Here`s how it works: civil agencies add 6% to offered foreign products (12% if the lowest domestic supply comes from a small company). For example, if Company A offers a domestic product at $25,000 and offers Company B a foreign product at $US 20,000, a civilian agency would value the foreign product as if it costs US$21,200 (a 6% increase) or $22,400 (a 12% increase) if the company offering the foreign product, competes with a small U.S. company. If price were the determining factor, the foreign item would win the deal because it is cheaper, even with the price penalty. Since the tariff preference applies only for valuation purposes, the government would pay the originally proposed price of $20,000. For example, the purchase is reserved for small businesses or is made as the sole source of supply). FAR 52.225-5 lists all « designated countries » for the purposes of the TAA. Countries include those that have signed the WTO GPA, have concluded a free trade agreement with the United States, or have been identified as « least developed country » or « Caribbean Basin country ». When it comes to an acquisition from the Ministry of Defense, the list of designated countries is even longer, as it also contains those identified as « qualified countries. » When it comes to buying products, governments around the world have historically shown a preference for domestic products. There are laws that require that public funds be used only for the purchase of domestic products or, at the very least, provide for a tariff preference for these products.
The law that enforces the U.S. government`s preference for domestic products is known as the Buy American Act (BAA). However, the BAA is not always applicable under the Trade Agreements Act (« TAA »). The TAA allows you to buy products from certain countries other than the United States. Understanding whether baa or TAA applies to your procurement and whether your products comply with current standards is essential to avoid liability under the False Claims Act and the termination of a contract. . . .