Build America, Buy America Final Guidance: What State and Local Governments Should Know

The Biden Administration’s Final Guidance for the implementation of the Build America, Buy America (BABA) statutory provisions of the Bipartisan Infrastructure Law (BIL) formally took effect on October 23, 2023, 60-days after it was published in the Federal Register. The Final Guidance replaces the Initial Guidance published in April 2022 and the Interim Guidance issued by the Office of Management and Budget (OMB) in February 2023. BABA establishes domestic content preferences for infrastructure projects that are funded with federal grant funding, including with the nearly $1 trillion dollars made available under the BIL.

The BABA Final Guidance is now added to the Federal Uniform Guidance in Title 2 as a new Part 184 (and incorporated by reference into Part 200) of the Code of Federal Regulations.1 As a regulation adopted after notice and opportunity to comment, the Final Guidance will inform how federal agencies and state and local governments manage infrastructure projects. For their part, state and local governments now deploying billions of federal BIL formula and competitive grants funds should have a firm grasp on how the BABA Final Guidance will and will not impact their current and future road, bridge, broadband, airport and other infrastructure projects. 


The BABA Requirement

The Final Guidance requires federal agencies to ensure that, consistent with the BABA statute, “none of the funds made available for a federal award for an infrastructure project may be obligated unless all of the iron, steel, manufactured products, and construction materials incorporated into the project are produced in the US.”2

Beginning October 23, 2023, all federal awards for infrastructure projects must include the Buy America preference in their terms and conditions and the Buy America Preference must be included in all subawards, contracts, and purchase orders for the work performed, or products supplied under the federal award.3 State and local governments, therefore, will be required to include the preference in awards of federal funds to subrecipients for infrastructure projects. 

The Final Guidance addresses how BABA will be applied to infrastructure projects and makes changes to key definitions that will impact its implementation by federal agencies and infrastructure funding recipients alike. In particular, state and local governments should keep in mind these key aspects of BABA when managing federal infrastructure grant funds.

How BABA Is Applied to Federal Awards

The Final Guidance applies to federal awards obligated on or after October 23, 2023. Awards obligated between May 14, 2022, the effective date of the Build America, Buy America Act4, and before October 23, 2023, are instead subject to OMB Memorandum M–22–11, the initial BABA implementation guidance issued by OMB in April 2022. All federal awards for an infrastructure project obligated after October 23, 2024, will be subject to the Final Guidance, regardless of whether the Final Guidance applied to previous grant awards for the project.5

Further, BABA’s domestic content requirements only apply to non-federal projects that are funded in whole or in part with federal grants. BABA does not apply to federal government direct procurement or override pre-existing Buy America rules of federal agencies where they are as strict or stricter that BABA. The Final Guidance applies to all federal formula and competitive grant programs used for infrastructure, regardless of whether the funds were appropriated by BIL, and regardless of whether infrastructure was the primary purpose of the federal grant.6 

One question posed by many interested parties in comments submitted to OMB was whether BABA will apply to an entire infrastructure project, even if that project is funded by federal and non-federal funds.  In the Preamble to the Final Guidance, OMB confirmed that BABA applies to the entire project regardless of the funding mix so long as federal funds are being used for the project.7

Definitions of Key Terms

The final guidance includes definitions of key terms, including iron or steel products, manufactured products, construction materials and materials identified in the BABA statute as exempt from the Buy America preference, e.g., aggregates and cement.

  • Infrastructure Project Infrastructure project is defined as “any activity related to the construction, alteration, maintenance, or repair of infrastructure in the US regardless of whether infrastructure is the primary purpose of the project.” The definition of infrastructure projects is intended to be broadly defined. The examples provided in the BABA Final Guidance are intended to be illustrative only.8
  • Iron and Steel  Iron or steel products means “articles, materials, or supplies that consist wholly or predominantly of iron or steel or a combination of both.” The Final Guidance, in turn, uses the term “predominantly of iron or steel or a combination of both,” to mean that the cost of the iron and steel content exceeds 50% of the total cost of all its components. The cost of iron and steel is the cost of the iron or steel mill products (such as bar, billet, slab, wire, plate, or sheet), castings, or forgings utilized in the manufacture of the product and a good faith estimate of the cost of iron or steel components.9 This definition is in keeping with the definition used for iron and steel in the Federal Acquisitions Regulations.
  • Manufactured Products  Manufactured products means (i) articles, materials, or supplies that have been: (ii) Processed into a specific form and shape; or (iii) combined with other articles, materials, or supplies to create a product with different properties than the individual articles, materials, or supplies. The Final Guidance confirms that recipients should follow the “cost of components” test in the Federal Acquisition Regulations in order to determine the domestic content for purposes of BABA compliance.
  • Construction Materials  Construction materials means articles, materials, or supplies that consist of only one of the following items: (i) Nonferrous metals; (ii) Plastic and polymer-based products (including polyvinylchloride, composite building materials, and polymers used in fiber optic cables); (iii) Glass (including optic glass); (iv) Fiber optic cable (including drop cable); (v) Optical fiber; (vi) Lumber; (vii) Engineered wood; and (viii) Drywall. Any one of these items that is an input to other listed items is still a construction material.  Minor additions of articles, materials, or supplies to a construction material do not change the categorization of the construction material.
  • Waivers  The Final Guidance also addresses how and under what processes Buy America waivers may be proposed and issued.  Allowable bases for a waiver consist of: (1) public interest, (2) unreasonable cost10, and (3) non availability. Based on the BABA statute, the Final Guidance restates these circumstances under which a waiver may be justified. The new Part 184 also includes guidance on the type of process that a federal agency should implement to allow recipients to request waivers, including the process federal agency should follow in issuing proposed and final waivers.

Recipients of federal grant funds such as state and local governments may request waivers from a federal awarding agency if the recipient reasonably believes a waiver is justified under any one of the statutory bases identified above. A waiver request from a recipient must be submitted to the agency in writing. Federal awarding agencies must provide waiver request submission instruction and guidance on the format, contents, and supporting materials required for waiver requests.11

Prior to issuing a waiver, the federal awarding agency must: (1) Make the proposed waiver and a detailed written explanation publicly available on a website designated by the federal awarding agency and the Office of Management and Budget; (2) Except as provided for waivers of general applicability, provide a period of not less than 15 calendar days for public comment on the proposed waiver; and (3) submit the waiver determination to the Made in America Office in OMB for final review pursuant to Executive Order 14005 and section 70923(b) of the BABA Act. Under the BABA Final Guidance, waivers of general applicability are open for public comment for no less than 30 days.12


Impact of International Trade Agreements

One issue that received much attention in comment submissions as OMB finalized the BABA guidance is the extent to which the guidance would formally acknowledge the role of international trade agreements, especially the Trade Agreements Act so that states, in particular, would be able to continue to utilize internationally procured goods and labor for infrastructure without running afoul of BABA.  

OMB’s April 18, 2022, Memorandum suggested that international trade agreements would be considered as a basis for a waiver of general applicability, “if a recipient is a State that has assumed procurement obligations pursuant to the Government Procurement Agreement or any other trade agreement, a waiver of a Made in America condition to ensure compliance with such obligations may be in the public interest.”13 

In the BABA Final Guidance, OMB maintained and confirmed the language used in Memorandum M-22-11, noting that the Memorandum’s language does not conflict with the new Part 184 and that OMB would be retaining the language in an updated Memorandum that would incorporate the changes in the Final Guidance.  


What Should State and Local Governments and Their Subrecipients be Looking for Next with BABA? 

While the BABA Final Guidance addressed several issues that had been raised with the Initial and Interim Guidance and the OMB Memorandum, several issues remain open and are likely to be of concern to states and their subrecipients. Here are four open issues to continue to watch: 

  1. Federal Agency Discretion  There are several instances where the BABA Final Guidance underscores how OMB has left federal agencies with broad discretion or has left open the potential for further agency guidance on key aspects of BABA implementation. These include, for example, deciding what constitutes an entire infrastructure project,14 the applicability of BABA to non-profits,15 and defining “work sites.”16 While flexibility can be helpful, it also opens the potential for conflicting and inconsistent application of BABA guidance by different federal agencies. State and local governments, for their part, will have to closely monitor how the BABA Final Guidance is being implemented by every applicable federal agency.
  2. Infrastructure Project and Materials Compliance  State and local governments and their subrecipients of infrastructure funding will have to determine if the products across their supply chain comply with BABA. It will be important for state and local governments to put into place as early as possible a system for identifying and monitoring materials compliance across their infrastructure projects. Differing agency rules may again come into play. Management of risk will be key.
  3. International Trade Agreements State and local governments that obtain labor and goods under one or more international trade agreements cannot take for granted their continued access under BABA without potentially seeking a waiver based on the public interest exception.  State and local governments are dependent on such foreign goods and increasingly on labor that will be essential to infrastructure projects. State and local governments must monitor federal agency waivers to stay on top of what is issued and how it may impact their projects.
  4. Bid Protests and Legal Challenges  The Buy America Act of 1933 brought numerous bid protests and legal challenges. There is no reason to believe that BABA will be any different. State and local governments, once again, need to carefully monitor the legal and procurement landscape as BABA is implemented and applied under the Final Guidance.


How Guidehouse Can Help 

We understand federal funding Guidehouse has the experience, resources, and technology to interpret and help prioritize and manage this influx of federal funds, as well as leveraging them with other state and federal funds to increase impact and meet federal matching requirements. We work with clients to establish benefits from funding sources are maximized, tapping funding streams in an order of applicability from state-specific and federal targeted programs (ARPA, IIJA, IRA, CHIPS) to mixed-use funds (capital projects and Broadband Equity and Deployment) to funds of general applicability (state and local Fiscal Recovery Funds, and general funds).  

We understand and track federal regulations and guidance  Through its Community Building and Investment Center of Excellence©, Guidehouse tracks all federal regulatory developments that impact its clients’ programs and services and socializes this information to keep clients up to date with important information on how the latest regulations and guidance may impact their project goals. Our understanding of the federal regulatory environment allows our team to recommend best practices in program administration and compliance.   

We design, implement, and operate grants management programs  Our team has extensive experience with grants management, from the design of technology-based portals to the review of all grant requirements in accordance with the Federal Uniform Guidance, 2 CFR Part 200, as well as all program requirements and guidance issued by federal agencies. We fully understand and support monitoring, reporting, and compliance requirements. We have performed these services for more than 65 state and local governments relative to numerous federal funding sources, including all COVID-19-related response, recovery, and rebuilding legislation. Guidehouse has a team of professionals nationwide who form our Community Building and Investment Center of Excellence©, which closely monitors federal legislation to track and analyze each release of regulations and guidance.   

We engage with clients locally and with key stakeholders and communities The successful pursuit and implementation of large federal grants are often tied to community understanding and support. Many of the funding opportunities offered by the IRA involve impactful investments in our nation to address long-standing and urgent climate, energy, and local infrastructure needs, including for disadvantaged communities. Guidehouse works locally with our clients to create a winning strategy and engages with the local community to establish successful grant pursuits and post-award implementation.


This article was authored by Jeffrey Meyers and Niki Gates.


1. 88 Fed. Reg. 57750, et sec. (August 23, 2023)
2. P.L. 117-58, Section 70914(a) (November 15, 2021); 2 CFR Part 184.3, Buy America Preference, definition. For “manufactured” products, the cost of the components that are mined, produced, or manufactured in the United States must be greater than 55 percent of the total cost of all components of the manufactured product. 
3. CFR Part 184.4(b).
4. Build America, Buy America Act (BABA), Public Law 117–58, 135 Stat. 429, 70901–70927, Nov. 15, 2021
5. 88 Fed. Reg. 57788 (August 23, 2023), codified at 2 CFR Part 184.2(b) and (c).
2 CFR Part 184.4 (a) and (b).
88 Fed. Reg. 57754 (August 23, 2023).
2 CFR 184.4(c) lists the following as “infrastructure projects” -- the structures, facilities, and equipment for roads, highways, and bridges; public transportation; dams, ports, harbors, and other maritime facilities; intercity passenger and freight railroads; freight and intermodal facilities; airports; water systems, including drinking water and wastewater systems; electrical transmission facilities and systems; utilities; broadband infrastructure; and buildings and real property; and structures, facilities, and equipment that generate, transport, and distribute energy including electric vehicle (EV) charging
2 CFR Part 184.3
An agency may find that a waiver is needed due to unreasonable cost if compliance would increase the price of the overall infrastructure project by more than 25%.
11. 2 CFR Part 184.7
OMB Memorandum M-22-11, April 18, 2022, p.11.
88 Fed. Reg. 57768 (August 23, 2023).
Id. at p. 57774
Id. at p. 57776 

Let Us Help Guide You

Complexity demands a trusted guide with the unique expertise and cross-sector versatility to deliver unwavering success. We work with organizations across regulated commercial and public sectors to catalyze transformation and pioneer new directions for the future.

Stay ahead of the curve with news, insights and updates from Guidehouse about issues relevant to your organization and its work.