Buy American gets summed up as "65 percent." That number is real, but it is only one prong of a two part test, and it does not apply to every item. A buyer who asks a supplier only "is it 65 percent?" will get an answer that sounds like a fact and is often a guess.
We are the supplier that has to answer this question on a quote. This article walks through the test as the FAR states it, the exceptions that change the answer, and what a buyer can ask a supplier to provide. For how Buy American sits next to the Trade Agreements Act, the Berry Amendment and Section 889, start with country of origin on government purchases.
What the rule is
The Buy American statute prefers domestic end products in federal supply purchases for use in the United States. The operative pieces for a supply contract are the policy and definitions at FAR 25.101 and the clause at FAR 52.225-1. Under the clause, the contractor delivers domestic end products unless the offer lists foreign end products. "Foreign end product" is defined in the clause as an end product other than a domestic end product, so everything turns on what counts as domestic.
The rule is separate from the Trade Agreements Act. A product can pass one and fail the other, and a purchase can be covered by both clauses at once. The two rules and their different tests are laid side by side in our TAA statement guide.
The domestic end product test, in two parts
For most manufactured items, FAR 25.101 sets out a two part test.
- Manufactured in the United States. The end product has to be manufactured here. An item assembled elsewhere fails at step one, no matter how much of its value is American.
- Domestic components exceed a percentage of component cost. The cost of the domestic components has to exceed a stated share of the cost of all the components.
The percentage has been phased up over time. Per FAR 25.101, it is 65 percent for items delivered in calendar years 2024 through 2028, and 75 percent for items delivered starting in calendar year 2029. Note the trigger: the year of delivery, not the year of the award or the date of the solicitation. A contract that spans a change in the threshold raises its own questions. FAR 25.101 has a provision for those cases, and the clause has an alternate version that leaves the percentage for the contracting officer to fill in. If your contract is long and delivers across 2028 and 2029, read the clause text in your contract, not a summary.
How "cost of components" is counted
The clause defines the terms, and the definitions matter more than the percentage.
- A component is an article, material or supply incorporated directly into the end product. The test looks at what goes into the product, not at what the factory used to make it.
- For a purchased component, cost is the acquisition cost, including transportation to the place where it goes into the end product, plus any applicable duty.
- For a manufactured component, cost covers the manufacturing costs, including transportation and allocable overhead, but not profit. It does not include the cost of manufacturing the end product itself.
- Whether each component is domestic is a question the component's own supplier has to answer, which is why the answer has to travel up the chain in writing.
So the math is a ratio of costs, not a count of parts. A cheap imported part and an expensive domestic one do not weigh the same. That is why a buyer cannot verify a domestic content claim from a country name on a box. It takes cost information, and that information sits with the manufacturer.
Iron and steel: a different test
For an end product made wholly or predominantly of iron or steel, FAR 25.101 replaces the percentage test. Here the end product has to be manufactured in the United States, and the cost of foreign iron and steel has to be less than 5 percent of the cost of all the components. The clause defines "predominantly of iron or steel" as iron and steel content exceeding 50 percent of the total cost of all components.
This changes what you ask for. A steel product fails the 5 percent test on foreign steel content even if the other components are domestic, and the reverse. Do not carry the 65 percent number into a conversation about structural steel, fasteners or similar items.
The COTS exception, and where it stops
The domestic content test has been waived for commercially available off-the-shelf (COTS) items, with one carve out: the waiver does not cover iron and steel items. FAR 25.101 says the content test of the statute has been waived for acquisitions of COTS items, and the clause treats a COTS item as a domestic end product if it is manufactured in the United States.
The clause's definition of COTS is a commercial product sold in substantial quantities in the commercial marketplace and offered without modification, with bulk cargo such as agricultural and petroleum products excluded. Read that in full before relying on it. A product modified for the government order, or built to a government specification, may not be offered "without modification."
Two points get missed here:
- Even for a COTS item, the item must still be manufactured in the United States to be a domestic end product. The waiver removes the component cost percentage, not the manufacturing location step.
- The COTS waiver does not apply to the iron and steel test, so a COTS item made predominantly of iron or steel still has to pass the 5 percent foreign content test.
Exceptions that allow a foreign end product
Separate from the content test, FAR 25.103 lists the cases where a contracting officer may buy a foreign end product anyway. It names public interest, nonavailability, unreasonable cost, resale for commissaries, and a provision for certain commercial information technology. Who makes the determination varies by exception: the agency head for public interest, the contracting officer for unreasonable cost, and for nonavailability either a class determination or an individual one at a higher level. Articles on the FAR 25.104 nonavailability list are handled by class.
That structure is why a supplier should not decide the question alone. If an item fails the test and the buyer's need is real, the exception is the buyer's to apply, not the supplier's. We cover that practice in foreign origin item: disclose, don't guess.
Critical items and critical components
FAR 25.101 and the clause definitions now include the idea of critical components, defined as components mined, produced or manufactured in the United States and deemed critical to the U.S. supply chain. FAR 25.105 is where the list of critical items and critical components, with their preference factors, is kept, and it says the list is to be republished for public comment at least every four years. It also ties into how the cost of domestic end products is evaluated for reasonableness.
We have not stated how any preference factor affects a particular price evaluation, because the mechanics are the contracting officer's to apply and the list can change. If your item might be a critical item or contain critical components, read 25.105 on the date of your purchase and ask the contracting officer how the solicitation evaluates it.
What a buyer can ask a supplier for
Think of this as a request in layers, starting with the cheapest to answer.
- Is the item offered as a domestic end product or as a foreign end product? The offer has to say, and the clause expects foreign end products to be listed.
- Country of origin for each line, by part number. The same data used in the Trade Agreements statement helps here.
- Where the end product is manufactured. Step one of the test.
- Whether the supplier is claiming the COTS waiver, and the basis: sold in substantial quantities in the commercial market, offered without modification.
- For non COTS items, the basis for the component cost percentage. That means a manufacturer statement or calculation, signed and dated, listing domestic and foreign component costs or at least the resulting percentage and the delivery year it was calculated for.
- For iron and steel products, the foreign iron and steel share.
- A named contact at the supplier who can answer questions about the sourcing.
A buyer who asks for all seven on a small buy may be asking for more than the purchase warrants. The right depth depends on the dollar value, the item and the contract. Ask for what you would be comfortable defending in a file review.
Common ways this goes wrong
- A marketing claim stands in for the test. "Made in USA" on a product page is not a cost-of-components calculation.
- The year is wrong. A calculation done against the old percentage, or against a different delivery year than the contract's.
- COTS is assumed. A product built or modified for the order is treated as off the shelf.
- Steel is treated like everything else. The 5 percent test applies, and the 65 percent figure does not.
- A distributor's answer replaces the manufacturer's. A distributor knows what it bought, not what is inside.
How Lunula Supply handles it
We send country of origin with each quote line and say whether the line is offered as a domestic end product. When the answer depends on component cost, we ask the manufacturer in writing before we quote. If we cannot get a basis, we say so to the buyer and do not quote the line as domestic on a guess. If the government named an item that fails the test, we disclose that to the contracting officer and leave the exception decision with them.
Have a requirement with an origin clause? Contact us or see what we supply.
Frequently asked questions
Is the Buy American threshold 65 percent or 75 percent?
Both, depending on when the item is delivered. FAR 25.101 sets 65 percent for items delivered in calendar years 2024 through 2028 and 75 percent for items delivered starting in 2029. Check the clause in your contract for how it handles a contract that spans the change.
Does the 65 percent test apply to commercial off-the-shelf items?
The content test is waived for COTS items, but not for iron and steel items. A COTS item still has to be manufactured in the United States to be a domestic end product. Read the COTS definition in FAR 52.225-1 before assuming it fits.
Is Buy American the same as the Trade Agreements Act?
No. Buy American applies a domestic content test, while the Trade Agreements Act treats U.S.-made and designated country end products alike. Different clauses apply, and a purchase can be subject to either or both.
What can a buyer ask a supplier to prove domestic content?
Ask for country of origin by part number, where the end product is manufactured, and for non COTS items a signed manufacturer statement of the component cost basis and the delivery year. For iron and steel products, ask for the foreign iron and steel share.
General information, not legal advice. References were checked against acquisition.gov (FAC 2026-01) on the publish date. Your contract's clauses and the current FAR control.