25.201 Policy
Source: FAR 25.201 on acquisition.gov
FAR 25.201 requires contractors to use domestic construction materials in U.S. federal construction contracts, with strict and increasing domestic content thresholds and special rules for iron and steel.
Overview
FAR 25.201 establishes the core policy for the use of domestic construction materials in federal construction contracts performed in the United States, implementing the Buy American statute and related Executive Orders. The regulation mandates that, except as provided in FAR 25.202, only domestic construction materials may be used. It defines domestic construction materials using a two-part test for manufactured items: (1) the item must be manufactured in the U.S., and (2) the cost of domestic components must exceed a specified percentage of total component costs (60% currently, increasing to 65% in 2024-2028, and 75% from 2029 onward). For iron and steel construction materials, foreign content must be less than 5% of total component costs. There are specific waivers and exceptions for Commercially Available Off-The-Shelf (COTS) items, but not for iron and steel materials except for COTS fasteners. The section also addresses how to handle contracts that span threshold increases, allowing for an alternate domestic content test with senior procurement executive approval and OMB consultation.
Key Rules
- Domestic Material Requirement
- Only domestic construction materials may be used in U.S. construction contracts, unless an exception applies (see FAR 25.202).
- Two-Part Domestic Test for Manufactured Materials
- Manufactured materials must be made in the U.S. and meet escalating domestic content thresholds (60%, 65%, 75%).
- Iron and Steel Content Rule
- For iron/steel materials, foreign content must be less than 5% of total component cost; COTS waiver does not apply except for fasteners.
- Threshold Increases Over Time
- Contracts spanning threshold increases must comply with the applicable threshold at the time of delivery, unless an alternate test is approved.
- Alternate Domestic Content Test
- Senior procurement executives may approve an alternate test, applying the threshold at contract award for the entire period, after OMB consultation.
Responsibilities
- Contracting Officers: Ensure solicitations and contracts include the correct domestic content requirements and clauses; seek senior procurement executive approval and OMB consultation for alternate tests.
- Contractors: Source and certify construction materials to meet domestic content thresholds; track and document component origins and costs; comply with escalating thresholds over contract duration.
- Agencies: Oversee compliance, approve alternate tests at the senior procurement executive level, and consult with OMB as required.
Practical Implications
- This policy ensures federal construction spending supports U.S. manufacturing and labor. Contractors must carefully track the origin and cost of components, especially as thresholds increase over time. Failure to comply can result in contract penalties or disqualification. The rules are complex for contracts spanning multiple years, requiring close coordination with contracting officers and awareness of changing thresholds.
(a) Except as provided in 25.202, use only domestic construction materials in construction contracts performed in the United States.
(b) The Buy American statute restricts the purchase of construction materials that are not domestic construction materials. For manufactured construction materials, the Buy American statute, https://www.federalregister.gov/executive-order/13881" target="_blank">E.O. 13881, and https://www.federalregister.gov/executive-order/14005" target="_blank">E.O. 14005 use a two-part test to define domestic construction materials.
(1) The article must be manufactured in the United States; and
(2)
(i) Except for construction material that consists wholly or predominantly of iron or steel or a combination of both, the cost of domestic components must exceed 60 percent of the cost of all the components, except that the percentage will be 65 percent for items delivered in calendar years 2024 through 2028 and 75 percent for items delivered starting in calendar year 2029, but see paragraph (c) of this section. In accordance with http://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title41-section1907&num=0&edition=prelim" target="_blank">41 U.S.C. 1907, this domestic content test of the Buy American statute has been waived for acquisitions of COTS items (see 12.505(a)).
(ii) For construction material that consists wholly or predominantly of iron or steel or a combination of both, the cost of foreign iron and steel must constitute less than 5 percent of the cost of all the components used in such construction material (see the definition of "foreign iron and steel" at 25.003). The cost of foreign iron and steel includes but is not limited to the cost of foreign iron or steel mill products (such as bar, billet, slab, wire, plate, or sheet), castings, or forgings utilized in the manufacture of the construction material and a good faith estimate of the cost of all foreign iron or steel components excluding COTS fasteners. This domestic content test of the Buy American statute has not been waived for acquisitions of COTS items in this category, except for COTS fasteners.
(c)
(1) A contract with a period of performance that spans the schedule of domestic content threshold increases specified in paragraph (b)(2)(i) of this section shall be required to comply with each increased threshold for the items in the year of delivery, unless the senior procurement executive of the contracting agency allows for application of an alternate domestic content test for that contract under which the domestic content threshold in effect at time of contract award will apply to the entire period of performance for the contract. This authority is not delegable. The senior procurement executive shall consult the Office of Management and Budget's Made in America Office before allowing the use of the alternate domestic content test.
(2) When a senior procurement executive allows for application of an alternate domestic content test for a contract, see 25.1102(a)(3) or (c)(4) for use of the appropriate Alternate clause to reflect the domestic content threshold that will apply to the entire period of performance for that contract.