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"Buy America" Preference in FEMA Financial Assistance Programs for Infrastructure

Background

Application

Interpretation

Waivers

As part of President Biden's Infrastructure Investment and Jobs Act, beginning with awards received on or after May 14, 2022, any infrastructure project receiving federal funding must source their iron, steel, manufactured products and construction materials from the United States.

These requirements apply to new awards made on or after May 14, 2022, as well as new funding FEMA obligates to existing awards or through renewal awards where the new funding is obligated on or after May 14, 2022.

Learn what that means for FEMA grant programs, as well as the process for seeking waivers.

Background

The Build America, Buy America Act (BABAA) requires all federal agencies, including FEMA, to ensure by May 14, 2022, that no federal financial assistance for “infrastructure” projects is provided “unless all of the iron, steel, manufactured products, and construction materials used in the project are produced in the United States.”

On April 18, 2022, the Office of Management and Budget (OMB) issued an memo that provides implementation guidance for federal agencies on the application of “Buy America” preference to federal financial assistance programs for infrastructure and a transparent process to waive such preference, when necessary. 

REFERENCES
Build America, Buy America Act (BABAA) is section 70914 of Public Law No. 117-58, §§ 70901-52, also know as the Infrastructure Investment and Jobs Act.

OMB Memorandum M-22-11, Initial Implementation Guidance on Application of Buy America Preference in Federal Financial Assistance Programs for Infrastructure

Application of "Buy America" Preference

In accordance with OMB Memo M-22-11, by May 14, 2022, FEMA must ensure that all of its applicable federal financial assistance programs comply with section 70914 of BABAA. This includes incorporating a “Buy America” preference in the terms and conditions of each financial award for an infrastructure project.

The Act requires the following "Buy America" preference:

1. All iron and steel used in the project are produced in the United States.

This means all manufacturing processes, from the initial melting stage through the application of coatings, occurred in the United States.

2. All manufactured products used in the project are produced in the United States.

This means the manufactured product was manufactured in the United States, and the cost of the components of the manufactured product that are mined, produced, or manufactured in the United States is greater than 55 percent of the total cost of all components of the manufactured product, unless another standard for determining the minimum amount of domestic content of the manufactured product has been established under applicable law or regulation.

3. All construction materials are manufactured in the United States.

This means that all manufacturing processes for the construction material occurred in the United States.

Interpretation of the Guidance

This guidance applies to all FEMA federal financial assistance programs as defined in 2 C.F.R. § 200.1, where FEMA awards funds for infrastructure projects. These requirements apply to new awards made on or after May 14, 2022, as well as new funding FEMA obligates to existing awards or through renewal awards where the new funding is obligated on or after May 14, 2022. Per the guidance, “[t]his means that agencies must include a Buy America preference in awards issued on or after May 14, 2022, even if Notices of Funding Opportunities for those awards did not include a Buy America preference.” 

These requirements apply to new awards made on or after May 14, 2022, as well as new funding FEMA obligates to existing awards or through renewal awards where the new funding is obligated on or after May 14, 2022.

Per the guidance, “[t]his means that agencies must include a Buy America preference in awards issued on or after May 14, 2022, even if Notices of Funding Opportunities for those awards did not include a Buy America preference.”

Programs and Definitions

Please see the following links for key definitions of federal financial assistance, as well as the full lists of FEMA federal financial assistance programs for which BABAA does and does not apply.

Subject to BABAA

NOT Subject to BABAA

Definitions

When Does a "Buy America" Preference Apply?

A "Buy America" preference only applies to the iron and steel, manufactured products, and construction materials used for the infrastructure project. If FEMA determines that no funds from a particular award will be used for infrastructure, a "Buy America" preference does not apply to that award.

Similarly, a "Buy America" preference does not apply to non-infrastructure spending under an award that also includes an infrastructure component. A "Buy America" preference applies to an entire infrastructure project, even if it is funded by both federal and non-federal funds under one or more awards.

A "Buy America" preference only applies to articles, materials, and supplies that are consumed in, incorporated into, or affixed to an infrastructure project. It does not apply to tools, equipment, and supplies, such as temporary scaffolding, brought to the construction site and removed at or before the completion of the infrastructure project.

It also does not apply to equipment and furnishings, such as movable chairs, desks, and portable computer equipment that are used or within the finished infrastructure project but are not part of or permanently affixed to the structure.

Issuing "Buy America" Waivers

Per section 70914(c) of BABAA, FEMA may waive the application of a "Buy America" preference under an infrastructure program in any case in which FEMA finds that:

  1. Applying the domestic content procurement preference would be inconsistent with the public interest (public interest waiver);
  2. Types of iron, steel, manufactured products, or construction materials are not produced in the United States in sufficient and reasonably available quantities or of a satisfactory quality (nonavailability waiver); or
  3. 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 percent (unreasonable cost waiver).

Approved General Applicability Public Interest Waiver

OMB approved FEMA’s General Applicability Public Interest Waiver of the Build America, Buy America Act (BABAA) requirements on July 1, 2022 and this waiver will be effective for a period of six months.

For FEMA awards made and any other funding FEMA obligates during this waiver period, through January 1, 2023, recipients and subrecipients will not be required to follow the BABAA requirements. 

For FEMA programs subject to the BABAA requirements, for any new awards FEMA makes after January 1, 2023, as well as new funding FEMA obligates to existing awards or through renewal awards where the new funding is obligated after January 1, 2023, recipients and subrecipients will be required to follow the BABAA requirements unless another waiver is requested and approved.

Public Comment Period

OMB Memo M-22-11 outlines the exceptions for unforeseen and exigent circumstances and the waiver principles and criteria. However, before issuing a waiver, FEMA must make publicly available on FEMA’s website a detailed written explanation for the proposed determination to issue the waiver and provide at least 15 days for public comment on the proposed waiver.

FEMA will use this website to post proposed waivers for public comment from the "Buy America" preference requirement for a FEMA program.

Proposed Waivers for Public Comment

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There are no proposed waivers for public comment at this time. Waivers will be posted here as available.

More Information

Additional information on FEMA’s Policy implementing OMB Memo M-22-11 is forthcoming.

If you have any questions, please contact your applicable point of contact for more information, including: