How Cities Will ‘Buy America’ with Federal Dollars

By:

  • McKaia Dykema

You may have heard the term “Buy America” used regarding federal infrastructure programs and be wondering what this means for your city, town or village’s infrastructure project plans. While further guidance is forthcoming from individual federal agencies, initial information is now available as a starting point for local governments to begin considering the impacts of this requirement on future infrastructure projects.

On November 15, 2021, President Biden signed the Infrastructure Investment and Jobs Act, or the Bipartisan Infrastructure Law (BIL), into law. This legislation included the Build America, Buy America Act (BABA), which strengthened the pre-existing Made in America Laws and outlined requirements for materials used in federally financed infrastructure projects. The Build America, Buy America Act went into effect on May 14, 2022—180 days after the enactment of BIL.

Shortly before the effective date, the Office of Management and Budget (OMB) released guidance for implementing the Build America, Buy America Act. This guidance includes directives for any company looking to compete for federally funded infrastructure project investment subject to Buy America requirements. Importantly, these directives also apply to local governments seeking federal funding for infrastructure projects – not just BIL infrastructure funding, but any federal funding for an infrastructure project.

When does “Buy America” apply?

The language from Build America, Buy America states that federal funds cannot be distributed to an infrastructure project unless all the iron, steel, manufactured products (with some exceptions), and construction materials used in that project are produced in the United States.

One exception is in the category of manufactured products, with the OMB guidance noting all manufactured products means that the cost of the components of the manufactured product that are mined, produced, or manufactured in the U.S. is greater than 55% of the total cost of the components for the manufactured product, unless there is another standard for determining the minimum amount of domestic content already established by other law or regulation.

Many local governments are getting ready to apply for many available opportunities through BIL or may have already made applications in previously released program funding opportunities. As such, these conditions apply to all federal financial assistance obligations made from May 14 onward.

Office of Management and Budget Guidance

The guidance released by OMB covers two separate areas:

  1. It describes the Buy America manufacturing and domestic content standards that will apply to iron, steel, manufactured products, and construction materials used in federal infrastructure projects; and
  2. It defines the bases for obtaining Buy America waivers in connection with such projects.

Any grants, cooperative agreements, non-cash contributions or donations of property, direct assistance, loans and loan guarantees count as federal funds under guidance by Buy America for any infrastructure project including roads, highways, and bridges, public transportation, railroads, airports, water systems including wastewater and drinking water, electrical transmission facilities and systems, utilities, broadband infrastructure, electric vehicle infrastructure, buildings and real property or other structures, facilities, and equipment that may be considered infrastructure. Importantly, this guidance is also applicable to infrastructure projects beyond those specifically funded by BIL programs.

Covered materials include most construction materials (including iron, steel, manufactured products, and other construction materials) subject to the guidance under Buy America. However, this guidance does not apply to tools, equipment, or supplies that are used at the construction site and removed at or before completion of the project. It also does not apply to any equipment or furnishings used within the finished infrastructure project that are not an integral part of the structure.

What circumstances allow for a waiver?

There are three types of waivers that an agency may allow if they find there is a case where certain circumstances are present:

  • A “nonavailability waiver” may be granted in cases where the type of covered material under Buy America is not sufficiently and reasonably available by quality or available quantity in the United States.
  • An “unreasonable cost waiver” may be granted in cases where the type of covered material under Buy America will increase the cost of the overall project by more than 25 percent.
  • A “public interest waiver” may be granted in cases where applying this domestic content procurement preference would not align with the public interest.

For public interest waivers, the guidance from the Made in America office provides some examples of what would be a valid public interest cause, including:

  • De Minimis Standards
  • Small Grants
  • Minor Components
  • Urgent Matters
  • Adjustment Period
  • Other Considerations

How do I know if my project is eligible for a waiver?

Each federal agency providing federal financial assistance for an infrastructure project or under an infrastructure program is required to develop its own guidance and waiver process based on the guidance OMB released. More clarity is forthcoming on how each agency is implementing and defining the parameters of Buy America into their processes including the language they might be using in their Notice of Funding Opportunities (NOFOs) or awards.

Local leaders should begin by identifying any Buy America language that may be in the NOFO for the desired program they will be applying for. If a waiver is desired, consider what type of waiver is most appropriate from above and seek guidance from the specific agency granting the funds for more information on the waiver process. Please note, the OMB guidance necessitates agencies to use a series of principles before issuing a waiver including project-award specific waivers and time-limited when possible, targeted waiver of a particular material or product, and the waiver may be conditional. After applying for a waiver, the agency will post the waiver for at least 15 days for public comment and will submit the waivers to the Made in America Office for review to determine if the waiver is consistent with the Buy American and Office policy.

NLC will be hosting an upcoming event with the OMB Made in America Office. Sign up for NLC’s Federal Advocacy newsletter to register for the event when it is announced.

Additional resources

About the Author

McKaia Dykema

About the Author

McKaia Dykema is the Legislative Specialist on NLC’s Federal Advocacy team.