Does the Build America, Buy America Act Apply to My Entity?

This article was authored by Daniel Petrelli

The Infrastructure Investment and Jobs Act (IIJA)—enacted on November 15, 2021—included the Build America, Buy America Act (BABA). On August 23, 2023, The Office of Management and Budget (OMB) published Final Guidance implementing BABA’s provisions, now known as 2 CFR 184.1 As stated in the legislation, BABA must be incorporated in all infrastructure projects awarded with Federal funds. This means any infrastructure projects funded by IIJA, BRIC, CHIPS, IRA, and related entitlement programs will need to incorporate these new regulations in their future contracts, reporting, and policies and procedures. Contractors need to be aware of this during the procurement process as it could have implications on budgets for future construction projects. In the following sections, this whitepaper will provide a high-level summary of BABA and some next steps organizations should take to prepare themselves to incorporate in their Federally funded infrastructure projects.  

BABA Summary

What does BABA cover?

BABA requires that all of the iron, steel, manufactured products, and construction materials used in infrastructure projects be produced in the United States. All infrastructure projects funded in whole or in part with Federal funds must abide by this act. BABA also applies regardless of whether or not infrastructure is the primary purpose of the Federal award. Guidance on how to implement BABA and the “Buy America” preference can be found in the new 2 CFR Part 184. Note, 2 CFR Part 200.332 has also been revised to include subsection 2 CFR 200.322(c), which has incorporated Part 184 as a part of the domestic preference requirements for procurements. All subawards, contracts, and purchase orders that are part of an infrastructure project must incorporate BABA language into their terms and conditions. Part 184.4 of Uniform Guidance provides a list of types of projects considered infrastructure. Note that the list provided is non-exhaustive and Part 184(d) states that Federal awarding agencies should interpret the term “infrastructure” broadly.

Useful Terms

Below are useful terms that help agencies and non-federal entities implement BABA. 

• “Construction materials” include fiber, glass, drywall, and lumber. (2 CFR 184.3) 

• “Manufactured products” are defined as articles, materials, or supplies processed into a specific form, or combined with other articles, materials, or supplies to create properties other than the original state of the individual articles, properties, and supplies. (2 CFR 184.3) 

• “Produced in the United States”: for a manufactured product to be considered produced in the United States, the product must be manufactured in the United States, and 55% of the cost of the components need to originate in the United States. For example, 55% of the mining, production, and manufacturing of the manufactured product must be conducted in the United States. (2 CFR 184.3) 

•  “Component” is defined as a material, article, or supply, manufactured or unmanufactured, that is incorporated into a manufactured product, or, where applicable, iron or steel. (2 CFR 184.3) 

•  “Categorization of articles, materials, and supplies” should only be categorized as iron or steel products, manufactured products, construction projects, or section 70917(c) materials. (2 CFR 184.4(e))

  • Articles, materials, and supplies must meet only one of the aforementioned categories.

  • 70917(c) materials such as cement and cementitious materials, stone, sand, or gravel, or aggregate binding agents and additives are not included in the definition of “construction materials” and thus are not subject to BABA requirements. 

Available BABA Waivers  

Part 184.7 provides three options for agencies to waive the BABA requirements. They include: 

1. Public Interest Waiver ‒ Applying the “Buy America” 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.

3. Unreasonable Waiver ‒ The inclusion of iron, steel, manufactured products, or construction materials produced in the United States will increase the cost of the overall infrastructure project by more than 25 percent.

Recommended Next Step

The Federal government has made major investments in infrastructure through the IIJA, BRIC, IRA, ARPA, and CHIPS Acts. If your organization intends to seek this funding either through the state as a pass-through entity or directly from a Federal agency, your organization will need to demonstrate the following steps for adherence to BABA to your funding partners. Furthermore, if you are an entitlement community, it will be important for your staff to be knowledgeable on the subject and incorporate it into any anticipated infrastructure projects. Learn more at the Witt O’Brien’s Center for Grant Excellence! Topics include: Major U.S. Federal Legislative Initiatives aimed at infrastructure, economic recovery, and resilience.   

1. Invest in training for your staff. This is especially important for the purchasing, legal, public works, and grant management divisions of your organization. Frequent training is vital with regard to managing Federal grant funds. This is especially true when an entirely new section of Uniform Guidance is created.

2. Review your procurement policies and procedures, as well as your templated contract terms and conditions. BABA language is now required to be included in the terms and conditions of infrastructure projects funded with Federal awards. Procurement procedures should mention BABA as a part of the procurement process as well as ensuring potential contractors and subawardees understand their responsibility to BABA.  

If you don’t know whether BABA applies to your company, let’s chat and see where we can help you.  

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