U.S. House approves Buy American legislation

May 19, 2005

On May 18, the U.S. House of Representatives approved legislation requiring the U.S. Department of Homeland Security to make more than 50 percent of is purchases from companies operating in the U.S. The legislation, an amendment to the Homeland Security Authorization Act, was authored by House Small Business Committee Chairman Don Manzullo (R-IL).

Specifically, the amendment requires more than 50 percent of the components in any end product procured by the Department of Homeland Security 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 Buy American Act's original intent 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, for example, has MOUs with 21 developed countries that waive the Act because the Defense Department (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.

Because the Department of Homeland Security has a very similar mission to the Defense Department—protecting the territory of the U.S. from possible enemy attack—the amendment prevents the Department of Homeland Security from waiving the 50 percent Buy American content restrictions like the Pentagon has done without an affirmative vote by Congress.

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