The Department of Defense (DoD), General Services Administration, and National Aeronautics and Space Administration jointly issued final rules on Executive Order 13881, which calls for iron and steel products that U.S. manufacturers sell to federal agencies governed by the Buy American Act (BAA) will have to contain 95% domestic steel inputs, up from 50%, the Fabricator reports.

“That new 95% requirement applies to everything except for commercial-off-the-shelf (COTS) fasteners (nuts, bolts, pins, rivets, nails, and screws),” writes Stephen Barlas for the Fabricator. 

“The Industrial Fasteners Institute had tried to convince the Trump administration to include COTS fasteners in the 95% edict because U.S. fastener manufacturers have no trouble meeting the 95% requirement, but the government officials declined to do so, mostly because those products are so inexpensive.” 

That means no domestic content requirement will apply to COTS fasteners sold to federal agencies.

The BAA 95% iron and steel content requirement used to apply only to certain Federal Transit Administration and Federal Highway Administration grant programs. But for metal fabricators selling to federal agencies, the domestic content requirement has just been increased 45 percentage points, the Fabricator reports. 

“That may not be economically feasible, and even if it is, it may not be possible before the date on which these new rules will be incorporated into solicitations and resulting contracts,” Richard Arnholt, a federal procurement expert at the law firm Bass Berry & Sims, told the Fabricator.

This situation has led some industry insiders to speculate that it may take years of reengineering, quality testing, and fabrication of tools/equipment to produce Buy American compliant products under the proposed rule.

And meeting the requirement is no guarantee that a manufacturer will close the deal because it can lose a sale to a non-BAA compliant customer based on price, Balas notes. That’s because the new rule gives a boost to the “price preference,” which can occur when a product containing foreign steel is bid at a lower price than a similar product using all domestic steel.