FAR 25.401—Exceptions.
Plain-English Summary
FAR 25.401 explains when the Buy American Act trade-agreements procedures in this subpart do not apply. It covers several categories of exempt acquisitions, including small business set-asides, certain national security and defense purchases, end products bought for resale, acquisitions from Federal Prison Industries and nonprofit agencies employing people who are blind or severely disabled, certain noncompetitive or sole-source acquisitions, and goods or services specifically excluded by individual trade agreements. It also identifies service categories that are excluded from coverage under the WTO Government Procurement Agreement (GPA) and various free trade agreements, such as military-support services overseas, certain ADP and telecommunications services, dredging, facility operation and management, research and development, transportation, utility services, and ship-related maintenance and repair. In practice, this section tells contracting personnel when they do not need to apply the trade-agreement rules in this subpart and when a procurement falls outside the agreement’s coverage because of the type of acquisition or the specific service involved. The practical significance is that it prevents misapplication of trade-agreement requirements, avoids unnecessary evaluation of foreign end products, and helps agencies use the correct acquisition framework for exempt buys.
Key Rules
Small business set-asides excluded
This subpart does not apply to acquisitions set aside for small businesses. If the procurement is reserved for small business participation, the trade-agreement procedures in this subpart are not used.
National security and defense exceptions
Acquisitions of arms, ammunition, war materials, or purchases indispensable for national security or national defense are excluded. These buys are outside the subpart because security and defense needs can override normal trade-agreement coverage.
Resale acquisitions excluded
Acquisitions of end products for resale are not covered. The rule recognizes that items bought for resale are treated differently from items acquired for direct government use.
Federal Prison Industries and nonprofit agencies
Acquisitions from Federal Prison Industries, Inc., and from nonprofit agencies employing people who are blind or severely disabled are excluded. These purchases are governed by their own statutory and regulatory frameworks.
Noncompetitive and sole-source buys
Certain acquisitions not using full and open competition are excluded when the limitation on competition would prevent use of this subpart, including acquisitions authorized under FAR 6.2 or 6.3 and sole-source acquisitions justified under 13.501(a). The key point is that the trade-agreement procedures do not apply where the acquisition method itself makes them inapplicable.
Trade-agreement-specific exclusions
Goods and services specifically excluded under individual trade agreements are outside coverage, including exceptions negotiated by the U.S. Trade Representative for particular agencies. Agencies must check the applicable agreement and any agency supplementary regulations.
Excluded services under WTO GPA and FTAs
Paragraph (b) lists services excluded from the U.S. schedules under the WTO GPA and certain FTAs. These include military-support services overseas, specified ADP and telecommunications services, dredging, certain facility operation and management contracts, research and development, transportation, utility services, ship equipment maintenance and installation, and nonnuclear ship repair.
Agreement-specific coverage varies
The table shows that some exclusions apply only to certain agreements, not all of them. Contracting personnel must match the service category to the correct agreement before deciding whether the procurement is covered.
Responsibilities
Contracting Officer
Determine whether the acquisition falls into one of the listed exceptions before applying this subpart. The contracting officer must identify the procurement type, check the applicable trade agreement or agency exception, and document why the subpart does or does not apply.
Agency Acquisition Staff
Apply the correct acquisition framework for exempt buys, including set-asides, prison industries, nonprofit agency sources, and noncompetitive acquisitions. They must also consult agency supplementary regulations and any USTR-negotiated exclusions.
Contractor
Understand that some procurements are outside the scope of this subpart and that trade-agreement preferences may not apply. Contractors should review solicitation terms carefully and not assume coverage where an exception or exclusion exists.
Program/Requirement Officials
Identify whether the requirement involves national security, defense, resale, or an excluded service category early in the acquisition planning process. They should provide accurate requirement descriptions so the contracting officer can determine coverage correctly.
Trade Agreement/Policy Advisors
Interpret the applicable WTO GPA or FTA schedule and agency-specific exclusions, and advise on whether a service or acquisition is covered. They help ensure the agency does not apply trade-agreement rules to excluded items or services.
Practical Implications
This section is a coverage screen: before applying trade-agreement procedures, the contracting team must ask whether the acquisition fits one of the exceptions. Missing an exception can lead to using the wrong evaluation rules or unnecessarily restricting competition.
The service exclusions in paragraph (b) are highly agreement-specific, so a service may be excluded under one trade agreement but covered under another. Always match the service code and the agreement before making a coverage decision.
Noncompetitive acquisitions and sole-source buys require special attention because the limitation on competition may make the subpart inapplicable. A common pitfall is assuming all sole-source actions are automatically covered or automatically excluded without checking the cited authority.
Agency supplementary regulations matter. Some exclusions depend on USTR-negotiated exceptions for particular agencies, so contracting officers should not rely only on the FAR text.
For contractors, the practical effect is that foreign-content or trade-agreement issues may not matter in these procurements. For contracting officers, the key is to document the basis for exclusion so the file clearly shows why the subpart was not applied.
Official Regulatory Text
(a) This subpart does not apply to- (1) Acquisitions set aside for small businesses; (2) Acquisitions of arms, ammunition, or war materials, or purchases indispensable for national security or for national defense purposes; (3) Acquisitions of end products for resale; (4) Acquisitions from Federal Prison Industries, Inc., under subpart 8.6 , and acquisitions under subpart 8.7 , Acquisition from Nonprofit Agencies Employing People Who Are Blind or Severely Disabled; (5) Other acquisitions not using full and open competition, if authorized by subpart 6.2 or 6.3 , when the limitation of competition would preclude use of the procedures of this subpart; or sole source acquisitions justified in accordance with 13.501 (a); and (6) Goods and services specifically excluded under individual trade agreements, such as exceptions negotiated by the U.S. Trade Representative for particular agencies. See the agency supplementary regulations. (b) In the World Trade Organization Government Procurement Agreement (WTO GPA) and each FTA, there is a U.S. schedule that lists services that are excluded from that agreement in acquisitions by the United States. Acquisitions of the following services are excluded from coverage by the U.S. schedule of the WTO GPA or an FTA as indicated in this table: The Service (Federal Service Codes from the Federal Procurement Data System Product/Service Code Manual are indicated in paren-theses for some services.) WTO GPA and KOREA FTA Bahrain FTA, CAFTA-DR, Chile FTA, Columbia FTA, USMCA, Oman FTA, Panama FTA, and Peru FTA Singapore FTA Australia and Morocco FTA (1) All services purchased in support of military services overseas. X X X X (2) (i) Automatic data processing (ADP) telecommunications and transmission services (D304), except enhanced ( i.e., value-added) telecommunications services. X X (ii) ADP teleprocessing and timesharing services (D305), telecommunications network management services (D316), automated news services, data services or other information services (D317), and other ADP and telecommunications services (D399). X X (iii) Basic telecommunications network services ( i.e., voice telephone services, packet-switched data transmission services, circuit-switched data transmission services, telex services, facsimile services, and private leased circuit services, but not information services, as defined in 47 U.S.C.153(24)). * * X X (3) Dredging. X X X X (4) (i) Operation and management contracts of certain Government or privately owned facilities used for Government purposes, including Federally Funded Research and Development Centers. X X (ii) Operation of all Department of Defense, Department of Energy, or the National Aeronautics and Space Administration facilities; and all Government-owned research and development facilities or Government-owned environmental laboratories. ** X ** X (5) Research and development. X X X X (6) Transportation services (including launching services, but not including travel agent services). X X X X (7) Utility services. X X X X (8) Maintenance, repair, modification, rebuilding and installation of equipment related to ships (J019). X X (9) Nonnuclear ship repair (J998). X X * Note1. Acquisitions of the services listed at (2)(iii) of this table are a subset of the excluded services at (2)(i) and (ii), and are therefore not covered under the WTO GPA. ** Note2. Acquisitions of the services listed at (4)(ii) of this table are a subset of the excluded services at (4)(i), and are therefore not covered under the WTO GPA.