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  • Question

    Is there anything regarding Trade Agreements that would restrict awarding to a possible 3rd party/re-seller vendor from Iraq?


    Answer

    This is a great question, implementing and complying with Buy American and the Trade Agreements Act can be complicated in many situations.

    To answer your question directly; no, nothing specifically related to Trade Agreements. But see below for how it should all work.

    In your case, I assume the PSC you have selected is from Product Service Group 65 Medical, dental, and veterinary equipment and supplies (see DFARS 225.401-70). If yes, then Buy American could be waived due to Trade Agreements. But Iraq is not a member of any of the Free Trade Agreements listed at FAR 25.402(b) Table 1 and defined at FAR 25.003 including implementing language at DFARS 225.003 (e.g. Qualifying Countries).

    First, follow the procedures in FAR subpart 25.7 and DFARS subpart 225.7 to determine if the vendor is a prohibited source. Then follow the procedures in FAR part 9 and DFARS subpart 209.1 to determine if they are a responsible source.

    The important thing to remember is that when it comes to Buy American and Trade Agreements, it is not the location of the company that matters but the source of the products they are providing.

    Next steps, if your acquisition is in PSG 65 and the vendor is not a prohibited source and is a responsible source, proceed as follows.

    Because your acquisition value is above $183,300 (again, see FAR 25.402(b) Table 1) you are above the WTO GPA threshold. As a result, your solicitation should include DFARS 252.225-7020 and DFARS 252.7021 (the basic provision and clause, not one of the alternates). The vendor will have to certify the country of origin of the products as either U.S. made (domestic), Qualifying Country made/transformed (see DFARS 225.003 and DFARS 252.225-7021(a)), or a Designated country made (signature to the WTO GPA).

    Then follow the procedures at DFARS 225.502(b) to evaluate foreign offers. If the vendor offers a 1) U.S. made (domestic), 2) Designated country (one of the WTO GPA signatories), or 3) Qualifying country end product and price is the determining factor, award to them if they are the low offer.

    If they are the low price (and price is the determining factor) and they did NOT offer a U.S., Designated, or Qualifying country product, then Buy American CANNOT be waived due to Trade Agreements. Now you can decide if the Buy American “unreasonable price” exception can be applied (see DFARS 225.104(c) which will direct you to DFARS 225.502(c)); the 50% application might be in play.

    Note: depending on the situation, the definition of what constitutes a domestic end item could change. If Trade Agreements applies, it is the “substantial transformation test” if BA cannot be waived due to Trade Agreements, it is the “cost of components test”.

    If you are interested in additional help for implementing and complying with Buy American and Trade Agreements Act; the DAU Tools page has three (3) work aids designed to help with that: Buy American Visual Understanding, Buy American-Solicitation Development Tool, and Buy American Foreign Offer Evaluation Tool. One at the Tools page, filter by "Contracting" and these are easily located.

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