The Office of Management and Budget (OMB) is releasing the final guidance for Build America, Buy America (BABA). The final guidance would provide needed clarification for BABA’s implementation across infrastructure sectors.
Currently, the pre-publication version of the guidance is available online here. It is likely to take effect 60 days after it is published to the Federal Register.
The new guidance would provide several new pieces of information for BABA implementation, including:
- The definitions of construction materials’ manufacturing processes
- Two new construction materials
- A positive definition for manufactured products
- A definition of “component” when considering manufactured products
All manufacturing processes
One major introduction is a definition for all manufacturing processes for construction materials.
BABA required construction materials that were “produced in the United States,” which meant that “all manufacturing processes for the construction material occurred in the United States.”
Under the new guidance, construction materials that fall under BABA now have defined standards for determining “all manufacturing processes.” The processes for non-ferrous metals, for example, include initial smelting or melting through final shaping, coating and assembly.
Construction materials definitions
The guidance also provides two new materials for the category of construction materials.
The construction materials covered under previous guidance had consisted of non-ferrous metals, plastic and polymer-based products, glass, lumber, and drywall.
Now, the category includes two new materials: fiber optic cable (including drop cable) and engineered wood.
The guidance enhances the definitions for the “manufactured products” category.
Under previous guidance, manufactured products had been defined as any material that was not an iron or steel product and was not a construction material. Stakeholders had criticized this for being a negative definition, or describing what manufactured products were not.
Now, the category has a positive definition: “articles, materials, or supplies that have been: ‘(i) Processed into a specific form and shape; or (ii) Combined with other articles, materials, or supplies to create a product with different properties than the individual articles, materials, or supplies.’”
The new guidance also makes minor changes to its guidance in determining the cost of components for manufactured products.
BABA requires that a manufactured product must have 55% of the cost of its components be manufactured in the U.S., and that the product itself be manufactured in the U.S.
Definition of component
OMB provided a definite article for the term “component” when considering manufactured products: “an article, material, or supply, whether manufactured or unmanufactured, incorporated directly into: (i) a manufactured product or, where applicable, (ii) an iron or steel product.”
More on the final guidance
The guidance also touched on the appropriateness of waiver processes, small changes to phrasing, explicit consistency with international trade obligations, and much more.
OMB has made sure to point out that its guidance is not the final, definitive word of law. OMB’s guidance is meant to help direct federal agencies, such as the U.S. EPA, in their own unique implementations of BABA’s requirements.
Stakeholders in the water industry have pointed our that BABA's implementation has been imperfect — thanks, in part, to a lack of guidance.
While OMB has referred to the guidance as “final,” it has also said that it may issue more guidance in the future, depending on feedback from stakeholders.