Buy American-Free Trade Agreements-Israeli Trade Act
Contractors must deliver domestic or eligible FTA/Israeli end products, accurately certify product origins, and comply with strict content thresholds, especially for iron and steel items.
Overview
FAR 52.225-3, Buy American-Free Trade Agreements-Israeli Trade Act, establishes requirements for contractors supplying end products to the U.S. Government, integrating the Buy American statute with various Free Trade Agreements (FTAs) and the Israeli Trade Act. The clause defines key terms such as domestic end product, foreign end product, and specific FTA country end products, and sets forth rules for determining the origin and content of supplied goods. It mandates a preference for domestic end products but allows for the supply of certain foreign end products if specified in the contractor’s offer and permitted by applicable trade agreements. The clause also provides detailed definitions and thresholds for content calculations, especially for products containing iron or steel, and outlines exceptions for commercially available off-the-shelf (COTS) items. Alternate versions of the clause address specific scenarios, such as the inclusion of Korean end products or customized domestic content thresholds.
Key Rules
- Definitions and Thresholds
- Provides precise definitions for domestic, foreign, FTA country, and Israeli end products, as well as content calculation methods and thresholds (e.g., 60%, 65%, or 75% U.S. content for domestic products, depending on delivery year).
- Preference for Domestic End Products
- Contractors must deliver domestic end products unless their offer specifies eligible foreign end products under FTAs or the Israeli Trade Act.
- COTS Exception
- The domestic content test is waived for COTS items, except for those predominantly of iron or steel, where only the iron and steel content is tested.
- Alternate Clauses
- Alternate versions address specific FTAs (e.g., Korea), the Israeli Trade Act, and allow for customized domestic content percentages.
Responsibilities
- Contracting Officers: Must ensure the correct clause and alternates are included in solicitations and contracts, verify contractor certifications, and determine applicable trade agreements.
- Contractors: Must accurately certify the origin of end products, comply with content thresholds, and deliver only eligible products as specified in their offer.
- Agencies: Oversee compliance, maintain lists of articles treated as domestic, and enforce reporting and certification requirements.
Practical Implications
- This clause ensures compliance with U.S. trade policy, balancing domestic preferences with international trade obligations. Contractors must carefully track the origin and content of their products, especially for iron and steel items, and understand which trade agreements apply to each procurement. Common pitfalls include misclassifying end products, failing to meet content thresholds, or incorrectly applying COTS exceptions.