Feds Consider Carving Out Exceptions to the Buy America Act


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By: Kenneth Coronel

The Biden administration is considering carving out two exemptions for federally funded transportation contracts which are subject to the 2021 Build America, Buy America Act, or BABAA. On November 4, 2022, the Department of Transportation proposed two waivers. The waivers would apply to HUD funded projects of de minimus value and to repairs and maintenance in exigent circumstances.

BABAA is a part of the $1.2 trillion Infrastructure Investment and Jobs Act which was signed into law in November 2021. BABAA requires the use of domestically sourced iron, steel, manufactured products and construction materials used by entities that receive federal financial assistance for infrastructure projects. (For example, starting in 2020, when the Federal Transit Administration purchases rolling stock, at least 70% of the cost must be for components and subcomponents produced in the United States.)

The U.S. Department of Transportation proposed issuing a narrow waiver shielding some projects already in construction and for which materials were purchased when a temporary waiver from May was in place. The DOT determined that enforcing the domestic sourcing requirements on pending projects could force the government to cancel contracts, redo procurement and delay construction. And this could potentially result in costing workers their jobs. The DOT said that the proposed waiver would preserve the eligibility of costs a project sponsor already incurred or estimated before the construction materials requirement took effect and to provide recipients with reasonable time to complete procurements. HUD commented that the waivers will assist it and its grantees and funding recipients in preventing immediate delays to critically important projects that serve to ensure the safety and health of HUD constituents and continuing to provide economic opportunity through housing and community development projects.

Under the first of HUD’s proposed waivers, projects funded by the agency valued below the federal Simplified Acquisition Threshold (currently $250,000) would get a blanket waiver.

The second proposed waiver would apply in exigent circumstances, including activities for the protection of life safety, and property. HUD cited examples of exigent circumstances, which included repairing damage caused by a boiler malfunction or replacing a damaged and unusable emergency exit or fire door.

The public comment period on the proposed waivers closed on November 15. The process for seeking a waiver is set forth in 49 CFR part 661. Contractors seeking waivers are encouraged to apply for a waiver request as soon as possible and to provide detailed requests to expedite the Federal Transit Administration’s review.

For more information on this topic contact Kenneth Coronel or your local FMG attorney.