How to navigate the Buy American preferences

In the fast-changing construction industry, knowing how to navigate the Buy American requirements is fundamental. In fact, this is a strategic and regulatory necessity to be able to compete in the industry and participate in large-scale projects. Indeed, the “Buy American Act” and the “The Build America, Buy America Act” are key in this area. Although, they have similar names, they have different applications and requirements that can affect your projects significantly. Actually, this blog aims to act as a guide to help clarify these requirements as well as offer practical insights for professionals in these sectors.

The Buy American Act (BAA)

At first, the Buy American Act (BAA) was signed into effect in 1933 during the Great Depression to help boost domestic industry and production to aid economic recovery. So, its main goal is to prioritize and favor American-made products in federal procurement across various sectors. This means it affects a wide range of purchases made by federal agencies. It helps ensure that taxpayer dollars are used as much as possible to support U.S. manufacturing and labor.  A key topic to understand of the Buy American Act (BAA) is domestic manufacturing.

Furthermore, domestic manufacturing refers to the need for the final product to be manufactured in the United States to be purchased by the federal government. In other words, this means that contractors and project managers need to review their supply chain. In fact, ensuring that a significant portion of components are sourced domestically may require significant changes to supply chain management. Eventually, this could involve small changes when working with U.S.-based providers, like WMC, that have the ability to comply with these laws or it may require a complete change in procurement strategies.

The Build America Buy America (BABA) Act

Then, the Build America Buy America Act (BABA) was enacted as part of the Infrastructure Investment and Jobs Act on November 15, 2021. Later, it established that for all Federal financial assistance for infrastructure projects after May 14, 2022, that domestic content procurement would be preferred. This follows the Surface Transportation Assistance Act of 1982, which includes the Buy America Act was introduced to strengthen domestic industries involved in transportation infrastructure. In addition, the BABAA applies to projects like highways, railways, airports, bridges, water system, energy generation, distribution and transit systems. And mandates the use of American-made materials for these projects.

That is to say, the key to understand the BABA is that iron and steel used in these types of projects have to be produced in the U.S. This includes all manufacturing processes, from the initial melting stage to coating and other finishing processes. For other manufactured products used in infrastructure projects the requirements are different and function according to the cost of the components. The manufactured product that are mined, produced, or manufactured in the United States have to be greater than 55% of the total cost of all components of the manufactured product. It is important to understand that the preference for domestic products under BABA only applies to articles, materials and supplies that are used in, consumed, incorporated or attached to an infrastructure project. It doesn’t cover tools, equipment, or temporary supplies like are either removed after the project is done.

Nor does it apply to equipment and furnishings like chairs, desks, or portable computers used in the project but not an integral or permanent part of it. Contractors and project managers must ensure strict compliance with these requirements, especially for iron and steel products. Because of this close coordination with suppliers is recommended in order to verify the origin of materials. It is also necessary to keep detailed documentation that proves compliance when audited. The increased need for domestic production might also mean that project timelines and budgets have to consider potential sourcing challenges.

Definitely, there are certain waivers for BABAA requirements which government agencies like Federal Emergency Management Agency (FEMA) apply like the public interest waiver when BABA requirements are inconsistent with public interest. Or a nonavailability waiver, when different types of materials are not produced in sufficient or reasonable available quantity in the U.S. or do not meet quality requirements. As well as an unreasonable cost waiver when following BABA requirements would increase the total cost of the project by over 25% than with materials sourced from other places. It is important to read up on the terms and conditions as well as applications, scope and waiver requirements and adjust supply chain management accordingly.

Practical tips to ensure compliance:

Stay informed

Regulations and thresholds may change over the course of time, so it’s crucial to stay updated on the latest requirements. Regularly review official guidelines and consider subscribing to industry newsletters or joining professional associations for updates.

Build strong relationships with domestic providers

Work closely with your domestic suppliers to understand their sourcing practices and ensure they can meet domestic content requirements. This collaboration is key to ensuring compliance and can also help in negotiating better terms as well as optimizing supply chain management.

Plan ahead

Prepare for future increases in domestic content thresholds as well as demand for domestic goods by adjusting procurement. Long-term contracts with domestic providers that meet the requirements ensure on-time access to the materials you need for your projects.

Documentation and audits

Maintain thorough records of your procurement processes and the origin of materials. Complete and accurate documentation is vital during audits to demonstrate compliance. Implementing a robust tracking system can streamline this process and ensure traceability. 

Conclusion

Finally, understanding and knowing how to navigate the Buy American preferences s is essential for professionals in the construction sector. Increasing regulations also mean that planning ahead and adapting to these regulations is crucial not just for compliance but also to remain competitive. These laws ensure that federal projects support domestic industries. And by doing so they also present opportunities for strategic planning and competitive advantages in federal and large-scale projects. Fostering long-term relationships with U.S.-based suppliers has never been as important as now. By aligning your supply chain and procurement strategies with domestic providers and manufacturers like WMC, you can ensure compliance, support American manufacturing, and position your projects for success.