Neal Fox | Trade Agreements Act disagreeable

IT Contracting

Neal Fox

The Trade Agreements Act is impeding federal agencies from buying needed information technology products. From the Army buying personal digital assistants to agency chief information officers trying to buy flat-panel monitors or upgrade their IT infrastructure, TAA has become a significant speed bump ' and in some cases, a stop sign. When it comes to IT products, it is time to ask whether TAA protects U.S. interests more than it harms them.

The idea behind TAA is noble enough: to protect U.S. companies from unfair foreign competition, even though it only applies to federal purchasing. Federal buyers who wish to buy foreign products where the purchase price exceeds $2,500 for a given contract are required to buy from countries that have signed a TAA agreement with the United States. The General Services Administration schedules, agency governmentwide acquisition contracts and other long-term contracts must assume such purchases of noncompliant IT would easily exceed $2,500 during the contract, so no noncompliant items of any value can be purchased on these contracts.

The idea behind TAA is noble enough: to protect the U.S. from unfair foreign competition.

And keeping noncompliant items off these contracts is no easy matter. China, Malaysia, Taiwan and other major IT manufacturing countries are not TAA-compliant. Trying to find a compliant mouse, LCD monitor or other computer component has become a chore and is sometimes not possible. The only reason computers can even be purchased is because assembly in the United States is called a substantial transformation of the noncompliant components, which makes the items compliant. GSA tries hard to keep noncompliant items off the IT Schedule, but they continually creep in. Most non-GSA GWACs simply punt the problem back to the customer agency and tell them to solve the problem on their own through waivers.

That's not much of a solution. The Justice Department does not have a sense of humor about companies violating TAA. Companies of all sizes have been heavily fined for simple violations.

There appears no end in sight to the problem. In fact, it is accelerating as China becomes an even larger player in the IT products marketplace.

So how do agencies buy non-TAA items when that is the only alternative? Buying very small quantities is one way, but this reduces quantity discounts, which means agencies would have to pay more for such items. Some agencies will file a TAA waiver for certain purchases, which is a burden. The fact is, there is no effective way to deal with it.

Given the increasing level of burden from TAA on agencies, the accelerating problem from China and the cost to American taxpayers of paying more for compliant items, it is time for Congress to exempt IT hardware products from TAA.

Neal Fox is the former assistant commissioner of commercial acquisition at GSA and now manages Neal Fox Consulting. E-mail him at nfox@usa.com.

About the Author

Neil Fox is the former assistant commissioner for commercial acquisition at GSA's Federal Supply Service, and is now principal at Neal Fox Consulting.

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