Final Rule Amending the Federal Acquisition Regulation (FAR) to implement an Executive Order Addressing Domestic Preferences in Government Procurement.

In a Federal Register Notice scheduled to be published March 7, 2022, Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA) are issuing a final rule amending the Federal Acquisition Regulation (FAR) to implement an Executive order addressing domestic preferences in Government procurement.

This rule increases the domestic content threshold initially from 55 percent to 60 percent, then to 65 percent in calendar year 2024 and to 75 percent in calendar year 2029. See FAR 25.101(a)(2)(i) and 25.201(b)(2)(i). The initial increase to 60 percent will occur several months from publication of the final rule, to allow industry time to plan for the new threshold and to provide workforce training on the new fallback threshold.

This rule also allows, until one year after the increase of the domestic content threshold to 75 percent, for the use of the 55 percent domestic content threshold (i.e., the threshold in effect prior to the effective date of this rule) in instances where an agency has determined that there are no end products or construction materials that meet the new domestic content threshold or such products are of unreasonable cost. See FAR 25.106(b)(2) and (c)(2), and 25.204(b)(1)(ii) and (b)(2).

The rule provides for a framework through which higher price preferences will be applied to end products and construction material deemed to be critical or made up of critical components. A subsequent rulemaking will establish the definitive list at FAR 25.105 of critical items and critical components in the FAR, along with their associated enhanced price preference(s). When a final rule goes into place establishing the list and preference factors at 25.105, the higher price preference for critical items or critical components shall be used.