Made in USA What Are Requirements for Electrical Fittings?
When Big Brands Become Big Box Offshore Stores For Profit, Why It’s Wrong, Unethical and Even Illegal
Today’s Electrical Industry supply chains are stuffed with “Camouflaged Fittings”. Many of the fittings being supplied today are from foreign countries such as China, India, and Turkey. These fittings are being sold by “old, established and thought reliable big brands without distributors, contractors and end users knowing what they are receiving. These manufacturers do not mention the country of origin on their catalog sheets or within other literature. The product itself is not marked with country of origin. It all falls under the shaded guize of “don’t ask, don’t tell” or as we call it Camouflaged Fittings. The only known origin is a simply a country in smaller fonts shown someone over the big branded box label.
Why They Do It? One Reason – The profit to be made by those manufacturers who shut down production in this country. They are now simply a “big box store” for those off-shore manufacturers. Read More why many times this is illegal even when Made in USA is not in the specification.
First and Foremost Don’t Buy Their Claims Unless It’s True
Within the last several years, the Federal Trade Commission has increased its enforcement actions against companies that mislead with a “Made In USA” claim. If your company is involved in installing or buying manufactured electrical products with possible foreign content, or assembled offshore or locally, it is crucial that you are aware of these regulations. FTC enforcement action can have far-reaching consequences, that could lead to significant fines and penalties. It takes years to build trust with your customers. It only takes a label with misleading claims to destroy it.
As a distributor, contractor or specifyer know the rules and more importantly the law. Today’s marketplace is frought with old line brands selling offshore products under the guise of “don’t tell if they don’t ask”. The contractor and end user must be careful attention to spec sheets, packaging and purchase orders to avoid inspection rejections and “tearouts”.
For manufacturers these days, it’s not uncommon to express their patriotism by claiming their products are “Made In USA.” But, ongoing FTC enforcement action suggests that many firms are unaware – or even choose to ignore – the strict rules the FTC has set forth against making false or misleading claims that their product is of U.S. origin.
Under Section 5 of the Federal Trade Commission Act, the FTC is granted enforcement powers to prevent unfair or deceptive marketing practices. This also includes product origin claims. Accordingly, a product marketed as “Made In USA” must be “all or virtually all” made in the USA. Companies that do not abide by these regulations are at risk of significant FTC enforcement action including fines and other penalties.
UNQUALIFIED & QUALIFIED US-ORIGIN CLAIMS
In its document “Complying With The Made In USA Standard,” the FTC spells out two categories under which companies can make the “Made In USA” claim: the first is the Unqualified claim; and the second is the Qualified claim.
Under an Unqualified claim, the product must comply with the “all or virtually all” requirement. This means that “all significant parts and processing that go into the product must be of U.S. origin. That is, the product should contain no — or negligible — foreign content.”
Other factors that determine the “all or virtually all” requirements include:
- The location of processing or final assembly
- The percentage of U.S. manufacturing costs
- Remoteness of foreign content.
- Final assembly in the United States.
WHAT IS A QUALIFIED CLAIM: “SOME – BUT NOT ALL – MADE IN USA”
A Qualified “Made In USA” claim indicates that a product isn’t completely of domestic origin by outlining the extent of a product’s processing or content. FTC examples of Qualified claims are:
- “60% U.S. content.”
- “Made in USA of U.S. and imported parts.”
U.S. CUSTOMS SERVICE REQUIREMENTS
Under the Tariff Act of 1930, the U.S. Customs Service requires that products manufactured overseas, or “substantially transformed abroad,” must be labelled or marked with the overseas country of origin. The Customs Service considers “substantial transformation” as the process that changes a product with a character, name, and use that is different than that which existed prior to the process. An example of this would be a company that imports sugar from Honduras, nuts from India, chocolate from Switzerland. Though the flour and butter are from U.S. sources. These ingredients would constitute a substantial transformation when combined to become chocolate chip cookies. Though the cookies themselves are produced in an American facility, the company is required to indicate the source of the ingredients on its packaging and in its marketing materials.
Equally important, the Customs Service requires “the foreign country of origin to be preceded by “Made in,” “Product of,” or words of similar meaning when any city or location that is not the country of origin appears on the product.” For instance, stating a product is “Made in USA from Imported Parts” or “Assembled in USA” would not be misleading.
Example: Apple states that its iPhone is “Designed by Apple in California. Made in China.” This meets the U.S. Customs Service requirements.
FAQ on Buy American Compliance
: Grantees are responsible. To assist grantees in making these determinations, EERE has issued a guidance document
.
The Special Terms and Conditions applicable to Recovery Act funded projects require that the financial assistance recipient flow down the Recovery Act special terms and conditions in any subaward or subcontract.
Based on the fact that the Special Terms and Conditions flow down to all subawards and sub-contracts, and the fact that a vendor is not a subawardee, sub-recipient, or subcontractor, the Recovery Act financial assistance recipient and sub-recipients are not required to flow down the Recovery Act’s Special Terms and Conditions to vendors. However, financial assistance recipients, sub-recipients and subawardees are ultimately responsible for complying with the Special Terms and Conditions, and should take whatever measures they deem necessary to ensure that the Buy American requirements of the Recovery Act are adhered to by their respective vendors.
Noncompliance with the Buy American provisions constitutes a violation of the Terms and Conditions of your Financial Assistance Agreement. Corrective action can include removing and replacing the improperly purchased foreign-manufactured goods, reducing the amount of the award, or even withholding future funds. In cases of fraud, it can even lead to criminal investigation and prosecution.
Grantees should include the Buy American requirements in all solicitations, Requests for Proposals (RFPs), agreements and sub-agreements. Recipients should expect contractors and vendors to verify their compliance with the Buy American provisions.
To assist grantees in making substantial transformation determinations and documenting compliance with the Buy American provisions, EERE has issued guidance documents on manufactured goods and substantial transformation for financial assistance awards and compliance with the Recovery Act Buy American provisions.
No. The Buy American Act of 1933 is a different law from the Recovery Act. The Buy American provisions of section 1605 of the Recovery Act are not the same as the Buy American Act of 1933.
No. The GSA Web site designations are not applicable to financial assistance recipients. Federal procurement, the process by which agencies acquire goods and services, has its own regulations for implementing the Buy American provision.
Regarding issues of non-compliance, resulting from a grantee relying on the misrepresentations of a third party, such as a vendor or manufacturer, DOE has not issued specific guidance. However, A Desk Guide to the Buy American Provisions of the Recovery and Reinvestment Act of 2009: Public Guidance on Implementation, Documentation, Compliance and Enforcement (DOE publication no. EE-0393) addresses the question of how these matters are addressed by EERE.
As stated in the Desk Guide, “Each issue of non-compliance will be addressed individually, because each has fact-specific considerations that must be addressed. However, broad guidelines have been developed to ensure consistency.”(Desk Guide, 22)
These broad guidelines include the consideration that at times, a grantee may have been “Mislead by Contractor, Vendor, or Manufacturer: The award recipient or sub-recipient has been misled by a contractor, vendor or manufacturer.” (Desk Guide, 22)
The OMB Interim Final Guidance for the American Recovery and Reinvestment Act (2 C.F.R. Part 176) permits a number of remedies in cases of non-compliance.
Pursuant to that guidance, the Desk Guide states, “…the Contracting Officer may allow the non-compliant materials to remain in the installation, and accommodate the project as it stands, taking no further action and allowing the award recipient to retain the manufactured goods and the full sum of the DOE award.” (Desk Guide, 28-29)
“In cases where all of the following are met:
- The value of the affected items is below a certain threshold or compelling exceptional circumstances exist; and
- Reasonable effort was made by the award recipient (and sub-recipient where applicable) to comply with the Buy American provisions, but despite these efforts, a mistake was made (or the award recipient, sub-recipient were misled by a contractor, manufacturer, distributor or vendor); and
- Reasonable effort was made by any contractor to whom the Buy American provisions were ‘flowed down’ to comply with the Buy American provisions; and
- The cost of removal and replacement of the items is unreasonable in respect to the cost of the items involved; and
- The award recipient and/or sub-recipient did not willfully disregard any communications or recommendations from Project Officers, Contract Officers, or the Buy American team in regards to compliance with the Buy American provisions; and
- The award recipient or sub-recipient has received no similar prior accommodation for this DOE award;
The Contracting Officer, in consultation with the Buy American team and Field Counsel; may choose to issue a determination that no further action will be taken regarding the non-compliance and the award recipient may retain the non-compliant manufactured good as installed, without forfeiting any amount of the DOE award funds.” (Desk Guide, 28-29) (Emphasis in original.)
Because these cases are so fact-specific, DOE is unable to determine whether a case is appropriate for resolution in this manner without a full review of the facts and circumstances. However, the Contracting Officer will strongly consider that the grantee has been misled by a vendor or manufacturer and relied upon the representations of that vendor or manufacturer to their detriment.