A product is considered to be nondomestic for the purpose of compliance with the “Buy American” requirement if:

(a) The product is manufactured outside the United States or any eligible country; or

(b) The product is manufactured in the United States or in any eligible country, but the cost of nondomestic components used therein constitutes 50 percent or more of the cost of all components. The cost of components shall be determined on a comparable basis, so that only the cost of domestic and nondomestic components, up to the point where they are combined and manufactured into a complete product shall be considered.

(1) The determination of the cost of the nondomestic components of a product shall include:

(i) The price paid to the nondomestic source;

(ii) The cost of shipment to the port of entry into the United States;

(iii) Applicable tariffs or duties;

(iv) The cost of transportation from the port of entry to the distributor's plant or warehouse; and

(v) Profit, overhead, and commissions of domestic and nondomestic suppliers and subcontractors of the components.

(2) The following items shall not be considered in determining the cost of components, although they are proper elements in the determination of the final selling price of the product:

(i) Fabrication or processing costs, if any, of nondomestic or domestic components at the assembly plant, or any other place of fabrication in the United States or any eligible country;

(ii) Testing costs at the assembly plant or at the installation site;

(iii) Direct profit, overhead, and commissions of the domestic distributor; and

(iv) Cost of transportation from the domestic assembly point to the installation site.