OMB Issues Final Guidance for Build America, Buy America Requirements
The Buy America Act imposed domestic preferences only on contracts related to rail or road transportation — such as the construction of highways, railways, or rapid transit systems — the BABA now expands the application of domestic preferences to include federal financial assistance programs for infrastructure.
According to JD Supra, while the BABA’s predecessor, the Buy America Act, imposed domestic preferences only on contracts related to rail or road transportation — such as the construction of highways, railways, or rapid transit systems — the BABA now expands the application of domestic preferences to include federal financial assistance programs for infrastructure. Accordingly, the BABA requires companies to use iron, steel, manufactured products and construction materials produced in the United States on all federally funded infrastructure projects.
This final guidance supplements the guidance OMB issued on April 18, 2022, Memorandum M-22-11, “Initial Implementation Guidance on Application of Buy America Preference in Federal Financial Assistance Programs for Infrastructure.” This memorandum provided preliminary guidance to federal agencies on the application of the “Buy America” preferences to federal financial assistance programs for infrastructure, as well as the process to waive such preferences. The final guidance is also largely consistent with proposed guidance OMB issued on Feb. 9, 2023. However, among other changes, the final guidance provides new definitions for the terms “manufactured products” and “construction materials,” and clarifies the waiver process for applying the BABA to international agreements.
The BABA establishes “Buy America” sourcing requirements for three types of key products and materials that are used in infrastructure projects (as defined in the IIJA):
- Iron and Steel — requiring that “all manufacturing processes, from the initial melting stage through the application of coatings, occurred in the United States.”
- Manufactured Products — requiring that “(i) the manufactured product was manufactured in the United States; and (ii) the cost of the components of the manufactured product that are mined, produced, or manufactured in the United States is greater than 55 percent of the total cost of all components of the manufactured product.”
- Construction Materials — requiring that “all manufacturing processes for the construction material occurred in the United States.”
