What you need to know

Government Contractors seeking help understanding the $1.2 Trillion Infrastructure Bill, consider this your lucky day! You’ll now have a clear overview of what you’ve been missing out on.

In a sweeping bipartisan vote, the United States Senate passed the $1.2 Trillion Infrastructure Bill in late November 2021. This bill is designed to rebuild America’s crumbling infrastructure and contains several provisions that will have a major impact on businesses and consumers across the country. Perhaps most significant of these is the domestic content procurement preference, which requires all iron and steel used in federally funded infrastructure projects to be produced in the United States. Construction materials are also affected. Read on!

What does this mean for government contractors? Simply put, domestically sourced iron, steel and construction materials will have a major impact on firms bidding on government contracts. Government contractors will need to find the right solution from the right supplier in order to keep their business strong. For example, the iron/steel used in federally funded projects will be required to be produced domestically in the United States, which means you’ll need to ensure your source is able to deliver the goods. To understand this more clearly, let’s dive into the bill itself.

What is in the Infrastructure Bill?

The new infrastructure legislation is one of the largest investments for rebuilding the United States. The new bill would provide $550 billion in additional federal spending, with a focus on transportation and quality of life. This includes $65 billion for internet access expansion, $110 billion for highway, bridge, and other construction projects, $25 billion for airports, and the most money ever given to Amtrak. In 2019, the American Society of Civil Engineers gave the nation’s infrastructure a C grade. Experts claim the cash is more important than ever to guarantee safe travel and cargo movement across the country. When the House of Representatives passed the bipartisan $1.2 trillion “physical” infrastructure bill, it provided the framework for President Biden’s “Build Back Better” domestic infrastructure strategy to be implemented. Perhaps most significantly, the Infrastructure Investment and Jobs Act (IIJA) includes a new provision called the Build America, Buy America Act (BABA).

The Build America, Buy America Act (BABA)

As a government contractor, it is important to understand the new Build America, Buy America Act (BABA). The BABA statutorily directs the application of “Buy America” domestic preference policies to federal financial assistance programs for infrastructure.

The definition of what constitutes “Made in America” changed with the 2009 American Recovery and Reinvestment Act’s Buy America provision. In contrast to the Buy America requirement, the statutory authority given to BABA was not limited to funds authorized or appropriated in the Infrastructure Investment and Jobs Act (IIJA), it extends beyond those sums. The BABA instead directs federal-aid infrastructure programs in such a way that has a long-term, and permanent impact to comply with Buy America legislation.

To say it more clearly, the BABA would prohibit the federal government from providing financial assistance for infrastructure projects unless all of the iron, steel, and manufactured goods and construction materials utilized in the project are produced in America.

There are exceptions to the rule, but they are limited. The BABA also mandates that it be implemented in a way that is consistent with trade obligations under United States free trade agreements. The specific exceptions include :

applying the Buy America requirement would be against the public interest
where there is not a large enough supply of high-quality iron, steel, and construction materials available in the United States
and/or including domestic products or construction materials in the project will increase the overall cost by more than 25 percent.

The BABA statutorily directs the application of “Buy America” domestic preference policies to federal financial assistance programs for infrastructure, both to programs that currently have such laws and to those that don’t have such laws yet.

BABA’s Timeline for Implementation

The Build America, Buy America Act (BABA) is a law that came into effect in November 2021. The BABA will have many implications for government contractors, and it’s important to be knowledgeable about the effects of this new legislation.

The Office of Management and Budget (OMB) was asked to issue guidance to Federal agencies and help identify programs that don’t have enough American-made products in them. Their mandate also included assisting agencies to understand and use new preferences for products made in America.

The BABA is at the same time looking into procurement programs that have not been subject to Buy America requirements at all, have limited Buy America requirements that don’t include iron, steel, or manufactured products and construction materials, or are subject to Buy America requirements that have been waived by generally-applicable and longstanding waivers. It is reviewing these as a way to identify procurement programs that are not sufficiently compliant with the new preferences.

Within the first 60 days of enactment, Federal agencies will need to report to the Office of Management and Budget (OMB) and Congressional Committees about any financial assistance programs for infrastructure that require domestic content preferences. The agencies will also need to identify which programs do not have the required preferences, and explain why.

Lastly, within 180 days of the enactment, agencies of the federal government must begin utilizing Buy America preferences to meet the requirements of the BABA. By this time, the BABA will have already established a new origin standard for “construction materials,” which OMB must meet by issuing standards to the BABA that satisfy the “all manufacturing processes” origin requirement.

As quoted directly from the Executive Order delivered on January 25, 2021:

“Sec. 8. Promoting Enforcement of the Buy American Act of 1933. (a) Within 180 days of the date of this order, the Federal Acquisition Regulatory Council (FAR Council) shall consider proposing for notice and public comment amendments to the applicable provisions in the Federal Acquisition Regulation (FAR), title 48, Code of Federal Regulations, consistent with applicable law, that would:

(i) replace the “component test” in Part 25 of the FAR that is used to identify domestic end products and domestic construction materials with a test under which domestic content is measured by the value that is added to the product through U.S.-based production or U.S. job-supporting economic activity;

(ii) increase the numerical threshold for domestic content requirements for end products and construction materials; and

(iii) increase the price preferences for domestic end products and domestic construction materials.”

Now, the “all manufacturing processes” origin requirement for construction materials breaks precedent since previously there was no such requirement. It was only applicable to iron and steel. The bill defines “produced in the United States” to mean, “in the case of iron or steel products, that all manufacturing processes, from the initial melting stage through the application of coatings, occurred in the United States.” In the case of construction, nonferrous metals, plastic and polymer-based products, glass (including optic fiber), timber, and drywall are considered to be common construction products. The OMB will establish the standard for common construction materials that precisely defines “all manufacturing processes” as required by the BABA’s origin standards for non-ferrous construction materials.

The BABA is very clear on the specification for manufactured products. Manufactured products can only fall under the “Made in America” statute if they meet the following standard:

the product was manufactured in the United States.
the price of the product’s components mined, produced, or manufactured in the United States is greater than 55 percent of the overall cost of the product’s components.

Made in America Office within the OMB

The BABA has made changes to the BAA (Buy America Act) that will make it easier for companies to create products using domestic components. The new standards will pave the way for increased production of American-made products. The waiver processes will also be improved, making it easier for companies, to get approval to produce goods using non-domestic components. A Made in America Office has been created within the OMB to help oversee these processes and promote American-made goods.

The $1.2 Trillion Infrastructure Bill includes provisions aimed at reducing the use of waivers and improving the enforcement of the Buy American Act, which applies to direct purchases by Federal agencies. The BABA will also direct the Made in America Office to publish guidance to Federal agencies so that they can all follow the same rules when it comes to complying with the Buy American Act (BAA). This should clear things up regarding a procedure that has lately been vague.

In particular, BABA advises that agencies consider various factors when making non-availability waivers, including project delays and the lack of substitutable goods, materials, and supplies. The bureau also recommends against issuing public interest waivers that would result in a reduced number of jobs in the United States. In addition, BABA will require cost calculations to be made for the first time for each foreign product, and it will also demand that Federal agencies consider whether the price benefit of a foreign product is caused by illegal trade practices like dumping or subsidization.

The “Make it in America” section of the BABA suggests that the Federal Acquisition Regulatory Council (FAR Council) increase the domestic content standard from 55 percent to 75 percent over the next five years. This would mean that Congress agrees with the goals of Executive Order 14005 and the proposed changes to the Federal Acquisition Regulations (FAR) that were announced in a notice of proposed rulemaking (NPRM) issued by the FAR Council in July of 2021. If no qualifying bids satisfy the higher component content criteria, then the lower echelon of 55 percent would be taken.

The Birth of BuyAmerican.gov

The Buy American Act and its associated regulations are administered by the Infrastructure and Investment Jobs Act (IIJA). The Act also created the BuyAmerican.gov website, (that has a redirect to MadeinAmerica.gov) which provides free information and resources for understanding the various Buy America laws. This website enables Federal executive branch agencies to use a digital waiver portal to submit proposed waivers directly to the Made in America Office. The Director of the Made In America Office at the OMB provided specific guidance for waivers.

The Future is Full of Opportunities

As government contractors seek to understand the $1.2 trillion Infrastructure Bill, it is important to note the specific measures that could benefit companies with U.S.-based manufacturing operations and their upstream suppliers of essential inputs. The new “origin standards” for nonferrous materials are being adopted, and the Buy American Act (BABA) is being imposed on federally-aided infrastructure spending. This means that contractors should be aware of the potential benefits of manufacturing construction materials with U.S. operations, in order to be better positioned to take advantage of upcoming opportunities.

Funds are moving already!

There are contracts that are moving already according to these sources below:

It’s clear that the government is moving on projects and awarding contracts to deserving businesses. If you’re a business with U.S.-based manufacturing operations, now is the time to make sure you’re taking advantage of potential opportunities. You can do this by visiting BuyAmerican.gov aka MadeinAmerica.gov for more information about how to qualify for these contracts. Stay ahead of the competition, and make sure your company is doing everything it can to “Make it in America.”

If you have any questions about the many laws and rules, please contact Schoonover & Moriarty’s legal team for further information. They are familiar with the Buy American Act and its efforts. This is the moment to make sure you have all of your queries answered.