Order Code RS21555
June 23, 2003
CRS Report for Congress
Received through the CRS Web
Iraq Reconstruction: Frequently Asked
Questions Concerning the Application of
Federal Procurement Statutes
John R. Luckey
Legislative Attorney
American Law Division
Summary
The announcement and award of contracts for the postwar reconstruction of Iraq
have engendered several questions concerning the application of Federal procurement
laws and regulations. This report addresses several of these questions.
Does the Buy American Act apply to contracts for the reconstruction of Iraq?
What is a “Little Buy American Act” and could one be used to require use of American
products in the reconstruction of Iraq?
May contracts for the reconstruction of Iraq be limited to American owned companies?
Are contracts for the reconstruction of Iraq subject to full and open competition?
If a contract is “sole-sourced,” what information must be made available?
Does the Buy American Act Apply to Contracts for the Reconstruction
of Iraq?
The Buy American Act,1 the major domestic preference statute governing
procurement by the federal government, is quite broad in scope, applying to all Federal
procurements that do not come under one of the five exceptions.2 Enacted in 1933,3 the
Act attempts to protect domestic labor by providing a preference for American goods in
government purchases. In determining what are American goods, the place of mining,
1 41 U.S.C. §§ 10a through 10d.
2 41 U.S.C. §§ 10a & 10b. The Act applies to leases as well as purchases. National Office
Equipment Co., B-191003, 78-1 CPD ¶ 413 (1978).
3 Ch. 212, 47 Stat. 1520, 72nd Congress, 2nd Session. (1933).
Congressional Research Service ˜ The Library of Congress

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production, or manufacture is controlling. The nationality of the contractor is not
considered in determining whether a product is of domestic origin.4
There are five primary exceptions to the Buy American Act. The Act excepts
procurements: (1) to which application would be inconsistent with the public interest; (2)
for which compliance would require unreasonable cost;5 (3) of products or services for
use outside the United States; (4) of products not produced or manufactured in the United
States in sufficient and reasonably available commercial quantities and of satisfactory
quality;6 or (5) for under $2,500.7
The third exception, exempting articles or services purchased "for use outside of the
United States,"8 would apply to most contracts for the reconstruction of Iraq. This
exception is not limited to only the country of use, but to products of any origin.9 For
example, the exemption has applied to Canadian steel towers for use in West German
communications system procured by the military10 and military bases leased from foreign
governments.11
What is a “Little Buy American Act” and Could One Be Used to Require
Use of American Products in the Reconstruction of Iraq?
A "Little Buy American Act" is a domestic preference enacted to govern a specific
type of procurement that for some reason is exempt from the Buy American Act. This is
usually necessitated because a procurement is for articles for use outside of the United
States.
Targeted domestic preference provisions have often been attached to the
appropriations acts for the agencies making the procurement in question and are of the
form—“Notwithstanding any other law, no funds may be used to purchase....not made in
America.” The most well known of these Acts is commonly referred to as the “Berry
Amendment” and requires domestic origin under a long list of certain procurements of
the Department of Defense.12
The United States Agency for International Development (USAID) has a key role in
providing government aid for the reconstruction of Iraq. A “Little Buy American”-like
4 See, E-Systems, Inc., 61 Comp. Gen. 431 (1982); and Patterson Pump Co., B-200165, 80-2 CPD
¶ 453 (1980).
5 41 U.S.C. § 10a.
6 Id.
7 Pub. L. No. 103-355, 108 Stat. 3346-7, 103rd Cong., 2nd Sess. (1994) codified at 41 U.S.C. 10a.
8 41 U.S.C. § 10a.
9 B-166137, 49 Comp. Gen. 176 (1969).
10 Id.
11 B-122519, 34 Comp. Gen. 448 (1955); see also B-221211, 85-2 Comp. Gen. Proc. Dec. P653
(1985).
12 For more information on this Act, see CRS Report RL31236, The Berry Amendment: Requiring
Defense Procurement To Come From Domestic Sources, by Valerie Grasso.

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provision in the Foreign Assistance Act of 1961 authorizes special rules for the source and
nationality of commodities and services financed by USAID.13 These special rules are set
out at 22 C.F.R. part 228 and apply to goods and services financed directly with program
funds under the Act.14 Detailed rules restrict contracts and subcontracts by categories of
countries classified according to certain foreign policy considerations.15 Also, special
rules require U.S. procurement of agricultural commodities (with some exception), motor
vehicles designed for normal road speeds, and pharmaceutical products.16 Other rules set
forth U.S.-flag requirements for transporting procured goods,17 and yet other provisions
set forth preference requirements for placing marine insurance.18
The existence of the USAID provision does not preclude the enactment of a “Little
Buy American Act” aimed specifically at Iraqi reconstruction funds. Such provisions
have in the past been attached to an appropriation placing a Buy American restriction on
the use of the funds.
May Contracts for the Reconstruction of Iraq be Limited to American-
Owned Companies?
There is no general limitation on the nationality of ownership of a company
contracting with the Federal government. However, Congress has placed this type of
limitation under certain programs, the most pertinent being the special rules limiting the
nationality of suppliers of commodities and/or services financed by USAID, discussed
above.19
Under these rules lists of countries are excluded from certain covered
contracts.20 These limits are on the nationality of the ownership of the company.
Are Contracts for the Reconstruction of Iraq Subject to Full and Open
Competition?
Under the Competition in Contracting Act, Federal procurement generally requires
full and open competition.21
Unlike the Buy American Act, the Competition in
Contracting Act does apply to contracts for good or services to be used outside the United
13 Pub. L. No. 87-195, § 621, 75 Stat. 445, 494, 87th Cong., 1st Sess. (1961), codified at 22 U.S.C.
§ 2381.
14 22 CF.R. § 228.02.
15 22 CF.R. § 228.03.
16 22 C.F.R. § 228.13.
17 22 C.F.R. §§ 228.21, 228.22.
18 22 C.F.R. § 228.23.
19 Pub. L. No. 87-195, § 621, 75 Stat. 445, 494, 87th Cong., 1st Sess. (1961), codified at 22 U.S.C.
§ 2381.
20 22 C.F.R. §§ 228.03 and 228.13.
21 10 U.S.C. § 2304 which applies to the Department of Defense and NASA and 40 U.S.C. § 253
which applies to all other executive agencies. See, also, 48 C.F.R. part 6.

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States. The Act does contain seven exceptions to the general rule. Other than full and
open competition is permitted under the following circumstances:
(1) Only one responsible source is available, and no other supplies or services
will satisfy agency requirements.22
(2) The agency’s need is of such unusual and compelling urgency that the
Government would be seriously injured.23
(3) The Government needs to ensure suppliers are maintained in case of
national emergency or to achieve industrial mobilization; establish or maintain
an engineering, research, or development capability; or obtain expert services
for litigation.24
(4) Such competition is precluded by international agreement.25
(5) A statute specifically authorizes or requires that the acquisition be made
through an other agency or from a specified source.26
(6) Disclosure of the agency’s need would compromise national security.27
(7) The public interest would be better served by other than full and open
competition.28
One can at least envision situations where exemptions (2) or (6) could be applied to
contracts for reconstruction of Iraq.
Apart from the Competition in Contracting Act, USAID need not use full and open
competition when it would impair or otherwise have an adverse effect on programs
conducted for the purposes of foreign aid, relief and rehabilitation.29 This authority may
be used for award of personal service contracts under section 636(a)(3) of the Foreign
Assistance Act of 1961; award of $250,000 or less by an overseas contracting activity;
individual awards with respect to which an assistant administrator of USAID has found
that use of full and open competition would impair foreign assistance objectives, and
would be inconsistent with fulfillment of the foreign assistance program; awards for
particular countries, regions, or projects, or programs, where the administrator of USAID
has found that compliance with full and open competition would
impair foreign
22 10 U.S.C. § 2304(c)(1), 40 U.S.C. § 253(c)(1), and 48 C.F.R. § 6.302.1.
23 10 U.S.C. § 2304(c)(2), 40 U.S.C. § 253(c)(2), and 48 C.F.R. § 6.302.2.
24 10 U.S.C. § 2304(c)(3) 40 U.S.C. § 253(c)(3), and 48 C.F.R. § 6.302.3.
25 10 U.S.C. § 2304(c)(4), 40 U.S.C. § 253(c)(4), and 48 C.F.R. § 6.302.4.
26 10 U.S.C. § 2304(c)(5), 40 U.S.C. § 253(c)(5), and 48 C.F.R. § 6.302.5.
27 10 U.S.C. § 2304(c)(6), 40 U.S.C. § 253(c)(6), and 48 C.F.R. § 6.302.6.
28 10 U.S.C. § 2304(c)(7), 40 U.S.C. § 253(c)(7), and 48 C.F.R. § 6.302.7.
29 40 U.S.C. § 474 and 48 C.F.R. §706.302-70.

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assistance objectives, and would be inconsistent with fulfillment of the foreign assistance
program; or awards when open competition would result in substantial additional costs
or would result in unacceptable delay.30
If a Contract is “Sole-Sourced,” What Information Must be Made
Available?
The Federal Acquisition Regulations require a written, certified justification before
any of the exceptions to full and open competition is used.31 The regulations specifically
require each justification to contain sufficient facts and rationale to justify the use of the
specific authority cited. As a minimum, each justification must include the following
information:
(1) Identification of the agency and the contracting activity, and specific
identification of the document as a "Justification for other than full and open
competition.”
(2) Nature and/or description of the action being approved.
(3) A description of the supplies or services required to meet the agency's needs
(including the estimated value).
(4) An identification of the statutory authority permitting other than full and
open competition.
(5) A demonstration that the proposed contractor's unique qualifications or the
nature of the acquisition requires use of the authority cited.
(6) A description of efforts made to ensure that offers are solicited from as
many potential sources as is practicable, including whether a notice was or will
be publicized and, if not, which exception applies.
(7) A determination by the contracting officer that the anticipated cost to the
Government will be fair and reasonable.
(8) A description of the market research conducted (see part 10) and the results
or a statement of the reason market research was not conducted.
(9) Any other facts supporting the use of other than full and open competition,
such as:
(i) Explanation of why technical data packages, specifications,
engineering descriptions, statements of work, or purchase
descriptions suitable for full and open competition have not been
developed or are not available.
30 48 C.F.R. §706.302-70(b).
31 48 C.F.R § 6.303-1.

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(ii) When 6.302-1 is cited for follow-on acquisitions as described in
6.302-1(a)(2)(ii), an estimate of the cost to the Government that
would be duplicated and how the estimate was derived.
(iii) When 6.302-2 is cited, data, estimated cost, or other rationale as
to the extent and nature of the harm to the Government.
(10) A listing of the sources, if any, that expressed, in writing, an interest in the
acquisition.
(11) A statement of the actions, if any, the agency may take to remove or
overcome any barriers to competition before any subsequent acquisition for the
supplies or services required.
(12) Contracting officer certification that the justification is accurate and
complete to the best of the contracting officer's knowledge and belief.
Each justification shall include evidence that any supporting data that are the
responsibility of technical or requirements personnel (e.g., verifying the Government's
minimum needs or schedule requirements or other rationale for other than full and open
competition) and which form a basis for the justification have been certified as complete
and accurate by the technical or requirements personnel.32
These justifications must be approved in writing by the agency official designated.
The designated official varies according to the size of the contract.33 Written justifications
and related materials are to be available to the public, consistent with the Freedom of
Information Act (5 U.S.C. § 552).34
32 48 C.F.R. § 6.303-2.
33 48 C.F.R. § 6.304.
34 41 U.S.C. § 253(f)(4) and 48 C.F.R. § 6.305.

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