FAR 25.201—Policy.
Plain-English Summary
FAR 25.201 states the basic Buy American policy for construction contracts performed in the United States: contractors must use domestic construction materials unless an exception in FAR 25.202 applies. It explains how the Buy American statute, Executive Order 13881, and Executive Order 14005 define when a construction material is “domestic,” including the two-part test for manufactured construction materials and the special rule for materials made wholly or predominantly of iron or steel. The section also addresses the phased increase in the domestic content threshold for manufactured construction materials, the special waiver for commercial off-the-shelf (COTS) items, and the limited exception for COTS fasteners in the iron-and-steel category. Finally, it covers how to handle contracts whose period of performance spans multiple threshold increases, including the authority of the senior procurement executive to approve an alternate domestic content test for the entire contract period. In practice, this section is the starting point for determining whether construction materials are acceptable for a U.S. construction contract and what domestic content standard applies at award and during performance.
Key Rules
Use domestic materials in U.S. construction
For construction contracts performed in the United States, the default rule is to use only domestic construction materials unless an exception in FAR 25.202 applies. This is the core policy contractors and contracting officers must apply before buying or installing materials.
Two-part test for manufactured materials
A manufactured construction material is domestic only if it is manufactured in the United States and meets the applicable domestic component cost test. This means both the place of manufacture and the component-cost requirement must be satisfied.
General domestic content threshold increases
For manufactured construction materials other than the iron-and-steel category, domestic components must exceed 60 percent of total component cost, rising to 65 percent for items delivered in calendar years 2024 through 2028 and 75 percent for items delivered starting in calendar year 2029. The applicable percentage depends on the delivery year, unless an alternate test is approved under paragraph (c).
COTS waiver for general materials
The domestic content test for the general manufactured-material category is waived for acquisitions of COTS items under 41 U.S.C. 1907 and FAR 12.505(a). This waiver does not eliminate the requirement that the item be domestic if another rule or clause applies, but it removes the component-cost test for COTS items in this category.
Special iron-and-steel rule
For construction material that consists wholly or predominantly of iron or steel, or a combination of both, foreign iron and steel must be less than 5 percent of the cost of all components used in the material. The rule specifically includes foreign mill products, castings, forgings, and a good-faith estimate of foreign iron or steel components, while excluding COTS fasteners from that foreign-content calculation.
Limited COTS treatment for iron and steel
The domestic content test for the iron-and-steel category is not waived for COTS items, except for COTS fasteners. That means COTS status generally does not excuse compliance with the iron-and-steel foreign-content limit.
Thresholds follow delivery year
When a contract spans multiple years and the domestic content thresholds increase during performance, each item must meet the threshold in effect for its year of delivery. This default rule ties compliance to delivery timing rather than award date.
Alternate test may be approved
The senior procurement executive of the contracting agency may authorize an alternate domestic content test so that the threshold in effect at award applies to the entire contract period. This authority is not delegable, and the senior procurement executive must consult the Made in America Office before approving the alternate test.
Responsibilities
Contracting Officer
Apply the domestic construction material policy when buying construction materials for U.S. construction contracts, ensure the correct clause and threshold are used, and verify whether an exception under FAR 25.202 or an alternate domestic content test has been approved.
Contractor
Provide domestic construction materials unless an exception applies, determine whether materials meet the applicable domestic content test, track delivery-year thresholds for multi-year performance, and document compliance for manufactured materials and iron-and-steel materials.
Senior Procurement Executive
Decide whether to allow an alternate domestic content test for a contract spanning threshold increases, consult the Made in America Office before approving that alternate test, and ensure the decision is made at the agency level because the authority is not delegable.
Agency
Implement the Buy American policy in construction acquisitions, ensure contracting personnel use the correct domestic content thresholds and clauses, and maintain internal controls for approvals involving alternate domestic content tests.
Made in America Office
Provide consultation to the senior procurement executive before an alternate domestic content test is approved for a contract spanning threshold increases.
Practical Implications
Contractors must check both the material type and the delivery date; a material that qualified one year may fail the next year because the threshold increases over time.
For manufactured materials, being made in the United States is not enough by itself—the component-cost test still matters unless the COTS waiver applies.
Iron-and-steel materials are treated more strictly than other manufactured materials, and COTS status usually does not remove the foreign-content limit.
Contracting officers need to know whether a contract spans the threshold-change years and whether an alternate test has been formally approved before relying on a single domestic content standard.
A common pitfall is misclassifying a material as COTS or overlooking the special treatment of COTS fasteners in the iron-and-steel calculation.
Official Regulatory Text
(a) Except as provided in 25.202 , use only domestic construction materials in construction contracts performed in the United States. (b) The Buy American statute restricts the purchase of construction materials that are not domestic construction materials. For manufactured construction materials, the Buy American statute, E.O. 13881, and E.O. 14005 use a two-part test to define domestic construction materials. (1) The article must be manufactured in the United States; and (2) (i) Except for construction material that consists wholly or predominantly of iron or steel or a combination of both, the cost of domestic components must exceed 60 percent of the cost of all the 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, but see paragraph (c) of this section. In accordance with 41 U.S.C. 1907 , this domestic content test of the Buy American statute has been waived for acquisitions of COTS items (see 12.505 (a)). (ii) For construction material that consists wholly or predominantly of iron or steel or a combination of both, the cost of foreign iron and steel must constitute less than 5 percent of the cost of all the components used in such construction material (see the definition of "foreign iron and steel" at 25.003 ). 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. This domestic content test of the Buy American statute has not been waived for acquisitions of COTS items in this category, except for COTS fasteners. (c) (1) A contract with a period of performance that spans the schedule of domestic content threshold increases specified in paragraph (b)(2)(i) of this section shall be required to comply with each increased threshold for the items in the year of delivery, unless the senior procurement executive of the contracting agency allows for application of an alternate domestic content test for that contract under which the domestic content threshold in effect at time of contract award will apply to the entire period of performance for the contract. This authority is not delegable. The senior procurement executive shall consult the Office of Management and Budget's Made in America Office before allowing the use of the alternate domestic content test. (2) When a senior procurement executive allows for application of an alternate domestic content test for a contract, see 25.1102 (a)(3) or (c)(4) for use of the appropriate Alternate clause to reflect the domestic content threshold that will apply to the entire period of performance for that contract.