Build America, Buy America: what changes for a manufacturer when the project is federally funded

The Build America, Buy America Act is sections 70901 through 70927 of the 2021 infrastructure law. It says that no federal financial assistance for an infrastructure project may be obligated unless all of the iron, steel, manufactured products and construction materials used in the project are produced in the United States. It applies to grants and loans, not only to direct federal purchases, which is what makes it different from the Buy America rules that came before it: a city building a treatment plant with a state revolving fund loan is covered.

The Office of Management and Budget's rule at 2 CFR Part 184, and its guidance memorandum M-24-02 from October 2023, define the three product classes and the standard each must meet.

The three classes

Iron or steel products. Every manufacturing process, from the initial melting stage through the application of coatings, must occur in the United States. A product is iron or steel if it is made predominantly of iron or steel, meaning the iron and steel content exceeds 50 percent of the total cost of all its components.

Manufactured products. The product must be manufactured in the United States, and the cost of its components that are mined, produced or manufactured in the United States must be greater than 55 percent of the total cost of all components, unless a stricter standard already applies under another law. Component costs are worked out under section 184.5 of the rule.

Construction materials. All manufacturing processes for the material must take place in the United States. The rule lists the covered materials and defines what all manufacturing processes means for each.

A product is classified once, into one of the three classes, and in general the classification is made at the point where it is incorporated into the project. That matters for assemblies: a pump skid is one thing at the worksite, not a collection of castings, motors and controls each judged separately.

How waivers work

An agency may waive the preference in three cases: applying it would be inconsistent with the public interest; the product is not produced in the United States in sufficient and reasonably available quantities or of satisfactory quality (nonavailability); or including domestic product would increase the cost of the overall infrastructure project by more than 25 percent (unreasonable cost). The 25 percent test is against the whole project, not the line item.

A request must be in writing, with the product, its cost, its country of origin, its PSC and NAICS codes, and a description of the market research done to avoid the waiver, including whether any compliant bids were received. Every proposed waiver is published for public comment of at least 15 days and reviewed by the Made in America Office before it is final. Agencies are told to target waivers to specific products and projects rather than issue them broadly.

Where it bites

Water first. Both state revolving funds carry the requirement, so do the 1,163 congressionally directed water projects funded in FY2026, and so does the $15 billion in lead service line replacement money. A manufacturer of pipe, valves, meters, pumps, instrumentation or treatment equipment selling into a public water system in 2026 should assume the project is covered until shown otherwise, and the specification will ask for a certification.

Highways carry FHWA's own long-standing Buy America for steel and iron, which is stricter in places; BABA sits alongside it. Transit, rail, broadband and the energy programs each have agency-specific guidance and, in some cases, program waivers that have been published and can be read.

What to do about it

Have the certification written before the specification asks. For a manufactured product, that means a component cost accounting that shows the 55 percent, kept current as sourcing changes. For iron and steel, it means mill certifications through coating.

Read the waiver notices. They are public, they name the product class and often the product, and they say why domestic supply was found insufficient. A nonavailability waiver in your category is a list of specifications your competitor could not meet, and an owner who had to ask for one is an owner who would rather not ask again.

Capveon reads the intended use plans, the appropriations project lists and the specifications where these requirements appear, and attaches the funding source to the project record, so a manufacturer knows a project is federally funded, and therefore covered, before the specification is written.