The Build America, Buy America Act (BABA) may sound straightforward: prioritize US-made materials for federally funded projects. But its real-world impact is anything but simple. From compliance hurdles to sourcing challenges, BABA is reshaping how infrastructure and affordable housing projects are planned and executed.
In a new Housing Huddle, I was joined by Government Contracts partner Cara Wulf to break down what stakeholders need to know about BABA compliance.
What is Build America, Buy America, and why was it created?
BABA is part of the Infrastructure Investment and Jobs Act, often called the Bipartisan Infrastructure Law. It requires that federal financial assistance for infrastructure projects be used only if all iron, steel, manufactured products, and construction materials are produced in the United States.
The goal is to maximize the use of US-made materials in infrastructure projects. Importantly, “infrastructure” is defined broadly. While people often think of roads, bridges, and airports, the requirements also extend to projects, like affordable housing. As a result, many nontraditional infrastructure projects now fall under BABA, including those funded through HUD programs and other federal financial assistance.
What are the biggest BABA compliance challenges facing developers and project teams?
The biggest challenge is understanding what “produced in the United States” means, since each material category has a specific regulatory definition that may differ from common assumptions.
Teams must also track materials across the project to confirm compliance and identify potential gaps, including where waivers may be needed. Assigning clear responsibilities across developers, contractors, and subcontractors is essential to ensure requirements are properly implemented.
Timing adds complexity, as projects evolve and materials may not be finalized early, making advance planning critical to manage lead times and avoid delays.
When do BABA waivers apply, and how can they be obtained?
There are three main waivers:
- Unreasonable cost, which requires showing a more than 25% increase. This waiver is rarely used.
- Public interest, often issued broadly by agencies but harder to obtain for individual projects.
- Non-availability, the most common, used when materials are not available in sufficient quantity or quality in the United States.
Non-availability waivers require documented due diligence, such as supplier outreach and market research. While the process can be time intensive, agencies like HUD have granted these waivers when applicants clearly demonstrate a lack of compliant materials.
What best practices should developers follow to navigate BABA requirements?
Start early by determining whether BABA applies and building compliance into the project plan from the outset to avoid delays and account for long lead times. Proactive coordination with contractors and subcontractors is critical, as they often handle sourcing and may identify compliance issues or the need for waivers.
Developers should also clearly define roles in contract documents, including responsibility for sourcing, certifications, and tracking compliance. Maintaining thorough documentation throughout the project is essential in case agencies request proof of compliance.
