FAR 25.406—Israeli Trade Act.
Plain-English Summary
FAR 25.406 implements the Israeli Trade Act for certain federal supply acquisitions and explains when Israeli end products receive special treatment. It covers the dollar-value trigger for coverage, the agencies that must apply the rule, the agencies that are excluded, and the practical effect on evaluation of offers containing Israeli end products. The section also makes clear that the rule is limited in scope: it requires agencies to evaluate Israeli end products without applying Buy American restrictions, but it does not bar the purchase of other foreign end products. In practice, this means contracting personnel must know when the acquisition falls within the Israeli Trade Act threshold, whether their agency is subject to the rule, and how to treat Israeli-origin supplies during evaluation. The section is important because it affects competition, evaluation, and source selection for covered supply acquisitions, while avoiding unnecessary exclusion of Israeli products. It also helps distinguish this statute from broader domestic preference rules and from other trade agreement or statutory exceptions that may apply to the same procurement.
Key Rules
Coverage threshold
The Israeli Trade Act applies to acquisitions of supplies by most agencies when the estimated value is $50,000 or more but does not exceed the WTO GPA threshold for supplies. If the acquisition is outside that dollar range, this section does not apply.
Agency applicability limits
Most agencies are covered, but the section specifically excludes the Department of Defense, the Department of Energy, the Department of Transportation, the Bureau of Reclamation of the Department of the Interior, the Federal Housing Finance Board, and the Office of Thrift Supervision. Those agencies do not apply this rule under this section.
Israeli end products must be evaluated favorably
Covered agencies must evaluate offers of Israeli end products without regard to the restrictions of the Buy American statute. In practical terms, Israeli end products cannot be downgraded or rejected solely because they are foreign under Buy American restrictions.
No ban on other foreign products
The Israeli Trade Act does not prohibit the purchase of other foreign end products. Agencies may still buy non-Israeli foreign products if otherwise permissible under the solicitation and applicable law.
Limited to supplies
This section addresses acquisitions of supplies, not services. The rule is therefore relevant when the procurement is for supply items and not for service-only acquisitions.
Responsibilities
Contracting Officer
Determine whether the acquisition is for supplies, whether the estimated value falls within the Israeli Trade Act range, and whether the agency is subject to the rule. When applicable, evaluate Israeli end products without applying Buy American restrictions and ensure the solicitation and evaluation process reflect that treatment.
Agency
Apply the Israeli Trade Act only if the agency is covered by the section and the acquisition meets the dollar threshold. Agencies excluded by the rule must not apply this section as a mandatory evaluation requirement.
Offeror/Contractor
Identify Israeli end products accurately in offers and understand that such products are entitled to evaluation without Buy American restrictions when the procurement is covered. Also recognize that the rule does not guarantee award, only proper evaluation under the statute.
Source Selection/Evaluation Team
Assess offers consistently with the Israeli Trade Act when applicable, ensuring Israeli end products are not treated as unacceptable solely because of Buy American restrictions. The team must still evaluate all other stated solicitation factors and applicable laws.
Practical Implications
For contracting officers, the first practical step is to check both the estimated value and the agency’s status before applying the rule; a mistake on either point can lead to an improper evaluation scheme.
Israeli end products must be treated differently from ordinary foreign products under Buy American analysis, but that does not mean they automatically win or that all foreign products are barred.
A common pitfall is confusing the Israeli Trade Act with broader trade agreement or domestic preference rules; this section is narrower and only affects the specified range of supply acquisitions.
Another frequent issue is failing to document why the rule does or does not apply, especially when the acquisition value is near the WTO GPA threshold or when the agency is one of the listed exclusions.
Because the section does not prohibit other foreign end products, agencies should avoid overreading it as a general foreign preference restriction; the rule is about special treatment for Israeli end products, not a blanket sourcing limitation.
Official Regulatory Text
Acquisitions of supplies by most agencies are covered by the Israeli Trade Act, if the estimated value of the acquisition is $50,000 or more but does not exceed the WTO GPA threshold for supplies (see 25.402 (b)). Agencies other than the Department of Defense, the Department of Energy, the Department of Transportation, the Bureau of Reclamation of the Department of the Interior, the Federal Housing Finance Board, and the Office of Thrift Supervision must evaluate offers of Israeli end products without regard to the restrictions of the Buy American statute. The Israeli Trade Act does not prohibit the purchase of other foreign end products.