Federal push promotes American-made procurement practices

The Bipartisan Infrastructure Law is set to invest $1.2 trillion into infrastructure, and thanks to updated spending guidance from the Biden Administration, more of it will go to producers of American-made products than ever before. 

A rule update created in relation to the bill, formally published in the Federal Register Monday, increases the percentage of components for a given federally funded project that must be produced domestically by nearly a quarter. In practice, it modifies the Buy American Act, a 1933 law that mandates federal agencies to procure American made materials. 

“Today, products qualify as ‘Made in America’ for federal procurement if 55 percent of the value of their component parts are manufactured here,” according to an explainer from the White House. “This final rule will increase that threshold to 60 percent this year, 65 percent in 2024, and 75 percent in 2029.” 

Even before the infrastructure package passed through Congress last year—marking the largest infrastructure investment by the United States in a century—the federal government averaged more than $600 billion in public procurement spending annually, the explainer says. Upping the percentage requirement enhances the impact of the spending package because it leverages the power of public spending to strengthen domestic supply chains and support American manufacturing advancements. 

“The federal government is a major buyer in a number of markets for goods and services and the single largest purchaser of consumer goods in the world. Leveraging that purchasing power to shape markets and accelerate innovation is a key part of the Administration’s industrial strategy to grow the industries of the future to support U.S. workers, communities, and firms,” according to text from the final rule update. 

Besides tweaking American-made procurement percentage mandates, the rule “creates a framework to allow the government to apply enhanced price preferences to select critical products and components identified in a subsequent rulemaking,” the explainer continues. “These preferences, once in place, will support the development and expansion of domestic supply chains for critical products by providing a source of stable demand for domestically-produced critical products.” 

Promoting American made products is an initiative the federal government has been pushing for some time. Most recently, the update builds on the “Ensuring the Future is Made in All of America by All of America’s Workers” executive order, which was signed by Biden in January. That action pushed federal agencies to use procurement “to maximize the use of goods, products, and materials produced in, and services offered in, the United States,” according to a White House brief issued at the time. “The United States government should, whenever possible, procure goods, products, materials, and services from sources that will help American businesses compete in strategic industries and help America’s workers thrive.” 

Notably, there’s another initiative that’s currently in Congress, the Bipartisan Innovation Act, which seeks to increase American’s competitiveness in the tech industry by funneling billions into innovation and development (specifically targeting semiconductor manufacturing).

The executive order issued in January also establishes a new Made in America Office within the Office of Management and Budget at the White House. Its mission is to promote American made products and push federal organizations to increase domestic procurement.  

Beyond the long-term benefits, Biden said the initiative is a way to combat rising inflation.

“The way to fight inflation is to drive down wages and make Americans poorer or have a better plan to fight inflation: Lower costs and not your wages,” he said in remarks to the press related to the rule update. In referencing a push to bring more semiconductor manufacturing to the United States, he said, “when we focus on making sure that we make those again in the United States of America … you bring prices down; the supply chain is filled.”