White House issues 'Buy America' guidance

The White House issued guidance to federal agencies April 18 that outlines obligations to use domestic materials for infrastructure projects under the Build America, Buy America Act, which was part of the $1.2 trillion Infrastructure Investment and Jobs Act (IIJA).

The Buy America provision applies to all taxpayer-funded infrastructure and public works projects. The guidance, released by the Office of Management and Budget, also aligns with the “Made in America” executive order that President Biden issued shortly after coming into office.

Under the Build American, Buy America Act, by May 14, the head of each covered federal agency must ensure that projects receiving federal funds use iron, steel, manufactured products and construction materials that are produced in the United States.

“This guidance applies to all federal financial assistance as defined in section 200.1 of title 2, Code of Federal Regulations—whether or not funded through IIJA—where funds are appropriated or otherwise made available and used for a project for infrastructure,” according to the guidance. 

Under the Buy America Act, all iron and steel used in projects that receive federal financial assistance must be produced in the United States. According to the guidance, “This means all manufacturing processes, from the initial melting stage through the application of coatings, occurred in the United States.”

Manufactured products used in federally funded projects must be “manufactured in the United States, and the cost of the components of the manufactured product that are mined, produced or manufactured in the United States” must be “greater than 55 percent of the total cost of all components of the manufactured product, unless another standard for determining the minimum amount of domestic content of the manufactured product has been established under applicable law or regulation.”

All manufacturing processes for construction materials used in these projects must take place in the U.S.  

According to the guidance, the IIJA defines “infrastructure” as public projects that include “at a minimum, the structures, facilities and equipment for, in the United States, roads, highways, and bridges; public transportation; dams, ports, harbors and other maritime facilities; intercity passenger and freight railroads; freight and intermodal facilities; airports; water systems, including drinking water and wastewater systems; electrical transmission facilities and systems; utilities; broadband infrastructure; and buildings and real property." Additionally, "Agencies should treat structures, facilities and equipment that generate, transport and distribute energy—including electric vehicle (EV) charging—as infrastructure,” under the guidance.

The head of a federal agency can waive the application of a Buy America preference if he or she finds that “applying the domestic content procurement preference would be inconsistent with the public interest (a 'public interest waiver'); (2) 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 (a 'nonavailability waiver'); or (3) the inclusion of iron, steel, manufactured products or construction materials produced in the United States will increase the cost of the overall project by more than 25 percent (an 'unreasonable cost waiver')," according to the guidance. 

Kevin Dempsey, president and CEO of the American Iron and Steel Institute (AISI), Washington, supports the guidance, saying, “We appreciate the commitment of the Biden-Harris administration to ensure that all federally funded infrastructure and public works projects use iron, steel and other products that are made in America. As some federal programs do not apply Buy America requirements for the procurement of iron and steel products, we are pleased that [Monday’s] initiative begins the process to remedy this situation by providing clear guidance to federal agencies for adopting appropriate Buy America requirements for all federally funded infrastructure projects.

“This announcement is an important first step toward ensuring the fullest possible implementation and enforcement of Buy America domestic procurement preferences by all federal agencies. But this represents just the beginning of a process, and we look forward to working in partnership with the administration and Congress to continue to ensure the use of cleaner American steel in all federally funded infrastructure projects.”

However, at least one organization that represents the construction industry does not support Buy America guidance.

The CEO of the Arlington, Virginia-based Associated General Contractors of America (AGC) Stephen E. Sandherr released a statement that reads in part: “AGC of America supports sensible efforts to effectively incentivize the growth of America’s domestic manufacturing capacity. Instead, the Biden administration is doubling down on failed procurement policies with its new Buy America mandate. This is the kind of red tape initiative that undermines Americans' confidence in the federal governments’ ability to effectively use their tax dollars.”

Sandherr adds, “It makes no sense to place unrealistic limitations on firms’ ability to source key materials at a time when prices for those products are skyrocketing and supplies are limited. Supply chain shortages are already prompting firms to avoid bidding on new projects, as the Army Corps of Engineers discovered on a recent project that received zero bids because of concrete scarcities in parts of the country.”

He adds that the requirement to run waivers by the White House “is like asking the U.S. Department of Education to verify every child’s permission slip to miss a day of school. Instead of improving infrastructure for the benefit of communities across the nation, firms will have to spend more time waiting for federal officials to decide whether a project is in compliance with the administration’s latest layer of red tape.”

Sandherr continues, “Whatever minimal gains in domestic construction material production this new mandate might temporarily generate will be offset by the increased cost of constructing new projects, slower schedules to build those projects and the fact some key projects could be hamstrung from moving forward.”