Buy American Requirements Contractors Who Would Like

Buy American Requirements

Contractors who would like to work within the U.S.A. have to follow some conditions stipulated. Several of the requirements are actually in the "Buy American" requirements and each contractor needs to abide by these rules in order to keep winning the contracts from the government under the American Recovery and Reinvestment Act (ARRA) sponsorship.

There are several requirements meant to strengthen the local market within America one of them being that the contracts that involve construction, alteration, maintenance, repair of the public buildings among other works that can be executed must of necessity buy materials like steel, iron and any other manufactured goods from the local manufacturers.

It is also a requirement that contractors who have won these government works must adhere to the Buy America Act (BAA) which requires all the contractors executing federal procurement contracts to highly utilize the materials that are sourced from the local sources or manufacturers. However, the ARRA rule does not consider in its definition the source of the material used to manufacture the goods to be used in the construction. The ARRA concentrates on whether the manufacture of these goods to be used in the construction is done within the U.S.A. Or not. Indeed the provisions of ARRA allow the external sourcing of such materials as long as the manufacturing takes place within the U.S.A. This is a less strict policy than the BAA which requires that there must be more than 50% of the cost of a product that is manufactured, mined or produced in the U.S.A. coming from the U.S.A. ARRA also excludes unmanufactured materials and these remain to be covered within the BAA (Gail D. Zirkelbach, 2009). There is therefore necessity for any contractors accepting the ARRA to adhere to the BAA conditions as well.

The BAA conditions are quite strict and are not friendly especially to the international aspect of business. This is due to the strict conditions of manufacturing that are imposed on the manufacturing sector of the U.S.A. economy. The more than 50% rule imposed on all the manufactured goods of the raw materials used in the manufacture of goods to be used in the contracts is unfair. This is in light of the fact that it could be more expensive sourcing for a given raw material within the U.S.A. As compared to the external source but the policy makes the contractors to either sacrifice their profits, or to increase the cost of the contract hence the tax payer dishing out more money to pay the higher costs of the contractor.

The second reason why the BAA is unfair is that it keeps at bay potential investors within the U.S.A. with the fear that even if they imported some goods and raw materials that could be useful in construction, they may be locked out and render their importations useless hence sinking with their capital. This will eventually interfere with the revenue from the foreign investors that should be contributing to the economy.

According to the Roosevelt Institute (2012), there is likelihood that the BAA could breed hostility towards America and systematic withdrawal of investments from this region. This is light of the view by several senators who view the BAA as contravention, albeit implicitly, of the WTO policies and goals. The BAA is viewed to be good for the short run but will come down in the long run and not benefit the U.S.A. economy eventually.

The BAA does not support the tenets of free market or the capitalist policies. This is seen in the protectionist manner in which the provisions of BAA are implemented. The policies therein are geared towards protecting the American goods and forcing the contractors to source from the U.S.A. despite the price and even if the contractor can source for a given material cheaply outside the U.S.A., there are no free market provisions to buy from across the available market. The other aspect noted by the Government of Canada (2012) is that many other countries will find themselves at a disadvantage position in a bid by their contractors and this will be both at home and in the U.S.A. since the U.S.A. faces no such rules as are with BAA when they are biding in other countries yet other countries face such rules in the U.S.A. This disadvantage comes especially in the 100% rule on steel and iron.