Josh Mahan is Director of Government and Industry Relations at Xylem, a Washington, D.C.-based water technology company. Opinions are the author’s own.
The Infrastructure Investment and Jobs Act has started to provide significant funding for new and rehab infrastructure projects. A provision in the IIJA is the Build America, Buy America Act, which impacts all federally funded infrastructure projects in the United States, not just those that receive IIJA funding.
Furthermore, these requirements apply to an entire infrastructure project, even if the project is funded by both federal and non-federal funds under one or more awards. The Buy America law requires a project’s iron, steel, construction materials and manufactured products be made in the U.S.
The cost of the components of the manufactured product that are mined, produced or manufactured in the U.S. must be greater than 55% of the total cost of all components of the manufactured product. The 55% requirement stands unless another standard for determining the minimum amount of domestic content of the manufactured product has been established under applicable law or regulation. The Biden administration continues to develop guidance on how to implement this provision.
All construction, alteration, maintenance or repair of infrastructure with federal financial assistance is subject to the Buy America requirements, unless an exemption applies. Funding increments or amendments within a current budget year, supplements for new scope of work and renewal of funding awards from federal agencies will likely trigger the application of the Buy America provisions to a project that receives federal funding.
If an exemption applies, a waiver is granted to the federal agency that provides funding for the project. Some waivers that are traditionally available under existing Buy America laws are authorized under the latest provision if:
- Applying the Buy America requirement would be inconsistent with the public interest.
- The iron, steel, manufactured products or construction material is not produced in the U.S. in sufficient and reasonably available quantities or of a satisfactory quality.
- Inclusion of the domestic products or construction materials will increase the cost of the overall project by more than 25%.
Several federal agencies granted six-month “adjustment period” waivers for the Buy America requirement. For some federal agencies, the six-month period ended in November 2022 or will end in January. For others, an extension or a one-time workaround is possible.
These restrictions have significant implications for infrastructure new build and modernization programs, as many projects depend on components that are only manufactured outside of the United States.
Eligible recipients of federal funding may request Buy America waivers for components or products that are necessary for completion of their projects. Federal agencies are urging eligible funding recipients to focus their waiver requests on time-limited, targeted waivers, to the greatest extent practicable.
Project managers are urged to work closely with federal funding agencies to understand how the Buy America requirements will affect shovel-ready and future projects. This includes:
- Encourage entities that receive federal funding to work with their federal partners to learn if new approvals, certifications or other actions are necessary to meet Buy America requirements.
- Plan for the Buy America requirements in the IIJA to delay and/or increase the cost of projects.
- Identify whether your project’s federal funders require alternatives to foreign manufacturers.
- Consider seeking waivers through federal funding partners for critical products that are manufactured outside of the U.S.
As the initial waiver period comes to a close, understanding the Build America, Buy America Act must be one of your top priorities if the agencies you work with receive federal funds to build or maintain projects.