FAR 25.003—Definitions.
Plain-English Summary
FAR 25.003 is the definitions section for FAR Part 25, which governs foreign acquisition, trade agreements, and related domestic preference rules. It defines the key terms that drive Buy American and trade-agreement determinations, including Caribbean Basin country, Caribbean Basin country end product, civil aircraft and related articles, component, construction material, cost of components, critical component, critical item, and designated country. These definitions matter because they determine whether an item qualifies for a preference, whether an exception applies, how to calculate content or component costs, and whether a procurement is subject to special treatment under trade agreements or domestic source restrictions. In practice, contracting officers use these definitions to draft solicitations, evaluate offers, apply evaluation preferences, and document compliance, while contractors use them to determine product eligibility and price their offers correctly. The section is foundational because many FAR Part 25 requirements turn on these terms, and a small definitional mistake can change the outcome of a competition or a compliance determination.
Key Rules
Country and product eligibility
The section defines which countries count as Caribbean Basin countries and which products qualify as Caribbean Basin country end products. Eligibility depends on either wholly obtaining the article in the country or substantially transforming foreign materials there, and the product must not be excluded from duty-free treatment under the cited statute.
Express exclusions apply
Certain products are specifically excluded from Caribbean Basin country end product status, including canned tuna, petroleum products, and watches or watch parts containing materials from certain column 2 duty countries. The definition also points readers to tariff schedule provisions for textiles, apparel, footwear, luggage, leather goods, and handloomed or folklore articles.
Supply contract value includes incidental services
For a supply contract, the term product includes the article offered for purchase, but the acquisition value also includes incidental services other than transportation if those services do not exceed the value of the article itself. This affects how agencies determine the value of the acquisition for applicability and evaluation purposes.
Civil aircraft definition is broad
Civil aircraft and related articles includes all aircraft except those for DoD or Coast Guard use, plus engines, parts, components, subassemblies, and ground flight simulators for those aircraft. The definition applies regardless of whether the items receive duty-free treatment under the Trade Agreements Act.
Component and construction material differ
A component is anything incorporated directly into an end product or construction material, while construction material is an article, material, or supply brought to the site for incorporation into a building or work. Materials purchased directly by the Government are supplies, not construction material, and emergency life safety systems are treated as a single construction material when they meet the stated conditions.
Cost of components has specific rules
For purchased components, cost includes acquisition cost, transportation to the place of incorporation, and any applicable duty. For contractor-manufactured components, cost includes manufacture costs, transportation, and allocable overhead, but excludes profit and excludes costs associated with manufacturing the end product.
Critical components and items are listed elsewhere
Critical component and critical item are defined by reference to the lists in FAR 25.105. These terms identify domestic supply-chain-sensitive items and are used to apply special procurement restrictions or preferences.
Designated country drives trade agreement coverage
Designated country includes WTO GPA countries and other countries identified in the definition. This status is central to determining whether trade agreement procedures, evaluation preferences, or exceptions apply in a given procurement.
Responsibilities
Contracting Officer
Identify the correct FAR Part 25 definitions before issuing the solicitation, especially when evaluating domestic preference, trade agreement coverage, Caribbean Basin eligibility, or construction versus supply classifications. Use the definitions to determine applicable clauses, evaluation factors, and documentation requirements, and verify whether an offered product or country qualifies under the cited rules.
Contractor
Determine whether offered products qualify as domestic, designated-country, Caribbean Basin country, or otherwise eligible under the solicitation. Accurately calculate component costs, classify products and construction materials correctly, and ensure representations and certifications match the actual origin and composition of the item.
Agency
Maintain and apply current lists and references incorporated by the definitions, including the critical component and critical item lists at FAR 25.105 and the tariff schedule references for duty-free treatment. Ensure acquisition planning and policy guidance align with the definitions used in Part 25.
Subcontractor or Supplier
Provide accurate origin, manufacturing, and cost information needed to support the prime contractor’s compliance determinations. Identify whether supplied items are components, construction materials, or excluded products so the prime can make correct sourcing and certification decisions.
Practical Implications
These definitions control eligibility, so a product can be disqualified by a small origin or transformation issue even if it is assembled in a preferred country.
Contractors often make mistakes by confusing supplies with construction materials, or by forgetting that transportation and duty can be included in component cost calculations.
The Caribbean Basin definition is not just geographic; it also depends on tariff-status exclusions and special product categories, so country of origin alone is not enough.
Civil aircraft rules are broader than many users expect and can apply to parts and simulators even when the aircraft itself is not being purchased for DoD or Coast Guard use.
Because critical components and critical items are defined by cross-reference to FAR 25.105, users must check that list rather than relying only on the text of 25.003.
Official Regulatory Text
As used in this part— Caribbean Basin country means any of the following countries: Antigua and Barbuda, Aruba, Bahamas, Barbados, Belize, Bonaire, British Virgin Islands, Curacao, Dominica, Grenada, Guyana, Haiti, Jamaica, Montserrat, Saba, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Sint Eustatius, Sint Maarten, or Trinidad and Tobago. Caribbean Basin country end product — (1) Means an article that– (i) (A) Is wholly the growth, product, or manufacture of a Caribbean Basin country; or (B) In the case of an article that consists in whole or in part of materials from another country, has been substantially transformed in a Caribbean Basin country into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was transformed; and (ii) Is not excluded from duty-free treatment for Caribbean countries under 19 U.S.C. 2703(b) . (A) For this reason, the following articles are not Caribbean Basin country end products: (1) Tuna, prepared or preserved in any manner in airtight containers. (2) Petroleum, or any product derived from petroleum. (3) Watches and watch parts (including cases, bracelets, and straps) of whatever type including, but not limited to, mechanical, quartz digital, or quartz analog, if such watches or watch parts contain any material that is the product of any country to which the Harmonized Tariff Schedule of the United States (HTSUS) column 2 rates of duty apply (i.e., Afghanistan, Cuba, Laos, North Korea, and Vietnam). (4) Certain of the following: textiles and apparel articles; footwear, handbags, luggage, flat goods, work gloves, and leather wearing apparel; or handloomed, handmade, and folklore articles. (B) Access to the HTSUS to determine duty-free status of articles of the types listed in paragraph (1)(ii)(A)(4) of this definition is available via the Internet at https://usitc.gov/tata/hts/index.htm . In particular, see the following: (1) General Note 3(c), Products Eligible for Special Tariff treatment. (2) General Note 17, Products of Countries Designated as Beneficiary Countries under the United States- Caribbean Basin Trade Partnership Act of 2000. (3) Section XXII, Chapter 98, Subchapter II, Articles Exported and Returned, Advanced or Improved Abroad, U.S. Note 7(b). (4) Section XXII, Chapter 98, Subchapter XX, Goods Eligible for Special Tariff Benefits under the United States-Caribbean Basin Trade Partnership Act; and (2) Refers to a product offered for purchase under a supply contract, but for purposes of calculating the value of the acquisition, includes services (except transportation services) incidental to the article, provided that the value of those incidental services does not exceed that of the article itself. Civil aircraft and related articles means- (1) All aircraft other than aircraft to be purchased for use by the Department of Defense or the U.S. Coast Guard; (2) The engines (and parts and components for incorporation into the engines) of these aircraft; (3) Any other parts, components, and subassemblies for incorporation into the aircraft; and (4) Any ground flight simulators, and parts and components of these simulators, for use with respect to the aircraft, whether to be used as original or replacement equipment in the manufacture, repair, maintenance, rebuilding, modification, or conversion of the aircraft and without regard to whether the aircraft or articles receive duty-free treatment under section 601(a)(2) of the Trade Agreements Act. Component means an article, material, or supply incorporated directly into an end product or construction material. Construction material means an article, material, or supply brought to the construction site by a contractor or subcontractor for incorporation into the building or work. The term also includes an item brought to the site preassembled from articles, materials, or supplies. However, emergency life safety systems, such as emergency lighting, fire alarm, and audio evacuation systems, that are discrete systems incorporated into a public building or work and that are produced as complete systems, are evaluated as a single and distinct construction material regardless of when or how the individual parts or components of those systems are delivered to the construction site. Materials purchased directly by the Government are supplies, not construction material. Cost of components means- (1) For components purchased by the contractor, the acquisition cost, including transportation costs to the place of incorporation into the end product or construction material (whether or not such costs are paid to a domestic firm), and any applicable duty (whether or not a duty-free entry certificate is issued); or (2) For components manufactured by the contractor, all costs associated with the manufacture of the component, including transportation costs as described in paragraph (1) of this definition, plus allocable overhead costs, but excluding profit. Cost of components does not include any costs associated with the manufacture of the end product. Critical component means a component that is mined, produced, or manufactured in the United States and deemed critical to the U.S. supply chain. The list of critical components is at 25.105 . Critical item means a domestic construction material or domestic end product that is deemed critical to the U.S. supply chain. The list of critical items is at 25.105 . Designated country means any of the following countries: (1) A World Trade Organization Government Procurement Agreement (WTO GPA) country (Armenia, Aruba, Australia, Austria,, Belgium, Bulgaria, Canada, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hong Kong, Hungary, Iceland, Ireland, Israel, Italy, Japan, Korea (Republic of), Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Moldova, Montenegro, Netherlands, New Zealand, North Macedonia, Norway, Poland, Portugal, Romania, Singapore, Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Taiwan (known in the World Trade Organization as "the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu (Chinese Taipei)"), Ukraine, or United Kingdom); (2) A Free Trade Agreement (FTA) country (Australia, Bahrain, Chile, Colombia, Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Korea (Republic of), Mexico, Morocco, Nicaragua, Oman, Panama, Peru, or Singapore); (3) A least developed country (Afghanistan, Angola, Bangladesh, Benin, Bhutan, Burkina Faso, Burundi, Cambodia, Central African Republic, Chad, Comoros, Democratic Republic of Congo, Djibouti, Equatorial Guinea, Eritrea, Ethiopia, Gambia, Guinea, Guinea-Bissau, Haiti, Kiribati, Laos, Lesotho, Liberia, Madagascar, Malawi, Mali, Mauritania, Mozambique, Nepal, Niger, Rwanda, Samoa, Sao Tome and Principe, Senegal, Sierra Leone, Solomon Islands, Somalia, South Sudan, Tanzania, Timor-Leste, Togo, Tuvalu, Uganda, Vanuatu, Yemen, or Zambia); or (4) A Caribbean Basin country (Antigua and Barbuda, Aruba, Bahamas, Barbados, Belize, Bonaire, British Virgin Islands, Curacao, Dominica, Grenada, Guyana, Haiti, Jamaica, Montserrat, Saba, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Sint Eustatius, Sint Maarten, or Trinidad and Tobago). Designated country end product means a WTO GPA country end product, an FTA country end product, a least developed country end product, or a Caribbean Basin country end product. Domestic construction material means- (1) For use in subparts other than 25.6— (i) For construction material that does not consist wholly or predominantly of iron or steel or a combination of both— (A) An unmanufactured construction material mined or produced in the United States; or (B) A construction material manufactured in the United States, if– (1) The cost of the components mined, produced, or manufactured in the United States exceeds 60 percent of the cost of all its components, except that the percentage will be 65 percent for items delivered in calendar years 2024 through 2028 and 75 percent for items delivered starting in calendar year 2029 (unless an alternate percentage is established for a contract in accordance with FAR 25.201 (c)).Components of unknown origin are treated as foreign; or (2) The construction material is a commercially available off-the-shelf (COTS) item; or (ii) For construction material that consists wholly or predominantly of iron or steel or a combination of both, a construction material manufactured in the United States if the cost of foreign iron and steel constitutes less than 5 percent of the cost of all the components used in such construction material. The cost of foreign iron and steel includes but is not limited to the cost of foreign iron or steel mill products (such as bar, billet, slab, wire, plate, or sheet), castings, or forgings utilized in the manufacture of the construction material and a good faith estimate of the cost of all foreign iron or steel components excluding COTS fasteners. Iron or steel components of unknown origin are treated as foreign. If the construction material contains multiple components, the cost of all the materials used in such construction material is calculated in accordance with the definition of “cost of components” in this section; or (3) For use in subpart 25.6 , see the definition in 25.601 . Domestic end product means- (1) For an end product that does not consist wholly or predominantly of iron or steel or a combination of both— (i) An unmanufactured end product mined or produced in the United States; (ii) An end product manufactured in the United States, if– (A) The cost of its components mined, produced, or manufactured in the United States exceeds 60 percent of the cost of all its components, except that the percentage will be 65 percent for items delivered in calendar years 2024 through 2028 and 75 percent for items delivered starting in calendar year 2029 (unless an alternate percentage is established for a contract in accordance with FAR 25.101 (d)). Components of unknown origin are treated as foreign. Scrap generated, collected, and prepared for processing in the United States is considered domestic; or (B) The end product is a COTS item; or (2) For an end product that consists wholly or predominantly of iron or steel or a combination of both, an end product manufactured in the United States, if the cost of foreign iron and steel constitutes less than 5 percent of the cost of all the components used in the end product. The cost of foreign iron and steel includes but is not limited to the cost of foreign iron or steel mill products (such as bar, billet, slab, wire, plate, or sheet), castings, or forgings utilized in the manufacture of the end product and a good faith estimate of the cost of all foreign iron or steel components excluding COTS fasteners. Iron or steel components of unknown origin are treated as foreign. If the end product contains multiple components, the cost of all the materials used in such end product is calculated in accordance with the definition of "cost of components" in this section. Domestic offer means an offer of a domestic end product. When the solicitation specifies that award will be made on a group of line items, a domestic offer means an offer where the proposed price of the domestic end products exceeds 50 percent of the total proposed price of the group. Eligible offer means an offer of an eligible product. When the solicitation specifies that award will be made on a group of line items, an eligible offer means a foreign offer where the combined proposed price of the eligible products and the domestic end products exceeds 50 percent of the total proposed price of the group. Eligible product means a foreign end product, construction material, or service that, due to applicability of a trade agreement to a particular acquisition, is not subject to discriminatory treatment. End product means those articles, materials, and supplies to be acquired for public use. Fastener means a hardware device that mechanically joins or affixes two or more objects together. Examples of fasteners are nuts, bolts, pins, rivets, nails, clips, and screws. Foreign construction material means a construction material other than a domestic construction material. Foreign contractor means a contractor or subcontractor organized or existing under the laws of a country other than the United States. Foreign end product means an end product other than a domestic end product. Foreign iron and steel means iron or steel products not produced in the United States. Produced in the United States means that all manufacturing processes of the iron or steel must take place in the United States, from the initial melting stage through the application of coatings, except metallurgical processes involving refinement of steel additives. The origin of the elements of the iron or steel is not relevant to the determination of whether it is domestic or foreign. Foreign offer means any offer other than a domestic offer. Free Trade Agreement country means Australia, Bahrain, Chile, Colombia, Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Korea (Republic of), Mexico, Morocco, Nicaragua, Oman, Panama, Peru, or Singapore. Free Trade Agreement country end product means an article that- (1) Is wholly the growth, product, or manufacture of a Free Trade Agreement (FTA) country; or (2) In the case of an article that consists in whole or in part of materials from another country, has been substantially transformed in an FTA country into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was transformed. The term refers to a product offered for purchase under a supply contract, but for purposes of calculating the value of the end product, includes services (except transportation services) incidental to the article, provided that the value of those incidental services does not exceed that of the article itself. Israeli end product means an article that- (1) Is wholly the growth, product, or manufacture of Israel; or (2) In the case of an article that consists in whole or in part of materials from another country, has been substantially transformed in Israel into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was transformed. Least developed country means any of the following countries: Afghanistan, Angola, Bangladesh, Benin, Bhutan, Burkina Faso, Burundi, Cambodia, Central African Republic, Chad, Comoros, Democratic Republic of Congo, Djibouti, Equatorial Guinea, Eritrea, Ethiopia, Gambia, Guinea, Guinea-Bissau, Haiti, Kiribati, Laos, Lesotho, Liberia, Madagascar, Malawi, Mali, Mauritania, Mozambique, Nepal, Niger, Rwanda, Samoa, Sao Tome and Principe, Senegal, Sierra Leone, Solomon Islands, Somalia, South Sudan, Tanzania, Timor-Leste, Togo, Tuvalu, Uganda, Vanuatu, Yemen, or Zambia. Least developed country end product means an article that- (1) Is wholly the growth, product, or manufacture of a least developed country; or (2) In the case of an article that consists in whole or in part of materials from another country, has been substantially transformed in a least developed country into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was transformed. The term refers to a product offered for purchase under a supply contract, but for purposes of calculating the value of the end product, includes services (except transportation services) incidental to the article, provided that the value of those incidental services does not exceed that of the article itself. Noneligible offer means an offer of a noneligible product. Noneligible product means a foreign end product that is not an eligible product. Predominantly of iron or steel or a combination of both means that the cost of the iron and steel content exceeds 50 percent of the total cost of all its components. The cost of iron and steel is the cost of the iron or steel mill products (such as bar, billet, slab, wire, plate, or sheet), castings, or forgings utilized in the manufacture of the product and a good faith estimate of the cost of iron or steel components excluding COTS fasteners. Steel means an alloy that includes at least 50 percent iron, between 0.02 and 2 percent carbon, and may include other elements. United States means the 50 States, the District of Columbia, and outlying areas. U.S.-made end product means an article that is mined, produced, or manufactured in the United States or that is substantially transformed in the United States into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was transformed. World Trade Organization Government Procurement Agreement (WTO GPA) country means any of the following countries: Armenia, Aruba, Australia, Austria, Belgium, Bulgaria, Canada, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hong Kong, Hungary, Iceland, Ireland, Israel, Italy, Japan, Korea (Republic of), Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Moldova, Montenegro, Netherlands, New Zealand, North Macedonia, Norway, Portugal, Romania, Singapore, Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Taiwan, Ukraine, or United Kingdom. WTO GPA country end product means an article that- (1) Is wholly the growth, product, or manufacture of a WTO GPA country; or (2) In the case of an article that consists in whole or in part of materials from another country, has been substantially transformed in a WTO GPA country into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was transformed. The term refers to a product offered for purchase under a supply contract, but for purposes of calculating the value of the end product includes services (except transportation services) incidental to the article, provided that the value of those incidental services does not exceed that of the article itself.