Float Like a Butterfly (Valve), Sting Like a B(AA Requirement): GAO Issues Rare Decision Sustaining Challenge to Agency’s Application of the Buy American Act

In a polarized political environment, one area of bipartisan agreement in recent years has been renewed interest in leveraging government purchasing power to promote the domestic manufacturing base by expanding and strengthening federal “Buy America” requirements.  For direct federal procurements subject to the Buy American Act (BAA), this has resulted in revised rules increasing the amount of U.S. content required to qualify a product as domestic, as well as heightened scrutiny of when waivers may be issued exempting a procurement in whole or in part from those requirements (covered here and here).    

A recent GAO decision is illustrative of this trend.  On August 1, in Unico Mechanical Corp., B-420355.6, B-420355.7, GAO sustained a protest challenging a U.S. Army Corps of Engineers (USACE) waiver of the BAA for the awardee. In Unico, USACE sought to award a construction contract for work at the Cougar Dam in Oregon and incorporated the requirements of the BAA requirements into the solicitation without exceptions.  Based on its market research, USACE determined that there were sufficient domestic manufacturers of the required construction materials for the Cougar Dam, including certain butterfly valves, to allow offerors to comply with the BAA requirements.  McMillen, LLC submitted a proposal using foreign-source butterfly valves and requested a BAA waiver, which USACE denied.  Notwithstanding, USACE awarded McMillen the contract and exempted the butterfly valves from BAA compliance.  An unsuccessful offeror, Unico Mechanical Corporation (“Unico”) protested, challenging USACE’s basis for granting the BAA waiver considering that Unico was a known domestic producer of the valves.  Following corrective action, USACE doubled down on its waiver, explaining that Unico provided insufficient pricing information in its proposal to determine its domestic supplier capabilities and reaffirmed the award to McMillen.  Unico protested once again and GAO sustained.  GAO reasoned that USACE failed to explain its basis for changing from its original position that sufficient domestic suppliers could provide the valves.  Furthermore, GAO rejected USACE’s claim that Unico did not provide necessary pricing information, noting that Unico was not required to include component pricing and that there was no evidence USACE had ever requested the pricing information it claimed was missing.  Moreover, GAO emphasized, it was McMillen’s responsibility, as the requester seeking a waiver, to provide a reasonable market survey.  Having failed to include Unico in its market survey, GAO found that McMillen did not meet its BAA obligations and therefore USACE’s waiver was unreasonable.    

Key Takeaways:

1. Contractors accustomed to regularly obtaining waivers from BAA requirements should review their policies and procedures for supporting waiver requests to ensure they adequately address the increased scrutiny being applied to such requests.
2. It is a contractor’s responsibility to submit a fully compliant waiver request, inclusive of adequate market research, and flaws in the underlying waiver request can potentially serve as a basis for loss of contract award.
3. Although not discussed in the GAO decision, it bears emphasizing that Unico was only able to protest the contract award because it was an actual offeror that submitted a proposal. Where a domestic supplier is not an offeror in a procurement, it may want to coordinate with a company that has submitted a proposal as a prime to pursue a potential protest of a BAA waiver.