Build America, Buy America: Are You Ready to Comply with HUD Funded Housing Infrastructure Projects?
By now, you have likely heard of the Build America, Buy America Act (BABA) given it was enacted on November 15, 2021 as part of the Infrastructure Investment and Jobs Act. BABA establishes a domestic content procurement preference that is often referred to as a “Buy America Preference” (BAP) for taxpayer-financed Federal assistance in public infrastructure.
Given the Department of Housing and Urban Development’s (HUD) phased implementation by program and the type of product (iron and steel, construction materials, and manufactured products) of the requirements in connection with its award of Federal financial assistance (FFA), you may have postponed your review of BABA unless you have an award of Community Development Block Grant (CDBG) formula grant funds obligated on or after November 15, 2022, new FFAs for Choice Neighborhood, Lead Hazard Reduction, and Healthy Homes Production Grants obligated by HUD on or after February 22, 2023 or new FFAs for Recovery Housing Program (RHP) grants obligated by HUD on or after August 23, 2023. HUD’s BAP was implemented for all iron and steel products for the foregoing.
With the BAP set to apply to other programs and product categories with new FFA obligated by HUD in 2024 or as of the date HUD obligates new FFA from Fiscal Year 2024 appropriations, it is time to familiarize yourself with the requirements, plan ahead and potentially provide input to HUD to smooth the way for implementation.
What is the Buy America Preference?
The BAP is
a requirement that no amounts made available through a program for [FFA, including all expenditures by a Federal agency to a non-Federal entity for an infrastructure project unless otherwise excepted] may be obligated for a project unless—
(A) all iron and steel used in the project are produced in the United States[, which means all manufacturing processes, from the initial melting stage through the application of coatings, occurred in the United States];
(B) the manufactured products used in the project are produced in the United States[, which means that
(i) the manufactured product was manufactured in the United States; and
(ii) the cost of the components of the manufactured product that are mined, produced, or manufactured in the United States is greater than 55 percent of the total cost of all components of the manufactured product, unless another standard for determining the minimum amount of domestic content of the manufactured product has been established under applicable law or regulation]; or
(C) the construction materials used in the project are produced in the United States[, which means that all manufacturing processes for the construction material occurred in the United States].
Pub. L. 117–58, Sec. 70912(2,4,6).
What is infrastructure?
The term “infrastructure” includes, at a minimum, the structures, facilities, and equipment for, in the United States—
(A) roads, highways, and bridges;
(B) public transportation;
(C) dams, ports, harbors, and other maritime facilities;
(D) intercity passenger and freight railroads;
(E) freight and intermodal facilities;
(F) airports;
(G) water systems, including drinking water and wastewater systems;
(H) electrical transmission facilities and systems;
(I) utilities;
(J) broadband infrastructure; and
(K) buildings and real property.
Pub. L. 117–58, Sec. 70912(5). As HUD notes in Notice CPD-2023-12:
The term “infrastructure” includes the structures, facilities, and equipment for projects traditionally considered infrastructure, including buildings and real property. For [HUD Office of Community Planning and Development (CPD)] programs, this may include, but is not limited to, certain funding for:
- road and sidewalk improvement projects;
- water, sewer, and other utility projects;
- broadband infrastructure;
- housing construction and rehabilitation;
- community facility construction and rehabilitation;
- homeless shelter construction and rehabilitation;
- and other CPD-funded activities that are defined as infrastructure according to BABA (section 70912(5)).
When will this impact me?
HUD’s phased implementation of the BAP requirements in connection with its award of FFA is outlined in HUD’s Public Interest Phased Implementation Waiver and Notice CPD-2023-12. The phased implementation is broken down by program, the type of product and the date HUD obligates new FFA.
Beyond that, you may (a) potentially utilize one of HUD’s general waivers related to (i) exigent circumstances, (ii) de minimis, small grants, and minor components or (iii) Tribal recipients or (b) obtain a project-specific waiver to exclude a project from the BAP. All waivers can be found here. Note that HUD requires a minimum level of diligence before seeking a waiver. For example, see 5(I), “Minimum Due Diligence Search Requirements,” in Notice 2024-01pihn and the “Federal Government-wide Guidance on Project/Product-Specific Waivers” section of Notice CPD-2023-12.
What issues will this present for HUD funded housing infrastructure projects?
Supply/Time/Cost
In a post-pandemic world, supply shortages, time delays, and increased costs immediately spring to mind as the BAP phases in to more programs and types of products and applies to an entire infrastructure project that includes FFA, even if it is also funded by non-Federal funds.
Procurement
There are also procurement considerations. In addition to intentionally dividing a procurement into separate and smaller awards to avoid BAP being prohibited, any procurement modification must be carefully considered (e.g., funds for amended scope now exceed HUD’s De Minimis and Small Grant waiver or are FFA to which the BAP applies). To help determine the need for a project specific waiver, public housing agencies (PHAs) may require respondents to solicitations to provide alternative responses depending on whether the respondent is successfully able to find the necessary BAP compliant products. Documents with procured parties need to require sufficient product purchase information be provided to enable compliance with the minimum BABA documentation requirements.
Record Keeping
For PHAs, HUD’s Notice 2024-01pihn contains an entire section on “Documentation of Compliance with BAP.” While it specifies that different approaches are permitted, it provides that
[a]t a minimum, the records must:
(1) track product purchases in sufficient detail to identify the source of the funding for the purchase;
(2) demonstrate compliance with BABA:
(i) for products purchased in compliance with the BAP, documentation that the product complied with BAP requirements; and
(ii) for products purchased pursuant to a waiver or other exemption from the BAP, adequate information to validate that the purchase was covered by a waiver or other exemption.
The records must be kept until 3 years after completion of the infrastructure project.
Similarly, Notice CPD-2023-12 for CPD grantees includes that “[a]s a part of its record keeping, a CPD grantee should document its process to analyze if the BAP applies to a project using the approach” set forth therein. It goes on to note that “[r]ecords should be consistent with existing records retention requirements for each of the Covered CPD programs. If there are no CPD program-specific records requirements, the CPD grantee may follow “retention requirements for records,” under 2 CFR § 200.334 as applicable to Federal grants.”
Is there anything I can do other than seek a project-specific waiver if I have concerns with a BAP?
On February 13, 2024, HUD published the Request for Information (RFI) Regarding Iron, Steel, Construction Materials, and Manufactured Products Used in Housing Programs Pursuant to the Build America, Buy America (BABA) Act (HUD’s RFI). HUD is seeking public input on the implementation of BABA
to improve HUD’s understanding of the current state of the domestic market for products required in housing infrastructure projects. HUD is especially interested in comments detailing domestic materials sourcing, market readiness, other product supply considerations, and whether specific housing products or their components are manufactured in the United States.
. . .
HUD is seeking more detailed product-specific information on the domestic availability of iron, steel, construction materials and manufactured products commonly used in HUD-assisted housing programs and infrastructure projects. Responses to this RFI will improve HUD’s understanding of the current domestic market for these products to effectively implement BABA for projects funded by its housing programs and to evaluate the potential need for short-term product waivers from BABA requirements if products are unavailable.
If you are interested in contributing comments, they are due April 15, 2024 and may be submitted electronically through the Federal eRulemaking Portal at www.regulations.gov.