FAR 25 - Buy American Act and Trade Agreements

MileHighAcq said:

So does that mean that construction contracts over $7,032,000 that are set aside for small business concerns don’t have either of the BAA or TA clauses/provisions?

This was the only question in your post. I thought for sure the answer would be "no", but after doing some research, I think you have it right.

I think based on a strict reading of the regs, the answer is no, but after I ran it past our solicitor, they came back with the opinion that the BAA would apply for constructions over $7,032,000 if it was set aside for small business concerns. It definitely makes sense from a "spirit of the law" perspective I guess. I mean I don't think you'd want to wind up on the front page of the paper because of a $30 million construction project that used $10 million worth of Chinese steel because it was set aside for small business concerns and the BAA and TA did not apply...

MileHighAcq,

You must not commingle the Buy American Act-Supplies (FAR subpart 25.1) and Buy American-Construction Materials (FAR subpart 25.2).  You also need to read the clause prescription in 25.1101 (supplies) wholly separate from 25.1102 (construction).  

MileHighAcq said:

So does that mean that construction contracts over $7,032,000 that are set aside for small business concerns don’t have either of the BAA or TA clauses/provisions?

How did you come to this conclusion?  What in 25.1102 drove you here?

Nothing in 25.1102 makes reference to the exceptions in 25.401 (such as the set-aside exception).  Nothing in 25.1102 tells you to drop the 52.225-11 clause when there is a set-aside.  If you are buying construction in the U.S., you use the 52.225-9 clause below the threshold and you use the 52.225-11 clause above the threshold, period.  You must not push the exception in 25.1101(b)(1)(i)(C) (for supplies) into 25.1102 (for construction).  The FAR treats these separately -- you should, too.

Set-aside status might matter under 25.1101 for supplies.  It is wholly irrelevant under 22.1102 for construction.

If you read the 52.225-11 clause, you will see how it works.

Yeah, I tried to make a clear distinction between BAA and TA, including the prescriptions for clause 52.225-1 and 52.225-9, however, I believe that there is a parallel between the applicability of the BAA to supplies and construction materials and the two are treated similarly in many ways.

I'm definitely not trying to apply the prescription for 52.225-1 to 52.225-9, but it does make me wonder why the prescription for 52.225-9 doesn't account for the inapplicability of the TA clauses the way the prescription for 52.225-1 does. I can't think of a good reason other than oversight. 

As far as the prescription for 52.225-11, I guess I don't understand why you would include the clause when that subpart does not apply to a class of procurements - in this case small business set-asides. That's kind of the dilemma I'm dealing with - typically I would simply rely on the prescription only for whether to include a clause or provision in a solicitation or contract. But typically the prescription accounts for instances where a subpart does not apply to a class of acquisitions. In this case, the prescription doesn't. I guess I'm just wondering why you would include 52.225-11 (Buy American-Construction Materials under Trade Agreements) in an acquisition set aside for small business concerns when the FAR clearly states that the trade agreements subpart doesn't apply to small business set-asides. Or do you think the clause and the subpart operate separately and independently of each other? To me, that doesn't make sense.

Or are you saying that when FAR 25.401(a)(1) says that the subpart doesn't apply to small business set-asides, it only applies to clauses at 25.1101 and does not apply to 25.1102 - i.e. 52.225-11? I guess I'm not sure how to interpret your statement that "Set-aside status might matter under 25.1101 for supplies.  It is wholly irrelevant under 22.1102 for construction."

I read the clause (52.225-11), and don't see how it resolves the issue of how the clause does/doesn't apply to small business set-asides.

Now I think @ji20874is correct.

ji20874 said:

Set-aside status might matter under 25.1101 for supplies.

See FAR 25.101(b): "The Buy American statute applies to small business set-asides."

See also 25.100(b). I found no such statement in FAR Subpart 25.2.

MileHighAcq said:

I guess I'm just wondering why you would include 52.225-11 (Buy American-Construction Materials under Trade Agreements) in an acquisition set aside for small business concerns when the FAR clearly states that the trade agreements subpart doesn't apply to small business set-asides.

Your reading is in error.  You are reading something in 25.1101 (for supplies) and trying to apply it under 25.1102 (for construction).  Don't do that.  Decide which lane you are in (supplies or construction), and then stay in your lane:

• for supplies, subpart 25.1 and 25.1101; or
• for construction, subpart 25.2 and 25.1102.

Have you read the 52.225-11 clause?  You should.

MileHighAcq said:

I believe that there is a parallel between the applicability of the BAA to supplies and construction materials and the two are treated similarly in many ways.

Whatever parallel there is is already accounted for in the FAR text.  Read it, and follow it.  Do not create your own parallels -- do not apply subpart 25.1 principles (or 25.1101 text) to subpart 25.2 (or 25.1102 text).  Don't do it.  Buy American-Supplies and Buy American-Construction are two entirely different matters.  Do not try to treat them the same way.  Stay in your lane.

@ji20874, 

I think you're correct regarding the interpretation of the prescription. However,  @MileHighAcq is asking for an explanation of why the FAR would prescribe a provision and clause implementing the policies and procedures of FAR subpart 25.4 in an acquisition set aside for small businesses in light of the exception at FAR 25.401. That's a good question. I can't figure it out. Do you know?

MileHighAcq said:

I guess I'm just wondering why you would include 52.225-11 (Buy American-Construction Materials under Trade Agreements) in an acquisition set aside for small business concerns when the FAR clearly states that the trade agreements subpart doesn't apply to small business set-asides.

Here is what I think has happened:

1. You know that FAR Subpart 25.1 and 25.2, which address the Buy American Act, include no exemption for small business set-asides.

2. You also know that FAR 25.401(a)(1) exempts small business set-asides from the trade agreement policies in FAR Subpart 25.4.

3. Then you saw that FAR 25.1102(c) prescribes FAR 52.225-11, Buy American-Construction Materials under Trade Agreements (my emphasis), for use in contraction contracts, but prescribes no exemption for small business set-asides, and the FAR provides no explanation or information that solves what appears to be a paradox.

Do I have it right?

Well, the clause prescription does strike me as peculiar, so I have discussed the matter with others and sought an understanding. But I have found nothing anywhere that resolves the matter.

I know very little about FAR Part 25. I have always found FAR Part 25 and its predecessors in the old Defense Acquisition Regulation (DAR) and Armed Services Procurement Regulation (ASPR) to be extremely complicated and difficult to understand. Those rules seriously challenge my attention span. And when conducting an acquisition we have to get on with things. We can't afford to get bogged down.

I think ji20874's advice boils down to this: Just comply with the clause prescription and move on.

In this case, I think that's reasonable advice. No one could justly criticize you for doing that.

In the very last line of your opening post you said:

On 3/14/2022 at 2:13 PM, MileHighAcq said:

I honestly don’t think that’s in accordance with the spirit of the law,  but it seems the letter and the spirit of the law don’t quite line up in this case.

Frankly, when we start thinking, talking about, and looking for the "spirit" of a law, we have stepped off the main road and are on the road to perdition. In this case I think you should get back on the main road, unless your name is Montesquieu.

"Steal Captain Black's car. That's what I always do."

Thanks for the puzzle. You were thinking, and I learned something.

MileHighAcq said:

I guess I'm just wondering why you would include 52.225-11 (Buy American-Construction Materials under Trade Agreements) in an acquisition set aside for small business concerns when the FAR clearly states that the trade agreements subpart doesn't apply to small business set-asides. Or do you think the clause and the subpart operate separately and independently of each other? To me, that doesn't make sense.

I think separately and independently.  Think 52.225-5/6 regarding FTA and 52.225-11/12 regarding BAA.   I may be repeating what others have said but I think of it this way.

52.225-11 is a Buy American clause not a Trade Agreements clause.   By prescription it applies to any construction contracts over $7,032,000 set aside or not.    So I have a small business set-aside with an estimated value above the $7,032,000 therefore I must put the clause in the solicitation/contract.  The small business is restricted to providing domestic material, but this restriction is waived for WTO GPA/FTA material and/or that material for which the CO has otherwise listed.  Pursuant to the clause, and I guess I could say the FAR, all such material is therefore in compliance with BAA.  If the contractor wants to provide material that is not in compliance with BAA the contractor can have the government evaluate whether it can be used by the particular contractor per the clause, again a BAA clause.

Conversely if not a small business set-aside FTA compliant issues come into play as well because 52.225-5/6 will be in the contract/solicitation as well.  Noted here that 52.225-5/6 are not prescribed for a small business set-aside because the acquisition (above $7,032,000) is NOT covered by the WTO GPA, by exemption.

C Culham said:

52.225-11 is a Buy American clause not a Trade Agreements clause.

True -- and this is a fundamental truth to the matter at hand.

C Culham said:

By prescription it applies to any construction contracts over $7,032,000 set aside or not.

Right.  The prescription is in FAR 25.1102, which is for construction.

C Culham said:

Conversely if not a small business set-aside FTA compliant issues come into play as well because 52.225-5/6 will be in the contract/solicitation as well.

Not true.  FAR 52.225-5/-6 will not be included in a construction contract.  FAR 52.225-5/-6 is prescribed in FAR 25.1101, which is for supplies.  

Here is the basic message--

• For supplies:  Use FAR subpart 25.1 and the prescriptions in FAR 25.1101. 
• For construction:  Use FAR subpart 25.2 and the prescriptions in FAR 25.1102.
• Do not mix.

Don Mansfield said:

I can't figure it out. Do you know?

It's complicated, and I don't remember everything I learned from the USTR -- the answer goes all the way back to the source statutes.  Whenever I think of a BAA or TAA question, I have to put everything else aside and focus solely on that question.  But one thing I remember:  contracts for supplies are treated differently than contracts for construction -- they are different -- that's why the FAR text treats them separately.  One other thing I remember:  the pertinent text in FAR part 25 and in the applicable clauses is very precise, and should be followed.  If a contracting officer will simply include the right clauses pre-award according to their prescriptions, and if a contracting officer will simply read the text of the pertinent clause and do what it says post-award, everything will be so much easier.  A contracting officer should not try to superimpose his or her better judgment on the text.

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Here is what I think has happened:

1. You know that FAR Subpart 25.1 and 25.2, which address the Buy American Act, include no exemption for small business set-asides.

2. You also know that FAR 25.401(a)(1) exempts small business set-asides from the trade agreement policies in FAR Subpart 25.4.

3. Then you saw that FAR 25.1102(c) prescribes FAR 52.225-11, Buy American-Construction Materials under Trade Agreements (my emphasis), for use in contraction contracts, but prescribes no exemption for small business set-asides, and the FAR provides no explanation or information that solves what appears to be a paradox.

Do I have it right?

Thanks Vern. You had my thought process it exactly right. I'll also take your advice about the road to perdition!

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Your reading is in error.  You are reading something in 25.1101 (for supplies) and trying to apply it under 25.1102 (for construction).  Don't do that.  Decide which lane you are in (supplies or construction), and then stay in your lane:

• for supplies, subpart 25.1 and 25.1101; or
• for construction, subpart 25.2 and 25.1102.

Have you read the 52.225-11 clause?  You should.

You keep getting hung up on the parallel I was drawing as I was comparing/contrasting the way the FAR treats supplies and constructions regarding the inapplicability of FAR 25.4 to small business set-asides. Don't do that. Stay in your lane.

My question ultimately boils down to this: FAR 1102(c) states the following:

"Insert the clause at 52.225-11, Buy American-Construction Materials under Trade Agreements, in solicitations and contracts for construction that is performed in the United States valued at $7,032,000 or more.

           (1) List in paragraph (b)(3) of the clause all foreign construction material excepted from the requirements of the Buy American statute, other than designated country construction material .

           (2) If the head of the agency determines that a higher percentage is appropriate, substitute the higher evaluation percentage in paragraph (b)(4)(i) of the clause.

           (3) For acquisitions valued at $7,032,000 or more, but less than $12,001,460, use the clause with its Alternate I. List in paragraph (b)(3) of the clause all foreign construction material excepted from the requirements of the Buy American statute, unless the excepted foreign construction material is from a designated country other than Bahrain, Mexico, and Oman."

Whereas FAR 25.401 states the following:

 "(a) This subpart does not apply to-

           (1) Acquisitions set aside for small businesses;"

ji20874 - you seem to be saying just follow the prescription and insert the clause if applicable, regardless of what FAR 25.401(a)(1) says. If I have that right, can you help me understand why I would insert a clause that deals with construction materials under trade agreements in a solicitation/contract that is exempted from the applicability of the trade agreements? I've read the text of the clause and don't understand how that resolves the dilemma.

C Culham said:

52.225-11 is a Buy American clause not a Trade Agreements clause.

What do you mean? The title of the clause is "Buy American--Construction Materials Under Trade Agreements". The clause implements the policies and procedures of FAR subpart 25.4 titled "Trade Agreements".

ji20874 said:

It's complicated, and I don't remember everything I learned from the USTR -- the answer goes all the way back to the source statutes.  Whenever I think of a BAA or TAA question, I have to put everything else aside and focus solely on that question.  But one thing I remember:  contracts for supplies are treated differently than contracts for construction -- they are different -- that's why the FAR text treats them separately.  One other thing I remember:  the pertinent text in FAR part 25 and in the applicable clauses is very precise, and should be followed.  If a contracting officer will simply include the right clauses pre-award according to their prescriptions, and if a contracting officer will simply read the text of the pertinent clause and do what it says post-award, everything will be so much easier.  A contracting officer should not try to superimpose his or her better judgment on the text.

Thanks for your answer. I think that's good practical advice. One more question. Paragraph (b)(1) of the clause at FAR 52.225-11 says: "In addition, the Contracting Officer has determined that the WTO GPA and Free Trade Agreements (FTAs) apply to this acquisition." How does the contracting officer make that determination without looking in FAR subpart 25.4?

Don Mansfield said:

What do you mean? The title of the clause is "Buy American--Construction Materials Under Trade Agreements". The clause implements the policies and procedures of FAR subpart 25.4 titled "Trade Agreements".

See clause paragraph (b)(1): "(b) Construction materials. (1) This clause implements 41 U.S.C.chapter 83, Buy American, by providing a preference for domestic construction material."

FAR Part 25 and its provisions and clauses are a mess.

ji20874 said:

Not true.  FAR 52.225-5/-6 will not be included in a construction contract.  FAR 52.225-5/-6 is prescribed in FAR 25.1101, which is for supplies.

Just now, Don Mansfield said:

What do you mean? The title of the clause is "Buy American--Construction Materials Under Trade Agreements". The clause implements the policies and procedures of FAR subpart 25.4 titled "Trade Agreements".

 Gentlemen I get it but then I do not!

I have an anticipated construction contract above $7,032,000.  

1. It is therefore covered by WTO GPA correct? 

2.The contractor is going to use a material from a foreign entity I have to evaluate that material for FTA because FTA applies does it not? 

 a. If the contract was set-aside I do not have to evaluate for FTA, correct?

3.If evaluation for FTA is appropriate  without 52.225-5/6 in the solicitation what authority do I have to do the FTA evaluation?

With the above 3 questions posed, and in some quick research I will stop right here and simply offer the below reference.   

https://marketingstorageragrs.blob.core.windows.net/webfiles/Buy_American_Act_and_Trade_Agreements_Act_Overview_KLGates.pdf

Don Mansfield said:

How does the contracting officer make that determination without looking in FAR subpart 25.4?

How about that?  The contracting officer made a determination, but the contracting officer has no recollection or record of making that determination.  I suppose that by following the prescription and including the clause, the contracting officer effectively made the determination.  Think of it as a ministerial act, where the contracting officer has no discretion.  But clearly, the contracting officer made the determination -- FAR 52.2256-11(b)(1) says he or she did.  🙂

MileHighAcq said:

ji20874 - you seem to be saying just follow the prescription and insert the clause if applicable, regardless of what FAR 25.401(a)(1) says. If I have that right, can you help me understand why I would insert a clause that deals with construction materials under trade agreements in a solicitation/contract that is exempted from the applicability of the trade agreements? I've read the text of the clause and don't understand how that resolves the dilemma.

You simply follow the clause prescriptions in FAR 25.1101 for supplies and 25.1102 for construction.  That is what you have to do.  That is what the USTR expects you to do.  No one will argue with you if you do this.  If you think the FAR text in 25 is incorrect, you might propose a change to your representative on the DAR Council or CAAC.  But I promise you that the clause at FAR 52.225-11 goes in construction contracts in the U.S. over the threshold amount, regardless of set-aside.  FAR 25.1101 (for supplies) reaches back to 25.401 -- FAR 25.1102 (for construction) does not.  I believe that is purposeful, but I cannot explain the reason.

Vern Edwards said:

FAR Part 25 and its provisions and clauses are a mess.

That's true -- but the prescription text in FAR 25.1101 and 25.1102 is correct.  I have always trained contracting officers to simply do what it says, and to stay avoid that road to perdition.  I know from experience that this is what the USTR's office wants us to do.

C Culham said:

I have an anticipated construction contract above $7,032,000.  

1. It is therefore covered by WTO GPA correct?

See FAR 52.225-11(b)(1).  The contracting officer made that determination already.  🙂

C Culham said:

I have an anticipated construction contract above $7,032,000.  

 *  *  *  *

2.The contractor is going to use a material from a foreign entity I have to evaluate that material for FTA because FTA applies does it not? 

 a. If the contract was set-aside I do not have to evaluate for FTA, correct?

If you are thinking of the evaluation process described in FAR subpart 25.5, then the answer is NO, you do not do that evaluation for a contract for construction -- that entire subpart is and only works for supply contracts, not construction contracts.  That evaluation for supply contracts compares offers, occurs after receipt of proposals, and decide the winner.  The evaluation for construction contracts contemplated by FAR 52.225-11(c) occurs before receipt of proposals, does not involve comparing proposals, and does not decide the winner.

C Culham said:

I have an anticipated construction contract above $7,032,000.  

  *  *  *  * 

3.If evaluation for FTA is appropriate  without 52.225-5/6 in the solicitation what authority do I have to do the FTA evaluation?

See above.  The evaluation contemplated by FAR 52.225-6(c) refers to FAR subpart 25.5, and only applies to contracts for supplies.  FAR 52.225-6 is not included in a contract for construction in the U.S. -- it is not prescribed in FAR 52.1102.

I regret being unable to better explain, but I am acting in good faith to share my understanding of the reality.  Here is the basic message--

• For supplies:  Use FAR subpart 25.1 and the prescriptions in FAR 25.1101 (note: FAR 25.1101 points back to 25.4 for the set-aside and other exceptions).
• For construction:  Use FAR subpart 25.2 and the prescriptions in FAR 25.1102. (note: FAR 25.1102 does not point back to 25.4 for exceptions).
• Do not mix.

My Summary:  I believe it would be grievous error for a contracting officer to issue a solicitation or award a contract for construction in the U.S. over the threshold without the clause at FAR 52.225-11, using as argument that the procurement is a set-aside.   Think about it, MileHighAcq or others -- if this is your argument, what clause will you use?

ji20874 said:

... but the prescription text in FAR 25.1101 and 25.1102 is correct.

How do you know that? There have been goofs in the FAR.

You referenced training by the Trade Representative. Did you attend a class? Is the class available on line?

ji20874 said:

I believe it would be grievous error for a contracting officer to issue a solicitation or award a contract for construction in the U.S. over the threshold without the clause at FAR 52.225-11, using as argument that the procurement is a set-aside.

It would clearly be in violation of the clause prescriptions. But at this point I think we're all just trying to understand.

For instance, what is the authority for the exception for set-asides, and what is the rationale?

If we go only by the prescription at FAR 25.1102(c) without looking at the exception at FAR 25.401(a)(1) (which I think is what ji20874 is recommending), then yes, we would include 52.225-11 in a small business set-aside  over the threshold.

However, note that in the prescription for 52.225-5 also, it doesn't mention anything about the TA clauses not applying because the procurement is set-aside (i.e. referencing FAR 25.401(a)(1)), but the prescription for 52.225-1 anticipates the applicability of the exception (even though it doesn't mention it explicitly) by saying "if none of the clauses prescribed in paragraphs (b) and (c) of this section apply".

So in the case of 52.225-5 (for supplies), you have to make the a logical jump that even though your procurement meets the threshold for the applicability of clause 52.225-5, because the exception at FAR 25.401(a)(1) applies, you're not going use that clause, but use 52.225-1 instead.

You see that just like the prescription for 52.225-11 doesn't mention the exception at FAR 25.401(a)(1), the prescription for 52.225-5 doesn't either. But in the case of supplies, you then make a logical jump that because the exception at FAR 25.401(a)(1) applies, you're not going to use that clause (and use 52.225-1 instead). However, we're not willing to use that same logic with regards to clause 52.225-11 - i.e. that just because the clause prescription doesn't specifically mention the exception at FAR 25.401(a)(1), it doesn't mean that the exception doesn't apply.

So the only difference is that FAR 25.1101 provides a path forward for when the trade agreements clauses don't apply to supplies (i.e. revert back to clause 52.225-1), FAR 25.1102 makes no such parallel path forward for construction materials (i.e. revert back to clause 52.225-9). 

But the logical leap you have to make in both cases is the same - namely, that even though the exception is not in the prescription for either clause (52.225-5 or 52.225-11), the exception still applies.

MileHighAcq said:

So in the case of 52.225-5 (for supplies), you have to make the a logical jump that even though your procurement meets the threshold for the applicability of clause 52.225-5, because the exception at FAR 25.401(a)(1) applies, you're not going use that clause, but use 52.225-1 instead.

There is no logical jump.  The text of FAR 25.1101(c)(1) says to use the 52.225-5 clause "if the acquisition is covered by the WTO GPA (see subpart 25.4)..."  So this prescribing text in 25.1102(c)(1) does point back to 25.4 -- and we know from 25.401(a)(1) that the entirety of 25.4 does not apply to set-asides, and WTO GPA is in 25.4, so a supplies procurement that is a set-aside does not fall under WTO GPA, so you don't use the 52.225-5 clause.  So, if a contract for supplies is a set-aside, then you don't use the 52.225-5 clause because the prescribing text in 25.1101(c)(1) says so.  Just follow the text -- there is no need for any logical jump.

MileHighAcq said:

However, note that in the prescription for 52.225-5 also, it doesn't mention anything about the TA clauses not applying because the procurement is set-aside...

But the prescription for FAR 52.225-5 does point back to 25.4 and the set-aside exception.  Re-read FAR 25.1101(c)(1) -- it clearly and unambiguously points back to 25.4.

MileHighAcq said:

You see that just like the prescription for 52.225-11 doesn't mention the exception at FAR 25.401(a)(1), the prescription for 52.225-5 doesn't either.

Again, the prescription for 52.225-5 does point back to 25.4.  Re-read FAR 25.1101(c)(1).

MileHighAcq, please tell me what clause you would use in a construction contract in the U.S. over the threshold -- it is clear that you don't want too use 52.225-11, so what do you propose instead?  If I knew that, I might be better able to help you.  Do you want to use 52.225-9 instead?  Or no clause at all?

ji20874 - I stand corrected, FAR 25.1101(c)(1) does indeed point you back to FAR 25.4 whereas FAR 25.1102(c) does not.

Our solicitor's opinion was to use 52.225-9 in lieu of 52.225-11 when the procurement is set aside for small business concerns. 

I think if we start with the premise that the idea behind the BAA is to protect US businesses from foreign competition it makes a little more sense as to why small business set-asides were excepted from trade agreements applicability, because the idea behind trade agreements was to increase competition (and thus provide less protection to American businesses) by treating foreign products as domestic products if we have a trade agreement with that country above a certain threshold. I think the idea behind the small business set-aside exception to not reduce the BAA protection for American small businesses even if we are above the $7,032,000 threshold.

Although obviously separate and distinct, I think there's a clear parallel between FAR 25.1 and 25.2 and FAR 25.1101 and 25.1102. But there's definitely an inconsistency (in my mind, unintentional) in how the FAR 25.401(a)(1) exception is applied to FAR 25.1101 and FAR 25.1102. Such things can happen when different parts/subparts of the FAR are updated at different times by different people, sometimes wearing blinders and not noticing such inconsistencies. That's the best explanation I can come up with for what appears (to me at least) to be an oversight.

It sounds like you have a plan to move forward.  Will you be doing a deviation?  FAR 1.401(a) says using a clause in a manner inconsistent with the FAR or the omission of a clause when its prescription requires its use is a deviation, and you are doing both.

I hear ya. I'm not sure about a deviation. I think there will further discussion of the matter before deciding how to proceed. I do agree that it's probably less risky to include the clause based on the strict reading of the prescription, and forget the apparent inconsistency of the prescription with FAR 25.4. I'm just not sure that doing so is consistent with the intent of the law - but then I begin to veer off the narrow path of strict interpretation into constructionism and spirit of the law good intentions stuff that the road to perdition is paved with...

Too bad FAR 1.401(a) doesn't account for inconsistencies within the FAR itself - like the prescription being inconsistent with a subpart.

I think I have the beginning of a solution.  But, it is late in the day, and I don't have the time or brain power to follow all the threads.  But, if someone else wants to, have at it.  Otherwise, I may give it another look tomorrow. 

Subpart 25.4 primarily deals with the application of the Trade Agreements Act (19 U.S. Code Chapter 13).  The Trade Agreements Act does not apply to small business set asides (19 U.S.C. § 2511(f)), and so that exception is properly noted at FAR 25.401(a)(1).

Why then would FAR 25.1102 not include the TAA exception for small businesses?  Well, despite the fact that 52.225-11 has the words Trade Agreements in its name, it is not implementing the Trade Agreements Act.  The clause expressly states, "This clause implements 41 U.S.C. chapter 83, Buy American, by providing a preference for domestic construction material."  So, 25.1102 is implementing provisions of the Buy American Act, which does apply to small business set asides.  That is why there is no exception.

Lionel Hutz said:

Why then would FAR 25.1102 not include the TAA exception for small businesses?  Well, despite the fact that 52.225-11 has the words Trade Agreements in its name, it is not implementing the Trade Agreements Act.  The clause expressly states, "This clause implements 41 U.S.C. chapter 83, Buy American, by providing a preference for domestic construction material."  So, 25.1102 is implementing provisions of the Buy American Act, which does apply to small business set asides.  That is why there is no exception.

Why do you think that because the clause says that it's implementing the Buy American Act, it is not implementing the Trade Agreements Act? Why can't it be implementing both? The Trade Agreements Act clearly applies to construction material and there is no other FAR clause that implements that policy for construction. The Trade Agreements Act requires agencies to waive the restrictions of the Buy American Act for construction material from Free Trade Agreement countries and WTO GPA countries. That's what the clause provides for, right?

Lionel Hutz said:

The Trade Agreements Act does not apply to small business set asides (19 U.S.C. § 2511(f)), and so that exception is properly noted at FAR 25.401(a)(1).

@Lionel HutzHere's 19 U.S.C. 2511(f):

Quote

(f)Small business and minority preferences

The authority of the President under subsection (a) of this section to waive any law, regulation, procedure, or practice regarding Government procurement does not authorize the waiver of any small business or minority preference.

I don't think that says what you indicated it says.

As noted by others my mission is to understand and apply.  My final thoughts after reading and re-reading are -

ji20874 said:

that entire subpart is and only works for supply contracts, not construction contracts.

You continually quote "only applies to supply contracts".   However is your read is too narrow?   Most specifically this or similar is found throughout 25.1 "The supply portion of a contract for services" (my emphasis added).   I would further offer applying the definitions of the FAR with regard to "construction" and "supply" would seem not to apply in the case of FAR 25.   What does apply is "domestic construction material" and "domestic end product" do.  Or in other words could a construction contract be a "service" contract that has a "supply portion"?

Case in point, you say -

ji20874 said:

FAR 52.225-6 is not included in a contract for construction in the U.S. -- it is not prescribed in FAR 52.1102.

Yet the leading general prescription found at 25.1101 where 52.225-6 is prescribed says - "The following provisions and clauses apply to the acquisition of supplies and the acquisition of services involving the furnishing of supplies ." Again my emphasis added.

Further 25.1102 while referencing construction in general does get more specific by referencing "construction materials".

I do not believe it is a stretch to think that a construction contract can have both "construction materials" - (again emphasis added)

"Construction material means an article, material, or supply brought to the construction site by a contractor or subcontractor for incorporation into the building or work . The term also includes an item brought to the site preassembled from articles, materials, or supplies . However, emergency life safety systems, such as emergency lighting, fire alarm, and audio evacuation systems, that are discrete systems incorporated into a public building or work and that are produced as complete systems, are evaluated as a single and distinct construction material regardless of when or how the individual parts or components of those systems are delivered to the construction site. Materials purchased directly by the Government are supplies , not construction material ."

And  "end product" -

"End product means those articles, materials, and supplies to be acquired for public use."

And just to add complication.  In 25.401 it discusses at (d) "services" excluded from FTA and 'dredging" is list yet at FAR Part 2 "dredging" is defined as "construction."

Does not your expressed narrow read of "supply"  not meet what I will call the final test where you say -

ji20874 said:

That evaluation for supply contracts compares offers, occurs after receipt of proposals, and decide the winner.  The evaluation for construction contracts contemplated by FAR 52.225-11(c) occurs before receipt of proposals, does not involve comparing proposals, and does not decide the winner.

By my read it does not.   First the contractor may request use of foreign material and such material would be evaluated based on in part - an exception to the BAA.  FTA is an exception so evaluation and determination is made both pre and post solicitation and award as well.  In construction I would agree it does not decide a winner but it does decide if the material can be used under the contract either BAA compliant and if not then FTA compliant.   

ji20874 said:

My Summary:  I believe it would be grievous error for a contracting officer to issue a solicitation or award a contract for construction in the U.S. over the threshold without the clause at FAR 52.225-11, using as argument that the procurement is a set-aside.   Think about it, MileHighAcq or others -- if this is your argument, what clause will you use?

This I agree with.  But I believe the "stay in the lane" analogy is misplaced..   BAA applies to all contracts over the micro-purchase threshold.  That is one lane.  FTA supersedes BAA in some cases for example a construction contract above $7,032,000, which is another lane applicable to construction.  Set aside for small business, excluded from FTA and only BAA applies, which I might call another lane.  So it seems it pans out like this with the "canned" determination that BAA is waived for FTA designated country materials in FAR 52.225-11.

Set-aside or not - contractor can not use post award a foreign material but can ask for it to be approved pre/post award.   

Set-aside - FTA does not apply and the material is only evaluated using BAA criteria. 

Not set-aside - CO uses criteria of FTA to determine acceptability. 

And then I will throw this out that during contract administration the CO, via inspection, has the post award ability to inspect and evaluate all material pursuant to 52.225-11.

C Culham said:

Set-aside - FTA does not apply and the material is only evaluated using BAA criteria.

I added the emphasis because my question is, how is this accomplished for construction material over $7,032,000 that is set aside for small business concerns? Under what clause is this accomplished?

Here is my basic message for WIFCON readers--

• For supplies:  Use FAR subpart 25.1 and the prescriptions in FAR 25.1101.
• For construction:  Use FAR subpart 25.2 and the prescriptions in FAR 25.1102.
• Do not mix.

I believe it would be grievous error for a contracting officer to issue a solicitation or award a contract for construction in the U.S. over the threshold without the clause at FAR 52.225-11, using as argument that the procurement is a set-aside. 

Other WIFCON contributors may disagree with some or all of the above.  It appears some are okay with mixing, including both sets of clauses (from FAR 25.1101 and 25.1102) in the same contract.  Some are okay with dropping the clause at FAR 52.225-11 in construction contracts over the threshold.  I advise against both, but WIFCON readers have to make their own decisions.  That's the benefit of WIFCON -- different perspectives from different people.

I always hope that WIFCON readers will also read the relevant FAR text, and allow the WIFCON discussions to inform their own readings of the FAR text.

MileHighAcq said:

Our solicitor's opinion was to use 52.225-9 in lieu of 52.225-11 when the procurement is set aside for small business concerns.

@MileHighAcqYour "solicitor" (are you British?) has developed a faulty opinion. The proper clause to use in acquisitions valued at more than the $7,032,000 trade agreements threshold is FAR 52.225-11, as prescribed by FAR 25.1102(c). I will explain.

Everyone-

There is no conflict between FAR 25.401(a)(1) and FAR 52.225-11, which implements the Buy American Act.

The Buy American Act, which applies to supply and construction procurements, requires the use of domestic construction materials, but provides for exceptions. See 41 USC 8303(b).

FAR 52.225-11 is the product of the 1999 "FAR Part 25 Rewrite," FAC 97-15, 64 FR 72416-01, Dec. 27, 1999. It implements the Buy American Act by requiring the use of domestic construction materials, but grants a blanket exception for construction materials from countries with trade agreements. The key language in the clause is this:

Quote

In addition, the Contracting Officer has determined that the WTO GPA and Free Trade Agreements (FTAs) apply to this acquisition. Therefore, the Buy American restrictions are waived for designated country construction materials.

Before the FAR Part 25 Rewrite, the construction clause was FAR 52.225-15, Buy American Act-Construction Materials Under Trade Agreements Act and North American Free Trade Agreement (JUN 1997). It imposed the Buy American Act on construction acquisitions. It also established an arduous procedure whereby an offeror or contractor could apply to the contracting officer for an exception allowing the use of materials from nations with U.S. trade agreements. Here is the procedure for contractors:

Quote

(c) Request for determination.

(1) Contractors requesting to use foreign construction material under paragraph (b)(4) of this clause shall provide adequate information for Government evaluation of the request for a determination regarding the InapplicabilIty of the Buy American Act. Each submission shall include a description of the foreign and domestic construction materials, including unit of measure, quantity, price, time of delivery or availability, location of the construction project, name and address of the proposed contractor, and a detailed justification of the reason for use of foreign materials cited In accordance with paragraph (b)(4) of this clause. A submission based on unreasonable cost shall include a reasonable survey of the market and a completed price comparison table in the format in paragraph (d) of this clause. The price of construction material shall include all delivery costs to the construction site and any applicable duty (whether or not a duty-free certificate may be issued).

(2) If the Government determines after contract award that an exception to the Buy American Act applies, the contract shall be modified to allow use of the foreign construction material, and adequate consideration shall be negotiated. However, when the basis for the exception is the unreasonable price of a domestic construction material, adequate consideration shall not be less than the differential established in paragraph (b)(4)(1) of this clause.

(3) If the Government does not determine that an exception to the Buy American Act applies, the use of that particular foreign construction material will be a failure to comply with the Act.

A separate procedure for offerors is prescribed in the solicitation provision at FAR 52.225-10(b).

Apparently, individual requests for exceptions in large construction procurements had become common. So rather than process numerous individual requests for Buy American exceptions, the FAR Part 25 Rewrite did away with all that by creating the FAR 52.225-11(b)(1) blanket exception that we now know and love.

In short, what FAR 52.225-11(b)(1) does is allow companies to use construction materials obtained from countries with U.S. trade agreements ("designated" countries) in procurements valued at more than $7,032,000 without having to apply for an exception. FAR 52.225-11(c) prescribes a procedure for requesting an exception for materials from other foreign countries.

So what about FAR 25.401(a)(1)?

The Buy American Act and small business set-asides are considered discriminatory trade practices. In 1978-79, members of the World Trade Organization (WTO) negotiated the "Tokyo Round" Agreement on Government Procurement (AGP). The signatories to the WTO/AGP agreed not to apply discriminatory practices to foreign trade partners. The Trade Agreements Act approved the president's agreement to the WTO/AGP. The Trade Agreement Act is a set of exceptions to the Buy American Act, and is implemented by FAR Subpart 25.4

The U.S. appendix to the WTO/AGP provided that the agreement would not prohibit the use of small and minority business set-asides. That is the basis for FAR 25.401(a)(1). But FAR 25.401(a)(1) does not prevent the government from allowing exceptions to the Buy American Act and allowing purchases of materials from foreign trade partners when domestic products are unavailable or too costly, so there are exceptions. Thus, FAR 52.225-11(b)(1).

The bottom line is:

1. You cannot understand FAR 25.401(a)(1) without some background.
2. FAR 52.225-11 must be used as prescribed by FAR 25.1102(c).

 

(A fun fact: When FAR was published in 1984, 52.225-11 was named "Certain Communist Areas.")

I traveled a tortuous, hours-long path of research to dig up and polish the above nugget. I had to condense a lot of information in order to fit it into a reasonably brief post. I don't like writing long stuff in this online forum, but I don't think I made any big mistakes. Hopefully, this post is clear enough to settle the debate.

During the course of my research I downloaded well over one thousand pages of historical documents. I learned lot about the history of the Trade Agreements Act. Thank goodness for the internet.

I don't sleep much, and it has worried me. But, sometimes, it has its rewards. I get in lots of reading. Please remember me fondly after Alzheimers sets in.

Thanks Vern. The time and effort you expended researching, reading, logic-applying and trying to make sense of it all, and condensing it into a reasonably short post is appreciated!

Vern Edwards said:

@MileHighAcqYour "solicitor" (are you British?)

p.s. not British, but that what our legal is called at DOI "Office of the Solicitor".

Don Mansfield said:

The Trade Agreements Act requires agencies to waive the restrictions of the Buy American Act for construction material from Free Trade Agreement countries and WTO GPA countries. That's what the clause provides for, right?

Well, Vern clearly did a deeper and more comprehensive dive than I did.     But, to answer your specific question here, I will just note that the TAA does not require agencies to waive the restrictions of the BAA. Rather, the TAA authorizes the president to waive all discriminatory purchasing requirements, including the BAA but not small business or minority restrictions, that affect eligible products.  FAR Subpart 25.4 implements the TAA, and it states it does not apply to small business set-asides. 

However, there is nothing prohibiting the government from relying on different statutory authority to waive all or part of the BAA.  And, in this case, the BAA itself authorizes the government to waive its requirements in some circumstances.  See 41 U.S.C. § 8303(b)(3).  This is an authority separate and apart from the TAA waiver authority.  If you look at the text of 52.225-11, you will see the exceptions that it authorizes are based on the waiver language of the BAA statute and the exceptions listed at FAR 25.202, which is in Subpart 25.2 - Buy American-Construction Materials.

@Lionel Hutz

Lionel Hutz said:

I will just note that the TAA does not require agencies to waive the restrictions of the BAA. Rather, the TAA authorizes the president to waive all discriminatory purchasing requirements, including the BAA but not small business or minority restrictions, that affect eligible products.  FAR Subpart 25.4 implements the TAA, and it states it does not apply to small business set-asides.

The relevant text of the Trade Agreements Act is in 19 USC § 2511(f):

Quote

(f) Small business and minority preferences

The authority of the President under subsection (a) of this section to waive any law, regulation, procedure, or practice regarding Government procurement does not authorize the waiver of any small business or minority preference.

Next

Lionel Hutz said:

FAR Subpart 25.4 implements the TAA, and it states it does not apply to small business set-asides.

FAR 25.401(a)(1) says:

Quote

This subpart does not apply to—(1)Acquisitions set aside for small businesses[.]

What does that mean?

It must mean that under a set-aside the CO need not do the things required and need not refrain from doing the things prohibited. I cannot think of what else it could mean. So, what does the subpart require and prohibit? What are the shalls and shall nots that do not apply to set-asides.

There are nine sections within Subpart 25.4—25.400 through 25.408.

(1) 25.400 states the scope of the part. It neither requires nor prohibits anything.

(2) 25.401 lists exceptions and services excluded from the WTO/GPA.

(3) 25.402(a)(2) says that the CO must determine the origin of services by country in which the firm providing the services is established.

(4A) 25.403(a) explains a couple of things but does not say that anyone shall or shall not do anything.

(4B) 25.403(b) explains the application of dollar thresholds.

(4C) 25.403(c) says to acquire only U.S.-made or designated country end products or services unless no offers are received or the offers are insufficient.

(5) 25.404 says that for certain acquisitions construction materials and services must be treated as end products.

(6) 25.405 says certain construction materials and services must be treated as end products.

(7) 25.406 says that certain agencies must evaluate Israeli offers without regard to Buy American restrictions/

(8) 25.407 says that the Trade Representative has waived Buy America statute for civil aircraft.

(9) 25.408(a) specifies certain procedures the CO must follow when the WPO/GPA applies: (1) and (2)synopsize, (3) not include technical requirements designed to preclude acquisition of eligible products, (4) state the offers must be in English and in U.S. dollars, (5) notify unsuccessful offerors as required by FAR. It refers readers to FAR Subpart 25.5 for evaluation procedures.

So that's it. That's all that does not apply to small business set-asides.

How about we move on from FAR 25.401(a)(1).

Vern Edwards said:

So that's it. That's all that does not apply to small business set-asides.

The TAA only “does” 2 things: 

1. It authorizes the president to waive the BAA, (19 U.S.C. § 2511), and
2. It imposes its own set of restrictions by authorizing the president to bar procurement from non-designated countries. (19 U.S.C. § 2512(a))
   Everything else are the details about how that happens and various exceptions.

24.402(a)(1) is the FAR implementation of the waiver of the BAA’s requirements.

25.403(c) is the FAR implementation of the TAA baring procurements from non-designated countries.

So, when FAR 25.401(a)(1) states that that entire subpart 25.4 (including the two provisions I highlighted above) does not apply to small business set-asides, it is saying that the regulations that implement the TAA’s waiver and restrictions do not apply.

You say “that’s it” as if that is not a lot. But, that is literally everything the TAA does.

Vern Edwards said:

How about we move on from FAR 25.401(a)(1).

I agree.  If all we are doing is looking at FAR 25.1102 and FAR Clause 52.225-11, which was the original question, then there is no need to worry about FAR 25.401(a)(1).  FAR Clause 52.225-11 implements BAA requirements and waivers under BAA authority.  It has nothing to do with the TAA or FAR 25.401(a)(1).  This what I said last night.  Don suggested the clause could implement both the TAA and the BAA.  I disagree. The clause only references the BAA and the language of the clause directly calls back to the BAA statute and BAA regulations in Subpart 25.2.

@Lionel:

I agree with your analysis of the TAA and I agree that 52.225-11 clause implements the BAA. I don't think think FAR 25.401(a)(1) has anything to do with it. But most importantly, I agree with ji20874 that the right thing to do is comply with FAR clause prescriptions.

Vern Edwards said:

@Lionel:

I agree with your analysis of the TAA and I agree that 52.225-11 clause implements the BAA. I don't think think FAR 25.401(a)(1) has anything to do with it. But most importantly, I agree with ji20874 that the right thing to do is comply with FAR clause prescriptions.

I agree a KO should comply with the FAR clause prescription as well.  We are in agreement all around.

Lionel Hutz said:

Don suggested the clause could implement both the TAA and the BAA.  I disagree.

What do you think implements trade agreements in construction contracts?

Don Mansfield said:

What do you think implements trade agreements in construction contracts?

52.225-11 

There is a difference between trade agreements and the Trade Agreements Act.  Trade agreements can be implemented in a number of different ways.  The TAA is one of them.  However, trade agreements can also be implemented under the BAA.

The BAA (at 41 U.S.C. 8303) provides that construction contracts must use domestic construction materials.  However, it also provides as an exception the following: "This section does not apply - ... (B) to any articles, materials, or supplies procured pursuant to a reciprocal defense procurement memorandum of understanding (as described in section 8304), or a trade agreement or least developed country designation described in subpart 25.400 of the Federal Acquisition Regulation."

If you look at the language of 52.225-11, it states, "In addition, the Contracting Officer has determined that the WTO GPA and Free Trade Agreements (FTAs) apply to this acquisition. Therefore, the Buy American restrictions are waived for designated country construction materials."

The BAA itself allows for the exception found in the WTO GPA, and the clause then implements that exception in the contract.  If the Supreme Court struck down the waiver authority of the TAA, clause 52.225-11 would not need to be changed as it does not rely on TAA authority.

As for why there is not a separate TAA clause for construction, I would ask why would there need to be?  The BAA itself waives the restriction, and the existing clause implements the requirements of applicable trade agreements.

Lionel Hutz said:

52.225-11 

There is a difference between trade agreements and the Trade Agreements Act.  Trade agreements can be implemented in a number of different ways.  The TAA is one of them.  However, trade agreements can also be implemented under the BAA.

The BAA (at 41 U.S.C. 8303) provides that construction contracts must use domestic construction materials.  However, it also provides as an exception the following: "This section does not apply - ... (B) to any articles, materials, or supplies procured pursuant to a reciprocal defense procurement memorandum of understanding (as described in section 8304), or a trade agreement or least developed country designation described in subpart 25.400 of the Federal Acquisition Regulation."

If you look at the language of 52.225-11, it states, "In addition, the Contracting Officer has determined that the WTO GPA and Free Trade Agreements (FTAs) apply to this acquisition. Therefore, the Buy American restrictions are waived for designated country construction materials."

The BAA itself allows for the exception found in the WTO GPA, and the clause then implements that exception in the contract.  If the Supreme Court struck down the waiver authority of the TAA, clause 52.225-11 would not need to be changed as it does not rely on TAA authority.

As for why there is not a separate TAA clause for construction, I would ask why would there need to be?  The BAA itself waives the restriction, and the existing clause implements the requirements of applicable trade agreements.

Ok, so you're saying FAR 52.225-11 implements trade agreements entered into under the authority of the TAA, but it does not implement the TAA?

I keep reading that clause 52.225-11 "implements the BAA statute for construction materials" - presumably because section (b)(1) of the clause states "this clause implements 41 U.S.C. chapter 83, Buy American, by providing a preference for domestic construction material"...

Okay, but read on. Section (b)(1) of the clause also states "in accordance with 41 U.S.C.1907, the domestic content test of the Buy American statute is waived for construction material that is a COTS item, except that for construction material that consists wholly or predominantly of iron or steel or a combination of both , the domestic content test is applied only to the iron and steel content of the construction material , excluding COTS fasteners."

Okay, that's almost verbatim what clause 52.225-9 say in the same section. But then clause 52.225-11 diverges from clause 52.225-9 (in my mind they both implement the BAA) and states the key aspect of the trade agreements rule as follows: "In addition, the Contracting Officer has determined that the WTO GPA and Free Trade Agreements (FTAs) apply to this acquisition. Therefore, the Buy American restrictions are waived for designated country construction materials".

Get that? Clause 52.225-11 actually waives the BAA requirements for designated country construction materials - not quite the same as "implementing" - or in a sense, it implements the BAA with some conditions - i.e. the TA waiver.

I guess you can argue that 52.225-9 implements the BAA requirements without any trade agreements waivers, whereas 52.225-11 implements the BAA requirements, but also provides for trade agreements waivers - technically that would be correct, but in this context, when the requirements at FAR 25.4 apply, you should use clause 52.225-11 (for construction materials) and when the requirements do not apply, it seems to me that you should not use that clause because that clause waives the BAA requirements for certain countries in the context of the trade agreements. It seems to me that if you wanted to implement the BAA without regard to trade agreement countries (because trade agreements don't apply to this class of procurements), you would use the clause that implements the BAA for construction materials that does NOT provide a waiver for trade agreements countries - that clause would be 52.225-9. To me, it seems like the prescriptions are not quite right.

Don Mansfield said:

Ok, so you're saying FAR 52.225-11 implements trade agreements entered into under the authority of the TAA, but it does not implement the TAA?

I'm saying FAR 52.225-11 implements the BAA as applied to construction contracts that exceed the applicable WTOGPA threshold.

Lionel Hutz said:

I'm saying FAR 52.225-11 implements the BAA as applied to construction contracts that exceed the applicable WTOGPA threshold.

but would you use that clause if the WOT GPA doesn't apply - whether because of threshold or because of the type of procurement (e.g. small business set-aside)?

or would it make more sense to use a clause that just implements the BAA without waiving any of its requirements, particularly is it concerns WTO GPA?

MileHighAcq said:

but would you use that clause if the WOT GPA doesn't apply - whether because of threshold or because of the type of procurement (e.g. small business set-aside)?

or would it make more sense to use a clause that just implements the BAA without waiving any of its requirements, particularly is it concerns WTO GPA?

You follow the clause prescription -  "Insert the clause at 52.225-11, Buy American-Construction Materials under Trade Agreements, in solicitations and contracts for construction that is performed in the United States valued at $7,032,000 or more."

That dollar value in the prescription changes to match the WTOGPA threshold.  So, it will only be used to apply the BAA to construction contracts that are covered by the WTOGPA, i.e., "Construction Materials under Trade Agreements."  You are not using that clause because 25.4 applies.  You are using that clause because the BAA itself has a waiver for construction materials purchased under trade agreements and 52.225-11 implements the BAA restrictions and applicable waiver. Yes, you use the clause for small business set-asides because the BAA applies to small business set-aside contracts.

If the value of the contract is below the threshold, you follow the applicable prescription - "Insert the clause at 52.225-9, Buy American-Construction Materials, in solicitations and contracts for construction that is performed in the United States valued at less than $7,032,000."

On 3/16/2022 at 3:04 PM, Lionel Hutz said:

The clause expressly states, "This clause implements 41 U.S.C. chapter 83, Buy American, by providing a preference for domestic construction material."  So, 25.1102 is implementing provisions of the Buy American Act, which does apply to small business set asides.  That is why there is no exception.

FAR 52.225-3, an analogous clause used for supply contracts, contains a similar statement in paragraph (c). Do you think this clause applies to small business set-asides?

Don Mansfield said:

FAR 52.225-3, an analogous clause used for supply contracts, contains a similar statement in paragraph (c). Do you think this clause applies to small business set-asides?

I wouldn't say the -3 and the -11 clauses are analogous.  

The prescription for the -3 clause says to use the clause if no exception in 25.401 applies (see FAR 25.1101(b)(1)(i)(C)).  But FAR 25.401(a)(1) speaks to set-asides, so I would not use the -3 clause if a procurement was a set-aside.

ji20874 said:

I wouldn't say the -3 and the -11 clauses are analogous.  

The prescription for the -3 clause says to use the clause if no exception in 25.401 applies (see FAR 25.1101(b)(1)(i)(C)).  But FAR 25.401(a)(1) speaks to set-asides, so I would not use the -3 clause if a procurement was a set-aside.

Agreed.

One thing that I think will help people see the difference is that the BAA’s restrictions and waiver for designated countries is different than the TAA’s waiver and restrictions.

First, let’s look at the BAA-Construction Materials as implemented in 52.225-9, which provides that contractors may not provide foreign construction material unless the Government (i.e., the KO) determines that an exception to the Buy American statute applies.  Among others, there are exceptions for COTS construction materials, information technology, and foreign construction material excepted by the KO.  The KO can except construction material if the “cost of domestic construction material would be unreasonable.”  The clause the states that the cost is unreasonable if the domestic material exceeds the cost of foreign material by more than 20 percent, and it allows the contractor to submit data to support the determination and exception.

52.225-11 is similar but adds the exception that if the value of the acquisition exceeds the WTOGPA threshold, then the domestic restriction is waived, but only for designated country construction materials.  In other words, you treat domestic and designated country materials equally.  But, the agency can still purchase foreign materials if the contractor demonstrates the cost of domestic or designated country material exceeds the cost of foreign material be more than 20 percent.

Now, let’s look at the Trade Agreements Act.  In general, when applicable the TAA does two things:

(1) It waives the BAA, and

(2) It imposes its own purchase restrictions.

The first thing to note is that the TAA waiver is similar to the BAA waiver in that it requires designated country products to be treated the same as domestic products.  But, as implemented under the FAR, the TAA does not waive the BAA when the contract has been set aside for small businesses, a significant difference.

In addition, the TAA purchase restriction is different.  As implemented in FAR 25.403, it states that only U.S.-made or designated country end products or services may be purchased unless such end products or services are either not received or are insufficient to fulfill the requirements.  There is no exception in the TAA or FAR Subpart 25.4 that allows you to purchase foreign construction material based on an “unreasonable cost” determination.

Further, the manner in which you determine whether an article is domestic/US-Made vs designated country vs foreign is different between the BAA and TAA. 

This is why you cannot have one clause implementing both the BAA and the TAA.  They have different and conflicting requirements.  As a law firm noted in this article, “where the TAA applies, the BAA does not apply.”

The BAA and TAA are similar in many ways and there is overlap in their subject matter coverage.  If different regulations had been promulgated, the line differentiating the application of the two could have been different.  But, as practitioners, KOs should follow the line that has been established by the applicable regs and follow the clause prescriptions.

If I was the staff reviewer of the solicitation/contract file and you had inserted any clause in the solicitation/contract other than the one prescribed by FAR, I would reject your file and send it back unapproved.

And I wouldn't engage in any Socratic Q&A or listen to your bs argument.

And the next time one of your files came to me I would go over it with a scanning electron microscope.

👎 😁  🧐 😎

Lionel Hutz said:

You follow the clause prescription -  "Insert the clause at 52.225-11, Buy American-Construction Materials under Trade Agreements, in solicitations and contracts for construction that is performed in the United States valued at $7,032,000 or more."

That dollar value in the prescription changes to match the WTOGPA threshold.  So, it will only be used to apply the BAA to construction contracts that are covered by the WTOGPA, i.e., "Construction Materials under Trade Agreements."  You are not using that clause because 25.4 applies.  You are using that clause because the BAA itself has a waiver for construction materials purchased under trade agreements and 52.225-11 implements the BAA restrictions and applicable waiver. Yes, you use the clause for small business set-asides because the BAA applies to small business set-aside contracts.

If the value of the contract is below the threshold, you follow the applicable prescription - "Insert the clause at 52.225-9, Buy American-Construction Materials, in solicitations and contracts for construction that is performed in the United States valued at less than $7,032,000."

So add clause 52.225-11 to a small business set-aside over $7,032,000 - a clause which applies the BAA, but also waives the applicability of the BAA for designated countries IAW trade agreements, even though FAR 25.401(a)(1) exempts small business set-asides from the applicability of trade agreements...

maybe it's just me, but that does not compute.

ji20874 said:

I wouldn't say the -3 and the -11 clauses are analogous.  

The prescription for the -3 clause says to use the clause if no exception in 25.401 applies (see FAR 25.1101(b)(1)(i)(C)).  But FAR 25.401(a)(1) speaks to set-asides, so I would not use the -3 clause if a procurement was a set-aside.

I think the -3 and -11 are analogous in that both implement the BAA in conjunction with TA (i.e. waiving the requirements of the BAA for designated countries). The problem arises because the prescription for clause 52.225-11 does not account for it, whereas there is no problem with the inapplicability of the -3 clause because the prescription for the -1 clause accounts for the possible inapplicability of the -3 clause due to the procurement being set aside for small business concerns.

ji20874 said:

I wouldn't say the -3 and the -11 clauses are analogous.

I said the clauses were analogous, not the prescriptions.

@Lionel Hutz,

I'm not following you. Let's try this--do you think FAR 52.225-11 implements any of the laws listed in FAR 25.400?

Don Mansfield said:

I said the clauses were analogous, not the prescriptions.

I wouldn't say the -3 and -11 clauses are analogous.

MileHighAcq said:

So add clause 52.225-11 to a small business set-aside over $7,032,000...

Follow the FAR -- that's your job.  The prescriptions in FAR 25.1101 and 25.1102 are correct.

Just now, ji20874 said:

I wouldn't say the -3 and -11 clauses are analogous.

I don't care.

ji20874 said:Follow the FAR -- that's your job.  The prescriptions in FAR 25.1101 and 25.1102 are correct.

I do. But that doesn’t mean I don’t ask questions when the FAR doesn’t seem to make sense. The writers of the FAR are not infallible. Parts of the FAR are poorly written, obtuse, and barely intelligible.

In my mind the prescriptions at FAR 25.1102 for construction materials should parallel the prescriptions for supplies at FAR 25.1101. The fact that they doesn’t is a mistake/oversight in my opinion.

Clause 52.225-11 is clearly meant to be included when TA applies. When TA doesn’t apply, be it because it’s below the threshold or because the procurement is set aside for small businesses, it makes no sense to use clause 53.225-11 - I don’t care what the FAR says.

Yes, I will follow it, but I will also ask questions, and try to find satisfactory answers.

MileHighAcq said:

Yes, I will follow it, but I will also ask questions, and try to find satisfactory answers.

You won't find answers bickering here. I gave you the best answer you're going to get at this website several posts ago. If you want a better answer write to the FAR councils. I think the civilian agency council handles Part 25.

I don't recall this having been mentioned in any of the above, but noncompliance with the clause prescription at FAR 25.1102(c) for whatever reason would constitute a FAR deviation. See the definition of "deviation" at FAR 1.401(b):

Quote

The omission of any solicitation provision or contract clause when its prescription requires its use.

Of course, someone among you is almost certainly going to argue that using the clause in accordance with its prescription would be a deviation as defined at FAR 1.401(a), since you argue that its use is inconsistent with FAR 25.401(a)(1).

Either way, someone among you could argue that whichever you decide to do you must proceed in accordance with FAR 1.403. See also FAR 1.405.

Forgive me if any of this was mentioned in any earlier post.

Seeking a deviation on the basis of the arguments presented in this thread might be a way to resolve the controversy.

We work in a utopia of rules.

MileHighAcq said:

even though FAR 25.401(a)(1) exempts small business set-asides from the applicability of trade agreements...

No, it does not.  FAR 25.401(a)(1) exempts small business set-asides from the applicability of FAR Subpart 25.4.  

FAR Subpart 25.4 contains regulations that implement the Trade Agreements ACT.

An acquisition can be outside the scope of Subpart 25.4 and yet still be covered by other laws, such as the BAA, that ALSO have provisions that deal with the WTOGPA.

Each statutory authority stands on its own.  Conceivably, you could have 10 different statutes that implement portions of a trade agreement.  Or perhaps its the other way around and the one trade agreement addresses the requirements of 10 different statutes.  Either way, if one of those statutes and its implementing regs says it does not apply to a subset of acquisitions, that does not mean the other 9 also do not apply.

Don Mansfield said:

@Lionel Hutz,

I'm not following you. Let's try this--do you think FAR 52.225-11 implements any of the laws listed in FAR 25.400?

Yes, it implements the BAA, which has provisions to account for the WTOGPA.  And the WTOGPA is listed in FAR 25.400.

Lionel Hutz said:

Yes, it implements the BAA, which has provisions to account for the WTOGPA.  And the WTOGPA is listed in FAR 25.400.

Ok. Would you also say that FAR 52.225-11 implements one or more of the laws listed at FAR 25.400(a)(2)?

@Lionel Hutz,

BTW, don't think I'm cross-examining you. I've never heard the argument you are making and I'm trying to understand. Before this discussion, I would have said that FAR 52.225-11 implemented the Trade Agreements Act. Now I'm not sure.

On 3/17/2022 at 7:45 AM, Vern Edwards said:

There is no conflict between FAR 25.401(a)(1) and FAR 52.225-11, which implements the Buy American Act.

Don Mansfield said:

Before this discussion, I would have said that FAR 52.225-11 implemented the Trade Agreements Act. Now I'm not sure.

Ha! So Lionel has got you thinking. I told you that two days ago.

Vern Edwards said:

Ha! So Lionel has got you thinking. I told you that two days ago.

That's not what he's got me thinking about. I'm trying to make sense of his claim that there's a difference between implementing trade agreements and the Trade Agreements Act. If he answers my question in the affirmative, then I'd understand him (not saying I would agree with him). If he answers in the negative, then I'm back to not understanding him. And I'm hoping he doesn't say that the clause implements the BAA again. I know that and that's not what I'm asking him.

I think you are misinterpreting FAR 25.401(a)(1). I think that because I have read the Trade Agreements Act. It mentions small business only once, at 19 USC § 2511. That section reads, in pertinent part, as follows:

Quote

(a) Presidential waiver of discriminatory purchasing requirements

Subject to subsection (f) of this section, the President may waive, in whole or in part, with respect to eligible products of any foreign country or instrumentality designated under subsection (b), and suppliers of such products, the application of any law, regulation, procedure, or practice regarding Government procurement that would, if applied to such products and suppliers, result in treatment less favorable than that accorded--

(1) to United States products and suppliers of such products; or

(2) to eligible products of another foreign country or instrumentality which is a party to the Agreement and suppliers of such products.

*     *     *

(f) Small business and minority preferences

The authority of the President under subsection (a) of this section to waive any law, regulation, procedure, or practice regarding Government procurement does not authorize the waiver of any small business or minority preference.

I think that all 25.401(a)(1) means is that the Trade Agreements Act does not preclude the use of small business set-asides.

I do not think it means that agencies cannot waive the Buy American Act with respect to countries with trade agreements when conducting a small business set-aside, which is all that FAR Subpart 25.4 and 52.225-11 do. If it meant that, it would mean that small businesses and the government would have to abide by the Buy American Act under a set-aside even when domestic construction materials are too expensive or unavailable.

Think of what the implications would be for bonding, which is not an issue under supply contracts.

But what do I know?

Don Mansfield said:

Ok. Would you also say that FAR 52.225-11 implements one or more of the laws listed at FAR 25.400(a)(2)?

Yes, it implements the trade agreements listed.  The clause even has Alt 1 that accounts for acquisitions that exceed most of the agreement thresholds, but not all of them.

The BAA allows the government to waive its application if the price of foreign construction material is unreasonable.  This is implemented in the clause (paragraphs (b)(4), (c ), and (d)) by allowing the contractor to submit evidence that the cost of domestic construction materials exceeds the cost of foreign material by more than 20 percent. The KO can then add that domestic construction material to the list of materials to which the BAA requirements do not apply. (Paragraph (b)(4).)

The Trade Agreements Act does not provide for a waiver based on “unreasonable cost.”  If the clause were implementing the TAA, it would say the contractor is required to provide domestic or designated country construction materials, with the only exception being a KO determination that there were no offers for such products or that the offers for those products are insufficient to fulfill the requirements of this solicitation.  See, e.g., FAR 52.225-5(b) and FAR 52.225-6(c).

Lionel Hutz said:

If the clause were implementing the TAA, it would say the contractor is required to provide domestic or designated country construction materials, with the only exception being a KO determination that there were no offers for such products or that the offers for those products are insufficient to fulfill the requirements of this solicitation.

But the clause says:

Quote

In addition, the Contracting Officer has determined that the WTO GPA and Free Trade Agreements (FTAs) apply to this acquisition.

If the WTO GPA and FTAs apply, doesn't that contradict a broad interpretation of 25.401(a)(1)?

Vern Edwards said:

But the clause says:

If the WTO GPA and FTAs apply, doesn't that contradict a broad interpretation of 25.401(a)(1)?

Yes it does.  I don't support a broad interpretation of 25.401(a)(1).  I do not think FAR 52.225-11 is attempting to implement 25.401(a)(1).

On 3/17/2022 at 5:29 PM, Lionel Hutz said:

If all we are doing is looking at FAR 25.1102 and FAR Clause 52.225-11, which was the original question, then there is no need to worry about FAR 25.401(a)(1).  FAR Clause 52.225-11 implements BAA requirements and waivers under BAA authority.  It has nothing to do with the TAA or FAR 25.401(a)(1).

Lionel Hutz said:

Yes, it implements the trade agreements listed.  The clause even has Alt 1 that accounts for acquisitions that exceed most of the agreement thresholds, but not all of them.

Ok, now I understand your position. Earlier, you wrote:

Quote

If the Supreme Court struck down the waiver authority of the TAA, clause 52.225-11 would not need to be changed as it does not rely on TAA authority.

Doesn't the authority to treat least developed country construction material as designated country construction material rely on TAA authority (specifically 19 U.S.C. 2511(b)(4))? So, if the TAA waiver authority were struck down, FAR 52.225-11 would then have to be changed?

Don Mansfield said:

Doesn't the authority to treat least developed country construction material as designated country construction material rely on TAA authority (specifically 19 U.S.C. 2511(b)(4))? So, if the TAA waiver authority were struck down, FAR 52.225-11 would then have to be changed?

No.  The BAA states it does not apply to any articles, materials, or supplies procured pursuant to a least developed country designation.  41 U.S.C. § 8303(b)(1)(B).  So, even if the TAA no longer excepted materials from least developed countries, the BAA still has its own exception that applies.

Lionel Hutz said:

No.  The BAA states it does not apply to any articles, materials, or supplies procured pursuant to a least developed country designation.  41 U.S.C. § 8303(b)(1)(B).  So, even if the TAA no longer excepted materials from least developed countries, the BAA still has its own exception that applies.

Now I'm back to not understanding you. The authority to make a least developed country designation comes from the TAA. Correct?

Don Mansfield said:

Now I'm back to not understanding you. The authority to make a least developed country designation comes from the TAA. Correct?

No.  The UN designates countries as LDCs.  (https://unctad.org/topic/least-developed-countries/recognition) 

See also the definition of LDCs in the TAA: "The term 'least developed country' means any country on the United Nations General Assembly list of least developed countries." 19 U.S.C. § 2518(6).

Lionel Hutz said:

No.  The UN designates countries as LDCs.  (https://unctad.org/topic/least-developed-countries/recognition)

That's not true. The US Trade Representative makes the designation subject to the approval of the Trade Policy Staff Committee. Here's an explanation from FAC 2005-69:

Quote

19 U.S.C. 2511(b)(4) allows the President to designate least developed countries as eligible countries under the Trade Agreements Act of 1979, allowing non-discriminatory treatment of the products of such countries in acquisitions subject to the World Trade Organization Government Procurement Agreement. This statutory authority has been delegated to the USTR. The USTR selects the countries for such designation from the United Nations (UN) Least Developed Countries List. USTR consults with other government agencies on trade policy matters through the Trade Policy Review Group (TPRG) and the Trade Policy Staff Committee (TPSC).

The authority to make the designation comes from the TAA. Agree?

Changes to such designations would require changes to the definition (3) of _designated country (_least developed country) in the clause at FAR 52.225-11, correct?

@Don Mansfield@Lionel HutzSee Eyester, "NAFTA and the Barriers to Federal Procurement Opportunities in the United States," 31 Pub. Cont. L.J. 695, the section entitled, "Small Business Set-Aside Exemption," pp. 714 - 718.

It might shed some light on your debate, esp. with regard to the interpretation of FAR 25.401(a)(1).

Don Mansfield said:

The authority to make a least developed country designation comes from the TAA.

Don Mansfield said:

19 U.S.C. 2511(b)(4) allows the President to designate least developed countries as eligible countries under the Trade Agreements Act of 1979, allowing non-discriminatory treatment of the products of such countries in acquisitions subject to the World Trade Organization Government Procurement Agreement. This statutory authority has been delegated to the USTR. The USTR selects the countries for such designation from the United Nations (UN) Least Developed Countries List.

The language you quoted does not support your first statement.  The UN designates countries as LDCs.  The USTR then may select countries off of the UN's list to make them eligible countries under the TAA.  If the USTR does not designate an LDC under the TAA, it is still a designated UN LDC, it just does not get the benefit of being an eligible country under the TAA.

Now, if you want to revise your statement to say that the authority to designate an LDC as a designated country under the TAA comes from the TAA, then yes, I agree with you.

Also, I think you have misconstrued my previous statement.  I stated that if the "waiver authority" of the TAA (i.e., 19 U.S.C. § 2511(a)) were struck down, 52.225-11 would not be affected.  The authority to designate an LDC as a designated country (19 U.S.C. § 2511(b)) is separate from the waiver authority and also affects the TAA's "Authority to bar procurement from non-designated countries." 19 U.S.C. § 2512(a)(1)(A)(i).

The BAA (41 U.S.C. § 8303(b)(1)(B)) expressly incorporates into its waiver the list of LDCs designated under the TAA and listed at FAR 25.4.  So, if the TAA designation authority were struck down, and there were no more TAA designated LDC's, then I'm sure FAR 25.4 and 52.225-11 would be amended to remove the list of countries.  But, in the end, the clause relies on the BAA, not the TAA, for its authority to waive the list of countries at 25.4.  In my opinion, referring to a list of TAA designated countries (as directed by the BAA) is not "implementing" the TAA.

Don, it is unclear to me what your position is.  Are you saying that 52.225-11 only implements the TAA?  Or, are you saying it implements both the TAA and the BAA at the same time?  If it is the latter, how do you account for the fact that the TAA and BAA have different tests to determine whether a material is foreign or domestic?  The TAA uses a substantial transformation test, while the BAA has a component cost percentage test.  There are situations in which material could be domestic under the BAA but foreign under the TAA, and vice versa. How would that work under a clause implementing both statutes?  I'd note that 52.225-11 implements the BAA's component test.

Vern Edwards said:

@Don Mansfield@Lionel HutzSee Eyester, "NAFTA and the Barriers to Federal Procurement Opportunities in the United States," 31 Pub. Cont. L.J. 695, the section entitled, "Small Business Set-Aside Exemption," pp. 714 - 718.

It might shed some light on your debate, esp. with regard to the interpretation of FAR 25.401(a)(1).

Thanks Vern, I'll take a look.

I don't think it will settle the issue for Don, but it might shed some light.

@Lionel Hutz,

Was on hiatus for a while. I wanted to get back to you, but don't feel that you need to respond.

On 3/21/2022 at 8:50 AM, Lionel Hutz said:

The UN designates countries as LDCs.  The USTR then may select countries off of the UN's list to make them eligible countries under the TAA.  If the USTR does not designate an LDC under the TAA, it is still a designated UN LDC, it just does not get the benefit of being an eligible country under the TAA.

No, the UN recognizes countries as LDCs. Under delegation from the President, the USTR designates countries as LDCs pursuant to the TAA 19 U.S.C. 2511(b)(4). Not all LDCs recognized by the UN have been designated as LDCs by the USTR.

On 3/21/2022 at 8:50 AM, Lionel Hutz said:

Don, it is unclear to me what your position is.  Are you saying that 52.225-11 only implements the TAA?  Or, are you saying it implements both the TAA and the BAA at the same time?

Your argument seems to be that the clause cannot implement the TAA because it implements the BAA. I don't follow that logic. Why can't the clause implement both? I think the clause implements the BAA and most of the statutes listed at FAR 25.400(a). That's why the clause usually needs to be revised each time the list at FAR 25.400(a) is revised or some action is taken pursuant to the authority in those laws (e.g., when the USTR designates a country as an LDC).

On 3/21/2022 at 8:50 AM, Lionel Hutz said:

If it is the latter, how do you account for the fact that the TAA and BAA have different tests to determine whether a material is foreign or domestic?  The TAA uses a substantial transformation test, while the BAA has a component cost percentage test.  There are situations in which material could be domestic under the BAA but foreign under the TAA, and vice versa. How would that work under a clause implementing both statutes?  I'd note that 52.225-11 implements the BAA's component test.

I assume you are referring to the "domestic content" test for BAA and the "substantial transformation" test associated with TAA. The clause has both tests. The definition of domestic construction material uses the BAA domestic content test. The definitions of Caribbean Basin country construction material, Free Trade Agreement country construction material, least developed country construction material, and WTO GPA country construction material all use the "substantial transformation" test. 

In any case, I appreciate the discussion and apologize for taking so long to respond.