Buy American Act (BAA)

The Buy American Act is the original domestic procurement law, signed in 1933. It requires the federal government to prefer domestically manufactured products when it buys goods for its own use. This is direct procurement: the government is the buyer, placing orders through contracts governed by the Federal Acquisition Regulation (FAR).

BAA is different from BABA. BAA covers direct purchases. BABA covers grant-funded infrastructure. A manufacturer selling fire extinguishers directly to a federal agency follows BAA. A contractor installing those same fire extinguishers on a state highway funded by a federal grant follows BABA. Different laws, different thresholds, different compliance paths.

BAA applies to acquisitions of supplies (end products and construction materials) by the federal government for use in the United States. It is governed by FAR Subpart 25.1 and applies to purchases above the micro-purchase threshold ($15,000 as of October 2025).

BAA applies when:

The federal government is buying supplies directly through a FAR contract. The supplies are for use inside the United States. The purchase exceeds the micro-purchase threshold.

BAA does not apply to:

Services (only supplies are covered). Products purchased for use outside the United States. Products on the commercial products list below the simplified acquisition threshold when TAA applies. Grant-funded projects (those fall under BABA instead).

A product qualifies as "domestic" under BAA if it meets two requirements. First, it must be manufactured in the United States. Second, the cost of domestic components must exceed the applicable threshold of the total cost of all components.

"Manufactured" means the article has been substantially transformed into a new and different article with a name, character, or use distinct from the components that went into it. Bolting imported parts together without changing their fundamental character does not count. The transformation must be meaningful enough that the finished product is genuinely different from its inputs.

The domestic component cost threshold has been increasing on a phased schedule under the 2021 final rule. Here is the current timeline:

The fallback to 55% allows contracting officers to accept a product at the lower threshold when no domestic product meeting the higher threshold is available. This fallback expires one year after the 75% threshold takes effect (2030).

BAA includes a price preference mechanism that BABA does not have. When a contracting officer compares domestic and foreign offers, a price evaluation factor is added to the foreign offer before comparing:

If a domestic product costs $120,000 and a foreign product costs $100,000, the government adds 20% to the foreign offer ($120,000 adjusted). The offers are now equal and the domestic product wins. If the foreign product cost $95,000 instead, the adjusted price would be $114,000 and the foreign product would win on price.

Commercially available off-the-shelf (COTS) items have a partial exemption under BAA. For COTS items, the domestic component cost threshold does not apply. Only the requirement that the product be manufactured in the United States matters.

The logic behind this exemption is practical: tracking component-level domestic content is impractical for mass-market commercial products. A company selling standard off-the-shelf fire extinguishers to a federal agency does not need to trace every component's country of origin as long as the final product is manufactured in the US.

BAA and BABA are the two laws most commonly confused with each other. They sound similar, they both require domestic content, but they work differently in almost every way that matters.

The Trade Agreements Act waives BAA for direct federal purchases above the WTO Government Procurement Agreement threshold (approximately $183,000 as of 2025). When TAA applies, products from 125+ designated countries qualify alongside US-made products.

TAA does not waive the Berry Amendment. If a product falls under Berry (textiles, hand tools, food for DoD), TAA cannot override that requirement regardless of the purchase amount.

TAA does not apply to BABA. A product from a TAA-designated country like Canada qualifies for direct federal purchases above the threshold, but the same product does not meet BABA's domestic requirements on a grant-funded infrastructure project.

BAA enforcement runs through the contracting officer under the FAR. Consequences for non-compliance include:

Rejection of non-compliant offers. If a product does not meet BAA requirements at the time of offer evaluation, the offer is rejected unless an exception applies.

Contract termination for default. If a contractor delivers non-compliant products after award, the government can terminate the contract for default, leaving the contractor liable for reprocurement costs.

Price adjustments. The government can reduce payment to reflect the price differential between what was delivered and what was contracted.

Suspension or debarment. Repeated or willful violations can lead to suspension or debarment for up to three years, which bars the contractor from all federal contracts government-wide.

BAA violations can also trigger False Claims Act exposure, though BABA violations carry a wider blast radius because of the grant funding clawback mechanism that can reach state and local recipients of the funds.