Buy American Act explained: requirements and the 65% rule

The Buy American Act decides whether a federal buyer can accept your end product as domestic, and the test runs on cost, not on a country-of-origin checkbox. Get the roll-up wrong and your offer is evaluated as foreign, with 20 to 50 percent added to its price, or you deliver against a certificate the product fails. The threshold is also rising, so a product that qualifies in 2026 can fail the same test in 2029 with no change to its bill of materials.

What is the Buy American Act?

The Buy American Act requires federal agencies to buy domestic end products and construction materials for use in the United States unless an exception applies. A manufactured end product counts as domestic only if it was manufactured in the United States and its domestic components exceed a set share of the cost of all its components.

The statute is 41 U.S.C. 8302. The FAR implements it through FAR 25.101(a) and FAR 52.225-1, whose numbers, along with their home in FAR Subpart 25.1, stayed the same after the FAR Overhaul. Construction materials get their own clause, FAR 52.225-9.

How do you determine whether a manufactured product qualifies as domestic?

A manufactured end product has to pass two tests. First, it must be manufactured in the United States. Second, the cost of its domestic components must exceed the threshold in effect for the year of delivery, not the year of contract award. FAR 25.101.

"Component" means an article, material or supply incorporated directly into the end product. "Cost of components" for a purchased component is the acquisition cost plus transportation to the place of incorporation and any duty, whether or not those costs go to a domestic firm. For a component the contractor manufactures itself, cost of components is the full manufacturing cost, including transportation and allocable overhead, but excluding profit. FAR 52.225-1(a). Your Buy American certificate rests on that cost roll-up, and a country-of-origin field on a form doesn't supply it. FAR 52.225-2.

Is it a domestic end product?

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Decision flow for whether a product qualifies as a Buy American domestic end product. Step 1 asks whether the product was manufactured in the United States; a no ends the flow unless it is an unmanufactured product mined or produced in the US. Step 2 asks whether it is a commercially available off-the-shelf item; a yes makes a non-iron/steel COTS item a domestic end product outright, while a COTS item that is predominantly iron or steel still goes to step 3. Step 3 asks whether the product is wholly or predominantly iron or steel; a yes applies a test that foreign iron and steel content must be under 5 percent of total component cost. Step 4, reached when the product is not COTS and not predominantly iron or steel, asks whether domestic components exceed the year's domestic content threshold (60/65/75 percent); a no result is a foreign end product, though it may still be evaluated as a domestic offer under the separate 55 percent fallback.

1. 1

   Was the end product manufactured in the United States?

   If yes

   Go to step 2

   If no

   Not a domestic end product, unless it is an unmanufactured product mined or produced in the United States

2. 2

   Is it a commercially available off-the-shelf (COTS) item?

   If yes

   Component cost test waived: a non-iron/steel COTS item is a domestic end product; a COTS item that is predominantly iron or steel goes to step 3

   If no

   Go to step 3

3. 3

   Does it consist wholly or predominantly of iron or steel?

   If yes

   Foreign iron and steel content must be under 5 percent of total component cost to qualify

   If no

   Go to step 4

4. 4

   Do domestic components exceed the threshold for the delivery year (60/65/75%)?

   If yes

   Domestic end product

   If no

   Foreign end product, but may be evaluated as a domestic offer (55 percent fallback)

Example: a control unit is assembled in the United States, with four components.

That's 60 percent of the $100 total, below the 65 percent threshold that applies through 2028. Resourcing the circuit board domestically would clear both thresholds.

What is the domestic content threshold, and how is it rising?

The 2022 rule (87 FR 12780, effective October 25, 2022) raised the domestic content threshold from 55 to 60 percent. It rises again to 65 percent for items delivered in calendar years 2024 through 2028, then to 75 percent for items delivered starting in calendar year 2029. FAR 52.225-1(a).

Buy American domestic content threshold by delivery year

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Timeline table showing the Buy American domestic content threshold by delivery year: 60 percent for deliveries before 2024 under clauses dated October 2022 or later, 65 percent for calendar years 2024 through 2028, and 75 percent for calendar year 2029 and later. A conditional 55 percent fallback, not tied to delivery year, requires a contracting officer to treat a foreign end product at or below 55 percent domestic content as domestic until January 1, 2030, for non-COTS, non-iron-or-steel items, when no domestic offer came in or its price is unreasonable. A DoD row shows DFARS 252.225-7001 applies the same percentages, but counts components from a qualifying country toward domestic content and exempts qualifying country end products from the 50 percent DoD evaluation factor.

1. 1

   Deliveries before 2024 under clauses dated October 2022 or later

   Domestic content threshold

   60%

   Applies to

   Manufactured end products and construction materials, not predominantly iron or steel

   Basis

   FAR 52.225-1(a); FAR 25.101

2. 2

   2024 through 2028

   Domestic content threshold

   65%

   Applies to

   Manufactured end products and construction materials, not predominantly iron or steel

   Basis

   FAR 52.225-1(a); FAR 25.101

3. 3

   2029 and later

   Domestic content threshold

   75%

   Applies to

   Manufactured end products and construction materials, not predominantly iron or steel

   Basis

   FAR 52.225-1(a); FAR 25.101

4. 4

   Not delivery-year based, until January 1, 2030

   Domestic content threshold

   55%

   Applies to

   Foreign end product evaluated as a domestic offer only when no domestic offer came in, or its price is unreasonable, and the low offer is a foreign end product at or below 55%; excludes COTS items and predominantly iron/steel products

   Basis

   FAR 25.106(b)(2) and (c)(2); FAR 25.204(b)(1)(ii) and (b)(2)(ii)

5. 5

   DoD supplies, all years

   Domestic content threshold

   Same percentages; qualifying country components count toward them

   Applies to

   DoD manufactured end products, under DFARS 252.225-7001; qualifying country end products exempt from the 50% DoD evaluation factor

   Basis

   DFARS 252.225-7001; DFARS 225.872-1; DFARS 225.502(c)(i)(A); DFARS Case 2022-D019 (2024-01220)

A contract that spans the increase has to apply the threshold for each item's actual delivery year, unless the agency's senior procurement executive authorizes an alternate test that locks in the threshold in effect at contract award. FAR 25.101.

Until January 1, 2030, a contracting officer must treat the lowest offer of a U.S.-manufactured product with more than 55 percent domestic content as a domestic offer. That applies only when no domestic offer came in or the domestic offer's price is unreasonable, and the low offer is a foreign end product at or below 55 percent. The product stays a foreign end product, and the rule excludes COTS items and products that are predominantly iron or steel. FAR 25.106(b)(2) and (c)(2); FAR 25.204(b)(1)(ii) and (b)(2)(ii).

The same 2022 rule that raised the thresholds also created a framework for an enhanced price preference on domestic products built from "critical components" or "critical items." FAR 25.105 reserves the list itself for a separate rulemaking, and it still has no populated list. Until the list is published, only the standard preference applies.

Does Buy American treat iron and steel differently?

An end product or construction material that consists wholly or predominantly of iron or steel skips the component cost test and gets one narrower test instead: the cost of foreign iron and steel content must come in under 5 percent of the cost of all components. It must still be manufactured in the United States. FAR 52.225-1(a).

A product is predominantly iron or steel when iron and steel content exceeds 50 percent of total component cost. FAR 52.225-1(a); FAR 25.003. The COTS exception waives the component cost test for commercially available off-the-shelf items, but a COTS item that is predominantly iron or steel still has to pass the 5 percent foreign iron and steel test, with an exception for COTS fasteners. FAR 25.101(a)(2)(ii).

How does the price evaluation preference work?

When a domestic offer costs more than the low foreign offer, the contracting officer adds an evaluation factor to the foreign price before comparing bids: 20 percent for a large business domestic offeror, 30 percent for a small business. If the domestic price is no higher than the adjusted foreign price, the domestic offer wins. FAR 25.106.

A domestic offer built around a critical component would add that item's own preference factor on top, once FAR 25.105 populates one. DoD adds a flat 50 percent to the low foreign offer under DFARS 225.502(c)(ii)(E), regardless of size, unless exempt.

DoD uses the same percentages under its own clause, DFARS 252.225-7001, aligned by DFARS Case 2022-D019 (89 FR 11950, effective February 15, 2024). DoD's test differs in two ways: components from a qualifying country count alongside U.S. components toward the threshold, and qualifying country end products are exempt from the 50 percent evaluation factor. DFARS 225.502(c)(i)(A). The Berry Amendment allows qualifying countries only for a few named textile items — para-aramid fiber and yarn, and chemical warfare protective clothing — a narrower carve-out than this one. DFARS 225.7002-2(m),(n).

Does Buy American apply to construction materials?

Construction materials follow the same threshold schedule under FAR 52.225-9, with a single 20 percent factor regardless of business size: a domestic material's cost counts as unreasonable only when it exceeds the foreign material's cost by more than 20 percent, plus a critical-item factor once one applies. FAR 25.204.

When does the Trade Agreements Act replace Buy American?

Above a dollar threshold, and for a product from a designated country, the Trade Agreements Act waives the Buy American statute and its domestic content test. FAR Subpart 25.4. The threshold for supplies and services under the WTO Government Procurement Agreement is $174,000 for calendar years 2026 and 2027, a figure USTR set and the FAR adopted effective March 13, 2026. 91 FR 188.

Below the threshold that applies, or for a product from a country no agreement covers, the domestic content test still applies. Free trade agreements set their own, lower thresholds, down to $50,000 under the Israeli Trade Act. FAR 25.402(b). Trade Agreements Act covers which rule governs a buy.

How did the FAR Overhaul change Part 25?

The Revolutionary FAR Overhaul reorganized Part 25's structure and rewrote it in plain language, but the Buy American clause numbers stayed put: 52.225-1, 52.225-9 and 52.225-11 keep their numbers in the FAR Council's model deviation text for Part 25, adopted by DoD and DOE alike. GSA Class Deviation RFO-2025-25.

The deviation also routes individual nonavailability waivers through the Made in America Office, which must finish its review, waive it or confirm an exception before award.

The Overhaul reaches Part 25 through agency class deviations; no FAR final rule has replaced Part 25 yet. GSA's deviation took effect November 3, 2025, and other agencies adopted their own versions later. It also renumbers the construction-material fallback to 25.204(a)(1)(ii) and (a)(2)(ii) in the RFO model text. Check which deviation your contracting agency has adopted, and since when, before citing a Part 25 section number against a specific contract.

What evidence should you request from suppliers?

Use your own cost for each component, and ask each supplier where the component it sells you was mined, produced or manufactured. That's the roll-up a Buy American certificate rests on: your acquisition cost, not a sub-tier cost breakdown or a country-of-origin field on a form. FAR 52.225-1(a).

Ask for a written statement that gives, for each component:

• the component name or part number
• its cost to you, or its own manufacturing cost if the supplier makes the component itself
• the country where it was mined, produced or manufactured

If a supplier delivers the whole end product, its components are the ones you need cost and origin for, not a sub-tier breakdown of what's inside them. For an item that is wholly or predominantly iron or steel, the component cost test doesn't apply; instead ask where the metal was melted and where each later step through coating happened, since "produced" covers that whole span, and keep the cost of its iron and steel content, since the under-5-percent foreign iron and steel test still needs it. Tie every declaration to the components or lots it covers, and record "unknown" rather than treating a missing answer as domestic: components of unknown origin are treated as foreign. FAR 52.225-1(a). Traceability to raw materials covers tracing a component's origin back through your supply chain.

Collecting origin statements from every supplier takes steady follow-up. Your team can open each request as a task and hand it to Scout Agent, who follows up with the supplier by email and phone.

If the PO also carries a specialty metals or other DFARS sourcing clause, ask for both answers in one request. Certificate of conformance and DFARS specialty metals cover the related requests to combine into one ask.

Questions teams ask

Does Buy American apply to every federal contract?

No. It applies to supply contracts for use in the United States above the micro-purchase threshold, for manufactured supplies only, and to construction contracts for public buildings or public works in the United States, except where a trade agreement at or above its dollar threshold applies. FAR 25.100(b); 41 U.S.C. 8302(a)(2)(C); FAR 25.200(b). Several statutory and administrative exceptions can also take it out of play, including nonavailability and public interest determinations. FAR 25.103.

Is a lower-tier subcontractor bound by the Buy American clause?

FAR 52.225-1 has no flowdown paragraph; the prime certifies the end product, not each subcontractor, though it may put the clause or an origin certification on your purchase order.

Does the 65 percent or 75 percent threshold apply to my contract if it was awarded before the increase?

It depends on the delivery year of each item, unless the agency has authorized the alternate domestic content test locking in the award-date threshold. Check your contract for that authorization.

If your team needs to collect component cost roll-ups and origin statements across a bill of materials before the 2029 threshold takes effect, talk to our team.

This article is general information, not legal or tax advice. Check how the rules apply to your business with your legal or tax advisor.

Sources (23)

1. 41 U.S.C. 8301-8305, Buy American Act
2. FAR 52.225-1 Buy American-Supplies
3. FAR Subpart 25.1 Buy American-Supplies (25.100 through 25.106)
4. FAR 25.101 General
5. FAR 25.105 Critical components and critical items
6. FAR 25.106 Determining reasonableness of cost
7. FAR 52.225-9 Buy American-Construction Materials
8. FAR Subpart 25.2 Buy American-Construction Materials
9. FAR Subpart 25.4 Trade Agreements
10. Federal Acquisition Regulation: Amendments to the FAR Buy American Act Requirements (FAC 2022-05, FAR Case 2021-008), 87 FR 12780
11. Procurement Thresholds for the Trade Agreements Act of 1979, 91 FR 188
12. Federal Acquisition Regulation: Trade Agreements Thresholds (effective 2026-03-13)
13. DFARS 252.225-7001 Buy American and Balance of Payments Program
14. DFARS 225.502 Application (evaluating foreign offers, 50 percent factor)
15. DFARS 225.872-1 General (qualifying country components and end products)
16. FAR 52.225-2 Buy American Certificate
17. FAR 25.100 Scope of subpart
18. FAR 25.200 Scope of subpart
19. DFARS 225.7002-2, Exceptions
20. FAR 25.204 Evaluating offers of foreign construction material
21. FAR 25.402 Application of the trade agreements
22. Defense Federal Acquisition Regulation Supplement: DFARS Buy American Act Requirements (DFARS Case 2022-D019), Federal Register 2024-01220
23. GSA Class Deviation RFO-2025-25, FAR Class Deviation for FAR Part 25 in Support of Executive Order 14275