Buy American Act Requirements: Waivers, TAA, and Penalties

Buy American Act requirements apply when an executive branch agency directly buys supplies or construction materials for use in the United States, and they turn on three things: whether the product is manufactured domestically, whether enough of its component cost is domestic, and whether any exception applies. The statute lives at 41 U.S.C. §§ 8301–8305 and is implemented through Part 25 of the Federal Acquisition Regulation. It has been tightened repeatedly since 1933, and the domestic content bar is still scheduled to climb through 2029.

When the Act Applies

The Act covers direct federal procurement by executive agencies, as defined by reference to 41 U.S.C. § 133.¹ Compliance obligations begin once a purchase exceeds the micro-purchase threshold, which rose to $15,000 effective October 1, 2025.² Purchases under that figure are exempt. Construction materials for federal buildings are covered alongside supplies. Purchases for use outside the United States are not.

How a Product Qualifies as Domestic

Unmanufactured end products, such as raw materials and minerals, qualify simply by being mined or produced entirely in the United States.³

Manufactured goods have to clear two tests. The product itself must be manufactured in the United States, and the cost of components that were mined, produced, or manufactured domestically must exceed a set percentage of the total component cost. That percentage is on a rising schedule:⁴

60 percent is the baseline threshold under the current framework.
65 percent applies to items delivered in calendar years 2024 through 2028.
75 percent takes effect for items delivered starting in calendar year 2029.

The number that matters for a contract delivering in 2026 is 65 percent. Each component going into the finished product needs a documented country of origin and cost, because agencies expect contractors to prove the calculation at the component level.

The Stricter Rule for Iron and Steel

Products that consist wholly or predominantly of iron or steel are held to a much tighter standard. The cost of foreign iron and steel in the product must stay below 5 percent of the total cost of all components. That calculation sweeps in foreign iron or steel mill products such as bar, billet, slab, wire, plate, and sheet, along with castings and forgings. Commercially available off-the-shelf fasteners are the one carve-out.⁴

COTS Items and Their Limit

Commercially available off-the-shelf items get a break. Under 41 U.S.C. § 1907, if a product is sold in substantial quantities in the commercial marketplace and offered to the government without modification, the agency skips the component-cost trace entirely.³ The waiver has one meaningful limit: it does not apply to end products consisting wholly or predominantly of iron or steel. For those, the domestic content test still governs, though COTS fasteners remain excluded from the calculation.⁴

How Foreign Bids Are Penalized on Price

When a foreign product comes in as the low bid, the contracting officer does not compare it to the domestic bid at face value. The FAR requires an evaluation factor to be added to the foreign offer before the comparison.⁵

20 percent is added to the foreign offer when the lowest domestic bid comes from a large business.
30 percent is added when the lowest domestic bid comes from a small business.

The contract price the government actually pays is unchanged; the markup only exists for evaluation purposes. For end products designated as critical items, or items containing critical components, an additional preference factor listed in FAR 25.105 is layered on top of the 20 or 30 percent, widening the gap a foreign supplier would have to overcome.⁵

When the Requirements Can Be Waived

The statute recognizes that strict domestic sourcing is not always workable. Under 41 U.S.C. § 8303, an agency can bypass the preference on three grounds:⁶

Unreasonable cost, when domestic sourcing would raise the cost unreasonably compared to foreign alternatives.
Non-availability, when the goods are not produced in the United States in sufficient and reasonably available quantities or of satisfactory quality.
Public interest, when the head of the agency determines that domestic sourcing would be inconsistent with the public interest.

Separately, acquisitions for use outside the United States, purchases below the $15,000 micro-purchase threshold, and procurements covered by reciprocal defense agreements sit outside the Act’s reach altogether.⁶

Waivers are no longer quiet decisions. The Made in America Office, established by Executive Order 14005 in 2021, reviews proposed waivers and publishes them at MadeInAmerica.gov. As of early 2026, the portal listed over 2,400 waivers with the issuing agency’s contact information.⁷ Domestic manufacturers who believe they can supply the need can see requests before they are finalized and push back through the agency.

The Trade Agreements Act Overlay

The Trade Agreements Act of 1979 creates a second layer. For procurements above the dollar thresholds in FAR 25.402, products from designated countries are treated as domestic for evaluation purposes. Designated countries fall into four groups: WTO Government Procurement Agreement signatories (most of the EU, Canada, Japan, Australia, and others), Free Trade Agreement partners such as Mexico, Chile, and Colombia, least developed countries, and Caribbean Basin countries.⁸ For larger contracts, then, goods from dozens of countries receive domestic treatment.

Buy American Act Is Not Build America, Buy America

The Buy American Act governs direct federal procurement. It does not govern federal grants and cooperative agreements for infrastructure. Those are covered by the Build America, Buy America Act (BABA), enacted in 2021 as part of the Infrastructure Investment and Jobs Act. BABA requires that all iron, steel, manufactured products, and construction materials used in a federally funded infrastructure project be produced in the United States, with iron and steel domestic from the initial melting stage through coating, and manufactured products finally assembled in the United States with at least 55 percent domestic component cost.⁹ The 55 percent figure under BABA differs from the Buy American Act’s current 65 percent, which sometimes catches out contractors working under both regimes.¹⁰

Penalties for Misrepresenting Domestic Content

Overstating a product’s domestic content to win a federal contract is not just a contract problem. It can trigger liability under the False Claims Act, 31 U.S.C. § 3729. The per-claim civil penalty ranges from $14,308 to $28,618 under the most recent inflation adjustment, and those penalties stack across each false claim submitted.¹¹ Treble damages, three times the government’s loss, come on top. The Act’s qui tam provisions let employees and competitors file suit on the government’s behalf and collect a share of any recovery.

The other exposure is debarment. Under FAR Subpart 9.4, an agency can bar a contractor from all federal work when a violation shows a pattern of dishonesty or a lack of present responsibility. The FAR frames debarment as protective rather than punitive, but for a company that depends on government contracts, the distinction rarely matters in practice.¹²

1
Office of the Law Revision Counsel. 41 USC 8301 – Definitions
2
GSA SmartPay. Effective October 1, 2025, FAR Amendment: Micro-purchase Threshold Limit Increased to $15,000
3
Acquisition.GOV. FAR 52.225-1 Buy American-Supplies
4
Acquisition.GOV. FAR 25.101 General
5
Acquisition.GOV. FAR 25.106 Determining Reasonableness of Cost
6
Office of the Law Revision Counsel. 41 USC 8303 – Contracts for Public Works
7
Made in America. Made in America Waivers Data
8
Acquisition.GOV. FAR 52.225-5 Trade Agreements
9
U.S. Department of Housing and Urban Development. Build America, Buy America Act Provisions
10
Federal Highway Administration. Buy America – Construction Program Guide – Contract Administration
11
Federal Register. Civil Monetary Penalty Inflation Adjustment
12
Acquisition.GOV. Subpart 9.4 – Debarment, Suspension, and Ineligibility