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The ABCs of Buy America, Buy American, and Build America Buy America

Feb 28, 2023

The ABCs of Buy America, Buy American, and Build America Buy America Image

Buy America, Buy American, and Build America Buy America are so closely named that it’s pretty difficult to distinguish between them, and it is easy to confuse their intents and purpose. This article intends to explain these terms, clarify who they affect, give details about how they will impact domestic manufacturers, and offer guidance about what you can do to ensure your business’s initiatives align with them now and in the future.

What’s the Difference Between Buy America and Buy American?

Though similarly named, these are two separate pieces of legislation are not the same. “Buy American” is a provision in American law that dictates the federal government to choose and procure American-made goods rather than foreign-made ones. The goal of “Buy American” is to bolster domestic manufacturing and employment.

“Buy America” is a provision of U.S. law that applies to only federal transportation funding. It requires all iron, steel, and manufactured goods used in transportation projects to be produced in the U.S. The goal of “Buy America” is to ensure all infrastructure projects use materials that are produced domestically. It is believed to stimulate economic growth and create new employment opportunities.

To Who Does “Buy American” Apply?

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“Buy American” applies only to the federal government when procuring goods. The provision intends to have federal agencies prefer American-made goods and products when purchasing goods for their own use or for use by other federal agencies.

“Buy American” also applies to private businesses, such as manufacturers and contractors, that do business with the federal government when supplying goods to the government. To those that “Buy American” applies, it is essential to ensure that provided goods are made in the U.S. or meet the “Buy American” exceptions and waivers.

It is important to note that State and local governments are not directly subject to “Buy American.” However, most state and local governments have their own requirements similar to “Buy American” that apply to their procurement procedures and activities.

To Who Does “Buy America” Apply?

State government, local governments, and private contractors must comply with “Buy America” when working on transportation and infrastructure projects funded with federal money. This includes projects funded through programs administered by the Federal Highway Administration (FHA), the Federal Transit Administration (FTA), and other federal agencies. It’s important to note that the “Buy America” provision only applies to iron, steel, and manufactured goods used in transportation projects. Other materials and goods used in these projects are not subject to these requirements. Federal agencies are responsible for ensuring that these provisions are followed and may withhold funding or take other actions (potentially substantial fines) if they are not.

What is “Build America Buy America”?

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“Build America Buy America” is a phrase often used in conjunction with the “Buy American” and “Buy America” provisions that promote the use of American-made goods and products and the creation of American jobs. The goal of this slogan is to support domestic manufacturing and employment by encouraging the use of American-made goods and products.

It also refers to the Build America Buy America Act (BABA). On November 15, 2021, President Joe Biden signed into law the Infrastructure Investment and Jobs Act (IIJA), which includes BABA. Under IIJA, no later than May 14, 2022 — 180 days after the enactment of the IIJA — the head of each covered Federal agency shall ensure that “none of the funds made available for a Federal financial assistance program for infrastructure, including each deficient program, may be obligated for a project (project – any activity related to the construction, alteration, maintenance, or repair of infrastructure in the U.S.) unless all of the iron, steel, manufactured products, and construction materials used in the project are produced in the United States.”

Iron and steel used in projects must be produced in the U.S. — from initial melting through the application of coatings.

BABA also encompasses manufactured products, stating that all manufactured products used in a project must be produced domestically. This means it was manufactured in the U.S., and the cost of the components of the manufactured product that are mined, produced, or manufactured in the U.S. 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.

Finally, Build America Buy America requires all construction materials to be manufactured in the U.S. This means all manufacturing processes for the construction materials (non-ferrous metals, plastic- and polymer-based products, glass, lumber, drywall, and others) occurred domestically.

Does BABA Have Waivers or Exclusions?

Yes, indeed, there is a waiver process for Build America Buy America! In accordance with Section 70914 (b) of the Act, agencies may waive the Buy America domestic content procurement preference requirements if NEH finds that:

  1. applying the domestic content procurement preference would be inconsistent with the public interest (General Applicability Waiver);
  2. types of iron, steel, manufactured products, or construction materials are not produced in the United States in sufficient and reasonably available quantities or of a satisfactory quality (Non-Availability Waiver); or
  3. the inclusion of iron, steel, manufactured products, or construction materials produced in the United States will increase the cost of the overall project by more than 25 percent (Unreasonable Cost Waiver).

Full details on BABA waivers and their procedures can be found here.

How Will Build America Buy America Impact the Future of Manufacturing?

While it’s not currently entirely possible to know the definitive outcomes of Build America Buy America, it will probably result in an increased demand for American-made goods and a boost to the domestic manufacturing industry. However, it could also potentially lead to higher costs for infrastructure projects and could complicate trading with other countries.

At Signal-Tech, our products are designed, engineered, assembled, and tested at our facility in Erie, PA. We source materials for our products from local vendors as much as possible. If a local source is unavailable, we will utilize vendors and suppliers from across the country as we believe in helping U.S. companies employ U.S. workers — a cornerstone principle of Build America Buy America. Click here to learn more about us, and if you’re ready to discover how our LED signs can benefit your business, contact us any time!