By David Cullen, Contributing Author
The Build America, Buy America provision (BABA) is a controversial aspect of the bipartisan Infrastructure Investment and Jobs Act (IIJA).
In February, President Biden addressed BABA in his State of the Union speech. The next day, the Office of Management and Budget (OMB) released new rules to guide officials through the provision.
This wasn’t the administration’s first attempt at clarifying BABA. In 2022, OMB issued a memo to help instruct stakeholders, stating that “Made in America Laws” have been strengthened to “bolster America’s industrial base, protect national security, and support high-paying jobs.”
Heads of covered agencies must ensure that “none of the funds made available for a Federal financial assistance program for infrastructure, including each deficient program, may be obligated for a project unless all of the iron, steel, manufactured products, and construction materials used in the project are produced in the United States.”
In addition, BABA affirms that it is a priority to “use terms and conditions of Federal financial assistance awards to maximize the use of goods, products, and materials produced in, and services offered in, the United States.”
OMB, however, makes certain distinctions about Federal Made in America “preferences.” For example, preferences apply only if “a domestic content procurement preference…does not already apply to iron, steel, manufactured products, and construction materials.”
Agencies must also comply with BABA “while preserving policies and provisions that already meet or exceed the standards required.” So, if a program’s standards for iron and steel already comply, it may still be necessary to adopt new standards for manufactured products and construction materials.
There are provisions for waivers if:
- The domestic content procurement preference is inconsistent with the public interest;
- Types of iron, steel, manufactured products, or construction materials are not produced in the U.S. States in sufficient and reasonably available quantities or of a satisfactory quality;
- Inclusion of iron, steel, manufactured products, or construction materials produced in the U.S. will increase the cost of the overall project by more than 25%.
However, there’s a time factor: before granting a waiver, an explanation for the proposed determination must be posted on the agency’s website and provide at least 15 days for public comment. General applicability waivers are subject to a minimum 30-day public comment period.
Consider conclusions on the impact expected in an analytical report prepared by the Congressional Research Service (CRS). CRS states that the requirements are administered by various Department of Transportation (DOT) agencies.
Each agency maintains its own regulations. The Federal Transit Administration, for example, addresses different issues in its Buy America requirements from other DOT agencies.
To be considered produced in America under the IIJA, manufactured goods must contain greater than 55% domestic content and be manufactured in the country, CRS advises.
For construction materials, all manufacturing processes must occur in the U.S. Construction materials and associated inputs must originate in the U.S., and OMB must “seek to maximize the direct and indirect jobs benefited or created in the production of the construction material.”
Still, many remain concerned about how BABA might impact the nation’s supply chain, as well as drive up construction materials cost.
In March, when Aric Dreher, an Associated Builders and Contractors (ABC) member and the assistant general manager of Portland, Maine-based Cianbro, testified before the House Subcommittee on Highways and Transit, he said it is “becoming increasingly difficult for construction projects to continue as originally planned.”
He said that construction materials prices are up 11% since IIJA was signed into law and that the industry workforce shortage is more than half a million. Dreher added that supply chain snarls have resulted in unpredictable delivery times.
As the roads and bridges construction industry battles these issues, its leaders deserve clarity on BABA. The Biden administration is trying to help, but Dreher raised a valid point when he said:
“Upholding the bipartisan principles included in IIJA will be key to the enduring success of this legislation and the effective modernization of our country’s infrastructure.” R&B
David Cullen has been covering transportation issues since 1981. He has received several Jesse H. Neal Awards for Outstanding Journalism and the ASPBE Stephen Barr Award for Individual Feature Writing.