What makes an end product domestic

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1. What the supply rule covers

Subpart 25.1 of the Federal Acquisition Regulation (FAR) implements the Buy American statute, 41 U.S.C. chapter 83, for supplies (FAR 25.100(a)). It also implements three executive orders and the waiver of the statute’s domestic content test for commercially available off-the-shelf (COTS) items under 41 U.S.C. 1907. The subpart applies to supplies acquired for use in the United States, including under contracts set aside for small business (FAR 25.100(b)). It applies when the supply contract exceeds the micro-purchase threshold, or when the supply portion of a services contract, such as a lease, exceeds it.

Except as FAR 25.103 provides, agencies acquire only domestic end products for public use inside the United States (FAR 25.102). The Buy American statute restricts the purchase of supplies that are not domestic end products (FAR 25.101(a)). The exceptions to that policy are covered in when Buy American does not apply to supplies.

2. The two-part test

For manufactured end products, the statute and Executive Orders 13881 and 14005 use a two-part test to define a domestic end product (FAR 25.101(a)). First, the article must be manufactured in the United States (FAR 25.101(a)(1)). Second, it must meet a domestic content test that depends on what the product is made of.

For most end products, the cost of domestic components must exceed 60 percent of the cost of all components (FAR 25.101(a)(2)(i)). The FAR sets higher figures by year of delivery. The threshold is 65 percent for items delivered in calendar years 2024 through 2028, and 75 percent for items delivered from calendar year 2029, subject to the alternate test the FAR allows for contracts that span the increases. Under 41 U.S.C. 1907, this domestic content test has been waived for COTS items.

3. Iron and steel products

A different test applies to an end product that consists wholly or predominantly of iron or steel, or both (FAR 25.101(a)(2)(ii)). For those products, the cost of foreign iron and steel must be less than 5 percent of the cost of all the components. That cost includes foreign iron or steel mill products, such as bar, billet, slab, wire, plate or sheet, and castings or forgings used in manufacture. It also includes a good faith estimate of the cost of all foreign iron or steel components, excluding COTS fasteners.

This test has not been waived for COTS items in the iron and steel category, except for COTS fasteners (FAR 25.101(a)(2)(ii)). The Defense clause defines predominantly of iron or steel. It means the cost of the iron and steel content exceeds 50 percent of the total cost of all components (DFARS 252.225-7001).

4. Small business set-asides

The Buy American statute applies to small business set-asides (FAR 25.101(b)). A manufactured product of a small business concern is a United States-made end product. It is not a domestic end product unless it also meets the domestic content test. Being made in the United States is therefore only the first half of the test.

5. How the Defense clause counts components

For Defense contracts, the Buy American and Balance of Payments Program clause in its basic form, dated February 2024, sets out the definitions that decide whether a product is domestic (DFARS 252.225-7001). A component is an article, material or supply incorporated directly into an end product. An end product is the articles, materials and supplies to be acquired under the contract for public use. A foreign end product is any end product other than a domestic one.

The clause first deals with end products that are not wholly or predominantly iron or steel. Such a product is domestic if made in the United States with qualifying country and United States components above the content threshold (DFARS 252.225-7001). The cost of components includes transportation to the place of incorporation into the end product and United States duty, whether or not a duty-free entry certificate is issued. Components of unknown origin are treated as foreign. Scrap generated, collected and prepared for processing in the United States is considered domestic. An unmanufactured end product mined or produced in the United States is also domestic.

The clause treats some components as domestic regardless of where they came from (DFARS 252.225-7001). That applies if the end product is manufactured in the United States and the component is of a class or kind the government has found not available domestically in sufficient quantity and satisfactory quality. It also applies where the government has found it inconsistent with the public interest to apply the statute to that class or kind.

6. Qualifying countries and COTS items

A qualifying country has a reciprocal defense procurement memorandum of understanding or agreement with the United States, under which both remove barriers to purchases from the other (DFARS 252.225-7001). The agreement must comply, where applicable, with section 36 of the Arms Export Control Act and 10 U.S.C. 2457. A qualifying country end product is one manufactured in a qualifying country that meets the same content thresholds, unless an alternate percentage is set for the contract, counting qualifying country, United States and certain nonavailable foreign components.

The clause implements the Buy American statute and, under 41 U.S.C. 1907, waives the component test for an end product that is a COTS item (DFARS 252.225-7001). A COTS item is a commercial product sold in substantial quantities in the commercial marketplace and offered without modification, in the same form as sold commercially. Bulk cargo, such as agricultural and petroleum products, is excluded. Unless the contract says otherwise, the clause applies to all line items.

The contractor must deliver only domestic end products unless its offer specified other end products in the solicitation’s certificate provision (DFARS 252.225-7001). If it certified that it would deliver a qualifying country end product, it must deliver one, or at its option a domestic end product. The contract price does not include duty for end products or components on which the contractor will claim duty-free entry. How cost reasonableness is judged when a domestic offer is not the lowest is covered in pricing a domestic offer against a foreign one.

Key terms

Domestic end product	Manufactured in the United States and meeting the domestic content test.
Content threshold	60 percent, rising to 65 percent for 2024 to 2028 deliveries and 75 percent from 2029, unless an alternate test applies.
Iron and steel test	Foreign iron and steel must be under 5 percent of component cost.
Qualifying country	A country with a reciprocal defense procurement agreement with the United States.
COTS item	A commercial product sold in substantial quantities and offered without modification.

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.

How Sentfore supports this

Programs that buy domestic still need reliable delivery where the work is done. Sentfore works at the delivery end of defense programs in difficult environments, providing secure movement, protective security, facilities and life support. Requirements can be sent through the contact page.