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What is the Build America, Buy America Act?
The Build America, Buy America Act is part of the Infrastructure Investment and Jobs Act (IIJA), signed into law by President Biden on November 15, 2021. It set May 14, 2022, as the deadline for all federal agencies to make sure that the infrastructure projects they fund comply with the Build America, Buy America domestic preference requirements. In some cases, this means that the IIJA Buy America requirements will supersede earlier procurement guidelines.
What Does “Domestic Preference Requirements” Mean?
“Domestic preference” means that all construction materials used in IIJA-funded infrastructure projects must, with few exceptions, be made in the United States. The White House has clarified that to mean that at least the last two stages of the manufacturing process must occur in this country.
IIJA domestic preference requirements apply only to construction materials. They do not apply to supplies or tools brought to a jobsite and removed before project completion or to furnishings or equipment used during construction and removed when the work is done. Only materials that become an integral part of a structure or are permanently affixed to it are subject to domestic preference requirements.
What Projects Do the IIJA Buy America Regulations Apply To?
The Buy America regulations apply to all infrastructure projects funded by one or more IIJA grants, whether the project owners are public entities or public/private partnerships (P3s). They apply to the entire project, not only to certain project phases or deliverables.
The Buy America Act defines infrastructure as including:
- Roads, highways, and bridges
- Public transportation
- Dams, ports, harbors, and other maritime facilities
- Intercity passenger and freight railroads
- Freight and intermodal facilities
- Airports
- Water systems, including drinking water and wastewater systems
- Electrical transmission facilities and systems
- Utilities
- Broadband infrastructure
- Buildings and real property
What Waivers Are There?
Three types of waivers of the IIJA Buy America regulations may be requested.
Public interest waivers
These may be granted when there are concerns that enforcing the Buy America regulations may not be in the best interest of the public. Some instances in which a public interest waiver might be approved include:
- When the amount of purchase falls below a certain minimum threshold or when procuring miscellaneous minor components within iron and steel products
- When it is necessary to allow states to comply with their international trade obligations under the World Trade Organization Government Procurement Agreement or other trade agreement
- When other considerations make a public interest waiver appropriate, such as the value of the items to be procured, sustainability, the potential domestic job impact, performance standards, and so on.
The party applying for a public interest waiver must justify in writing why the waiver is in the public interest.
Nonavailability waivers
These allow the applicant to purchase items that don’t meet the Buy America regulations when no suitable domestic product is available in sufficient quantity or quality. The applicant for a nonavailability waiver must show that sufficient market research has been conducted and domestic alternatives have been investigated.
Unreasonable cost waivers
These may be appropriate when using items made in America increases overall project cost by more than 25%. Applications for an unreasonable cost waiver must include detailed pricing and cost documentation, including comparing the cost of domestic and foreign-produced items or the overall project cost using a product made in America versus the overall project cost using a foreign product.
There is no guarantee that an application for waiver of the IIJA Buy America regulations will be granted. The waiver application and review process emphasizes documentation and transparency so that waivers are approved only when appropriate or necessary.
Consequences of Violating Buy America Requirements
The consequences of violating IIJA Buy America regulations can be severe. Having to re-procure products that do comply with the regulations can cause significant project delays and substantial costs. Contractors who have been found liable for such violations can lose their license and become ineligible for future contracting opportunities on federal, state, or local government-funded projects. Buy America violations also can have a negative impact on a contractor’s bonding capacity.
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