Buy and Hire American
Federal and State Governments are increasing enforcement of “Buy American Hire American” laws, in light of Executive Order 13788 issued in April 2017. Essentially every contractor and subcontractor on a federally funded project supplying construction materials must certify that the materials used are in compliance with the Buy American Act (BAA) requiring use if domestic materials including steel. There are a number of laws which apply.
Three Buy American Act laws are found at 41 U.S.C. Sections 8301-8305; 49U.S.C 5323(j) and 23 U.S.C. Section 313. The 1933 Buy American Act (BAA) requires the government to five preferences to U.S. made products in federal procurements whenever practicable. The 1979 Trade Agreements Act (TAA). Which generally supersedes the BAA allows items made in certain designated countries with which the U.S. has trade agreements to be substituted for American products. These are deemed favorable countries. There is also the Berry Amendment which requires the U.S. Department of Defense and Department of Homeland Security to give preference to domestic food, textile and specialty metal sources.
When a certificate of compliance, filed by a government contractor contains false information about the origin of materials used under the Buy America Act, this may give rise to a False Claims Act case, which may be filed by an individual whistleblower on behalf of the federal or state governments. If the case us successful, the whistleblower may be entitled to receive a reward of between 15-30% of what the governments collect on the case.
Here is an example of a successful case of this type: In January 2016 an architectural firm Novum Structures LLC of Wisconsin agreed to pay $3 Million and enter a guilty plea to settle criminal and civil liability arising from its illegal use of foreign materials on construction projects involving federal funds. Novum specialized in the design and construction of glass space frames used in roofs and atrium enclosures. The Department of Justice Press Release revealed that the company repackaged materials and falsified documents relating to federal jobs to hide that is was using noncompliant materials.
Country of Origin Misclassification
Another area of fraud which the federal government is watching for relates to evasion of tariffs for products entering our country. Certain products which have been “dumped” into the stream of commerce at extremely low prices have resulted in special anti-dumping tariffs. This is the case with many products from China including steel, certain furniture products and honey. However, many Chinese companies engage in schemes to hide the country of origin by “transshipping” the products. For example, a steel maker in China set up a factory in Mexico and shipped the steel there, where it was re-formed and trucked into the United States. This was done to avoid the tariffs which do not include steel products from Mexico. In these cases, the products are falsely labeled as manufactured in Mexico when the product is really from China.
The United States Government relies on whistleblowers to reveal these schemes to evade Buy American laws. If you are aware of information about intentional violation of Buy American Laws or evasion of tariffs or foreign made products wrongfully substituted and sold as Made In America, contact us or fill out the form on our web site.