More Changes to Come on the ‘Made in America’ Front

In his State of the Union speech last week, President Biden announced “new standards to require all construction materials used in federal infrastructure projects to be made in America,” including lumber, glass, drywall and fiber-optic cables,” which drew applause from House Speaker Kevin McCarthy, R-Calif.. Then the Office of Management of Budget followed up the next morning with proposed guidance for the new standards. But what does this all mean exactly? 

The proposal builds on initial implementation guidance, issued in April 2022, for the Build America, Buy America Act included in the bipartisan infrastructure law enacted in November 2021 as well as other efforts by the Biden administration to boost U.S. manufacturing. 

“For decades, Buy America laws focused on iron and steel and only covered certain federally funded infrastructure projects,” said a statement from the White House ahead of the speech. "Once finalized, these standards will apply to virtually all infrastructure spending supported by federal financial assistance—not simply roads and bridges, but also buildings, water infrastructure and high-speed internet, providing consistency for companies and state and local governments to apply the standards and a strong federal government-wide demand signal.” 

Livia Shmavonian, director of the Made in America Office, which is housed within OMB, wrote that the proposed guidance will improve “federal financial assistance management, consistency, transparency, and oversight to ensure effective stewardship of Bipartisan Infrastructure Law funding.” Public comments on the proposal are due by March 13.

“One notable aspect of OMB’s latest proposed guidance is the effort to align the ‘Buy America’ standards for federal infrastructure projects with the ‘Buy American Act’ requirements applicable to federal procurement contracts,” wrote Kevin Maynard and Cara Sizemore, partner and associate, respectively, at the law firm Wiley Rein LLP. “Although that may help simplify the currently diverse definitions in domestic preference laws, contractors should carefully consider whether there are reasons for maintaining a different set of standards that have traditionally applied to federal infrastructure projects.” 

Dismas Locaria, a partner at the law firm Venable who specializes in government contracts, told Government Executive the April guidance was essentially a “stop-gap” measure, so the administration would work on something more substantial. “There’s a patchwork right now of statutory and regulatory requirements” for domestic preferences, so he hopes this proposal “provides a little bit more clarity.” The applicability will be broader than just the infrastructure package, Locaria noted. 

Dustin Painter, a partner at the law firm Kelley Drye & Warren LLP who co-chairs the Government Relations and Public Policy practice group, said the guidance is a “significant step” on implementation of the Build America, Buy America Act as previous deadlines set by Congress were missed and agency waivers delayed it. 

Jerry McGinn, executive director of the Baroni Center for Government Contracting at George Mason University, said this proposal is consistent with efforts from past administrations to boost domestic manufacturing jobs. “There is always a tension with Buy America efforts, however, given the global nature of our economic system,” he said. “When you promote domestic manufacturing, some other party loses out. If that party is a company based in China, that is one thing, but if the company is based in Canada or another country that is a close ally and trading partner of the U.S. that could be problematic for the overall relationship between these countries.” 

As CTV News reported, Canadian manufacturers and Canada’s ambassador to the United States quickly raised concerns about the impact of Biden’s new policies, meanwhile David Cohen, U.S. ambassador to Canada, in an interview with the network tried to assuage their concerns. 

The Associated General Contractors, a trade association for the construction industry, said in a post the proposal “brings yet more questions for contractors as well as owners.”