The mechanism: The Buy American Act's domestic-content test isn't static — it's a ratchet. Under the current FAR Part 25 rule, an end product delivered in 2026 must clear 65% domestic component cost to qualify as "domestic"; that bar rises to 75% by 2029. Layer on DFARS-specific rules, ITAR export controls, and the January 2026 executive order "Prioritizing the Warfighter in Defense Contracting" (EO 14372), which leans on contractors to plow capital into production over buybacks, and the message to foreign primes is unambiguous: manufacture here, or get squeezed out of the solicitation before you ever bid.
That's precisely why Elbit Systems — an Israeli prime — has spent two decades building out Elbit Systems of America, headquartered in Fort Worth, Texas, with subsidiaries like KMC Systems (Merrimack, NH) and a joint venture with General Dynamics, UAS Dynamics, built specifically to adapt Elbit's Hermes and Skylark drone families using "US engineering, technology, manufacturing and logistics." None of that is incidental — it's a compliance architecture. Every tightening of the domestic-content screw forces Elbit to disclose, in effect, how much of its backlog is truly localized versus how much still rides on Israeli-built subsystems wrapped in a U.S. shell.