Construction material requests and noncompliance

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1. Offers that propose foreign construction material

Subpart 25.2 of the Federal Acquisition Regulation (FAR) applies to contracts for the construction, alteration or repair of public buildings or public works in the United States (FAR 25.200(b)). Offerors that propose foreign construction material not already listed by the government, and not covered by a trade agreement, must provide the information required by paragraphs (c) and (d) of the applicable clause (FAR 25.204(a)). The government’s own list of foreign construction material appears at paragraph (b)(2) of FAR 52.225-9 or paragraph (b)(3) of FAR 52.225-11, depending on the clause used. That applies to material other than what the government has already listed in FAR 52.225-9 or 52.225-11, or material covered by the World Trade Organization Government Procurement Agreement (WTO GPA) or a free trade agreement. The rules on when construction material counts as domestic, and the exceptions, are covered in domestic construction materials in United States projects.

2. The 20 percent factor

For ordinary construction material, the contracting officer adds to the offered price 20 percent of the cost of the foreign material proposed for exception (FAR 25.204(b)(1)(i)). That applies to material that is not a critical item and has no critical components, where the exception is sought because domestic material costs unreasonably much. The head of the agency may specify a higher percentage. In a tie, the contracting officer gives preference to an offer that does not include foreign construction material excepted on that ground at the offeror’s request.

A fallback applies to construction material that is not a commercially available off-the-shelf (COTS) item and is not made wholly or predominantly of iron or steel (FAR 25.204(b)(1)(ii)). It applies if the first step finds the domestic offer unreasonable, or no domestic offer is received, and the low offer is for foreign material not exceeding 55 percent domestic content. The contracting officer then treats the lowest offer of foreign construction material manufactured in the United States and exceeding 55 percent domestic content as a domestic offer. Its cost is judged by applying the paragraph (b)(1)(i) evaluation factor to the low offer. The fallback no longer applies as of 1 January 2030 (FAR 25.204(b)(1)(iii)).

3. Critical items and alternate offers

For construction material that is a critical item or contains critical components, the addition is 20 percent plus the additional preference factor listed for that item in FAR 25.105 (FAR 25.204(b)(2)(i)). The same tie rule applies. The 55 percent fallback has a matching version for these materials, using the increased factors, and it also ends on 1 January 2030 (FAR 25.204(b)(2)(ii) and FAR 25.204(b)(2)(iii)).

Offerors may also submit alternate offers based on equivalent domestic construction material (FAR 25.204(c)). The FAR explains that this avoids possible rejection of the entire offer if the government decides an exception for a particular foreign material does not apply. If the contract goes to an offeror that proposed foreign material not already listed in the solicitation clause, the contracting officer must add the excepted materials to the list in the contract clause (FAR 25.204(d)).

4. Requests after award

A contractor may ask after award for a determination that the statute does not apply (FAR 25.205(a)). It must explain why it could not ask before award, or why the need was not reasonably foreseeable. If the contracting officer concludes the request should have been made before award, the contracting officer may deny it. The evaluation must rest on the information required by the applicable clause, other readily available information, or both (FAR 25.205(b)).

If a determination is made after award that an exception applies, the contracting officer must negotiate adequate consideration and modify the contract to allow the foreign material (FAR 25.205(c)). Where the exception rests on the unreasonable price of domestic material, adequate consideration is at least the differential established under the exceptions rule, or as agency procedures provide.

5. Noncompliance

The contracting officer must review allegations of violations of the Buy American statute (FAR 25.206(a)). Unless fraud is suspected, the contracting officer notifies the contractor of the apparent unauthorized use of foreign construction material and asks for a reply, including proposed corrective action (FAR 25.206(b)). If the review shows that a contractor or subcontractor used foreign construction material without authorization, the contracting officer must take appropriate action (FAR 25.206(c)). Those actions include the following four.

The contracting officer may process a determination on whether the statute applies, under the postaward rules (FAR 25.206(c)(1)). The contracting officer may consider requiring removal and replacement of the unauthorized material (FAR 25.206(c)(2)). Removing material built into a building or work may be impracticable, cause undue delay, or otherwise harm the government’s interests. In that case the contracting officer may decide in writing that it need not be removed and replaced (FAR 25.206(c)(3)).

A decision to keep foreign construction material is not a determination that an exception applies, and the written decision should say so (FAR 25.206(c)(3)). It does not affect the government’s right to suspend or debar a contractor, subcontractor or supplier for violating the statute. Nor does it affect other contract rights and remedies, such as reducing the price or terminating for default.

If the noncompliance is serious enough, the contracting officer should consider contract remedies such as termination for default (FAR 25.206(c)(4)). The contracting officer should also consider a report to the agency suspending and debarring official under FAR subpart 9.4. If the noncompliance appears fraudulent, the contracting officer refers the matter to other appropriate agency officials, such as the officer responsible for criminal investigation.

6. Timing and the contract list

An offeror may ask for a determination before award (FAR 25.203(a)). A contractor that asks after award must explain why it could not ask before award, or why the need was not reasonably foreseeable (FAR 25.205(a)). Foreign material proposed by the awardee that was not already listed in the solicitation clause is added to the list in the contract clause (FAR 25.204(d)). Unauthorized use of foreign construction material is handled under the noncompliance rules (FAR 25.206(c)).

Key terms

20 percent addition	The factor, unless the agency head sets a higher one, added for foreign material proposed on unreasonable cost grounds.
Tie rule	Preference for the offer without foreign material excepted at the offeror’s request on unreasonable cost grounds.
Alternate offer	An offer using equivalent domestic material, to avoid rejection of the whole offer.
Adequate consideration	What the government negotiates when allowing foreign material after award.
Retention decision	A written decision not to remove foreign material, which is not an exception.

Every statement above links to the document behind it. The full source list for this piece is on the sources page.

This page describes public United States government programs for general information. It is not legal, regulatory or procurement advice, and it does not address the facts of any particular case.

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