Buy American Act (BAA)

The Buy American Act (BAA) establishes a federal procurement policy favoring domestically produced end products for supplies and construction materials purchased by government agencies.

The Buy American Act uses a two-part test to determine if an end product is domestically produced:

1. The article must be manufactured in the United States
2. The cost of domestic components must exceed 60% percent of the cost of all the components.

The percentage will increase to 65%  effective in calendar year 2024 and 75% effective in calendar year 2029. The relevant threshold is determined by the year that the goods are sold in, not the year that the contract was originally executed.

A price premium of 20% or 30% (depending on the size of the business) will be added for pricing evaluation by the contracting officer (making it less competitive) when the domestic requirement is not satisfied.

The two-part test does not apply to commercial off the shelf (COTS) items unless the COTS items consist wholly or predominately of iron or steel.

BAA Compliance

Determining BAA Compliance entails initially pinpointing the specific end-product slated for delivery and confirming its place of manufacture. Non-domestic manufacturing renders the product ineligible for BAA Compliance.

If the product originates from within the United States but isn’t categorized as a Commercially Available Off-the-Shelf (COTS) item, a thorough examination of its components is necessary. Each component’s place of manufacture and cost must be assessed. Compliance with BAA is achieved if the combined cost of all domestically manufactured components surpasses the current threshold of the total component cost.

Active Power, with headquarters and manufacturing in Austin, Texas, produces and sells commercially available, off the shelf, BAA-compliant, Flywheel UPS systems.