A.R. "Trey" Hodgkins photo
Why Restrictions on Domestic Sourcing Hurts the American Government, Jobs and the Economy

America and technological innovation are synonymous. From revolutionizing society with the internet, to the smartphones providing us apps that drive our day, to the microchips powering the device you are using now to read this blog, the private sector in the United States has consistently maintained an edge against foreign competition when it comes to innovation. This success, however, is not guaranteed. Which is why the tech industry continues to support efforts and advocate for policies to grow the U.S. economy through the creation of jobs, opening of markets, and increasing the exports of U.S. manufactured goods and services.

One of the policies the Trump Administration has placed a priority on is “Buy American,” which it hopes will encourage more production in the United States. On September 15, ITI and ITAPS filed comments explaining that tightening existing restrictions under “Buy American” is the wrong way to achieve this objective for two reasons: 1) it would decrease access to government procurement markets around the world, and 2) it would weaken the federal government’s ability to modernize its information technology infrastructure.

First, let’s talk about how this proposal limits the United States’ access to global markets, ultimately hurting U.S. businesses, jobs, and the economy. Ninety-six percent of the customers for U.S. goods and services are outside the United States. For the tech industry to remain competitive, we must access this worldwide customer base, including the growing government procurement markets around the world. The United States has trade agreements that provide access to a significant portion of these markets, such as the EU and its member states, Canada and Mexico, and South Korea, however, the U.S. lacks trade agreements with strong government procurement commitments in large, emerging markets, such as Brazil, China, and India. Efforts in the U.S. to restrict the ability of companies to supply goods and services to the federal government will result in reciprocal loss of access to these markets, rather than opening them up. This would be a strategic mistake for an administration that is trying to break down barriers to trade.

Secondly, these restrictive domestic sourcing policies hurt the government’s ability to access the most advanced and cost-effective commercial technology, which is essential to our nation’s security and advancement. It is no secret that the U.S. government hasn’t always kept up with the private sector’s technology. One glaring example, is that today - in 2017 - several U.S. government departments rely on mainframe computers that are over forty years old. Recognizing the necessity and scope of bringing the federal government fully into the digital age, President Trump signed multiple executive orders earlier this year prioritizing the modernization of government information technology (IT). We are ardent supporters of this administration’s federal modernization efforts and its continued commitment to upgrade the nation’s legacy systems. Modernized products and services will increase the capabilities and technological advantages needed to fulfill the government’s missions in the national security, homeland security, economic, and diplomatic policy spheres.

Harmful domestic sourcing restrictions, particularly in the technology sector, would unnecessarily limit sources of contract fulfillment to items produced in the United States, as well as limit access to the most innovative and mission-critical technologies. Instead of imposing stricter domestic sourcing requirements, we encourage the Trump Administration to further engage in diplomatic efforts to sustain and expand the global government procurement market. Doing so would not only improve government access to the latest and greatest IT products and services, but American taxpayers will also benefit from the cost-savings and commercial efficiencies that they bring to citizen services.

Public Policy Tags: Trade & Investment, Business Development, Public Sector