On Monday, January 25, 2021, the Biden Administration issued an Executive Order setting forth a policy to, procure goods and services from sources that will "help American businesses compete in strategic industries and help America's workers thrive." According to an accompanying Fact Sheet, the policy will help ensure that "when the federal government spends taxpayer dollars they are spent on American made goods by American workers and with American-made component parts." According to the Administration, the Executive Order will fulfill President Biden's promise "to make Buy American real and close loopholes that allow companies to offshore production and jobs while still qualifying for domestic preferences."
Federal law currently requires government agencies to give purchasing preference to domestic companies. However, the Administration observed that these preferences—some of which have remained unchanged since the Eisenhower Administration—have not always been implemented consistently or effectively.
In fact, as Courts have found, different federal statutory and regulatory schemes offer varying definitions and standards for claiming that products are "Made in the U.S.A.," precluding "a universal and definitive meaning." Honeywell Intern. Inc. v. ICM Controls Corp., 45 F. Supp. 3d 969, 988-89 (D. Minn. 2014) (analyzing disparate standards across federal laws, and holding that "'Made in the USA' is not unambiguous enough" to support a "literally false" false advertising claim under the Lanham Act); see also A.P. Deauville, LLC v. Arion Perfume and Beauty, Inc., No. 14-cv-3343, 2014 WL 7140041, at *4 (N.D. Cal. Dec. 12, 2014) (same).
These inconsistent and potentially ambiguous standards have made it difficult for both foreign and domestic companies to prepare and evaluate labeling and other advertising and marketing materials for their own products, while also impacting their ability to challenge the potentially false and misleading advertising of competitors.
The Office of Management and Budget will establish a Made in America Office, headed by the Made in America Director, to oversee the implementation of the Executive Order and to take charge of the Made in America policy initiatives. In addition to "updat[ing] how government decides if a product [is] sufficiently [domestic to be considered] made in America," the Executive Order "[d]irects agencies to close current loopholes in how domestic content is measured and increase domestic content requirements." It also "directs an increase in both the threshold and the price preferences for domestic goods—the difference in price over which government can by a product from a non-US supplier." Among policy initiatives, the Order:
- Establishes "a central review of agency waivers of Buy American requirements," and promises to increase oversight of potential waivers to domestic preference laws "to crack down on unnecessary waivers." It also directs the GSA "to publish relevant waivers on a publicly available website."
- Orders a cross-agency review of all domestic preferences and requires agencies "to report on their implementation of current Made in America laws and make recommendations for achieving the President's Made in America goals, and to continue to do so on a bi-annual basis." Agencies will also be required to develop recommendations for ensuring "items offered to the general public on federal property are Made in America—to the fullest extent possible—and to consider service industries in addition to manufacturing."
- Promises to support "America's Workers through Federal Purchasing," as part of a "commitment to invest in American manufacturing, including clean energy and critical supply chains, grow good-paying, union jobs, and advance racial equity."
The Executive Order also "[r]eiterates the President's strong support for the Jones Act," and requires agencies to utilize the Manufacturing Extension Partnership—a network covering all 50 states and Puerto Rico, supporting small and medium-size manufacturers—"to help agencies connect with new domestic suppliers who can make the products they need while employing America's workers."
Depending on their implementation, the highlighted policy initiatives have the potential to give domestic manufacturing a needed boost, while streamlining and clarifying often muddy and inconsistent standards for promoting goods as "Made in the U.S.A." They could also adversely impact foreign manufacturers, as well as domestic companies that rely on a global supply chain for components of their finished goods.
We will be monitoring this development and assessing its potential impact on stake-holders wishing to promote their goods as "Made in the U.S.A."