Buy America Material Requirement Takes Effect
While the Buy America requirements for construction materials took effect last week, the U.S. Department of Transportation has also proposed two new partial waivers for certain projects.
Effective Nov. 10, the Build America, Buy America Act now requires that projects under the bipartisan infrastructure law must use construction materials, such as iron, steel and manufactured products, manufactured in the United States.
While the Department announced that while it would not be extending its temporary waiver for materials, it is seeking comments on whether a waiver of Buy America requirements under the law should be granted in the public interest for de minimis costs, small grants and other minor components, as well as a narrow category of contracts and solicitations.
Buy America Requirement, Waiver
In an order issued mid-April, the Biden Administration announced that projects funded by the bipartisan infrastructure law will be required to use only iron and steel produced in the U.S. The Buy America Act, included in the Infrastructure Investment and Jobs Act, aims to support the country’s industrial base, protect national security and support jobs.
The requirement was set to go into effect on May 14. The 17-page guidance released on April 18 notes that “none of the funds” provided under the law may be used for infrastructure, unless:
The rule also indicates to waive the process in the event there are not enough domestic producers or material costs are too high. However, the goal is to issue fewer waivers over time as U.S. manufacturing capacity increases.
If the purchase would be “inconsistent with the public interest,” the materials are not being produced in enough quantities or of necessary quality or the inclusion of these U.S.-based materials will increase the cost of the overall project by more than 25%, a request to waive the application can be submitted in writing to the agency.
At the end of May, the U.S. Department of Transportation issued a notice of a temporary public interest waiver regarding construction materials through the recent Buy America standards.
Implementation guidance issued earlier this year stated that materials are to be classified in one of three categories: iron or steel, a manufactured product or a construction material. Construction materials affected by the waiver include any material that is or consists primarily of non-ferrous metals, plastic and polymer-based products, glass, lumber or drywall.
“In order to deliver projects and meaningful results while ensuring robust adoption of Buy America standards, the department is establishing a temporary public interest waiver for construction materials for a period of 180 days, expiring on Nov. 10,” wrote the Department in its release. “DOT is establishing this transitional waiver to prepare for compliance with the new Made in America standards for construction materials.”
DOT reported that it received 83 comments in response to its previous notice, including from state transportation agencies, public transit agencies, airport operators, construction firms, manufacturers and suppliers, labor organizations, individuals and associations. A “vast majority” of these commentors supported the proposal to issue a temporary waiver.
According to the notice, the temporary waiver would provide the DOT time to:
Additionally, the DOT requested that implementing partners will also take action to prepare for compliance with the new requirements, including establishing certification processes; working to ensure that manufacturers, contractors and subcontractors are prepared to meet the Buy America Standards; and providing data to the DOT on the domestic availability of construction materials.
The following month, nearly 50 transportation groups asked the White House to extend the waiver for the new Buy America, Build America Act requirements for construction materials included in the bipartisan infrastructure law. In a June 21 letter to Senior Advisor Mitch Landrieu, the organizations commended the implementation of the Infrastructure Investment and Jobs Act, but requested to extend the 180-day waiver amid inflation and material shortages.
The letter, published by the American Public Transportation Association, was also signed by the Associated General Contractors of America, the U.S. Chamber of Commerce, the American Association of State Highway and Transportation Officials, and the Associated Builders and Contractors, among others.
The coalition noted that infrastructure costs are continuing to climb, including rising construction material prices and shortages, with material prices doubling or tripling in some cases. Additionally, lead times for procurement and delivery of materials have “dramatically” increased, with conditions anticipated to worse as the year progresses.
Notice of Proposed Waiver
Following the implantation of the Buy America Executive Order, the DOT issued two notifications regarding waivers: one for construction material contracts and one for demines costs, small grants and minor components.
Published in the Federal Register on Tuesday (Nov. 15), the DOT is proposing to waive Buy America preferences for iron and steel, manufactured products, and construction materials used in infrastructure projects funded under USDOT-administered financial assistance programs, under the following conditions:
“The basis for this proposal is that applying Buy America preferences to iron, steel, manufactured products, and construction materials below these thresholds would be inconsistent with the public interest,” wrote the Department. “If issued, the waiver would be applicable to awards that are obligated on or after the effective date of the waiver.”
The second notice involves waiving the Buy America preference awards obligated on or after Nov. 10, as well as projects solicited before May 14 and entered into contract before March 10, 2023.
“In addition, although not proposed to be included in the waiver, DOT is requesting information on potential impacts for projects with existing grant awards for which additional Federal funds will be awarded in future grants or amendments, and for which not all contracts including construction materials have been awarded by the recipient with pre-award authority,” wrote Nuria Fernandez, Administrator of the Federal Transit Administration, in a letter to colleagues regarding the waiver.
According to reports, the American Road and Transportation Builders Association says the new waivers appear to address some of its concerns, particularly in not disrupting projects already awarded.
ARTBA says it plans to submit comments on the waivers and Buy America rules and encourages its members to do the same, noting “the association will continue to seek clarity on a number of related implementation issues.”
The commenting period on the notice ends Nov. 20.