Federal Agencies Must Ensure Applicable Programs Comply By May 14

The White House Office of Management and Budget (OMB) has released guidance on the implementation of new Buy America requirements for federally funded infrastructure projects pursuant to the Infrastructure Investment and Jobs Act (IIJA), which was enacted in Nov. 2021. The IIJA broadened the scope of Buy America and directed OMB and federal agencies to have the new rules in place by May 14, 2022.

This initial OMB guidance seeks to apply Buy America preferences broadly and consistently across federal agencies that fund infrastructure, and to increase transparency when agencies waive Buy America requirements. Agencies will now need to develop program guidance for Buy America and implementation guidelines for how it applies to their specific programs that assist state and local governments’ infrastructure projects. Key OMB guidelines are discussed below.

Materials Requirements
Federally funded infrastructure projects are subject to these materials requirements:

• All iron and steel must be produced in the U.S.
• All manufactured products must be produced in the U.S.
• All construction materials must be manufactured in the U.S.

Qualifying Projects and Expenditures

• Buy America requirements apply to all public infrastructure projects receiving federal grant or loan funding after May 14, 2022. Qualifying infrastructure includes the structures, facilities and equipment for roads/highways, ports, airports, water systems, wastewater systems, utilities and broadband, as well as structures, facilities and equipment that generate, transport and distribute energy, including electric vehicle charging.
• Buy America requirements apply to the entire project, not just federally funded portions.
• This new guidance applies to all federal financial programs for infrastructure for all federal funds awarded on or after May 14, 2022. It also applies to:
  • Renewal awards and amendments obligating additional funds to existing awards that are executed on or after May 14, 2022
  • Awards made on or after May 14, 2022 (even if the Notices of Funding Opportunities did not include a Buy America preference)
• This new guidance does not apply to specific expenditures authorized in anticipation of or in response to an emergency or major disaster under the Robert T. Stafford Disaster Relief and Emergency Assistance Act.

Potential Waivers
A federal agency may grant three types of waivers after posting its waiver request on an agency website and buyamerican.gov and providing a period for public comment. These waivers include:

• Public Interest Waiver: Available when the head of a federal agency finds that an important policy goal cannot be achieved consistent with Buy America requirements (and the other two waivers do not fit reasonably);
• Nonavailability Waiver: Available when the head of a federal agency finds that the types of iron, steel, manufactured products or construction materials needed for a project are not produced in the U.S. in sufficient and reasonably available quantities or of a satisfactory quality;
• Unreasonable Cost Waiver: Available if the head of a federal agency finds that the 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%.

The guidance gives federal agencies the ability to consider a General Applicability Waiver, which would apply across multiple awards. But it states that “[t]o the greatest extent practicable, waivers should be targeted to specific products and projects.”

Terms
OMB needs to define the term “all manufacturing processes” and the distinction between construction materials and manufactured products. OMB will issue this definition by May 14, 2022. In the interim, the IIJA defines “construction materials” as an article, material, or supply – other than an item of primarily iron or steel; a manufactured produced; cement and cementitious materials; aggregates such as stone, sand, or gravel; or aggregate binding agents or additives – that is or consists primarily of nonferrous metals, plastic and polymer-based products (including polyvinylchloride, composite building materials, and polymers used in fiber optic cables), glass (including optic glass), lumber or drywall.

Conclusion
Buy America is one of several statutes that require those receiving federal assistance to prefer goods, products and materials made in the U.S. Buy America applies to infrastructure projects that receive federal assistance – i.e. grants or loans. It differs from the Buy American Act (BAA), which is the primary law requiring the federal government to prefer domestic goods and manufactured products in federal agency procurement under the Federal Acquisition Regulations (FAR). The new guidance on Buy America requirements reflects the Biden Administration’s general policy direction for broad application of these requirements, with limited opportunities for waivers and exceptions.

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