The Infrastructure Investment and Jobs Act (P.L. 117-58; IIJA) expanded the scope of the Buy America preference by requiring that all construction materials, iron and steel, and manufactured products used in federally supported infrastructure projects be produced in the United States. Prior to the IIJA, Buy America requirements did not apply to construction materials.
The federal government began implementing the new requirements earlier this year, beginning with the Office of Management and Budget’s implementation guidance, followed by the U.S. Department of Transportation’s (USDOT) temporary waiver for construction materials, which expired on November 10, 2022.
U.S. Department of Transportation Actions
On November 4, 2022, USDOT took three concurrent actions: (1) USDOT allowed its temporary waiver for construction materials to expire, making the IIJA Buy America requirement effective November 10, 2022; (2) USDOT proposed a narrow waiver for de minimis costs, small grants, and minor components; and (3) USDOT proposed a waiver for narrow categories of contracts and solicitations to ease the transition to the new construction materials standard in specific instances.
(1) Buy America Requirement for Construction Materials Takes Effect November 10, 2022
USDOT’s rationale for the temporary waiver was that it would be against public interest to apply the new construction materials requirement immediately since adequate compliance processes were not in place yet. Based on the comments and input received from stakeholders, USDOT believes that the temporary waiver has served its intended purpose by providing a sufficient transition period. As a result, projects with USDOT funding or financial assistance obligated on or after November 10, 2022 are now subject to the construction materials requirement, unless covered by a separate waiver.
(2) Proposed Waiver of Buy America Requirements for De Minimis Costs, Small Grants, and Minor Components
USDOT proposed a narrow waiver for de minimis costs, small grants, and minor components. It would waive the Buy America requirements for iron and steel, manufactured products, and construction materials used in infrastructure projects funded under USDOT-funded programs under a single financial assistance award for which:
- The total value of the non-compliant products is no more than the lesser of $1,000,000 or 5% of total allowable costs under the federal financial assistance award;
- The size of the federal financial assistance award is below $500,000; or
- The non-domestically produced miscellaneous minor components comprise no more than 5% of the total material cost of an otherwise domestically produced iron or steel product.
(3) Proposed Waiver of Buy America Requirement for Construction Materials for a Narrow Category of Contracts and Solicitations
USDOT also proposed a new waiver to assist the transition to compliance with the new Buy America requirement for construction materials by including carve-outs for specific categories. For the first element, USDOT proposed to waive the construction materials requirements for any contracts entered into before November 10, 2022. As the second, USDOT proposed to waive the construction materials requirement for any contracts entered into before March 10, 2023, which resulted from solicitations published before May 14, 2022, the date USDOT issued the original temporary waiver.
Comments on the two proposed waivers are due by November 20, 2022. USDOT may consider late comments to the extent practicable.
Federal Transit Administration “Dear Colleague” Letter
To help transit agencies prepare for implementation of the construction materials requirement, Federal Transit Administration (FTA) Administrator Nuria Fernandez posted a Dear Colleague letter to transit agencies on November 7, 2022. The letter summarizes the general Buy America development under IIJA as well as transit agencies’ Buy America obligations on FTA-funded projects.
Federal agencies will continue to develop and refine implementation guidance for the expanded Buy America preference under the IIJA. To ensure the success of the important policy purpose undergirding these Buy America requirements, project sponsors and industry participants must continue to partner with the federal government and share their expertise and project-specific experience, upon which the federal government relies.
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