Buy American Act Challenges and Opportunities for the Maritime Industrial Base

With the One Big Beautiful Bill Act providing billions in funding for the Department of Defense and the Coast Guard to spend on shipbuilding and the maritime industrial base, marine equipment manufacturers, shipbuilders, ship suppliers, and others in the maritime industry have a unique opportunity to win government contracts.   

However, exceptions to the Buy American Act and inconsistent executive branch application of the Buy American Act give foreign firms the chance to obtain procurement contracts.  

How do foreign businesses access U.S. government procurement contracts?  

First, our trade agreements waive the Buy American Act for companies in countries that have signed trade agreements.  But, these agreements do not waive the Buy American Act for all categories of maritime-related procurement.  Some categories are excluded from the trade agreements, meaning the Buy American Act still applies in these cases.   

Second, federal agencies have discretion in how they write procurement contracts, and those decisions have significant implications for whether the Buy American Act applies.  Sometimes, agencies may simply misapply the laws, leaving companies inappropriately exposed to foreign competitors.   

Third, the Department of Defense (DoD) negotiates agreements with countries to exempt DoD procurement from the Buy American Act for companies operating in the nation that signed the agreement.  DoD has agreements with 28 nations, including Spain, Italy, Germany, Canada, and the U.K., on the books and sought additional agreements with India, Brazil, and Korea.  A recent GAO investigation concluded that DoD process for negotiating these agreements was deeply flawed.   

Congress and the Trump Administration have taken note of these exemptions to the Buy American Act. 

The Trump Administration released its "America First Report" in April, and it is critical of the World Trade Organization's Government Procurement Agreement (GPA), which gives companies in nearly 50 countries the ability to compete for U.S. government contracts as if they were American companies. The report calls for the U.S. to modify or renegotiate the GPA, and if unsuccessful, withdraw.
The report is also critical of Reciprocal Defense Procurement Agreements--bilateral agreements that waive U.S. domestic preferences for Department of Defense contracts--and calls for a review.   GAO recently identified major flaws in DoD's process for negotiating these agreements, and there is bipartisan interest in Congress in addressing these shortfalls.  

In conclusion, American firms that contract with the federal government are exposed to foreign competition due to exemptions to the Buy American Act and issues with the executive branch's application of the laws.   Given the bipartisan support in Congress and calls for action by the Trump Administration to address these exemptions along with the recent infusion of funding for shipbuilding and the maritime industrial base, there is a golden opportunity for maritime and machine equipment businesses to engage and ensure the government is providing preference to American companies in procurement contracts.