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Cost and Analysis

In: Business and Management

Submitted By moe71865
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Buy American Requirements
David Moore
Strayer University
Cost and Analysis
BUS 315
Michael Raponi
February 17, 2016

Buy American Requirements

Buy American is a section of the American Recovery and Reinvestment Act (ARRA) that substantially increases funds distributed by the federal government to the local, and state governments over a period of years illustrates that the increased funding of the federal, state and local projects imposes additional requirements on the contractors and their suppliers to ensure that the products or material composition that they utilize during the construction and completion of those projects must contain a certain percentage of USA made goods and components. Under the Buy American Act and the Buy America, products that do not meet the domestic requirements are permitted to include a ‘cost premium’ to the price that is offered to the purchaser or contractor of an item used in completing a project.
Johnson suggests that the Buy American Act applies in cases where the federal government directly purchases materials or products or a federal facility or building. It requires that the final product must contain 51 percent of components made in the US. A cost waiver happens when the domestic materials are 6 percent higher than the foreign materials. The act also allows a price premium of 6 percent to be charged if the local requirements are not met.
The Buy America applies to the projects undertaken by the state and local governments and funded by Federal Transit Authority (FTA). It requires that 100 percent of the supplies or components of construction to be manufactured in the United States. A cost waiver can only apply when the cost of materials used is 25 percent higher than the cost of foreign materials. Consequently, it allows that a 25 percent premium price be charged on the contractors should the domestic requirements…...

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