Biden Proposes Rule to Bolster America’s Manufacturing Sector

July 28, 2021 by Dan McCue
President Joe Biden finishes leaves after speaking during a visits to the Office of the Director of National Intelligence in McLean, Va., Tuesday, July 27, 2021. (AP Photo/Susan Walsh)

WASHINGTON — President Joe Biden announced a new proposed rule Wednesday morning that’s intended to strengthen domestic supply chains and bolster the nation’s manufacturing sector by establishing a higher threshold for products to qualify as made in the United States.

The announcement comes ahead of Biden’s appearance this afternoon at a manufacturing facility in Lower Macungie Township, Pennsylvania.

During that appearance he is expected to deliver remarks on the importance of American manufacturing and on how buying products made in America supports good-paying jobs for American workers.

Administration officials also pointed out that the new proposal is intended to build upon an executive order Biden signed in January that directed procurement officials across the government to support American manufacturing. 

The new proposal not only increases U.S. content in the products the federal government buys, it also supports the domestic production of products critical to national and economic security.

It represents “the most robust changes to the implementation of the Buy American Act in almost 70 years,” the White House said in a handout explaining the policy.

With $600 billion in annual procurement spending, almost half of which is in manufactured products, from helicopter blades to trucks to office furniture, the Federal government is a major buyer in a number of markets for goods and services, including the single largest purchaser of consumer goods in the world.

Leveraging that purchasing power to shape markets and accelerate innovation has been a key part of the Biden industrial strategy to grow the industries since his administration took office in January.

Administration officials said Wednesday’s proposals are the result of over a dozen agency roundtables with business groups, small businesses and labor unions.

The proposed rule would immediately raise the threshold for products to qualify to be bought by the federal government. 

Currently, 55% of the value of the products’ component parts have to be manufactured in the U.S. to qualify, but the rule would raise that threshold to 60%.

It then aims to raise the threshold to 65% by 2024 and 75% by 2029.

The rule would also apply enhanced price preferences to some critical products to support their development and expansion of domestic supply chains. The enhanced price preferences aim to provide a source of stable demand for domestically produced critical products.

At the same time, it would establish a reporting requirement for critical products to bolster compliance with the Buy America Act of 1982 and improve the government’s data on the amount of domestic content in federal purchases. 

Currently, contractors only tell the government if they meet the content threshold rather than reporting the total domestic content in their products, the administration said.

To support this work, the Small Business Administration has created a new manufacturing office in its federal contracting division. The office will coordinate activities across the agency in response to the president’s executive orders on Made-in-America, supply chain resiliency, and racial equity.

“This proposal would close a problematic loophole in the current regulation, while also allowing businesses time to adjust their supply chains to increase the use of American-made components,” the White House said. “If adopted, this change would create more opportunities for small- and medium-sized manufacturers and their employees, including small and disadvantaged enterprises, from all parts of the country.”

The proposed rule will be published in the Federal Register with a 60-day comment period, which includes a public meeting and a review of all the comments, before a final rule is issued. 

In addition to explaining the new proposed rule, the handout from the White House also cast a spotlight on how federal agencies have supported the administration’s “Buy American” effort, purchasing more than $2 billion in products since January.

For instance, it noted that the Department of Energy acquired new electric vehicles for its fleet, all of which were manufactured in the U.S. or have batteries that were produced at U.S. facilities. 

The department will also purchase steel products, advanced computing, and hazardous materials isolation equipment manufactured in Texas, Iowa, Idaho, Louisiana, South Carolina, Ohio, Connecticut and Wisconsin.

The General Services Administration worked with several small businesses to procure energy efficient technologies for federal facilities. 

These contracts are a part of GSA’s Green Proving Ground program, which tests emerging technologies at federal facilities in order to help them scale and become viable in the market.

The Department of Defense funded prototypes to sustainably source critical minerals and to create a new training hub with the DOE to increase the productivity of the U.S. machine tool base.

NASA added new project recipients to its programs to rapidly acquire lunar delivery services from American companies to further U.S. capabilities for science, exploration, or commercial development of the Moon and to demonstrate a commercially-developed habitable space station elements with the potential to transition to free-flying, self-sustaining commercial destinations in low earth orbit.

The Office of Naval Research issued Phase 1 awards for a Small Business Innovation Research project to accelerate the pace, security and quality of autonomous vehicles.

The Department of Labor purchased $1.5 million of Made-in-America products, spanning a range of needs from office furniture to state of the art testing equipment to ensure America’s mines and other workplaces are safe.

And finally, the Army Corps of Engineers Mississippi Valley Division issued over $42 million in new contracts to help make communities more storm and flood resistant and to improve the flow of goods along the Mississippi River to support the region’s manufacturers.

“These purchases are aligned with the president’s commitment in his Build Back Better legislative proposal to strengthen R&D, manufacturing and grow jobs in the industries of the future, including through a $48 billion commitment to federal procurement of clean energy and clean technologies,” the administration said.

The White House also went on to note that its COVID-19 response has advanced the president’s Buy American strategy by increasing U.S. capacity to produce critical products.

In March, for instance, the DOD and Department of Health and Human Services procured over $22 million in American-made cloth face masks for communities hard-hit by the pandemic.

In May and June, the DOD purchased more than $1.8 billion in U.S.-made COVID treatment and testing supplies.

In addition, since February, the administration has invested more than a billion dollars in expanding American production capacity for critical pandemic response throughout the health care supply chain to meet current and future needs.

The president has proposed dedicating another $30 billion to these investments in his Build Back Better plan.

Beyond direct purchasing, the administration said it is continuing to invest in workforce training and small business support.

Specifically, it pointed to a Labor Department program that in June invested $430 million in workforce training and apprenticeships, including grantees focused on bolstering the domestic manufacturing workforce. 

The funding supports programs across the country, including in Colorado, Texas, California, Michigan, Idaho and Nevada.

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