Build America Buy America Act - EO 14005

MCAA Webinar on July 13, 2023

Kelly Eisenhardt will present the second in a series of Build America Buy America Act webinars to the Measurement, Control & Automation Association (MCAA) on July 13, 2023 at 2pm EST. This webinar will review the basics of the executive order and then answer questions submitted by MCAA members.

Build America Buy America Act

The Build America Buy America Act is Executive Order 14005 and it was signed into law on November 15, 2021.

The Build America Buy America Act focuses on maximizing the federal government’s use of services, goods, products and materials produced and offered in the United States.

The act requires that all iron, steel, manufactured products, and construction materials used in federally funded projects must be produced in the United States.

There are three goals to be achieved with BABAA: increase domestic content thresholds from previous Buy America regulations, create a new class of critical items and components that benefit from greater incentives to make and buy American materials, parts, and products, and to establish new reporting requirements and the management of waivers.

White House Office of Management and Budget (OMB)

The Biden Administration issued a memorandum through the Office of Management and Budget (OMB.) The memorandum outlined sourcing requirements under the “Build America Buy America” portion of the Infrastructure Investment and Jobs Act (IIJA). The order is meant to strengthen Made in America Laws “Ensuring the future is made in America by America’s Workers."

The OMB released the “Initial Implementation guidance on Application of Buy America Preference in federal Financial Assistance Programs for Infrastructure” on April 18, 2022.

In addition, a Made in America Office (MIAO) was created. The office is responsible for managing all processes required by Executive Order 14005. MIAO’s goal is to increase reliance on domestic supply chains, aid the government in supply chain decision making, and build resiliency. The office is also responsible for handling the waiver process.

Sections of Executive Order 14005

The executive order is comprised of sixteen (16) sections. Each government agency has put out guidance on how sections are relevant to their organization.

The sixteen sections include:

1. Policy

2. Definitions

3. Review of Agency Action Inconsistent with Administration Policy

4. Updating and Centralizing the Made in America Waiver Process

5. Accounting for Sources of Cost Advantage

6. Promoting Transparency in Federal Procurement

7. Supplier Scouting

8. Promoting enforcement of the Buy American Act of 1933

9. Updates to the List of Non-available Articles

10. Report on Information Technology That is a Commercial Item

11. Report on Use of Made in America Laws

12. Bi-Annual Report on Made in America Laws

13. Ensuring Implementation of Administration policy on Federal Government Property

14. Revocation of Certain Presidential and Regulatory Action

15. Severability

16. General Provisions

Government agencies such as the Commerce Department, the EPA, the Department of Energy, and FEMA all have specific criteria for BABAA outlined on their website. Other government agencies are planning to follow suit.

Infrastructure and Government Purchases

BABAA specifically focuses on domestic production of iron and steel, manufactured products, and construction materials for the use in federal infrastructure projects.

For iron and steel, the manufacturing process from the initial melting stage through the application of coatings must occur in the United States.

For manufactured products, the end product must be manufactured in the United States and more than 55% of the total cost of all components must be of U.S. origin.

For construction materials, all manufacturing processes must occur in the United States including the final manufacturing step.

Phase-In of the Executive Order

It’s important to realize that the domestic content requirement has a phase in period that runs until January of 2029. This provides manufacturers with more time to work with their supply chains to meet government sourcing requirements.

Lack of Clarity

The details for how to comply with the Build America Buy America Act are still being worked out by the OMB.

At this point there are many questions regarding how to calculate the domestic content threshold, determining substantial transformation, overlap with previous Buy America regulations, and whether or not states can supersede the federal requirements when projects are funded by both the state and federal governments.

According to Miles & Stockbridge (a U.S. Legal firm) as of April 2023:

“In the Proposed Rule, OMB solicited feedback on a laundry list of issues from a wide range of stakeholders. Common themes in the comments include criticism about the expansive scope of the Proposed Rule, ambiguities and internal inconsistencies in the proposed standards, and possible deviations from the parameters established by Congress. The Proposed Rule still appears to be a work in progress and leaves open a number of important questions. Contractors and state and local authorities continue to face regulatory uncertainty about how the BABA restrictions apply to their infrastructure projects.”

The lack of instruction and process regarding how companies need to comply with the regulation is a cause for concern. Companies are also being deterred from filing any type of waiver in order to circumvent the requirements. This makes conducting business with the United States government a challenge for all federal contractors.

Potential for Fraud

There is a large opportunity for fraud to occur regarding the categorization of products being stated as domestic materials and manufacturing, when in fact the content is from suppliers outside of the United States.

Attorneys across the country are willing to take cases from whistle blowers who share knowledge of companies, programs,products, and parts in violation of the Build America, Buy America Executive Order. Keep in mind that violations might be grounds for lawsuits under the United States False Claims Act and enforcement will be taken.

As we learn more from the Office of Management and Budget, we will keep all of our clients and subscribers up to date.

If your company needs help navigating Build America Buy America, BlueCircle Advisors is ready.

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Get started with the Build America Buy America Act now! Protect you company and meet federal requirements.

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Links

Build America Buy America, Commerce Department

Build America Buy America, EPA

Build America Buy America, Department of Energy

Build America Buy America, FEMA

MCAA

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