FAR 25.001—General.
Plain-English Summary
FAR 25.001 is the gateway provision for the Buy American and trade agreements framework. It explains what the Buy American statute does: it restricts the purchase of non-domestic supplies for use in the United States and generally requires domestic construction materials in U.S. construction contracts, subject to exceptions and waiver rules in subparts 25.1 and 25.2. It also explains when those Buy American restrictions do not apply because an acquisition is covered by a trade agreement under subpart 25.4, in which case qualifying foreign end products and construction materials from designated countries receive nondiscriminatory evaluation treatment. The section further distinguishes three different country-of-origin concepts that contractors and contracting officers often confuse: the Buy American domestic end product/domestic construction material test, the trade agreements substantial transformation test, and the simple place-of-manufacture representation at FAR 52.225-18. Finally, it notes a special rule for ARRA-funded construction materials, where domestic manufacture is required but component origin generally is not, except for iron or steel, which must be produced in the United States if the material is wholly or predominantly iron or steel. In practice, this section tells the reader which sourcing regime applies, which definition to use, and why the answer can change based on dollar value, funding source, product type, and whether the acquisition is covered by a trade agreement.
Key Rules
Buy American Restricts Foreign Supplies
The Buy American statute limits purchases of supplies that are not domestic end products when they will be used in the United States. A foreign end product may still be bought if the contracting officer finds the lowest domestic offer unreasonable or another exception applies under subpart 25.1.
Domestic Construction Materials Required
For construction contracts performed in the United States, the statute generally requires the use of only domestic construction materials. Exceptions and waivers are addressed in subpart 25.2, so the requirement is not absolute in every case.
Trade Agreements Can Override
If an acquisition is subject to a covered trade agreement, the Buy American restrictions do not apply. Instead, end products and construction materials from designated countries are treated nondiscriminatorily in evaluation with domestic offers, and the applicable agreement usually depends on the dollar value of the acquisition.
Different Origin Tests Apply
The country-of-origin test under Buy American is not the same as the test under trade agreements or the representation at FAR 52.225-18. Contractors and contracting officers must use the correct test for the specific clause, statute, or solicitation provision involved.
Buy American Domestic Content Test
Under Buy American, a domestic end product or domestic construction material must be manufactured in the United States and meet a domestic content test. For COTS items, the domestic content test is waived except for products wholly or predominantly of iron or steel, excluding COTS fasteners.
Trade Agreements Use Substantial Transformation
Under trade agreements, origin is determined by substantial transformation—whether an article has been transformed into a new and different article of commerce with a distinct name, character, or use. This is a different and often more complex analysis than the Buy American domestic content test.
52.225-18 Uses Manufacture Only
For the representation at FAR 52.225-18, the only question is whether the end product is manufactured in the United States or outside the United States. The origin of the components does not matter for this representation.
ARRA Construction Material Rule
When using funds appropriated under the American Recovery and Reinvestment Act of 2009, domestic manufactured construction material must be manufactured in the United States without a component-origin requirement. If the material is wholly or predominantly iron or steel, the iron or steel itself must be produced in the United States.
Responsibilities
Contracting Officer
Determine whether the acquisition is subject to the Buy American statute or instead covered by a trade agreement. Apply the correct origin test, evaluate offers accordingly, decide whether a foreign end product may be accepted because a domestic offer is unreasonable or another exception applies, and ensure the proper construction material rules are included in solicitations and contracts.
Contractor
Identify whether offered products or construction materials qualify as domestic under the applicable rule, provide accurate representations, and understand that the required analysis may differ depending on whether the solicitation is governed by Buy American, a trade agreement, FAR 52.225-18, or ARRA funding rules.
Agency
Use the correct procurement regime based on the acquisition’s purpose, dollar value, and funding source; ensure solicitations and evaluations reflect the applicable statute, trade agreement coverage, and exceptions; and avoid applying the wrong country-of-origin standard.
Offeror/Supplier
Trace product manufacturing and, where relevant, component origin to support compliance with the applicable domestic preference or trade agreement rule. For iron or steel items and ARRA-funded work, verify the special U.S.-production requirements before certifying or pricing the item.
Practical Implications
This section is a roadmap for choosing the right sourcing rule; the biggest mistake is assuming all "domestic" tests are the same when they are not.
Trade agreement coverage can completely change the evaluation framework, so dollar thresholds and country coverage must be checked before applying Buy American restrictions.
COTS items often have a relaxed domestic content rule, but that relief does not extend to products wholly or predominantly of iron or steel, which remain tightly controlled.
The representation at FAR 52.225-18 is narrower than Buy American compliance analysis, so a product can be "manufactured in the United States" for representation purposes yet still fail a domestic content test.
For construction, ARRA-funded projects require special attention because component-origin rules are generally relaxed except for iron or steel, which can create a separate compliance trap.
Official Regulatory Text
(a) 41 U.S.C. chapter 83 , Buy American- (1) Restricts the purchase of supplies, that are not domestic end products, for use within the United States. A foreign end product may be purchased if the contracting officer determines that the price of the lowest domestic offer is unreasonable or if another exception applies (see subpart 25.1 ); and (2) Requires, with some exceptions, the use of only domestic construction materials in contracts for construction in the United States (see subpart 25.2 ). (b) The restrictions in the Buy American statute are not applicable in acquisitions subject to certain trade agreements (see subpart 25.4 ). In these acquisitions, end products and construction materials from certain countries receive nondiscriminatory treatment in evaluation with domestic offers. Generally, the dollar value of the acquisition determines which of the trade agreements applies. Exceptions to the applicability of the trade agreements are described in subpart 25.4 . (c) The test to determine the country of origin for an end product under the Buy American statute (see the various country "end product" definitions in 25.003 ) is different from the test to determine the country of origin for an end product under the trade agreements, or the criteria for the representation on end products manufactured outside the United States (see 52.225-18 ). (1) The Buy American statute uses a two-part test to define a "domestic end product" or "domestic construction material" (manufactured in the United States and a domestic content test). The domestic content test has been waived for acquisition of commercially available off-the-shelf (COTS) items, except a product that consists wholly or predominantly of iron or steel or a combination of both (excluding COTS fasteners) (see 25.101 (a) and 25.201 (b)). (2) Under the trade agreements, the test to determine country of origin is "substantial transformation" ( i.e. , transforming an article into a new and different article of commerce, with a name, character, or use distinct from the original article). (3) For the representation at 52.225-18 , the only criterion is whether the place of manufacture of an end product is in the United States or outside the United States, without regard to the origin of the components. (4) When using funds appropriated under the American Recovery and Reinvestment Act of 2009 (Pub. L. 111-5), the definition of "domestic manufactured construction material" requires manufacture in the United States but does not include a requirement with regard to the origin of the components. If the construction material consists wholly or predominantly of iron or steel, the iron or steel must be produced in the United States.