New Federal Rule Extends Ban to 5 Years for Small Businesses Falsely Claiming 'Made in America'

The “Made in America Integrity Act of 2025” is short, but it packs a punch for small businesses that contract with the federal government. Essentially, this legislation tightens the screws on any small business caught lying about where their products or services actually come from, specifically when they claim to be “Made in America” to win a contract.

The Integrity Check: Why This Matters

When a small business bids on a federal contract, claiming their product is “Made in America” often gives them a competitive edge, especially given existing procurement rules designed to favor domestic goods. This bill acknowledges that some companies might be gaming the system. It amends Section 16 of the Small Business Act to specifically target businesses that secure a federal contract, even partially, based on this false claim. The core idea is simple: if you say it’s made here, it better be made here, or you’re going to pay a steeper price.

The New Bottom Line: Five Years on the Sidelines

For most small business owners, the biggest takeaway is the penalty hike. Under the existing law, a business caught in this kind of fraud already faces fines and other remedies. However, the period during which they are barred from receiving any federal contracts—known as debarment—is typically three years. This new Act increases that ban period from 3 years to 5 years if the fraud involves falsely claiming "Made in America" status. Think of it as the federal government saying, “If you try to cheat the system designed to help domestic producers, you’re going to be out of the game for even longer.”

Real-World Impact: Who Feels the Heat?

This change specifically targets businesses that rely on federal contracts, such as construction companies, suppliers of office equipment, or even IT service providers. For a small manufacturing shop that falsely claims its imported components were domestically sourced to win a Department of Defense contract, the penalty is now significantly harsher. Losing the ability to bid on high-value federal work for five years—instead of three—can be a death sentence for a company where government contracts make up a large chunk of their revenue. This increase in the penalty period is designed to be a serious deterrent, ensuring that the "Made in America" label remains meaningful in federal procurement and that compliant domestic businesses aren't undercut by fraudulent competitors.