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Buy America – What Does It Mean For Contractors?

Fri 3rd Jun, 2022 Industry News

In November 2021, the Infrastructure Investment and Jobs Act (the “IIJA”) was signed into law, which, amongst other things, provided federal funding for infrastructure across the nation. As a requirement of the federal funding, the IIJA further required federal infrastructure programs to provide for the use of materials produced in the United State, referred to as the Buy America preference. The Office of Management and Budget (the “OMB”) recently issued the first guidance on the Buy America preference, which goes into effect on May 14, 2022.

The Buy America preference applies to federally supported public infrastructure projects, including the structures, facilities, and equipment for highway, transit, water, and energy projects in the United States. Specifically, the Buy America preference requires that:

  1. All iron and steel used in the project must be produced in the United States, from the melting process through the coating process;
  2. All manufactured products must be produced in the United States; and
  3. All construction materials used in the project must be manufactured in the United States.

Important to note is that the Buy America preference applies to an entire infrastructure project, even if the project is funded by both federal and non-federal funds.

There are also three categories of Buy America waivers that allow for certain Buy America requirements to be waived, following a public comment process and subject to approval by the newly-created Made in America Office at OMB. The public interest waiver would be implemented when applying the Buy America preference would be inconsistent with public interest, whereas the nonavailability waivers and the unreasonable cost waivers, allow for a waiver when the product is not produced in the United States in sufficient quantities or quality or when the inclusion of the product would increase the overall cost of the project by more than 25%, respectively.

Bottom Line: For contractors that enter into contracts for the construction of infrastructure after May 14, 2022 and which include any amount of federal funds, it is critical that the Buy America preference be studied and implemented.

By E. Ashley Fields