Solar devices in Defense energy and housing contracts

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1. Why solar devices have their own rule

Section 225.7017 of the Defense Federal Acquisition Regulation Supplement (DFARS) applies the Buy American statute to solar devices the Department comes to own through certain contracts (DFARS 225.7017-1 and DFARS 225.7017-2). It implements section 846 of the National Defense Authorization Act for Fiscal Year 2011 (DFARS 225.7017-2). Under it, photovoltaic devices provided under any covered contract must comply with 41 U.S.C. chapter 83, Buy American. That compliance is subject to the exceptions to the statute in the Trade Agreements Act of 1979.

A photovoltaic device is a device that converts light directly into electricity through a solid-state, semiconductor process (DFARS 225.7017-1). A domestic photovoltaic device is one manufactured in the United States, and a foreign photovoltaic device is any other.

2. Covered contracts and Defense ownership

The contracts are of three kinds, all Defense contracts performed in the United States: an energy savings performance contract, a utility services contract and a private housing contract (DFARS 225.7017-1). Such a contract is covered if it results in Defense ownership of photovoltaic devices by means other than purchasing them as end products. Devices the Department buys directly as end products are outside that definition. The ordinary supply rules are covered in what makes an end product domestic.

The Department is treated as owning a photovoltaic device if two conditions are met (DFARS 225.7017-1). The device must be installed in the United States on Defense property or in a Defense-owned facility. And it must be reserved for the Department’s exclusive use in the United States for the full economic life of the device.

3. The domestic requirement and its threshold

The Department requires the contractor to use domestic photovoltaic devices in covered contracts that exceed the simplified acquisition threshold, subject to listed exceptions (DFARS 225.7017-3). The first exception is for qualifying countries. Qualifying country photovoltaic devices may be used in any covered contract (DFARS 225.7017-3(a)). The DFARS explains that its Buy American rules already give an exception for products of qualifying countries, pointing to DFARS 225.103(a)(i)(A) and to the qualifying country definition at DFARS 225.003. A qualifying country photovoltaic device is one manufactured in a qualifying country (DFARS 225.7017-1).

4. Unreasonable cost

For a covered contract that uses photovoltaic devices valued at less than $174,000, the Buy American exception for unreasonable cost may apply (DFARS 225.7017-3(b)). If the cost of a foreign photovoltaic device plus 50 percent is less than the cost of a domestic device, the foreign device may be used. The general unreasonable cost exception in the Federal Acquisition Regulation is at FAR 25.103(c), which the DFARS cross-refers to.

5. Trade agreements

For covered contracts, photovoltaic devices may be used from a country covered by a free trade agreement, depending on the dollar threshold in FAR subpart 25.4 (DFARS 225.7017-3(c)(1)). For covered contracts using devices valued at $174,000 or more, the World Trade Organization Government Procurement Agreement (WTO GPA) sets the rule (DFARS 225.7017-3(c)(2)). Only American-made devices, designated country devices or qualifying country devices may then be used.

A United States-made photovoltaic device is one manufactured in the United States, or substantially transformed there into a new and different article of commerce with a distinct name, character or use (DFARS 225.7017-1). For a transformed device, that holds only if it is not later substantially transformed outside the United States. The two terms differ: a domestic device must be manufactured in the United States, while a United States-made device may also be one substantially transformed there (DFARS 225.7017-1). A designated country device is a WTO GPA country, free trade agreement country, least developed country or Caribbean Basin country device.

Each of those four categories is defined the same way (DFARS 225.7017-1). The device must be wholly manufactured in a country of that group. Alternatively, if it contains materials from elsewhere, it must have been substantially transformed in such a country into a new and different article of commerce, and not later substantially transformed outside the group. The general trade agreement rules are covered in what trade agreements exclude from coverage.

In acquisitions covered by the WTO GPA, the Trade Agreements Act limits agencies to United States-made or designated country end products, unless such offers are not received or are insufficient (FAR 25.403(c)(1)). Least developed country end products must be treated as eligible products in WTO GPA acquisitions (FAR 25.404). The Trade Representative has made the same determination for Caribbean Basin country products under the Caribbean Basin Trade Initiative (FAR 25.405). That purchase restriction does not apply below the WTO GPA threshold for supplies and services, even where a free trade agreement covers the acquisition (FAR 25.403(c)(1)). Most trade agreement thresholds are revised by the Trade Representative about every 2 years (FAR 25.402(b)). Eligible products receive equal consideration with domestic offers (FAR 25.402(a)(1)).

6. The clause and certificate

The clause at DFARS 252.225-7017, Photovoltaic Devices, goes in solicitations for contracts expected to exceed the simplified acquisition threshold that may be covered contracts (DFARS 225.7017-4(a)(1)). That includes solicitations using FAR part 12 procedures for commercial products and services. It applies where the contract will result in Defense ownership of photovoltaic devices other than by purchase as end products. The clause goes into the resulting contract if it is a covered contract (DFARS 225.7017-4(a)(2)).

Solicitations that contain the clause also use the provision at DFARS 252.225-7018, Photovoltaic Devices, Certificate (DFARS 225.7017-4(b)). The provision, like the clause, is also used in solicitations under FAR part 12 procedures for commercial products and services. The dollar figures in this section are those in the DFARS text current as of 29 September 2026. The WTO GPA threshold for supplies in the FAR trade agreement table is the same $174,000 (FAR 25.402(b)).

Key terms

Photovoltaic device	A device converting light directly into electricity by a solid-state semiconductor process.
Covered contract	A Defense energy savings, utility services or private housing contract leaving the Department owning devices.
Defense ownership	Installed on Defense property or in a Defense-owned facility and reserved for its exclusive use for the device’s economic life.
50 percent test	A foreign device may be used if its cost plus 50 percent is below the domestic cost.
Substantial transformation	Change into a new article of commerce with a distinct name, character or use.

Every statement above links to the document behind it. The full source list for this piece is on the sources page.

This page describes public United States government programs for general information. It is not legal, regulatory or procurement advice, and it does not address the facts of any particular case.

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