The Buy American Act (BAA) is part of American economic policy and plays a crucial role in promoting domestic manufacturing. With the enactment of the Build America, Buy America (BABA) Act of 2021, this legislation has gained renewed relevance, particularly in the context of federal infrastructure projects.
Let’s explore the key Buy American Act requirements, its implications under BABA, and how BABA supports US domestic manufacturing.
To learn more about federal funding available for infrastructure projects through the BAA, see what Stephen Koprince, a federal government contracts educator with over 20 years advising clients on federal purchasing matters, discusses in our FREE On-Demand Webinar.
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Buy American Act Summary
The BAA is a domestic sourcing preference statute that applies to federal government contracting when the government is purchasing goods. It mandates that products used in federal projects be sourced domestically to support American manufacturers and workers.
This act ensures that federal spending contributes to the US economy by prioritizing the use of American-made products. The original act was signed into law in 1933, but it has gained new relevance and has been amended more recently.
Requirements for BAA
The Federal Acquisitions Regulation (FAR) sets a domestic content threshold that defines what percentage of materials need to be made in America. The Buy American Act percentage began at 55%. New amendments are increasing that percentage over time, up to 75% by 2029.
Since the law has been in effect so long, many countries have been granted waivers for federal procurement bids. These Buy American Act countries are exceptions to the regulations.
Buy America vs. Buy American Act
Although they sound similar, these two acts are actually different! We’ve been discussing Buy American, the US government purchasing preference from 1933. The Buy America Act is from 1982 and applies to materials procured for projects funded by the federal government.
Buy American applies to purchases directly made by the federal government or for a federal facility, while Buy America applies to federally funded mass transit projects procurements by state and local governments.
The Build America, Buy America Act of 2021
Enacted as part of the Infrastructure Investment and Jobs Act in 2021, BABA reinforces the principles of the BAA. IIJA is often called the Bipartisan Infrastructure Law (BIL), reflecting the broad government support for this funding.
BABA requires that all iron, steel, manufactured products, and construction materials used in federally funded infrastructure projects be produced in the United States. This legislation highlights the benefits of choosing American Manufacturers by supporting American jobs and industries.
Build America, Buy America Act Requirements
- Domestic Content Requirement: Buy American compliance mandates that materials used in federal infrastructure projects be sourced domestically. This includes iron, steel, and manufactured products so American manufacturers benefit from federal spending.
- Agency Compliance: Federal agencies report on their compliance with the Act, detailing how they are meeting domestic content procurement preferences. This includes assessing the applicability of these requirements and providing information on any waivers granted.
- Waiver Process: While the Act has strict domestic sourcing requirements, it allows for waivers in certain rare circumstances. These waivers create Buy American act exceptions, allowing foreign-made products to be used without compliance issues.
Support Domestic Manufacturing
Already in 2023 and 2024, BABA has been a significant step towards revitalizing the US manufacturing sector. By prioritizing domestic products in federal projects, the Act aims to create jobs, stimulate economic growth, and reduce reliance on foreign goods.
This focus on American manufacturing is crucial for building a resilient and self-sufficient economy.
Benefits for American Manufacturers
- Increased Demand: With federal projects required to use American-made materials, domestic manufacturers are likely to see an increase in demand for their products. This can lead to job creation and economic growth in manufacturing communities.
- Innovation and Competition: By investing in domestic manufacturing, the Act encourages innovation and competitiveness among American companies, leading to new technologies and processes that enhance the quality and efficiency of US-made products.
- Strengthening Supply Chains: The emphasis on domestic sourcing helps strengthen supply chains by reducing dependence on foreign suppliers. This can enhance the resilience of the US economy, particularly in times of global disruptions.
Buy American Requirements and Considerations
Complying with Build America, Buy America requirements can be challenging and might require specialized BABA Resources. Still, there are significant benefits to educated contractors and distributors.
Ensuring Buy American Act compliance requires you to understand exceptions and waivers, which can be hard for projects involving a wide range of materials and components. Buy American provisions are complex, requiring training and resources to fully understand and avoid violations.
The Importance of Made in USA Certificates
Certificates proving that manufactured products are indeed Made in USA are a critical component in the compliance framework for contractors engaging in federal government contracts. These certificates are formal declarations by the offeror that the end products in a contract meet all domestic content requirements.
Specifically, the certificate requires contractors to list each end product and certify whether it qualifies as a domestic end product— an item mined, produced, or manufactured in the United States, with a significant portion of its components also originating domestically.
Manufacturers are expected to supply certification for their USA-Made manufactured products. This is an essential part of the auditing process.
For contractors, this certificate is not just a compliance requirement but a commitment to supporting U.S. industry and adhering to domestic sourcing principles, thereby contributing to national economic resilience and growth.
American-Made Legacy
Almost a hundred years after it was signed, the legacy of the Buy American Act can still be felt today. BABA represents a significant commitment to supporting US domestic manufacturing. By prioritizing American-made products in federal infrastructure projects, the Act aims to create jobs, stimulate economic growth, and enhance the resilience of the US economy.
While challenges remain, the potential benefits for American manufacturers and workers are substantial, making this legislation a critical component of the nation’s economic strategy. Buying American strengthens American infrastructure.
Next Steps
Now that you understand the Buy American Act, why not watch our FREE on-demand, sponsored webinar featuring Steven Koprince, Government Purchasing expert and former Government Project Attorney.
Can’t find time to attend the webinar? Get the complete Webinar content overview in the Executive Summary by clicking the link below.
Through government programs like BAA, IIJA, and BABA, over a trillion dollars is available for funding federal projects. Contractors need to understand how to identify what products are USA-made—and distributors need to carry Made-in-America brands their customers can use!
And Finally…
Whether you are a Contractor looking to stay compliant, or a Distributor looking to help your contractor clients purchase the correct Made in USA products, the Comply When You Buy Webinar is the best starting point for you to learn the ins and outs of federal infrastructure procurement!
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