The Buy America initiative, a vital part of President Joe Biden’s $1 trillion infrastructure program, seeks to boost domestic manufacturing and job growth by increasing the use of American-made products in federally funded projects. The White House Office of Management and Budget officially approved the binding Buy America guidance on August 14, 2023. These new rules will significantly impact construction contractors.
Originally introduced in 1933, Buy America regulations required American-sourced materials for federally funded construction projects when possible. Under the updated rules, contractors must now ensure that construction materials primarily come from domestic sources, with a minimum of 60% American-made products for specific infrastructure projects like highways, bridges, and tunnels.
What Contractors Need to Know:
1. Potential Costs and Delays: Contractors should prepare for potentially higher costs and longer lead times for American-made materials. Adjusting supply chains to meet the new rules may cause delays and operational inefficiencies.
2. Expanding Supply Chains: Contractors are incentivized to expand domestic supply chains and partner with American manufacturers, bolstering domestic manufacturing.
The 2021 Buy America rules lay out compliance requirements, product origin criteria, and a waiver process for non-compliance. Some items are exempt, but contractors must provide comprehensive supply chain information and ensure products meet regulatory standards.
To prepare for Buy America compliance:
1. Secure Supplier Certifications: Obtain certifications from suppliers confirming compliance with Buy America requirements.
2. Allocate Responsibility: Include clauses in contracts with subcontractors and suppliers holding them accountable for non-compliance expenses.
3. Build Relationships with American Manufacturers: Partner with American manufacturers and explore competitively priced American-made material suppliers.
4. Stay Informed: Keep up with changing guidelines and compliance requirements. Develop procedures to ensure materials meet standards.
While complying with Buy America regulations may be challenging, it presents opportunities for contractors to strengthen domestic supply chains and collaborate with American manufacturers. Proactive compliance preparation positions contractors for success in the evolving regulatory landscape. Contact us to learn how our team can assist you with these changes.
