U.S. DOT proposed changes to Build America, Buy America rules

U.S. DOT proposed changes to Build America, Buy America rules

On November 4, 2022, the U.S. Department of Transportation made three important announcements related to the Build America, Buy America (BABA) requirements of the Infrastructure Investment and Jobs Act. I want to alert you to those proposed rules changes and solicit feedback on whether ACEC ought to comment on them.

(1) U.S. DOT is not extending the 180-day waiver for construction materials announced back in May, making that requirement applicable effective November 10, 2022.
(2) U.S. DOT is proposing a five-year waiver of BABA requirements for de minimis costs, small grants, and minor components.
(3) U.S. DOT is proposing a waiver of domestic preference requirements for construction materials for a narrow set of contracts that were entered into or solicited before BABA rules went into effect.

Background
The IIJA requires that federal agencies ensure that all of the iron, steel, manufactured products, and construction materials used in infrastructure projects receiving federal financial assistance are produced in the United States. The Office of Management and Budget developed implementation guidance to agencies, including the process and parameters for issuing waivers of the BABA rules.

In May, U.S. DOT issued a temporary waiver of the rules related to construction materials for 180 days. They are declining to extend that general waiver, and the BABA requirements for construction materials will go into effect on November 10.

Waiver for De Minimis Costs, Small Grants, and Minor Components
DOT is proposing to waive the Act's Buy America preferences for iron and steel, manufactured products, and construction materials used in infrastructure projects funded under DOT-administered financial assistance programs under a single financial assistance award for which:

• The total value of the non-compliant products is no more than the lesser of $1,000,000 or 5% of total allowable costs under the federal financial assistance award;
• The size of the federal financial assistance award is below $500,000; or
• The non-domestically produced miscellaneous minor components comprise no more than 5 percent of the total material cost of an otherwise domestically produced iron or steel product.

The waiver would cover all modal administrations (highways, transit, aviation, etc.) and programs. According to the notice, DOT made 19,000 awards totaling $83 billion in FY 2022 that may be covered by DOT's domestic preference requirements, and awards for an amount under $500,000 represented nearly half (48%) of the 19,000 total number, but just 1.4% of the $83 billion. 

This proposed waiver for small grants and minor components would be subject to review within five years of the issue date. However, DOT reserves the right to modify or shorten the duration of the waiver if it obtains information before the end of the five-year period indicating the waiver is no longer in the public interest.

Click here for the official notice of the proposed waiver. There is a 15-day comment period.

Waiver for Certain Contracts and Solicitations
In a separate notice, U.S. DOT is proposing to waive the domestic preference requirement for construction materials requirements for

• any contracts entered into before November 10, 2022 (the expiration of the initial temporary waiver); and,
• any contracts entered into before March 10, 2023, that result from solicitations published before May 14, 2022 (when the initial waiver was issued).

According to the notice, requiring compliance with the BABA domestic preference for construction materials would be unduly burdensome for projects that already have executed construction contracts, because it could compel contract terminations and cause projects to be put on hold while conducting new procurements. Similarly, for large infrastructure projects with long lead times, the preparation of solicitations by project sponsors and the preparation of bids and proposals by offerors require significant time and investment, and are based on project design that occurs well in advance of the solicitations. Amending the specifications of the contract solicitations to impose new requirements that were not previously applicable would cause significant project delays.

Click here for more information on this proposed waiver. There is a 15-day comment period.

ACEC might submit comments on either or both of these proposed waivers. ACEC may also join other stakeholders in providing industry input.

Please contact Matt Reiffer at ACEC National directly or 202-682-4308) by November 11 if you have feedback