Why the Buy American Act and Build America Buy America Act matter to your business and industry

The Buy American Act and Build America Buy America Act serve as critical pillars in supporting U.S. manufacturing and infrastructure. They are designed to ensure that federal spending of American taxpayer dollars prioritizes American made products, supply chain and workforce, all of which has several direct and strategic benefits for your business and industries served.

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Buy American Act (BAA)

The Buy American Act (BAA), enacted in 1933, establishes a legal framework for how the federal government uses taxpayer dollars when purchasing supplies and construction materials.   Its primary goal is to ensure that federal procurement prioritizes domestically produced goods, thereby strengthening the U.S. manufacturing sector and supporting American jobs.  According to the Congressional Research Services, an End Product or Construction Material qualifies as being of domestic origin under BAA if it meets the following requirements:

  1. The item must be manufactured in the United States
  2. The cost of the domestic components mined, produced, or manufactured in the United States exceeds 60% of the cost of all components when purchased; increasing to 65% effective calendar year 2024 and 75% effective calendar year 2029; or
  3. The material is a commercially available off-the-shelf (COTS) item. Construction materials “that consist wholly or predominantly of iron or steel” are domestic under the BAA if the cost of domestic iron and steel constitutes at least 95% of “the cost of all the components used in such construction material.”

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You can find more information about BAA here:

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Build America Buy America Act (BABAA)

The Build America Buy America Act (BABAA) is a provision within the 2021 Infrastructure Investment and Jobs Act (IIJA) to promote the use of public taxpayer dollars for investments in federally funded US infrastructure projects to use products or materials manufactured in the US. Items purchased for use must meet the following to be considered “produced in the United States”:
  1. 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;
  2. In the case of manufactured products, that — (i) the manufactured product was manufactured in the United States; and (ii) the cost of the components of the manufactured product that are mined, produced, or manufactured in the United States is greater than 55 percent 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
  3. In the case of construction materials, that all manufacturing processes for the construction material occurred in the United States.

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You can find more information about BABAA here:

Waivers

Under BAA and BABAA there is a process in which a waiver may be granted.  Waivers are not meant to be a permanent solution to the Buy America Preference but a temporary solution.  There are limited circumstances where a waiver may be granted and below is a sample list of common waivers:

  1. Public interest waivers – if applying the requirement would be inconsistent with public interest.
  2. Nonavailability waivers – if the material is not produced in the U.S. in sufficient quantity or quality.
  3. US Content waiver – When the cost of components and subcomponents produced in the U.S. is more than 60 percent of the cost of all components of the facility or equipment procured and final assembly occurs in the United States; or
  4. Unreasonable cost waivers – if using U.S.-produced materials increases project cost by more than 25%.

Resources

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