On November 15, 2021, President Biden signed the Infrastructure Investment and Jobs Act – the physical infrastructure bill – that includes updated and expanded Buy America requirements under a provision known as the Build America, Buy America Act (BABA). The BABA goes above and beyond previous Buy America requirements. It expands the scope of materials covered, heightens the scrutiny of waiver applications, and increases the domestic component content standards. We offer a brief overview of the changes here and invite you to contact our firm with questions and to seek guidance on your compliance with the new regulations.
BABA Covers All Infrastructure Projects
BABA’s impact is not limited to only the new funds appropriated by the infrastructure bill. Instead, the BABA explicitly applies to all federal-aid infrastructure programs with the intent of creating an enduring and permanent impact on the Buy America requirements. In its wide scope, the BABA prohibits the use of federal funds for an infrastructure project (including initial construction, alteration, maintenance, and repairs) unless all iron and steel manufactured products and all construction materials used in the project are produced in the United States. The BABA covers essentially all public works projects in the United States including:
- roads, highways, and bridges;
- public transportation;
- dams, ports, harbors, and other maritime facilities;
- intercity passenger and freight railroads;
- freight and intermodal facilities;
- water systems (including drinking water and wastewater systems);
- electrical transmission facilities and systems;
- utilities; broadband infrastructure;
- and buildings and real property.
BABA Expands the Scope of Materials Covered by the Buy America Requirements
Like prior Buy America requirements, the BABA requires that certain materials used in projects are “produced in the United States.” In a major shift, the BABA includes new requirements on “construction materials” as well as the previously covered iron and steel and other manufactured products. Iron and steel products will continue to be considered “produced in the United States” if all manufacturing, from initial melting through the application of any coatings, occurred in the United States. In the case of other construction materials, those are considered “produced in the United States” if all manufacturing occurred in the United States. Notably, the intent is to cover the entire manufacturing process like with iron and steel products. Lastly, all other manufactured products are “produced in the United States” if they were actually manufactured in the United States and the cost of the components mined, produced, or manufactured in the United States is greater than 55% of the total cost of all components of the product. Importantly, the current 55% component standard will be increased to 75% with a fallback to 60% in the event that no qualifying offer is presented in compliance with the new 75% standard.
Changes to the Waiver System
Currently, waivers of the Buyer America requirements are available when compliance with the requirements would be inconsistent with the public interest, when United States products are not available or of sufficient quality, or if the use of United States products would increase the total project cost by more than 25%. While those categories will remain available for applications, the newly created Made in America Office will apply stricter scrutiny to every waiver application. Specifically, the Office will consider possible project delays and the ability to use a substitute material when evaluating an availability waiver. When considering a public interest waiver, the Office will put additional weight and scrutiny on the impact such a waiver will have on employment in the United States employment and whether the lower cost of foreign material is due to unfair trade practices.
Congress intends for the new Buy America requirements to apply beginning on approximately May 14, 2022. Before then, it will be important to understand how the changing standards might impact your business. We can help. Please contact us to schedule a consultation.