On August 23, 2023, the White House Office of Management and Budget (OMB) issued its final guidance, a noteworthy shift in policy that endeavors to implement the Build America, Buy America (BABA) provisions of the Infrastructure Investment and Jobs Act (IIJA). Hogan Lovells, a multinational legal practice, delivered a detailed examination of these developments.
The approved directive stipulates that none of the funds allocated for a federal financial assistance program for infrastructure may be obligated for a project unless all of the iron, steel, manufactured products, and construction materials used in the project are produced domestically. Numerous proponents believe that these requirements will energize American manufacturing sectors and will stir national economic growth by investing in local firms and workers.
However, it presents various implications for legal professionals operating either in multinational corporations or law firms that offer counsel to such institutions. For these entities, understanding the nuances of these requirements is crucial to navigate possible certainties and opportunities precipitated by this regime.
Given the sweeping influence of this policy on a vast range of industries — from manufacturing to infrastructure, and larger economic activities — it is vital that all stakeholders thoroughly understand and align their strategies with these new measures. It not only defines the compliance landscape but strongly impacts business operations vis-à-vis international trade agreements, procurement processes, supply chains, and even litigation scenarios that might emerge from potential non-compliance.
The BABA provisions of the IIJA represent a significant shift towards reinforcing domestic commercial activity and economic self-reliance. As we move forward in this new landscape, staying aware of key policy shifts can ensure companies remain agile and compliant.