The Buy American Act’s domestic content requirements set two tests a product must pass to count as domestic in federal procurement: it has to be manufactured in the United States, and the cost of its U.S.-origin components has to reach a set percentage of total component cost. That percentage is 65 percent for items delivered during calendar years 2024 through 2028, and it rises to 75 percent for deliveries starting in 2029.1Acquisition.GOV. Subpart 25.1 – Buy American-Supplies The rules sit at 41 U.S.C. §§ 8301–8305 and are implemented through the Federal Acquisition Regulation.2Office of the Law Revision Counsel. 41 U.S.C. Chapter 83 – Buy American
The Act reaches executive branch agencies buying tangible goods for use inside the United States. Both prime contractors and subcontractors have to comply when what they supply will be used domestically. Goods bought for use outside the United States are outside the statute. So are purchases below the micro-purchase threshold, which sits at $15,000 for most supply acquisitions as of 2025.3Federal Register. Federal Acquisition Regulation: Inflation Adjustment of Acquisition-Related Thresholds
The Two-Part Domestic Test
FAR 25.101 lays out the test. A product qualifies as domestic only if it clears both halves.4Acquisition.GOV. Federal Acquisition Regulation: Amendments to the FAR Buy American Act Requirements
First, final manufacturing has to happen in the United States. Repackaging imported goods or performing trivial assembly does not count. The transformation from raw materials or components into a finished product must be a substantial domestic activity.
Second, the cost of components mined, produced, or manufactured in the United States must meet the applicable threshold: 65 percent for 2024 through 2028 deliveries, 75 percent starting in 2029.1Acquisition.GOV. Subpart 25.1 – Buy American-Supplies The current schedule came from Executive Order 14005 and replaced the earlier 55 percent floor that had governed for decades.
The percentage is measured by component cost, not weight or volume. Component cost means the actual purchase price of each part, plus transportation to the manufacturing plant and any applicable duties. A widget assembled entirely in Ohio still fails if 40 percent of its components by cost come from overseas suppliers. And a contract awarded in 2026 that stretches into 2029 gets both thresholds: 65 percent now, 75 percent for the later deliveries.
The Iron and Steel Rule
Products made predominantly of iron or steel face a much tighter standard. If iron and steel account for more than 50 percent of a product’s total component cost, foreign iron and steel content cannot exceed 5 percent of the cost of all components.5eCFR. 48 CFR 25.003 – Definitions That works out to a 95 percent domestic iron and steel requirement, well above the general threshold. Foreign iron and steel costs cover mill products like bar, billet, plate, and sheet steel, along with castings and forgings. Commercially available off-the-shelf (COTS) fasteners are the only carve-out.
The COTS Exception
Commercially available off-the-shelf items get a break on the second half of the test. The domestic component cost calculation is waived for COTS products, so they only need to satisfy the “manufactured in the United States” requirement.6eCFR. 48 CFR 25.101 – General The waiver does not extend to COTS products made predominantly of iron or steel; those still have to hit the 95 percent standard, with the fastener exception noted above.
When Foreign Products Can Still Win
The Act does not ban foreign goods. It gives domestic products a price advantage during bid evaluation. When a contracting officer compares a domestic offer against a foreign one, the officer adds a percentage to the foreign offer’s price before comparing.7Acquisition.GOV. 25.103 Exceptions
If the lowest domestic bid comes from a large business, the adjustment is 20 percent. If it comes from a small business, the adjustment is 30 percent.8The White House. Strengthening Domestic Sourcing for Critical Items A small domestic manufacturer can price its product up to 30 percent above a foreign competitor and still win. If the domestic price exceeds the adjusted foreign price even after the addition, the government can buy foreign on grounds of unreasonable cost.
Other Exceptions
FAR 25.103 lists additional situations where the domestic preference doesn’t apply.7Acquisition.GOV. 25.103 Exceptions The head of an agency can find that requiring domestic goods conflicts with the public interest. Products or materials not produced domestically in sufficient commercial quantities or satisfactory quality fall under a nonavailability determination. Foreign products bought for commissary resale are exempt. Commercial information technology bought with fiscal year 2004 or later funds is exempt from the Buy American restriction. Purchases below the $15,000 micro-purchase threshold generally don’t trigger the requirement at all.
Contractors don’t make these calls themselves. The contracting officer or agency head does, based on justification the contractor provides before award. The Made in America Office reviews proposed waivers, particularly broad ones that would exempt entire product categories.
The Trade Agreements Act Override
For larger contracts, the Trade Agreements Act effectively overrides the Buy American Act by treating products from “designated countries” as equivalent to domestic goods. The override kicks in when a contract’s estimated value meets or exceeds trade-agreement thresholds. For 2026, the most common threshold under the WTO Government Procurement Agreement is $174,000 for supply and service contracts and $6,683,000 for construction contracts.9Federal Register. Federal Acquisition Regulation: Trade Agreements Thresholds Some free trade agreements set lower triggers, including $100,000 under the Korea FTA and $105,767 under the USMCA for supplies and services.
Above the applicable threshold, a contractor can deliver from any designated country without running afoul of Buy American rules.10Acquisition.GOV. FAR 52.225-5 Trade Agreements Below it, the domestic content test applies in full. A product line that qualifies for one procurement can miss on another based on contract value alone.
Not the Same as BABA or the Berry Amendment
Two related laws get mixed up with the Buy American Act, and the requirements are different enough that treating them as interchangeable creates compliance failures.
The Build America, Buy America Act (BABA), enacted through the 2021 Infrastructure Investment and Jobs Act, applies to federal financial assistance rather than direct federal procurement. It reaches grants, loans, and other funding that federal agencies send to state and local governments or non-federal entities for infrastructure projects.11Office of the Law Revision Counsel. 41 U.S.C. 8301 – Definitions A state highway project built with a federal grant runs under BABA. A federal courthouse built under a direct government contract runs under the Buy American Act.
The Berry Amendment (10 U.S.C. § 4862) applies only to Department of Defense procurement of a specific list of items: food, clothing and textiles, tents and tarpaulins, hand and measuring tools, stainless steel flatware, dinnerware, and U.S. flags. For those items, DoD funds cannot be spent unless the products are entirely grown, reprocessed, reused, or produced in the United States.12Office of the Law Revision Counsel. 10 U.S.C. 4862 – Requirement for Authorization to Procure There is no percentage-based component test. The standard is essentially 100 percent domestic.
Certifying Compliance
Certification starts with a bill of materials that traces every component in the end product back to its origin and records acquisition cost. Those numbers feed into the Buy American Certificate that accompanies each bid: FAR 52.225-2 for supply contracts, FAR 52.225-4 for construction contracts. Contractors identify any end products that don’t meet the domestic content test and list the foreign products along with their countries of origin.
Contractors also complete annual representations and certifications through SAM.gov as part of their federal registration.13Acquisition.GOV. FAR Subpart 4.12 – Representations and Certifications The annual certifications cover general domestic status across all potential procurements for the fiscal year.14Acquisition.GOV. 52.204-8 Annual Representations and Certifications A mismatch between the SAM.gov profile and a specific bid draws scrutiny. Federal officials can request additional documentation or audit material origins at any point during evaluation or after award.
Penalties for Getting It Wrong
Misrepresenting domestic content reaches beyond losing a contract. A contractor that knowingly certifies a foreign product as domestic faces False Claims Act exposure under 31 U.S.C. §§ 3729–3733. That means treble damages, so the government recovers three times what it lost, plus per-claim civil penalties adjusted annually for inflation.15U.S. Department of Justice. The False Claims Act A 2026 executive order directs agencies to verify domestic-origin claims on government-wide contracts and refer misrepresentations to the Department of Justice for possible False Claims Act prosecution.16The White House. Ensuring Truthful Advertising of Products Claiming to be Made in America
Intentionally labeling a product “Made in America” when it wasn’t manufactured domestically is an independent ground for debarment from all federal contracting. Debarment generally runs up to three years and bars the company from new contracts, from acting as a subcontractor on contracts above $45,000, and from representing other contractors in government business.17Acquisition.GOV. Subpart 9.4 – Debarment, Suspension, and Ineligibility Suspension, a temporary measure imposed while an investigation is pending, can run up to 18 months if legal proceedings have not been initiated. For a company that depends on government revenue, either outcome can end the business.