What is TAA Compliance?

Is the Government Going to Investigate Your Company for TAA Compliance? How Would You Do?

In Government Contracting What is TAA Compliance?

Trade Agreements Act TAA Compliance Lawyers TAA compliance 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 Agreement Act which has a minimum contract amount $193K or more, means that if you selling 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 (TAA Compliant products made outside of the U.S.)
  • foreign end products – made outside of the United States and do not meet the 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 False Claims Act crimes.

What is Required for Your Products to be TAA Compliant?

To meet the regulatory TAA compliance requirements, your products must be made completely in the United States or one of the TAA designated 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 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 TAA 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 helps the company determine whether it meets the Trade Agreements Act requirements.
  • Simply packing and assembling parts generally will be deemed non-TAA compliant.

Why Does Being TAA Compliant Matter?

Congress passed the Trade Agreements Act as an important part of the United States’ economic, diplomatic, and defense strategy. Government contractors also must follow the TAA statutes and manufacture their products in TAA compliant countries. This is not a choice. Federal law enforce agencies have prosecuted several cases where companies paid millions to resolve False Claims Act TAA non-compliance liability.   

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. Companies must be very careful to make sure that they comply with GSA Trade Agreements Act compliance requirements.

What are TAA Countries?

The full list of TAA countries can be found HERE. Government contractors must make sure that they keep up to date on the various designated countries since they may change.

TAA-designated countries are those with whom the United States as an executed multilateral or bilateral agreement, such as a Free Trade Agreement, or the World Trade Organization Government Procurement Agreement, or that have otherwise been designated as TAA eligible (i.e., Least Developed Countries and Caribbean Basin Countries).

Non-TAA compliant countries are omitted from the list, including, but not limited to:

China, India, Indonesia, Iran, Iraq, Malaysia, North Korea, Pakistan, Russia, Sri Lanka, …

What TAA Compliance Exceptions?

FAR 25.40 mentions TAA Compliance 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 Agreements Act 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.

Consider retaining a Trade Agreements Act compliance attorney to help. At Watson & Associates, LLC our trade agreements lawyers help your company to minimize civil and criminal liability and to become TAA compliant.

Call our TAA compliance attorneys for immediate help at 1.866.601.5518 today or contact us online.