The Office of Management and Budget (OMB) recently unveiled its final guidance for the Build America, Buy America Act (BABA). This comes after the act was enacted in November 2021 as a component of the Infrastructure Investment and Jobs Act (IIJA). The OMB’s guidance lays out tighter U.S content prerequisites for federally financed infrastructure ventures. These new rules indicate an increasingly stronger focus on enhancing domestic production and supporting American industries.
This Act, often simply referred to as BABA, represents a significant shift in US government policy, with the intention of putting a greater share of federal infrastructure spending towards domestically sourced goods. The purpose of the act is clear – to bolster the American economy by incentivizing national production and creating opportunities within the nation.
As legal professionals who work with some of the biggest corporations and law firms worldwide, it is crucial to understand the updated guidance’s implications on federal procurement, public infrastructure projects, and broader considerations in legal strategy and compliance.
The stricter U.S. content requirements for federally funded infrastructure projects would mean that for any such project to qualify for federal funding, its components would need to have a higher percentage of domestically produced material. Such an approach is a marked departure from previous guidance, which placed less emphasis on the place of a product’s final manufacture.
The new rules could potentially have a significant effect on businesses and government entities involved in federally funded infrastructure projects. Ensuring timely and smooth compliance with these requirements will necessitate a careful review of supply chains, sourcing policies, and potentially, realignment of business strategies.
Additional details about the OMB’s final guidance can be read in its entirety here.