Acquisition Mythbusters 2025-02: BAA/TAA Compliance Rules Don’t Forbid Foreign Purchases
Buy America / TAA Compliance doesn’t forbid the Government from purchasing foreign-made IT hardware or software
(Plenty of other rules might—just not these.)
Why this matters
Even seasoned Contracting Officers sometimes pause a purchase the moment they hear, “It isn’t made in America.” That pause can cost agencies the best-fit, best-value technology on the market. The good news: the Buy American Act (BAA) and the Trade Agreements Act (TAA) are much narrower than many people think—especially when software is involved.
The Myth
“Buy American and TAA rules stop the Government from buying any foreign-made IT hardware or software.”
The Reality
There is no blanket ban on foreign products.
Which rule—if any—applies depends on only two things:
Is the item hardware (a tangible “supply”) or software (a service)?
How much does the order cost?
The Three Rules, Plain-Language Version
1 | Buy American Act (BAA)
When it kicks in: Any tangible purchase over $10,000 (the micro-purchase threshold).
What it covers: Physical “supplies” used in the United States—servers, laptops, routers, paper clips.
What it requires: Each end item must be at least 65 percent U.S.-made (through 2028) unless the CO documents a waiver (non-availability, unreasonable cost, etc.).
What it doesn’t touch: Pure software—licenses, SaaS seats, custom code—because FAR treats software as a service, not a supply.
2 | Trade Agreements Act (TAA)
When it kicks in: Orders $174,000 or more and the contract contains the TAA clause (typical on GSA Schedules, SEWP, CIO-SP4, and other IDIQ task orders).
What it covers: Tangible supplies, including COTS software downloaded or shipped on media.
What it requires: Hardware and off-the-shelf software are fine if they’re produced or “substantially transformed” in the United States or a TAA-designated country (EU members, Canada, Japan, Israel, Australia, South Korea, and many more). Products from non-TAA countries—China, India, Russia, etc.—are ineligible.
Key point: Above $174 K, TAA replaces BAA. The 65 percent U.S.-content test disappears; you simply confirm the country of origin.
3 | Build America, Buy America Act (BABA)
When it appears: Only when federal infrastructure grant dollars bring BABA terms into the award (think bridges, rail stations, broadband build-outs).
What it covers: Iron, steel, construction materials, and “manufactured products” permanently installed in the project.
Effect on IT buys: Stand-alone software and cloud subscriptions are almost always outside BABA; hardware is affected only if it is literally built into the infrastructure.
Rule-of-Thumb Timeline for 2025 Purchases
Up to $10 K → No BAA, no TAA. Unless another law (for example, § 889 telecom bans) blocks it, a CO may buy from any country.
$10 K to $174 K → BAA applies to hardware only. Software remains unrestricted.
$174 K and above → TAA applies to hardware and COTS software. If the item comes from a TAA country (or is substantially transformed there) it is eligible. Non-TAA origins are filtered out—not because they’re foreign, but because they’re on the wrong list.
2025 Changes We’re Tracking (Nothing Alters the Thresholds)
Executive Order 14275 (Apr 15 2025) launched the Revolutionary FAR Overhaul (RFO). It cleans up clause numbers but keeps BAA and TAA thresholds intact.
OMB Memo M-25-26 (May 2 2025) tells agencies how to use interim “model deviations” while the FAR is rewritten—again, no change to the dollar triggers or country lists.
Executive Orders 14144 & 14306 (Jan & Jun 2025) tighten secure-software attestations (SSDF, SBOM) but do not touch BAA or TAA.
Common Myths—Debunked with Real-World Fixes
Myth: “We can’t buy SaaS from a foreign vendor.”
Fact: SaaS is a service. BAA and TAA don’t apply.
Fix: Check § 889/§ 5949 bans, FedRAMP, and the secure-software attestation instead.
Myth: “That €150 K German router is off-limits—it isn’t American.”
Fact: Germany is a TAA country, but €150 K (≈$163 K) is below the $174 K TAA trigger. BAA applies; document the U.S.-content or a BAA waiver.
Myth: “Australian software on my GSA task order? Not allowed.”
Fact: Australia is TAA-eligible, and the Schedule order already carries the TAA clause. Go ahead and buy it.
Key Take-Aways for 2025
BAA is a U.S.-content test and rarely touches stand-alone software.
TAA is a country-of-origin filter, not a “Buy American” rule, and it starts at $174 K.
Most allied-nation products qualify once the clause and price threshold align.
Origin checks are only the first gate. Supply-chain bans (§ 889 / § 5949), secure-software attestations, FedRAMP hosting, CMMC, and other cyber rules often matter more—stay tuned for our next Mythbuster on those hurdles.
Need Help?
Procurement Partners LLC turns dense regulations into clear go / no-go answers. If you’re uncertain whether a product is BAA-, TAA-, or BABA-compliant—or how the new FAR deviations affect your solicitation—reach out anytime.
