If you want to supply goods to the U.S. federal government, you'd better be prepared to show your products are either of U.S. origin, or there’s a good reason they don’t have to be. The government prioritizes using American-made goods and hiring American workers and, in most cases, if the government’s going shopping, it’s going to have to buy American. If you’re an American manufacturer, finding ways to supply your product to the government could be just the boost your company needs. But, before you start responding to RFPs, take a minute to make sure you’re in compliance with the relevant rules and regulations, because the legal web in this space is tangled, and noncompliance could seriously cost you.

For consumer-facing “Made in USA” (MUSA) claims, although the nuances are complicated, the overall legal framework is simple. Most products advertised as MUSA should be all or virtually all made in the United States, all the way back to raw materials. That’s not the right standard for products subject to domestic preference requirements under acquisition and procurement regulations. Under the Federal Acquisition Regulation and Defense Federal Acquisition Regulation Supplement, contracts subject to the Buy American Act (BAA) require components from domestic or qualifying countries to make up at least 65% of a manufactured end product’s cost for the product to qualify as domestically manufactured (for products delivered between 2024 and 2028). BAA requires suppliers to confirm the cost of U.S. components exceed these thresholds that are set to increase over time. If you’re supplying to the Department of Defense, however, depending on what you’re supplying, the Berry Amendment – which requires products to contain exclusively U.S. content – could apply. And, if you’re involved in an infrastructure project receiving federal financial assistance, the details of what you’re supplying may be governed by the Build America, Buy America Act (BABA).

The requirements under these laws and associated regulations vary and shift over time. As, in all likelihood, have your supply chains. Just because you were in compliance in 2020 does not mean you’re in compliance today. Why does this matter, you may ask? Well, if you tell the government that your product is of domestic origin in compliance with procurement requirements and it’s not, you could be liable for significant penalties under the False Claims Act, 31 U.S.C. §§ 3729-3733. The government could sue you directly. And, because the FCA allows whistleblowers to file confidential qui tam lawsuits on the government’s behalf and receive a percentage of any resulting recovery, company insiders who see an issue are incentivized to let the government know if your compliance falls through the cracks. 

If you’re a federal contractor (or want to become one), today’s a great day to do a thorough supply chain audit and make sure your products are compliant and related certifications are up to date. Consider the following:

• Conduct a contract-by-contract review. Make it a regular project. Revisit your contracts to make sure that you understand what your obligations are, what regulations apply to your contract, and that you have systems in place to verify any claims.
• Verify your country-of-origin information. Require suppliers to provide reliable origin certifications and maintain internal documentation demonstrating how components and manufacturing steps satisfy all applicable requirements.
• Monitor for supply chain changes. Remember that if something changes in how you source or produce your product, that might be material. It might even mean that you no longer comply with contract requirements. If that happens, you need to let the contracting agency know immediately.
• Don’t rely on FTC compliance as proof your product is compliant with procurement regulations (or vice-versa). The standard for consumer-facing MUSA claims differs from the procurement standards for domestic-origin products. Do not confuse the two, in either your procurement contracts or your consumer-facing advertising.
• Need help? Give us a call. Navigating federal procurement regulations and the FCA compliance landscape can be challenging. We can help.