Build America, Buy America

August 24, 2023, Department, by Elyse Gentile

0923 advocacy 410

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How to ensure compliance for federally funded projects

As part of the Infrastructure Investment and Jobs Act (IIJA), Congress included updates to the Build America, Buy America (BABA) Act, which mandates the use of domestically produced materials in infrastructure projects receiving federal funding, including state and local projects. NRPA’s Public Policy and Advocacy team is working to provide resources for compliance with the new requirements for park and recreation agency projects and is ready to assist with any questions related to compliance with the latest requirements.

What Is BABA?

BABA aims to boost U.S.-based supply chains by requiring any project funded by federal financial assistance — such as Land and Water Conservation Fund funding — to utilize domestically sourced materials. This includes all iron, steel, manufactured products and construction materials. The White House fact sheet further specifies what is covered.

Historically, Buy America requirements have existed for federally funded projects at certain agencies, but BABA expands the list of covered agencies for consistency across the federal government — including agencies from which NRPA members typically receive federal funding, including the U.S. Department of the Interior (DOI), the U.S. Department of Housing and Urban Development (HUD), and the EPA. BABA requirements apply to all projects unless an agency has established Buy America requirement above the new threshold. The requirements mandated in BABA went into effect on May 14, 2022, with the Office of Management and Budget (OMB) and other federal agency leaders continuing to develop and finalize guidance specific to each federal agency administering programs.

BABA Implementation and Waiver Process

The IIJA was signed into law in 2021, but as is common for the implementation of new provisions like BABA, it often takes time for agencies to develop guidance and regulations outlined in the legislation. As NRPA members consider applications for projects, it is important to understand the new BABA requirements and the impact on any new proposal. As agencies progress to full implementation, it is critical to recognize that IIJA included a waiver process, which allows the agencies to waive the new BABA requirements if a given project meets three criteria outlined in the OMB Memorandum M-22-11, Initial Implementation Guidance on Application of Buy America Preference in Federal Financial Assistance Programs for Infrastructure:

  • Applying the domestic content procurement preference would be inconsistent with the public interest (a ‘public interest waiver’)
  • 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’)
  • 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’)

Following is additional information relevant to NRPA members’ likely federal-project partners at DOI, HUD and the EPA. BABA requirements for construction projects funded via other federal agencies can be found on agency websites as well.

Department of the Interior

In February 2023, DOI released regulations on how it will apply BABA to projects and outlined its waiver process:

  • DOI De Minimis Waiver – This waiver provides approval to waive the Buy America Preference for otherwise covered infrastructure project purchases totaling up to 5 percent of the total applicable project costs, up to a maximum of $1 million.
  • DOI Small Grants Waiver – This waiver provides approval to waive the Buy America Preference for DOI financial assistance agreements when the total award amount of an agreement does not exceed the Simplified Acquisition Threshold, which is currently $250,000.

DOI’s BABA requirements are in effect for funding obligated by the agency on or after May 14, 2022.

Department of Housing and Urban Development

In May 2023, HUD released regulations on how it will apply BABA to projects and outlined its waiver process:

  • HUD De Minimis Waiver – This waiver provides approval to waive the Buy America Preference for otherwise covered infrastructure project purchases totaling up to 5 percent of the total applicable project costs, up to a maximum of $1 million.
  • HUD Small Grants Waiver – This waiver provides approval to waive the Buy America Preference for DOI financial assistance agreements when the total award amount of an agreement does not exceed the Simplified Acquisition Threshold, which is currently $250,000.

HUD’s BABA requirements are in effect for Community Development Block Grant (CDBG) funding obligated by the agency on or after November 15, 2022. For all other HUD programs, requirements are in effect for funding obligated by the agency on or after February 21, 2023.

Environmental Protection Agency Guidance on BABA

In fall 2023, the EPA released regulations on how it will apply BABA to projects and outlined its waiver process.

  • EPA De Minimis Waiver – This waiver provides approval to waive the Buy America Preference for otherwise covered infrastructure project purchases totaling up to 5 percent of the total applicable project costs, with no maximum cost threshold.
  • EPA Small Grants Waiver – This waiver provides approval to waive the Buy America Preference for DOI financial assistance agreements when the total award amount of an agreement does not exceed the Simplified Acquisition Threshold, which is currently $250,000.

EPA’s BABA requirements are in effect for funding obligated by the agency on or after May 14, 2022.

Next Steps and Considerations

NRPA members should review BABA requirements and their associated general applicability waivers and consult with their general counsel at state and local agencies that work with federal partners to secure financial assistance for projects.

The general applicability waivers described above will be in place for a period of five years and will be reassessed as their expiration approaches. It is important to note that, even if a project is not eligible for a general applicability waiver, it may be eligible for a project-specific waiver if one or more of the three criteria under the “BABA Implementation and Waiver Process” header are applicable.

Elyse Gentile is Executive Branch Specialist at NRPA.