Earlier this year, the federal Office of Management and Budget published guidance regarding the implementation of the Build America, Buy America (BABA) provisions of the Infrastructure Investment and Jobs Act (IIJA). The BABA provisions took effect May 14, requiring federally funded infrastructure projects to use iron, steel, manufactured products and construction materials produced in the United States.
The guidance was meant to help federal agencies apply BABA requirements and waiver processes for all federally funded infrastructure projects — not just those funded by the IIJA. However, construction companies intending to pursue federal infrastructure jobs should take note of them as well.
Important definitions
The guidance broadly defines “infrastructure.” Under the provisions, the term refers to, at minimum, structures, facilities and equipment for U.S. roads, highways and bridges; buildings and real property; public transportation; and dams, ports, harbors and other maritime facilities.
Also covered are intercity passenger and freight railroads; freight and intermodal facilities; airports; water systems, including drinking water and wastewater systems; broadband infrastructure; utilities; and electrical transmission facilities and systems. In addition, agencies will treat as infrastructure the facilities and equipment that generate, transport and distribute energy — including electric vehicle charging.
The guidance defines “project” as the construction, alteration, maintenance or repair of infrastructure in the United States.
Materials sourcing
As mentioned, the BABA provisions mandate use of domestic materials. This includes:
Construction materials. All manufacturing processes for construction materials must occur in the United States. For iron and steel specifically, this applies to everything from the initial melting stage to the application of coatings.
Manufactured products. A product must be manufactured in the United States. Furthermore, the cost of its components that are mined, produced or manufactured in the United States must be at least 55% of the total cost of all components. An exception may apply if another standard for determining the minimum amount of domestic content of the manufactured product has been established under applicable law or regulation.
Exempt items and waivers
Tools, equipment and supplies brought to the jobsite and removed at or before project completion aren’t subject to the BABA provisions. Also excluded are equipment and furnishings — such as movable chairs, desks and portable computer components — that aren’t an integral part of or permanently affixed to the structure.
What’s more, waivers for some materials can be issued under certain circumstances. Requests must be in writing and will be available for public comment for at least 15 days. The guidance lists three types of waivers:
1. Public interest. This waiver could apply when the domestic content procurement “preface” is inconsistent with the public interest. In other words, important policy goals can’t be achieved because of the BABA requirements. Several examples are provided, including international trade obligations.
2. Nonavailability. This one might apply when materials aren’t produced in sufficient and reasonably available quantities or to a satisfactory quality.
3. Unreasonable cost. This waiver could apply when domestically made materials will increase the cost of the overall project by more than 25%.
Consider costs, logistics
If your construction company intends to bid on a federal infrastructure project, be sure that you and your leadership team familiarize yourselves with the BABA provisions. From there, carefully consider the cost and logistical impact of procuring the required materials.
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