Build America, Buy America Act: Requirements, Waivers, and Penalties

The Build America, Buy America Act requires that iron, steel, manufactured products, and construction materials used on federally funded infrastructure projects be produced in the United States. Congress enacted it as part of the Infrastructure Investment and Jobs Act on November 15, 2021, and the rules took effect for all federal financial assistance obligated after May 14, 2022.¹ Nearly every federal agency that hands out infrastructure grants or loans is covered, which makes BABA one of the broadest domestic-sourcing mandates on the books.

Who Has to Comply

BABA attaches whenever a federal agency provides financial assistance to a non-federal entity for an infrastructure project. Non-federal entities include state and local governments, tribal nations, and other public bodies receiving federal grants or cooperative agreements.² The requirements flow down to sub-awardees. A subcontractor on a state highway project funded by a federal grant carries the same obligations as the state agency.

For-profit companies sit in an unusual spot. A for-profit that receives a federal award directly as the prime recipient is generally not a “non-federal entity” under the statute, so BABA does not automatically attach. It does attach when a for-profit takes funds as a sub-awardee under an award that already carries the requirement, and a for-profit prime can also opt in by committing to domestic sourcing in its application.¹

What Counts as Infrastructure

The statute defines infrastructure broadly. Covered project types include:²

Roads, highways, bridges, public transit, airports, intercity passenger and freight rail, and freight and intermodal facilities
Dams, ports, harbors, drinking water systems, and wastewater systems
Electrical transmission facilities, utilities, and broadband
Buildings and real property generally

The phrase “includes, at a minimum” tells agencies they can extend coverage further. One category is carved out entirely: spending related to a major disaster or emergency declared under the Stafford Act. CDBG-DR grants and similar disaster-response infrastructure fall outside BABA.²

The Three Material Categories and Their Domestic Content Tests

BABA divides everything used in an infrastructure project into three groups, and each has its own test for what qualifies as produced in the United States.³ Classification drives compliance, so this is where a project team should start.

Iron and Steel

A product is in this group if it is predominantly iron or steel, meaning the cost of the iron and steel content exceeds 50 percent of the total cost of all components.⁴ Structural beams, reinforcing bars, steel pipe, and metal decking are typical examples.

The domestic-content rule here is the strictest of the three. Every manufacturing step, from initial melting of raw material through the application of coatings, must take place in the United States.⁵ Melting steel abroad and finishing it domestically does not qualify.

Construction Materials

Construction materials are articles made primarily of a single material from a defined list:⁶

Non-ferrous metals
Plastic and polymer-based products, including PVC, composite building materials, and polymers used in fiber optic cables
Glass, including optic glass
Fiber optic cable, including drop cable
Optical fiber
Lumber
Engineered wood
Drywall

If a listed item contains inputs from another listed item, it stays a construction material rather than reclassifying as a manufactured product. Small quantities of binding agents or similar additions do not change the category.

The test here is simpler than a percentage calculation but still demanding: all manufacturing processes for the construction material must occur in the United States.³ For lumber, the milling must be domestic. For fiber optic cable, glass drawing and cable assembly must both happen in the U.S.⁷

Manufactured Products

Manufactured products are the catch-all: items made from multiple components or materials that do not fit the iron-and-steel or construction-materials definitions. Equipment, fixtures, and assembled goods usually land here.

Two conditions have to be met. The final product must be manufactured in the United States, and the cost of components mined, produced, or manufactured domestically must exceed 55 percent of the total cost of all components.⁵ Agencies can apply a higher threshold if another law already imposes one, but 55 percent is the BABA baseline.² Running the component-cost math means identifying every part in the finished product, tracing where each was mined, produced, or manufactured, and comparing the domestic portion against the total.

Built-In Relief: Small Projects and De Minimis

Not every federally assisted project carries the full compliance weight. OMB guidance points agencies toward several standard forms of relief.

Many agencies waive BABA for infrastructure projects where the total project cost, including federal and non-federal funds, does not exceed the Simplified Acquisition Threshold of $250,000.⁸

Agencies can also allow a small share of non-domestic materials without a formal waiver. The standard de minimis threshold is 5 percent of the total cost of covered materials, capped at $1 million.⁸ That flexibility handles the case where a minor component has no domestic source and a full waiver application would be disproportionate.

The Three Waiver Types

When a project genuinely cannot meet the domestic-content standards, the recipient can ask the funding agency for one of three waivers:⁵

A public interest waiver, granted when the agency finds that applying BABA would be inconsistent with the public interest.
A non-availability waiver, granted when the specific type of iron, steel, manufactured product, or construction material is not produced domestically in sufficient quantities or of satisfactory quality.
An unreasonable cost waiver, granted when using domestic materials would increase the overall project cost by more than 25 percent.⁹

A waiver request should include technical specifications of the materials involved, the project location, the federal funding identification number, and a detailed explanation of why the preference cannot be met. For a non-availability waiver, that explanation means documented market research showing no domestic source exists. For unreasonable cost, it means concrete price quotes comparing domestic and non-domestic options.

Some situations are already covered by general applicability waivers that agencies have issued for entire categories of products or project types.¹⁰ Check whether one applies to your project before drafting a project-specific request.

How Waiver Review Works

Once a recipient submits a request, the agency posts the proposed waiver on its website and provides at least 15 calendar days for public comment. General applicability waivers get at least 30 days.⁵ The window lets domestic manufacturers flag American alternatives the applicant may have missed.

After comments close, the agency sends the waiver to the Made in America Office at the Office of Management and Budget for final review. MIAO generally finishes within 3 to 7 business days, though complex or high-value waivers can take up to 15 days.¹¹ The agency cannot finalize the waiver until MIAO has completed its review or waived the requirement, and then the agency issues a final determination to the recipient.

What Happens if You Get It Wrong

BABA does not spell out a single penalty clause, but the exposure is real. A federal agency can withhold funding, require replacement of non-compliant materials at the contractor’s expense, or demand repayment of funds already disbursed. Recipients are responsible for collecting, verifying, and maintaining compliance records for every covered material, and federal auditors review that documentation.¹²

The larger risk sits under the False Claims Act. A contractor or grant recipient that knowingly submits a false certification of domestic content faces civil penalties per false claim plus damages equal to three times the amount the government lost.¹³ A March 2026 executive order directed agencies to audit domestic-origin claims more aggressively and refer suspected misrepresentations to the Department of Justice. Agencies may now require affirmative verification of origin claims rather than accepting contractor self-certifications.

BABA Is Not the Buy American Act

The two laws sound alike and get mixed up constantly. The Buy American Act, from 1933, applies to direct federal procurement, meaning goods the government buys for its own use. BABA applies to federal financial assistance, meaning grants, loans, and cooperative agreements that flow to state governments, local agencies, tribes, and other non-federal recipients for infrastructure projects.²

The domestic-content numbers are different too. The Buy American Act currently requires at least 65 percent domestic component cost for manufactured end products in direct procurement. BABA’s manufactured-products threshold is 55 percent.⁵ A single project can involve both direct federal procurement and grant-funded infrastructure, and in that case both laws can apply to different purchases on the same job.

1
U.S. Department of Energy. Build America, Buy America
2
HUD. Build America, Buy America Act Provisions
3
Environmental Protection Agency. Build America, Buy America Act Domestic Preference Overview
4
The White House. M-24-02 Buy America Implementation Guidance Update
5
eCFR. 2 CFR Part 184 – Buy America Preferences for Infrastructure Projects
6
Federal Highway Administration. Buy America – Construction Program Guide
7
United States Department of Agriculture. Build America, Buy America Definitions
8
U.S. Department of Housing and Urban Development. Build America, Buy America
9
United States Department of State. Build America, Buy America Waivers
10
Environmental Protection Agency. Build America, Buy America Act Approved Waivers
11
The White House. Improving the Transparency of Made in America Waivers
12
U.S. Fish and Wildlife Service. Build America, Buy America Act
13
Office of the Law Revision Counsel. 31 USC 3729 – False Claims