[Congressional Record Volume 151, Number 17 (Wednesday, February 16, 2005)]
[Senate]
[Pages S1526-S1528]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. FEINGOLD:
  S. 395. A bill to amend the Buy American Act to increase the 
requirement for American-made content, and to tighten the waiver 
provisions, and for other purposes; to the Committee on Homeland 
Security and Governmental Affairs.
  Mr. FEINGOLD. Mr. President, today I am introducing the second in a 
series of bills intended to support American companies and American 
workers. Yesterday, I submitted S. Con. Res. 12, which would set some 
minimum standards for future trade agreements into which our country 
enters.
  The bill that I am introducing today, the Buy American Improvement 
Act, focuses on the Federal Government's responsibility to support 
domestic manufacturers and workers and on the role of Federal 
procurement policy in achieving this goal. The reintroduction of this 
bill, which I first introduced in 2003, is part of my ongoing effort to 
find ways to stem the flow of manufacturing jobs abroad.
  The Buy American Act of 1933 is the primary statute that governs 
Federal procurement. The name of this law accurately and succinctly 
describes its purpose: to ensure that the Federal Government supports 
domestic companies and domestic workers by buying American-made goods. 
This is an important law but, regrettably, it contains a number of 
loopholes that make it too easy for government agencies to buy foreign-
made goods.
  My bill, the Buy American Improvement Act, would strengthen the 
existing act by tightening its waiver provisions. Currently, the heads 
of Federal departments and agencies are given broad discretion to waive 
the Act and buy foreign goods. We should ensure that the Federal 
Government makes every effort to give Federal contracts to companies 
that will perform the work domestically. We should also ensure that 
certain types of industries do not leave the United States completely, 
thus making the Federal Government dependent on foreign sources for 
goods, such as plane or ship parts, that our military may need to 
acquire on short notice.
  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. Regrettably, 
nearly 80,000 good-paying manufacturing jobs have left my state since 
2000. And the country has lost more than two-and-one-half million 
manufacturing jobs since January 2001, including more than 25,000 jobs 
last month alone. This hemorrhaging of jobs shows no signs of stopping. 
Congress should do more to support domestic manufacturers and their 
employees. One way to do this is to ensure that the Federal Government 
makes every effort to buy American-made goods.

[[Page S1527]]

  There are five primary waivers to the Buy American Act, and my bill 
addresses four of them The first of these waivers allows an agency head 
to buy foreign goods if 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 too much 
discretion to department secretaries and agency heads. My bill would 
modify this waiver provision to prohibit it from being invoked by an 
agency or department head after a request for proposals, or 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. To do otherwise pulls the rug out from under 
companies that are spending valuable time and resources to prepare a 
bid for a Federal contract.
  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 modify 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 are occasions when the Federal 
Government needs to procure items quickly for use outside the United 
States, such as in a time of war. However, there may be items that are 
bought on a regular basis and used at foreign military bases or United 
States embassies, for example, that could reasonably be procured from 
domestic sources and shipped to the location where they will be used. 
My bill would require Federal agencies to compare the difference in 
cost for obtaining articles that are used on regular basis outside the 
U.S., or that are not needed immediately, between an overseas versus a 
domestic source--including the cost of shipping--before awarding the 
contract to the company that will do the work overseas.
  The Buy American Act's domestic source requirements may also 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 a waiver, determine whether 
domestic production can be initiated to meet the procurement needs and 
whether a comparable article, material, or supply is available 
domestically.
  My bill would also strengthen the Buy American Act in four other 
ways. It would, for the first time, make the Buy American requirement 
applicable to the United States Congress. The current definition of a 
Federal agency in the Act specifically exempts the Senate, the House, 
and Architect of the Capitol, and activities under the direction of the 
Architect. I believe that Congress should lead by example and comply 
with the Buy American Act--a requirement that we have imposed on 
executive agencies.
  Secondly, my bill would increase the minimum American content 
standard 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 minimum of 75 
percent.
  In addition, my bill would make permanent the expanded reporting 
requirement that I authored which was first enacted as part of the 
fiscal year 2004 omnibus spending bill and was extended as part of the 
fiscal year 2005 omnibus spending bill. Prior to the enactment of these 
provisions, only the Department of Defense was required to report to 
Congress on its use of Buy American waivers and purchases of foreign 
goods. It is virtually impossible to get hard numbers on the Federal 
Government's purchases of foreign- and domestic-made goods and to 
ensure that there is disclosure and accountability in the waiver 
process.
  The annual report to be submitted by agency heads will be required to 
include the following information: the dollar value of any items 
purchased that were manufactured outside of the United States; an 
itemized list of all applicable waivers granted with respect to such 
items under the Buy American Act; and a summary of the total 
procurement funds spent by the Federal agency on goods manufactured in 
the United States versus on goods manufactured overseas. In addition, 
my bill also requires that the heads of all Federal agencies make these 
annual reports publicly available on the Internet.
  My bill also seeks to prevent dual-use technologies from falling into 
the hands of terrorists or countries of concern by prohibiting the 
awarding of overseas contracts or sub-contracts that would require the 
transfer of information relating to 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. It only makes sense that we would not award contracts that 
require the transfer of sensitive technology without following our own 
export licensing process. It is possible that this technology could 
later be used by some countries to make their own products to sell to 
countries that cannot obtain such goods from the United States. This 
loophole in our export control laws should be closed.

  Finally, my bill would require the Government Accountability 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 
require to make recommendations for statutory definitions of both of 
these terms, as well as for establishing a consistent waiver process 
that can be used by all federal agencies.
  I am pleased that my legislation is supported by a broad array of 
business and labor groups. The groups are committed to ensuring that we 
have a strong domestic manufacturing base that provides good-paying, 
stable jobs for American workers, and they include Save American 
Manufacturing, the national and Wisconsin AFL-CIO, the U.S. Business 
and Industry Council, the International Association of Machinists and 
Aerospace Workers, the International Brotherhood of Boilermakers, and 
the United Auto Workers.
  In addition to strengthening the Buy American Act, Congress should 
support trade agreements that do not undermine it. As I have repeatedly 
stated on this floor, Congress and Administrations of both parties have 
a dismal record of promoting trade agreements that send American jobs 
overseas. And many of those same flawed trade agreements have 
repeatedly weakened the Buy American Act and other domestic preference 
laws.
  Last year, the Ranking Member of the Homeland Security and 
Governmental Affairs Committee, Mr. Lieberman, and I asked the GAO to 
study the effect of trade agreements on domestic source requirements 
such as those contained in the Buy American Act. That study found that 
the United States government is required to give

[[Page S1528]]

favorable treatment to certain goods from a total of 45 countries as a 
result of trade agreements and reciprocal defense procurement 
agreements. The report notes that the United States is a party to seven 
trade agreements, including the North American Free Trade Agreement 
(NAFTA) and the World Trade Organization's Government Procurement 
Agreement, that prevents the U.S. from applying domestic preference 
laws fully. The report also identifies 21 Department of Defense (DoD) 
Memoranda of Understanding that allow DoD to procure goods and services 
from foreign countries.
  The gaping loopholes in the Buy American Act and the trade agreements 
and defense procurement agreements that contain additional waivers of 
domestic source restrictions have combined to weaken our domestic 
manufacturing base by allowing--and sometimes actually encouraging--the 
Federal Government to buy foreign-made goods. Congress can and should 
do more to support American companies and American workers. We must 
strengthen the Buy American Act and we must stop entering into bad 
trade agreements that send our jobs overseas and undermine our own 
domestic preference laws.
  By strengthening Federal procurement policy, we can help to bolster 
our domestic manufacturers during these difficult times. As I have 
repeatedly noted, Congress cannot simply stand on the sidelines while 
tens of thousands of American manufacturing jobs have been and continue 
to be shipped overseas. While there may be no single solution to this 
problem, I believe that one way in which Congress should act is by 
strengthening the Buy American Act.
  I ask unanimous consent that the text of my bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 395

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Buy American Improvement Act 
     of 2005''.

     SEC. 2. REQUIREMENTS FOR WAIVERS.

       (a) In General.--Section 2 of the Buy American Act (41 
     U.S.C. 10a) is amended--
       (1) by striking ``Notwithstanding'' and inserting the 
     following:
        ``(a) In General.--Notwithstanding''; and
       (2) by adding at the end the following:
       ``(b) Special Rules.--The following rules shall apply in 
     carrying out the provisions of subsection (a):
       ``(1) Public interest waiver.--A determination that it is 
     not in the public interest to enter into a contract in 
     accordance with this Act may not be made after a notice of 
     solicitation of offers for the contract is published in 
     accordance with section 18 of the Office of Federal 
     Procurement Policy Act (41 U.S.C. 416) and section 8(e) of 
     the Small Business Act (15 U.S.C. 637(e)).
       ``(2) Domestic bidder.--A Federal agency entering into a 
     contract shall give preference to a company submitting an 
     offer on the contract that manufactures in the United States 
     the article, material, or supply for which the offer is 
     solicited, if--
       ``(A) that company's offer is substantially the same as an 
     offer made by a company that does not manufacture the 
     article, material, or supply in the United States; or
       ``(B) that company is the only company that manufactures in 
     the United States the article, material, or supply for which 
     the offer is solicited.
       ``(3) Use outside the united states.--
       ``(A) In general.--Subsection (a) shall apply without 
     regard to whether the articles, materials, or supplies to be 
     acquired are for use outside the United States if the 
     articles, materials, or supplies are not needed on an urgent 
     basis or if they are acquired on a regular basis.
       ``(B) Cost analysis.--In any case where the articles, 
     materials, or supplies are to be acquired for use outside the 
     United States and are not needed on an urgent basis, before 
     entering into a contract an analysis shall be made of the 
     difference in the cost for acquiring the articles, materials, 
     or supplies from a company manufacturing the articles, 
     materials, or supplies in the United States (including the 
     cost of shipping) and the cost for acquiring the articles, 
     materials, or supplies from a company manufacturing the 
     articles, materials, or supplies outside the United States 
     (including the cost of shipping).
       ``(4) Domestic availability.--The head of a Federal agency 
     may not make a determination under subsection (a) that an 
     article, material, or supply is not mined, produced, or 
     manufactured, as the case may be, in the United States in 
     sufficient and reasonably available commercial quantities and 
     of satisfactory quality, unless the head of the agency has 
     conducted a study and, on the basis of such study, determined 
     that--
       ``(A) domestic production cannot be initiated to meet the 
     procurement needs; and
       ``(B) a comparable article, material, or supply is not 
     available from a company in the United States.
       ``(c) Reports.--
       ``(1) In general.--Not later than 180 days after the end of 
     each fiscal year, the head of each Federal agency shall 
     submit to Congress a report on the acquisitions that were 
     made of articles, materials, or supplies by the agency in 
     that fiscal year from entities that manufacture the articles, 
     materials, or supplies outside the United States.
       ``(2) Content of report.--The report for a fiscal year 
     under paragraph (1) shall separately indicate the following 
     information:
       ``(A) The dollar value of any articles, materials, or 
     supplies that were manufactured outside the United States.
       ``(B) An itemized list of all waivers granted with respect 
     to such articles, materials, or supplies under this Act.
       ``(C) A summary of--
       ``(i) the total procurement funds expended on articles, 
     materials, and supplies manufactured inside the United 
     States; and
       ``(ii) the total procurement funds expended on articles, 
     materials, and supplies manufactured outside the United 
     States.
       ``(3) Public availability.--The head of each Federal agency 
     submitting a report under paragraph (1) shall make the report 
     publicly available by posting on an Internet website.''.
       (b) Definitions.--Section 1 of the Buy American Act (41 
     U.S.C. 10c) is amended--
       (1) by striking subsection (c) and inserting the following:
       ``(c) Federal Agency.--The term `Federal agency' means any 
     executive agency (as defined in section 4(1) of the Federal 
     Procurement Policy Act (41 U.S.C. 403(1))) or any 
     establishment in the legislative or judicial branch of the 
     Government.''; and
       (2) by adding at the end the following:
       ``(d) Substantially All.--Articles, materials, or supplies 
     shall be treated as made substantially all from articles, 
     materials, or supplies mined, produced, or manufactured, as 
     the case may be, in the United States, if the cost of the 
     domestic components of such articles, materials, or supplies 
     exceeds 75 percent.''.
       (c) Conforming Amendments.--
       (1) Section 2 of the Buy American Act (41 U.S.C. 10a) is 
     amended by striking ``department or independent 
     establishment'' and inserting ``Federal agency''.
       (2) Section 3 of such Act (41 U.S.C. 10b) is amended--
       (A) by striking ``department or independent establishment'' 
     in subsection (a), and inserting ``Federal agency''; and
       (B) by striking ``department, bureau, agency, or 
     independent establishment'' in subsection (b) and inserting 
     ``Federal agency''.
       (3) Section 633 of the National Military Establishment 
     Appropriations Act, 1950 (41 U.S.C. 10d) is amended by 
     striking ``department or independent establishment'' and 
     inserting ``Federal agency''.

     SEC. 3. GAO REPORT AND RECOMMENDATIONS.

       (a) Scope of Waivers.--Not later than 6 months after the 
     date of enactment of this Act, the Comptroller General of the 
     United States shall report to Congress recommendations for 
     determining, for purposes of applying the waiver provision of 
     section 2(a) of the Buy American Act--
       (1) unreasonable cost; and
       (2) inconsistent with the public interest.

     The report shall include recommendations for a statutory 
     definition of unreasonable cost and standards for determining 
     inconsistency with the public interest.
       (b) Waiver Procedures.--The report described in subsection 
     (a) shall also include recommendations for establishing 
     procedures for applying the waiver provisions of the Buy 
     American Act that can be consistently applied.

     SEC. 4. DUAL-USE TECHNOLOGIES.

       The head of a Federal agency (as defined in section 1(c) of 
     the Buy American Act (as amended by section 2) may not enter 
     into a contract, nor permit a subcontract under a contract of 
     the Federal agency, with a foreign entity that involves 
     giving the foreign entity plans, manuals, or other 
     information pertaining to a dual-use item on the Commerce 
     Control List or that would facilitate the manufacture of a 
     dual-use item on the Commerce Control List unless approval 
     for providing such plans, manuals, or information has been 
     obtained in accordance with the provisions of the Export 
     Administration Act of 1979 (50 U.S.C. App. 2401 et seq.) and 
     the Export Administration Regulations (15 C.F.R. part 730 et 
     seq.).
                                 ______