The Buy American-Supplies Act (52.225-1, Oct 2022) mandates that government contracts prioritize U.S.-made products. While the regulation applies broadly to supplies, its impact on IT purchases is significant- especially for contracting teams responsible for procuring computer hardware, networking equipment, and related technologies.
FAC Number: 2025-03
Effective Date: 01/17/2025
FAR 52.225-1 Buy American-Supplies Act Requirements for IT Procurement
FAR 52.225-1 lays out how to determine whether an IT end product qualifies as domestic:
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Non-Iron/Steel IT Equipment
Most servers, workstations, switches and routers don’t rely predominantly on iron or steel. For these items, U.S.-sourced components must exceed 60% of total component cost, rising to 65% for deliveries in 2024-2028 and 75% from 2029 onward. -
Products with Iron or Steel Components
Ruggedized or industrial-grade hardware often includes iron/steel. Foreign-sourced iron/steel must be under 5% of total cost (and note the de minimis waiver for very small amounts). -
Commercially Available Off-the-Shelf (COTS) Items
COTS end products are exempt from the domestic-content test under 41 U.S.C. 1907 and FAR 12.505(a)(1), except that their iron/steel content is still subject to the threshold. -
Critical Components
Any component mined, produced or manufactured in the U.S. and deemed critical (FAR 25.105 list) must be identified- think specialized microprocessors or secure networking modules.
TAA Compliance - Trade Agreements Act Requirements
Even if an item meets Buy American thresholds, the Trade Agreements Act (TAA) may apply. Under FAR 52.225-5:
- IT products must originate from the U.S. or a “designated country” (partners in WTO GPA, free-trade agreements, etc.).
- TAA compliance is required for certain procurements over the simplified acquisition threshold unless a Buy American exception applies.
- Verify your vendor’s country-of-origin certificates against the current list of designated countries in the FAR.
Key Thresholds and Exceptions to Review
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Applicability Thresholds
Buy American-Supplies rules kick in only when a contract exceeds the micro-purchase threshold (currently $10,000). Purchases at or below that amount are exempt. -
Full Exception Suite (FAR 25.103)
Beyond COTS and the IT-commercial-item exception, agencies can waive Buy American for:- Public-interest determinations (e.g., under international agreements)
- Domestic non-availability
- Unreasonable cost (via price-preference factors in FAR 25.5)
- Resale (e.g., commissary stock)
- Trade-agreement waivers (TAA, WTO GPA countries)
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Fallback Threshold (“55% Rule”)
Until Jan 1, 2030, agencies may treat offers with 55% U.S. content as domestic if no offer meets the higher threshold or is unreasonably expensive. -
De Minimis Waiver for Iron & Steel
Small amounts of foreign iron/steel may be waived (e.g., EPA allows up to 5% of material cost).
Documentation & Flow-Down
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Buy American Certificate & List of Foreign Articles
FAR 52.225-1(c) lets offerors request the contracting officer’s list of foreign articles treated as domestic under that contract. -
Alternate I
Use Alternate I in FAR 52.225-1 to adjust the domestic-content percentage on a per-contract basis. -
Subcontractor Flow-Down
Push Buy American and TAA clauses into lower-tier contracts so compliance flows through your supply chain.
Software vs. Hardware
Software, SaaS and other digital goods are commercial items under FAR 12.102 and are bought via Part 12 procedures- they aren’t subject to the same domestic-content tests as physical hardware.
Practical Tips for IT Purchasing Teams
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Supplier Data-Call Document
Maintain a data-call document to capture country-of-origin, cost breakdowns and iron/steel percentages automatically. -
Critical Components List
Keep a living list of FAR 25.105 critical components and monitor agency updates. -
Staff Training
Run regular workshops on invoking exceptions—cost vs. non-availability vs. public interest vs. TAA.