More than a year has passed since Congress enacted the Build America, Buy America Act (“BABA”)—a sweeping change to domestic sourcing requirements for federally funded infrastructure projects. BABA, which was included as part of the November 2021 Infrastructure Investment and Jobs Act (“IIJA”), materially changes the way many companies must source supplies for federally-funded projects; however, implementation has not happened overnight. With a phased approach, piecemeal guidance from the federal government on how to interpret certain requirements, and a host of waivers that vary by agency, the implementation of BABA can be difficult to track. This post provides a refresher on BABA’s requirements and a status update on how these requirements are being implemented on federally-funded infrastructure projects.
BABA’s Buy American Requirements
BABA differs from the “Buy American” requirements that apply to federal construction projects, i.e. construction contracts entered into with, and administered by, the federal government, and subject to the Federal Acquisition Regulation (FAR). Federal construction projects have long been subject to requirements to purchase materials domestically or from sources or designated US trade partners. In contrast, public infrastructure projects administered by state and local governments with federal funding are not subject to those requirements (though some have been subject to different requirements, discussed below). While many government contractors are familiar with the FAR Buy American requirements, BABA could be a significant new compliance burden for companies that do not generally contract or subcontract with the federal government, but which may work on federally-funded state and local infrastructure projects.
BABA requires that “none of the funds made available for a federal financial assistance program for infrastructure, including each applicable program, may be obligated for a project unless all of the iron, steel, manufactured products, and construction materials used in the project are produced in the United States.” BABA defines “infrastructure” broadly to include roads, highways, and bridges; public transportation; dams, ports, harbors, and other maritime facilities; inter-city passenger and freight railroads; freight and intermodal facilities; airports; water systems, including drinking water and wastewater systems; electrical transmission facilities and systems; utilities; broadband infrastructure; and buildings and real property.
To be considered “produced in the United States” under BABA, materials must meet varying standards, depending on whether the material constitutes a manufactured product, construction material, or iron/steel:
- Manufactured products: must contain greater than 55% domestic components (by cost) and be manufactured in the United States;
- Construction materials: all manufacturing processes must occur in the United States;
- Iron/steel: all manufacturing processes, from the initial melting stage through the application of coatings, must occur in the United States.
While the distinctions between these categories are not always clear, the government has provided some guidance as to how to categorize different materials, as discussed more below.
Some infrastructure projects already have domestic sourcing requirements. For example, USDOT agencies have their own “Buy America” requirements that generally apply to iron, steel, and manufactured products (though the requirements differ by agency). BABA does not supersede these DOT requirements, but applies where these requirements are less-stringent than the IIJA requirements.
Agencies must apply BABA requirements in accordance with US trade agreements. This could be an important exception because these agreements often require US agencies to give reciprocity to goods from trading partners such as Korea, Japan, and the entirety of the EU (notable omissions are India and China). This could be a fact-specific and complicated analysis, as coverage by a trade agreement can vary by government entity (40 states are covered in our trade agreements) and type of project (US excludes DOT grants from its trade commitments, and some states exclude construction projects). Moreover, goods from those countries must have been produced or transformed in those countries, which can necessitate another fact-intensive exercise.
BABA directed agencies to apply the new domestic content requirements to federally-funded infrastructure projects 180 days after BABA’s November 2021 enactment, though many agencies have issued waivers to delay the contemplated May 2022 effective date.
The Office of Management and Budget, which was tasked with issuing guidance on BABA requirements, issued preliminary guidance in April 2022. The guidance primarily addressed the process for agencies to request waivers of BABA requirements, and also provided additional detail on the BABA requirements for construction materials. More specifically, the guidance explained how to categorize materials as manufactured products, construction materials, or steel/iron and provided a definition of “construction material” as: “an article, material, or supply—other than an item of primarily iron or steel; a manufactured product; cement and cementitious materials; aggregates such as stone, sand, or gravel; or aggregate binding agents or additives—that is or consists primarily of:
- non-ferrous metals;
- plastic and polymer-based products (including polyvinylchloride, composite building materials, and polymers used in fiber optic cables);
- glass (including optic glass);
- lumber; or
Since OMB issued its preliminary guidance in April 2022, agencies have been busy developing plans to implement BABA requirements. Recent developments include:
- More guidance from OMB: On February 9, 2023, OMB issued a proposed rule and notice of proposed guidance, building on its preliminary guidance from April 2022. The new guidance provides additional color on how the government will interpret the “produced in the United States” requirements for manufactured products, construction materials, and iron/steel, which involves borrowing certain standards and definitions from the Buy American requirements in the FAR at 48 C.F.R Part 25, how the government will distinguish between a manufactured product and a steel/iron product, and how the government will define the requirement that “all manufacturing processes” for construction materials occur in the United States. OMB is accepting comments on the proposed rule until March 13, 2023.
- Waivers, waivers everywhere: Many agencies have issued waivers to delay implementation for part or all of the BABA requirements, though some of these waivers are nearing expiration or have already expired. For instance, in May 2022, DOT issued a waiver to delay implementation of the domestic construction material requirement by 180 days. When that waiver expired in November 2022, DOT did not extend it, though it did issue several narrow waivers to assist with implementation, including a de minimis waiver for small purchases and limited waivers for awards prior to March 10, 2023, from solicitations published before May 14, 2022. In August 2022, the Department of Energy issued a waiver of BABA requirements for DOE awards issued as a result of solicitations published prior to May 14, 2022, though this waiver expires on February 28, 2023. On February 15, 2023, the Department of Housing and Urban Development issued a waiver to allow for a phased implementation of BABA requirements over the next two years. Other agencies have issued product-specific waivers. For instance on February 21, 2023, the Federal Highway Administration issued a waiver specific to electric vehicle chargers, which combines elements of both FHWA’s Buy America requirements as well as BABA requirements.
So What’s the Status?
Notwithstanding the open questions on how to apply the BABA requirements in certain circumstances, in the case of many agencies these domestic sourcing requirements are either currently live or will be soon, though the implementation may vary from agency to agency. Companies pursuing federally-funded infrastructure projects should educate themselves on BABA requirements and should be aware that implementation deadlines may vary across projects, depending on the types of materials used and sources of funding.
 Pub. L. No. 117-58, §§ 70901-70953 (emphasis added).
 See Pub. L. No. 117-58, §§ 70901-70953.
 See e.g. 49 U.S.C. § 5323(j) (mass transit grants); 23 U.S.C. § 313 (federally-funded highway grants); 49 U.S.C. § 24305(f) (federal grants to Amtrak); 49 U.S.C. § 50101 (grants to the Federal Aviation Administration); 48 C.F.R. § 25.600, et seq. (projects using funds appropriated by the American Reinvestment and Recovery Act)
 See OMB Memorandum M-22-11, Initial Implementation Guidance on Application of Buy America Preference in Federal Financial Assistance Programs for Infrastructure, April 18, 2022.