FHWA wants to drop Buy America waiver for manufactured products

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Dive Brief:

  • The Federal Highway Administration announced a proposal Thursday to discontinue its four-decade-old general waiver of Buy America requirements for manufactured products used in federally funded highway projects. The goal is to bolster domestic manufacturing and supply chains and also to stimulate jobs. 
  • The FHWA also wants to create standards that would apply to the manufactured products covered under Buy America requirements, and seeks input in order to outline those standards. Contractors have previously complained about a lack of clarity around those requirements.
  • This proposed rule would implement President Joe Biden’s January 2021 executive order to maximize domestically produced goods. The agency reviewed the waiver under the Infrastructure Investment and Jobs Act’s Build America, Buy America Act, which greatly expanded the domestic procurement requirement. 

Dive Insight:

Buy America generally is applied to direct federal procurement — goods that the U.S. government buys for its own use — while BABA applies to awards made with federal financial assistance, according to the Made in America Office. BABA requires all manufactured products, construction materials and iron and steel used in federally funded infrastructure projects to be made in America.

The FHWA’s Buy America waiver dates back to 1983; at that time manufactured products were used in insufficient quantities on highway construction projects to incentivize domestic manufacturing, according to the release.

“For decades, America’s highway projects were allowed to use taxpayer dollars to purchase products manufactured in other countries,” said Transportation Secretary Pete Buttigieg in the release. “As we rebuild America’s infrastructure, this new rule would require federal highway projects to use products manufactured here.”

Last August the White House issued final guidance on its BABA rules, which define relevant construction materials and local manufacturing process standards for each material.

The FHWA’s proposed rule will not change the Buy America requirements that currently apply to iron or steel products, nor change BABA requirements that apply to products classified as construction materials or excluded materials including cement; aggregates like stone, sand or gravel; or aggregate binding agents. 

To comply with the proposed requirement, a product must be made in the U.S. and the cost of its American-produced or -manufactured components must exceed 55% of its total cost. While contractors are reimbursed for the additional cost of U.S.-fabricated materials, some of these products might be difficult to obtain. That could translate to project delays as builders are forced to apply for a waiver instead of it being offered automatically.

Builders weigh in

The agency also issued a request for information on the domestic availability of manufactured products commonly used in FHWA-funded projects, which will help guide implementation should the waiver be rescinded. The RFI and proposed waiver were published in the federal register today, and comments are open until May 13.

The American Association of State Highway and Transportation Officials has previously expressed concern to the FHWA and the U.S. DOT that suspension or elimination of the waiver would delay projects, since some domestically produced materials aren’t yet sufficiently available.

“Instead of completely eliminating the waiver, we recommend that the waiver be continued as FHWA carries out targeted market studies to observe which products can be onshored successfully,” said Jim Tymon, AASHTO’s executive director, in a press release. “This strategy stands a stronger chance of achieving the overall goal of increasing domestic manufacturing.”

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