The Buy American Act (BAA) now demands stricter domestic sourcing for federal contracts. Key updates include:

• Domestic Content Thresholds: Increased from 55% to 60% in 2022, rising to 65% in 2024, and reaching 75% by 2029.
• New Rules for Iron and Steel: Structural iron and steel must be 100% U.S.-sourced for melting and pouring.
• Phased Manufacturing Rules: Domestic final assembly required by October 1, 2025, with 55% domestic component costs by October 1, 2026.
• Exceptions: Waivers exist for cases like domestic unavailability, public interest conflicts, or unreasonable costs.

Failing to comply can lead to penalties, contract termination, or debarment. Contractors must now audit supply chains, verify component origins, and adjust sourcing to meet these requirements. Recent updates also simplify procurement processes through Executive Order 14275, aligning FAR and DFARS standards for consistency.

For small businesses, managing these changes can be complex. External compliance support, like GSA Focus, offers solutions for documentation and certification, helping contractors secure lucrative federal contracts.

Takeaway: Staying compliant with BAA updates is critical for GSA contractors to maintain eligibility and competitiveness in federal procurement.

Buy American Part 2: Breaking down the Buy American Act

What Changed in the Buy American Act

The recent updates to the Buy American Act bring notable changes to federal procurement rules, reshaping how GSA contractors handle their supply chains and sourcing strategies.

New Domestic Content Requirements

The domestic content threshold is increasing significantly. For items delivered between 2024 and 2028, at least 65% of components must come from U.S. sources. Starting in 2029, this threshold jumps to 75%. This means GSA contractors will need to ensure that three-quarters of their product components originate domestically in the near future.

The Federal Highway Administration estimates these changes could lead to material cost increases ranging from $41 million to $980 million annually.

Requirements for structural iron and steel remain unchanged, with 100% of the melting and pouring still required to take place in the United States. Additionally, new phased manufacturing rules demand that domestic final assembly begins by October 1, 2025, and by October 1, 2026, over 55% of the total cost of components must come from domestic sources.

These adjustments signal a shift toward stricter domestic sourcing policies, with further regulatory updates on the horizon.

Recent Executive Orders and Policy Changes

Executive Order 14275, signed on April 15, 2025, titled "Restoring Common Sense to Federal Procurement," introduces changes aimed at making the procurement process more efficient while maintaining core requirements.

The Federal Acquisition Regulation (FAR), which governs nearly $1 trillion in annual federal spending, has grown to over 2,000 pages. This executive order directs the FAR to focus only on statutory or essential provisions, potentially simplifying compliance for contractors.

"The Federal Government is the largest buyer of goods and services in the world –- yet conducting business with the Federal Government is often prohibitively inefficient and costly." – The White House

To further streamline the process, agencies must align their supplemental regulations with these FAR reforms, eliminating conflicting requirements across contract types. Additionally, the new DFARS rule now mirrors FAR standards, creating consistency for contractors working with both the Department of Defense and civilian agencies. This change addresses the administrative challenges posed by previously differing standards.

Exceptions and What’s Covered

While the new rules tighten domestic sourcing requirements, several exceptions provide flexibility. Contractors can still purchase foreign end products in specific cases, including:

• Public interest conflicts
• Domestic product unavailability
• Unreasonable domestic costs
• Commissary resale goods
• Commercial IT product acquisitions

The Trade Agreements Act (TAA) also offers relief by allowing waivers for eligible products from designated countries. Under TAA, qualifying foreign products are treated as domestic, broadening the range of compliant suppliers.

Commercial IT products receive special consideration due to the global nature of technology supply chains, where sourcing 100% domestic components can be particularly challenging.

Contractors and agencies have the flexibility to determine exceptions directly. This collaborative approach helps identify solutions when domestic sourcing isn’t feasible.

A great example is Dig Defence, a woman-owned business that successfully met Buy American thresholds by working with compliance experts. Through strategic sourcing adjustments and content verification, they secured approval for the GSA Schedule, paving the way for long-term federal contracts. Their success highlights how proactive measures can help contractors navigate these evolving requirements.

Compliance Requirements for GSA Schedule Contractors

GSA contractors must adhere to specific documentation and certification rules to align with the updated Buy American Act regulations. Knowing these requirements is essential to remain eligible and avoid costly mistakes.

Documentation and Certification Essentials

Contractors are required to provide detailed records of their components, including the country of origin and the acquisition cost of each item, to ensure compliance with FAR 52.225-1 or DFARS 252.225-7000. This demonstrates that products meet the updated domestic content thresholds.

The documentation process involves tracking the origin of components at every level of the supply chain. This means contractors must not only verify their direct suppliers but also trace the origin of each component used in manufacturing. For purchased components, contractors need to include acquisition costs, transportation, and duties. For in-house manufactured components, calculations must cover all production costs, transportation, and overhead – excluding profit.

Additionally, contractors must update their contract language to reference the correct FAR or DFARS clauses. Certification requires proving that products meet the criteria for "domestic end products" under the Buy American Act, ensuring the government prioritizes U.S.-made goods.

Proper and thorough documentation is critical to avoid errors during certification.

Pitfalls to Avoid in Compliance

Compliance with the Buy American Act can be derailed by several common mistakes. Missteps like incorrectly certifying foreign products as compliant, failing to update certifications when suppliers change, or misunderstanding the applicability of the Trade Agreements Act (TAA) can lead to significant issues.

One major risk is supply chain verification errors. Without careful audits, contractors may submit inaccurate compliance certifications. As a compliance expert from USFCR explains:

"If you’re not auditing your supply chain now, you’re risking more than a missed bid; you could be disqualified before you even get started." – USFCR

Pricing discrepancies are another frequent issue. Around 20% of reviewed GSA contracts revealed pricing problems, such as vendors failing to justify their pricing or violating the Most Favored Customer (MFC) policy. For example, a technology firm lost a GSA contract after offering a 15% deeper discount to a large commercial client without proper disclosure.

Administrative errors, like selecting incorrect Special Item Numbers (SINs), submitting incomplete forms, or providing outdated financial records, can also jeopardize compliance. In one case, a construction services company had its GSA Schedule contract terminated after static pricing over five years led to accusations of overcharging compared to market rates.

Failing to update certifications after supplier changes is another serious risk. With Buy American requirements frequently changing due to new executive orders and regulations, keeping certifications current is non-negotiable.

Understanding FAR Updates and Their Impact

The Federal Acquisition Regulation (FAR) governs nearly $1 trillion in annual federal spending and spans over 2,000 pages. Recent updates to FAR have introduced more stringent compliance requirements.

FAR 52.225-1 and DFARS 252.225-7000 now demand detailed documentation of components to verify domestic content percentages. These clauses outline the certification process and the necessary information to prove compliance.

The new DFARS rules align closely with FAR standards, simplifying compliance for contractors working across different agencies. For Department of Defense contracts specifically, at least 60% of a product’s component costs must come from U.S. manufacturing to qualify as a "domestic end product". This differs slightly from general Buy American Act standards, emphasizing the importance of knowing which rules apply to each contract.

Waiver conditions also play a role in compliance. Waivers are granted only in cases where U.S.-made products are unavailable or prohibitively expensive. Understanding these exceptions allows contractors to navigate situations where full domestic sourcing isn’t feasible while staying within legal boundaries.

These updates highlight the need for strong compliance controls to meet evolving regulatory standards.

sbb-itb-8737801

How Changes Affect GSA Schedule Management

The amendments to the Buy American Act are shaking up GSA Schedule management, pushing contractors to rethink their eligibility, pricing, and procurement strategies. Let’s break down how these changes are influencing contract eligibility, procurement thresholds, and compliance strategies.

Impact on Contract Eligibility and Pricing

One of the most notable changes is the rise in the domestic content threshold, which has jumped from 55% to 65%, with plans to hit 75% by 2029. For now, there’s a "fallback threshold" allowing products with 55% domestic content to qualify under certain conditions. Meanwhile, structural iron and steel products face an even stricter requirement – a 95% domestic content threshold – which could heavily impact contractors in construction and infrastructure projects.

The shift in domestic content requirements also means contractors need to rethink their pricing strategies. Domestic materials often come with higher costs, and this can complicate bidding and proposals. Procurement attorney Dan Ramish from Haynes Boon highlights the challenge:

"Bottom line, contractors are going to need to pay careful attention to navigate this issue and take each bid and proposal case by case to figure out what makes sense."

To manage these rising costs, economic price adjustment clauses have become essential. These clauses help contractors handle unexpected material price spikes, reducing financial risks in fixed-price contracts.

Higher Purchase Thresholds and Procurement Changes

Changes to the Federal Acquisition Regulations (FAR) are also reshaping the landscape, particularly with purchasing thresholds. Over the next five years, the Simplified Acquisition Threshold (SAT) could increase from $250,000 to $10 million for commercial products and services. Similarly, the Micro-purchase Threshold might climb from $10,000 to $100,000. These adjustments could lead to more contracts in the $250,000 to $10 million range being awarded to larger businesses, potentially squeezing out smaller GSA contractors. However, the Buy American Act requirements will still apply to purchases exceeding $10,000, keeping domestic content standards in play.

Another major shift is the move from evaluating proposals based on the "lowest overall cost alternative" to a "best value" standard for GSA Multiple Award Schedule (MAS) contracts. Christopher Slottee, Industry Group Leader at Schwabe, explains the intent behind this change:

"The intent of the proposed changes is to revise federal acquisition statutes to, in the eyes of GSA, promote efficiency in federal contracting."

Other updates include permanent Commercial Solutions Opening (CSO) authority for GSA and DHS, allowing contracts up to $100 million. This gives agencies more flexibility in acquisition methods. Additionally, a proposal to raise Cost Accounting Standards (CAS) compliance thresholds from $2 million to $35 million could reduce administrative burdens for many contractors.

Managing Compliance: Internal vs. External Support

With these shifts in eligibility and pricing, contractors face the challenge of staying compliant with evolving regulations. Larger companies often rely on in-house compliance teams that conduct regular audits and tracking. However, the pace of regulatory changes under the Buy American Act can make this a demanding and resource-heavy task.

For smaller contractors, bringing in specialized staff may not be financially feasible. This is where external compliance support becomes a practical option. Companies like GSA Focus assist small businesses with GSA Schedule Contracts by offering services such as document preparation, compliance management, and negotiation support. These services help simplify the process and reduce the time and effort required to maintain compliance.

Ultimately, the choice between internal and external compliance management often comes down to a cost-benefit analysis. Federal Acquisition Service Commissioner Josh Gruenbaum emphasizes the importance of balancing value and responsibility in federal contracting:

"FAS takes seriously its responsibility to the American taxpayer, and rightsizing the MAS Program is a significant opportunity for us to prioritize value and fiscal responsibility in contracting."

For many contractors, a hybrid approach works best – combining regular internal monitoring with external expertise for more complex issues. With $51.5 billion in MAS Program sales in FY 2024, the stakes are high, and effective compliance management is crucial for staying competitive in federal contracting.

Contractors should tailor their compliance strategies based on their contract volume, complexity, and growth goals. Those aiming to expand their footprint in federal contracting may want to invest in robust internal systems early on. Meanwhile, contractors with fewer federal engagements might find external support a more budget-friendly and efficient choice.

Steps to Stay Compliant and Competitive

To thrive in federal contracting, staying ahead of compliance requirements isn’t just about following the rules – it’s about securing your competitive edge. By regularly reviewing operations, establishing strong internal controls, and seeking expert support when needed, contractors can position themselves for success in this complex landscape.

Review Your Products and Supply Chain

Compliance with the Buy American Act (BAA) starts with a deep dive into your products and supply chain. Since contractors rely on self-certification for BAA and Trade Agreements Act (TAA) compliance, skipping this step can lead to costly errors.

Here’s what to focus on:

• Audit your supply chain by checking supplier certifications and verifying the country of origin for all materials and components.
• Maintain separate inventories for products that are BAA- and TAA-compliant.
• Conduct market research to confirm the origin of materials, components, or products you’re sourcing.

Given the frequent changes to Buy American requirements through executive orders and regulatory updates, this review isn’t a one-and-done task – it needs to be an ongoing process. A thorough audit like this lays the groundwork for the next crucial step: internal controls.

Set Up Internal Compliance Controls

Strong internal compliance controls are your safety net for catching issues early. This involves creating structured processes that ensure every step of your supply chain and operations aligns with compliance standards. Here’s how to get started:

• Develop formal internal review procedures to verify certifications and monitor supplier changes.
• Conduct regular audits to keep domestic content calculations accurate.
• Train employees on compliance standards, including those outlined in the Office of Management and Budget Circular A-123.
• Ensure employees integrate these controls into their daily workflows.
• Centralize all compliance-related documentation – supplier certifications, country-of-origin records, domestic content calculations, and audit results – to quickly respond to government inquiries.
• Seek legal advice for complex country-of-origin determinations.

By embedding these controls into your operations, you can reduce risks and confidently navigate compliance requirements.

Using GSA Focus for Compliance Support

Sometimes, even the best internal measures need reinforcement. For small-business contractors, managing BAA compliance internally can be particularly challenging. That’s where expert support, like the services offered by GSA Focus, comes into play.

GSA Focus specializes in helping contractors manage GSA Schedule contracts, taking on the heavy lifting of paperwork and compliance tied to Buy American Act amendments. They boast an impressive 98% success rate with GSA contract applications, reducing the contractor’s time commitment to just three hours. Josh Ladick, President and Founder of GSA Focus, highlights their dedication:

"We guarantee your success with the GSA Program, or you don’t pay a cent."

Clients working with GSA Focus reportedly see an average return on investment (ROI) of 87x, potentially adding $927,000 to their bottom line. With only 4% of small businesses currently holding GSA Schedules, there’s a significant opportunity for those who can successfully navigate compliance.

For contractors new to federal contracting or experiencing rapid growth in government sales, specialized support like this can be a game-changer. Whether you handle compliance internally or turn to experts, the key is making informed decisions that align with your resources and goals.

Conclusion: Managing BAA Changes Successfully

The evolving requirements under the Buy American Act (BAA) present both challenges and opportunities for GSA contractors. With domestic content thresholds increasing, those who adjust quickly and effectively can gain a competitive edge. On the flip side, failing to comply with these mandates could lead to severe consequences, including penalties, suspension, or even debarment from federal contracts.

Navigating these changes starts with a solid understanding of the new requirements, backed by strong compliance systems and expert guidance. The federal government’s push for prioritizing American-made products and services is clear. As USFCR notes:

"If you’re not auditing your supply chain now, you’re risking more than a missed bid; you could be disqualified before you even get started."

To stay ahead, contractors should take proactive steps – like mapping their supply chains, identifying domestic alternatives, and keeping a close eye on waiver activity, which can provide useful insights for strategic planning.

For many small businesses, managing these intricate requirements in-house can be overwhelming. This is where specialized support becomes invaluable. GSA Focus, for instance, has built a strong reputation for helping contractors tackle these challenges, with a 98% success rate and an average ROI of 87x. Their expertise in compliance and documentation can make the difference between thriving and struggling in the federal marketplace.

The message is clear: the Buy American Act is here to stay, with recent executive orders reinforcing the push for domestic procurement. Contractors who embrace these changes, invest in compliance, and seek expert help when needed will be better positioned for success. The key is to act quickly – adaptation isn’t optional, and those who move fast will reap the rewards.

FAQs

What steps can GSA contractors take to comply with the increasing domestic content thresholds under the Buy American Act?

To meet the increasing domestic content requirements under the Buy American Act, GSA contractors should prioritize sourcing materials and products from suppliers based in the U.S. By 2025, the domestic content threshold for manufactured goods and construction materials will rise to 65%, so planning ahead is essential.

Contractors can also consider using Commercially Available Off-the-Shelf (COTS) items that are made in the U.S. If meeting the threshold becomes difficult, applying for waivers may be an option worth exploring. Additionally, GSA offers helpful resources like industry webinars and compliance tools, which can provide guidance and simplify procurement processes to align with the updated requirements.

What can small businesses do to comply with the updated Buy American Act requirements, especially with limited internal resources?

To align with the updated Buy American Act, small businesses need to understand the new domestic content requirements. These thresholds will rise to 65% in 2025 and 75% by 2029, meaning a greater portion of a product’s components must originate in the U.S. for compliance. A good starting point is reviewing the Small Entity Compliance Guide from the General Services Administration (GSA), which offers step-by-step guidance specifically designed for small businesses.

If managing compliance feels overwhelming or your business lacks the necessary resources, external support can be a game-changer. There are services that specialize in GSA Schedule Contracts, offering help with tasks like gathering documentation, sourcing components made in the U.S., and navigating certification requirements. By leveraging these services, you can save time, ensure compliance, and focus on expanding your federal contracting opportunities.

How will the Buy American Act changes impact material costs for GSA contractors, and what steps can they take to reduce these risks?

The revised Buy American Act brings tighter rules for sourcing materials, which could lead to higher costs for contractors working with the General Services Administration (GSA). By 2025, contractors will likely need to ensure that 65% of the materials they use come from domestic sources. On top of that, tariffs on imported components could further drive up expenses.

To navigate these challenges, contractors should prioritize building strong partnerships with domestic suppliers. Keeping meticulous records and staying informed about regulatory updates are also key steps. By proactively adjusting sourcing strategies and ensuring compliance, contractors can better manage costs while meeting the updated requirements.

Related posts

• Ultimate Guide to GSA Compliance Standards
• How GSA Contracts Impact Federal Construction Compliance
• 5 Misconceptions About Buy American Act Compliance
• How to Source Materials for GSA Compliance