What is TAA Compliance Requirements? Are You TAA Compliant?
Is the Government Investigating Your Company for Trade Agreement Act TAA Compliance Requirements Fraud? How Would You Do?
TAA Certificate of Compliance rules in federal government contracting is critical for companies who sell their products either directly or indirectly to the federal government to make sure their products comply with the Trade Agreements Act (TAA). ( 19 USC Ch. 13: TRADE AGREEMENTS ACT OF 1979)
The U.S. Trade Agreements Act certification rules, which require a minimum contract amount of $193K or more, mean that if you sell products to the federal government, whether on a GSA schedule contract or otherwise, your products are TAA compliant if your product or service must be made or “substantially transformed” in the U.S. or a designated country.
TAA-compliant products fall under three main categories. They are
- domestic end products – made entirely in the United States of America
- designated country end products – made in a country that has a trade agreement with the United States (Trade Agreement Act compliant products made outside of the U.S.)
- foreign end products – made outside of the United States and do not meet the Trade Agreement Act compliance requirements for designated country end products
Federal law enforcement agencies such as the Office of Inspector General (OIG) and Department of Justice (DOJ) have ramped up their investigations of small businesses, prime contractors, subcontractors, and manufacturers. As a result, record numbers of corporations and CEOs are charged and or convicted for FalseClaims Act crimes.
Get Help From Trade Agreements Act Certification Lawyers Who Understand the Rules and Can Aggressively Push Back When the Government is Wrong or Cannot Meet Its Burden Of Proof That You Are Not Trade Agreement Act Compliant.
LOCATIONS: WASHINGTON DC, DENVER COLORADO, DUBAI, MIAMI FLORIDA, LOS ANGELES, CALIFORNIA
US AND INTERNATIONAL REACH
Theodore P. Watson, Esquire. Practice Group Lead.
Call him at 1.866.601.5518. At Watson & Associates, with law offices in Colorado and Washington, DC, our top-rated federal government investigations attorneys have experience working for federal contracting agencies. We understand the nuts and bolts of the government’s investigation, criminal cases, and how the DOJ or even the SBA OIG develops a civil or criminal case against you.
A crucial aspect of our practice lies in the fact that many of our federal crime investigations defense attorneys possess extensive experience as government contracting officials. We also understand how trial lawyers, and federal prosecutors in federal agencies like the DOJ and the U.S. Attorney’s Office operate.
Drawing on those valuable insights, our job is to deconstruct the government’s case and develop a legal defense in federal courts that can create leverage in the event of litigation. Contact Mr. Watson directly.
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HERE IS WHAT YOU NEED TO KNOW
Definition of TAA: TAA is the abbreviation of Trade Agreements Act, a federal law that was enacted in 1979 to promote fair and open international trade among willing countries. The TAA compliance also implements many multilateral and bilateral international trade agreements and other trade initiatives. The TAA requires the United States government to only buy end products that are made in the U.S. or in a listed designated TAA-compliant country.
- When you sign a TAA certificate of compliance, there is not much turning back if you do so recklessly.
TAA Compliant Meaning: To be compliant, products sold through the GSA Multiple Award Schedule (MAS) Contract must be manufactured or “substantially transformed” in the U.S. or a TAA-compliant country.
The TAA compliance regulation prohibits supplying products and services from non TAA compliant countries, including major manufacturing countries like China and India. If your company is alleged to have violated Trade Agreements Act compliance requirements, you can be held civilly or criminally liable under the False Claims Act (FCA).
TAA Threshold 2024 – Apply to You TAA Certificate of Compliance Assessment
The U.S. Trade Representative has determined the U.S. dollar procurement thresholds, effective on January 1, 2024, for calendar years 2024 and 2025 as follows:
World Trade Organization (WTO) Agreement on Government Procurement
A. Central Government Entities listed in U.S. Annex 1:
(1) Procurement of goods and services—$174,000; and
(2) Procurement of construction services—$6,708,000.
Can You Just Point to Your Subcontractor’s Representation to Defend Against TAA Compliance Fraud Charges?
It depends. The hard approach is that the federal government, as a party to the contract, generally has no privity of contract with your subcontractors. However, many prime contractors try to escape liability by pointing to the TAA compliance representation of their subcontractors. It would help if you always got written representation of compliance with the Trade Agreements Act from your subcontractors and manufacturers.
You still have to be very careful when your subs represent to you that their products or materials are TAA-compliant. You are not always completely off the hook. Some courts may inquire further as to how much did you conduct due diligence on this matter. Did you simply accept the TAA Certificate of Compliance as true? Sometimes you can rely on the expertise of your subcontractors. See United States ex rel. Ervin and Assoc., Inc. v. The Hamilton Sec. Grp., Inc., 298 F.Supp.2d 91 (D.D.C.2004). However, you cannot always count on this. See United States ex rel. Folliard v. Govplace, 930 F. Supp. 2d 123 (D.D.C. 2013)
In United States ex rel. Compton v. Midwest Specialties, Inc., 142 F.3d 296 (6th Cir.1998), the United States Court of Appeals for the Sixth Circuit held that a supplier “knowingly” made a false claim to the government, where the supplier delivered goods to the government knowing the goods had not been tested and without knowing de facto whether the goods otherwise conformed to specifications. Id. When it comes to TAA compliant certification to the federal government, you should not sit and be idle. You must inquire and show due diligence.
How Can We Fight on Your Behalf in False Claims Act Trade Agreements Certification Case?
This is just but one angle: When assessing the elements of submitting a False Claim in a TAA compliance investigation, the Government has to show that your actions were “knowing,” mere negligence or even gross negligence is not enough. Based on the evidence investigated, the prosecutor must show gross negligence plus deliberate ignorance or reckless disregard.
What is Required for Your Products to be TAA Compliant?
What is TAA compliance? To meet the regulatory TAA conformity requirements, your products must be made completely in the United States or one of the TAA countries, or the product must be substantially transformed or have undergone a significant change in form or character in one of the designated countries.
Substantial transformation under Trade Agreements Act certification rules means that your products underwent a fundamental change (normally as a result of processing or manufacturing in the country claiming origin) in form, appearance, nature, or character. This becomes a highly contested issue.
Government contractors must realize that they cannot guess and certify to the government that their products are Trade Agreement Act compliant. See FAR 52.225-5 Trade Agreements.
Without an actual analysis for compliance, companies face significant civil and criminal exposure.
- Saying that you made a certification mistake does not get you off the hook with OIG or DOJ
- During TAA investigations, federal agents want to see if you have an internal policy or control and help the company determine whether it meets the TAA requirements
- Simply packing and assembling parts generally will be deemed non-TAA compliant.
Watch the Video Below to Learn More About TAA Compliance Rules Requirements
What is TAA Compliant? Why Does Being TAA Compliant Matter?
It is no secret that selling products to the federal government is very lucrative but with that comes severe consequences if the TAA requirements are not met. What is TAA compliant means that companies must be very careful to ensure they comply with GSA Trade Agreement Act compliance requirements.
Trade Agreements Act Certification & GSA TAA Compliant Products
Avoid fierce government investigations or exposure to criminal liability:
The Trade Agreements Act certification (TAA), as it applies to GSA Schedule holders, simply means that unless otherwise stated in the solicitation, the contracting officer, or contract. The GSA TAA compliance means that the country of origin for products sold through your GSA Schedule contract is limited. To become GSA TAA compliant, you can only sell to the federal government:
- Articles that are wholly the growth, product, or manufacture of the U.S. or a designated country or
- Articles that are “substantially transformed” in the U.S. or a designated country into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was transformed.
Tip: As a government contractor, you are solely responsible for ensuring that your TAA compliance product information is accurately incorporated into the contract and displayed on GSA Advantage throughout the life of your contract. You must keep the information on your GSA contract current. Blaming manufacturers or claiming you did not understand the law is not usually an excuse for DOJ or OIG investigators. You are solely responsible for information about TAA compliance rules in 52.225-5 Trade Agreements.
How Do You Get Trade Agreements Act Certification
For federal government contracts and state and local contracts, each company must attest to Trade Agreements Act certification. You must represent to the government that your product meets the TAA compliance requirements. It is your responsibility to perform the due diligence and show that you went through the effort of making sure that your products are TAA compliance certified.
What are Trade Agreement Act TAA Compliant Countries?
The full list of TAA compliant countries can be found HERE.
Designated TAA Contract compliant country means any of the following countries:
(1) A World Trade Organization Government Procurement Agreement (WTO GPA) country (Armenia, Aruba, Australia, Austria, Belgium, Bulgaria, Canada, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hong Kong, Hungary, Iceland, Ireland, Israel, Italy, Japan, Korea (Republic of), Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Moldova, Montenegro, Netherlands, New Zealand, North Macedonia, Norway, Poland, Portugal, Romania, Singapore, Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Taiwan (known in the World Trade Organization as “the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu (Chinese Taipei)”), Ukraine, or United Kingdom);
(2) A Free Trade Agreement (FTA) country (Australia, Bahrain, Chile, Colombia, Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Korea (Republic of), Mexico, Morocco, Nicaragua, Oman, Panama, Peru, or Singapore);
(3) A least developed country (Afghanistan, Angola, Bangladesh, Benin, Bhutan, Burkina Faso, Burundi, Cambodia, Central African Republic, Chad, Comoros, Democratic Republic of Congo, Djibouti, Equatorial Guinea, Eritrea, Ethiopia, Gambia, Guinea, Guinea-Bissau, Haiti, Kiribati, Laos, Lesotho, Liberia, Madagascar, Malawi, Mali, Mauritania, Mozambique, Nepal, Niger, Rwanda, Samoa, Sao Tome and Principe, Senegal, Sierra Leone, Solomon Islands, Somalia, South Sudan, Tanzania, Timor-Leste, Togo, Tuvalu, Uganda, Vanuatu, Yemen, or Zambia); or
(4) A Caribbean Basin country (Antigua and Barbuda, Aruba, Bahamas, Barbados, Belize, Bonaire, British Virgin Islands, Curacao, Dominica, Grenada, Guyana, Haiti, Jamaica, Montserrat, Saba, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Sint Eustatius, Sint Maarten, or Trinidad and Tobago).
What Trade Agreement Act Compliance Exceptions?
TAA compliant meaning – FAR 25.40 mentions TAA Compliance Rules Exceptions.
(a) This subpart does not apply to-
(1) Acquisitions set aside for small businesses;
(2) Acquisitions of arms, ammunition, or war materials, or purchases indispensable for national security or for national defense purposes;
(3) Acquisitions of end products for resale;
(4) Acquisitions from Federal Prison Industries, Inc., under subpart 8.6, and acquisitions under subpart 8.7, Acquisition from Nonprofit Agencies Employing People Who Are Blind or Severely Disabled;
(5) Other acquisitions not using full and open competition, if authorized by subpart 6.2 or 6.3, when the limitation of competition would preclude the use of the procedures of this subpart; or sole source acquisitions justified in accordance with 13.501(a); and
(6) Goods and services specifically excluded under individual trade agreements, such as exceptions negotiated by the U.S. Trade Representative for particular agencies. See the agency supplementary regulations.
What To Do If You Are Investigated or Charged for Non-TAA Compliance?
If your company is under investigation for alleged Trade Agreement Act TAA compliance violations, you do not want to handle it on your own. There can be serious mistakes related to incriminating documents or testimony requested via a civil investigative demand (CID) or responding to criminal subpoenas by the DOJ, OIG or other law enforcement agencies.
Tip: When federal law enforcement believes that your company is not Trade Agreement Act compliant, it will seek to investigate and or charge you with False Claims Act violations or some type of procurement fraud. To mitigate the situation, you have to show due diligence is trying to comply.
How can you overcome charges for False Claims Act charges for not being Trade Agreement Act compliant?
Government attorneys often have a difficult time proving intent. When you develop your internal policies and controls and diligently try to abide by those policies, it is then difficult to claim that you intended to defraud the government by not complying with the Trade Agreements Act requirements.
Consider retaining a Trade Agreement Act TAA compliance rules attorney to help. At Watson & Associates, LLC, our trade agreements lawyers help your company minimize civil and criminal liability and become TAA compliant.
Not sure what TAA compliant meaning is, call our TAA compliance requirements attorneys for immediate help at 1.866.601.5518 today or contact us online. Speak to Theodore Watson our Department Head.