Biden Address Highlights Buy America Standard

THURSDAY, FEBRUARY 16, 2023


Last week, President Joe Biden detailed the new Buy America requirements during his State of the Union address, including several new covered materials.

Following the speech, the Office of Management and Budget also issued a new proposed guidance on implementing these provisions by broadening the scope on federal infrastructure projects. This new guidance could reportedly lead to more types of construction materials to be covered by the requirements.

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:

  • All iron and steel used in the project are produced in the U.S.—this means all manufacturing processes, from the initial melting stage through the application of coatings, occurred in the U.S.;
  • All manufactured products used in the project are produced in the U.S.—this means the manufactured product was manufactured in the U.S.; and the cost of the components of the manufactured product that are mined, produced or manufactured in the U.S. is greater than 55% 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; and
  • All construction materials are manufactured in the U.S.—this means that all manufacturing processes for the construction material occurred in the U.S.

The rule also indicates waiving the process in the event that 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:

  • Seek information and feedback from State, local, industry, and other partners and stakeholders on challenges with and solutions for implementing the requirement;
  • Allow a reasonable adjustment period for recipients of DOT financial assistance, including states, local communities, Tribal nations, transit agencies, railroads, airports and ports and their industrial vendors to develop and transition to new compliance and certification processes for construction materials; and
  • Gather data on the sourcing of the full range of construction materials used in federally funded transportation projects and strategies for increasing domestic capacity to produce those materials.

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.

Following the implementation of the order on Nov. 10, 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 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 percent of the total material cost of an otherwise domestically produced iron or steel product.

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.

The commenting period ended Nov. 20.

Latest Update

While Biden listed materials falling under the policy, as well as key steps to boost the standard, he did not say when the proposed standards would be released. Previous Buy America laws focused on iron and steel for only certain federally funded infrastructure projects, but the White House described this as a “giant loophole.”

“This giant loophole meant projects could be built with other materials sourced from anywhere in the world,” wrote the White House. “The Biden-Harris Administration is working to close this loophole and implement new standards, once and for all, so materials for roads and bridges, airports, transit, rail, water, high-speed internet, and clean energy infrastructure are made in America and support American jobs.”

Additionally, the White House reported that the Buy America rule increased the percentage value of component parts manufactured in the US from 55% to 60% this past fall, as the first step toward increasing that value to 75%.

The new guidance, which adds three new materials to the list including composite building materials, fiber optic cables and optical fiber, was published in the Federal Register on Feb. 9. Comments are due by March 13.

Brian Turmail, Vice President for Public Affairs and Strategic Initiatives for the Associated General Contractors of America, told Engineering News-Record via email, “The federal government continues to create uncertainty as it relates to new Buy America requirements, and at a time when most of the country will soon be entering construction season.”

“We’re still seeking clarity on a number of items,” said Rich Juliano, American Road and Transportation Builders Association General Counsel.

   

Tagged categories: Building materials; Construction; Government; Infrastructure; Infrastructure; NA; North America; President Biden; Program/Project Management; Regulations

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