As part of the Infrastructure Investment and Jobs Act (IIJA), signed into law on November 15, 2021, the Build America, Buy America (BABA) Act was expanded beyond what was previously required. For over 40 years, Buy America required steel/iron products which were permanently incorporated into federal-aid highway projects, however, now expands the list of construction materials to be manufactured in the United States to include: (i) Non-ferrous metals; (ii) Plastic and polymer-based products (including polyvinylchloride, composite building materials, and polymers used in fiber optic cables); (iii) Glass (including optic glass); (iv) Fiber optic cable (including drop cable); (v) Optical fiber; (vi) Lumber; (vii) Engineered wood; and (viii) Drywall.
In April 2022, the White House Office of Management & Budget (OMB) issued preliminary guidelines for BABA. These guidelines were unclear on requirements for additional material including hot mix asphalt and concrete and how they were to be covered under BABA requirements even though the raw materials (aggregate, cement, and asphalt binder) have been exempted from the legislation.
On August 14, 2023, OMB announced its final guidance which clarifies existing provisions related to domestic preferences and provides further guidance on implementing the statutory requirements to improve Federal financial assistance management and transparency including Section 70917(c) Materials.
Section 70917(c) of the BIL provides that “construction materials” shall not include cement and cementitious materials, aggregates such as stone, sand, or gravel, or aggregate binding agents or additives. The final guidance clarifies that:
- Section 70917(c) materials, on their own, are not manufactured products.
- Section 70917(c) materials should not be considered manufactured products when they are used at or combined proximate to the work site (for example, wet concrete or hot asphalt mix brought to the worksite)
- Section 70917(c) materials (such as stone, sand, and gravel) may be used to produce a manufactured product, such as the case with precast concrete.
It is important to note that while materials on their own as listed above are exempt, materials incorporated into a manufactured products which is “processed into a specific shape or form.” are not exempt and require BABAA compliant. OMB offers the example of Precast concrete products as a manufactured product that would require BABAA compliance, “Precast concrete consists of components processed into a specific shape or form and is in such state when brought to the work site, making it a manufactured product.”
The BABA requires that more than 55 percent of the cost of components, for a manufactured product to be manufactured in the United States and the product itself must be manufactured in the United States. This does not require all components to be produced in the United States.
Finally, the guidance also restates the circumstances defined in the statute under which a waiver may be justified: (1) Public interest, (2) Unreasonable cost, and (3) Nonavailability. The final guidance is likely to take effect on or about October 18, 2023.