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“Buy America” – Tipping Defense, Aviation and Space Back Toward America

ByKent Johnson - Senior Warrior Maven contributor

--retired USAF F-15 Strike Eagle and A-10 Warthog pilot, and political-military advisor on the staff of the secretary of the Air Force, and an adjunct at North Central Texas College in Gainesville, Texas, specializing in defense studies.

“Buy America” – Tipping Defense, Aviation and Space Back Toward America

President Trump sent another flaming arrow into the wide-ranging federal procurement community, from who we buy rocket launches from to who makes rivets for bridges and aircraft carriers. His January 31st, 2019 Executive Order, titled “Strengthening Buy American Preferences,” reinforces the Buy America and Buy American Acts. But is this renewed emphasis on procuring all-American goods and services a positive or negative influence on how the American government does business?

At least one news outlet, “The Procurement Playbook: Legal Insight for Government Contractors,” reported on this E.O. with some circumspection. The article, “President Trump Expands Buy American Act – Another Wrench in the Works?” – noted: “While domestic preference requirements in federal procurements… are not new,” “increased emphasis” is. Additionally, while the President’s “policy objective” is “straightforward,” “the intersection and resulting nuances between these Acts, their regulations and related trade statutes, agreements or exceptions … are anything but.”

The goal of the latest E.O., which expands on an earlier one from 2017, is to require federal agencies to refocus – for economic if not security reasons – on developing plans and rules that “adhere to domestic preference requirements to the maximum extent practicable in all projects,” including both outright procurement and incentives, loans and cooperative agreements. The effect of this new push will be felt widely, effectively applying “to any project that receives financial assistance from the federal government, even if the project is not a procurement that was solicited by the federal government.”

In other words, every federal agency, outlay, contract, grant, loan, financial incentive or relationship will now be tested against this new requirement: Is it focused tightly on America, meaning the tightest possible nexus with American investment, American jobs, American territory, American supply chains, American national security, and American research and development?

If it is not, then back to the drawing board.

Key to this discussion will be the impact on specific economic sectors, particularly on aerospace and defense businesses who contract with the U.S. government. This is simply due to the importance of those business sectors to national security, and the size of our budgets dedicated to that purpose. Notably here, the 2019 E.O. affects “transportation…,” “aviation,” and other related areas, from varied and diverse transport sectors, ranging from “port” infrastructure to “cybersecurity.”

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Historically, price has always been a dominant factor when the U.S. Department of Defense acquired basic services or goods – from industrial materials like steel and aluminum, to finished products, to services like air transport and even space launch. And while certain goods and services are awarded based on “best value” (which can carry a higher price tag), lowest price still stands as a primary procurement threshold.

Now, that might be changing – fast.

Driven by this “Buy America” pressure – and rising concerns over international threats to supply chain integrity, intellectual property and our industrial base – government acquisition is looking to quickly tip back toward “all American” purchasing and all-American incentives. Lowest price – particularly if tied to foreign sourcing – may not have the acquisition value it once had.

Thus, if a federally procured, defense-related, or national security service or product has any potential risk associated with it, and any “purely American” alternative options exist – especially if the American option grows jobs at home, keeps sensitive assets on U.S. territory, or advances U.S. policy – the U.S. option will now be favored.

If all this sounds difficult to sort out, it surely will involve an evolution – especially since the typical federal procurement cycle is two years. But in general, the entire focus of government procurement appears to be shifting, back toward the United States. Coincidentally, the fact that U.S. growth remains a leading engine of global growth – as Europe and China slow – means that international buyers may also tip toward U.S. options, if they are cheaper and more readily available. Of course, they may have to take a number – behind increased U.S. procurement. That, at least, seems the Administration’s chief goal.

With the new “Buy American” push, federal agencies are being encouraged, rather directly, to put renewed focus on goods and services offered in the U.S. to the U.S. Realistically, this will probably cause a major rethink by leadership and program managers, in areas from program design and focus to the “nuts and bolts” for making the program real – and from where ships, planes and rockets are manufactured to where they are eventually launched.

Certainly, change can be difficult, and some will find this re-casting of federal procurement priorities unsettling. But for many new and old all-American companies, this latest “Buy America” directive from the White House is likely to be favored.

After all, that is probably why the White House signed it.

ByKent Johnson - Senior Warrior Maven contributor

Kent Johnson is a retired USAF F-15 Strike Eagle and A-10 Warthog pilot, and political-military advisor on the staff of the secretary of the Air Force, and an adjunct at North Central Texas College in Gainesville, Texas, specializing in defense studies.