What Contractors Need to Know About the Build America, Buy America Act

This is part of a series sponsored by IAT Insurance Group.

In response to the Great Depression, the Hoover administration passed the “Buy American Act” in 1933. The main purpose of this act was to show itself – to revive and stimulate the US economy by requiring US steel and metals mined or produced in the United States for use in government projects. federal.

In 1982 Congress passed the “Buy America Act,” which for the first time expanded the requirement that contractors only use US-sourced steel and steel for federally funded public transportation projects. The Buy America Act also expanded what products must be of US origin to include manufactured goods.

More recently, another extension, called the “Build America, Buy America Act” (BABA), was passed in November 2021 as part of the Infrastructure and Investment Jobs Act (IIJA). Contractors need to know how the laws related to Buy American requirements have changed and how they may affect their businesses in new ways.

Most importantly, BABA requirements apply to all projects that receive federal funding – not just IIJA projects – and not only where the federal government is the contracting entity, but also projects where the state or local governments are the contracting parties. . In addition, “infrastructure” services are broadly defined to include:

• roads, tunnels and bridges
• rail (both passenger and freight)
• dams, ports, docks and other marine facilities
• airports
• water systems
• electronic devices and systems
• useful
• Broadband infrastructure
• buildings associated with all of these, including for example train and bus stations, tollbooths and even offices

Here are some things you should know about BABA:

• Along with iron, steel and manufactured goods, BABA requirements are extended for the first time to building materials, which must also be from the US. Building materials are defined as including materials such as glass, drywall, fiber optic cable, non-ferrous metals such as copper and aluminum, and PVC and other plastic or polymer materials. Cementitious materials are not included.
• BABA increases the percentage of domestic demand (by value) of manufactured goods from 55% to 60% from October 2022, to 65% by 2024, and will rise to 75% in 2029.[1] However, in some cases the increase has been delayed pending review.
• Off-the-shelf products manufactured abroad can be used as long as they are not modified.

Frequently asked questions about BABA

Q: Can a product or component fall into multiple categories between steel and steel, manufactured products and construction?

A: No. These guidelines indicate that all items included in the construction process fall into one of three categories. For example, a composite material, such as glass, and other materials or a product (such as window panes) will be considered a product.

Q: What exactly is a product off the shelf (COTS)?

Answer: Under the Federal Acquisition Regulations, COTS is any product (including hardware) that is sold in bulk in the commercial market and used without modification in the manner in which it is sold.

Q: Are exemptions available for BABA requirements under IIJA?

A: Yes. An exemption may be obtained if it is found that the work is not in the public interest or if the goods are not available or valuable. Waivers granted by a specific government agency can apply to that agency or have a project. Furthermore, under the Global Compact agreement, products from preferred partners are treated as made in America for contracts of $7,804,000 or more, such as Small Business Administration contracts, which fall under Buy American mandates regardless of project size. .

Q: What can contractors do if they are unsure whether BABA requirements apply to a particular project or item or if additional assistance is needed to comply?

A: In addition to consulting an attorney or other professional, contractor questions about purchasing American utilities can be sent via email to BuyAmerican@ee.doe.gov. In addition, the Office of Management and Budget periodically publishes guidelines for changes to the BABA structure.

Best practices for contracting

If you’re working on a government-sponsored project of any kind, complying with Buy American requirements is critical to your bottom line. Stay on top of these best practices and rules:

• Get certificates from your suppliers. Obtain certificates to confirm that construction materials or products comply with BABA requirements.
• Share responsibility. Construction contracts with subcontractors and vendors should include language that makes these parties responsible for costs not covered by BABA.
• Stay current with important changes. The rules change frequently. Pay close attention to documents from government agencies such as the Office of Management and Budget. Differentiation factors may change along with the types of building materials that target BABA. Exceptions to this rule may also change. Although cement and aggregates are not included in BABA, this may change.
• Do not count the withdrawal. BABA exists for a reason, so discounts may not be easy to find and may be project or specific. Do your due diligence, be aware that the time frame for meeting BABA requirements is not the same for all government funded projects, and make sure that the applicable BABA requirements are met.
• Consider consecrating someone to watch over the FATHER. Documentation is important so make sure you document everything related to the job and BABA compliance. Get your team involved with tracking documents or consider having someone volunteer to monitor ΒΑΒΑ compliance. Whenever in doubt seek legal advice.

Failure to comply with BABA requirements may result in the need to remove and replace completed work at your own expense, termination of contract and disqualification from government paid work. In addition, willful failure to comply with Buy American’s requirements may result in liability under the False Claims Act, penalties that include triple damages.

For more information about BABA and IIJA, contact a The IAT group.

This article should not be used as legal advice. All parties should consult appropriate legal counsel and seek professional advice on legal and compliance matters.

[1] Federal Register, “Federal Acquisition Regulation: Changes to FAR Buy American Requirements,” March 7, 2022.

Heads
Contractors