On January 31, 2019, President Trump signed an “Executive Order on Strengthening Buy-American Preferences for Infrastructure Projects” (the “Order”), here. The Order is the second executive order issued by President Trump that aims to strengthen existing domestic preference acquisition policies within the United States – this time focusing on infrastructure projects and broadening the scope of a previous Buy American executive order beyond federal procurements and grants.
Background and Requirements of the Executive Order
President Trump issued the previous executive order (“EO 13788”) on April 18, 2017. EO 13788focused on revamping the government’s “Buy American” policy, announcing that it is the executive branch’s policy to maximize the use of goods, products, and materials produced in the United States in Federal procurements and grants, as those terms are used in EO 13788. EO 13788 also directed agencies to scrupulously enforce existing laws that provide a preference or requirement for domestically produced goods and materials in federal procurements and grants (collectively, the “Buy American Laws”), and further directed agencies to minimize the use of waivers under the Buy American Laws. EO 13788 is available here.
The latest Order reiterates the EO 13788 policy; however, where the scope of EO 13788 was limited to Federal procurements and grants, this Order applies to Federal procurements and “Federal financial assistance” awards, as that term is defined at 2 C.F.R. § 200.40. The Order also directly amends the text of EO 13788 by replacing “Federal grants” with “Federal financial assistance.” This is an expansive change, as “Federal financial assistance” includes not just grants, but also cooperative agreements, non-cash contributions or donations of property, direct appropriations, and other financial assistance from the Federal government.
The Order focuses on “infrastructure project[s],” defined broadly to include most forms of construction: “project[s] to develop public or private physical assets that are designed to provide or support services to the general public” in almost every imaginable infrastructure sector – including “cybersecurity.”
With respect to financial assistance programs, the Order places certain requirements on the heads of agencies and executive departments that have “covered programs,” meaning (subject to certain exceptions) programs whose statutory authority includes a focus on the award of Federal financial assistance for infrastructure projects. First, agency and department heads are required, within 90 days after the date of the Order, to “encourage recipients of new Federal financial assistance awards pursuant to a covered program to use, to the greatest extent practicable, iron and aluminum as well as steel, cement, and other manufactured products produced in the United States in every contract, subcontract, purchase order, or sub‑award that is chargeable against such Federal financial assistance award[,]” to the extent consistent with law.
Second, within 120 days after the date of the Order, agency and department heads are required to issue a report to the President through the Assistant to the President for Trade and Manufacturing Policy on their agency’s or department’s strategy, plan, or program designed to satisfy the above requirement to “encourage” use of domestic products. The reports also must identify “any tools, techniques, terms, or conditions that have been used or could be used, consistent with law and in furtherance of the policy . . . to maximize the use of iron and aluminum as well as steel, cement, and other manufactured products produced in the United States in contracts, sub-contracts, purchase orders, or sub-awards that are chargeable against Federal financial assistance awards for infrastructure projects.”
Unclear What the Executive Order Means for Public Infrastructure Contractors
The practical implications of the Order, as well as the means by which it will be implemented, are unclear. Contractors who participate in infrastructure projects that receive Federal funds should look for communications from the Federal agencies and executive departments responsible for those projects. Specifically, the Order should lead to certain communications “encouraging” contractors’ use of domestically produced materials on existing projects, and, for new projects, the Order may lead to the inclusion of new RFP terms codifying such “encourage[ment].”
For now, the Order should not be read as an instruction to contractors to change their compliance efforts under existing applicable Buy American Laws with respect to current, on-going projects. The Order specifically states that covered programs under the Order do not include“ programs providing Federal financial assistance that are subject to comparable domestic preferences.” Therefore, the impact of the Order may be limited with respect to public infrastructure projects that are already covered by a Buy American Law, such as those funded in part by, for example, the Federal Transit Administration or the Federal Highway Administration.
Opinions and conclusions in this post are solely those of the author unless otherwise indicated. The information contained in this blog is general in nature and is not offered and cannot be considered as legal advice for any particular situation. The author has provided the links referenced above for information purposes only and by doing so, does not adopt or incorporate the contents. Any federal tax advice provided in this communication is not intended or written by the author to be used, and cannot be used by the recipient, for the purpose of avoiding penalties which may be imposed on the recipient by the IRS. Please contact the author if you would like to receive written advice in a format which complies with IRS rules and may be relied upon to avoid penalties.
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