Federal Agencies Spent Over $92 Billion on Foreign Contracts Because of Buy America Loopholes

Elizabeth Brotherton-Bunch

Elizabeth Brotherton-Bunch Digital Media Director, Alliance for American Manufacturing

Michigan Sen. Debbie Stabenow (D) is a longtime proponent of Buy America, which ensures that when the federal government builds new infrastructure or buys new goods, the materials and products purchased are American-made.

It’s commonsense policy, as it reinvests taxpayer money into local communities, supporting job growth and strengthening the economy.

But loopholes have meant that some federal agencies have skirted Buy America — and so Stabenow wanted to find out just how much money is being sent overseas.

Spoiler: It’s a lot.

A new report from Stabenow’s office found that 13 federal agencies used Buy America loopholes to spend more than $92 billion on foreign contracts between 2008 and 2016.

The Defense Department led the way, spending nearly $85 billion on foreign contracts because of loopholes (and spent about $154 billion total on foreign purchases during that same period). The department, unfortunately, has a history of skirting these laws — 81 out of 280 Defense Department contracts were found to not comply with Buy America, a recent audit by the agency’s inspector general found.

And while the Defense Department is certainly the biggest offender, it is hardly alone. Other agencies that used loopholes to spend money on foreign contracts include the State Department, which spent nearly $2.5 billion; the Department of Homeland Security, which spent more than $1.58 billion; and the Treasury Department, which spent more than $510 million.

These agencies bypass Buy America in a variety of ways, including granting themselves an exemption if a particular item isn’t available in “sufficient quality or quantity” from U.S. manufacturers; if an agency determines complying with Buy America is “inconsistent with the public interest,” such as responding quickly to a national emergency; and if a product is set to be used outside the United States, like at an embassy or for overseas military operations.

The problem is that federal agencies have often stretched the limits of the loopholes, the report notes.

“[F]ederal agencies have abused their authority by granting domestic non-availability waivers even when a U.S. manufacturer could clearly fill the intended contract,” the report states. “In February 2018, DoD’s Inspector General issued a report finding multiple instances when DoD contracting officials improperly purchased foreign-made items… In one documented example, Air Force officials did not perform adequate research to find American vendors to produce Buy American-compliant football uniforms. Instead, officials issued two domestic non-availability waivers to purchase foreign made jerseys and pants.”

Agencies also are allowed Buy America waivers if a purchase is from a company that is located in a country that has joined certain free-trade agreements with the United States. This eases certain Buy America restrictions, so long as U.S. manufacturers are given equal access to that country’s market.

The problem is that the United States is rarely given that access.  “These agreements have given foreign manufacturers substantially more opportunities to bid on U.S. government contracts and have shortchanged American manufacturers,” the report states.

For example, the United States opened about 80 percent of its federal procurement market in 2010 to countries that were signers to the World Trade Organization (WTO) Agreement on Government Procurement. Other signers gave significantly less access to their markets; South Korea granted access to just 13 percent of its total procurement spending, while the European Union provided U.S. companies access to just 16 percent.

Stabenow recommends strengthening Buy America laws in the report, including via her Make It In America Act, which seeks to close Buy America loopholes, further prioritize American companies, eliminate the overseas exemption, and create more transparency in the foreign procurement process. The senator is also supportive of the Made In America Act of 2018, which would add new Buy America requirements to 16 federal programs.

“My report shows that foreign companies are benefitting from loopholes in our nation’s Buy American laws," Stabenow said. "My agenda closes these loopholes, holds the federal government accountable, and creates opportunities for Michigan businesses and workers.”

Find the whole report here.

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Reposted from AAM

Posted In: Allied Approaches, From Alliance for American Manufacturing

Union Matters

Federal Minimum Wage Reaches Disappointing Milestone

By Kathleen Mackey
USW Intern

A disgraceful milestone occurred last Sunday, June 16.

That date officially marked the longest period that the United States has gone without increasing federal the minimum wage.

That means Congress has denied raises for a decade to 1.8 million American workers, that is, those workers who earn $7.25 an hour or less. These 1.8 million Americans have watched in frustration as Congress not only denied them wages increases, but used their tax dollars to raise Congressional pay. They continued to watch in disappointment as the Trump administration failed to keep its promise that the 2017 tax cut law would increase every worker’s pay by $4,000 per year.

More than 12 years ago, in May 2007, Congress passed legislation to raise the minimum wage to $7.25 per hour. It took effect two years later. Congress has failed to act since then, so it has, in effect, now imposed a decade-long wage freeze on the nation’s lowest income workers.

To combat this unjust situation, minimum wage workers could rally and call their lawmakers to demand action, but they’re typically working more than one job just to get by, so few have the energy or patience.

The Economic Policy Institute points out in a recent report on the federal minimum wage that as the cost of living rose over the past 10 years, Congress’ inaction cut the take-home pay of working families.  

At the current dismal rate, full-time workers receiving minimum wage earn $15,080 a year. It was virtually impossible to scrape by on $15,080 a decade ago, let alone support a family. But with the cost of living having risen 18% over that time, the situation now is far worse for the working poor. The current federal minimum wage is not a living wage. And no full-time worker should live in poverty.

While ignoring the needs of low-income workers, members of Congress, who taxpayers pay at least $174,000 a year, are scheduled to receive an automatic $4,500 cost-of-living raise this year. Congress increased its own pay from $169,300 to $174,000 in 2009, in the middle of the Great Recession when low income people across the country were out of work and losing their homes. While Congress has frozen its own pay since then, that’s little consolation to minimum wage workers who take home less than a tenth of Congressional salaries.

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