May 25, 2005
The U.S. House today approved legislation that requires the U.S. Department of Defense (DoD)to make more than 50 percent of its purchases from companies operating in the U.S. The provision, part of an en bloc amendment to the Department of Defense Authorization Act, was authored by House Small Business Committee Chairman Don Manzullo (R-IL).
Specifically, the provision requires more than 50 percent of the components in any end product procured by the DoD to be mined, produced, or manufactured inside the U.S. The amendment reaffirms the "Buy American Act," a law passed during the Great Depression to restore America's industrial base. To qualify under Buy American, a company must have "substantially all" of a product made, grown, or mined in the United States. Federal agencies have generally interpreted "substantially all" to mean 50 percent or more of U.S. content and labor.
According to Manzullo, the original intent of the Buy American Act has been further undermined by memoranda of understanding (MOU) among the U.S. and various foreign countries that permit the substitution of foreign components for components mined, produced, or manufactured inside the U.S. The Pentagon has MOUs with 21 developed countries that waive the Act because the DoD has determined that for these countries, complying with the Act is "inconsistent with the public interest." Basically, a company winning a contract from the Pentagon can claim compliance with the Buy American Act without having to actually make anything in the U.S. as long as the components come from one of the 21 countries.
The Manzullo provision prevents the DoD from waiving the 50 percent Buy American content restrictions through MOUs without an affirmative vote by Congress.
Last week, the House passed a similar Manzullo amendment to the Homeland Security Authorization Act that requires the Department of Homeland Security to buy more than 50 percent of its products from U.S. manufacturers.