Buy American vs. Buy America

President Joseph R. Biden Jr. signed an executive order intended to strengthen Buy American provisions. Congress passed the Buy American Act in 1933. This program covers specified products and requires the U.S. government to purchase domestic construction materials. The Buy American Act created a national preference for the government to procure only domestic materials used for public construction unless a waiver had been granted. The 1933 Act applies to direct purchases by the federal government, but not third parties, such as private contractors given procurement funding through government endowments.

In summary, the executive order intends to strengthen oversite and leadership and increase waiver scrutiny and inter-agency communication about domestic preferences with respect to Buy American Act provisions.

The Executive Order does not apply to the Buy America Act. The Buy America Act is familiar those operating primarily in the transportation industry performing on projects utilizing funds administered by Federal Highway Administration (FHWA) for state and local public works entities. The Buy America Act was established within Section 165 of the Surface Transportation Assistance Act of 1982, which was a transportation funding and policy act created under the Reagan administration. This provision addresses concerns over the surface transportation of highways and bridges. The Buy America Act was intended to give preference for the use of domestically produced materials on any procurements funded at least in part by the federal government.

AGC Comments on FHWA Buy America Revisions

Source: AGC Highway Facts Bulletin

AGC submitted comments to the Federal Highway Administration (FHWA) in strong support of its proposal to provide nationwide waivers of Buy America requirements for commercially available off-the-shelf (COTS) products with iron and steel components and for steel tie wire permanently incorporated in precast concrete products. AGC also urged FHWA to issue a nationwide waiver for specialized steel lifting devices that are incorporated in precast concrete products. AGC suggested that FHWA raise the dollar threshold for the minimum amount of steel products that can be exempted from Buy America requirements from $2500 to $20,000 or base it on a PPI escalator. AGC also suggested that utility relocation work required as part of a highway improvement project also be exempted.

FHWA took this action to relieve some of the burden on states in implementing Buy America requirements. While these requirements have been in place since the mid-1980s, following the ramp up of Federal highway funding under the American Recovery and Reinvestment Act (ARRA), new scrutiny was placed on how Buy America requirements were enforced on FHWA funded projects. The new scrutiny led to unreasonable requirements to obtain certification that every component of every manufactured product was Buy America compliant. The new scrutiny also led to every project component, no matter how small (nails, bolts, etc) to also meet the mandate. At AGC’s urging FHWA issued guidance relieving some of the mandate on manufactured products but this was challenged in court. The judge ruled that FHWA had not followed proper procedures in issuing this guidance. AGC along with several industry groups urged FHWA to issue a rule following the proper procedures to relieve some of the burden.