South Korea, the Philippines, Malaysia, Indonesia, or\nVietnam. These countries would all be targets for takeover by China once the\nChinese lose their fear and respect for U. S. naval and air power.<\/p>\n\n\n\n

Four of the last five sessions of Congress attempted to\naddress this problem, but the following bills to strengthen the Buy American\nAct introduced in Congress failed to be enacted:  <\/p>\n\n\n\n

H.R. 4553 (111th), introduced February 2,\n2010<\/p>\n\n\n\n

S. 2391 (113th), introduced May 22, 2014<\/p>\n\n\n\n

S. 2167 (114th), introduced October 8,\n2015.<\/p>\n\n\n\n

At least, President\nTrump issued an Executive Order<\/a> on Buy American and Hire American onApril\n18, 2017, which set forth a policy to \u201cmaximize …use of goods, products and\nmaterials produced in the United States\u201d through federal procurements.<\/p>\n\n\n\n

This was followed by the introduction of the 21st Century\nBuy American Act (S.2196<\/a>)\non Dec. 6, 2017 by Sen. Chris Murphy, D-CN, and a similar bill, H.R. 4812 introduced in the House by\nRepresentative David Cicilline. D-RI. \nBoth bills aimed to strengthen existing Buy American standards, but\nafter considerable support, both failed to be enacted. The legislation focused\non five change areas<\/a>.<\/p>\n\n\n\n

  1. The\ncost of components test for non-commercial-off-the-shelf items would be\nmodified to require that an item\u2019s U.S. component costs exceed 60% of the\nitem\u2019s total costs for the item to be deemed \u201cdomestic.\u201d From the current 50%<\/li>
  2. The\nso-called \u201coverseas exemption\u201d regarding items procured for use outside the\nUnited States would be limited significantly.<\/li>
  3. Agencies\nwould not be permitted to apply a public interest exception unless it considers\nthe short-term and long-term effects of applying such exception on employment\nwithin the U.S.<\/li>
  4. A\nprogram to make or guarantee loans would be created for contractors seeking to\nmanufacture certain items that are not currently manufactured in the U.S.<\/li>
  5. Actions\nwould be taken to increase transparency related to the use of exceptions<\/li><\/ol>\n\n\n\n

    On May 2, 2019, Congressmen Dan\nLipinski<\/a> (IL-3) and Mike Bost (IL-12) \u201creintroduced the BuyAmerican.gov\nAct, which helps ensure that federal agencies adhere to Buy American laws and\nprioritize the purchase of American-made goods. The legislation, H.R. 2472<\/a>,\ndirects the General Services Administration to establish a website, BuyAmerican.gov<\/a>, to collect\nand display information about each request by a federal agency to bypass \u2018Buy\nAmerican\u2019 laws and purchase foreign-made products.  Once the law is\napproved, manufacturers and others will be able to use the site to identify\ncontract opportunities and challenge pending \u2018Buy American\u2019 waivers sought by\nfederal agencies.\u201d<\/p>\n\n\n\n

    The press release stated, \u201cIn the last five years, federal agencies have\nspent $34 billion on goods manufactured by foreign firms.  The Department\nof Defense, the largest purchaser of manufactured goods in the world, has spent\nalmost $200 billion on manufactured goods made by foreign companies since\n2007.\u2026This bill applies \u201cBuy American\u201d requirements to federal spending\nprograms that are not covered under current law and closes loopholes in \u201cBuy\nAmerican\u201d programs.<\/p>\n\n\n\n

    Under current law, federal agencies are exempt from following Buy American\nlaws if American-made goods are unavailable or cost-prohibitive. Unfortunately,\nfederal agencies are too often abusing this waiver authority and there\u2019s no way\nto hold them accountable,\u201d Lipinski said.\u201d<\/p>\n\n\n\n

    Senators Rob Portman (R-OH), Chris Murphy (D-CT), Lindsey Graham (R-SC), and\nSherrod Brown (D-OH) introduced companion legislation the same day in the\nSenate.<\/p>\n\n\n\n

    This bill increases transparency related to waivers and exemptions to the\nBuy American Act, but it doesn\u2019t address the other four issues that previous\nbills addressed. <\/p>\n\n\n\n

    Congress must act to strengthen the Buy American Act, not\nweaken it, eliminate the incentives for offshoring, and provide incentives for\nbringing manufacturing back to America. We must protect the supply chain for\ndefense and military products and systems, so that the Defense Department can\nfulfill its primary mission of defending our country. <\/p>\n","protected":false},"excerpt":{"rendered":"

    The Buy American Act was passed by Congress in 1933. It required the U.S. government to give preferential treatment to American producers in awarding of federal contracts. The Act restricted the purchase of supplies that are not domestic products. For manufactured products, the Buy American Act used a two-part test:  first, the article must be […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[138,216],"tags":[11,117,133],"class_list":["post-914","post","type-post","status-publish","format-standard","hentry","category-country-of-origin","category-legislation","tag-american-manufacturing","tag-country-of-origin-labeling","tag-legislative-powers"],"_links":{"self":[{"href":"https:\/\/savingusmanufacturing.com\/blog\/wp-json\/wp\/v2\/posts\/914","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/savingusmanufacturing.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/savingusmanufacturing.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/savingusmanufacturing.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/savingusmanufacturing.com\/blog\/wp-json\/wp\/v2\/comments?post=914"}],"version-history":[{"count":1,"href":"https:\/\/savingusmanufacturing.com\/blog\/wp-json\/wp\/v2\/posts\/914\/revisions"}],"predecessor-version":[{"id":915,"href":"https:\/\/savingusmanufacturing.com\/blog\/wp-json\/wp\/v2\/posts\/914\/revisions\/915"}],"wp:attachment":[{"href":"https:\/\/savingusmanufacturing.com\/blog\/wp-json\/wp\/v2\/media?parent=914"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/savingusmanufacturing.com\/blog\/wp-json\/wp\/v2\/categories?post=914"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/savingusmanufacturing.com\/blog\/wp-json\/wp\/v2\/tags?post=914"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}