The White House issued guidelines to federal agencies on April 18 that outline obligations to use domestic materials for infrastructure projects under the Build America, Buy America Act, which was part of the 1.2 Trillion Investment and Jobs in Infrastructure (IIJA).
The Buy America provision applies to all taxpayer-funded infrastructure and public works projects. the orientationreleased by the Office of Management and Budget, also aligns with the “Made in America” executive order that President Biden issued shortly after taking office.
Under the Build American, Buy America Act, by May 14, the head of each covered federal agency must ensure that projects receiving federal funds use iron, steel, manufactured goods and materials of construction that are produced in the United States.
“These guidelines apply to all Federal financial assistance as defined in Section 200.1 of Title 2 of the Code of Federal Regulations12 – whether or not funded by the IIJA – where funds are earmarked or otherwise placed available and used for an infrastructure project”, according to the guidance.
Under the Buy America Act, all iron and steel used in projects that receive federal financial assistance must be produced in the United States. According to the guidelines, “this means that all manufacturing processes, from the initial melting step to the application of coatings, took place in the United States.”
Manufactured goods used in federally funded projects must be “made in the United States, and the cost of components of the manufactured good that are mined, produced, or manufactured in the United States” must be “greater than 55% of the cost total of all components of the manufactured product, unless another standard for determining the minimum amount of domestic content of the manufactured product has been established under applicable law or regulation.
All manufacturing processes for building materials used in these projects must take place in the United States
According to the guidelines, the IIJA defines “infrastructure” as public projects that include “at a minimum, structures, facilities, and equipment for, in the United States, roads, highways, and bridges; public transport; dams, ports, harbors and other maritime installations; intercity passenger and freight railways; freight and intermodal facilities; airports; aqueduct networks, including drinking water and wastewater networks; electrical transmission installations and systems; public services ; broadband infrastructure; and buildings and real estate. Additionally, “agencies must treat structures, facilities, and equipment that generate, transmit, and distribute energy, including electric vehicle (EV) charging, as infrastructure,” according to the guidelines.
The head of a federal agency may waive the application of a Buy America preference if they believe that “application of the domestic content sourcing preference would be inconsistent with the public interest (a ‘waiver of’ public interest’ ); (2) the types of iron, steel, manufactured goods, or building materials are not produced in the United States in sufficient and reasonably available quantities or of satisfactory quality (an “Unavailability Waiver”); or (3) the inclusion of iron, steel, manufactured goods, or building materials produced in the United States will increase the cost of the entire project by more than 25% (an “unreasonable cost waiver”) “, according to the guidelines.
Kevin Dempsey, President and CEO of American Institute of Iron and Steel (AISI), Washington, supports the guidelines, saying, “We appreciate the Biden-Harris administration’s commitment to ensuring that all federally funded infrastructure and public works projects use iron, steel and other American-made products. Since some federal programs do not enforce Buy America requirements for sourcing steel products, we are pleased that [Monday’s] The initiative begins the process to remedy this situation by providing clear guidance to federal agencies for adopting appropriate Buy America requirements for all federally funded infrastructure projects.
“This announcement is an important first step in ensuring the fullest possible implementation and enforcement of Buy America domestic procurement preferences by all federal agencies. But this is only the beginning of a process, and we look forward to working in partnership with the administration and Congress to continue to ensure the use of cleaner American steel in all infrastructure projects funded by the federal government.
However, at least one organization that represents the construction industry does not support the Buy America guidelines.
The CEO of the Arlington, Va.-based company Associated General Contractors of America (AGC) Stephen E. Sandherr released a statement that reads in part: “AGC of America supports sensible efforts to effectively encourage the growth of America’s domestic manufacturing capability. Instead, the Biden administration is doubling down on failing procurement policies with its new Buy America mandate. It’s the kind of red tape initiative that undermines Americans’ confidence in the federal government’s ability to use its tax dollars effectively.
Sandherr adds, “It makes no sense to place unrealistic limits on companies’ ability to source key materials at a time when prices for these products are skyrocketing and supplies are tight. Supply chain shortages are already causing companies to avoid bidding on new projects, as the Army Corps of Engineers discovered on a recent project that received no bids due to the shortage. of concrete in some parts of the country.
He adds that the requirement to execute waivers by the White House “is like asking the US Department of Education to check each child’s permission slip to miss a day of school. Instead of improving infrastructure to benefit communities across the country, companies will have to spend more time waiting for federal authorities to decide whether a project complies with the administration’s final layer of bureaucracy.
Sandherr continues, “Whatever small gains in domestic production of building materials this new mandate may temporarily generate, they will be offset by the increased cost of building new projects, slower schedules to build those projects, and the fact that certain key projects could be prevented from proceeding.