Federally funded infrastructure projects have long provided mechanisms to benefit other parts of the U.S. economy. The most familiar examples are “Buy American” provisions that require the use of domestically sourced iron, steel, and other materials wherever possible. The Build America, Buy America Act (BABA), enacted last November as part of the Bipartisan Infrastructure Law (BIL), expands that coverage to other construction materials, including non-ferrous metals, plastic and polymer-based products (e.g., polyvinylchloride, composite building materials, and polymers used in fiber optic cables), glass (including optic glass), lumber, and drywall.
While the intent of these provisions is certainly clear, implementing them has proven problematic. As a result, the U.S. Department of Transportation (USDOT) issued a 180-day suspension of BABA on May 19, 2022 to address questions and concerns while allowing other facets of the infrastructure act to move forward. Other agencies are exploring similar waivers.
Information will be key to helping communities and project owners stay aware of what is sure to be a dynamic construction environment as they seek to help their citizens receive maximum benefit from the BIL’s landmark funding opportunities.Caroline Whitehead
Availability and Cost of Materials
The most challenging issues involve availability and cost. Increased demand and supply chain issues have made many transportation materials harder to find and more expensive. Some products cost as much as 21% higher, based on estimates by the U.S. Bureau of Labor Statistics. And as BIL funds are dispersed to states and eligible projects are scheduled, it’s expected that the market for infrastructure construction materials will lose little of its current volatility.
Compounding the added cost is the fact that many suppliers of these materials, as well as the specialty contractors that use them, are small businesses that don’t always have the reach or resources to cover the added expenses, including having staff available to review compliance with BABA provisions. Potentially, many of these small enterprises could miss out on project opportunities as a result. For contractors, alternative supply sources may be available, but the process of locating them, negotiating purchase prices, and securing delivery is sure to have a ripple effect on project schedules and budgets.
BABA has raised other questions as well. Many elements of domestically produced construction materials originate overseas, making the final products ineligible for meeting BABA requirements. Other new and current materials may qualify but have yet to receive federal certification for use under those provisions. And with a fiscal year 2026 deadline to fully allocate the BIL funding, many industry organizations have publicly questioned whether some of the more complex issues associated with BABA can be resolved in time.
Where Baba Stands Now
At this writing, USDOT has given no indication that it will extend the current six-month waiver of BABA beyond December. But that doesn’t mean the agency is ignoring the challenges. In response to the public comments when the waiver was first proposed this spring, USDOT published language in its final rule saying that the agency’s Made in America Office “will issue further guidance” on certain provisions, including identifying initial manufacturing processes for each type of construction material.
The agency also acknowledged the need to collect more data to inform standards, and hinted that, following expiration of the current waiver, it might be amenable to refine specific elements of BABA over time as information becomes available and processes run their course, rather than waiting for every issue to be resolved before moving forward with implementation.
Though such an approach would facilitate optimal resolutions to BABA’s many issues, changes could come quickly as the process unfolds. Information will be key to helping communities and project owners stay aware of what is sure to be a dynamic construction environment as they seek to help their citizens receive maximum benefit from BIL’s landmark funding opportunities.
Update: The Department of Transportation (DOT) did not extend its six-month BABA waiver, but instead released proposed waivers for smaller or previously initiated projects on November 4, 2022. More information on the proposed waivers can be found here.