This guide explains FAR Part 25 of the Federal Acquisition Regulation (FAR), with practical examples for federal contractors.
Watch the FAR Part 25 video
FAR Part 25: foreign acquisition
You found the perfect networking equipment at a great price. The reseller's website lists a street address in Ohio, so you assume the equipment is domestic. Pause right there. A United States address tells you where a company does business. However, it does not tell you where a product was made.
FAR Part 25 covers foreign acquisition, and it is a family of rules, not one rule.
- Supplies: Subpart 25.1 covers Buy American.
- Construction materials: Subpart 25.2 covers Buy American.
- Overseas performance: Subpart 25.3 addresses contracts performed outside the United States.
- Trade agreements: Subpart 25.4 provides the relevant coverage.
- Offer evaluation: Subpart 25.5 explains how agencies evaluate offers that include foreign products.
- Prohibited sources: Subpart 25.7 addresses these restrictions.
The scope section, 25.000, sets the tone: Buy American restrictions exist, with exceptions, and covered trade agreements are treated differently.
Buy American and trade agreements use different tests
Neither one is a blanket ban on foreign goods. First, start with Buy American for supplies. The idea is that the end product must be manufactured in the United States, and enough of what goes into it must also be domestic. That second part is the component test. It compares the cost of domestic components to the cost of all components, and the share required has changed over time, with the applicable level depending on when delivery occurs.
Agencies can also adopt deviations. So never quote a percentage from memory. Next, read the clause in your solicitation. Exceptions matter too. The domestic component test is generally waived for COTS items, but that waiver generally does not cover end products wholly or predominantly iron or steel, except COTS fasteners. Then, check FAR 25.101 and the applicable clause. Now the trap. A domestic seller address is not domestic origin.
And an end product that is assembled in the United States is not automatically a domestic end product, because the components still count. Trade agreements use a different yardstick. They ask whether the product comes from a designated country, generally by looking at where it was substantially transformed. That is not the same as the Buy American component test. One product can pass one test and fail the other, so you cannot assume that satisfying one regime satisfies both.
Check origin, exceptions, and construction requirements
Buy American is also not one rule for every program. The Buy American Act in the FAR is one statute. Other programs have their own domestic preference laws. And the Defense Department adds its own supplement, the DFARS, as a separate overlay. If you sell to defense customers, read those clauses too. Construction is a different regime. Construction materials are items brought to a building site and incorporated into the work, and FAR Subpart 25.2 has its own clauses and its own tests.
Prohibited sources in 25.7 work differently again. Some sources are off limits entirely, regardless of price. Evaluation of foreign offers in 25.5 describes how an agency may compare domestic and foreign offers, which is why your representation can affect how your price is treated. And when work is performed overseas, 25.3 may bring its own considerations. Here is a hypothetical. Dana resells IT equipment. An agency wants network switches, and Dana finds a distributor with a United States address and a good price.
Instead of certifying, she reads the solicitation, finds the foreign acquisition clause, and asks the manufacturer where the switches are made, with records that fit the clause's test. The answer shows the product's origin is not what she assumed. Because she checked, she can switch products or ask the contracting officer a question. Now change the facts. Dana also quotes a small renovation job that includes installing network cabling.
Verify product origin before offering equipment
Quoting cabling does not automatically trigger the construction materials clause. It depends on the procurement classification, the actual contract, and the applicable clauses. If it is construction, the construction clause applies instead of the supplies clause, and the test and records she needs are different. Same word, foreign, but a different regime, so a certification cannot be a guess. You need the accurate clause, the certificate, and the manufacturer's records.
Try this practice. It is a GovSuccess practice, not a FAR requirement. Take one recent solicitation. On a one-page worksheet, list the product, the manufacturer, the clauses, which regime each belongs to, and the evidence you requested. Then ask a colleague to read it cold. If they cannot follow your reasoning, your file is not ready. For more small business contracting education, visit govsuccess.com. This guide is general education, and is not legal advice.
It does not guarantee any certification, compliance outcome, or contract award. For your specific situation, consult your solicitation, your contracting officer, or qualified counsel.
Official sources
Explore GovAssessment to build your business-readiness baseline. General education, not legal or tax advice. No certification or award guarantee.
