The $1.2 trillion Infrastructure Investment and Jobs Act (IIJA) that President Biden signed on November 15, expands the provisions supporting American manufacturing through federal procurement. The IIJA statutory directives impose novel domestic origin requirements and standards for construction materials and products acquired for federally-aided public works infrastructure projects at state and local levels.
Prior efforts to protect and promote the U.S. industrial base consisted of President Trump’s July 15, 2019 Executive Order 13881, Maximizing Use of American-Made Goods, Products, and Materials, and President Biden’s January 25, 2021 Executive Order 14005, Ensuring the Future is Made in All of America by All of America’s Workers. Find more information about these two executive orders on our blog post titled “Heightened Buy American Act Requirements Are Here and More Are on the Way.”
President Biden’s EO 14005 was reinforced by the statutory authorities detailed in the domestic preference provisions of the IIJA. The three key concepts of the IIJA are:
- Expanding domestic preference procurement policies applicable to federal financial assistance programs for public works infrastructure.
- Increasing the domestic component content requirements of products and construction materials sold to the federal government under the Buy American Act.
- Providing transparency into the government’s domestic sourcing contracting decisions.
In response to the IIJA, the U.S. Department of Transportation, the U.S. Department of Energy, and the Environmental Protection Agency have increased their workforce and development programs. The expansion will enhance each agency’s ability to handle the federal government’s prospective procurements.
The IIJA Broken Down
The U.S. House of Representatives approved the bill on a 228-206 vote and the Senate passed the legislation on a 69-30 vote, ending weeks of intraparty negotiations. The final draft signed by President Biden allocates the following:
- $110 billion for repairing the nation’s highways, bridges, and roads.
- $39 billion for improving and increasing accessibility of public transit.
- $66 billion for expanding and maintaining the U.S. railroad system.
- $7.5 billion for increasing electric vehicle charging stations.
- $65 billion for improving internet services and increasing broadband access.
- $65 billion for improving the reliability and resilience of the power grid.
- $25 billion for renovating airports’ runways, gates, and terminals.
- $55 billion for revamping the water and wastewater infrastructure to eliminate lead pipes, reduce polyfluoroalkyl substances and other chemicals from the water.
The United States will utilize $210 billion from unspent COVID-19 relief aid and $53 billion from unemployment insurance aid, among other sources, to fund the IIJA.
Build America, Buy America
The IIJA includes many “Buy America” provisions, and most importantly, the IIJA includes a “Build America, Buy America” (BABA) section. BABA reflects Congress’s attempt to consolidate prior domestic preferences by aligning previous “Buy America” provisions. The BABA provision imposes a domestic preference on all infrastructure projects that receive federal funding. The statutory authority provided by the BABA is not limited to the funds appropriated by or authorized in the IIJA. Instead, the BABA directs the application of Buy America laws to federal-aid infrastructure programs, allowing for a longer-lasting impact.
According to the BABA provision, every federal agency with an infrastructure project receiving federal funding has 180 days from the day of the IIJA’s enactment to impose the domestic preference requirement. Funds appropriated to the BABA will only be made available for infrastructure projects in which all the iron, steel, and manufactured products used are entirely produced in the United States – “[…] from the initial melting stage through the application of coating […].” That restriction is targeted to infrastructure projects, aiming to advance the domestic preference movement. However, there are three exceptions to FAR 25.003 “all” requirement:
- When there is inconsistency with the public’s interest.
- Where the necessary volume of iron, steel, and manufactured products is not produced in sufficient quantities or satisfactory quality.
- Where enforcement of Buy America would increase the cost of the project by more than 25%.
A nuance worth noting is that the “Buy America” provisions will not apply to infrastructure projects covered under the World Trade Organization Government Procurement Agreement or the Free Trade Agreements. However, IIJA directs the drafting of a report (to be made public) assessing the impact of these free trade agreements on the operation of the Buy American laws. So, stay tuned to how the administration interprets the interplay between these different preference regimes.
The IIJA is a major victory for Americans – it goes well beyond the initial efforts of previous administrations to expand American manufacturing through federal procurement. The IIJA extends into FY 2026, ensuring that efforts to improve the U.S. infrastructure continue even in a new administration. The IIJA also includes the BABA provision, strengthening existing “Buy America” requirements by prioritizing “Made-in-America” American manufacturing.
Overall, the enactment of the IIJA is monumental for our country’s ability to improve roads, bridges, ports, rail transits, water systems, the power grid, broadband internet, and more. The IIJA is a welcomed step to developing and establishing consistency in the requirements and standards associated with “Made-in-America.” According to President Biden, the IIJA is “[…] a blue-collar blueprint to rebuild America.”
If you have any questions about the IIJA or domestic source provisions, please contact Todd Overman, chair of our Government Contracts Practice group, who regularly advises clients on such requirements.
The author would like to thank our intern Ustina Ibrahim for her valuable contributions to this article.