The White House Office of Management and Budget OMB has released the final guidance related to the Build America, Buy America Act provisions of the Infrastructure Investment and Jobs Act (IIJA).
This final guidance includes comparisons to the initial guidance from OMB from April of 2022 and responses to comments submitted to the OMB Request for Information from earlier this year. The IIJA expanded current Buy America requirements for infrastructure projects, including the addition of construction materials as a covered category.
The final OMB guidance directly responds to specific concerns raised by ATSSA, with those responses below. This guidance is expected to be published in the Federal Register later this week, which would then take effect 60 days after that.
What is the Buy America requirement for a manufactured product?
Manufactured products must be manufactured in the United States and the cost of components of a manufactured product that are manufactured in the United States must exceed 55% of the cost of all components.
The final guidance further provides that “manufactured products” means articles, materials or supplies that have been: “i Processed into a specific form and shape; or ii Combined with other articles, materials, or supplies to create a product with different properties than the individual articles, materials, or supplies.” The final guidance also clarifies that construction materials and iron or steel products should not be considered manufactured products.
Do components need to be produced in the United States to allow the manufactured product to qualify?
The Build America, Buy America Act requires that more than 55% of the cost of components for a manufactured product to be manufactured in the United States and the product itself must be manufactured in the United States. This does not require all components to be produced in the United States.
How is the cost of components of a manufactured product determined( i.e., how is it determined whether a product manufactured in the United States exceeds 55% of the cost of all components)?
In general, there are four steps in this determination:
1. Determine the components manufactured in the United States.
2. Determine the cost of those components manufactured in the United States.
3. Determine the cost of all components.
4. Divide the cost determined in step 2 by the cost determined in step 3. If the fraction is more than 55%, the manufactured product complies with the Buy America requirements as long as the manufactured product is, itself, manufactured in the United States.
What is considered a construction material in this guidance?
Under the final guidance, construction materials include: i Non-ferrous metals; ii Plastic and polymer-based products including polyvinylchloride, composite building materials, and polymers used in fiber optic cables; iii Glass including optic glass; iv Fiber optic cable including drop cable; v Optical fiber; vi Lumber; vii Engineered wood; and viii Drywall.
ATSSA’s Government Relations team will provide further analysis of the final guidance as it continues reviewing the draft. A summary of the key provisions is available for review.