Importing Products That You Want to Sell to the US Government? Is That Even Possible?

Sure you want to be a vendor of the U.S. Government, but in order to sell to government agencies, you must have a product that is a
 “U.S. –Made End Product.”

 

As defined in the Federal Procurement Regulations, a U.S. – Made End Product is

"An article that is mined, produced, or manufactured in the United States or that is substantially transformed in the United States into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was transformed.”

Given the breadth of international trade, it is not uncommon to find that a product sold to the US government is not actually 100% of U.S. origin, but rather has some foreign components that were substantially transformed - as the above definition references - here in the U.S.

As a result of this international trade reality, a waiver may be granted on certain “Buy American” restrictions for purposes of selling to the U.S. government.  U.S. Customs offers advisory rulings and final country of origin determinations as to whether an article is or would be a product of a designated country or instrumentality for the purpose of granting such a waiver.

The rule of origin set forth in the U.S. Customs law at 19 USC §2518(4)(B) (see also 19 CFR §177.22) provides that:

An article is a product of a country or instrumentality only if

     i) it is wholly the growth, product, or manufacture of that country or instrumentality, or

     ii) in the case of an article which consists in whole or in part of materials from another country or instrumentality, it has been substantially transformed into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was so transformed.

In determining whether a substantial transformation occurred, US Customs considers the totality of the circumstances in its analysis of the assembly of components of various origins into completed products.  It further does so on a case-by-case basis.

Such analyzed factors include the origin of the components themselves, resources expended on product design and development, the extent of the processing that occurs within a country, and whether such processing rendered a product with a new name, character and use.

Other considerations include the nature and extent of post-assembly inspection and testing procedures, and the worker skill required during the actual manufacturing process.

Questions/comments?  Post below or email me at clark.deanna@gmail.com

 

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