OMB implements guidance on Build America, Buy America Act

Before diving in, let’s be sure that we’re both on the same page when it comes to the Buy American Act versus Build America, Buy America. They are, in fact, two different things.

The Buy American Act is the dominant domestic preference statute that applies to the federal government’s direct procurement of goods. We’ve written about these requirements generally and recent updates.

The Build America, Buy America Act, on the other hand, refers to domestic content requirements applicable to federally-funded infrastructure projects. Recent legislation has broadened the reach of these requirements; they now apply to most infrastructure projects in the United States involving federal dollars.

After a long wait, the Office of Management and Budget has issued guidance to agencies regarding these Buy American (not Buy American!) requirements. Below we briefly summarize this new guidance. For those intrepid enough to plow through OMB’s full production, you can access the 160-page pre-publication version here.

Build America, Buy America’s general requirements

In a nutshell, no federal agency may spend federal funds on infrastructure unless all the iron and steel products, manufactured products, and construction materials used in the project are produced in the United States. This requirement is obviously broad (like the meaning of “infrastructure”), hence the need for OMB to guide agencies with respect to enforcement.

The guidance focuses principally on fleshing out definitions of key terms (what is a “construction material” for instance?) and other related considerations.

Key definitions

Let’s first understand what the Build America, Buy America statute means with respect to iron, steel, manufactured products, and construction materials.

• Iron or steel products means “articles, materials, or supplies that consist wholly or predominantly of iron or steel or a combination of both.” A product is predominantly made of iron or steel if the “cost of the iron and steel content exceeds 50 percent of the total cost of all its components.” The cost of those components covers the steel mill products, castings, or forgings used in the product’s manufacture and good faith estimate of the cost of iron or steel components.
• Manufactured products means “articles, materials, or supplies that have been (i) processed into a specific form and shape; or (2) combined with other articles, materials, or supplies to create a product with different properties than the individual articles, materials, or supplies.” Products qualifying as iron or steel products or construction materials are not manufactured products. And, on their own, cement and cementitious materials, aggregates (like stone, sand, and gravel) or aggregate binding agents and additives are not manufactured products. But naturally, they could be used to created a manufactured product.
• Construction materials means “articles, materials, or supplies that consist of only one of the [following] items”: non-ferrous metal, plastic and polymer-based products, glass, fiber optic cable, optical fiber, lumber, engineered wood, and drywall.

Produced in the United States

The Build America, Buy America Act wants iron/steel products, manufactured products, and construction materials produced in the United States. But what does that mean?

• Iron/steel products: “all manufacturing processes, from the initial melting stage through application of coatings, occurred in the United States”
• Manufactured products: “(1) the product was manufactured in the United States; and (ii) the cost of components of the manufactured product that are mined, produced, or manufactured in the United States in the United States is greater than 55 percent of the total cost of all components of the manufactured product.” For those familiar with the Buy American Act, that standard will look familiar.
• Construction materials: “all manufacturing processes for the construction material occurred in the United States.” Yet, the guidance goes even deeper for each material. For example, glass is produced in the United States if “all manufacturing processes, from initial batching and melting of raw materials through annealing, cooling, and cutting, occurred in the United States.”

Waiver

It’s possible to escape the Build America, Buy America requirements under certain circumstances. For example, a funding agency can waive the requirements where they would not be consistent with the public interest, where products or materials are not available in sufficient quantity or quality, or compliance would increase the entire project’s cost by 25%. As you might expect, agencies can’t grant exceptions willy-nilly: they must be vetted and open to public comment.

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If you questions about the Buy American Act or Build America, Buy America Act, give us a call or shoot us an email.