Author: Christopher Yukins

GW Law Webinar – Wed. 19 January 2022 – 9 am Eastern – 14:00 UK – 15:00 CET

President Biden recently signed into law the Infrastructure Investment and Jobs Act, Public Law 117-58 (Nov. 15, 2021), trillion-dollar legislation intended to rebuild U.S. infrastructure. This webinar will focus on Title IX of the new law, the “Build America, Buy America” Act (BABA), which will impose much broader domestic-preference requirements on items purchased using federal grants, tighten federal procurement requirements under the Buy American Act, and launch a review of U.S. agreements that have opened defense markets with U.S. allies around the world.

Part I of the BABA addresses procurement for infrastructure supported by federal financial assistance. As commentator Dustin Painter noted, unlike the “Buy American” requirements of Section 1605 of the 2009 American Recovery and Reinvestment Act, the domestic content requirements imposed by the BABA are “not limited to the funds appropriated or authorized” by the new legislation — and so the new law likely will have a broader impact on all federally funded infrastructure programs.

Under the new legislation, all iron and steel products and construction materials must be produced in the United States. Manufactured products will need to be manufactured in the United States, and at least 55 % of their component costs will need to be U.S.-origin.

Domestic-content waivers on projects funded with federal assistance will need to be published for comment (much as the Biden administration has begun to publish federal waivers for Buy American Act purposes). Waivers will be available only if applying the U.S. preference (1) will be inconsistent with the public interest, (2) iron, steel, manufactured products or construction materials are not produced in U.S. in sufficient and reasonably available quantity or satisfactory quality, or (3) inclusion of domestic products or materials will increase overall project cost by 25 percent.

In line with the new legislation, the U.S. Office of Management & Budget (OMB) guidance for federal grantees (set forth in Title 2 of the Code of Federal Regulations) may be amended to reflect the new domestic content requirements, which are to be applied consistently with international trade agreements. In the meantime, in a December 20, 2021 memorandum, OMB asked federal agencies for extensive data on the iron and steel, manufactured goods and construction materials used in federally supported infrastructure projects.

As former U.S. trade official Jean Heilman Grier noted in a recent post, under most current free trade agreements the United States has already excepted highways, mass transit and airport projects. This has meant that foreign firms may “participate in such projects but must comply with the ‘Buy America’ requirements.” Under the new legislation, Ms. Grier wrote, the “broader implication of the expansion of domestic preferences to all infrastructure projects that receive federal funds is that the U.S. would not likely be able to offer [those projects as market-opening concessions] in future procurement negotiations.”

Part II of the the BABA includes a suite of “Make It In America” provisions, which echo President Biden’s January 2021 Executive Order 14005. Under the legislation, a new “Made in America Office” is to be established in OMB, which will oversee more rigorous standards for Buy American Act (BAA) waivers. The new legislation also reflects a sense of Congress that the Buy American Act should be applied with a 75% domestic content requirement — a substantial increase from the traditional 50% requirement, which was increased by President Trump.

As with the requirements for federal grants, Buy American Act requirements under the new law are to be implemented consistently with standing international trade agreements. This means that the stronger Buy American requirements will not apply to procurements over the Trade Agreements Act threshold, which per FAR 25.402 is generally $183,000 for supplies.

Notably, the new legislation calls for a review of the impact of free trade agreements on U.S. procurement. That review will include reciprocal defense procurement agreements, which are the key to open international trade in defense materiel and services between the United States and its allies. Existing trade agreements are to be assessed for “equal and proportionate” access by U.S. suppliers. The new law also codifies longstanding exceptions to Buy American requirements, such as those for U.S. allies under the reciprocal defense procurement agreements, and general exemptions for least developed nations.

Panelists