President Trump is signing an executive order today to implement a more muscular Buy American Act. This measure likely signals strengthened enforcement of the Buy American Act under the False Claims Act.
The Buy American Act is a domestic preference procurement program. It gives favorable treatment to contractors that are completing the project with goods Made in the United States. The requirement can be waived by the Contracting Officer if the product is not available domestically, the domestic version is 25% or more expensive, or waiving the requirement is in the public interest. The law, often shortened to the BAA, was passed by Congress in 1933 and signed by President Hoover.
The False Claims Act provides a means to enforce the Buy American Act. If a government contractor gains the contract and a pricing discount because of a promise of domestic manufacturing, it can be a violation of the False Claims Act if it makes the product overseas and knowingly certifies compliance with the Buy American Act in order to receive payment from the United States for its goods and services.
This is how our firm has come to handle cases for customs whistleblowers. Violations of the law often involve import and export of goods with false markings in order to hide that the products were not made in America.
President Trump has criticized the law because there are too many contracts where the requirement is waived because of dumping or because of reciprocal trade agreements. After the executive order, they are going to take a harder line on the waiver process so that fewer waivers are granted. For example, Contracting Officers will now be able to specifically take into account if there is dumping in the determination of whether goods are 25% cheaper. Agencies may also require government contractors to Buy American as well, according to a Senior Administration Official.
The Trump Administration is going to follow this up with a report from the Secretary of Commerce concerning additional executive and regulatory actions to strength the Buy American principle. Each agency will be required to conduct a comprehensive top-to-bottom review of their implementation of the Buy American mission. This effort has been described as one to close the loopholes in the law to maximize made in America.
With respect to Hire American, there was a False Claims Act lawsuit a few years back where a whistleblower brought an action against the Indian IT company Infosys for visa fraud and failure to comply with the Immigration Reform and Control Act of 1986. The company settled the lawsuit for around $34 million. Based on the minimum required by the law, the whistleblower would have received a reward of approximately $5 million for bringing the misconduct to the attention of the U.S. Government.
The executive order also calls for agencies to review and strengthen rules covering work visas such as the H-1B.
If you are working at a government contractor where misconduct is happening with respect to either the Buy American or Hire American provisions, call 1-800-590-4116 to speak to one of our whistleblower attorneys about reporting it to the U.S. Government.