Seven Steps for an Effective Compliance Program for the Buy American Statute and Trade Agreements Act

by Tyler Freiberger


Are you selling your products or services to the U.S. Government? If so, what does your compliance program look like? There are seven different elements that you should have in place in order to be confident that your compliance program can be effective. The Buy American Statute (BAS) requires the U.S. Government to give a preference to U.S.-made goods over foreign-made goods in federal procurements. The Trade Agreements Act (TAA) prohibits the U.S. Government from buying products and services from non TAA-eligible countries such as China. The TAA is applicable to all federal supply schedules. Both acts are discussed in detail in the Federal Acquisition Regulation (FAR) Part 25, Foreign Acquisition. This article identifies 7 parts of an effective compliance program that you should have in place when you sell your products and services to the U.S. Government.

1. Accountability:

Accountability must permeate your entire organization. It must reside within upper management and each employee alike. Accountability consists of committing sufficient resources for compliance and designating appropriate senior business representative(s) to ensure overall responsibility. Accountability also means that your business will correct errors, conduct internal investigations, report certain violations, and recognize your employees who ensure that your business stays TAA and BAS compliant every day of the year.

2. Due Diligence:

Due diligence is always required to ensure all sales are TAA and BAS compliant. Each federal contractor who sells to the U.S. Government must comply with the federal law and FAR. When determining whether a particular product is compliant, each contractor should be able to answer the following questions:

  • What is the country of origin for this product?
  • How do I know this and what are my records?
  • How current is the information?
  • Who do I contact when I am not sure?

While vendor-provided letters of supply show due diligence, it is always important to ensure that such letters are current. Another way to ensure due diligence is to conduct an annual review of all the letters of supply, and to sample individual transactions for compliance. In close-call situations, federal contractors may submit a request to the U.S. Government for a country of origin determination.

3. Internal Policies:

Your business operations will be more efficient and predictable if your employees can understand and follow your updated written policies and internal checks. Your policies will allow your employees to quickly make right decisions and seek assistance when necessary. It is generally a good idea to have internal policies on compliance monitoring, due diligence, record-keeping, training, reporting of TAA and BAS violations, and code of business ethics. Other policies may be applicable based on your specific risks.

4. Training and Awareness:

There are always new developments in the areas of BAS and TAA. Recently, Montenegro and New Zealand became the newest “designated countries” under the World Trade Organization Government Procurement Agreement. In May 2016, U.S. Congressman Pete Visclosky included certain Buy American Statute requirements in the Fiscal Year 2017 National Defense Appropriations Act. This may require the U.S. Department of Defense to purchase U.S.-made armor plate, mooring chains, ball bearings, and certain engine components among others. Another bill seeks to redefine “U.S.-made” altogether. Staying current with the new developments is a critical part of your compliance program.

Want to review the final 3 points in our 7 step guide? Download the full guide here.