On June 23, 2022, the U.S. Department of Defense (DoD) issued a Final Rule that amends the Defense Federal Acquisition Regulation Supplement (DFARS) to implement Executive Order 13881, Maximizing Use of American-made Goods, Products, and Materials. These changes to DFARS were first announced in a Proposed Rule that DoD issued in August 2021 and that we explored in an earlier Bulletin. The Final Rule makes no significant changes to the Proposed Rule.
Thus, as we discussed in our earlier Bulletin, for purposes of applying Buy American domestic pricing preferences to DoD procurements, under the changed DFARS rules, a product is foreign if the cost of all foreign components used in the product constitutes 45 percent or more of the cost of all components, except that iron and steel products are foreign if the cost of foreign iron and steel equals or exceeds 5 percent of the cost of all components.
The Final Rule becomes immediately effective, and DoD government contractors, especially contractors that are involved in producing hardware to DoD agencies, should examine the Final Rule closely.