U.S. Senator Russ Feingold on the Buy American Act July 29, 2003 Mr. President, today I am introducing legislation to strengthen the Buy American Act of 1933, the statute that governs procurement by the federal government. The name of the act accurately and succinctly describes its purpose: to ensure that the federal government supports domestic companies and domestic workers by buying American-made goods. While I a strong supporter of the act, I am concerned that, through abuse of its 5 broad waivers, the spirit--if not the letter--of the act is being weakened time and again. It only makes sense, Mr. President, for the federal government to make every effort to purchase goods that are made in America. A law requiring this common-sense approach should not be necessary. Unfortunately, this law is necessary, and the way in which its many loopholes are being used also makes strengthening it necessary. I have often heard my colleagues say on this floor that American-made goods are the best in the world. I could not agree more. This Congress should do more to ensure that the federal government adheres to this sentiment by enforcing and strengthening the provisions of the Buy American Act. As we all know the United States manufacturing industry is hemorrhaging, as jobs and companies move overseas or are lost all together. According to the AFL-CIO, the United States has lost more than 2.4 million manufacturing jobs since April 1998. This disturbing trend is of particular concern in my home state of Wisconsin. A March 2003 report by the Wisconsin State Department of Workforce Development notes that ``a combination of weak domestic and global demand, mergers and consolidations, automation, globalization of operations, and uncertainty surrounding war have caused employment in Wisconsin's manufacturing sector to shrink in recent years.'' The Department found that there were 594,100 manufacturing jobs in Wisconsin in 2000, and the Department estimates that this figure had dropped to 517,100 jobs by June of this year. More than 77,000 jobs lost in just 2 1/2 years, Mr. President. And the people of my state can expect more of the same during the rest of this decade if we don't take action soon. While the Department expects some sectors to experience an upturn by 2010, it estimates that the people of my state can still expect to lose thousands more manufacturing jobs by 2010. Much of this can be blamed on flawed trade agreements that the United States has entered into in recent years. The trade policy of this country over the past several years has been appalling. The trade agreements into which we have entered have contributed to the loss of key employers, ravaging entire communities. But despite that clear evidence, we continue to see trade agreements being reached that will only aggravate this problem This has to stop. We cannot afford to pursue trade policies that gut our manufacturing sector and send good jobs overseas. We cannot afford to undermine the protections we have established for workers, the environment, and for our public health and safety. And we cannot afford to squander our democratic heritage by entering into trade agreements that supercede our right to govern ourselves through open, democratic institutions. I will be introducing legislation in the near future to address that problem directly by establishing minimum standards for the trade agreements into which our nation enters. That measure is a companion to a resolution that will be introduced in the other body by my colleague from Ohio [Mr. Brown]. Regrettably, some of the blame for the dire situation in which American manufacturing finds itself also lies in our own federal tax and procurement policies, some of which actually encourage American companies to move or incorporate abroad. The Buy American law was enacted 70 years ago to ensure that Federal procurement policies support American jobs. Some argue that the Buy American Act has outlived its usefulness in today's global economy. I argue that it is as relevant today as it was when it was enacted in 1933. The passage of 70 years has not diminished the importance of this Act for American manufacturing companies or for those who are employed in this crucial sector of our economy. In fact, a strong argument can be made that this Act is even more necessary today than it was 70 years ago. With American jobs heading overseas at an alarming rate, the Government should be doing all it can to make sure that U.S. taxpayer dollars are spent to support American jobs. Some argue that the Buy American Act is protectionist and anti-free trade. I disagree. Supporting American industry is not protectionist--it is common sense. The erosion of our manufacturing base needs to be stopped, and Congress should support procurement and trade policies that help to ensure that we do not continue to lose portions of this vital segment of our economy. The legislation that I introduce today, the Buy American Improvement Act, would strengthen the existing Act by tightening existing waivers and would require that information be provided to Congress and to the American people about how often the provisions of this Act are waived by Federal departments and agencies. As I noted earlier, there are currently five primary waivers in the Buy American Act. The first allows an agency head to waive the Act's provisions if a determination is made that complying with the Act would be ``inconsistent with the public interest.'' I am concerned that this waiver, which includes no definition for what is ``inconsistent with the public interest'' is actually a gaping loophole that gives broad discretion to department secretaries and agency heads. My bill would clarify this so-called ``public interest'' waiver provision to prohibit it from being invoked by an agency or department head after a request for procurement (RFP) has been published in the Federal Register. Once the bidding process has begun, the Federal Government should not be able to pull an RFP by saying that it is in the ``public interest'' to do so. This determination, sometimes referred to as the Buy American Act's national security waiver, should be made well in advance of placing a procurement up for bid. The Buy American Act may also be waived if the head of the agency determines that the cost of the lowest-priced domestic product is ``unreasonable,'' and a system of price differentials is used to assist in making this determination. My bill would amend this waiver to require that preference be given to the American company if that company's bid is substantially similar to the lowest foreign bid or if the American company is the only domestic source for the item to be procured. I have a long record of supporting efforts to help taxpayers get the most bang for their buck and of opposing wasteful Federal spending. I don't think anyone can argue that supporting American jobs is ``wasteful.'' We owe it to American manufacturers and their employees to make sure they get a fair shake. I would not support awarding a contract to an American company that is price gouging, but we should make every effort to ensure that domestic sources for goods needed by the Federal Government do not dry up because American companies have been slightly underbid by foreign competitors. The Buy American Act also includes a waiver for goods bought by the Federal Government that will be used outside of the United States. There is no question that there will be occasions when the Federal Government will need to procure items quickly that will be used outside the United States, such as in a time of war. However, items that are bought on a regular basis and are used at foreign military bases or United States embassies, for example, could reasonably be procured from domestic sources and shipped to the location where they will be used. My bill would require an analysis of the difference in cost for obtaining articles, materials, or supplies that are used on a regular basis outside the United States, or that are not needed on an immediate basis, from an American company, including the cost of shipping, and a foreign company before issuing a waiver and awarding the contract to a foreign company. The fourth waiver allowed under the Buy American Act states that the domestic source requirements of the Act may be waived if the articles to be procured are not available from domestic sources ``in sufficient and reasonably available commercial quantities and of a satisfactory quality.'' My bill would require that an agency or department head, prior to issuing such as waiver, conduct a study that determines that domestic production cannot be initiated to meet the procurement needs and that a comparable article, material, or supply is not available from an American company. The newest Buy American Act waiver, which was enacted in 1994, exempts purchases of less than $2,500 from the domestic source requirements of the Act. While this waiver is not addressed in my bill, I have requested that the General Accounting Office conduct a study of this so-called ``micro purchase'' exemption, including how often it is used and its impact on American businesses. My bill also strengthens the Buy American Act in four other ways. First, it expands annual reporting requirements regarding the use of waivers that currently apply only to the Department of Defense to include all Federal departments and agencies. My bill specifies that these reports should include an itemized list of waivers, including the items procured, their dollar value, and their source. In addition, these reports would have to be made available on the Internet. The bill also increases the minimum American-made content standard for qualification under the Act from the current 50 percent to 75 percent. The definition of what qualifies as an American-made product has been a source of much debate. To me, it seems clear that American-made means manufactured in this country. This classification is a source of pride for manufacturing workers around our country. The current 50 percent standard should be raised to a 75 percent minimum. My bill also addresses the crucial issue of dual-use technologies and efforts to prevent them from falling into the hands of terrorists or countries of concern. My bill would prohibit the awarding of a contract or sub-contract to a foreign company to manufacture goods containing any item that is classified as a dual-use item on the Commerce Control List unless approval for such a contract has been obtained through the Export Administration Act process. Finally, my bill would require the General Accounting Office to report to Congress with recommendations for defining the terms ``inconsistent with the public interest'' and ``unreasonable cost'' for purposes of invoking the corresponding waivers in the Act. I am concerned that both of these terms lack definitions, and that they can be very broadly interpreted by agency or department heads. GAO would be required to make recommendations for statutory definitions of both of these terms, as well as on establishing a consistent waiver process that can be used by all Federal agencies. I am pleased that this legislation is supported by a broad array of business and labor groups including: Save American Manufacturing, the U.S. Business and Industry Council, the International Association of Machinists and Aerospace Workers, the Milwaukee Valve Company, and the National and Wisconsin AFL-CIO.

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