Foreign End Products Accounted for Less Than 5 Percent of Contract Obligations for Products Potentially Subject to the Buy American Act in Fiscal Year 2017

Based on our analysis of FPDS-NG data, almost 40 percent of federal  contract obligations in fiscal year 2017—totaling approximately $196  billion—were for domestic and foreign end products, such as aircraft  parts, that may be subject to the Buy American Act. Less than 5 percent  of these obligations—approximately $7.8 billion—were reported as  foreign end products. In the non-generalizable sample of 38 contracts and orders we examined  from DOD, HHS, DHS, and VA, we found 6 awards where information  related to the Buy American Act was incorrectly reported in FPDS-NG. Awards for both Foreign and Domestic Products. DHS reported that  94 percent of contracting staff had taken the required course as of April  2018. VA policy officials explained that the Buy American  Act is introduced in several VA training courses, but the agency does not  have a specific course on implementing the Buy American Act  requirements or provide additional instruction or tools. HHS Does Not Provide Department-wide Buy American Act Training or Guidance

HHS does not have agency-level Buy American training or guidance. Agencies Face Challenges Applying Waivers and Exceptions Where Guidance and Training Is Incomplete or Does Not Exist

In our analysis of 38 contracts from across the four agencies, we found  that agencies faced various levels of challenge in applying the Trade  Agreements Act waivers and Buy American Act exceptions to acquire  foreign end products. However, data reporting errors by contracting staff  and FPDS-NG limitations mean that data on the use of exceptions and  waivers are not fully captured. The Director of the Office of Management and Budget should instruct the  Office of Federal Procurement Policy:
To facilitate additional training to improve the understanding of the  contracting workforce regarding the Buy American Act requirements;  and
To facilitate clarifying revisions to FPDS-NG, where needed, and  provide training and guidance for recording Buy American Act  information in FPDS-NG to improve the accuracy of the Buy American  data. Appendix I: Objectives, Scope and Methodology

The objectives of this report are to assess the extent to which (1) the  federal government procures foreign products through Buy American Act  exceptions and waivers; and (2) selected agencies provide training and  guidance to implement the Buy American Act requirements. To assess the federal government procurement of foreign products,  including those procured through citing exceptions and waivers of the Buy  American Act, we analyzed data from the Federal Procurement Data  System-Next Generation (FPDS-NG) for fiscal year 2017, which was the  most recent and complete data available at the time of our review. Using FPDS-ND data, we identified four agencies—the Departments of  Defense (DOD), Health and Human Services (HHS), Homeland Security  (DHS), and Veterans Affairs (VA)—that had the highest fiscal year 2017  obligations in the product codes for manufactured products, which are  potentially subject to the Buy American Act restrictions.
Why GAO Did This Study

The Buy American Act of 1933, as amended, is the main U.S. law promoting domestic purchasing. The Act permits agencies to buy foreign end products only under certain exceptions, such as when domestic items are not available at a reasonable cost. Further, U.S. trade agreements waive the Buy American restrictions for certain products.
GAO was asked to review implementation of the Buy American Act. This report assesses the extent to which (1) the federal government procures foreign products through Buy American Act exceptions and waivers; and (2) selected agencies provide training and guidance to implement the Act.
GAO reviewed laws, regulations, and policies related to the Buy American Act and analyzed data for fiscal year 2017 from FPDS-NG. GAO also analyzed a non-generalizable sample of 38 contracts from DOD, HHS, DHS, and VA—the agencies with the most obligations for products in fiscal year 2017. The 38 awards selected include a mix of foreign and domestic products, as well as dollars obligated. Finally, GAO interviewed cognizant contracting and policy officials from the selected agencies.

What GAO Found

According to data reported in the Federal Procurement Data System-Next Generation (FPDS-NG) in fiscal year 2017, foreign end products accounted for less than 5 percent—about $7.8 billion—of federal obligations for products potentially subject to the Buy American Act. Federal agencies procured foreign products using exceptions to Buy American Act requirements, as well as through waivers or when the Buy American Act did not apply, as shown in the figure.
The amount of foreign end products purchased could be greater than reported in FPDS-NG, however, due to reporting errors and system limitations. GAO found that 6 of the 38 contracts reviewed from the Departments of Defense (DOD), Health and Human Services (HHS), Homeland Security (DHS), and Veterans Affairs (VA) inaccurately recorded waiver or exception information. FPDS-NG system limitations compound these errors because it does not fully capture Buy American Act data. Among other things, the database does not always enable agencies to report the use of exceptions or waivers on contracts for both foreign and domestic products, reducing data accuracy. The Office of Management and Budget (OMB) is considering strategies to improve Buy American Act data.
The four agencies GAO reviewed varied in their approaches to Buy American Act training and guidance. DOD reports that it will have trained more than 18,000 personnel by the end of 2018. DHS reports training almost 1,400 people—approximately 94 percent of its contracting staff—as of April 2018. Some VA courses mention the Act, but none is focused specifically on implementing its requirements. HHS does not have agency-level training or guidance on the Act. GAO found that contracting officers for the contracts it reviewed face challenges implementing Buy American Act requirements. Having specific and targeted Buy American Act guidance and training can better ensure that agencies meet the Act's requirements.

What GAO Recommends

GAO is recommending that OMB take steps to improve Buy American Act data and that HHS, DHS, and VA improve agency guidance and training on implementing the Act. All of the agencies either concurred or generally concurred with GAO's recommendations.