The Build America, Buy America Act (BABA) provides federal financial assistance to award recipients domestic manufacturing and infrastructure. Understanding who qualifies and how to apply may be confusing, but Cherry Bekaert’s Risk & Accounting Advisory professionals are here to help.
Please read our overview and FAQs below to learn more about the BABA Act and how it might affect your organization
What Is the Build America, Buy America Act (BABA)?
The Build America, Buy America Act, also abbreviated to BABAA or BABA, was signed into law with the Bipartisan Infrastructure Law (BIL) on November 15, 2021. It establishes a domestic content procurement preference that requires all steel, iron, construction materials and manufactured products used in an infrastructure project to be created in the United States.
BABA aims to prioritize the domestic manufacturing and procurement of infrastructure products and components. Infrastructure projects may be eligible for federal financial assistance if they adhere to domestic content preference as defined in BABA.
How To Qualify for the BABA Act
Recipients must adhere to the following domestic preference requirements in order to comply with the BABA Act:
- All iron and steel items used in a project must be produced in the United States from the initial melting stage through the application of coatings.
- All construction materials used in a project must be manufactured in the United States, including:
- Non-Ferrous Materials
- Plastic and Polymer-Based Products
- Glass
- Fiber Optic Cable
- Lumber
- Engineered Wood
- Drywall
- All manufactured products used in a project must be produced in the United States. To be considered produced in the United States, the cost of the components of the manufactured product must be greater than 65% of the total cost of all components of the manufactured product.
- FEMA may waive Build America, Buy America requirements for domestic content preference and issue a waiver under the certain circumstances.
Build America, Buy America Act FAQs
Find out more about the BABA Act and its requirements with the answers to these frequently asked questions:
The Buy American Act (BAA) is different from the Build America, Buy America Act. BAA was passed in 1933 and requires the federal government to prefer domestic products for its own use on transportation projects, such as the creation of railways or highways. BABA, on the other hand, created the domestic content procurement preference for infrastructure projects.
While these two acts focus on different requirements, both were created to help bolster domestic manufacturing and increase employment.
The BABA Act could provide the following benefits:
- Potential to qualify for federal financial assistance for funds appropriated through BIL and other appropriated funds that are available and used for infrastructure projects
- Preferential provider status for being a domestic supplier
- Differentiation in the marketplace and customer pricing advantages
The Federal Emergency Management Agency (FEMA) awards financial assistance to qualifying recipients. All related documents must be submitted to FEMA.
FEMA may waive the requirements in the following circumstances:
- When the requirement is inconsistent with the public interest, FEMA may issue a public interest waiver.
- If the types of iron, steel, manufactured products, or construction materials needed for the project are not produced in the United States in sufficient and reasonably available quantities or of satisfactory quality, FEMA may issue a nonavailability waiver.
- If the inclusion of iron, steel, manufactured products or construction materials produced in the United States will increase the cost of the overall project by more than 25%, FEMA may issue an unreasonable cost waiver.
Recipients and subrecipients must submit a contract provision, contract documents and contractor self-certifications of compliance with BABA to FEMA. Although not required, FEMA recommends, as a best practice, that award recipients submit a certification letter from product manufacturers to demonstrate BABA compliance requirements.
How Can Cherry Bekaert Help With BABA?
Our experienced team of professionals can help:
- Perform analysis of products and suppliers to determine the likelihood the client will meet the domestic content preferences outlined in BABA.
- Prepare the required contract provision that explains BABA’s requirements and is required to be submitted to FEMA.
- Select, prepare and send self-certifications as outlined by BABA to the client’s suppliers.
- Accumulate and review self-certifications to verify the domestic content preference requirements were met as outlined in BABA.
- Prepare waiver letters for circumstances that may waive the application of the domestic preference requirements outlined in BABA.
- Assist with federal financial assistance submission to FEMA.
Your Guide Forward
Our Risk & Accounting Advisory team regularly interprets and offers guidance on federal financial assistance, so clients understand their award eligibility and requirements. We also have the industry insight and experience to act as an independent source of knowledge and practical advice for our clients. For further information on Build America, Buy America guidance, please get in touch with one of our advisors today.
