OMB Releases Implementation Guidance for Build America, Buy America Act

On April 18, the Office of Management and Budget (OMB) released a guidance memo on the initial implementation of the “Build America, Buy America Act” (BABA). The Act, which is a component of the Infrastructure Investments and Jobs Act (IIJA), requires federal agencies to ensure that “none of the funds made available for a Federal financial assistance program for infrastructure, including each deficient 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.” The memo provides guidance to Federal agencies on the application of BABA to Federal financial assistance programs for infrastructure, and the process to waive these requirements when necessary. Agencies have been given until May 14, 2022, to make sure that all applicable programs are in compliance with the Act. New applicable financial awards made on or after this date will need to comply with BABA.

The guidance applies to all Federal financial assistance, not just funds from the IIJA, otherwise known as the Bipartisan Infrastructure Law. Section 70914 of the IIJA outlines the application of the BABA preference and requires that:

1. All iron and steel used in the project are produced in the United States. This means all manufacturing processes, from the initial melting stage through the application of coatings, occurred in the United States.
2. All manufactured products used in the project are produced in the United States. This means the manufactured product was manufactured in the United States, and 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, unless another standard for determining the minimum amount of domestic content of the manufactured product has been established under applicable law or regulation.
3. All construction materials are manufactured in the United States. This means that all manufacturing processes for the construction material occurred in the United States.

Section 70914(c) of the IIJA provides Federal agencies with the option to waive the Buy America preference under three different circumstances:

1. Public interest waiver: applying the domestic content procurement preference would be inconsistent with the public interest;
2. Nonavailability waiver: types of iron, steel, manufactured products, or construction materials are not produced in the United States in sufficient and reasonably available quantities or of a satisfactory quality; or
3. Unreasonable cost waiver: the inclusion of iron, steel, manufactured products, or construction materials produced in the United States will increase the cost of the overall project by more than 25 percent.

A federal agency may also issue a “general applicability waiver.” These waivers can be applied to a specific product or category of products, as well as a broader category such as “manufactured products.” The general applicability waivers must be reviewed by the issuing Agency at least every five years. According to the memo, before issuing a waiver, “the head of the Federal agency must make publicly available on the agency’s website a detailed written explanation for the proposed determination to issue the waiver and provide at least 15 days for public comment on the proposed waiver.” General applicability waivers will be subject to a minimum 30-day public comment period.

OMB’s memo leaves it to the Federal agencies to determine how best to apply this guidance to their individual programs. The memo notes that OMB may update or provide additional guidance as needed.