Build America Buy America Act

The Build America Buy America Act (BABA) was enacted as Division G of the Infrastructure Investment and Jobs Act (IIJA), Public Law 117-58, signed November 15, 2021. It extends domestic preference requirements beyond direct federal procurement to reach grant recipients and other entities that receive federal financial assistance for infrastructure projects. Any entity spending federal infrastructure funds -- whether a state transportation department, a water utility, or a broadband provider -- must comply with BABA's domestic sourcing requirements.

What is the Build America Buy America Act?

BABA establishes domestic content requirements for four categories of materials used in federally funded infrastructure:

Iron and steel: all manufacturing processes, from initial melting through the application of coatings, must occur in the United States. This is the strictest category, permitting essentially no foreign content.

Manufactured products: the product must be manufactured in the United States and must contain at least 55% domestic content by cost of all components.

Construction materials: the material must be produced in the United States. OMB has defined construction materials to include items such as lumber, drywall, fiber optic cable, optical fiber, glass, PVC pipe, and similar materials.

Semiconductors and fiber optic cable: OMB has issued guidance extending BABA to additional categories as directed by the statute, with further expansions anticipated.

OMB issued the primary implementing guidance under Memorandum M-22-11 in April 2022, requiring all federal agencies to incorporate BABA requirements into their financial assistance programs. Federal agencies must include BABA award terms in grants and cooperative agreements for covered infrastructure projects. The OMB also maintains a public waiver dashboard where agencies must post approved waivers and the justifications for them.

Waivers are available but granted narrowly. An agency may waive the requirement where the covered material is not produced in the United States in sufficient quantity or quality, where the cost of compliant materials is unreasonably high (generally defined as more than 25% more expensive than non-domestic alternatives), or where applying the requirement would be inconsistent with the public interest.

Why it matters for contractors

BABA reaches contractors and subcontractors who work on federally assisted infrastructure projects, not just direct federal prime contractors. A state or city that receives a federal infrastructure grant passes BABA compliance obligations down through its construction contracts. Prime contractors and their subcontractors must be able to trace and document the domestic origin of covered materials and certify compliance to the grantee.

Failure to comply can result in grant clawback from the grantee, contract termination, and potential False Claims Act liability where certifications were made incorrectly. Because BABA applies to a wide range of program areas including highways, transit, water infrastructure, broadband, energy, and airports, contractors across many sectors need to understand its requirements.

Example

A mid-sized city receives a federal grant under the Clean Water State Revolving Fund to replace aging water distribution mains. The city solicits bids for the project. The prime contractor must certify that all iron and steel pipe, fittings, and valves used in the project were melted and manufactured in the United States. The contractor's specifications also cover pump stations whose equipment must meet the 55% domestic content threshold for manufactured products. Before commencing work, the contractor collects mill certifications for pipe and documentation of domestic content percentages for pumps and valves. Where a specific valve meeting the domestic content threshold is unavailable in the required size, the contractor applies to the relevant federal agency for a non-availability waiver before substituting a foreign-sourced product.