Section 1605 of the Recovery Act
Recovery Act-funded construction projects must use iron, steel, and manufactured goods produced in the U.S., with limited exceptions for trade agreements and specific components.
Overview
FAR 25.602-1 implements Section 1605 of the American Recovery and Reinvestment Act (Recovery Act), establishing strict domestic sourcing requirements for iron, steel, and manufactured goods used in projects funded by the Act. It mandates that, unless an exception applies, no Recovery Act funds may be used for construction, alteration, maintenance, or repair of public buildings or public works unless all iron, steel, and manufactured goods are produced or manufactured in the United States. The regulation details specific requirements for iron and steel components, manufactured materials, and provides examples to clarify compliance. It also addresses the impact of trade agreements and clarifies that these requirements apply to all relevant contracts or line items within a project.
Key Rules
- Domestic Production Requirement
- All iron, steel, and manufactured goods used as construction material must be produced or manufactured in the United States, with specific rules for iron and steel components.
- Iron and Steel Components
- For materials consisting wholly or predominantly of iron or steel, all manufacturing processes (except certain metallurgical refinements) must occur in the U.S.
- Manufactured Materials Purchased by the Government
- These must meet the same domestic source requirements as other construction materials.
- Trade Agreement Exception
- If trade agreements apply, materials may be sourced from designated countries if substantially transformed there.
- Project Scope
- Requirements apply regardless of whether the project is covered by one or multiple contracts or line items.
Responsibilities
- Contracting Officers: Ensure all applicable contracts comply with domestic sourcing requirements and verify exceptions or trade agreement applicability.
- Contractors: Source and document all iron, steel, and manufactured goods in compliance with U.S. production requirements or applicable trade agreements.
- Agencies: Oversee compliance and ensure Recovery Act funds are not used in violation of these sourcing rules.
Practical Implications
- This section ensures Recovery Act funds support U.S. manufacturing and labor.
- Contractors must carefully track the origin and manufacturing process of all relevant materials, especially iron and steel.
- Non-compliance can result in disallowance of costs or contract termination. Common pitfalls include misunderstanding the definition of "manufactured in the United States" and failing to account for all components in complex assemblies.