FAR 25.602-1—Section 1605 of the Recovery Act.
Plain-English Summary
FAR 25.602-1 implements Section 1605 of the Recovery Act for construction-related projects funded with Recovery Act dollars. It covers the domestic source restrictions that apply to projects for the construction, alteration, maintenance, or repair of a public building or public work located in the United States, including the requirement that iron, steel, and manufactured goods used as construction material be produced or manufactured in the United States unless a trade agreement exception applies. The section also explains how to treat manufactured construction material, how to handle iron or steel components versus other components or subcomponents, and gives examples showing when the restriction applies to an entire item and when it does not. It further extends the same domestic source rules to manufactured materials purchased directly by the Government and delivered to the site for incorporation into the project. Finally, it clarifies that a project may be structured as several contracts, a single contract, or one or more line items, which matters for how the restriction is applied in practice. In short, this section is a key compliance rule for Recovery Act-funded construction work and requires careful sourcing, specification, and contract administration to avoid using noncompliant materials.
Key Rules
Recovery Act funds trigger Buy American
Funds appropriated or otherwise made available by the Recovery Act may not be used for covered construction, alteration, maintenance, or repair projects unless the project is in the United States and the domestic source requirements are met. This is a funding restriction, so it applies based on the source of the money and the type/location of the project.
Iron, steel, and manufactured goods must be domestic
All iron, steel, and manufactured goods used as construction material must be produced or manufactured in the United States, unless the trade agreements exception applies. For manufactured construction material, the item itself must be manufactured in the United States.
Iron and steel components have special rules
If construction material consists wholly or predominantly of iron or steel, all manufacturing processes for that iron or steel must occur in the United States, though the origin of the raw elements is not restricted. Metallurgical refinement of steel additives is an exception to the U.S.-process requirement.
Non-iron/steel components are unrestricted
The domestic source rule does not restrict the origin or place of production of components or subcomponents that do not consist of iron or steel. This means only the iron/steel portion of a mixed item may be subject to the special U.S.-manufacturing requirement.
Trade agreements can change the test
If trade agreements apply, manufactured construction material may satisfy the rule either by meeting the U.S.-manufacture requirement or by being wholly the product of, or substantially transformed in, a Recovery Act designated country. This creates an alternate compliance path for covered foreign products.
Government-purchased materials are covered too
Manufactured materials purchased directly by the Government and delivered to the site for incorporation into the project must meet the same domestic source requirements as materials purchased by a contractor. The rule prevents agencies from avoiding the restriction by buying the materials themselves.
Project structure does not avoid compliance
A project may be divided into several contracts, a single contract, or one or more line items, but the domestic source requirement still applies to the project. Contracting structure cannot be used to evade Section 1605 coverage.
Responsibilities
Contracting Officer
Determine whether the project is covered by Recovery Act funding and located in the United States, apply the correct domestic source test, account for any trade agreements exception, and ensure solicitations, contracts, and line items reflect the applicable requirements. The contracting officer must also administer compliance when materials are purchased directly by the Government or when the project is split across multiple contracts.
Contractor
Source iron, steel, and manufactured construction materials in compliance with the domestic source rules or the trade agreements exception, and ensure that any mixed materials are evaluated correctly for their iron/steel and non-iron/steel components. The contractor must provide compliant materials and avoid substituting noncompliant products during performance.
Agency
Use Recovery Act funds only for covered projects that satisfy Section 1605, structure acquisitions and funding actions in a way that does not circumvent the rule, and ensure direct purchases of materials meet the same requirements as contractor-supplied materials. The agency must also support proper oversight and documentation of compliance.
Supplier/Manufacturer
Produce or manufacture covered iron, steel, and manufactured goods in the United States when required, or otherwise support compliance under the trade agreements exception. Suppliers should be prepared to document manufacturing location and product origin for covered items.
Practical Implications
This section is a sourcing rule, not just a contract clause, so compliance has to be built into procurement planning, specifications, and submittal review from the start.
Mixed products can be tricky: a steel-heavy item like a guardrail may trigger the iron/steel rule for the steel portion, while a wood-based item with a small steel component may not.
Do not assume that buying materials directly through the Government avoids the restriction; direct purchases for incorporation into the project are subject to the same test.
If trade agreements apply, the compliance analysis changes, so contracting officers need to confirm whether the alternate designated-country path is available before rejecting or accepting a product.
Breaking a project into multiple contracts or line items does not eliminate the requirement, so contractors and agencies should treat the project as a whole for coverage purposes.
Official Regulatory Text
Except as provided in 25.603 - (a) None of the funds appropriated or otherwise made available by the Recovery Act may be used for a project for the construction, alteration, maintenance, or repair of a public building or public work unless the public building or public work is located in the United States and- (1) All of the iron, steel, and manufactured goods used as construction material in the project are produced or manufactured in the United States. (i) All manufactured construction material must be manufactured in the United States. (ii) Iron or steel components . (A) Iron or steel components of construction material consisting wholly or predominantly of iron or steel must be produced in the United States. This does not restrict the origin of the elements of the iron or steel, but requires that all manufacturing processes of the iron or steel must take place in the United States, except metallurgical processes involving refinement of steel additives. (B) The requirement in paragraph (a)(1)(ii)(A) of this section does not apply to iron or steel components or subcomponents in construction material that does not consist wholly or predominantly of iron or steel. (iii) All other components . There is no restriction on the origin or place of production or manufacture of components or subcomponents that do not consist of iron or steel. (iv) Examples . (A) If a steel guardrail consists predominantly of steel, even though coated with aluminum, then the steel would be subject to the section 1605 restriction requiring that all stages of production of the steel occur in the United States, in addition to the requirement to manufacture the guardrail in the United States. There would be no restrictions on the other components of the guardrail. (B) If a wooden window frame is delivered to the site as a single construction material, there is no restriction on any of the components, including the steel lock on the window frame; or (2) If trade agreements apply, the manufactured construction material shall either comply with the requirements of paragraph (a)(1) of this subsection, or be wholly the product of or be substantially transformed in a Recovery Act designated country; (b) Manufactured materials purchased directly by the Government and delivered to the site for incorporation into the project shall meet the same domestic source requirements as specified for manufactured construction material in paragraphs (a)(1) and (a)(2) of this section; and (c) A project may include several contracts, a single contract, or one or more line items on a contract.