- Specify the main points of the Buy American Requirements in one (1) page or less.
- Determine the substantive means by which the Buy American Requirements would benefit both VectorCal and your new company. Provide a rationale for the response.
- Analyze the fundamental ways in which the Buy American Requirements are contradictory to a capitalistic ethos, given that the U.S. government claims to promote competition and the U.S. espouses a free market ideology (i.e., capitalism). Support your answer with two (2) examples of such a contradiction.
- Debate whether or not you believe that the exceptions to the Buy American Requirements set forth by the government are fair and advantageous to the U.S. economy. Provide a rationale for the response.
- Determine the key advantages and disadvantages of using the Buy American Requirements with the navigation system that both VectorCal and your company produce. Justify the response.
- Use at least three (3) quality resources in this assignment. Note: Wikipedia and similar Websites do not qualify as quality resources
Main Points of the Buy American Requirements
The Buy American Requirements which is similarly known as The Buy American Act was passed back in 1933 by the American Congress and it was signed by the then president, President Hoover(Frank, 2000). The main points of this act is that it required the government of the United States to make a preference on the U.S. made products while making purchases. It restricts generally the purchase of foreign supplies that are not domestic end products for use in the United States
The other pieces of the federal legislation make an extension of the similar requirements to the third party purchases that make utility of the federal funds such as transit and highway programs. There are certain circumstances however, where this requirement purchase may be waived mostly by the Head of the Contracting Activity or the Contracting Officer. These are in situations where the product needed may not be available domestically in quantity or quality that is sufficient as per the requirement, if the domestic product is found to be expensive by 50% or more than a product that is identical in the foreign market. Lastly, it may be waived if the waiver is for the interest of the public(Frank, 2000).
The president as well has been given the authority to waive the Buy American Act only when it is within the terms of a reciprocal agreement or in some cases when responding to the provision of reciprocal treatment to the US producers(Luckey, 2009).
Construction materials and end products from certain countries in most cases receive nondiscriminatory treatment during evaluation by the domestic officers. In general, the value of the dollar of the acquisition makes a determination of the trade agreement that is applicable(Frank, 2000).
How The Buy American Act will be of benefit to VectorCal and my new company
Many products that most Americans buy each and every day are manufactured in other countries. The Buy American Act is thus beneficial as it ensures this does not go overboard. American companies before the onset of this Act were facing very stiff competition from other foreign firms. As a result of this, the federal government came to the realization of the essence of the regulation of the economy by passing this act which would protect the American Companies in the United States.
One of the benefits of this is that when American products and services are used, American companies are able to thrive and stay longer in the market. For example, an employer will not be able to build a company when they have nothing to make. If people are not willing to purchase the product, then employers have no reason to produce it. For example, when a tractor is bought from a local supplier, the local market will thrive. This is the same way that works out for VectorCal and the new company. When their navigation products are utilized in the market, this is how they can be able to thrive well but when they are not used, the company is more likely to exit the market.
Most of the American companies as well as the individuals have benefited a great deal from this act. This is because the supply of the local commodities to the US government as well as the contractors is now possible (Luckey, 2009). This has given the local companies a competitive advantage over the foreign ones. Both my new company and VectorCal are now advantageous as they stand at a better chance of winning the government contracts as they are local US Companies.
However, it is advisable not to keep the hopes too high. VectorCal and my new company may fail to get the government tenders as there are many competitors within the American local market. If this happens, then they will have the chance to supply the locally made goods to the local companies that will have won the tender. This is because according to the law, the local companies that will have been given the tenders will have to ensure that their supplies are locally made (Wise, 2009). There is also a provision for these companies to buy the goods and services from other local companies and thus at the end of the day, the Buy American Act will satisfy almost all the local companies in the American market.
According to Luckey, 2009, the argument above is based on the rationale that companies that are operating in the local American market are likely to win more tenders in the US government as compared to the international companies. Aside from this, if these companies may fail to get the tenders, they can as well sell their locally produced products to the companies awarded the tenders.
Contradictions of Buy American Requirements to the capitalistic ethos.
For a competition to be termed as being fair, they should not be interfered with either by the capitalists markets or by the government. According to Connolly, 2008, all companies should be allowed to compete basically on the basis of their capacities. The Buy American Act on the contrary acts against the rule of capitalism. It protects the American local firms from the foreign firms so as to ease competition. The federal government has thus interfered with the fair competition by implementing this act. They experience favourism from the federal government in order to attain a competitive advantage over the foreign companies that may be trying to get into their local market. The government has made it clear to the companies that have managed to secure its tenders should ensure the usage of locally produced goods in their supplies. The local companies are given the first priority in the giving of tenders over the international tenders.
They government only makes use of the international products when they are not available locally, when the local prize is way higher than the international prize and also when they wish to fulfil the interest of the citizens. Without these exceptions, the international companies will stay at bay in their supply of tenders. This is beneficial to the American companies at a greater scale but also it is very well contradicting with the capitalism spirit which was set forth by the same government of the United States (MacCraw, 1999).
The American government thus contradicts itself with the Buy American Requirement in that what they practice does not go in line with the capitalism spirit that they endorsed (Scott, 2011). This is because capitalism advocates for freedom in the business market which is not in practiced here. Competition is denied in that the foreign companies that supply the foreign goods are not allowed to make their supplies to the US government. The local contractors that are awarded the contract are as well not allowed to supply the government with any foreign products. The local companies that have failed to secure the contract are as well not allowed to supply the companies that have the contract with any foreign good unless there the above three exceptions are applicable.
Connolly, 2008, says that a capitalistic market should let all the companies in a business market to compete according to their capabilities. This is thus not so because the American government has come forth with interventions in that they have introduced some regulations that enable the reduction in competition. These regulations have also contradicted a great deal capitalistic ethos.
Benefits of the Exception to the Buy American Requirements
This requirement comes with various exceptions. One of these is that if the local prize is expensive by 50% or more, the government should purchase the same product from the international market at a lower prize. The second exception is that if a requirements conflicts the interest of the public, then they will have to be imported. Thirdly, if a product is not available in the US market, they it will be supplied by an international company.
People might have different views with these exceptions but in my view, the exceptions listed above are of some benefit to the American economy. On the first exception, the government expenditure on supplies will be greatly reduced and thus the funds can be redirected to other projects within the country. The second exception protects the interests of the public. The government thus shows that as much as they would wish to protect the country’s economy, they would not do so at the expense of the citizens’ interest. Finally, the third exception shows clearly that the country is not mean and that once they lack something, they can as well import it. This ensures that they do not lack anything. In my view, all these exceptions are meant to strengthen the American Economy. This is because they are in line with the US economic goals.
Advantages of using the Buy American Requirements with the navigation system
The Buy American Requirements has a myriad of benefits to the local companies producing local goods. VectorCal Company as well as my new company both produce the navigation system and thus stand at a higher chance of benefiting from the application of this requirement. This is because, these two companies can work jointly in producing better products and services at prices that are lower than those produced by other companies. This is because with the combined resources as well as expertise from the two companies, they are likely to have a higher competitive advantage over other companies producing the same goods (Manuel, 2013).
Application of the Buy American Requirement will as well be beneficial to both the companies when a procurement process comes forth to assess the rate of taking care of the public interest with the local production of goods. This would make it easier for the two companies to win government tenders. The two companies will thus benefit from this.