(See also our Customs Fraud page)
Do You Know a Company Selling Foreign Products or Materials as American Made in a Government Contract?
This Violates the Buy America – Buy American and False Claims Acts
Since the Great Depression in 1933, Congress has required the Federal government to give preferences to American made products. Beginning that year, Congress passed the Buy American Act and continues to pass similar legislation today. These laws were passed to stimulate the American economy and preserve valuable manufacturing jobs in the United States.
When a government contractor or vendor substitutes foreign-made goods, there is a potential whistleblower claim under the False Claims Act. (Some foreign goods are dangerous or inferior too… more on that below.)
Even if the foreign made goods are of the same quality – often they are not – there is still a fraud on taxpayers if a contractor fails to use American products. Why? Because the vendor profited from its government contract yet the government was deprived of its ability to promote American manufacturing and job creation.
Buy American Act
As noted above, the first of these American preference laws was the Buy American Act passed in 1933. That law requires government to purchase American made “articles, materials and supplies.” There are exceptions to the law including the ability to grant waivers if a particular product is not produced in the United States or is prohibitively priced.
Subsequent treaties such as the North American Free Trade Agreement (NAFTA) also exempts certain goods from specified countries.
Buy America Act and Transport Project Whistleblower Claims
The Buy America Act was passed in 1983 and incorporated into the Surface Transportation Assistance Act. This law requires certain transportation projects to give preference to American made products.
American Recovery and Reinvestment Act of 2009
Construction of public buildings or buildings built with public funds must use American steel, iron and other products.
AMTRAK (national Railroad Passenger Corporation) Requires U.S. Materials
Raw materials and manufactured goods must be sourced and produced in the United States
National Defense Authorization Act
Other laws that give preference to American made goods include the National Defense Authorization Act which says that certain arms and ammunition critical to our defense must be made in the U.S. In a time of war, Congress doesn’t want a foreign power to cut off weapons needed for our defense.
Berry Amendment on American Sourced Military Clothing & Food
A similar law called the Berry Amendment requires textiles (clothing) and food for the military be sourced within the United States.
“Little Buy American” Acts
There are many more such laws that give preference to American made goods. These laws include spending for local public works grants, disaster relief funds, water treatment facilities constructed with federal funds, and Indian health care facilities. Often these secondary laws are called the “Little Buy American” acts.
There are two bills introduced in Congress that would further strengthen the American made preference laws. Called the 21st Century Buy American Act and the American Jobs Matter Act, these laws would remove some of the loopholes that allow agencies to grant waivers.
Safety Concerns with Imported Steel and Other Products
Despite the ability to obtain waivers for cause, some contractors cut corners and falsely certify that they have used American made products. These fraudsters bill taxpayers as if they were using higher quality and higher cost American made products yet substitute lower quality, cheap goods.
This is especially true with steel used in bridges and government buildings. There is a big price differential between American made steel and imports from certain countries such as China. When contractors lie about the origin of steel, safety concerns also arise.
The Bay Bridge (San Francisco – Oakland) project in San Francisco elected to use imported steel and is now plagued with safety concerns and billion dollar cost overruns as key structural components must now be replaced. Even though steel manufactured at one facility looks like steel produced from any other facility, there are large differences in quality.
The chemical composition of steel and how it was made and tempered varies widely. Every piece of industrial steel sold in the United States comes with a certificate of origin and composition. When a dishonest vendor or contractor forges or swaps these certificates, it is impossible to know the quality of the steel.
MahanyLaw’s Whistleblower Lawyers are Experienced in Buy America and Buy American False Claims Act Cases with Whistleblower Awards
The whistleblower lawyers at Mahany Law have years of experience in investigating and bringing False Claims Act cases involving foreign made products wrongfully substituted and sold as Made in America. Our legal team has helped our clients collect over $100,000,000.00 in award monies (whistleblower cash rewards) and has helped taxpayers recoup billions of dollars.