For example, contractors who perform work for the government must be aware of their obligations of the Buy American Act (BAA) and the other statutes that relate to it. The BAA, enacted in 1933, mandates that construction companies with government contracts use domestic "construction materials.
A domestic construction material is an unmanufactured product mined or produced in the U.S., or a manufactured item where domestic components make up 50% of the cost of the item. A contractor that violates the BAA can face penalties including large fines, adjustments in contract price or termination for default.
The Buy American Act generally applies when the federal government is directly buying products or materials or a federal building or facility is being newly constructed or receiving major renovations. The act requires that at least 51% of the components of the final product be produced in the U.S.