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New Executive Order Complicates Construction Industry

New Executive Order Complicates Construction Industry

A new executive order by the federal government has some contractors wondering if their projects will be in compliance according to the new Buy American rules set forth in May. According to Construction Business Owner, Executive Order 13881 has many caveats and nuances for contractors large and small that require a thorough read-through of the order, because where previous executive orders had little impact on the construction industry, this one does have the potential to upend the way construction firms have been doing business. 

The components of concern to contractors are the clauses regarding supplies and materials, as the act has new requirements for what items must be manufactured in the United States and what percentage of materials must be mined in the United States. For iron and steel, the domestic requirement increases to 95 percent, the Construction Business Owner article says, and for everything else, the cost of all components must be 55 percent domestically purchased.

But the devil is in the details when it comes to the new order, as there are exceptions for certain items that are considered commercially available "off the shelf," items that are purchased from countries with existing trade agreements with the United States, and items purchased by companies working on projects beneath a certain price threshold. In particular, depending on regulatory clarification that is expected to come, the component excepting items commercially available off the shelf (called COTS) has the potential to negate much of the impact of the new order. "A significant amount of the supplies purchased by the federal government and virtually all construction materials qualify as COTS items. If the COTS exception remains (and we expect it will), the practical effect of EO 13881 will be significantly blunted," writer Hal J. Perloff says in the article. 

Acknowledging that the topic can be exceedingly complex, the article sets forth a few steps for construction professionals trying to stay within the confines of the new order, including spending the time necessary to decipher how it impacts their work, seeking waivers early where possible, and keeping abreast of rulings and changes that may follow in the coming weeks or months. Go HERE for the full article.