For last year’s 10th anniversary of the Sept. 11 terror attacks, U.S. Transportation Security Administration officials wanted their workers to remember the thousands who died. So the agency bought 70,000 commemorative bracelets -- made in China.
The wristbands were among as much as $84 billion in U.S. contracts awarded for foreign goods and services in the fiscal year that ended Sept. 30, mostly through exemptions from legislation designed to restrict such deals. Foreign purchases by federal agencies also included rocket launchers and machine guns from Bulgaria, as well as generic cholesterol medication for U.S. veterans that came from plants in India.
A Buy American Act from 1933 and similar measures since then have become so riddled with loopholes that some U.S. lawmakers are saying enough. Three senators proposed legislation last month to expand domestic preference rules and require agencies seeking made-in-America waivers to publish their plans on the Internet and allow time for public comment.
“A major objective of our bill is to demand accountability and ensure waivers are not being overused to allow for the purchase of foreign products when there is a quality, American-made alternative available,” U.S. Senator Debbie Stabenow, a Michigan Democrat sponsoring the legislation, said in an e-mailed statement.
In the past five years, federal agencies awarded contracts valued at more than $500 billion for foreign goods and services, peaking at $111 billion in the fiscal year that ended Sept. 30, 2008, according to data compiled by Bloomberg Government.
The U.S. Department of Defense was responsible for more than 90 percent, or $76.5 billion of spending last year on non-American goods and services, according to the data. The military accounts for most U.S. contract awards, and the wars in Iraq and Afghanistan contributed to the surge in overseas spending.
Policies that push government agencies to buy U.S.-made goods are “one of the more effective ways to leverage tax dollars to enhance domestic employment,” said Scott Paul, executive director of the Alliance for American Manufacturing, a Washington-based trade group.
He noted the U.S. has begun making streetcars again, after domestic preference policies helped United Streetcar, an Oregon manufacturer that began operations in 2005, win work in Portland, Oregon, and Tucson, Arizona.
There are still “glaring” loopholes, Paul said in an interview. They include exceptions that allow the Pentagon to buy foreign-made goods for use abroad even as companies such as New Balance Athletic Shoe Inc. try to win military business for their U.S.-made products, he said.
‘Sitting in Warehouse’
New Balance, based in Boston, made 5,000 pairs of military footwear that the company believes comply with Defense Department rules for American-made goods, said Matt LeBretton, a New Balance spokesman.
“We are the only people foolish enough to invest time and money into making shoes that the government won’t buy,” LeBretton said in an interview. “Now they’re sitting in a warehouse somewhere.”
While Buy-American policies are intended to help stimulate economic growth and domestic employment, they may shortchange taxpayers if agencies are paying more to buy U.S.-made goods, said Stephen Bronars, a senior economist at Welch Consulting in Washington.
“If we can acquire the products from another country at a lower cost, it frees up resources that could be allocated to other things,” Bronars said in an interview. “Rather than spending more for materials and fixing fewer roads or schools, you could do more work overall.”
The TSA bracelet purchase has drawn particular scrutiny, not so much for its economics as for its symbolism. The wristbands were manufactured in China and purchased from TJM Promotions Inc. of Ocala, Florida, according to government data available online.
Paul, the manufacturing trade group leader, said it’s very easy to find such silicone wristbands made in mass quantities in the U.S.
“That is absurd,” Paul said. “And it certainly cheapens the remembrance to have it made in China.”
TSA employees contacted 50 vendors, and conducted extensive market research that showed the vast majority of wristband shells were manufactured overseas and customized in the U.S, Chris Ortman, a Department of Homeland Security spokesman, said in an e-mail.
The TSA found four vendors that said their wristbands were manufactured in the U.S. Those suppliers weren’t able to meet the government’s delivery date, Ortman said. He declined to identify them.
The TSA paid $17,500, or about 25 cents per wristband, including shipping and handling, for the 70,000 bracelets, Greg Soule, an agency spokesman, said in an e-mail.
Pentagon purchases last year included ammunition from Romania, as well as at least $1.2 million for machine guns and a minimum of $2.1 million for rocket launchers manufactured in Bulgaria, according to the data.
The Bulgarian-made machine guns and rocket launchers are for use by the Afghan army and were exempt from rules requiring American-made purchases because there are no plans to use the weapons inside the U.S., Matthew Bourke, an Army spokesman, said in an e-mail.
Defense Department purchases also included staples for foreign operations such as groceries, refrigerators, washing machines and interpreter services, as well as ammunition and armored vehicles.
Good Foreign Policy
“Some of that spending may be a function of a desire to buy things in local communities where the military is stationed,” said Larry Allen, president of Allen Federal Business Partners, a procurement consulting firm based in Arlington, Virginia.
“When you’re trying to keep people happy with you near your naval base in Okinawa, Japan, making a certain amount of procurements with local companies is, on a macro level, good foreign policy,” Allen said in an interview.
The amount of U.S. spending on foreign goods and services decreased last year by about 22 percent from about $107.7 billion during the fiscal year that ended Sept. 30, 2010, according to the latest data available. Some reduction is to be expected as the U.S. spends less money on wars, said Bronars, the Washington-based economist. The declining value of the U.S. dollar may also be contributing to a decrease in such spending, he added.
“The dollar has lost purchasing power relative to some trading partners,”Bronars said. “It may have been less cost-effective to buy from foreign vendors.”
New trade agreements may encourage U.S. agencies’ overseas spending even as the dollar declines, said Dan Jacobs, the chief executive officer of The Federal Market Group, a Warrenton, Virginia-based consulting firm.
“In my opinion, Buy American is a joke,” Jacobs said in an interview.